Exam 1

Study Guide
Chapter 1: (Check Book)
1.
2.
3.
4.

Types of Financial Management Decisions

Roles of Financial Managers
Objectives of Financial Managers
The Financial implications of the different forms of business
organizations
5. The conflicts of interest that can arise between owners and
managers
6. Sarbanes Oxley Act

Chapter 2: Financial Statements, Taxes, and Cash Flows

1.
2.
3.
4.

The Difference between book value and market value

The difference between accounting income and cash flow
The difference between average and marginal tax rates
How to determine a firms cash flow from its financial
statements
5. Terminology
6. Tax Brackets
7. Formulas

Chapter 3: Working with Financial Statements

1. How to standardize financial statements for comparison

purposes
2. How to compute and interpret important financial ratios
3. What are the major categories of ratios
4. The determinants of a firms profitability and growth
5. Understand the problems and pitfalls in financial statement
analysis
6. Formulas
7. Internal and sustainable growth
8. DuPont identity

Chapter 4: Introduction to Valuation: The time value of money

1. Be able to compute:
a. The future value of an investment made today
b. The present value of cash to be received at some
future date
c. The return on an investment
d. The number of periods that equates a present value
and a future value given an interest rate
2. Be able to solve time value of money problems using:

a. Formulas
b. A financial calculator
c. A spreadsheet
3. Future Value and Compounding
4. Present Value and Discounting
5. Future and Present Value
a. Implied interest rate
b. Number of periods

Chapter 5: Discounted Cash Flow Valuation

1. Be able to compute the future value of multiple cash flows

2. Be able to compute the present value of multiple cash
flows
3. Be able to compute loan payments
4. Be able to find the interest rate on a loan
5. Understand how loans are amortized or paid off
6. Understand how interest rates are quoted
7. Understand the TI financial capabilities