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Financial Structure of Financial Environment
Financial structure is the mixture of financial instruments, financial markets and other financial institutions operating within the economy. ( Fase & Abma, 2003). Financial structure consists of a company's assets, capital and liabilities. Financial structure is also specific equity and long-term debts that firms employ to finance its business operations. Typically, financial structure of a company generally affects the business operations and value of a business. On the other hand, financial structure could also be described as the amount of organization's cash flow that goes to shareholders and creditor. Organizations use their financial structure to finance their short-term and long-term obligations and financial structure is different from capital structure since capital structure only focuses on the long-term source of funds, which include long-term debt, debentures, and equity capital shares.
On the other hand, financial environment constitutes the financial market that includes foreign exchange market, bond…
Fase, M.M.G & Abma, R.C.N. (2003). Financial environment and economic growth in selected Asian countries. Journal of Asian Economics 14: 11 -- 21.
Konzelmann, S. Wilkinson, F. Fovargue-Davies, M. et al. (2009).Governance, regulation and financial market instability: the implications for policy. Cambridge Journal Economics. 34 (5): 929-954.
Lee, R. (2010). The Governance of Financial Market Infrastructure. Oxford Finance Group. Princeton University Press. USA.
Levine, R. (1991). Stock Markets, Growth, Tax Policy. The Journal of Finance. XLVI (4): 1444-1465.
While all of this is well and good, the reality is that most businesses are not founded by accountants and most find a financial system that is beneficial for them. For instance, it may have been acceptable in school to take large risks on certain costs; however, if a business is struggling and incoming capital is lower, then no risks may be considered acceptable.
The final financial factor that businesses use on a regular basis is leveraging. When a company wants to grow and expand in exceedingly large ways, it does so by weighing the current assets and determining the amount the company as a whole is willing to borrow. The key where financial impacts come into play is the question of how much and for how long to borrow (Ghosh 1993). The primary technique used for this is known as forecasting. A financial analyst will take the companies past…
Ghosh, Dilip; Sherman, Robert (1993). Leverage, Resource Allocation and Growth. Journal of Business Finance & Accounting, June, 575-582.
Haddad, Mahmoud; Redman, Arnold (2005). Ivory Tower vs. The Real World: Do We Practice What We Teach? Financial Decisions, 5, 1-19.
Bent Flyvbjerg, Mette K. Skamris Holm, and Soren L. Buhl (2002), "Understanding Costs in Public Works Projects. Journal of the American Planning Association, 68(3), 279-295.
Baker, Malcolm P; Wurgler, Jeffrey (2002). Market Timing and Capital Structure. Journal of Finance 57 (1): 1 -- 32.
The overall financial structure of JP Kenny Limited can be analyzed from the viewpoint of time duration, which includes short-term and long-term funds.
Debt- Equity Ratio
This ratio analyses relationship between borrowed funds and JP Kenny's capital. It is indicative of reflective claims of the creditors and the shareholders against JP Kenny's assets. Here analysis of the long-term Equity ratio and total equity ratio will be made.
Long-Term Debt -- Equity Ratio
This ratio establishes the relationship between long-term outside liabilities and JP Kenny's funds. It shows the proportion of the External and Internal Equities. The long-term debt for 2010 was 1, 138,000 pounds and the equity shareholder was 8, 885,000 pounds giving a 8:1 long-term debt equity ratio. This shows that creditors of JP Kenny have a larger claim than the shareholders, therefore it can be construed that JP Kenny will deal with stringent conditions from lenders,…
Financial Structure Information System
The delivery of care across all levels of healthcare delivery system is largely influenced by information and information exchange. The information exchange takes place between the various stakeholders in the health care delivery process i.e. The health care facility, the patient, the caregiving team, and political-economic environment. The significance of information in health care delivery process and system has contributed to the development of health care information systems. Health care information systems can be described as systems that captures, manages, stores, and conveys information that is related to people's health and activities of a health care organization of facility. These systems play a crucial role in the management of information exchange towards decision-making on health care activities and processes. Health care information systems have different structures including financial structure, which has positive and negative impacts and is applicable to different work areas in the health sector.…
Glickman et. al. (2007, October 18). Promoting Quality: The Health-care Organization from a Management Perspective. International Journal for Quality in Health Care, 19(6), 341-348.
Pina et. al. (2015, April). A Framework for Describing Health Care Delivery Organizations and Systems. American Journal of Public Health, 105(4), 670-679.
Thede, L. (2012, January 23). Informatics: Where Is It? The Online Journal of Issues in Nursing, 17(1). Retrieved from http://www.nursingworld.org/MainMenuCategories/ANAMarketplace/ANAPeriodicals/OJIN/TableofContents/Vol-17-2012/No1-Jan-2012/Informatics-Where-Is-It.html
5 times the actual value of equity.
The return on investment is calculated by dividing the total net profits by the total assets value and shows the "overall effectiveness to generate profits from total investment in assets." At the Colorado Group, the return on investment amounted to 20.4% in 2006 and 21.5% in 2005. The small decrease from 2005 to 2006 can be explained by the fact that that the net profits decreased significantly during this period of time and that the decrease of the total assets value was by no means similar in value.
The gross profit margin is calculated by dividing the net sales minus the cost of goods sold by the net sales value and shows the "profitability of a company's sales after the cost of sales has been deducted." In this case, in 2006 this ratio was equal to 54.4%, as compared to 55.9% in 2005.…
1. Financial Ratios. Cardinal Stritch University Library. On the Internet at http://library.stritch.edu/guides/financialratio.htm
2. The company's 2006 Annual Report
Financial Ratios. Cardinal Stritch University Library. On the Internet at
Understanding how a company operates within any industry is dependent upon comprehension of many financial properties. Assessing the financial stability of a company is essential in determining the company's strengths and weaknesses as well as ultimately assessing its profitability. Financial ratios should be considered a useful tool when examining the profitability and efficiency of any company. Some companies are certainly more successful and profitable than others, and pharmaceutical companies in particular seem to have a distinct advantage when measuring financial ratios.
When assessing any organization, for terms of this paper are as follows: Johnson & Johnson, Pfizer and Merck it is important to consider the profitability and efficiency of the company. This is among the first information investors will explore before "investing" in a company. atio analysis is a critical analysis of the financial structure of an organization. There are four categories of ratios that need to be…
Calculating and Interpreting Financial Ratios. http://aolsearch.aol.com/redir.adp?appname=MS&query=Pfizer%20efficiency%20and%20profitability%20ratios&url=http%3a%2f%2fwww%2efool%2ecom%2fportfolios%2frulemaker%2f2001%2frulemaker010531%2ehtm&datasource=Google&partner=Google&clickedItemRank=2&requestId=cns92890&component=websearch.google.http.tcl&searchType=MS
MBA 681, Fall 2002. "Financial Analysis." http://aolsearch.aol.com/redir.adp?appname=MS&query=Merck%20profitability%20and%20efficiency%20ratios&url=http%3a%2f%2fwww%2emgmtguru%2ecom%2fmgt499%2fTN4%5f3%2ehtm&datasource=Google&partner=Google&clickedItemRank=5&requestId=cns41327&component=websearch.google.http.tcl&searchType=MS
A non-for-profit entity has a financial structure based on assets and liabilities solely. Such an entity does not have equity. The main source of financing for a non-profit entity is donations. A non-profit entity is, other than a few fixed assets, a flow-through entity. This means that donations come into the organization, and are then rendered out in the form of services. There is a high emphasis on expenses. Most charities will have some current assets, but usually these are things likely to be converted to cash. Otherwise, the assets tend to be equipment or buildings, likely depreciable. The balance sheet is known as the statement of financial position, outlining the assets and liabilities. These are not necessarily balanced, which is why the term balance sheet is not used (Foley, 2015). Spending in a non-profit is almost entirely discretionary in nature, technically, though there may be ongoing programs.…
CharityWatch.org (2015). Overhead ratios are essential for informed giving. CharityWatch.org. Retrieved April 13, 2015 from https://www.charitywatch.org/charitywatch-articles/overhead-ratios-are-essential-for-informed-giving/133
Foley, E. (2015). Reporting and operations. Non-Profit Accounting Basics. Retrieved April 13, 2015 from http://www.nonprofitaccountingbasics.org/reporting-operations/statement-financial-position
Friedman, M. (1970). The social responsibility of business is to increase its profits. New York Times Magazine. Retrieved April 13, 2015 from http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html
" Bhattacharya (1988). It is used to calculate the value of a company based on its total cash flow. (oss, 1988).
Bhattacharya (1998) states that this theory assumed that lower dividends will lead to reduced levels of new equity and this will bring about a balance between the debt and equity of a company. This is not ture for utilities companies and other monopolistic firms where new equities are rare.
For the "Current Examples" in our table, do we need to find specific company examples that exist today or have happened in the last 2-3 years? Or will it suffice to give a theoretical example of a measurement in a firm that fits the model.
For example, would this be OK.
Efficiency Theory Example
- Production returns based on shared, variable, and per unit costs divided by the total output of a factory in a given period of time.
Chew, DH (Ed.). (2001). The new corporate finance: Where theory meets practice (3rd ed.). New York, McGraw-Hill Irwin.
Copeland, T. & Weston, J.F., (1988). Financial theory and corporate policy (3rd ed.). Reading, MA. Addison-Wesley Publishing Company.
Fabozzi, R., & Modigliani, F. (1996). Capital markets institutions and instruments (2nd ed.). New Jersey, Prentice Hall.
Fama, E. And K. French. (2001). Disappearing dividends: Changing firm characteristics or lower propensity to pay," Journal of Financial Economics, 60, 3-43
stock market and the Banks promote economic growth and it provides a critique of their functions in transitional economies. Every country depends on its economy for its growth. For a country to be stable it has to be stable in terms of its economy. Bank and stock market contribute to a great extent to the economy growth of every country where it provides firms with opportunity to get funds thus encouraging more investment from the firms. At the same time they give information on the ways resources should be allocated. The development of a financially sound, market-oriented banking system is always considered to be fundamental to a flourishing transition. Arguably, it is important to macroeconomic stability and to positive long-term growth prospects. As documented, bank intermediation in transition economies continues to be stunted after a decade or addition of reform, mainly where advancement in banking reforms is inadequate. The banking…
Atje, Raymond and Jovanovic, Boyan, (April 1993), "Stock Markets and Development," European Economic Review, 37 (2/3), pp. 632-40.
Bagehot, Walter. (1873) Lombard Street. Homewood, IL: Richard D. Irwin, (1962
Bresharan, T., Milgrom, P., and Paul, J., (1992),"The Real Output of the Stock
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…
Allen, S., and M. Bombardieri. 2008. "A Healthcare System Badly Out of Balance." The Boston Globe, November 16.
Glaeser, E.L. 2004. "The Governance of Not-for-Profit Organizations." The International Journal of Not-for-Profit Law 6 (3).
Halvorson, G.C. 2005. "Healthcare Tipping Points." Healthcare Financial Management (March): 74 -- 80.
Helvin, L.K. 2008. "Caring for the Uninsured: Are Not-for-Profit Hospitals Doing Their Share?" Yale Journal of Health Policy, Law, and Ethics (summer): 421 -- 70.
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).…
Angel, James, and Douglas McCabe. "The Business Ethics Of Short Selling And Naked
Short Selling." Journal Of Business Ethics 85.(2009): 239-249. Business
Source Elite. Web. 1 Apr. 2012.
Barth, Mary E., and Wayne R. Landsman. "How Did Financial Reporting Contribute To
Financial analysis is a tool that allows third parties to analyze corporate financial statements. One of the main reasons that the Securities and Exchange Commission requires that statements are compiled and presented in a consistent manner is to ensure that third parties will be able to use the statements to compare different companies. These comparisons can, among other things, help with investment decisions. This paper will compare PepsiCo and Coca-Cola Company, the two leading soft drink marketers in the world. PepsiCo is actually the larger of the two companies, because it is more diversified, with its snack food properties. These properties also alter the company's finances, creating certain points of difference between the two companies. This report will cover a number of different forms of financial analysis, arriving at a conclusion about which company has the stronger financial position.
The first set of ratios to be studied…
FTC. (2010). FTC puts conditions on PepsiCo's $7.8 acquisition of two largest bottlers and distributors. Federal Trade Commission. Retrieved May 19, 2012 from http://www.ftc.gov/opa/2010/02/pepsi.shtm
Leckey, A. (2010). Coca-Cola Co. outlook strong after big acquisition. Los Angeles Times. Retrieved May 19, 2012 from http://articles.latimes.com/2010/oct/31/business/la-fi-leckey-20101031
Loth, R. (2012). Financial ratio tutorial. Investopedia. Retrieved May 19, 2012 from http://www.investopedia.com/university/ratios/ #axzz1vG92KPwm' target='_blank' REL='NOFOLLOW'>
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…
Anderson, C. (2013, January 25). 8 Things You Need to Know About Starting A Fashion
Business. The Huffington Post. Retrieved January 10, 2014, from http://www.huffingtonpost.com/2013/01/24/starting-a-fashion-business_n_2534518.html
de Bettignies, J. (2008, January). Financing the Entrepreneurial Venture. Management Science,
54(1), 151-166. Retrieved January 10, 2014, from http://web.business.queensu.ca/faculty/jdebettignies/docs/EntrepFinPrintedVersion.pdf
Assumption Use in the Financial Plan
Additional Assumption in Sensitivity Analysis
FIRST TWELVE MONTH CASHFLOW RESULT
HOW MUCH SHOULD NORMAN PAY FOR THE EXCLUSIVE RIGHT?
FORECASTED CASHFLOW FOR THE NEXT FIVE-Year
CASH FLOW WITH A LOAN AT 8% PER ANNUM
THE SALES PRICE AND kg SALES GRADUALLY INCREASE AT 5%
THE SALES PRICE PER kg INCREASE AT 10% UT THE UNIT SALES REMAIN AT 5%.
Investment Value Using At Discounted Rate 5%
est Financial Plan and Option
Assumption Use In The Financial Plan
Additional Assumption in Sensitivity Analysis
It is further assumed that price will increase gradually at the rate of 8% per annum and sales will increase at 7% per annum.
For the purpose of analysis, both the sales price and Kg sales will gradually increase at 5%.
Another scenario will be that the sales price per Kg increase at 10% but the unit sales…
Saltelli, A., Ratto, M., Andres, T., Campolongo, F., Cariboni, J., Gatelli, D. Saisana, M., and Tarantola, S., 2008, Global Sensitivity Analysis.The Primer, John Wiley & Sons.
Sensitivity analysis. (2014). Retrieved Janaury30, 2014, from http://en.wikipedia.org/wiki/Sensitivity_analysis
€ Exchange Rate $
he only observation that could be made here is that one would expect a larger proportion of the total expenses to be allocated to research and development, given the fact that this is such an important part of Microsoft's activity and essential in order to obtain a competitive advantage on the market.
Asset and Capital Structure
Cash and cash equivalents
otal fixed assets
he asset structure at Microsoft reflects some of the particularities in the industry, notably the fact that the inventory levels tend to be quite low, as compared to the other assets. his means that the I industry is not one supporting production on stock. At the same time, the value of the total fixed assets is significantly high, which can be partly explained by the size of the company and the investments in land, buildings and equipment.
The return on assets at Microsoft was 0.24 in 2008, as compared to 0.22 in 2007. As most of the other profitability and asset management figures, the return on assets also shows a better performance in 2008.
Part IV -- Conclusions and Recommendations
Microsoft's results, both in terms of absolute value from the income and cash flow statements and balance sheet and the ratio analysis, show a solid, extremely competitive company, whose results have improved from 2007 to 2008, despite the global economic crisis. Its capacity to retain low levels of inventory, to gradually increase its efficiency in using assets and to bring new products to the market are some of the positive aspects at Microsoft. As a recommendation, the company could consider allocating a larger proportion of its expenses into research and development.
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…
BLS. (2010). Occupational Outlook Handbook 2010-11 Edition. Bureau of Labor Statistics. Retrieved May 21, 2011 from http://www.bls.gov/oco/ocos301.htm
Loth, R. (2011). Financial ratios tutorial. Investopedia. Retrieved May 21, 2011 from http://www.investopedia.com/university/ratios/
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,…
MSN Moneycentral. (2013). Nordstrom. Retrieved April 20, 2013 from http://investing.money.msn.com/investments/stock-balance-sheet/?symbol=us%3AJWN&stmtView=Ann
MSN Moneycentral. (2013). Hennes & Mauritz. Retrieved April 20, 2013 from http://investing.money.msn.com/investments/stock-income-statement/?symbol=HM
Edgerton, a. (2012). Thousands celebrate H&M's South Beach debut. Miami Herald. Retrieved April 20, 2013 from http://www.miamiherald.com/2012/11/08/3087998/thousands-celebrate-hms-south.html
Bull Run, Virginia
Pleasant Valley Estates is envisioned as an upwardly mobile community - located in Bull Run, Virginia - and targeted toward the young, single professional and young families.
Cash Flow Statement Overview
The cash flow statement constitutes a financial document, which details the exchange of cash between a business and the outside world while strategically demonstrating the in and outbound logistics. Flow is traditionally categorized as:
flow "in" from Operations - the cash the entity or company makes by selling goods and services, flow "in" from Financing - the cash the entity or company raises by selling stocks and bonds, and flow "out" to Investing - the cash the company spends toward investing in future growth
Each of these flows can move bi-directionally. Investors generally like to see that the company covers its spending with cash from operations rather than resort to financing. The cash flow…
Jordan, B. "Homeownership Alliance." Banc One Investments Advisor.
Freddie Mac Reports Strong Multifamily Lending Volume: New Product Lines Boost Production and Position Freddie Mac as Industry Leader." Freddie Mac News and Information Report. Nov. 2000.
Indeed, risk-seeking is pervasive in the financial industry, as competition compels banks to seek higher returns. Regulation such as capital requirements can help to reduce risk-seeking behavior, although the negative affect such regulations have on value can ultimately encourage at least some degree of risk-seeking. Despite this unintended potential consequence, regulation serves to neuter overly aggressive bankers and reduces risk in the banking system. Reducing the risk in the banking system is congruent with the government's objective of making effective use of taxpayer money.
A fourth consideration is that consumers demand regulation. hile this does not constitute an economic case for regulation, it must be understood that governments are not motivated by purely economic considerations. Consumers want to know that their deposits are safe and that they can access money when needed for homes, vehicles and small businesses. Consumer demand, while irrational, is a key driver in the level of…
Llewellyn, D. (1999). The economic rationale for financial regulation. Financial Services Authority. Retrieved November 13, 2009.
Hellmann, T., Murdock, K. & Stiglitz, J. (2000). Liberalization, moral hazard in banking, and prudential regulations: Are capital requirements enough? The American Economic Review. Vol. 90, 1, 147-165.
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…
2009 FedEx Annual Report. Retrieved February 4, 2010 from http://files.shareholder.com/downloads/FDX/791567587x0x312397/557bd7f3-8372-4afe-a664-1fdb82a488b0/FedEx2009AnnualReportl.pdf
Loth, R. (2010). Financial ratio tutorial. Investopedia. Retrieved February 4, 2010 from http://www.investopedia.com/university/ratios/
Market cap and other financial information from MSN Moneycentral. Retrieved February 4, 2010 from http://moneycentral.msn.com/companyreport?Symbol=U.S.%3aFDX
Altman Z-Score calculator from CreditGuru.com. Retrieved February 4, 2010 from http://www.creditguru.com/cgi-bin/calculator/calcAltZ.pl
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…
MSN Moneycentral Verizon. Retrieved October 24, 2009 from http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=VZ&lstStatement=Balance&stmtView=Ann
MSN Moneycentral at&T. Retrieved October 24, 2009 from http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=T&lstStatement=Balance&stmtView=Ann
Loth, R. (2009). Financial Ratios Tutorial. Investopedia. Retrieved October 24, 2009 from http://www.investopedia.com/university/ratios/
Chen, B. (2009). Verizon iPhone? Don't hold your breath. Wired. Retrieved October 24, 2009 from http://www.wired.com/gadgetlab/2009/10/verizon-iPhone/
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…
Investopedia. (2010). Net present value -- NPV. Investopedia. Retrieved October 2, 2010 from http://www.investopedia.com/terms/n/npv.asp
Wang, J. (2003). Capital asset pricing model. MIT. Retrieved October 2, 2010 from http://web.mit.edu/15.407/file/Ch11.pdf
Yahoo! Finance. (2010). Advanced bond screener. Yahoo!. Retrieved October 2, 2010 from http://reports.finance.yahoo.com/z1?b=1&so=a&sf=m&tt=1&stt=-&pr=0&cpl=-1&cpu=-1&yl=-1&yu=-1&ytl=-1&ytu=-1&mtl=6&mtu=24&rl=-1&ru=-1&cll=-1
MSN Moneycentral. (2010). Magna International financial statements. MSN Moneycentral. Retrieved October 2, 2010 from http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=MGA&lstStatement=Balance&stmtView=Ann
92%. This compares to the 0.36% for its peers last year and 17.42% over five years for the sector. UHS has a net profit margin of 3.86% and a five-year average net profit margin of 4.49%. The sector averaged a net profit margin of -0.38% last year, but has a five-year average of 12.27%. hat this indicates is that historically UHS has lagged its peers in terms of bottom line margins. They have, however, been able to sustain those margins during a downturn in the business cycle whereas their competitors have struggled. This stability is a sign of financial strength. It may also contribute to their willingness to be more highly levered than most of their competitors in order to drive growth.
Revenue growth last year was 13.36%. This compares with 6.5% the previous year and 8.19% the previous year. The five-year average growth rate is 8.01%. Revenues grew faster…
Charts from Yahoo! Finance. Retrieved November 8, 2008 at http://finance.yahoo.com/echarts?s= UHS#chart10:symbol=uhs;range=1y;compare=' target='_blank' REL='NOFOLLOW'>
3.2: Data Used: The data used in this study effot includes pimay and seconday data. Along with infomation etieved fom the liteatue eview, this eseache also pesonally compiled fom... (Consideations fo this section: What spatial and tempoal chaacteistics do data include? Do any known o anticipated souces of eo exist in the data?
3.2.1: Spatial and tempoal chaacteistics: Specific data chaacteistics within a sub-section
3.3: Methods and techniques: Two specific types of methods and techniques ae elated in this section
3.3.1: Method fo Specific Field wok: Subsections discuss specific technique.
CHAPTER IV: ANALYSIS
4.1: Intoduction: Hee, this eseache discusses the contents of the sections included/following in this chapte. A numbe of coss-efeences fom the methods chapte ae also included. This analysis chapte does not sum up the findings etieved fom the liteatue eview and this eseache's study "in one wod," albeit, it does pesent a synopsis of elevant findings etieved…
references from the methods chapter are also included. This analysis chapter does not sum up the findings retrieved from the literature review and this researcher's study "in one word," albeit, it does present a synopsis of relevant findings retrieved from this study's efforts.
4.2: Results for two rumours explored during this study are presented in this section. Data is synthesised and presented in numerous figures.
4.3: Discussion of results: This last section of this analysis chapter synthesizes results from the study, with key results highlighted and their importance emphasised in relation to this dissertation's overall aim.
CHAPTER IV: DISCUSSION; CONCLUSIONS; RECOMMENDATIONS
5.1: Introduction: Here in this final chapter's introduction, this researcher reminds the reader of this study's original study aim and objectives relating to financial rumours and their affect on stock prices. The point that research questions have been answered is presented. The determination of this study's hypothesis is revealed.
Despite having an exceptional pace of growth throughout the early years of their existence, Saatchi & Saatchi is facing client attrition and declining revenues. What had happened through their continual restructurings was the corporation lost track of their core vision, mission and values. The distance between these three core attributes of their business and financial performance had drifted apart so far that financial results were showing the increasingly disjointed nature of their corporate culture (Greenhalgh, 2004). The reliance on a balanced scorecard to unify their core vision, mission and values back to financial performance was needed (Niven).
As a result of the continued deterioration of financial and customer performance, management at Saatchi & Saatchi put into place financial and customer-driven goals for the company. The financial objectives included the foundation of their company's resurgence and comeback, including growing the revenue base faster than market rates, converting…
Greenhalgh, C. (2004) Building a Strategic Balanced Scorecard: Saatchi & Saatchi Complementary Case Study. Business Intelligence Company. Retrieved February 17, 2013, from http://www.business-intelligence.co.uk/PDFdownloads/strat_bsc/Saatchisr.pdf
MyStrategicPlan (N.D.) Balanced Scorecard: Performance Measurements for Success. Retrieved July 20, 2010, from http://www.mystrategicplan.com/strategic-planning-topics/balanced-scorecard.shtml
Niven, P. (N.D.) Financial perspective. EPM Review. Retrieved July 20, 2010, from http://www.epmreview.com/Resources/Articles/Delivering-shareholder-value-growing-revenue-and-enhancing-productivity.html
Robin, D. (ND) Vision, Mission and Values: Management Tools for Building a Better Workplace. Daniel Robin & Associates. Retrieved July 20, 2010, from http://www.abetterworkplace.com/027.html
The reasons companies create and maintain accounting systems
Accounting is the language of business. The ability to record transactions is critical for companies in regards to keeping track of critical performance metrics. The subsequent management of revenues and expenses is critical for the sustainability of the business. Accounting systems, therefore, are needed for accurate assessment of business progress. Businesses create these systems to help facilitate their overall strategic objectives. For instances, if accounts receivables are high, management may be inclined to increase credit terms to discourage customers from borrowing. A natural reaction from this strategic move could possibly be an increase in customers paying in cash. Through tightening credit, management was able to avoid potential delinquencies while increase the cash on hand. These decisions can be made through accurate and timely accounting systems.
In addition, accounting systems can help businesses determine methods by which to improve operations. Aspects…
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…
InvestorWords.com, "Definition of Financial Leverage" http://www.investorwords.com/cgi-bin/getword.cgi?1952&financial%20leverage
The Motley Fool, www.fool.com
Financial Accounting Case Study
Despite its large size and established market position, General Mills, like any other company, has to grapple with those factors that, if not properly addressed, could have a negative effect on performance. Market demand is one of those factors. In order to effectively address the issue of demand, the company has to determine and respond to two major demand-related issues. First, there is need to understand the factors influencing demand. These include the prices of products, the availability and prices of substitutes produced by competitors, and government regulation - especially with regard to the promotion of healthy foods. Secondly, there is need to analyze the outlook of this demand in the near future. General Mills offers for sale a wide range of food items such as snacks. The demand of these could fall significantly in future, mainly due to the government's effort to ensure…
General Mills. News Releases: General Mills Reports Fiscal 2013 Results. General Mills. General Mills, 2013. Web. 13th Dec 2013.
Google Finance. "General Mills, Inc. (NYSE: GIS)." Google Finance. Google Finance, 2013. Web. 13th Dec 2013. < http://finance.yahoo.com/echarts?s= ^gspc+interactive#symbol=^gspc;range=5y;compare=;indicator=;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;>
Hoovers. "General Mills, Inc. Competition." Hoovers. Hoovers, 2013. Web. 12th Dec 2013.
Weil, Roman L. Financial Accounting: An Introduction to Concepts, Methods and Uses. 14th ed. Mason, OH: Cengage Learning, 2012. Print.
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…
College Board. (2010). Trends in college pricing, 2010. Retrieved from http://trends.collegeboard.org/
Hung, a., & Yoong, J. (2010). Asking for Help: Survey and experimental evidence on financial advice and behavior change. RAND Working Paper WR-714-1.
Morris, Kenneth M., Alan M. Siegel, and Virginia B. Morris. (1995). The Wall Street Journal Guide to Planning Your Financial Future. New York: Lightbulb Press.
Parisse, a., & Richman, D. (2006). Questions Great Financial Advisors Ask… and Investors Need to Know. Chicago: Kaplan.
Thus, the Board ultimately had little control over this particular cost, which is how it is found itself in a difficult financial position this year. The general lack of control over the budget is a definite weakness for the Bridgeport Board of Education.
In lieu of financial statements, there were two main resources available to help assess this organization's health. Its budget book was the primary source, as it detailed the Board's financial situation with respect to its inflows and outflows. News items are also helpful. Since the Board is not a public company, it is not required to disclose items of financial significance, but such items may come to light through the local news media.
The organization's approach to creating shareholder value is to spend its money on the programs that deliver on its strategic objectives. These include graduating students at a college-ready level, reducing the dropout rate to…
Bridgeport Public Schools Budget Request 2009-2010.
Bridgeport Board of Education website, various pages. (2009). Retrieved November 12, 2009 from http://www.bridgeportedu.net/
Lambeck, L. (2009). Bridgeport schools face health insurance funding gap. Connecticut Post. Retrieved November 12, 2009 from http://www.allbusiness.com/education-training/education-administration-school-boards/13333032-1.html
Brewer, R. (2008). Bridgeport school funding dilemma: No easy solutions. 06106. Retrieved November 12, 2009 from http://06106blog.org/2008/03/07/bridgeport-school-funding-dilemma-no-easy-solutions/
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…
Valerius, Bayes, Newby & Seggern. (2008) Medical Insurance: An Integrated Claims Process Approach. McGraw-Hill, New York, 2008.
Website: MedicalCodingandBilling.com. Various pages. Retrieved February 20, 2009 at http://www.medicalcodingandbilling.com/pract_management.htm
No author. (no date). Writing a Financial Policy. Physician's Computer Company. Retrieved February 20, 2009 at http://www.pcc.com/practmgmt/business/finpol.php
No author. (no date). Financial Policy. Napa Valley Orthopaedic. Retrieved February 20, 2009 at http://napavalleyortho.com/financial_policy.html
The applicability of Activity-Based Costing for decision making is directly linked to the influences that ABC has over process control. In this order of ideas, by better identifying the incurred costs or the overhead, managers can better monitor and control the evolution of products, prices, costs and consequently, profits. ABC identifies the costs incurred by each item in terms of resources consumed. Therefore, with the aid of ABC, organizational managements have the ability to control resource allocation.
Activity-Based Costing reveals yet another significant feature: it has the ability to evaluate the costs of not producing an item. This basically means that with the aid of the ABC, managers are able to know how much they have lost due to machine malfunctioning, product damaging, increased inventory costs or time spent waiting for a machine component to be replaced. "Activity-Based Costing therefore gives not only much better cost control, but increasingly, it…
Barnat, R., 2005, Strategic Control: A New Perspective, Strategic Control, http://www.strategic-control.24xls.com/en139last accessed on October 21, 2008
Chellasamy, P., Ligy, V.K., 2008, Activity-Based Costing - a Tool for Decision Making, Fibre 2 Fashion, http://www.fibre2fashion.com/industry-article/7/670/activity-based-costing-a-tool-for-decision-making1.asplast accessed on October 21, 2008
Cooper, R., Kaplan, R.S., 1998, Design of Cost Management Systems, 2nd Edition, Prentice Hall
Drucker, P.F., 2006, Classic Drucker, Harvard Business School Press
Another point of difficulty is that different firms may use different calendars when reporting. For example, the fiscal year at FedEx ends at the end of May, while at UPS the fiscal years ends at the end of December. This makes for a difficult comparison. For example, fuel prices escalated rapidly in early 2008. Comparing a FedEx FY09 and UPS FY08 would be very difficult, given that one of those statements would reflect the fuel price increase and the other would not.
There are also limitations to accounting analysis as a whole. At best, these forms of analysis are only as good as the financial statements from which they are produced. A large number of variables contribute to those statements, including accounting policy, accounting accuracy (or lack thereof), outdated information and changes in the accounting standards (NetTom, n.d.)
Changes in accounting policy or accounting standards can distort data year-over-year, which…
MSN Moneycentral: FedEx Corporation. (2009). Retrieved November 3, 2009 from http://moneycentral.msn.com/investor/invsub/results/hilite.asp?Symbol=FDX
MSN Moneycentral: Thomson Reuters. (2009). Retrieved November 3, 2009 from http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=TRI
Loth, R. (n.d.). Financial ratio tutorial. Investopedia. Retrieved November 3, 2009 from http://www.investopedia.com/university/ratios/ profitability-indicator/default.asp
No author. (2007). Common Size Financial Statements. NetMBA. Retrieved November 3, 2009 from http://www.netmba.com/finance/statements/common-size/
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…
State Street stock information from Reuters. Retrieved April 27, 2008 at http://stocks.us.reuters.com/stocks/ratios.asp?symbol=STT&WTmodLOC=R2-Ratios-1-More
State Street Corp 2007 Annual Report. Retrieved April 27, 2008 at http://library.corporate-ir.net/library/78/782/78261/items/284296/STT_AR.pdf
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…
Brown, C. (2011, January 20). How to Finance an Acquisition. Retrieved from Inc.com:
Ford, P. (2010, August 17). China's economic status is good news for the country ...
right? Retrieved from Csmonitor.com: China's economic status is good news for the country ... right?
Financial Fraud Fannie Mae
eview of Fraud Schemes within Fannie Mae 1998-2004
The agency found the fraud understatements of earnings and illegal gratuities that led to accounting violations and inability to meet Wall Street goals.
The investigation of Lee Frakas, executive of a major mortgage company which had dealings with Fannie Mae with hundreds of fake mortgages. The Securities Exchange Commission cited that Fannie Mae had to repay earnings and correct their books for the period 2001 through 2004. This major undertaking will cost the company over $11 billion by SEC estimates. In addition the Department of Justice has conducted a criminal investigation on the board members.
The top executive managing Fannie Mae were found guilty of illegally reporting accounting information that led to their receiving million dollar payments. Under Fraudulent Financial Statement Schemes this case is one of corruption and financial fraud. The specific areas include Illegal…
Associated Press. (2006). Fannie Mae manipulated accounting. Retrieved January 19, 2012 from http://www.msnbc.msn.com/id/12923225/ns/business-corporate_scandals/t/report-fannie-mae-manipulated-accounting/#
Schoenberg, T. (2011). Silence on taylor bean opened the way to $3 billion fraud. Retrieved January 19, 2012 from http://www.freerepublic.com/focus/f-news/926704/posts
The reclassification of this expense from an aggregated category to a specific one, Fuel and oil expense, reflects a shift in how hedging will be done in the future within Southwest. Hedging was treated as a pre-emptive financial strategy within the air carrier, often managed completely off the Income Statement and included in accrued or long-term liabilities (Carter, ogers, Simkins, 54). Given the market-to-market impact of fuel contracts being negative ($73M in 2009 per the annual report) and the ineffectiveness of fuel hedges settling in future periods of -$97M the net effect on the company's profitability will be a -$54M reduction in asset valuation. This is compared to a $92M valuation in 2008. This significant shift in the valuation of hedging contracts led to the redefinition of the expense category as well.
Despite the losses incurred by Southwest with their hedging strategies in 2009, the results…
David A Carter, Daniel A Rogers, and Betty J. Simkins. "Does Hedging Affect Firm Value? Evidence from the U.S. Airline Industry. " Financial Management 35.1 (2006): 53-86.
Duncan Wood. "Cheaper Oil Isn't the Only Payback. " Treasury and Risk Management 16.1 (2005): 42.
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…
The overall examination of financial documents is integral to the proper functioning of government entities. For one, examinations help to prevent budgetary shortfalls that may jeopardize the economic viability of governments. Stress tests, are particular useful as they provide outlooks contingent of varying macroeconomic situations. These stress test and examinations, when done correctly, allow stakeholders to make proper assessments as to the financial stability of their government. Without these assessments, unexpected events may cause policy changes that harm society overall. Aspects such as the budget cuts currently underway in many of the nation's largest states are a direct result of lackluster financial examinations. Consequently, the individuals will have to sacrifice in the form of higher taxes and lower benefits (McKenna, 2006).
When evaluating Swobodaville's financial condition based on the partial list of factors given, a number of elements cause concern. First, the low income, sales tax exempt households,…
1) Gilbert W. Joseph and Terry J. Engle (December 2005). "The Use of Control Self-Assessment by Independent Auditors." The CPA Journal.
2) Guthrie, J., Roger Burritt and Elaine Evans. 2011. "The Relationship between Academic Accounting Research and Professional Practice," in Bridging the Gap between Academic Accounting Research and Professional Practice, eds. Elaine Evans, Roger Burritt and James Guthrie.
3) McKenna, Francine. "Auditors and Audit Reports: Is The Firm's "John Hancock" Enough?"( 2006). Forbes
Even if the prices of consumer staples such as gas continue to escalate in America and in Europe, this is less likely to deter European consumers, given that such cost-of-living budgetary issues such high fuel costs have long become acceptable to European consumers, and because public transportation is better funded within the EU. The fears of competitors regarding European investment may actually be a potential boon, given that they will temporarily lessen the threat of competition in the present environment, and the fact that European spending seems to be continuing, unabated -- hence the fears of inflation.
In contrast, the average American's spending on consumer goods may flag, given likely increases in the interest rates by the Fed. This is especially true for mid-market products like Levi jeans. Consumers who are lower middle-class are likely to cut back on their clothing budgets, or buy from discount retail stores. Upper…
Dougherty, Carter. (8Jun 2006) "European Bank Raises Rate but Doesn't Signal Future Moves." The New York Times. Retrieved 9 Jun 2006 at http://www.nytimes.com/2006/06/09/business/worldbusiness/09euro.html?_r=1&oref=slogin&pagewanted=printwrite
Levi Strauss & Co. (2006) Official Website. Retrieved 9 Jun 2006 at http://www.levistrauss.com
Secondly, performance-related pay increases prevents inflationary tendencies since such increases are the outcomes of increased productivity. Managers and employees are benefited by performance-related pay increases in the following way: when profit or performance goes up higher earnings go to the employees. However, when the profits come down, the lowering of performance-related pay can protect employees from job losses. Moreover, there is enhanced motivation as employee can identify with the success of the business. Depending on the information-sharing habits of the management, pay variations may result in employees knowing more about fortunes and misfortunes that a business goes through. (de Silva, 1998)
Other advantages of performance-related pay include the following: it is an effective method of coping with poor performance; introducing such a reward system can help to develop a performance culture within the company; it can work as a direct incentive for employees to help reach defined job targets; an…
Armstrong, Michael. 2002. Employee reward. CIPD Publishing.
Armstrong, Michael; Murlis, Helen. 2007. Reward Management: A Handbook of Remuneration Strategy and Practice. Kogan Page.
Bee, Roland; Bee, Frances. 1997. Project management: the people challenge. McGraw-Hill Education.
Bucknall, Hugh; Wei, Zheng. 2005. Magic numbers for human resource management: basic measures to achieve-. Wiley Publications.
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…
2009 A Year of Revival for Property Sector, 2010, Visit Kuwait. Available from: . [30 March 2010].
Barwa Real Estate, 2010, Arabian Business. Available from: . [30 March 2010].
Business Risk, 2010, Invest Words. Available from: [29 March 2010].
Dubai Property Companies Called Merger Off, 2009, Property Wire. Available from: [30 March 2010].
The ratios that derive from the financial accounting statements are used frequently in finance to determine the health of a company (Russo, n.d). hen a lender wants to know what interest rate to charge a borrower, it looks at the liquidity and solvency ratios of the company to determine the likelihood of default, and assigns the interest rate based on that analysis. This is just another example of how the information that accountants compile and audit is used in financial management.
The same can be said for the investments side of finance. For example, when one wants to invest in a company, or in derivatives relating to that company, accounting information is critical. Usually this is financial accounting information, but if managerial accounting data can be found then that is also sometimes used. Formulas such as Black-Scholes are used to value derivate holdings of companies for the production of financial…
Russo, S. (no date). The importance of financial information. Valencia College. Retrieved February 5, 2013 from http://faculty.valenciacollege.edu/srusso/ch18bus.htm
Simpson, S. (2011). The difference between finance and economics. Investopedia. Retrieved February 5, 2013 from http://www.investopedia.com/articles/economics/11/difference-between-finance-and-economics.asp#axzz2K45yGnjc
Suppose you are comparing two firms within an industry. One is large and the other is small. Will relative or absolute numbers be of more value in each case? What kinds of statistics can help evaluate relative size?
Gibson, Charles H. (2012-05-10). Financial Reporting and Analysis (Page 217). Cengage Textbook. Kindle Edition.
When comparing two firms that are unequal in size, the relative financial ratios are more appropriate for any type of comparison. The advantage of using ratios is that they represent a metric that can be easily compared with industry standards or other specific companies of different sizes. The financial statement represents a snap shot of a company's performance over a given time period and the financial information that these reports provide can allow the analysis of a wide range of different ratios. These ratios can provide insights to factors such as the company's ability to repay…
Every country has a different level of financial development. The World Bank uses four measures of banking development: depth, access, efficiency and stability. An international banking conglomerate considering expansion will want to understand a country's local banking conditions in order to have the most informed view, to help with making the expansion decision. In this scenario, the countries being evaluated are the United States, Saudi Arabia, Brazil, India, South Africa, Iran, China and Turkey. This report will analyze the banking systems of each of these countries against the World Bank criteria.
Basic Economic Conditions
Before investigating the banking systems in each country, a brief overview will be provided of the prevailing economic conditions in each nation. The size of the economy, measured by GDP and by GDP per capita, is related to the market potential for a bank to enter the country. The more money there is a…
Chossudovsky, M. (2008). Global financial meltdown: Sweeping deregulation of the U.S. banking system. Global Research Retrieved December 5, 2014 from http://www.globalresearch.ca/global-financial-meltdown-sweeping-deregulation-of-the-us-banking-system/10588
CIA World Factbook: Various pages. (2014). Retrieved December 5, 2014 from https://www.cia.gov/library/publications/the-world-factbook/geos/us.html
Dheghan, S. (2014). UK and Iran agree to re-establish direct diplomatic relations. The Guardian. Retrieved December 5, 2014 from http://www.theguardian.com/world/2014/feb/20/uk-iran-direct-diplomatic-relations
FRED. (2014). Personal savings rate. Federal Reserve Bank of St. Louis. Retrieved December 5, 2014 from http://research.stlouisfed.org/fred2/series/PSAVERT/
The industry average current ratio is 2.5 (MSN Moneycentral, 2009), so the Gap has less capacity to meet its current obligations than many of its peers. However, in the retail industry most firms have a large portion of their current assets tied up in inventory, which distorts the current ratio figures higher. The Gap's figure of 1.855 is strong and indicates that the company will have little difficulty in meeting its upcoming obligations.
Overall, the liquidity measures provide an indication of the company's short-term health. Low amounts of working capital or a poor current ratio can indicate that the firm is in short-term distress. The figures for the Gap in 2008 do not indicate a firm in financial distress. Rather, they indicate that the company will have little difficulty in meeting its upcoming financial obligations. The company has strong working capital figure and a high current ratio. The latter is…
The Gap Inc., 2008 Form 10-K. Retrieved August 17, 2009 from http://www.gapinc.com/public/Investors/inv_fin_sec_filings.htm
MSN Moneycentral: The Gap Inc. (2009). Retrieved August 20, 2009 from http://moneycentral.msn.com/investor/invsub/results/compare.asp?Page=ProfitMargins&Symbol=GPS
For a corporation, this increased their bottom line results and the total amounts of income they are generating. When this happens, investors are pleased with the direction of the firm and will reward the managers with lucrative pay packages and other benefits. ("omney Forgoes Full Charity," 2012)
The reason why this is important is because corporations' can avoid having to pay the same taxes twice under the progressive system. The way that this occurs is the company can take a write off for operations they have overseas. This is because they can argue that the income was not generated within the United States. When this happens, they will be taxed at a lower rate for any kind of profits from these locations. ("omney Forgoes Full Charity," 2012)
If a firm is generating a certain percentage of their earnings using this strategy, they can reduce their tax liabilities dramatically. This is…
Progressive Taxes. (2012). Investopedia. Retrieved from: http://www.investopedia.com/terms/p/progressivetax.asp#axzz2K9truLTQ
Romney Forgoes Full Charity. (2012). Bloomberg. Retrieved from: http://www.bloomberg.com/news/2012-09-21/mitt-romney-paid-14-1-federal-tax-rate-in-2011-campaign-says.html
Coefficients reflect to a rate of change in the dependant variable which leads to one point change in dependant variable. For example, coefficient of -0,05 infers small negative influence of this explanatory variable on the dependant variable, while coefficient of 1.5 implies that 1.5 rate growth of this variable will lead to positive growth by one point of the explanatory variable.
The results of the regression model are as follows:
GDP ($, billions)= 568.04 + 16.07*Interest_ate + 1.19*Disposable_Personal_Income -64.75*Personal_Savings_ate + 0.5*Personal_Expenditure_On_Nondurables - 0.26*Personal_Expenditure_On_Durables.
Disposable Personal Income
Personal Savings ate
Personal Expenditure Nondurables
Personal Exp Durables
The result suggest, that autonomous value of the GDP is rather high, or that explanatory variable that has big negative affect on GDP was not included in the model. Interest rate has the biggest positive affect on the GDP, while simple calculation…
1) Federal Bank of Reserve of Saint Louis financial system
Financial Management - Personal Investment Decision for a Public Company
ationale for Toyota
Stock price analysis
Toyota Motor Corporation, which is recognized as is one of the most exhilarating productions in the automobile business these days. The company is one of the most economical corporations all over the world and has appreciated a record setting achievement for a very long time. In the previous years, the worldwide automobile industry has been overwhelmed by soaring gas prices, and hard-hitting environmental protection laws. With that even being said, it has not been a walk in the park for Toyota, but to no gain the company has been one of the most effective establishments so far. Toyota Motor Corporation has also been one of the manufacturing leaders in creating new and innovative technologies that take advantage of the productions existing barriers. There are a lot of things…
Bryce, H.J. (2007). "Financial and Strategic Management for Nonprofit Organizations." Englewood Cliffs: Prentice-Hall,.
Campos, F. (2010). "As funding dries up, nonprofits must work harder.." Pacific Business News,, 34(8), 34-56.
Elliot, S. (2014). Toyota Motor Corporation. The New York Times, 34(9).
Herrold, C.Y. (2012). "How to Carve a Pie." Foundation News and Commentary,. Foundation News and Commentary, 41(4), 45-67.
For both debt ratios, the lower their values are the more conservative the company is, choosing to finance its operations/investments from internal sources. However, such a company may miss out on growth and investment opportunities.
It is recommended for companies not to finance more than 50% of their capital via external debt. The debt-to-equity is superior to the recommended values, indication a much higher proportion of equity financing via external debt. The debt-to-asset is also higher to the recommended values, but much closer indicating that the assets are around 80%financed by external debt.
The two indicators suggest that the group is heavily financing its capital/assets from external debt, which is explained by the group's expansion strategy. However, FFS's values are not as justified because the company didn't expand as fast as the group, yet the debts were proportional to those of the group. At both levels, group and company, the…
This aspect of the study were inclusive of works of "economic historians on the development of financial systems" most particularly the "banking systems" worldwide and exactly what the resulting impact will be. (Rousseau & Sylla, 2001) hile the two identified "strands of literature" one dealing with domestic and the other international developments, are no always related to one another" but are however, both elements of the story called financial globalization." Definition of a "Good Financial System" states that there are five key components which are: (1) Sound public finances and public debt management; (2) Stable monetary arrangements; (3) a variety of banks, some with domestic and others with international orientations, and perhaps some with both orientations; (4) a central bank to stabilize domestic finances and manage international financial relations; and: (5) ell-forming security markets."
Impacts of Globalization on National Economies
Impacts on the economies of the world have been stated…
Rousseau, Peter L. And Sylla, Richard (2001) "Financial Systems, Economic Growth and Globalization"
Financial Systems, Economic Growth and Globalization" 2001 Oct 15 Online available at http://www.nber.org/~confer/2001/globes01/sylla.pdfr.org/~confer/2001/globes01/sylla.pdf
Bruno, Giovanni S.F. et al. (2003) Measuring the effect of globalization on labor demand elasticity: An empirical application to OECD Countries ISBN 1616-4814. FLOWENLA Discussion Paper 2 available Online at http://www.eastwestmi gration.org retrieved from the Internet 26 May 2006
Gartzke, Erik (2003) War, Peace, and the Invisible Hand: Positive Political Externalities of Economic Globalization International Studies Quarterly Volume 47 Issue 4-Page 561 - December 2003 doi:10.1046/j.0020-8833.2003.00279.x Quan Li21Columbia University, 2 the Pennsylvania State University
Because the home country is not required to reimburse foreign depositors for losses, there is no corresponding financial penalty for lax supervision; there is, though, a benefit to the country with lenient regulatory policies because of increased revenues generated and the employment opportunities these services provide (Edwards 1999). Furthermore, banks seeking to conduct multinational business are attracted to countries where incorporation laws and the regulatory framework offer less regulatory oversight (Edwards 1999). The quid pro quo nature of offshore financial services is clearly indicated by Edwards's observation that, "Multinational banks provide the offshore financial centre with increased tax revenue and employment for its citizens. Because the benefits outweigh the costs, offshore financial centres have a powerful incentive to maintain lenient regulatory policies. As a result, multinational banks incorporated in an offshore financial center successfully avoid supervision by an effective home country regulator" (1999, p. 1267). Given the scope of the…
Black's Law Dictionary. (1999). St. Paul, MN: West Publishing Co.
Boise, C.M. & Morriss, a.P. (2009). 'Change, Dependency, and Regime Plasticity in Offshore Financial
Intermediation: the Saga of the Netherlands Antilles.' Texas International Law Journal, vol. 45,
no. 2, pp. 377-379.
Nevertheless, more crucial remained the truth that the dollar itself oscillated severely as against the yen that is another vital currency for carrying out business for the affected nations. The fading of the dollar within the decadal period from 1985 to 1995 made a huge boon in the trade surplus for the affected nations. Thereafter, the acute turnaround began in 1995 wiped their enormous edge in price and damaged their current account situation, which in its effect spoiled the trust in the market created an appropriate climate for the crisis. To put it differently, it was not the system of linking the dollar in its own which is responsible. The cause was the non-observance of the basic instability in the economies of the nations and the uncontrolled oscillation of the exchange rate of dollar-yen. The dilemma was the outcome of the huge quantity of unstable capital and the blind follower…
Akyuz, Yilmaz. Causes and sources of the Asian Financial Crisis. Paper presented at the Host Country Event: Symposium on Economic and Financial Recovery in Asia. UNCTAD X, Bangkok. 17 February 2000. Retrieved at http://www.unctad-10.org/pdfs/hi_akyuz.en.pdf. Accessed on 3 February, 2005
Chakravarthi Raghavan. G -24 calls for international regulation of financial markets. Retrieved at http://www.twnside.org.sg/title/g24-cn.htm . Accessed on 3 February, 2005
Fischer, Stanley. Reforming the International Monetary System. November 9, 1998.
Retrieved at http://www.imf.org/external /' target='_blank' REL='NOFOLLOW'>
The use of FID in this industry also has been more tactical and focused on the scanning and inventory management systems as opposed to automating an entire supply chain and creating auditabiluity and therefore increasing performance of the entire chain. This is one of the shortcomings of how the industry is shortchanging itself in terms of technology adoption. In addition, the majority of spending in this industry is going to most likely be centered on marketing (Bourdeau, 26) in addition to merger and acquisition activity. The dual strategy of driving for greater differentiation but also acting as the consolidator are the most likely strategies of market leaders in this industry looking for growth strategies going forward. As a result of all of these factors, Foot Locker faces a very challenging future.
Tables 5 and 6 provide analysis of the footwear industry by comparing Foot Locker's performance relative to their top…
Annette Bourdeau. "Scent of a... How big players like Samsung and Foot Locker are taking their brand identities to the next level. " Strategy
May 2006: 36. ABI/INFORM Global. ProQuest. 28 Apr. 2008. www.proquest.com
Foot Locker, Inc. 2008. Access to the Hoover's database of companies. 2008. Hoover's Company Records. ProQuest. 28 Apr. 2008. www.proquest.com
Mark Sullivan. "A Powerful Hook. " Sporting Goods Business 1 Sep. 2004: 20.
Similarly, an offshore might set up a wholly owned subsidiary in an OFC to extend offshore fund administration facilities or other facilities. (the future for offshore financial centers (OFCs)) multinational corporation establishes an offshore bank to deal with its foreign exchange operations or to ease out financing of a joint venture spanning on a global basis. An onshore bank sets up a wholly owned subsidiary in an OFC to extend offshore fund administration services. The proprietor of an onshore bank coming under legal regulation sets up a branch "satellite" bank in an OFC. The appeal of an OFC might comprise no capital tax, no restraining tax on dividends or interest, nil taxation on transfers, nil corporation taxes, no capital gains tax, no exchange controls, lenient legal rules and management, less strict reporting necessities, and trading limitations. Offshore corporations or international business corporations -IBCs are means having restricted liability recorded in…
Dwyer, Terry. Harmful Tax Competition and the future of Offshore Financial Centers such as Vanuatu. Pacific Economic Bulletin. Retrieved at http://www.freedomandprosperity.org/dwyer-11-00.pdf . Accessed on 22 April, 2005
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Offshore Financial Centers: IMF Background Paper. Monetary and Exchange Affairs Department. June 23, 2000. Retrieved at http://www.imf.org/external /' target='_blank' REL='NOFOLLOW'>
budget components (Policy Document, Financial Plan, Operating Plan, Communications Device), rank them in order of importance in your opinion and justify your rank order.
ank 1: Policy Document: The Policy Document is synonymous with a Budget Document. The budget document can be a line item detailed listing of every expenditure for every department within the government operation. The document conveys the policies and procedures of the administration and outlines its funding.
The expenditure amount is a further clarification of the entity's commitment to their underlying cultural and operating practices which complement their specific organizational goals and organizational strategies. Organizational strategies in accordance to the Policy Document include the Strategic Planning Document which details how the organization will propel itself into the coming years as a strategic city seeking to attract the best and the brightest to start businesses and to be residents. As the underlying specific goals to the macro…
Blocksidge, Charles. "The Art of the Budget." The American City & County 110.3 (1995): 6-. ProQuest. Web. 18 July 2011.
Thomas, John. "Operational Plan Framework: A Step Toward Sound Management." Optimum 15.2 (1984): 76-.ABI/INFORM Complete. Web. 18 July 2011.
financial analysis of Chevron from the perspective of a potential creditor. The issue surrounds primarily the creditworthiness of Chevron rather than the type of credit that would be issued. Specifically, the issue is whether "we" would lend Chevron 10% of its net assets. The net assets for Chevron are $209.474 billion, so the amount in question is $20.9 billion in new debt. The report will first analyze the financial statements of Chevron in general terms, focusing on trends and ratios, and drawing conclusions about the overall financial health of the company based on that analysis. The second part of the paper will outline some of the criteria that a lending institution would have for lending to a company, and then that criteria will be applied to Chevron specifically.
Chevron operates in the hydrocarbon industry, where it is one of the world's largest companies with sales of $241.9 billion and net…
2011 Chevron Annual Report. Retrieved February 25, 2013 from http://www.chevron.com/annualreport/2011/
Chevron. (2013). Corporate officers. Chevron.com. Retrieved April 20, 2013 from http://www.chevron.com/about/leadership/corporateofficers/
MSN Moneycentral. (2013) Chevron. Retrieved February 25, 2013 from http://investing.money.msn.com/investments/stock-price?symbol=CVX&ocid=qbes
Moffat, M. (2013). What is the price elasticity of demand for gasoline. About.com. Retrieved February 25, 2013 from http://economics.about.com/od/priceelasticityofdemand/a/gasoline_elast.htm
financial crisis a "crisis of capitalism?
Compare and contrast the theories of Susan Strange, Karl Polanyi and Giovanni Arrighi. Explain how three of them accessed issues of Financial crisis and its relationship with capitalism
Starting from 2008 onwards, we are currently experiencing an unremitting state of economic recession. Each of the three theorists stated in this essay have different perspectives of whether or not the recession indicates crises of capitalism. Whilst Susan Strange and Karl Polanyi have a more optimist perspective on the subject and indicate that rather than crisis, the recession may, in effect, be, in the first case, a misplaced paradigm (or different, tortured perspective) and in the second case, only a slight wrench that necessitates government intervention for amending a temporary situation, Arrighiri sees the situation as indeed manifesting something that is intrinsically, irremediably, and inherently wrong in the structure of capitalism itself. Each of these views…
Giovanni Arrighi (2000) Workers North and South) in C. Leys and L. Panich, eds., The Socialist Register. London: The Merlin Press
Giovanni Arrighi (1996). Capitalism and the Modern World-System: Rethinking the Non-Debates of the 1970s"
Giovanni Arrighi (2001) Braudel, Capitalism and the New Economic Sociology, Review, XXIV, 1
financial comparison of Pepsi and Coke. The comparison of the two companies is facilitated by the use of GAAP, which means that the financial statements of the two companies are constructed, broadly, according to consistent methodologies and criteria. As a result, there should be direct comparability between the statements of these two companies.
Two main techniques will be used for this comparison. The first is horizontal analysis, where the results of the company are compared against past results from the same company. The second is vertical analysis, where the results of each company are compared on a year-over-year basis according to how the different line items are weighted. The two companies can also be compared on this basis. Horizontal analysis allows the two companies to be compared on the basis of which company is growing faster or controlling costs better. The vertical analysis allows the two companies to be compared…
Overall, it is reasonable to conclude that the trends in the financials of these two companies favor PepsiCo, simply because the company appears to have responded to its financial challenges more quickly. For example, Pepsi had a massive increased in selling, general and administrative expenses in FY2010, but recovered to contain those expenses in FY2011. Compare this with Coca-Cola, where the firm's selling, general and administrative expense increased significantly in FY2011. It is worth considering, however, that the trends we are seeing may be reversed in the coming 2012 fiscal year. Both companies have the opportunity, having identified negative trends, to reverse those trends with solid financial management. When sales increase at a relatively slow rate, the best response is to cut the costs more rapidly. Both of these firms appear to take the view that revenues are cyclical and therefore it is not important to worry about slowdowns, but that is not the case at all. Both firms need to be more aggressive, because the vertical analysis shows that expenses as a percentage of revenues are increasing. This means that both companies have seen their margins reduced over the past couple of years.
Both Pepsi and Coke have had trouble recently on account of costs that are increasing much faster than revenues. However, we can see from this analysis that the costs associated with PepsiCo have been contained better than the costs that Coca-Cola faces. This tells us that Pepsi may well be responding better to a negative environment than Coke is. The company has maintained its margins better and in general outperformed its rival, based on horizontal and vertical analysis, over the past couple of years.
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…
The work of Bartram et al. (2011) indicated that the effect of derivative use on firm value is very positive but is more sensitive to endogeneity as well as omitted variable concerns .The work of Ameer (2009) confirmed this.
The literature suggests that hedging has a value adding effect on firms. The effect however depends on that the type of exposure (whether short or long-term) as well as the type of instruments (options, forwards, foreign currency debt and swaps).The effect is more sensitive to endogeneity as well as omitted variable concerns.