1. Robert Uberman, Financial Management, KA im Frycza Modrzewskiego 11

2. Finance vs Accounting Financial Accounting Financial Accounting historically the first to described and normalized officially; historically the first to described and normalized officially; oriented towards stakeholders not directly involved into operations; oriented towards stakeholders not directly involved into operations; primary data source for all mentioned below. primary data source for all mentioned below. Tax Accounting Tax Accounting driven by state regulations; driven by state regulations; strictly regulated. strictly regulated. Managerial Accounting Managerial Accounting oriented towards managers and other people directly involved into operations; oriented towards managers and other people directly involved into operations; based on certain standards but not regulated. based on certain standards but not regulated. Corporate Finance Corporate Finance Banking & Financial Markets Banking & Financial Markets Insurance Insurance

3. Robert Uberman, Financial Management, KA im Frycza Modrzewskiego Exercise An owner of a successful retail business of a traditional handmade wool clothes in Krynica considers buying the house he runs his business in. The landlord expects an offer around 500,000 PLN. At present the monthly rent is 1,000 PLN and does not include any maintenance. On the upper floor there is an apartment rented for 800 PLN/month net. Since there is a high risk of cancellation of rent in case a third party buys in the owner identified another location to be rented for 800 PLN, though slightly less attractive. An owner of a successful retail business of a traditional handmade wool clothes in Krynica considers buying the house he runs his business in. The landlord expects an offer around 500,000 PLN. At present the monthly rent is 1,000 PLN and does not include any maintenance. On the upper floor there is an apartment rented for 800 PLN/month net. Since there is a high risk of cancellation of rent in case a third party buys in the owner identified another location to be rented for 800 PLN, though slightly less attractive. Location (PLN) Cost/ Month (excl. rent) Monthly turnover Mark upDays in stock Days payable Initial investm ent Present4 00030 00030 %1560 0 New3 50025 00030 %156020 000

4. Robert Uberman, Financial Management, KA im Frycza Modrzewskiego Additional exercises (1) You have been offered 2 years bonds: zero coupon, 100 GBP nominal value, for 91 GBP You have been offered 2 years bonds: zero coupon, 100 GBP nominal value, for 91 GBP Now a bank pays you 4,5 % on a semi-annual deposit. What is your decision? Now a bank pays you 4,5 % on a semi-annual deposit. What is your decision?

5. Robert Uberman, Financial Management, KA im Frycza Modrzewskiego Additional exercises (2) You have considered investing up to 2 million PLN somewhere (your bank offers you 6 % per annum) You have considered investing up to 2 million PLN somewhere (your bank offers you 6 % per annum) Since You owned a plot nearby the city centre one obvious idea was to construct an office building. Since You owned a plot nearby the city centre one obvious idea was to construct an office building. A property agent contacted has a client willing to pay 2,5 millions for the building desired providing it becomes available in 2 years. A property agent contacted has a client willing to pay 2,5 millions for the building desired providing it becomes available in 2 years. The agent also pointed out that he would be willing to buy this plot onto his own account for 400 thousands PLN The agent also pointed out that he would be willing to buy this plot onto his own account for 400 thousands PLN The agent provision is 4 % The agent provision is 4 % Your colleague, running a construction company offered to construct this building on a turn-key basis for 1 500 thousands, Your colleague, running a construction company offered to construct this building on a turn-key basis for 1 500 thousands, and expects his consideration in three equal instalments (500 thousands each) and expects his consideration in three equal instalments (500 thousands each)

6. Robert Uberman, Financial Management, KA im Frycza Modrzewskiego Additional exercises (3) Comapany X has budgeted the following for the coming month: Production Product A5000units Product B15000units Direct material Product A25GBP/unit Product B5GBP/unit Direct labour Product A4hrs/unit Product B2hrs/unit rate10GBP/unit OverheadsTotal no of activitiesProductAB Total 750 000 Machine set-ups 115 000GBP 5 000 3 000 2 000 Quality inspections 320 000GBP 8 000 5 000 3 000 Production orders 90 000GBP 900 300 600 Machine hours worked 175 000GBP 25 000 5 000 20 000 Material receipts 50 000GBP 5 2 3 Prepare conventional based and ABC based cost forecast for product A and B