Computational Methods for Financial Applications

Computational Methods forFinancial Applications

SCC 2301

Frederick H. Willeboordsephyfhw@nus.edu.sg

Quiz 1

In Lecture 1, we discussed the income statement

Quiz 1

What is Golden Dragon’s Cost of Sales?

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2

3456 Sales 140007 Cost of Sales8 Gross Profit9 Other Expenses 200010 EBITDA 600011 ITDA 80012 Net Income 520013

Golden Win Double Dragon InternationalIncome Statement

Quiz 1 - Answer

In Lecture 1, we discussed the income statement

Quiz 1 - answer

What is Golden Dragon’s Cost of Sales?Answer: $6,000.-

2

3456 Sales 140007 Cost of Sales 60008 Gross Profit 80009 Other Expenses 200010 EBITDA 600011 ITDA 80012 Net Income 520013

Golden Win Double Dragon InternationalIncome Statement

Quiz 2

In Lecture 2, we discussed the balance sheet

Quiz 2

1) True or false: Owners Equity is an asset.2) I set up a (wholly owned) company with $20,000 in cash.

Since then, I made a profit of $562 and paid out $400 in dividends. What are the retained earnings?

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Quiz 2 - answer

In Lecture 2, we discussed the balance sheet

Quiz 2 - answer

1) True or false: Owners Equity is an asset. False.2) I set up a (wholly owned) company with $20,000 in cash.

Since then, I made a profit of $562 and paid out $400 in dividends. What are the retained earnings? $162.-

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Quiz 3

In Lecture 3, we discussed the Cash Flow Statement

Quiz 3

1) True or False: Dividends do not appear on the Income Statement and hence not on the Cash Flow Statement either.

2) Is it possible to find the Net Cash Flow (which is the sum of the cash flows in the Cash Flow Statement) from the Balance Sheet(s) of a company.

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Quiz 3 - answer

In Lecture 3, we discussed the Cash Flow Statement

Quiz 3 - answer

1) True or False: Dividends do not appear on the Income Statement and hence not on the Cash Flow Statement either. FALSE

2) Is it possible to find the Net Cash Flow (which is the sum of the cash flows in the Cash Flow Statement) from the Balance Sheet(s) of a company. YES

Quiz 4

In Lecture 4, we discussed the Cash Budget

Quiz 4

1) True or False: Dividends are not part of the ‘normal’ operational costs of a company and hence do not appear in the Cash Budget.

2) True of False: The Cash Budget predicts the future cash needs with absolute certainty.

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Quiz 4 - answer

In Lecture 4, we discussed the Cash Budget

Quiz 4

1) True or False: Dividends are not part of the ‘normal’ operational costs of a company and hence do not appear in the Cash Budget. FALSE

2) True of False: The Cash Budget predicts the future cash needs with absolute certainty. FALSE

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Quiz 5

In Lecture 5, we discussed the Cash Budget

Quiz 5

1) True or False: When sales increase, fixed costs rise as quickly as variable costs.

2) What is the net income of a company when it breaks even?

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Quiz 5 - answer

In Lecture 5, we discussed the Cash Budget

Quiz 5

1) True or False: When sales increase, fixed costs rise as quickly as variable costs. FALSE

2) What is the net income of a company when it breaks even?0.

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Quiz 6

In Lecture 6, we discussed ratios

Quiz 6

What is Aunt Petunia’s Gross Profit Margin?

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Sales 29,500Cost of Sales 13,300Rent 5,000Utilities 400Helper 4,280Net Income 6,520

Auntie Petunia Flowers

Quiz 6 - answer

In Lecture 6, we discussed ratios

Quiz 6

What is Aunt Petunia’s Gross Profit Margin?

Sales 29,500Cost of Sales 13,300Rent 5,000Utilities 400Helper 4,280Net Income 6,520

Auntie Petunia Flowers

It is: (Sales – Cost of Sales)/Sales = 54.9%

Quiz 7

In Lectures 7 we discussed Stocks

Quiz 7

Over any thirty year holding period, which had the worst recorded performance: bonds or stocks? ?

Answer with ONE word!

Quiz 7 – answer

In Lectures 7 we discussed Stocks

Quiz 7

Over any thirty year holding period, which had the worst recorded performance: bonds or stocks?

Answer with ONE word!

Bonds

Quiz 8

In Lecture 8, we discussed Bonds

Quiz 8

When interest rates go up, does the market-value of a bond go up or down? ?

Answer with one word!

Quiz 8

In Lecture 8, we discussed Bonds

Quiz 8

When interest rates go up, does the market-value of a bond go up or down?

Answer with one word!

Down

Quiz 9

In Lecture 10, we discussed inflation

Quiz 9

Assume that you have $2400.- in cash at the beginning of 2003 and that inflation is expected to run at the rates indicated to the right.In today’s dollars, how much is your money worth at the end of 2005?

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Expected Inflation Rates

2003: 20% 2004: 25% 2005: 33%

1-3

Note: You won’t need acalculator for this

Quiz 9

In Lecture 10, we discussed inflation

Quiz 9

Assume that you have $2400.- in cash at the beginning of 2003 and that inflation is expected to run at the rates indicated to the right.In today’s dollars, how much is your money worth at the end of 2005?

Expected Inflation Rates

2003: 20% 2004: 25% 2005: 33%

1-3

2400 * 5/6 = 20002000 * 4/5 = 16001600 * 3/4 = 1200

Quiz 10

Let’s not forget our Excel skills

Quiz 10

If we copy and paste the formula in D1 into D2, what is the value that will be displayed?

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A B C D

1 20 9 3 =$A$1*$B1 +C1

2 8 5 12

Quiz 10

Let’s not forget our Excel skills

Quiz 10

If we copy and paste the formula in D1 into D2, what is the value that will be displayed?

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A B C D

1 20 9 3 =$A$1*$B1 +C1

2 8 5 12 112