Escolar Documentos
Profissional Documentos
Cultura Documentos
MODULE
TUTORIAL
SESSION
TOPIC 8
Outline
BBA, BIM, BHRM, BAC, BEC, BMKT, BTRM, BHM
BBPW3103
FINANCIAL MANAGEMENT I
T4
Cost of Capital
Subtopics:
1. Definition for Cost of Capital
2. Determining the Cost of Capital for Each Component of Capital Resources
3. Weighted Average Cost of Capital (WACC)
TOPIC 9
Financial Planning
Subtopics:
1. Financial Planning
2. Cash Budget
3. Pro Forma Income Statement
TOPIC 10
LEARNING
OUTCOMES
Topic 8:
Calculate the cost of debts, cost of ordinary shares and cost of preference
shares
Explain the importance of cash budget and pro forma income statement in
financial management
Identify costs that are related to inventory and explain how decisions on
inventory management are made
Notes
INSTRUCTIONAL
ACTIVITIES
Topic 8:
Topic 9:
DIAGNOSTIC
EXERCISE
(5-10 minutes to
ensure basic
understanding
of topic)
Topic 8:
1. Why do we calculate a firms cost of capital? In computing the cost of capital,
which sources of capital do we consider?
2. Compare approaches that could be used in computing the cost of ordinary
shares.
Topic 9:
1. What is the purpose of cash budget?
2. What is the purpose of pro forma income statement?
Topic 10:
1. Why is working capital management an important area in financial
management?
Or other
exercises
prepared
by face to
face
tutors
2.
3.
4.
5.
= 90 (5% x 90)
= 90 4.50
= 85.50
= RM7.50
RM85.50
= 0.0877 (8.77%)
2
Method/Solution:
Kcs=
1.25
+ 6%
40 (5% x 40)
= 1.25 + 0.06
38
= 0.0929 (9.29%)
Method/Solution:
Sutera Sdn. Bhd.
Pro forma Income Statement
For the year ended 31 December 2012
RM
Sales
Cost of goods sold
Gross profit
Depreciation expenses
Administration and sale
expenses
Operating profit (EBIT)
Interest expenses
Profit before tax
Tax (28%)
Net income
10,000,000
6,000,000
4,000,000
1,680,000
1,200,000
1,120,000
120,000
1,000,000
280,000
720,000
Extra Notes
Method/Solution:
Cash conversion cycle = Age of inventory + Collection period
Payment period
a) Cash cycle = 60 + 40 30 = 70 days
b) Cash cycle = 60 + 30 30 = 60 days
You are given the quarterly sales of Setapak Sdn. Bhd. for the year
2011.
Qtr 1
64,000
Qtr 2
56,000
Qtr 3
72,000
Qtr 4
64,000
RM25,000
45% of sales
RM2,000
RM1,500
RM2,000
28%