FINANCIAL MANAGAMENT FINAL REPORT (AFN-536)

SUBMITTED TO MA’AM SUBEIKA RIZVI

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TABLE OF CONTENTS

ACKNOWLEDGEMENT ............................................................................................................................ 3
QUESTION 1................................................................................................................................................ 4
QUESTION 2................................................................................................................................................ 5
QUESTION 3................................................................................................................................................ 7
COST VOLUME PROFIT ANALYSIS ................................................................................................... 7
WEIGHTED AVERAGE COST OF CAPITAL ...................................................................................... 9
FREE CASH FLOW ............................................................................................................................... 10
NET PRESENT VALUE ........................................................................................................................ 11
QUESTION 4.............................................................................................................................................. 12
QUESTION 5.............................................................................................................................................. 18
QUESTION 6.............................................................................................................................................. 19
QUESTION 7.............................................................................................................................................. 20
CONTRIBUTION BY TEAM MEMBERS ........................................................................................... 20

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ACKNOWLEDGEMENT

Firstly, we would like to extend special gratitude to our professor Ms. Subeika Rizvi for providing
us with this opportunity to study and understand different financial topics and their implications
used in the real business environment throughout this semester. Secondly, I am extremely
appreciative to all my group members who contributed to this project equally with their
knowledge and skills to compile and complete this report.

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REFLECTION PAPER
QUESTION 1

The introduction giving an overview of what learnt in the course along with practical and technical
skills learned. This can be through tasks, assignments, projects lectures in the course.

Financial Management is a significant element of any business, as its extremely imperative for
organizations to be efficient in order to manage its overall finances, utilizes funds in an effective way in
order to achieve success in the business journey. Financial Management has provided opportunities for us
as it played a vital role in developing our skillset including technical, analytical, soft skills and made us
learn to apply practical concepts and interpret the outcomes.

Some challenges that we faced while learning previous courses like business finance and accounting were
much more cleared by understanding the concept of financial management, as this course played a vigorous
role in enhancing the ability in us to understand the financial position of the organization. Not only we
learned the theoretical concepts and interpretation but also learned the practical implications of those
concepts.

The first achievement from this course was the rational and critical thinking which was developed by
learning CVP Analysis which helped us to better differentiate between which investment is more profitable
to choose. The topic of capital budgeting too provided us insights to make the best decision among
alternatives. Practically speaking, the choices to make decisions regarding spending money has enable us
to be more cautions in real life and base decisions keeping in mind the outcomes.

Secondly our research skills have been shaped in a more comprehensive manner as the teacher assigned us
different research based concepts which let us explore these concepts in a meaningful way. The end results
have been quite satisfying as we have learned to pick out important information from a number of articles
and understand the complexities in a sound manner. By learning Financial Management’s fundamentals
we have gained much knowledge about Pakistan Stock Exchange, SECP, State Bank of Pakistan, IMF and
how these institutions work to uplift the financial sector and the overall economy

Furthermore in this semester we were assigned a presentation on the topic “Micro financing and the way it
can be leveraged in current crisis”. Initially we were not much familiar with the topic, however after
exploring a variety of research articles we were able to analyze how micro financing can actually help
nations to experience a growth and work for their benefit collectively to enhance their quality of live and
become independent in all aspects.

Financial management comprises of both conceptual theory and mathematical numericals and initially some
difficulties were faced by us due to shift towards online learning .However our course teacher with her
utmost dedication co-operated a lot, our technical skills were much more enhanced and that accounted for
fewer queries. Solving the questions manually in university was made much easier by switching to
Microsoft Excel which enabled us to have a strong grip on Microsoft Excel. Also the capability to
understand financial concepts made our minds broader and we are able to get ourselves familiar with
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important financial concepts like WACC, factors affecting WACC, the interpretation of positive and
negative trends of free cash flows and how they help businesses to make investment decisions, the CAMP
Model, The stock and debt side of Company, Time Value of Money etc.

Apart from this our analytical skills were much more boosted because the concepts of financial management
were explained in depth .Detailed explanation regarding major concepts made us relate to things quickly
and have a command to express our opinions. By looking at company’s financial statements we are now
able to examine the financial ratios and comment on the credibility of the company by comparing it with
market trends and other competitors.

Furthermore this course enables us to observe the trends of Pakistan Stock Exchange and see its implications
in different ways. Lastly we have gained an opportunity to better understand that how company finances its
funds, and chose among which option is profitable through this course.

Not only our analytical or technical skills were enhanced because of this course, financial management
played a key role in order to improve our soft skills as well because of the two way communication and the
ability to freely interact with one another,

An online session was conducted with the professional speaker Mr. Waqas Durrani who had an experience
of almost 15 years in both international and local markets. The well-known speaker talked about the “Impact
of Covid 19 on Financial Sector in Pakistan”, which played a critical role in our lives to practically observe
the implications that Covid has brought, comment on the topic and ask the questions without any hesitation
and hence the session instilled our knowledge towards something very constructive and this would surely
help us in our future.

In a nutshell, Financial Management has been a course to polish our skills, and clear concepts in an
improved manner and has contributed extensively towards building our intellectual knowledge. The course
helped us understand financial problems and concerns at professional level

QUESTION 2

The content and methodology and the online learning experience of the team.

Covid’19 has bought undeniable shocks in the world. Unforeseen challenges caused by the pandemic have
bought significant toll on people everywhere. The quarantine and social distancing period has given rise to
online classes as the educational institutions all around the city have been closed completely.

CONTENT AND METHODOLOGY

The overall content which was provided by our instructor was too good, the course outline covered the
topics and the course was not much lengthy. Apart from this the instructor based learning was followed in
online learning in which we were made familiar with different topics ,this resulted in making learning
effective. The overall methodology was live and there was no restrictions to ask queries, students were

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given a free hand to discuss their confusions and contribute positively to grasp the basic concepts
effectively .The PowerPoint slides ,lecture recording pertaining to any topic was uploaded after every for
ease of students. Also reference books were available on student’s portal to clear confusions. Online
learning emphasized more towards on peer learning as the presentations and final project were team based
which required group discussions and enabled us to work collectively.

PROS OF ONLINE LEARNING

Following are some pros of online learning:

The experience of studying financial management through online classes was quite interactive as
the discussion fostered efficiently which resulted in creation of a good learning environment for us.

Teachers played a huge role to make online classes easier for us and were extremely responsive to
the problems that we faced. Our communication skills were more enhanced; increase in class
participation could also be observed because students also played their part to ace this semester.

Learning this course online improved our technical skills. As the only alternative of doing the
calculations manually was Microsoft Excel, so by doing practice we did develop a viable command
on Excel.

Online Learning has also made students more independent, as most of the assignments assigned
required individual submission due to which one was not dependent on other one. Also because of
online learning platform it was easier for students to work on time management skills.

CONS OF ONLINE LEARNING

Since online learning was something entirely new for us therefore students initially were encountered with
certain difficulties such as:

The work load had much more increased in online courses as compared to normal classes, online
learning required more assignments and projects which were research based.

Sometimes online classes seemed to be more effective, but one major issue and con of online
learning was the internet instability, as the whole world has come up to the zoom platform so due
to network traffic we faced difficulties in attempting classes.

Unstable internet connections at times prevented us to attempt our quizzes and other activities
which have had a bad impact on our grades.

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To have a grip on a conceptual Course like Financial management initially seemed difficult because
of problem solving numericals. However, with the passage of time we became receptive to such
matters.
Lack of concentration was the major disadvantage in virtual class. Since nobody is watching you,
students tend to do other things and couldn’t properly focus, this made the conceptual course really
challenging.

QUESTION 3

Select any 4 topics of the course like WACC, FCF, budgeting, NPV etc. and write about it using how
companies use that method or topic.

COST VOLUME PROFIT ANALYSIS

Cost-volume-profit (CVP) analysis essentially aims to disclose how a change in costs (both fixed and
variable cost) and sales volume impact’s a company's operating income and net income. Companies make
investments solely for the purpose to generate a greater ROI or to achieve a break even i-e cover up all the
production costs.

3 major elements cover up the cost volume profit analysis.

 Cost: this element talks about the fixed and variable cost that are significantly required to produce
a product or service.
 Volume: in layman’s language volume refers to the number of products sold.
 Profit: it calls for the ability of the company to earn money by giving major emphasis on price of
the product sold, the volume of products sold and the company's fixed and variable costs.

The cost volume profit analysis primarily works on a set of assumptions pertaining to fixed and variable
costs. Some assumptions are listed below:

 Everything produced is sold

 Total fixed costs doesn’t change
 Variable costs per unit are constant
 If a company sells more than one product type, the product mix will remain constant.

HOW COMPANIES USE CVP ANALYSIS

For companies, CVP analysis acts as a major indicator as it provides strong insights regarding the profit
potential of a company’s products and services. These analyses provide assistance to companies in
following ways.

 Companies use cost volume profit analysis to set a bench mark that is to estimate the breakeven
point for their products and services with an objective to arrive at a position where the company
covers all its production costs and does not report a profit or loss. Knowing the approximate level

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of sales needed to achieve breakeven is essential for the company as it provides managers with
relevant information to make decisions regarding future spending to shape success of the company.
 Companies at times of uncertainty also use cost volume profit analysis in order to calculate the
margin of safety which estimates an amount where companies still carry the potential to arrive at a
break even, even when a company reports a decline in its sales. The cvp analysis acts as a major
tool for companies to identify internal problems pertaining to cost and sales and establish different
strategies that eventually will give sales a boost and reports a decline in costs.

 Through cost volume profit analysis companies are able to make more informed decisions related
to investments, cost structures and profitability. This in turn assists companies to set up flexible
budgets in order to make a fruitful return out of an investment.

 During recessionary times the cost volume profit analysis are of a great help to the company. They
serve to provide a comparative analysis to let the professionals know whether it is imperative to
close down a business or to run business while incurring a loss to prevent further damage.

 Before introducing a new product or a service, CVP analysis comforts decision makers to properly
forecast cost and profit on account of changes in volume.

 Companies use cost volume profit analysis to explore prospects pertaining to existing or new
business opportunities by examining a break-even point and potential profitability. This in turns
provides managers with viable information to set the prices of the products in order to maximize a
company’s profit.

 Cost profit volume analysis helps companies to achieve their targeted operating income by
providing the estimation of sales require attaining the set profit. This in turn assist companies to
remain focused and develop sound plans that are aimed at making profit.

 Through cost volume profit analysis estimates can be made regarding a single product, diversified
product portfolio and performance of a company as a whole. Incase if a single product reports a
loss, CVP can act as a tool to provide a mix of options to the company that will be beneficial in
the long run.

 Companies make use of CVP analysis in order to evaluate alternative and take actions accordingly.
Managers then come up with different budgeted financial statements to go for the alternative that
is in company’s benefit.

 CVP examine which products and services yield benefits than other and thus play a significant role
to help companies yield maximum revenue.

Popular airline markets like Boeing and Airbus also use CVP analysis to estimate how many airplanes they
need to sell in order to recover the multibillion‐dollar costs of designing and developing new ones. Thus to
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conclude it can be said that the cost volume profit analysis are critical for companies to take vital decisions
regarding their products or services.

WEIGHTED AVERAGE COST OF CAPITAL

WACC in simple words refers to the company’s various capital sources, comprising of debt, common
stock, and preferred stock. From an investor’s standpoint, WACC serves to be an opportunity cost of taking
risk for the purpose to make investment in a company. Each component of WACC serves as a cost to the
company. The company essentially pays a fixed rate of interest on its debt, Likewise a fixed yield is paid
on the preferred stock. In case of common stock, the company pays dividends in the form of cash to equity
holders. In financial modeling, Wacc is also used as the discount rate in order to calculate the net present
value of a business.

HOW COMPANIES USE WACC

 Companies use WACC to identify whether a project will yield profit or would it just adjust the cost
required to fund the project. This helps professionals to take better decisions by evaluating the pros
and cons of making an investment.

 Companies see WACC as one of the significant ways to increase the value of the firm. To attain
this objective, the managers make constant efforts to reduce the WACC. The lower the WACC, the
more worthy the firm would be. This will enable investors to invest their money in the respective
company which will further act as positively for the company’s growth.

 Company sees WACC as a hurdle rate for evaluating mergers and acquisitions (M&A), as well as
for financial modeling of internal investments. If an investment opportunity has a lower Internal
Rate of Return (IRR) than its WACC, it should buy back its own shares or pay out a dividend
instead of investing in the project.

 Companies use WACC to base their investment decisions and assess projects with similar and
dissimilar risks. It provides the company to decide whether they should invest in the project with
the same risk or the project with the dissimilar risk.

 WACC provides company with the ability to choose between the investments projects that are
valuable to accept. Also it’s imperative for companies to have a command on
its weighted average cost of capital in order to make decisions regarding the expenses involved for
funding future projects. The lower a company's WACC, the more attractive it will be for the
company to fund new projects.

 The weighted average cost of capital provides company with the insights to assess whether the
company should undertake debt or equity in order to purchase new assets. The activity to evaluate
the cost of both options i-e debt and equity is undertaken by managers for the company’s best
interest.
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 Since the company uses the single rate (WACC) for all the new projects therefore managers makes
prompt decisions to take these new opportunities which will eventually improve the credit
standing of the company in the eyes of shareholders.

FREE CASH FLOW

Free cash flow (FCF) is an important indicator that explains how much cash a business generates after
capital expenditures like buildings or equipment have been adjusted. Since FCF accounts for changes in
working capital, it acts as a powerful tool to give useful insights regarding the standing of a company and
the health of its fundamental trends. For example, a decrease in accounts payable (outflow) infers that
vendors demands payments to be made quicker. Likewise a decrease in accounts receivable (inflow)
implies that company is efficient in collecting cash from its customer. An increase in inventory (outflow)
indicates huge unsold products. Thereby working capital acts as a measure of profitability and provides
useful information that cannot be equated from the income statement.

The formula to calculate free cash flow for a company is as follows:

FCF= NOPAT- Net investment in Operating Capital

FCF= EBIT (1-tax rate) - Net investment in Operating Capital

NOPAT also known as net operating profit after taxes refers to the cash that company generates from its
current operations. Non-cash expenses like Depreciation and amortization are added back which reduces
EBIT but doesn’t affect amount of cash that the company has available to pay its investors. The second
term refers to cash that company invests in its fixed assets (capital expenditures) and operating working
capital in order to sustain ongoing operations.

Companies pay huge emphasis on free cash flows as it opens the door of opportunities that relates to
developing new products, pay dividends, reduce debt, make acquisitions and conduct other meaningful
practices to provide more value to the shareholders.

Positive and negative cash flow helps companies to understand which investments are fruitful and shape
future plans accordingly. If a business is encountered with negative cash flows for a prolonged time period,
it might be inferred that companies aren’t able to sustain economic growth and hence insights are provided
to adopt restructuring plans in order to give a boost to those negative cash flows. Free cash flows are also
pertinent to inform about liquidity position of a company as consistent negative cash flows threaten the
ability of business to sustain its position.

Sufficient knowledge regarding a company’s free cash flow assists management to plan about future
ventures that would eventually improve the credit standing of the company and attract more shareholders
by providing them a greater value.

Companies as investors likely to invest their money in those businesses that have greater FCF as it implies
the fact that company is expanding, has sufficient cash in hand to meet contingencies and will provide a
greater return overall.

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NET PRESENT VALUE

Net Present Value (NPV) refers to the value of all future positive and negative cash flows over the entire
life of an investment made and discounted to the present. NPV analysis are widely used to define how
much worthy an investment, project, or any series of cash flows is .Net Present Value has a great
significance in capital budgeting to establish which projects are likely provide the greatest return.

Cash flows in net present value analysis are discounted primarily for 2 major reasons

(1) To adjust for the risk of an investment opportunity

(2) To account for the time value of money (TVM).

Taking risk into consideration is extremely viable as all businesses, projects, or investment opportunities
do not incur the same level of risk. To deal with this, the discount rates are kept higher for riskier
investments and lower for a safer one.

As far as the time value of money is concerned, money holds more significance the earlier it is received as
it can be invested today and can generate return because in later stages change in inflation, interest rates,
and opportunity costs can reduce the purchasing power of individuals

A positive net present value indicates that the projected earnings exceeds anticipated costs pertaining to
any specific investments, A NPV of 0 means the inflows equal the outflows, and an investment with a
negative NPV implies a net loss.

HOW COMPANIES USE NET PRESENT VALUE

Net present value method aids company to evaluate and compare different capital projects or financial
products by bringing into consideration how cash flows spread over time, as in loans, investments, payouts
from insurance contracts plus many other applications.

Business managers use net present value method extensively to help them assess the profitability pertaining
to different projects. This in turn provides stockholders a clearer picture to know how much a project will
provide them with a greater value.

Companies also use net present value as a capital budgeting method to evaluate whether the projects are
independent or mutually exclusive in order to decide whether to accept or reject a project and hence net
present value method serves to be the most insightful and useful method to evaluate whether to invest in a
new capital project.

Companies makes choices between mutually exclusive alternatives, by choosing the NPV tool, the one
yielding higher NPV is selected.Net present value enables managers to take sound decisions and decide
whether to make large purchases or not.

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QUESTION 4

Select any 4 financial news that appeared in local newspaper and comment on it.

Pakistan receives $1 billion from Asian Development Bank and World Bank

Covid’19 has bought undeniable shocks in the world. , the lockdown further aggravated the situation.
Different business collapsed and economy is shattered. In order to combat with the coronavirus pandemic
and mitigate its impact Pakistan has received $1 billion in financial support from World Bank and Asian
Development Bank (ADB). Following the World Bank and Asian Infrastructure Investment Bank the ADB
and World Bank had signed an agreement for a $500 million loan with Pakistan on June 19 with the
government, Imran Khan. Pakistan has received $500 million loan each from Asian Development Bank
ADB and World Bank WB to facilitate country to fight against Covid’19 impact. ADB’s loan was first
approved and is financed under the bank’s COVID-19 Active Response and Expenditure Support program.

State bank before issuing the interest rate cut policy took disbursement from the World Bank and ADB
which increased state bank of Pakistan reserves to 11 billion as it was declining to $9.96 billion on 19 June,
so that these extra reserves could help to overcome any offsets in outflows due to deduction in interest rate
from 8% to 7 %.

Firstly the fresh loans received from the World Bank and ADB will help Pakistan to expand the capabilities
of health sector, deliver the social protection programs to poor and vulnerable and pro poor fiscal stimulus
will be delivered which will boost growth in the economy, taxes will be cut and employment opportunities
will be created to help the country fight against the disease. The funds that are received will also be used to
strengthen the civil registration and vital statistics, health, and education systems essential for Human
Capital (HC) accumulation.

Secondly disbursement from the two financial institutions will lead to the increment in external debt
repayment of loans; Pakistan’s foreign exchange reserve held by State Bank increased by $1 billion that
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is from $10.1 billion stood at June 12, up to $11 billion and have also pushed the country’s foreign exchange
reserves up to $17.77 billion from $14.76 billion

Moreover, the loan of $1 billion will be recorded in the financial account instead of current account which
will increase the balance of payment positions. On a cumulative basis, the current account deficit has
narrowed by 73.6 percent to $3.3 billion during July-May FY 2020 from $12.5 billion during the same
period last year.

The inflows will strengthen the rupees against the dollar. The rupee fell to 2.8 percent or Rs4.55 against the
dollar due to decline in foreign exchange reserves and increase in outflows due to foreign debt repayments.

The country’s gross domestic product will contract 0.4 percent in the current fiscal year the. Decline in the
GDP is because of fall in the industrial output as a result of business closures amid coronavirus- lockdown.
Pakistan’s debt to gross domestic would reach 89% inflating fiscal deficit to 9.5 percent of GDP in the
current fiscal year. The higher the debt to gdp ratio the less chances company will be able to pay back its
debt and will be at higher risk of default. Secondly one of the components of GDP that is saving will also
report decline in order to pay back the debt.

Pakistan’s economic and financial outlook for the next year will be risky due to slowdown in growth and
large budget deficit which might lead to higher debt on the financial sector if the company is unable to pay
the loan as the amount is huge.

Further, if people do not use these foreign aids efficiently for what purpose they have taken it, they will not
be able to stabilize themselves; no investments will be made which will shatter the business sector further
affecting the financial sector.

State Bank of Pakistan cuts interest rate by 100 bps to 7%

Coronavirus outbreak has severely hit the economy , to combat against the pandemic and to deal with the
economic slowdown, the State Bank Of Pakistan (SBP's) Monetary Policy Committee (MPC) met in the
meeting and announced to reduce the policy rate of the country by 1%, bringing it to 7% from 8% with the
total by 100 basis points .The policy rate cut down by SBP (that is from 13.5 percent to 7% by total of 625
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basis points ) is the fifth time since the Covid’19 has evoked This policy has been announced for the next
two months. The State Bank of Pakistan proclaimed that Covid’19 had shattered several industries; this
policy of reducing interest rate was designed to boost up the economy and financial sectors. Many of the
central banks have also slashed their interest rates due to COVID’19.

Impact

Decrease in the interest rate has improved the inflation which is beneficial for the country on every level
from GDP to borrowing of loans etc. and has significant implications on the business and finance sectors
in this challenging time of pandemic, State bank’s monetary policy decision will result in supporting growth
of the economy and increasing the employment level.

Firstly due to reduction in interest rate organizations can issue bonds at lower interest rate by raising higher
capital at the same interest rate. Callable bonds that are issued by the companies can now be called back
and issued at a lower interest rate that will save their amount which can be used to overcome with the losses
companies are facing and uplift the business but on the other hand if the company has issued bonds at a
fixed rate it cannot be called back, company will be at loss at it has to pay the higher interest rate at which
it has issued the bond till its call provision period. Companies cost of capital will be higher than the actual
market rate.

Secondly Decrease in the interest rate will ease the borrowing cost and debt service burden which will help
in recovering from pandemic subsides. Cut in the policy rate will benefit the local business and small
medium enterprises in maintaining the financial stability which is effected due to corona virus they can
attain loans from bank at a lower interest rate which will leverage the company and further then investments
can be made at a lower interest rate to get higher returns relative to the WACC. It will boost liquidity of the
company as debts can easily be paid at lower interest rate on the due date.

If an investor has purchased the bonds at a higher interest rate of 8% and he sells the bond today he will
earn premium on its issued bonds, as the previously issued bonds will give higher interest rate of 8% while
the market rate is less 7%.

Government has cut the high interest rate to bring Pakistan at par with other countries so as to improve the
economy as a whole.

Besides boosting liquidity , investments , repayment of loans , easing borrowing it will also has certain
drawbacks like if the rate of inflation will drop CPI (Consumer Price Index) and SPI (Sensitive Price
Indicator) will also mark reduction , the future of the economy is expected to enter into the sharpest
downturn ,contracting by 3% in 2020.

Lender of the loans will face losses as they will get the return at the lower interest rate then it was previously
been lending at.

Decline in interest rate and cost of borrowings will lead the investors and even public to invest more instead
of purchasing bonds which will result in reduction of their savings causing an effect on the spending pattern
throughout the economy.

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Inflation is expected to remain less due to reduction in interest rate, absence of new taxes, reduced import
duties which will also offset the subsidies in sectors it will slow down the economy and will also affect the
growth of the economy.

Cash flow will also increase due to reduction in interest rate which will elevate the intrinsic value of share

Since the present and future value of the money has greater implications on the decision of the investment
projects and capital budgeting it needs to be reconsider as the discounting rate has slashed and so the time
value of money will also be effected.

Secured Transactions Registry launched to boost small enterprise financing

To combat against the disease and to boost up the small medium enterprises the government on 8 th May,
2020 decided to facilitate micro, small and medium enterprise (MSME) sector to access financial services
launched Secured Transactions Registry (STR). STR is an electronic data base where security interest can
be recorded by financial institution , it is created by the unincorporated entities and individuals to pledge
credit on their moveable assets which includes inventory , receivables , intellectual property , motor vehicles
etc. . Secured Transactions Registry (STR) was launched by Finance Adviser Dr Abdul Hafez Shaikh. It
was establish under the Monetary Establishments (Secured Transactions) Act, 2016 for registration of
safety pursuits and cost and was operationalized by the Securities Exchange Commission of Pakistan
(SECP). It was supported by the International Finance Corporation (IFC), a member of the World Bank
Group and for the successful implementation of this reform. Collaboration between SECP, State Bank of
Pakistan (SBP), Board of Investment and the World Bank took place. Additionally the finance minister
Shaikh is also keeping meetings to negotiate for lending financial assistance to help MSMEs to uplift their
business and pay salaries to their staff in order to retain them in business.

The MSMEs plays a vital role in the economic development of the country due to their significant
contribution in terms of output, exports and employment. Despite playing such a vital role in the economy
their access to finance is limited to only 6 percent in terms of total lending from bank. In order to address

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this issue STR was inaugurated by the government to provide the legal enforcement of security interest on
moveable assets as small companies do not comprises of much immovable assets like real estates which
can be used as collateral to provide guarantee against their loans . They have chance to grow and earn better
revenues in this recovery phase and increase employments.

Secured transactions laws and collateral registries have a great impact on economic growth and
development of a country. Firstly STR will facilitate small and medium enterprises and agriculture sector
borrowers to obtain credit from financial institutions through the moveable assets instead of immovable
asset while offering security interest to financial institutions .it will broaden the scope of assets which they
can offer as security for availing loans and will also help banks to expand their portfolio .

Financial credits taken by pledging the movable assets as collateral will let the MSME’s and general public
to opt for more loan and further invest in business which will elevate the stock market. Presently the stock
market is also suffering, the individuals and SME’S can invest in stable or growing companies like health
care industries, digital industry etc., they might not get profit initially, but by making investments in safer
companies they are likely to earn afterwards. Also there are speculations that once the COVID ends, the
stock market will again rise up and hence the borrowers of the loans will get benefited from the investments
and will easily pay back the repayments.

Reduction in the interest rate and due to the STR policy they can attain loans which can help them to start
a small business.

Already the pandemic has elevated employment levels due to reduced operations of businesses as
businesses are struggling with their cash flows and are attempting to cut down costs. However small
amounts of loans guaranteed through security interest can help these companies to sustain and continue
their operations which essentially require manpower thereby raising the requirement of people at work.
Hence it would lessen the adverse impact on employment levels of the country and leverage to local
economy.

The negotiations made in the meeting for the assistance package to provide to the stakeholders, government
are exploring the possibilities of supporting the SMEs that have faced losses due to the recent lockdown so
that the firms can continue their production, pay salaries to the workers attached with the small business
and can easily pay their fixed cost.

Moreover , Government’s commitment to expand credit to at least 700,000 SMEs by 2023 , STR transaction
reform will initiate new borrowing opportunities for MSME’s which will results in increase in the rate of
getting capital indicators improving the countries legal framework for transactions.

IFC’S are now focusing on assisting the government of Pakistan to help develop market for moveable
assets. IFC in collaboration with SECP and SBP are providing online training sessions on the secured
transactions.

It can be concluded that country’s micro, small and medium enterprises are adversely effected by
COVID’19 boosting finance to such enterprises are just not enough more needs to be done to improve the
credit infrastructure of the MSME’s sector.

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Blue chips drag index down by 325 points

Stock market knocked off the KSE -100 index by 325.02 points (0.95 percent) which settled at 33,709
below the bench level of 34,000 as business sectors like banking, exploration and production, banking and
fertilizers suffered massive loses in the previous 4 months due to corona outbreak and lockdown in the
country which triggered the foreign investors and they sold out their shares at equity worth $ 2.16 million.
It was also reported that international monetary funds had depicted an economic front by reducing
Pakistan’s fiscal year GDP growth from 2 percent to 1 percent.

The index was opened in the red area and it remains negative for almost most of the time of trading. In the
exploration and production, Pakistan Petroleum; Oil and Gas Development Company and Pakistan Oilfields
finished at the second day in the red area it was mainly due to pressure on international crude prices over
the chances of excessive supply as the demand fear is staggering because there is a slowdown in the opening
up of economies as the new cases of Covid’19 is emerging whereas cement sector showed really good
performance in terms of price due to expected increase in dispatches in the current month.

The shares volume fell by 15 percent that is about 168.4 million shares on the contrary traded value also
fell by 9 percent that is it reached $ 31.5 million. Sectors that were contributing in the performance consist
of production & exploration dropped by 86 points; banking industry with 55 points decline; both food and
power industries by 39 points declined; and the fertilizer industry also decline by 30 points. Foreign investor
have also sold their shares

Companies that were the major contributors in dragging down the index were Engro Corporation decline
by 0.5 percent , Fauji Fertilizer by 1.5 percent , Habib Bank 0.8percent , OGDC 2.1 percent, Hub Power
2.4 percent, MCB 2.1 percent , Pakistan Petroleum 2.1 percent and Lucky Cement 0.8 percent

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It can be commented that when the index of share market knocked off by 325.02 points and there was a
decline in growth of GDP many investors sell off their shares which drag down the stock market. It can be
clearly depicted that stock market works on the speculations.

This shock in the stock market has decreased the shares in the stock market and prove that investors who
have sold their shares are risk averse as they don’t seem interested to put their finances at risk in case if the
growth in GDP will further decline and share price falls.

Cement industry has boosted a bit whereas oil and gas producing industries are still struggling in the
outbreak due to international pressure on oil prices.

QUESTION 5

How will your future career planning be impacted by this course?

Initially when our whole team had a discussion on this question so among us three had already a mind of
taking finance as their majors but the rest two were a little bit confuse, the reason behind this confusion was
the lack of interest in accounting courses and even some concept of basic accountings were not much clear
but after studying Business Finance and Financial Management the clarification of topics gave a rise to the
interest in accounting courses and taking Finance as majors.

Finance is a wide area and has great scope at organizational level, as all the departments are somehow
interrelated to the finance department. All the areas which we covered in this course like financial analysis,
examining the organization’s current financial position, working capital and its management, choosing the
best option to invest ,provided us insights and it built our interest towards this course and now we all plan
to pursue Finance as majors in our Bachelors program.

The degree in finance majors have a great importance nowadays in terms of employment opportunities as
the accounting and finance is the main element of any organizations. Finance creates many employment
opportunities in future like in domain of Corporate Finance, Asset Management, Investment Banking,
Financial Planning, and Financial Analyst.etc.

In today’s world, there is a constant requirement and need for the people to be able to perceive and
understand the story behind the values in the industry of finance.

Financial Managers are the real worth in today’s developing world because this course helps in making
decisions regarding the investments, managing the overall budget, monitoring financial analysis. All these
skills are useful for the success of any business so in order to work for the betterment of organization,
having the knowledge of this subject is very crucial. Finance as an area of specialization motivates and help
the fresh graduates to adjust with the organizational change, or regulations because the person having the
degree in finance will be capable of examining and measuring the risks and finding great solutions and
opportunities at professional level.

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Conclusively, Financial Management is no doubt the best option for majors in future because it comprises
of many employment opportunities in business organizations. The future of organizations is based on the
professionals working in finance areas. A business cannot achieve its success if the basis of finance
department is weak as this area is the main fundamental of business decision making.

QUESTION 6

Constructive feedback for the instructor and how to further improve the course.

As the nature of financial management is conceptual, so while studying online it was a challenge for us, but
the way we were taught using MS Excel, Board etc. that eventually capture our interest. Initially we faced
difficulties at start to understand such practical course but later the co-operation of teacher and the way she
come up with quick fix to our problems made it easier for us to understand.

In the first week of online classes we are blank regarding this course but later when we were provided with
recorded lectures and material it helped us to understand each lecture deeply and the confusions were also
eradicated. Also the lecturer made sure that before starting any new lecture previous concepts were clear
by doing a revision of 15 to 20 minutes.

This course comprises of theory and numerical parts it was quite difficult for us to understand the numerical
part as they are more clearly understood in class conducted in university but the instructor come up with a
prolonged solution of explaining all the questions through Microsoft Excel, due to which the question were
made clear and easily understood. This idea also developed our technical skills as solving through Ms Excel
reflects professional skills and saves time too. Assignments were given in such a way that it did not burden
us because assignment given were not much lengthy and the deadline was of one week so this was very
helpful to balance time of this course along with other lengthy courses. Besides this the assignments also
open up our minds to new financial terms.

Due to connectivity issues or heavy traffic on lms network, the portal was disrupted due to which one of
our quiz was effected which made it very problematic because the theory answers which we submitted were
instantly vanished and removed, still the teacher collaborated a lot and compensated the marks so that our
grades should not be affected due to technical fault.

Online learning is much more difficult in some aspects than normal learning because here lies the lack of
interaction, the teacher made every possible effort to make it possible and make it as interactive as she
could. Furthermore in one to one learning, students can freely ask their queries if they cannot understand a
certain concept but still here an open hand was provided to us to share all our questions and confusions, all
the unclear topics were made clear by explaining again and again. The way the delivery of topic was given
using different types of example as per the topic was very useful. The assignments which were provided
were quite relevant to the subject and enhanced our research skills, which will be beneficial for us at our
professional level too.

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Start was full of worries for this course and getting good grades by learning online but later with the massive
support of our teacher now we are standing here where all the things are clear and we have actually learned
something, and this was all because of the untiring effort and assistance of the course lecturer.

QUESTION 7

Contribution by each team member and signed by them.

CONTRIBUTION BY TEAM MEMBERS

To comprehensively understand the requirements of the final project, we (group of 5 members) conducted
a meeting on zoom and discussed all relevant points. After having a detailed discussion in which everyone
came up with their point of view, we decided to divide the tasks amongst us to meet the deadline timely.

The writing work was divided among members in the following sequence

 Muskan Fatima (Q1 and Q2)

 Saniya Sohail (Q4 and Editing)
 Alina Ali (Q3 and Compilation)
 Minahil Q5
 Arooba Q6

The edited document was shared among every group member for proof reading and making any changes if
required.

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REFRENCES
QUESTION 2

https://blog.wiziq.com/online-learning-methods-for-virtual-classroom/

QUESTION 3

https://www.cliffsnotes.com/study-guides/accounting/accounting-principles-ii/cost-volume-profit-
relationships/cost-volume-profit-analysis

https://www.wyzant.com/resources/lessons/accounting/cost-volume-profit

https://corporatefinanceinstitute.com/resources/knowledge/finance/cvp-analysis-guide/

https://www.foxbusiness.com/markets/what-is-cvp-and-how-is-it-important-to-managerial-accounting

https://corporatefinanceinstitute.com/resources/knowledge/finance/what-is-wacc-formula/

https://www.divestopedia.com/definition/6599/wacc-formula

https://blog.apruve.com/what-is-wacc-and-why-is-it-important-to-capital-expenditure

https://corporatefinanceinstitute.com/resources/knowledge/valuation/fcf-formula-free-cash-flow/

https://www.sharesmagazine.co.uk/article/what-is-free-cash-flow-and-why-is-it-so-important

https://www.investopedia.com/ask/answers/032615/what-formula-calculating-net-present-value-npv.asp

https://corporatefinanceinstitute.com/resources/knowledge/valuation/net-present-value-npv/

https://sba.thehartford.com/finance/cash-flow/net-present-value/

https://xplaind.com/478294/npv

QUESTION 4

https://www.thenews.com.pk/print/677248-pakistan-receives-1bln-from-world-bank-adb

https://pk.mashable.com/business/3838/pakistan-receives-1-billion-from-asian-development-bank-and-
world-bank

https://www.dawn.com/news/1565154/sbp-cuts-policy-rate-by-100-bps-to-7pc
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https://www.arabnews.pk/node/1695196/pakistan

https://www.brecorder.com/2020/05/08/595348/secured-transactions-registry-launched/

https://www.thenews.com.pk/print/655466-govt-launches-new-system-for-small-businesses-to-secure-
credit

https://fp.brecorder.com/2019/02/20190214446943/

https://dailytimes.com.pk/553827/govt-notifies-rules-for-secured-transactions-registry/

https://epaper.dawn.com/DetailImage.php?StoryImage=26_06_2020_009_012

https://www.thenews.com.pk/print/651317-stocks-end-up-on-institutional-buying-boosting-blue-chips

https://www.dawn.com/news/1565249/blue-chips-drag-index-down-by-325-points

QUESTION 5

https://byjus.com/commerce/scope-of-financial-
management/#:~:text=The%20other%20scope%20of%20financial,and%20distribution%20of%20profits
%2C%20and

https://www.topuniversities.com/student-info/careers-advice/what-can-you-do-finance-
degree#:~:text=If%20you%20want%20to%20study,public%20sector%20and%20other%20areas.

https://business.ku.edu/what-can-i-do-major-finance

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