FINA 202 Business Finance Worksheet

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Business Finance


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Business Finance FINA 202 Workshop 2 1. Please develop the vocabulary presented herein. When I said develop, please explain and illustrate each of the concepts. These are as follows: a. Cash Flow b. Financial Ratios c. Liquidity d. Productivity e. Leverage f. Time Value of the Money g. Present Value h. Future Value i. Annuities j. Compound Interest 2. Please, explain in detail what is the difference between “Cash Accounting” and “Accrual Accounting”. Explain tax implications for each case. 3. Imagine that you manage the Finance Department for a service provider, and the Sales Manager brings a new project to the company. The project consists in placing a couple of engineers in a well-known corporation in a country in South America. The Sales Manager said that the project is excellent, it is for a period of two years placement, the company will charge the client $20,000 a month and the cost of the engineers is $14,000 a month; he said it is a no-brainer! However, the head of finance knows as a fact the following details: a. Each month is invoiced the first day of the following. b. This client in particular takes 90 days to pay from invoicing. c. It is required to provide the engineers with a computer and accessories for $2,000 each. Please, elaborate a model in Excel that illustrate the cash flow expectations for this isolated project. Please, indicate in your model the necessary working capital required by this project. What would be the difference between the accounting reporting and the cash flow; explain. No Tax considerations or funds repatriation withholdings. Pedro E. Núñez
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