Agricultural finance and credit management UE Past Papers Questions.

An industrial Engineer is employed to manage a cheese and butter factory. Together with land, the firm bought machinery at a cost of US$20,550 using a loan from Stanbic Bank. The machine is expected to last for 10 years at the end of which it will have a salvage value, which is exactly 8% of the buying price. Calculate its annual depreciation charges using the straight line and the sum-of-years digit method. Present any assumptions you may need for either of the approaches.

Answer / Solution

UNSOLVED

Financial institutions are always weary of long term finance risks. Understanding such risks is of paramount importance on the part of lenders in order to maintain their loan portfolio qualities.

What are the major factors that exacerbate long term finance risks?

Answer / Solution

UNSOLVED

The financial system is principally made up of savers, investors, financial intermediaries, brokers and advisors, and regulators. Explain the role and functions that the following actors play in the system:

1. Investors
2. Financial Intermediaries

Answer / Solution

UNSOLVED

Financial ratios analyses are important in assessing the robustness of a business before justifying a lending package. These ratios are based on coefficients obtainable from financial statements.

1. Outline the financial statements commonly used to derive financial ratios
2. Write short notes on

1. Liquidity ratios
2. Activity ratios
3. Leverage ratios

Answer / Solution

UNSOLVED

Assume you are food processing manager employed to manage a dairy processing plant. Using a loan from the FBME Bank, the firm procured new plant equipment at TSh. 155 million. The plant is expected to last for 10 years at the end of which it will have a salvage value which is exactly 30% of the buying price. Calculate its annual depreciation charges for the first five years using the declining balance method. The market depreciation ratio used for DBM is 25%. Present any other assumptions you may need.

Answer / Solution

UNSOLVED