Finance Homework Help

About Finance

Finance is about money decisions: raising it, investing it, and judging whether a project is worth doing. These questions cover sources of finance, interest, financial statements and ratios, and investment appraisal — net present value, payback and the cost of capital — usually with figures to work through.

Popular topics in Finance

• Sources of Finance

  Short and long-term sources, equity against debt, overdrafts, leasing and retained earnings, with their costs.

• Interest

  Simple and compound interest, the effective rate, loan repayments and the effect of compounding frequency.

• Investment Appraisal

  Payback period, net present value, internal rate of return, and choosing between projects.

• Financial Statements

  Income statement, balance sheet and cash-flow statement, and how the three connect.

• Ratio Analysis

  Profitability, liquidity, efficiency and gearing ratios, and what a trend in each one means.

• Cost of Capital

  Cost of equity and debt, the weighted average cost of capital, and its role as a discount rate.

• Working Capital

  Current assets and liabilities, the operating cycle, and managing receivables, payables and inventory.

• Risk & Return

  Diversification, portfolio returns, the risk-return trade-off, and shares against bonds.

How ScanSolve helps with Finance

ScanSolve shows the formula, the substitution and the units for every calculation, and for appraisal questions sets out the cash flows year by year with their discount factors — so an NPV can be checked line by line rather than trusted as a total.

Ratio answers give the ratio, the comparison (previous year or industry) and the interpretation, because the number alone earns little. Where a recommendation is asked for, the answer makes one and names the assumption it rests on.

Study tips for Finance

1. 01

   Lay cash flows out in a table by year before discounting. NPV mistakes are almost always table mistakes.

2. 02

   State the formula before substituting. Examiners give method marks for it even when the arithmetic slips.

3. 03

   Interpret every ratio you calculate. A liquidity ratio of 0.8 means something specific about paying next month's bills.

4. 04

   Keep profit and cash apart. Depreciation reduces profit and not cash, and questions are built on that difference.

Frequently asked Finance questions

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