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      WELCOME_OBA3105_INTRODUCTION TO FINANCE_BBAIB_ODL

      This is Introduction to Finance OBA 3105, a core subject in Bachelor of Business Administration in International Business (BBAIB)_ODL

      DESCRIPTION OF THE COURSE

      This module is designed to provide students with a strong foundation in finance that allows them to understand and apply the concepts in the world of finance as well as to focus their attention to certain issues they can further explore. which applicable for both in personal and managerial finance. At the end of the course, students can recognize relationship between finance and other business disciplines, as well as to be able to use synergy of those disciplines in decision making.

      AIM OF THE COURSE

      The overall aim of the module is to give students an exposure to the basic business finance theory both quantitative and qualitative with some simple applications.

      • Specific topics covered will include time value of money, the role of the financial markets in company financing, the nature and role of financial instruments, sources of financial information, evaluation of proposed capital expenditure, and cost of capital and the returns to providers of finance.
      • This is an introduction to the fundamental concepts of business finance. The students will be exposed to the time value of money concept, the assets evaluation, the capital budgeting, the capital structure, and the cost of capital, and working capital management.

      COURSE LEARNING OUTCOME

      At the end of the course the students will be able to:

      • Discuss the principles of finance and the roles of financial market that underline the finance discipline.(C2, PLO1)
      • Demonstrate the concept of time value of money and various decision making techniques in financial planning. (C3,PLO8)
      • Calculate the value of bonds and stock in a market place (C3,PLO8)

      SUPPORT AND CONTACT DETAILS

      • Name: Mimi Suriaty Binti Haji Abdul Rani
      • Email : msuriaty@nilai.edu.my
      • Consultation Hours: Wednesday (08:00 am – 10:00 am) and Thursday (08:00 am – 10:00 am


      Lecturer Image
◄Chapter 8 - Common Stock Valuation_Part 2Text Book_BA3105_Introduction to Finance►

Chapter 9 - Working Capital Management

  • Chapter 9 - Working Capital Management

    WEEK 14 (Lecture) and (Tutorial)

    Chapter 9 Working capital management requires monitoring a company's assets and liabilities to maintain sufficient cash flow to meet its short-term operating costs and short-term debt obligations. Working capital management involves tracking various ratios, including the working capital ratio, the collection ratio, and the inventory ratio. Working capital management can improve a company's cash flow management and earnings quality by using its resources efficiently.

    Here are the main topics to be covered in Chapter 9 (Week 14):

    • Working capital management and the risk - return tradeoff
    • Working capital policy
    • Operating and Cash Conversion Cycles

    LEARNING OUTCOMES

    At the end of this lesson students able to :

    • Explain turn tradeoff involved in firm’s working capital.
    • Discuss the principle of self-  liquidating debt as a tool for managing  firm liquidity.
    • Identify the cash conversion cycle to  measure the efficiency with which a firm  manages its working capital.
    • Working Capital Management











    REQUIRED READINGS

    Chapter 9:

    Overview of Working Capital Management

    Titman, Keown, A. J. and Martin, J.D. (2018). Financial Management, (13th ed). Principles and Applications, Pearson Education.


    • OBA3105_INTRODUCTION TO FINANCE_VIDEO 9_CHAPTER 9 File

      CHAPTER 9 : WORKING CAPITAL MANAGEMENT


    • SELF CHECK 9.1 : Online Discussion Forum
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      Once completed view the video. Let's discuss!

      Tutorial (9) _Working Capital Management

      ▪ Details: 5 questions

      ▪ Duration of submission: 1 week

      Question 1 :

      ABC, Inc., is considering opening a new convenience store in downtown New York City. The expected annual revenue at the new store is $900,000. To estimate the increase in working capital, analysts estimate the ratio of cash and cash-equivalents to revenue to be 0.03 and the ratios of receivables, inventories, and payables to revenue to be 0.05, 0.10, and 0.04, respectively, in the same industry. What is the incremental cash flow related to working capital when the store is opened?

      Question 2 : 

      Suppose ABC Limited has Current Assets $ 5,00,000 and Current Liabilities of $ 300,000. Fixed Assets are $ 1,00,000. Long Term Debt is $1,00,000 and Short Term Debt included in the Current Liability above is $25,000. Calculate the Working Capital of the Company and analyze the same.

      Question 3:

      PQR Limited has Current Assets of $2,00,000 and Current Liabilities of $ $90,000. Inventory of $ 1,50,000 included in current Assets have become Obsolete since the Goods are lying in Inventory for more than 6 months. The Market Value of the same would be $50,000.

       Question 4 :

      AXN Ltd. plans to sell 30,000 units next year. The expected cost of goods sold is as follows:

       

                                                                                                         ($) Per Unit


      Assuming the monthly sales level of 2,500 units, estimate the gross working capital requirement. Desired cash balance is 5% of the gross working capital requirement and working- progress in 25% complete with respect to manufacturing expenses.

       Question 4 :

      Calculate the amount of working capital requirement for CDE Ltd. from the following information:


                                                                                                        ($) Per Unit

      Question 5 :

      Raw materials are held in stock on an average for one month. Materials are in process on an average for half-a-month. Finished goods are in stock on an average for one month. Credit allowed by suppliers is one month and credit allowed to debtors is two months. Time lag in payment of wages is 1½ weeks. Time lag in payment of overhead expenses is one month. One fourth of the sales are made on cash basis.

      Cash in hand and at the bank is expected to be $ 50,000; and expected level of production Cash in hand and at the bank is expected to be $ 50,000; and expected level of production amounts to 1,04,000 units for a year of 52 weeks.

      You may assume that production is carried on evenly throughout the year and a period of four weeks is equivalent to a month.

       

       

       

       


◄Chapter 8 - Common Stock Valuation_Part 2Text Book_BA3105_Introduction to Finance►