$(20$ Marks$)$

QUESTION $1$

$1\mathrm{.}1\mathrm{.}1$ As a student of financial management discuss the THREE $(3)$ liquidity motives for maintaining the minimum operating cash balance in a firm.

$(3$ marks$)$

$1\mathrm{.}1\mathrm{.}2$ As a student of financial management your friend has asked you to briefly explain the three discounting capital budgeting techniques or methods.

$(3$ marks$)$

$1\mathrm{.}2$ The primary objective of financial ratios is to simplify the process of evaluating the financial performance and position of a company. Elaborate on the advantages of ratio analysis.

$(4$ marks$)$

$1\mathrm{.}3$ Why would a financial manager have an interest in controlling inventory levels and how would he set about doing this?

$(4$ marks$)$

$1\mathrm{.}4$ Every business whether small or big requires sufficient funding to start and maintain operations. Explain why most businesses will need a mix or combination of debt and equity finance.

$(6$ marks$)$

$(20$ Marks$)$

QUESTION $2$

As the financial manager of Gold Mining Limited you have been tasked to come up with strategy that will help finance your business that is engaging in an expansion program. You are to write a report addressed to the Financial Director informing on the differences between the following various sources of finance:

$($i$)$ Short$-$term financing

$>$ Trade credit and Leaning on trade

$>$ Factoring and hire purchase

$($ii$)$ Intermediate finance

Venture capital and business angels

$($iii$)$ Long$-$term financing

$>$ Ordinary shares and Preference shares

$>$ Bonds and debentures