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The financial ratio categories are Liquidity, Activity, Profitability, and Coverage (Kieso, Weygant, & Warfield, 2008). These ratios are comparisons of different financial accounts that show financial performance measures in different areas. Fluctuations of these ratios can be red flags. These fluctuations can show increases or decreases in performances. Increases could indicate growth, but decreases could show negative signs in performance levels that need to be analyzed and addressed. Liquidity, or solvency, ratios measure the short run ability to pay maturing obligations and include the current ratio, current cash debt coverage ratio, and the quick ratio. The current ratio measures current assets to current liabilities. The current cash debt coverage ratio measures net cash from operating activities to average current liabilities. The quick ratio measures cash, marketable securities, and net receivables to current liabilities.
The Activity, turnover or efficiency, ratios measure the effectiveness of using assets and include receivable…… [Read More]
This means that not bank loans or stock issuing would occur. The two partners would share rights and responsibilities directly derived from the amounts of capital deposed.
Using a partner is rather similar to the issuing of stocks, but a major difference however occurs. While the issuing of stocks generally occurs within an open market, the shares would be likely purchase by numerous small investors. The amount of stocks purchased will be controlled by the business owner and most importantly, the power of the shareholders would be limited. With a single investor however, this has more power to become involved and influence organizational decisions. Ultimately, having a partner is a direct investment method, whereas selling stocks onto the market is an indirect investment method.
Once the matter of having sufficient funds to invest in the new venture has been resolved, the owner, or owners, has to consider the foreseen return…… [Read More]
Hence, the likelihood of having to repurchase a large amount of repurchases would result. This was increasingly risky as the company spiralled into much lower reserves than it would admit publicly. The increasing risks were recognized by New Century employees. Despite efforts by these employees to suggest changes, the response by Senior Management was generally to reject or ignore these suggestions.
Senior Management was therefore fully aware of the increase of early payment defaults on loans as early as mid-2004. Although rising interest rates exacerbated the risks inherent in the type of products offered by New Century, these were ignored by Senior Management, who continued to capitalize on investor demand without any regard for the probability of repurchase requirements. The inevitable, however, occurred, and New Century faltered under the pressure.
Additionally, Senior Management also failed to provide inadequate attention to the issue of investor "kickouts." Relatively elementary loan rejections such…… [Read More]
Financial Risk Management
Over the past decade, there have been tons of arguments over financial risk management especially if it is logically defensible in financial terms. Most risk managers have been able to observe both a better acceptance of their discipline along with a better enthusiasm on the part of businesses to employ the word "risk management." In the financing and banking business, nevertheless, these attitudinal changes have donated to a condition where the manager of pure risk has gotten lost among the hordes of financial risk managers. The thing that makes this situation widespread and debatable by all sides is the fact that the management of financial risk, otherwise recognized as balance sheet, speculative market, or, more generally, business risk, is the financial society's trade and stock. The argument has always been that finance has been founded on two supports: risk and expected returns. In times such as today,…… [Read More]
Financial isk Management: The Sports Industry
Financial risk management is the process of reducing a firm's exposure to various risks. According to Emery (2011), it is a process that enables organizations to reduce failures and increase their profitability by carefully evaluating the risks they are exposed to and developing strategies to manage them. The sports industry can learn a lot from the business industry in regard to risk management as it is often prone to issues such as corruption and drug abuse, which it is often insufficiently prepared/equipped to deal with. The office of Sport and ecreation Tasmania (as cited in Emery, 2011) claims that today, risk management is a central part of sports organizations' strategies because it enables management result to balanced and responsible decision making. This text examines risks sports businesses are exposed to, how financial risk management can be applied, and the strategies that should be applied…… [Read More]
Business and Financial isk
There are many business and financial risks that are dealt with by companies each and every day. Among these are risks dealing with interest rates, foreign exchanges, credit, operations, and commodities. Organizations have to learn how to measure these risks, and they need to take global initiatives that they can use in financial risk management in order to ensure that they are as successful as possible. Protecting themselves financially takes work, but it has to be done if the company is to remain viable in the marketplace. In order to understand how to identify and address the major risks, a company needs skills and knowledge. Or, more appropriately, it needs people with skills and knowledge. The right people can make all the difference in an organization (Flyvbjerg, et al., 2003; Markowitz, 1952). Finding those who are trained to identify and understand risks allows the company to…… [Read More]
Second and third supporting opinions center on the improvement of the financial system. The current Administration will be able to develop better systems to manage risk across the financial system. In this will be the development of better ways to identify risk. This will lead to a more robust and more transparent system, when it all comes together (Johnson & Kwak, 2009). A complementary component of the healthier system is increased disclosure.
Johnson and Kwak (2009) use this anticipated increased disclosure as their third supporting opinion. They theorize that increased disclosure requirements will be developed for off-balance sheet exposures, including items like structured investment vehicles. Hedge funds will require some measure of disclosure as well. Each of these should help revitalize the financial system and prevent similar problems from occurring in the future.
Three Opposing Opinions/easons:
The three opposing opinions to Johnson and Kwak's (2009) theory that the United States…… [Read More]
Ethics and Derivatives
Ethical and Financial Risks of Derivatives
This paper examines the ethical and financial risks of derivatives. The paper discusses moral philosophies, how white collar crime differs from blue collar crime, and reviews the role of corporate culture and banking industry leaders in the banking industry meltdown that contributed to the worst recession in U.S. history.
The moral philosophy most applicable to understanding the banking industry meltdown is teleology. Teleological ethics holds that an action is right or wrong in terms of the consequences that result from it. From the perspective of the banking industry, this consequentialist approach defines their ethics in terms of whether an act produces a desired result. Given that their desired results were the advancement of self-interest and the accumulation of wealth, any action that produced these results would be considered ethical.
The single-minded pursuit of profit to the disregard of all other considerations,…… [Read More]
Most developed economies, however, allow the market to set exchange rates, only influencing currency values through indirect means such as the increased or reduced sale of bonds to foreign entities and individuals, or through other means of international wealth exchange. Essentially, all manipulations of exchange rates and actions based on predictions of exchange rates are focused on the forward exchange rate, or the predicted rate of exchange between two currencies at a future point in time.
The spot exchange rate, on the other hand, is the rate of exchange at the current moment in time. It is through a comparison of the spot rate and the forward rate of exchange -- inasmuch as it can be predicted with any accuracy -- that companies and businesses make decisions that affect either the exchange rate itself (in the case of some governments, notably China in the modern period), or more often make…… [Read More]
Financial esource Management
eaching a financial decision regarding heath care services
All forms of industries deemed financial management as expressive in origin till the 1960's. Its basic and sole role was to ensure financing for completing the business's operatives and functions. The department for business planning or marketing would project a net total for meeting the services and meeting daily demands; managers would calculate the assets required to complete a given project needed, equipment's, supplies and building. Financial management is a field which focuses on business securities as well as the markets in which they are in key demand. Also, more emphasis is made on how businesses can tap new markets and unlock their hidden potential. As a result, financial management books were pretty explanatory and predictable in origin during those times. (Sandrick, 2008).
These days, financial management plays a pivotal role in day-to-day operations of a business. The responsibility…… [Read More]
Financial Analysis of Bestwish Limited
Bestwish Limited produces extensive range of quality products such as gift dressing, greetings cards, and plush merchandise of more than 50,000 stocks. The production of different categories of products involve between 2 and 15 processes. The company produces standardized products and custom designed products ordered from customers on contract basis. However, Bestwish Limited is facing challenges to control the costs because of varying production process, reliance on indirect costs and large number of stock keeping units.
Bestwish Limited has just closed the 2010 fiscal year account and the company is finalizing the 2011 budget. Bestwish intends to analyze the 2010 financial statement to present the accurate picture of the company financial performances.
Objective of this report is to analyze 2010 financial statements to assess the viability of Bestwish Limited.
Audit Committee of the Board
Subject: Financial statement Analysis
Date:…… [Read More]
Financial Appraisal of yanair
yanair's Financial Appraisal
In this report we provide an elaborate financial appraisal of yanair for a naive investor with no financial expertise.
The key conclusions of this report are:
- yanair has a very strong as well as continuously expanding market position which is enabled by its expansion of its fleet by 40 new aircrafts to a total of 272 as well as the opening of new routes (328) and bases.
-One reason as to why yanair has achieved as well as maintained its very strong position is its dedication to quality service care and service provision. These approaches have ensured that the company has an exceptional financial performance as well as improved efficiencies.
The Strategic Issues that are facing yanair
The current increase in fuel prices by about 37% which the company attempted to offset by the instituting a 12% increase in average fare. The…… [Read More]
Financial Proposal: Dorchester, Ltd.
As discussed in earlier papers, for Dorchester, the final decision as to which particular nation to invest in is dependent on a range of distinct scenarios; these factors naturally impact the selected acquisition target. Before the acquisition target is selected, the nation which houses the potential acquisition target needs to be scrutinized closely. For instance, the trade environment of the nation where the prospective acquisition is located needs to be assessed, since this factor will impact the cost and ability to engage in trade. The political environment of the nation where the prospective target resides is also a crucial factor that needs to be examined closely. No potential targets exist in peaceful vacuums; rather all the prospective nations looked at during this course have some element of political risk attached to them. Furthermore, as discussed during earlier assignments, it's been found that political stability of a…… [Read More]
But these changes, materialized in increased sales and consequently revenues, improved quality of the products and services offered as well as the technologies used in the manufacturing process have supported the development of the corporation. From a financial point-of-view, they created the image of a strong and reliable company. The reasons why this change has financial implications is a simple one: a stronger company is better perceived by the market and by the stakeholders, increasing as such the company's sales and easing their penetration of new territories. Then, it generates increased interest from investors, easing as such Krispy Kreme's access to funding possibilities.
Even though Krispy Kreme is a strong company and represents an international brand, they are still subjected to numerous risks deriving from both the inside as well as the outside of the company. These risks, as presented by the Management's Discussion and Analysis of Financial Condition and…… [Read More]
There are discrepancies encountered in conducting the valuation and risk of a private company. There arises these factors that if investigated can impact the process accordingly. The first research question that I suggest is investigating if the tax risk and equity market value exhibit a concave association, which is consistent with the optimal tax risk level from a valuation of equity standpoint. The second topic that can be researched upon is the changes facing the risk and value valuation service area for businesses and how they impact the practice. Finally, a study on how the Merger and Acquisitions revised standards are impacting business deals.
Chandra, U., & o, B.T. (2008). The role of revenue in firm valuation. Accounting Horizons,
22(2), 199-222. etrieved from http://search.proquest.com/docview/208923683?accountid=35812
Darrough, M., & Ye, J. (2007). Valuation of loss firms in a knowledge-based economy. eview of Accounting Studies, 12(1), 61-93. doi: http://dx.doi.org/10.1007/s11142-006-9022-z
Bernier, G.,…… [Read More]
Oracle sells software for database-management and network products, application-development productivity tools, and end-user applications. Its principal product, the Oracle relational database-management system, runs on supercomputers, mainframes, minicomputers, microcomputers, and personal computers. The firm also offers consulting and systems-integration services. Foreign sales make up about 50% of revenue.
Oracle sees the wisdom in managing business data. Oracle also offers business applications for data warehousing, customer relationship management, and supply chain management. The company made an unsolicited bid to acquire PeopleSoft for about $5.1 billion in June 2003. y early 2004 the offer had increased to $9.4 billion, but was later reduced to $7.7 billion to reflect market conditions. The Department of Justice filed antitrust lawsuits in seven states to block the deal, and started hearings on June 7. Peoplesoft's lawsuit against Oracle is scheduled to go to court November 1 in Alameda, California.
Long-Term Debt Ratio (Long-Term Liabilities/Total Assets)…… [Read More]
The major difference between standard deviation and the beta is that the former measures the volatility against the asset's own mean, whereas beta measures the asset's volatility against the market. Standard deviation, therefore, allows the user to understand the asset's specific risk on its own, and can use this information to compare returns against historical average returns. This is valuable because the risk profile of an investment can be significantly different than that of the market, so the returns will be expected to be significantly different as well.
Standard deviation can also be used to measure against other means, for example against historic market returns. However, the beta coefficient is more effective as a measure against the market. Standard deviation and beta are both often used as measures on their own, without any model, because they communication the information clearly. In the capital asset pricing model, for example, the systematic…… [Read More]
Conduct a benchmarking analysis
As explained by Prasnikar, Debeljak and Ahcan (2005) benchmarking depends on comparing between two activities of an organization and another. In our case, we shall compare McDonald's activities and those of its competitors, Burger King and Wendy's.
• Best practices
McDonald's as a main player in the fast food industry is concerned with best practices with the industry. To this end, the corporation has adopted some best practices that include sustainability, nutrition and well-being, employee experience ad environmental responsibility. Accordingly, McDonald's protects the environment by going green and using methods that protect and conserve the environment. McDonald's also encourages its suppliers to uphold effective environmental. The company treats it employees well and offers them good working conditions as a way retaining them. Employees are offered training and promoted accordingly. McDonald's also adheres to ethical conduct its operations and food items are produced ethical. Similarly, the company…… [Read More]
Small usiness' Need for a CPA
One of the critical investments a small business can make to mitigate loss and risk is hiring a CPA and putting that CPA on the 'management team.' As Wells notes in his groundbreaking research, "Denise, a bookkeeper for a small trucking firm in irmingham, Alabama, wishes she had never heard of Ralph Summerford, CPA. ecause of his thoroughness, Denise is facing several years in prison for embezzling $550,000 from her employer. At least she will look good standing before the sentencing judge: Denise spent a great deal of her illegal loot on head-to-toe cosmetic surgery. She blew the rest on a shiny new Lexus, luxury vacations, clothing and jewelry. And, of course, Denise had to have a big house to store all of her finery." (Wells, 2003)
Surprisingly, it was not at all the fancy standard of living that made her employer suspicious. "The…… [Read More]
It is hoped that the value added by the UDA system will help to incease sales of the coe poduct. The division manage of Gadgets has a valid point in egads to the oveall impact on the Division's pofits. He had a valid eason fo equesting this exception to the ules. It may at fist appea that the Gadget Division manage is acting out of self-inteest and potectionism. Howeve, it may be that he tuly does have the best inteests of the entie oganization in mind.
If Gadgets fails to poduce a poduct that will incease sales of the coe poduct then the entie oganization may be in jeopady. If the exclusion is allowed, then the Gadget Division would have moe money at thei disposal fo bette eseach and development. The Gadget Division has to get it ight the fist time. Theefoe it seems easonable to allow the Gadget Division…… [Read More]
. Research Design Rationale
1. Question format: In order to allow the research study to become embedded in the field of economics, the research question will use an applied question format. The purpose of the study is to develop a predictive method regarding player choices in the Prisoner's dilemma. It will explore the association of risk and cooperation or defection in the Prisoner's
2. Research design: The research will use a deductive approach where the theory will be presented and tested through the methodology. The research will use quantitative research methods, which are suited for research where the information can be reduced to a numerical format. This is the case in the proposed study as both risk tolerance and the decisions made in the Prisoner's Dilemma can be reduced to numerical data and standard statistical methods applied.
III. Data/Information from Previous research
A. Literature Review
The literature review for…… [Read More]
Financial Analysis of Mcdonald
A financial analysis McDonald's Cor
McDonald Corporation is a global company that conducts business in 117 countries. McDonald operates 32,737 restaurants and 26,338 franchises in the highly competitive fast food industry. Since 1940, McDonald has built a loyal customer base by continuing dedicating to customer service and providing high quality fast food for customers. Presently, McDonald could boast of over 60 millions customers and the company serves average of 64 millions customers daily. In the United States, and other countries where McDonald is operating, fast food business is very competitive. Despite the competition that McDonald is facing, the company has been able to record revenues of more than $16 billions in restaurants and revenues of more than $7 billions in franchise restaurants business. McDonald operates in six geographical locations. The company business operations are in the U.S., Europe, Middle East, Asia-Pacific, Latin America and…… [Read More]
S. firms. he ambiguity can therefore not be ignored.
he work of Gomez-Gonzalez et al. (2012) investigated whether the use of foreign currency derivatives have any effect on the market value of firms using evidence gathered from Colombia. heir results indicated that an increase in the level of hedging ultimately leads to a higher growth in the value of a firm. he use of financial derivates (hedging) is therefore indicated to have a positive impact on a firms' value.
he work of Clark and Mefteh (2010) investigated the relationship between foreign currency derivative usage and firm value using evidence gathered in France and found that the value effect of the financial derivative usage is about 1.5 times higher and was much significant with relatively larger exposure to depreciation while remaining insignificant for firms with lower levels of exposure. his implies that the effects of the hedging instruments depends on the…… [Read More]
risks that BP faces is with respect to ethics. The company's pursuit of profits over safety on the Deepwater Horizon is perhaps the most obvious example of this risk. Ethically, safety would have been the more important concern, but BP pushed profit as a primary motive despite what it would do to worker safety. The end result, of course, cost the company over $40 billion as the result of the damage that was caused by the accident that occurred as a result of that ethical lapse (earden, 2010).
Ethics continue to be a risk at BP because the unethical practices that led to Deepwater Horizon. Instead of learning from Deepwater Horizon, BP is still believed to lack transparency with respect to its practices. As a reflection of how ingrained the company's lack of ethics is, the chair of safety, ethics and environment had 43% of shareholders vote against him in…… [Read More]
According to these analysts, "The implicit assumption underlying the price-to-earnings method is that the fair market value of the closely held business can be approximated from the market value of comparable publicly traded businesses. To implement this method, the valuator must be able to identify a set of presumed-to-be comparable publicly traded companies and obtain sufficient information on each to verify the extent of comparability from an economic, management, and financial perspective. No publicly traded company will be precisely comparable to the closely held business being valued, so informed judgment must be exercised" (p. 81). As a general rule, the smaller in size and the more limited the scope of activities of the business being valued, the less likely there will be a set of publicly traded companies that are comparable, or even a single comparable publicly traded company. Publicly traded companies are for the most part large, measured in…… [Read More]
risk that one needs to be concerned with when selling a franchise (and this is a general case, not only the case of Germany) is that the franchiser (that is, the person who buys the franchise) may not fulfill all his contractual obligations. These include a certain quality standard and a brand image of the mother company (the franchisor). This obviously may lead to the fact that the customers will associate with the mother company a certain level of quality that is less than that agreed upon and less that the one the company actually has in the country of origin. This can cause serious prejudice to the brand image. If we think of a classical case of franchising, McDonald's, a level of quality may include a certain degree of organization, in order to avoid long lines, a certain quality of the products (for example, the franchise contract foresees that…… [Read More]
Operational risks tend to focus on employees, and finding ways to ensure that employees are not a source of reduction in the wealth of the company. Among the operational risks that were identified in Horcher (2005) were those related to training, fraud, theft, as well as managing exposures to certain risks that arise in the course of operations. There have been many examples of operational failures over the years. While most fraud is going to occur at the highest levels of the organization (i.e. Enron), in other companies operating issues have been the problem.
One such instance was with Subway, which faced a salmonella outbreak in the UK (Poulter, 2008) in a major outbreak, but has also faced similar situations in Canada (Mickleburgh, 2011), and the U.S. As well (Blau, 2012; Falkenstein, 2010). Food poisonings increase the risk of legal action that could devastate franchisees and can have…… [Read More]
This study emphasized the importance roles of financial derivatives, which has been known for the last decade and its effects on the Global financial crisis. It further analyzes the impact of financial derivatives and how it can be controlled to prevent corporations from incurring a lot of risks. It also explains the existence of financial derivatives since 1970, to the recent Global Financial Crisis which occurred in the 2006.
Risk is a feature associated with all productivity. As a result, financial markets adjust themselves to the fluctuation of exchange and interest rates. Hedging risk, these corporations highlight the importance of risk management tools known as Derivatives. Derivatives are defined as financial tools providing investors with effective solutions when avoiding risk caused from market volatility (Dodd, 2006). Financial derivatives are considered to be an effective risk management tool associated with Financial Engineering creating solutions to financial problems (Marks, 2010).…… [Read More]
There are a number of financial ratios that will be valuable to a small business person. A small business is often concerned with cash flow, so ratios that are the most concern fall into three categories -- liquidity, profitability and efficiency. Liquidity ratios measure the ability of the company to meet its upcoming financial obligations. These ratios are important for ensuring that there is enough cash on hand to pay the bills. The profitability ratios are important because the business will be more successful if it is able to manage its margins. Efficiency ratios are concerned with how fast items like inventory or accounts receivable are turned over. These ratios are a direct reflection of the company's working capital, and improvements in these ratios improve the working capital flow.
These ratios are going to be slightly different from those that a large corporation values. The large corporation actually…… [Read More]
Financial Analysis of Lehman rother
The history has been full of financial collapses and financial scandals and one of the biggest financial collapses that a company has ever seen was that of Lehman brother. The collapse of a firm as huge as Lehman rother and a firm which has such great experience of over a hundred years lead the world into a shock. It created doubts in the minds of people regarding the condition of other financial institutions. The history of Lehman rother is rich which is further discussed.
The history of Lehman rother dates back to 1844, when a boy named Henry who was a 23-year-old son of a cattle merchant who immigrated to the United States from Germany and he settled in Alabama State of the United States where he opened dry goods store. In 1847, when Henry Lehman's elder brother arrived to Alabama, the firm…… [Read More]
The question is missing a clause. "…is more conducive to ethical behavior" than what? The word "more" invites comparison but there is nothing to compare the current environment to. Well, the current environment is not much different than any past environment. The regulatory environment does not dictate ethics, as ethics exist distinct from laws. Ethical behavior rests on how society itself defines ethics, and is only loosely related to the regulatory environment. So while there is definitely a tighter regulatory environment at least with the introduction of Sarbanes-Oxley and the PCAOB, these laws do not dictate ethics, just behavior (Lennox & Pittman, 2010). Indeed, an increasingly complex regulatory environment only serves to complicate the issue of individual ethics, and creates confusion among business practitioners between legal/illegal and right/wrong, the two operating entirely different conceptual spheres (Jennings, 2004).
The "business" environment is quite vague -- there are many facets…… [Read More]
Part of the overall calculation of uncertainty according to iskMetrics recommendations, however, should include a calculation of correlative uncertainty (Finger 2007). The rationale for including this specific uncertainty in calculations is that it helps to account for inaccuracies and inadequacies in the model, determining the level of risk associated with incorrectly defined or changing correlations used by the model in other calculations and definitions (Finger 2007). An accurate calculation of uncertainty and risk will necessarily include a calculation of the correlative uncertainties attendant upon the model and the situation to which it is applied, providing not a necessarily more accurate view of direct risk, but a useful evaluation of the risk prediction's efficacy.
iskMetrics Calculations: Exposure and Uncertainty
An accurate and well-developed combined understanding of the exposure and uncertainty of a various investment venture or portfolio contributes a nearly complete understanding and assessment of the risks presented by that investment…… [Read More]
isks in Export Market
There is need for companies to develop a professional approach before venturing into the exporting business. The management of the company is supposed to be committed extremely as well as devoting time and money in commencing the campaigns of export. A company is supposed to be ready to face greater competition as well as more stringent rules and regulations concerning products and packaging due to the variance in rules to which or across which the company will be exporting.
In the process of exportation, there are a number of risks that the company will face. These elements of risks are encountered in every commercial transactions as well as the complexity of the environments that exporters operate in. The content of this paper will analyze risks that a company can face while entering the field of exporting as well as discussing the roles of intermediaries in the…… [Read More]
isk, eturn and Their Evaluation
isk & Performance Indicators
Since this is a small business, therefore raising equity capital through public stock issue is less likely than debt or whatever form of paper issued to angel or venture investors. Therefore while a larger, publicly traded firm would consider the return on equity version of the short form DuPont equation, a small, more closely-held concern would focus on return on assets (OA). If OA is net income over sales times sales over total assets, i.e. net income over total assets, then any action that could increase the numerator, total income, or shrink the denominator(s) should increase OA compared to past performance within the firm and the competition outside it. If competitors all use the same (best) plant, then maximizing efficiency of the same assets through process or brand innovation; input cost reductions, and also financial performance like minimizing payables days over…… [Read More]
Hyundai company analysis
Finance is a critical function in any business. It acts as an indicator for the health of a company, as well as determining its growth. When a company realizes new investment opportunities and other future aspirations, finance enables such ventures. Thus, finance reflects the performance of an organization (Gruen & Howarth, 2005). Measurement of performance takes place over a period of time. Organizations practically present their financial performance on a quarterly and yearly basis while others carry out a monthly exercise of tracking their performance. The government requires that all companies present an annual assessment of their performance. The information is featured in the form of financial transactions of sales, investments, savings and others. The information is part of a document called the Annul eport. Investors are informed by the annual report of companies before deciding on whether to invest in the company (Mclean, 2003).…… [Read More]
Financial Contracting for New Venture:
Investments in a new venture usually involve financial contracts between the entrepreneur and external investors. These external investors include venture capitalists, angel financiers, banks, private financing companies, and credits unions among others. Notably, financial contracts can have positive and negative effects on the new venture. For instance, an angel financier can add a clause on the financial contract that will not permit the entrepreneur to borrow more funds without permission from the lender. While this is likely to occur when the lending institution has a mortgage or lean on the venture's property, the clause is usually added to lessen foreclosure risk. As an individual seeking to venture in a clothing business for the Mixed Martial Arts customers to provide shirts, hoodies/fleeces, and hats, it is important to choose the most appropriate type of financial contracting with the external investor. This process of selecting the most…… [Read More]
Financial analysts play a number of roles within an organization. They made assessments of the value of investments the firm has or may have in the future. They can specialize in determining the value of projects. In addition, financial analysts are engaged in risk assessment, and take steps to determining the best ways for the firm to mitigate the risks that have been identified. Overall, financial analysts use a multitude of different knowledge sets including taxes, finance, economics and risk management to assist the company in making the best financial decisions for the firm (BLS, 2010).
a )The net profit would be the gross profit less operating expenses, interest expenses and tax expenses. Thus, the net profit is: $1,000,000 - $345,000 - $125,000 = $530,000. From this the taxes are removed: $530,000 * (1-.3) = $371,000. The preferred stock dividends of $57,000 must then be removed in order to determine…… [Read More]
As noted, the leverage is deliberate, and probably is designed to deliver these ROEs to shareholders.
H&M pays out a large portion of its profits as dividends. Nordstrom's dividend is healthy for an American company, but far less than that of H&M. Nordstrom shareholders must rely on capital gains to a greater extent. Given that both companies are growing, H&M's ability to deliver both growth and dividends is superior for shareholders. These superior outcomes are, not surprisingly, reflected in the share prices of the two firms, with H&M having the better P/E ratio (22.2 versus 15.4).
In addition to the financials, it is important to consider what recent news might affect the viability of working in these firms in the future. There are no major news stories for either company. Essentially, both are still growing firms, with a moderate growth pace. Nordstrom is still focused on the North American market,…… [Read More]
The projected growth rates are of 7% for 2009, 7% for 2010, 8% for 2011 and 9% for 2012 (Hoovers). Wyeth is expected to increase at higher rates due to its being taken over by Pfizer.
3. Stock Price Analysis
The Wyeth stock is being currently (September 16th, 2009) traded at $47.70, revealing a 0.23 (0.48%) decrease relative to the previous trading session, which closed at $47.93. The day's high value so far is of $47.94, with a low of $47.64. The highest value for the past twelve months is of $48.30, with the lowest of $28.06 (Wyeth Pharmaceuticals Company Website). Compared then to the evolution of the past year, it is obvious that the price of the Wyeth stock option increased. The highest price in its trading history was of $69.75 and it was achieved on the 12th of April 1999. The lowest price was registered on the 17th…… [Read More]
This was because they were seeing one of their primary competitors (Travelers) merging with Citicorp (which created a juggernaut of: insurance, banking and brokerage activities). At which point, executives at AIG felt that in order to: maintain their dominance in the industry and offer new products they should become involved in similar activities. The difference was that they would grow the company by expanding into areas that were considered to be speculative to include: commodities, stocks, options and credit default swaps. The way that this was accomplished is by purchasing a host of businesses that were involved in these activities. This is significant, because it meant that a shift would take place in: how managers were accounting for risks and the kinds of activities that they were becoming involved in. With the newly acquired companies; bringing over executives that did not practice the same kind of strategies for dealing with…… [Read More]
3.2.3 Portfolio Diversification of Investment in Global Property Markets
ecause the global property markets are affected by globalization and specific country / regional factors, means that the overall amounts of risks will vary, the most notable include: transparency and efficiency. Where, each country / region has different on laws and regulations pertaining to the real estate markets. This means that the risks in a number of different markets will depend upon specific market conditions themselves, reflecting these two factors. To protect themselves against these kinds of risks, many investors will often seek to diversify their portfolio. Diversification is: when you are investing a number of different asset classes in real estate, across a variety of countries / regions. The idea is that if a risk occurs in a specific country or region, the other areas that you are diversified in will protect you against the severity of the declines. For…… [Read More]
Financial Resources Performance
The Managing Director,
King Edwards Electronics,
INTERNAL REPORT. FIXING RISK, UNCERTAINTY AND CASH FLOW DISCREPANCIES
In making investment decisions we are dealing with; and actually shaping; the firm's future, but the future is not certain and investment decisions, whether personal or corporate, are invariably undertaken with imperfect knowledge about the future. The future may turn out to be better or worse than expected. For the corporate firm, the objective of an investment decision is to allocate resources only to those projects which will preferably increase, or at least maintain, the firm's value and the wealth of its shareholders. Clearly it would not make good financial sense to invest in projects which would reduce corporate value (Ang, 2002).
The problem for managers is that at the outset it is often difficult to determine which of the firm's potential investment projects will enhance corporate value…… [Read More]
isk and Insurance Management
isk is believed to be a newly coined word of assurance (for example, Ewald, 1991: 198). One of the broadly shared suppositions regarding insurance is that it spins around an instrumental concept of risk. Possibility and the amount of influence make up a technical concept of hazard/risk and hazard administration is chiefly worried about reviewing these possibilities and influences (for an overview see Gratt, 1987). For instance, external profits of financial or political occurrences lay down thresholds for the availability of associated risk guesstimates or reckonings (Huber, 2002).
So, the range of the risk groups cannot be clarified by risk judgment single-handedly; peripheral circumstances that could be political, financial or inclusive of image, arts and manners, are also required to be taken into account. Therefore, if risks are not be present, per se, but are deliberately selected, we can go a step ahead and presume them…… [Read More]
The developments of credit derivatives began in 1980s as a new financial innovation after the swap market started. Swap market provided derivative organizations with profit due to their intermediary position while the credit margins for borrowers were reduced. As the swap market developed there was the development of new interest derivatives so that there were additions to the list of products. Credit derivatives are relatively recent introductions and these are mechanisms for the credit institutions to separate the credit risk from their loans and treat market risk as a separate category so that their pricing efficiency could be more competitive and the concerned organizations could be more competitive in the market. (Credit Derivatives Move Beyond Plain Vanilla)
Thus one can say that credit derivatives are a recent form that can be used by bankers to reduce risk, or increase risks and thus meet their corporate objectives. The general…… [Read More]
Financial Management: atios, isk and Diversification
Financial atios elevant to Small Businesses and Large Corporations
In an attempt to determine the performance of his or her business, a small business owner can utilize ratios such as the current ratio and the profit margin ratio. The profit margin in the words of Needles and Powers (2010) "shows the percentage of each sales dollar that results in net income." For a small business owner, this ratio would be an appropriate measure of the profitability of his or her business. The current ratio as Stickney et al. (2009) point out helps in the measurement of a firm's ability to settle its short-term debts/obligations. A small business owner interested in determining the ability of the business to settle its everyday bills and other obligations would find this ratio useful. On the other hand, a manager of a large corporation would be interested in ratios…… [Read More]
Financial managers and CEO's play important roles in ensuring that organizations meet their specific goals. The skill levels for both positions are high and require a great deal of patience and experience. The purpose of this discussion is to determine whether being a financial manager is the best preparation for later becoming a CEO.
ole of the Financial Manager
According to the Bureau of Labor, financial managers must have a bachelor's degree in a field such as business administration, accounting, economics or finance. Although, as the business world becomes more competitive, organizations are requiring financial managers to have Master's degrees and a great deal of experience before they can become financial managers. The Bureau also explains that financial managers are vital to the success of any organization and their jobs involve supervising the preparation of financial reports, direct investment activities, and implement cash management strategies. As computers are increasingly used…… [Read More]
Bank of America and Merrill Lynch would have to be separated and Goldman Sachs could no longer be a bank holding company. "Commercial banks would take deposits, manage the nation's payments system, make standard loans and even trade securities for their customers -- just not for themselves. The government, in return, would rescue banks that fail. On the other side of the wall, investment houses would be free to buy and sell securities for their own accounts, borrowing to leverage these trades and thus multiplying the profits, and the risks. Being separated from banks, the investment houses would no longer have access to federally insured deposits to finance this trading. If one failed, the government would supervise an orderly liquidation. None would be too big to fail -- a designation that could arise for a handful of institutions under the administration's proposal" (Uchitelle, "Volcker," 2009).
The Volcker proposal seems sensible,…… [Read More]
The decision of investing or not here then depends on the personal adversity to risk of each individual investor. The general theory states that each investor should construct a diversified portfolio, which adequately balances high risk-high gain shares with medium or even low rates of risk and gains (Hagin, 2004). New Zealand could then be assimilated with a medium risk-medium gain share, and as such would be perceived as a valuable addition to one's portfolio. In this order of ideas then, the recommendation would be that of investing in the country.
Amadeo, K., 2009, An Introduction to the Financial Markets, About, http://useconomy.about.com/od/themarkets/a/capital_markets.htm last accessed on December 17, 2009
Hagin, ., 2004, Investment Management: Portfolio Diversification, isk and Timing -- Fact and Fiction, John Wiley and Sons
Healy, J., 2001, New Zealand Capital Markets, Ministry of Economic Development, http://www.med.govt.nz/upload/18163/healy.pdf last accessed on December 17, 2009
Malkin, B., 2009, Financial Crisis:…… [Read More]
Once the written request is received, we will pay within 30 days (PCC.com, no date). If you paid by credit card, we will issue the refund to your card directly. If you paid cash, we will issue you a check.
This policy is ideal for a small generalist office.
The policy should outline the Medical Associates position clearly, so that the patient has an understanding of how billing and collections work from our end. This is important because of medical offices are somewhat unique in this regard compared to other businesses. The multiple means of payment, often for a single bill, necessitate this written explanation for the patient.
The main objective of the financial policy is to effectively communicate the means and methods of payment to the patients. Not only should it clarify the role of the office, but it should also clarify for the patient their role…… [Read More]
Significance of Interest to the economy:
Interest rates keep on changing with the passage of time; the rates which were present a month ago are quite different from the current rates. This is because the interest rates change with the change in the growth of the economy. The expectations of lenders and borrowers regarding the future prices also affect the interest rates (Trainer, 2012).
The interest rates in U.S. are affected by the values of the dollar, by foreign interest rates and also by the close examination of the monetary policy actions which are taken by the Federal eserve. In our market economy a great role is played by the interest rates. Interest rates work just like traffic signals. The way in which the signals direct the traffic on intersecting roads, similarly interest rates manage the flow of money to borrowers from savers. Usually in the fund movement,…… [Read More]
isk Management in Family Owned Businesses
A family business can be simply described as "any business in which a majority of the ownership or control lies within a family, and in which two or more family members are directly involved" (Bowman-Upton, 1991). In other words, it is a multifaceted, twofold structure consisting of the family and the business meaning that the involved members are both the part of a job system and of a family system (Bowman-Upton, 1991).
Most families seek stability, intimacy, a sense of community, and belonging through the family business (Hess, 2006). On the other hand, whenever family and business are mentioned together, a majority of people think of continuous conflict, competition and contention (Crenshaw, 2005). However, "successful family businesses do not let the family destroy the business or the business destroy the family" (Hess, 2006).
The family-owned businesses are the backbone of the world financial system.…… [Read More]
To rebuild their image, the company would try a number of different strategies, none of which would prove to be successful. This would hurt the market share of Gap to the point that many analysts now believe that it may be advantageous to spin off the company's: Old Navy, anana Republic and Gap stores. What this shows, is how a company can begin to lose its way when it is not focused on adjusting to changes in consumer tastes and trends. In the case of Ann Taylor, they need to be aware of this hazard, as it can have an adverse impact on the long-term viability of their business. (Reingold)
A second challenge that Ann Taylor can be wrestling with is a lack of focus on the part of management. In this case, managers must understand the role that their decisions will have on their organization. Where, executives must clearly…… [Read More]
Overall, at&T is the more profitable of the two companies. That Verizon has the stronger gross margins and at&T the stronger net margins indicates that at&T does a better job of controlling its cost structure than does Verizon.
The telecommunications industry is highly competitive in both the landline and wireless segments. By 2006, wireless spending had match wireline spending. hile this presents significant opportunities for telecommunications, much of that spending comes in the form of cannibalizing, as wireline revenues have been decreasing steady over the past decade, matching the steady increases in wireless spending.
There are four major wireless operators in the U.S. And over 170 regional players (Megna, 2009). Competition is based on coverage area (capital investment), price and customer service. Both firms can be considered industry leaders. As of 2007, at&T had a subscriber base of 65.7 million and wireless revenues of $10.9 billion. Verizon had…… [Read More]
Content Find articles address financial reporting practices ethics standards health care finance, including * generally accepted accounting principles * corporate compliance, ethics, and fraud abuse
Financial management: Literature review
Healthcare institutions, like all organizations, are continually confronted with the four basic elements of financial management: deciding what to invest in or produce; how to finance those investments or products; how to manage assets, and how to report those assets in a manner that is useful and also complies with all necessary regulations. This paper will provide an overview of two recent articles, one on the necessity of uniform accounting procedures to ensure ethical and legal compliance amongst healthcare institutions and the other on the financial consequences of failing to do so for the institution itself.
Article 1: Maintaining the strength of your convictions
According to Larry Tyler's 2004 article "Maintaining the strength of your convictions" "Most financial executives…… [Read More]
This seems to have been in response to the perception of an upcoming slowdown and indicates that the firm is both cognoscent of its liquidity position and is taking steps to ensure the robustness of that liquidity position.
Moreover, in terms of cash flow coverage, State Street is in a solid position. Cash flow coverage measure the ability of the firm to pay its interest expense. In each of the past three years, State Street has generated more interest revenue than they have incurred interest expense.
Because it is difficult to separate operations and investments in a financial services firm, such as State Street, measuring the firm's operating efficiency is valuable. State Street's asset turnover is 6.7%. The gross margin was 15.1% in the past year, slightly down from the previous year. Overall, the gross margin has been steady and healthy over the past few years. If one were to…… [Read More]
If this investment was financed entirely with debt, the new capital structure would be 67.2% debt and 32.8% equity. If this investment was financed entirely with equity, the new capital structure would be 30.5% debt and 69.5% equity.
One rule of thumb for making such a decision is to match the asset type with the financing. Therefore, an asset that is expected to have a service life of five years would be financed with a five-year bond issue, so that the cash flows from the asset can be used to cover the costs of financing. In this case, the asset life is not known, so any financing type can be used.
Internal cash is not possible because the firm likely does not have $10 million in cash if it only has $17.2 million in assets and $17.5 million in annual revenues. A debt issue will leave the firm with a…… [Read More]
They were just so intense, so focused, so transaction-driven, there literally wasn't time for people to put ideas out and discuss and debate them."
These constraints to effective management oversight and innovation were further exacerbated when the company went private in 2001. According to Stopper, "ARAMARK went from a leveraged buyout situation in 1984, with only some 50 people having equity in the company, to an initial public offering (IPO) in 2001 with 97% ownership by employees. It was a huge cultural shift. Many employees incurred debt in order to have ownership in the company. In his view, HR's power and influence came from performance and creating value, not from advancing or acceding to personal agendas."
To their credit, though, Hayes reports that the company finally took action to remedy this situation by creating an action project team to assess the potential threats involved in retaining the status quo and…… [Read More]
There are many ways that one can finance a project. Either a company can use its investors own funds, that is equity, or borrowed money, meaning debt can be used. Generally, the two are used in a combination depending on the risk preference of the investor. Financial leverage is financial leverage "The degree to which an investor or business is utilizing borrowed money" (InvestorWords.com). There are many views on using debt to finance a company. Some would say that it is a bad thing, and that it feeds on itself, but then again, it could be used to boost up return on equity very easily. This is because it can be used to increase the asset base of the company, and hence increasing the earning power of the company, without actually increasing the amount of equity. The reason is that an equity investor is entitled to a share…… [Read More]
She is well-connected within the community and is confident that her business would be profitable within a year or two. She has a strong, charismatic personality and is also connected to Milwaukee's artistic community through her husband's architectural work restoring some of the city's beautiful historic buildings. She has a considerable portfolio, and occasionally sold stock photos or worked as a wedding photographer when she was in law school.
Laura realizes that in the current market, individuals and companies may be cutting back on "luxuries" like professional family and staff pictures. However, she has a range of expertise in architectural and interior photography as well as portrait and event photography. She is willing to diversify her skill set and pursue further education if necessary, although in her field an additional artistic degree would only be desirable for teaching or competing for gallery showings at a national level.
According to her…… [Read More]
The horizontal analysis showed that FedEx's profits in 2009 were just 5% of their profits in 2007. Given that EBIT contributes to the T3 component of the Z-score, which is the most significant component by weighting, this would explain why the Z-score dropped so much. The other major contributor to the Z-score is the drop in the company's market cap. The market cap is deemed important in part because the market's view of company reflects the most known information at the time. The market has a strong ability to predict financial distress. A depressed stock price indicates that investors need a greater percentage return on the expected future cash flows from the company in order to invest -- an indicator that the market believes the firm's risk level has increased. The market cap contributes to the T4 component, which is the smallest component of the Z-score. However, the decline in…… [Read More]