Midterm Quiz

Financial Management PKN STAN 4.07

Instructor: Agung Endika Satyadini, S.S.T, M.P.F

This quiz consists of two parts. You must answer all components of all two parts of the Quiz.

A. Short Answer
1. It is often argued that in a firm’s liquidity financial analysis a higher “inventory turnover”
depicts a better profitability. Do you agree or disagree? Please explain!
2. Please explain the difference between Mutual Funds and Exchange Traded Funds (ETFs)!
3. Please explain the difference between Effective Annual Rate (EAR) and Annual Percentage
Rate (APR)! Further, please identify the circumstance when an investor should use EAR instead
of APR!

B. Essay
1. Mulling over the OECD (2005) concept in tax administration to carefully examine the taxpayer’s
compliance risk, it is agreed that the financial ratio indicators should be carefully analyzed. In
this brain area, Pak Suryo Utomo as the new DGT’s Chairman asked you to analyze the
financial statement of PT Kalimongso Jaya and affiliated enterprises. Your team observed the
following information:

Financial Ratios PT Kalimongso Jaya Industry Average

Current ratio 1.18 1.30
Debt ratio 0.65 0.42
Inventory turnover 18.3 16.8
Operating return on assets 15.2% 42.5%
Operating profit margin 11.3% 24.5%
Return on equity 18.2% 37.4%

However, PT Kalimongso Jaya’s financial manager argued that the company is heading a very
optimistic year and then requested a tax allowance.
Question:
a. What do you think about the real condition of the company? Explain!
b. Hinge on your analysis result above, what is your best suggestion for PT Kalimongso Jaya’s
financial manager to maintain company’s performance? Explain!

2. Considering the OECD (2018) concept of efficient financial management, it is worth

acknowledging that optimum point of mixed efficiency and outcome should be attained. Once
again, the DGT’s Chairman asked you to analyze the project finance of PT Ceger Oil Exploration
(PT COE) to estimate the level of tax compliance. Based on PT COE’s proposal, oil exploration
project will cost $900.000 with estimation of revenue approx. $150.000 per year for the first 13
years (net operating costs). It is worth noting that interest rate is 13% per year.

Question:
a. Please estimate the Net Present Value of the oil exploration project! (Hint: you can estimate
the gap between present value of cash inflow and outflow).
b. You received a statement from the PT COE’s finance manager, explained that PT COE ‘s
project revenue will be taken over by PT Exxon Oil Bintaro at the end of year-8 for $700.000.
Does it sound logical? Explain!