Tag Archives: Finance research papers

Finance: Buy your Research Paper


Finance: Buy your Research Paper

Buy your Research paper by clicking Buy your Research paper by clicking http://www.customwritings-us.com/orders/

Email us: support@customwritings-us.com

 

Analyze the financial performance of your firm and, using historical financial statements for the last 5 years. Examine any relevant trends within your company over the past five years and compare your firm’s performance to the industry wherever possible. Focus on ratios that seem most relevant to the firm/industry, although you should look at ratios in each of the ratio groups. Since the definitions of some ratios vary by source and since sources such as finance.yahoo.com often combine numbers to simplify things, you need to calculate these ratios yourself. Morningstar provides this data in downloadable format for the past five years. Consequently, while the above analysis should be discussed in a text document (not more than two pages), you should also turn in ONE spreadsheet that includes:

 

  1. A copy of the balance sheets and income statements from Morningstar for your company for the past 5 years. Ratios should be calculated directly within this spreadsheet, using cell formulas linked to the financial statement data, so that we can see exactly how each ratio is being calculated.

 

  1. Some data is occasionally missing from the Morningstar download, in which case you might have to verify data in the company’s annual reports.

 

  1. Include DuPont analysis for your firm

 

  1. The definitions of the ratios that you used.

Buy your Research paper by clicking http://www.customwritings-us.com/orders/

Email us: support@customwritings-us.com

 

 

Advertisements

Exchange rate determination_Buy your research paper online [http://customwritings-us.com/orders.php]


Exchange rate determination.

Exchange rate determination_Buy your research paper online [http://customwritings-us.com/orders.php]

Buy your research paper online [http://customwritings-us.com/orders.php]

Take a look at the exchange rate history of your favorite foreign country.   Is there a pattern of movement over the last 6 months to a year?  What was the cause of the movement?  Discuss some of the issues related to this unit’s topic of exchange rate determination.

Buy your research paper online [http://customwritings-us.com/orders.php]

Buy Research Paper-Finance 3504 Intermediate Corporate Finance


Buy Research Paper-Finance 3504 Intermediate Corporate Finance

Finance 3504 Intermediate Corporate Finance © 2017 Pavel G. Savor
INTERMEDIATE CORPORATE FINANCE (FIN 3504)
Spring 2017
Professor Pavel Savor
Alliance Concrete Case Instructions and Questions
You can buy the case at: http://store.darden.virginia.edu/alliance-concrete (choose the “PDF Download” option).
You should prepare a written case report, with a page limit of five pages. Please ensure you answer the following questions in your report.
1. What is your best estimate of the 2006 financial statements? As a starting point, you can assume that Alliance will make the expected $3 million dividend payment to National. Hence, the balance sheet will be balanced by adjusting the amount of the bank loan. This implies a possible renegotiation with the bank.
Once this forecast is completed, consider the effects on the borrowing amount from changing the dividend and/or capital expenditure choices.
Please note that this question requires you to do a financial projection of Alliance Concrete’s 2006 financial statements (using Excel or similar spreadsheet software). I will ask you about your projections.
2. Alliance faces the following options:
a. make the principal repayment to the bank
b. make the capital investments proposed by the plant manager
c. make the dividend payment to National
Most likely, it cannot do all three. What is your recommendation about how to proceed (provide the reasoning underpinning your recommendation)?
3. Assume you chose to renegotiate with the bank. How would you approach the bank, and what arguments would you put forward?
4. Assume you chose to skip the dividend. How would you approach National, and what arguments would you put forward?

Buy Research Paper-Finance 3504 Intermediate Corporate Finance

Research Assignment help


Research Assignment

FNSFPL502 – FNSFPL508 – FNSINC501 2016

Assignment help:  

Click the link: http://customwritings-us.com/orders.php

Contact us: support@customwritings-us.com

customwritings-us.com Chat Window

ASSESSMENT EVENT/S Event 2 of 3

ASSESSMENT CONDITIONS/ INSTRUCTIONS TO STUDENTS

  • Answers must be typed (not hand written).
  • Assignments to be submitted electronically through SAKAI All parts must be completed

DUE DATE – As detailed on Sakai site

PERFORMANCE MEASURMENT   Results will be reported as:- Satisfactory or not yet Satisfactory

Question Satisfactory or not yet Satisfactory
1
2
3
4
5
6
7
8
9

Plagiarism Declaration

I have read the Student Service Guide under Student Responsibilities to “… not engage in plagiarism, collusion or cheating in any assessment event or examination”.

 

Student Signature…………………………………………Date………………………………………………

 

Assignment help:  

Click the link: http://customwritings-us.com/orders.php

Contact us: support@customwritings-us.com

customwritings-us.com Chat Window

CASE STUDY

Your clients are Daniel Brown and Louise Brown. They have telephoned you to make an appointment for financial advice.

Daniel Brown (45) is an electrician and works for Energy Australia. He is married to

Louise (41). They have two children Oliver (13) and Kel (10).

Daniel receives a salary of $80,000 per annum and Louise has a casual job which pays $29,000 per annum (before tax).  Please use current tax rates.

The children attend private school with annual fees of $7,000 each per annum. They also pay living expenses of $40,000 and mortgage payments of $16,000 per annum.

The family home is valued at $700,000 which has a mortgage of $320,000. The repayments on the mortgage are $50 per annum per $1,000 borrowed.

Daniel has superannuation of $80,000 AND Louise $50,000. It is currently invested in a cash option.

Your clients would like advice about holding their insurance within their superannuation.

They also have a car loan of $35,000 which costs $900 per month and a credit card debt of $13,000 which costs $800 per month.

Your clients have adequate Life Insurance which costs $2,200 per annum in addition to their other annual expenditure. They do not have any other personal insurance.

Your clients rarely take sick leave and have accumulated entitlements of four weeks each. They also keep two weeks holiday in case of emergency because their elderly parents live in Perth.

Your clients do not have private health insurance and do not have a will and do not have powers of attorney.

Your clients have advised that they do not require retirement advice at this stage and would like to focus on paying off their mortgage.

Question 1

Identify eight financial planning issues contained in the case study. Question 2

Prioritise the issues identified in question 1 and include reasons for your ranking. Question 3

Prepare a current annual budget for Daniel and Louise with income, tax, medicare levy and expenditure.

Question 4

Prepare a personal balance sheet for Daniel and Louise. Question 5

Add a column to your budget document and calculate the percentage of total expenditure that each expenditure item represents.

 

Question 6

 

Prepare three important observations about the expenditure pattern. Question 7

Prepare recommendations for Daniel and Louise that will improve their financial position.

 

Question 8

 

What advice would you provide to Daniel and Louise about their insurance? Question 9

Prepare a new annual budget and balance sheet after the implementation of your recommendations.

Help-BBA 3310 Unit VI Assignment


Help-BBA 3310 Unit VI Assignment

BBA 3310 Unit VI Assignment

Instructions: Enter all answers directly in this worksheet. When finished select Save As, and save this document using your last name and student ID as the file name. Upload the data sheet to Blackboard as a .doc, .docx or .rtf file when you are finished.

 

Question 1: (10 points). (Bond valuation) Calculate the value of a bond that matures in 12 years and has $1,000 par value. The annual coupon interest rate is 9 percent and the market’s required yield to maturity on a comparable-risk bond is 12 percent. Round to the nearest cent.

 

 

The value of the bond is

 

Question 2: (10 points). (Bond valuation) Enterprise, Inc. bonds have an annual coupon rate of 11 percent. The interest is paid semiannually and the bonds mature in 9 years. Their par value is $1,000. If the market’s required yield to maturity on a comparable-risk bond is 14 percent, what is the value of the bond? What is its value if the interest is paid annually and semiannually? (Round to the nearest cent.)

 

a. The value of the Enterprise bonds if the interest is paid semiannually is $
b. The value of the Enterprise bonds if the interest is paid annually is $

 

Question 3: (10 points). (Yield to maturity) The market price is $750 for a 20-year bond ($1,000 par value) that pays 9 percent annual interest, but makes interest payments on a semiannual basis (4.5 percent semiannually). What is the bond’s yield to maturity? (Round to two decimal places.)

 

The bond’s yield to maturity is %

 

Question 4: (10 points). (Yield to maturity) A bond’s market price is $950. It has a $1,000 par value, will mature in 14 years, and has a coupon interest rate of 8 percent annual interest, but makes its interest payments semiannually. What is the bond’s yield to maturity? What happens to the bond’s yield to maturity if the bond matures in 28 years? What if it matures in 7 years? (Round to two decimal places.)

 

The bond’s yield to maturity if it matures in 14 years is %
The bond’s yield to maturity if it matures in 28 years is %
The bond’s yield to maturity if it matures in 7 years is %

 

Question 5: (15 points). (Bond valuation relationships) Arizona Public Utilities issued a bond that pays $70 in interest, with a $1,000 par value and matures in 25 years. The markers required yield to maturity on a comparable-risk bond is 8 percent. (Round to the nearest cent.) For questions with two answer options (e.g. increase/decrease) choose the best answer and write it in the answer block.

 

 

Question Answer
a. What is the value of the bond if the markers required yield to maturity on a comparable-risk bond is 8 percent? $
b. What is the value of the bond if the markers required yield to maturity on a comparable-risk bond increases to 11 percent? $
c. What is the value of the bond if the market’s required yield to maturity on a comparable-risk bond decreases to 7 percent?

 

$
d. The change in the value of a bond caused by changing interest rates is called interest-rate risk. Based on the answer: in parts b and c, a decrease in interest rates (the yield to maturity) will cause the value of a bond to (increase/decrease):
By contrast in interest rates will cause the value to (increase/decrease):
Also, based on the answers in part b, if the yield to maturity (current interest rate) equals the coupon interest rate, the bond will sell at (par/face value):
exceeds the bond’s coupon rate, the bond will sell at a (discount/premium):
and is less than the bond’s coupon rate, the bond will sell at a (discount/premium):
e. Assume the bond matures in 5 years instead of 25 years, what is the value of the bond if the yield to maturity on a comparable-risk bond is 8 percent? $ 960.07 Assume the bond matures in 5 years instead of 25 years, what is the value of the bond if the yield to maturity on a comparable-risk bond is 11 percent? $
f. Assume the bond matures in 5 years instead of 25 years, what is the value of the bond if the yield to maturity on a comparable-risk bond is 7 percent? $
g. From the findings in part e, we can conclude that a bondholder owning a long-term bond is exposed to (more/less) interest-rate risk than one owning a short-term bond.

 

 

Question 6: (5 points). (Measuring growth) If Pepperdine, Inc.’s return on equity is 14 percent and the management plans to retain 55 percent of earnings for investment purposes, what will be the firm’s growth rate? (Round to two decimal places.)

 

 

The firm’s growth rate will be 7.70 %

 

Question 7: (10 points). (Common stock valuation) The common stock of NCP paid $1.29 in dividends last year. Dividends are expected to grow at an annual rate of 6.00 percent for an indefinite number of years. (Round to the nearest cent.)

 

a. If your required rate of return is 8.70 percent, the value of the stock for you is: $
b. You (should/should not) make the investment if your expected value of the stock is (greater/less) than the current market price because the stock would be undervalued.

 

Question 8: (10 points). (Measuring growth) Given that a firm’s return on equity is 22 percent and management plans to retain 37 percent of earnings for investment purposes, what will be the firm’s growth rate? If the firm decides to increase its retention rate, what will happen to the value of its common stock? (Round to two decimal places.)

 

a. The firm’s growth rate will be: 8.14%
b. If the firm decides to increase its retention ratio, what will happen to the value of its common stock? An increase in the retention rate will (increase/decrease) the rate of growth in dividends, which in turn will (increase/decrease) the value of the common stock.

 

Question 9: (10 points). (Relative valuation of common stock) Using the P/E ratio approach to valuation, calculate the value of a share of stock under the following conditions:

 

  • the investor’s required rate of return is 13 percent,
  • the expected level of earnings at the end of this year (E1) is $8,
  • the firm follows a policy of retaining 40 percent of its earnings,
  • the return on equity (ROE) is 15 percent, and
  • similar shares of stock sell at multiples of 8.571 times earnings per share.

 

Now show that you get the same answer using the discounted dividend model. (Round to the nearest cent.)

 

 

a. The stock price using the P/E ratio valuation method is: $
b. The stock price using the dividend discount model is: $

 

Question 10: (10 points) (Preferred stock valuation) Calculate the value of a preferred stock that pays a dividend of $8.00 per share when the market’s required yield on similar shares is 13 percent. (Round to the nearest cent.)

 

a. The value of the preferred stock is $ Per share

Help-BBA 3310 Unit VI Assignment

Need help- ACC7001:Managerial Finance


  Need help- ACC7001:Managerial Finance

POSTGRADUATE  DEGREES

COURSEWORK FRONT SHEET

MODULE TITLE:                   Managerial Finance (1)

MODULE CODE:         ACC7001

ISSUE DATE:              10th Oct

HAND IN DATE:          11th Dec,  12.00 PM Midday

HAND BACK DATE:   13th Jan, Next Year

Learning outcomes and pass attainment level:

 

1.    Evaluate the financial performance of an organisation using financial and narrative information.
2.    Apply appropriate costing and budgeting techniques to assist in making management decisions.
3.    Evaluate investment projects using various appropriate techniques.

3.

 

 

 

 

General guidance

 

The assessment for this unit is one coursework assignment. The required mark has been set at 50%.

 

This is an individual assessment. Whilst there is no objection to you discussing the content of this assignment with your peers, your final submission must be completely your own work. Plagiarism and copying will not be tolerated and may lead to subsequent penalties being imposed. This is an individual assignment and all calculations, analysis and narrative submitted must be your own work.

 

The assignment will require a considerable personal investment of time and effort.

Structure of the assignment

 

There are THREE separate questions included within the assignment and you should attempt all THREE questions. When determining the amount of effort and words for each section of the assignment it will be advisable to examine the weighting of the marks allocated to each question. If any part of the assignment is ignored then this reduces the maximum marks which could potentially be earned.

 

The word limit to any potential narrative question in the third section alone will be a maximum of 1,500 words excluding the cited references. There is no word limit to questions 1 and 2.

Submission of the assignment

 

All THREE questions must be attempted and submitted in one document. You are advised to prepare your assignment in Word format and copy and paste contents from Excel where spreadsheets have been used to support your work.

 

Your student ID number should be shown on each page of your assignment.

 

Your assignment should be submitted electronically via Moodle and you are advised to do this well in advance of the submission deadline to avoid any system related issues. Feedback on your assignment will also be provided via Moodle once the marking has been completed.

 

 

Marking of the assignment

 

The matrix on the following page has been provided to assist you in completing your assignment and is an indicative guide only, not a formal marking scheme.

 

 

 

 

 

 

 

 

 

Indicative marking guide

Fail

(0%-49%)

Pass

(50%-59%)

Commendation

(60%-69%)

Distinction

(70%-100%)

Question 1
A lack of breadth and depth of financial analysis techniques accompanied by incorrect formulae or calculation without appropriate explanation.

Poor layout or presentation in anything other than business report style. Inadequate grammar and lacking in overall knowledgeable synthesis.

 

Evidence of some financial analysis techniques but with errors of formulae and calculation with insufficient explanation and adequate presentation.

Attempt at a business report format with some supportive appendices. Mainly descriptive with some attempt at synthesis. Grammar and structure being adequate.

Wide range of financial analysis techniques evident and supported by full disclosure of formulae and accurate calculation in a clear format.

Presented in business report format and coherently structured. Supported by referenced appendices. Effective and well-reasoned narrative discussion.

An excellent range of financial analysis techniques which are supported by full disclosure of formulae and accurate calculation in a clear format.

Excellent business report format and well structured. Supported by fully referenced appendices. Excellent analytical and justified explanations showing synthesis and application.

Question 2
A lack of understanding of preparing cash budget and capital budgeting techniques is evident. Unable to correctly prepare cash budget and apply techniques of capital budgeting. Has limited or no narrative discussions.

 

Some understanding of preparing cash budget and capital budgeting techniques is evident. Partially correct cash budget and application of techniques of capital budgeting. Narrative analysis partially covers the requirements.

.

A good understanding of preparing cash budget and capital budgeting techniques is evident. Correct cash budget and A good application of techniques of capital budgeting in the given scenarios. Narrative analyses are adequate and explain the use of financial information for decision making.

.

Excellent understanding of preparing cash budget and capital budgeting techniques is evident. Cash budget and application of techniques of capital budgeting in the given scenarios are both correct and exceptionally well presented including workings. Narrative analyses are quite objective and well-written and explain in detail the use of financial information for decision making. .
Question 4
Failure to engage with the topic and lacking credible academic argument. No evidence of research other than internet sites of dubious quality. Poorly structured and partial coverage of the contents with weak grammar.

 

Partial engagement with the topic with some limited evidence of research. Some analysis of the two approaches provided. Grammar, structure and layout adequate. Identification and conclusion of arguments surrounding the topic with reference to credible academic citations that are fully referenced in a bibliography. Well-structured and coherent narrative employing above average grammar and evidencing significant student research.

 

Thoroughly developed arguments with well referenced credible academic sources. Well-structured and presented evidencing excellent grammar and extensive student research and analysis of the topic area.


Question 1

Alliance Pharma is a British Pharmaceutical firm. The company’s financial statements for the period 2011-2015 are presented below.

Required:

Prepare a business report for Alliance’s board of directors analysing the company’s financial performance between the periods 2011-2015. Your report should utilise key ratios, horizontal and vertical analysis and make reference to relevant developments within Alliance Plc.                                                                                                                                                                                                                     Total Marks (50)

Alliance Pharma
Income Statement
2015 2014 2013 2012 2011
£000s £000s £000s £000s £000s
Revenue 48,344 43,536 45,275 44,897 45,957
Cost of sales -19,614 -18,493 -17,944 -19,779 -21,469
Gross profit 28,730 25,043 27,331 25,118 24,488
Operating Expenses:
Admin & Marketing Exps -17,480 -12,510 -12,917 -11,856 -11,235
Amortisation of Intangible assets -199 -488 -422 -573 -735
Share-based employee remuneration -615 -571 -632 -369 -179
Share of joint venture profits 194 319 -48 0 0
Total operating expenses -18,100 -13,250 -14,019 -12,798 -12,149
Operating profit/loss excluding Exceptional items) 10,630 11,793 13,312 12,320 12,339
Exception Items 6,332 -622 0 0 0
Operating profit/loss 16,962 11,171 13,312 12,320 12,339
Finance cost -1,780 -1,014 -1,303 -1,511 -1,627
Profit before taxes 15,182 10,157 12,009 10,809 10,712
Taxation -2,490 -1,772 -2,425 -2,119 -2,076
Profit for the year 12,692 8,385 9,584 8,690 8,636

 

 

 

Alliance Pharma Plc
Balance Sheet
2015 2014 2013 2012 2011
£000s £000s £000s £000s £000s
Non-current assets
Intangible assets 259,945 88,875 87,111 79,890 66,130
Property, plant and equipment 1,013 396 592 564 765
Joint Venture investment 1,465 1,271 533 0 0
Joint Venture receivable 1,462 1,462 1,462 0 0
Deferred tax asset 418 194 0 0 0
Other non-current assets 122 0 443 0 0
Total non-current assets 264,425 92,198 90,141 80,454 66,895
Current assets
Inventories 12,910 5,914 5,468 5,393 5,652
Trade and other receivables 11,630 8,322 10,641 10,145 8,660
Cash and cash equivalents 3,229 1,434 687 4,634 1,079
Total current assets 27,769 15,670 16,796 20,172 15,391
Total assets 292,194 107,868 106,937 100,626 82,286
Equity
Ordinary share capital 4,682 2,641 2,641 2,430 2,401
Share premium account 108,308 29,388 29,380 25,297 24,866
Share option reserve 2,610 1,995 1,424 792 423
Reverse takeover reserve -329 -329 -329 -329 -329
Other reserve -98 -103 350 0 -4
Translation reserve 32 0 0 0 0
Retained earnings 47,237 37,188 31,202 23,658 16,771
Total equity 162,442 70,780 64,668 51,848 44,128
Liabilities:
Non-current liabilities
Long term financial liabilities 58,968 19,235 20,881 20,225 15,225
Convertible debt 0 0 0 0 4,460
Other liabilities 1,496 0 0 20 40
Derivative financial instruments 120 129 0 0 0
Deferred tax liability 37,413 6,309 6,294 6,124 4,064
Provision for other liabilities 0 0 199 364 510
Total non-current liabilities 97,997 25,673 27,374 26,733 24,299
Current liabilities
Cash and cash equivalents 31 414 2,125 1 1
Financial liabilities 15,776 2,895 2,895 6,250 4,250
Convertible Debt 0 0 0 4,189 0
Corporation tax 2,075 959 1,154 1,322 1,046
Trade and other payables 13,873 6920 8,531 10,086 8,367
Derivative financial instruments 0 0 0 0 6
Provisions for other liabilities 0 227 190 197 189
Total current liabilities 31,755 11,415 14,895 22,045 13,859
Total liabilities 129,752 37,088 42,269 48,778 38,158
Total equity and liabilities 292,194 107,868 106,937 100,626 82,286
  2015 2014 2013 2012 2011
Alliance Pharma 49.75 33.75 32.5 32.1 29.3
FTSE100 6960.6 6598.4 6430.1 5737.8 6069.9

 

 

Question 2

 

  1. a) Cash Budget

On December 1, 2016, Zipper Co. is attempting to project cash receipts and disbursements through January 31, 2017. On this latter date, a note will be payable in the amount of £50,000. This amount was borrowed in September to carry the company through the seasonal peak in November and December.

Selected general ledger balances on December 1 are as follows:

Cash                                      £ 44,000

Inventory                                  32,600

Accounts payable                                        £68,000

Sales terms call for a 3% discount if payment is made within the first 10 days of the month after sale, with the balance due by the end of the month after sale. Experience has shown that 50% of the billings will be collected within the discount period, 30% by the end of the month after purchase, and 14% in the following month. The remaining 6% will be uncollectible. There are no cash sales.

The average selling price of the company’s products is £50 per unit. Actual and projected sales are as follows:

October actual                                                                                  £ 140,000

November actual                                                                                 160,000

December estimated                                                                          165,000

January estimated                                                                              125,000

February estimated                                                                             120,000

Total estimated for year ending June 30, 2017                       £1,200,000

All purchases are payable within 15 days. Approximately 60% of the purchases in a month are paid that month, and the rest the following month. The average unit purchase cost is £40. Target ending inventories are 500 units plus 10% of the next month’s unit sales. Total budgeted marketing, distribution, and customer-service costs for the year are £300,000. Of this amount, £60,000 are considered fixed (and include depreciation of £15,000). The remainder varies with sales. Both fixed and variable marketing, distribution, and customer-service costs are paid as incurred.

 

Required:

Prepare a cash budget for December 2016 and January 2017. Supply supporting schedules (workings) for collections of receivables; payments for merchandise; and marketing, distribution, and customer-service costs.        (15 Marks)

 

  1. b) Capital Budgeting

John Cooper Plc. is an international clothing manufacturer. One of its manufacturing units in Milan, Italy will become idle on December 31, 2016. You have been asked to look at three options regarding the plant.

Option 1: The plant, which has been fully depreciated for tax purposes, can be sold immediately for €225,000.

Option 2: The plant can be leased to the Anderson Corporation, one of John Cooper’s suppliers, for four years. Under the lease terms, Anderson would pay John Cooper €55,000 rent per year (payable at year-end) and would grant John Cooper a €10,000 annual discount off the normal price of fabric purchased by John Cooper. (Assume that the discount is received at year-end for each of the four years.) Anderson would bear all of the plant’s ownership costs. John Cooper expects to sell this plant for €37,500 at the end of the four-year lease.

Option 3: The plant could be used for four years to make souvenir jackets for the Olympics. Fixed overhead costs (a cash outflow) before any equipment upgrades are estimated to be €5,000 annually for the four-year period. The jackets are expected to sell for €27.50 each. Variable cost per unit is expected to be €21.50. The following production and sales of jackets are expected: 2017, 9,000 units; 2018, 13,000 units; 2019, 15,000 units; 2020, 5,000 units. In order to manufacture the jackets, some of the plant equipment would need to be upgraded at an immediate cost of €40,000. The equipment would be depreciated using the straight-line depreciation method and zero terminal disposal value over the four years it would be in use. Because of the equipment upgrades, John Cooper could sell the plant for €67,500 at the end of four years. No change in working capital would be required.

 

John Cooper treats all cash flows as if they occur at the end of the year, and it uses an after-tax required rate of return of 10%. John Cooper is subject to a 35% tax rate on all income, including capital gains.

 

Required:

  1. Calculate net present value of each of the options and determine which option John Cooper should select using the NPV criterion. (10 Marks)
  2. Calculate the IRR for Option 3. Can the IRR of Option 2 be calculated? Explain. (2 Marks)
  3. What nonfinancial factors should John Cooper consider before making its choice?                     (3 Marks)                 Total Marks (30)

 

 

Question 3

 

Recent accounting scandals including Enron have been argued to be the result of rule based accounting. Companies, such as Enron, involved in accounting scandals have been claimed to have skilfully taken the advantage of the fine details of rule based accounting standards (US GAAPs) to manipulate accounting threshold for legal and illegal dealings (Ijiri, 2005).

 

There is now this debate that rules-based approach (such as the US GAAPs) should be abandoned in favour of a principle-based approach such as (IFRS).

 

Required:

 

Critically analyse both rules-based and principles-based approaches of financial accounting and reporting. Evaluate the merits and demerits of each approach and their implications for quality of accounting and financial reporting.  Total Marks (20)

Assignment help-CASE QUESTIONS: Warren E Buffett 2005


Assignment help-CASE QUESTIONS: Warren E Buffett 2005

CASE QUESTIONS: Warren E Buffett 2005
1. Market reaction: What does the stock market seem to say about the acquisition of PacifiCorp by Berkshire Hathaway? Specifically, does the deal create value? If so, for which party? What does the $2.55 billion increase in Berkshire Hathaway’s market value represent?
2. Choice of valuation methods: What do you think PacifiCorp is worth on its own before its acquisition by Berkshire? Which valuation method should you use to value PacifiCorp and why? Show clearly the steps to arrive at the following estimates in Exhibit 10:
Enterprise Value as Multiple of: MV Equity as Multiple of: Revenue EBIT EBITDA Net Income EPS Book Value Median 6,252 8,775 9,023 7,596  4,277 5,904 Mean 6,584 9,289 9,076 7,553  4,308 5,678 If you need to use a discount rate to discount cash flows then an appropriate discount rate estimate for PacifiCorp is approximately 9%.
3. Bid assessment: How do you assess the bid for PacifiCorp by Berkshire Hathaway? How much does Buffett pay for PacifiCorp for its equity and as a whole? How do these values compare with the firm’s intrinsic values estimated in Exhibit 10?
4. Investment valuation: Evaluate Berkshire Hathaway’s investment in MidAmerican Energy Holdings in 2000. Using the information from Exhibit 6, calculate the net gain to Berkshire Hathaway in 2000 dollars. First, calculate the free cash flow accruing to Berkshire from MidAmerican each year from 2001 to 2004. Second, discount the cash flows to year 2000 and compare with Berkshire’s investment in MidAmerican. Assume tax = 40% on EBIT, discount rate r = 9%, growth rate for the steady period starting 2004 g = 2%. Correction: Exhibit 6, Balance sheets, Assets: “Properties, plants, and equipment” and “Goodwill” figures are “gross” amount, not “net”. Clearly state your assumptions if any.
5. Past performance: Discuss Berkshire Hathaway’s business strategy during 1965-2004. How well did Berkshire Hathaway perform during that period? Using financial databases (such as Bloomberg, Datastream, Yahoo Finance, etc.), assess Berkshire Hathaway’s recent performance during the period of 10 years up the end of last year. Comment on your findings.
6. Investment assessment: Assess Berkshire’s investment in Buffett’s Big Four: American Express, Coca-Cola, Gillette, and Wells Fargo in terms of strategy and return performance (each individual company and portfolio as a whole).
7. Investment philosophy: Critically assess Buffett’s investment philosophy. Identify the points where you agree and disagree with him.

Assignment help-CASE QUESTIONS: Warren E Buffett 2005

Marylebone Bank’s Capital Reserves Report


Work type: Research paper
Subject or discipline: Finance
Title: Marylebone Bank’s Capital Reserves Report
Number of sources: 16
Provide digital sources used: No
Paper format: Other: Harvard
# of pages: 9
Spacing: Double spaced
# of words: 2475
# of slides: ppt icon 0
# of charts: 0
Paper details:
We shall make sure that report have:

1- Table of content

2- executive summary

Students are required to note the following:

  1. Students should ensure that the work follows a CLEAR AND LOGICAL STRUCTURE,

and the work should be CAREFULLY PROOFREAD several times to avoid grammatical

and spelling mistakes. Marks will be deducted for poor spelling and grammar and if there

is a lack of clarity in the report.

  1. The report component of the coursework should be written in Microsoft Word, using the

TIMES NEW ROMAN 12 POINT font, with ONE AND A HALF LINE SPACING.

  1. All tables, figures and appendices in the report and Excel file should be CLEARLY

LABELLED; marks will be deducted if for tables and figures that are not clearly labelled.

  1. HEADINGS for sections and subsections should be in BOLD and correctly LABELLED.
  2. Any formulae included in the report should be expressed in the correct MATHEMATICAL

format and NOT in Excel format.

 

Suggested structure:

The report should following the following structure:

  1. COVER PAGE, which should contain:
  2. a) The module title and code.
  3. b) The title of the report.
  4. c) The names of the group members with the respective student numbers.
  5. TABLE OF CONTENTS, which should contain:
  6. a) A full list of sections (including list of references, list of bibliographic materials, and

any appendices).

  1. b) The page number on which each section begins.
  2. EXECUTIVE SUMMARY, which should:
  3. a) Highlight the key points and findings of the report.
  4. b) Be in the third person and use the present tense, e.g. “This report compares…”
  5. INTRODUCTION, which should:
  6. a) Give a succinct explanation of the aims, scope and context of the report.
  7. b) Include brief details and definitions of any information necessary for the reader to

understand the report.

  1. MAIN BODY, which:
  2. a) Is the main account of the case or organisation that you are writing about with the

main discussion and analysis of any results taking place here.

  1. b) Should be based on a factual analysis of evidence (results), not on your unsupported

opinion, e.g. you should avoid writing things like “I feel that…”

  1. c) Ensures that any assertions that are made are backed up with supporting evidence,

other from other academic sources or from your results.

  1. d) Includes tables and diagrams of relevant and important results.
  2. CONCLUSION, which:
  3. a) Should briefly summarise the aim and key findings of the report.
  4. b) Could make use of bullet points to isolate key points.
  5. LIST OF REFERENCES AND BIBLIOGRAPHY, where:
  6. a) The list of references lists the details of any material cited in the report (full details of

the source should be given using the Harvard referencing system).

  1. b) The bibliography lists the details of any other sources referred to when preparing the

report but not actually cited in the report itself (full details of the source should be

given using the Harvard referencing system).

 

CASE STUDY:

Marylebone Bank is a UK-based bank and is therefore regulated under the Basel Accords

and governed by UK banking regulation. As the Chief Risk Officer (CRO) at Marylebone

Bank, you are responsible for setting the bank’s capital reserves at an appropriate level such

that these are in line with the requirements of the Basel Accords.

You are aware that Marylebone currently holds the following assets:

  1. Cash reserves worth £0.02 million.
  2. £12.00 million worth of 2-year bonds issued by International Business Machines

Corp.

  1. A 4-year interest rate swap with Shell Energy North America, (US) L.P., which has a

notional principal value of £14.00 million and is currently valued at £4.60 million.

  1. A 6-year forward contract with the Chilean government as the counterparty, which

has a face value of £50.00 million and is currently valued at £4.80 million.

  1. An 18-month forward contract with the Thai government as the counterparty, which

has a face value of £2.10 million and is currently valued at £0.42 million.

  1. £6.00 million worth of 5-year government bonds issued by Poland.
  2. Loans to the Bank of Ireland, which have a maturity of six months and a principal

value of £5.00 million.

  1. £20.00 million worth of residential mortgages.
  2. £100.00 million worth of 2-year UK gilts.
  3. A 2-year exchange rate swap with Toyota Motor Corp., which has a notional principal

of £8.00 million and is currently valued at £1.60 million,

At a risk meeting yesterday, Marylebone Bank’s Chief Financial Officer (CFO) also informed

that the bank had recently invested in £20.00 million EACH in FIVE FTSE100 stocks.

You are also aware that the bank’s reported annual gross income over the past three years

was £25.00 million (2015), £23.60 million (2014), and £22.40 million (2013), respectively.

 

ASSUMPTIONS:

When setting the capital reserves, you always make the following assumptions:

  1. There is no capital charge for the bank’s specific risk and the average VaR (or sVaR)

over the last 60 days is less than 1/3 of the bank’s most recently calculated VaR (or

sVaR).

  1. The stressed VaR is equal to 120% of the VaR.
  2. All transactions are in pounds sterling, therefore you will need to use Standard & Poor’s

(S&P) foreign short- / long-term credit rating (see point 2 in the tips section).

  1. Lambda is set at 0.995 for the extended (i.e. weighting) version of the historical

simulation method of estimating the market risk capital charge.

REQUIRED:

Students are required to complete the following:

  1. Estimate the MARKET RISK capital charge under the different Basel Accords, where you

are required to:

  1. a) Choose FIVE companies which are constituents of the FTSE100 index and collect

the respective historical adjusted closing prices for each of these over the past two

years (501 trading days).

  1. b) Use BOTH the variance-covariance and historical simulation methods to estimate the

market risk capital charge.

  1. c) Use either the basic or extended methods for the historical simulation method of

estimating the market risk capital charge.

  1. d) Compare the results from and pros and cons of the chosen variance-covariance and

historical simulation methods.

  1. Estimate the CREDIT RISK capital charge under the different Basel Accords.
  2. Estimate the OPERATIONAL RISK capital charge under the different Basel Accords.
  3. Make a recommendation to the CFO as to the amount and types of capital that

Marylebone should hold in order to comply with the regulatory requirements.

  1. Discuss the development of the Basel Accords framework and explain the incremental

impact on the capital requirements of Marylebone Bank.

When addressing the first three points above, students are required to:

  1. Discuss the steps involved in each calculation, explaining any formulae provided as well

as any assumptions that they have made.

  1. Provide details of the data, steps in each method, Excel formulae and values of

elements in the formulae for each calculation in the Excel spreadsheet.

  1. Compare the results under each different Basel Accord used and provide a commentary

on these differences.

 

Tips for the coursework:

  1. The respective credit ratings of the counterparties in claims can be obtained from the

S&P website, which can be found at:

https://www.standardandpoors.com

Registration is required but is free of charge.

  1. Definitions of the different types of S&P credit ratings can be found at:

http://people.stern.nyu.edu/igiddy/ABS/sandpratings.htm

  1. A list of the OECD countries is available from the OECD website, which can be found at:

www.oecd.org/about/membersandpartners/

 

Frequently asked questions:

  1. “Where can we find data for the historical stock prices?”

This is readily available from databases like Datastream, Yahoo Finance or Bloomberg

(FMS Suite). Students should always remember to use the adjusted closing price.

  1. “Where can we find a list of the constituent stocks in the FTSE100?”

This is readily available from databases like Datastream, Yahoo Finance or Bloomberg

(FMS Suite). This will usually be in the details of the index itself.

  1. “How should we structure the main body of the report? Should we have separate subsections

for each of the Basel Accords, i.e. Basel I (including the 1996 amendment),

Basel II (including Basel 2.5) and Basel III? Or should we rather have separate

sub-sections for each risk-type, i.e. market risk, credit risk and operational risk?”

This is totally up to you, either of these structures works for us. This being said, past

experience tells us that some students found it easier to use the former structure.

  1. “Should we consider the change in Basel Accords that occurred within the data period?”

No. To make your life easier, it is safe to assume that only one of the latter Basel

Accords dominated within the time-frame examined. In other words, you only need to

calculate the required risk capital under Basel I, and the repeat the same process for

Basel II and then finally Basel III.

%d bloggers like this: