Essays on Interest Expense

Company Profile

Revered as the biggest e-commerce website around the globe, Amazon Inc. is an American multinational entity engaged in e-commerce selling and cloud computing. Founded in the year 1994 by Jeff Bezos, the company is headquartered in Seattle, Washington DC. Amazon is the biggest e-retailer in terms of revenue and market capitalization. Beginning with the modest background of selling books and Blu-Ray DVD’s, Amazon today offers more than billion products and is now operating globally with presence in 19 countries. The company is listed on NASDAQ under the ticker symbol of AMZN and is also the constituent of NASDAQ ...

The FA

The FA i.e. The Football Association refers to the English football’s governing body, which was established in 1863. Ebenezer Morley is considered the father of The Association. The activities of the company include overseeing, promotion and development of the game at different levels like The FA Cup and England International Teams. The activities also include broadcast and media rights, sponsorship, licensing, merchandising along with sales of tickets (The Bloomberg, 2017).

Financial Position of the FA

Current position with respect to financials of the company as on 31st July 2015 provided an overview of that the company is continuously striving to generate commercial revenues ...

QUESTION A

Definition of Credit Default Swaps A CDS is an instrument used to transfer the risk of default or credit exposure between two or more parties (Fabozzi and Kothari, 2008). It protects the lender from the possible loss of default by the borrower. The lender (protection buyer) pays premiums to the CDS seller. In return, the CDS seller guarantees to pay the lender the face value of the loan plus interests due in the intervening period if the borrower defaults.

Cash flows

Annual CDS premium = 4% × 1,000,000 = $40,000 Quarterly payments = 40,000/4 = $10,000 The borrower does not default ...

Business Risk

This risk or uncertainty concerns that an organization may witness decline in profitability or might suffer from losses in any financial accounting period. Business risks originate from different uncertainties such as changes in consumer tastes, change in preferences and buying behavior, modifications to government policy as well as increase in intensity of competition etc. business risks also stem from those unforeseen or unexpected events that may cause a business to fail in future . Business risks are not just related to an organization as a whole. Different departments of an entity face numerous business risks that are unique to their ...

About the report

The objective of this report is to assist One-World Investment Consortium, who is planning to invest £150 million in Thomas Cook PLC, a British global travel company listed on the London Stock Exchange under the ticker sign of ‘TCG’. We duly understand the impact of our professional recommendation on Consortium’s final decision making related to investment, and therefore, we intend to be comprehensive in the approach our analysis. As for the structure of this report, it will be a two-part report. In the first section of the report, we will evaluate the past 5 year(2007-2011) financial performance ...

Edmonds, Tsay, and Olds (2011, p.314) considers the cash budget to be one of the most important operating budgets developed by the company. The reason for this is that it reveals the amount of cash excess and deficit incurred by the company, which is usually on a monthly basis (Horngren, Harrison, & Oliver, 2012, p.1065). The additional purpose of the cash budget is that it reveals the amount of cash that can be used by the company for short-term investments or for the repayment of previous borrowings in the event of a cash excess (Edmonds, Tsay, & Olds, 2011, p.315). The ...

Performance Measurement

Asset Utilization Revenue generation by each employee is perceived to be better for Boeing at $595,501.86, which may be due to a better employee retention policy. This was concurred by Boeing’s annual report where it revealed that the management has good relations with its employees since 38% are represented by unions (Boeing, 2016, p.20) with Lockheed at 18% (Lockheed, 2016, p.18). Due to the better employee retention, Boeing was able to generate a higher amount of sales based on its investor’s capital or equity at 15.02 but Lockheed was not lagging far behind at 14.90. The ...

Walmart is a multinational store that was founded on the idea of selling inventory at a low price (selling more for less). This selling concept has propelled the retailer to be among the largest across the globe. The firm enjoys a presence in over twenty-eight countries. Its network is made up of eleven thousand five hundred stores and eleven e-commerce sites (Walmart, 1). The adoption of e-commerce has enabled it to tap the growing demand for internet shopping. In the recent financial year, the firm revenue was $482.1 billion. The continuous growth and increasing economic value of the retail ...

Question 1

Question 2 It relates to the assertion of accuracy. It can be tested by vouching to trace recorded expenses to invoices to check whether the full amount was recorded.

Question 3

It can be detected by comparing with the previous year’s number of employees and adjusting for new hires and exits. It can also be detected by checking the records of terminated employees to see if they are still being paid after termination.

Question 4a

This is because management can use inventory in transit to hide some information. For instance, if they want to overstate inventory, they can indicate that the inventory ...

The management’s assessment of the financial condition for Star Bucks agrees with the previous analysis of the company’s financial statements. A close examination of the consolidated income statement confirms that the net revenues earned in 2015 by the entire business increased by 17% from 16.4 billion in 2014 to 19.2 billion in 2015. This net increase in the incomes earned by the business has been contributed to by the segmental growth of the business revenues. A trend analysis shows that the net revenues from the company operated stores, licensed stores, and the CPG, food service and others ...

Question 1

Within an organisation, accounting plays an active role to ensure that all business transactions of monetary value are classified, recorded, measured, summarised and reported in an accurate manner by adhering strictly to basic reporting rules such as International Financial Reporting Standards (IFRS) or US GAAP. Accounting rules make sure that financial statements are prepared and reported accurately by complying strictly with all reporting principles. Additionally, accounting steps confirm that all financial information is included in reporting mechanism while financial statements contain no error or any material misstatement having huge financial consequences. When the industry follows one accounting mechanism, it ...

Executive Summary

In view of the issues facing the ABC management, the key solutions identified relates to three issues on cash and budget, innovation and product development as well as theft and fraud reduction. With that, The Cost and budget management solution is meant to enhance the business performance by reducing the excessive and unnecessary use of the company resources. That would be achieved through key initiatives involving effective management of the sales and expense as well as debt management that would cut on expenses and the interest paid on debt by having more responsible personnel overseeing the accounts and their ...

Executive summary

Royal Dutch Shell PLC commonly known as the shell is second largest energy company in the world whose registered office is in London. It is oil and Gas Company operating in various parts of the world; to stay relevant to climatic and environmental changes it engages in both renewable and non renewable energy. In addition, it is a vertically integrated oil company which engages in all oil activities from exploration to refining and marketing. Apart from its core activities, it has entered into partnership with various international organizations to preserve the environment. The company shares are listed in London stock ...

Abnormal returns refers to the excess returns that are generated by an investment over and above the expected return. Abnormal returns are positive if the actual returns are higher than the expected and negative if the actual returns are lower than the expected returns. This section seeks to compare the pre merger and post merger abnormal returns of the Access Bank of Nigeria. It also seeks to analyze how abnormal returns relate to mergers and acquisition.

In July 2004, the Central Bank of Nigeria (CBN) announced a new bank policy on the minimum paid-up capital requirement of banks in Nigeria. ...

Daktronics' Capital Structure Policy

Worksheet 5: Current Debt-Equity Policy of the company: Referring to the financial statements of the company, we came to know that since the company has not acquired any debt financing in its capital structure, the debt equity ratio has been zero(0) since 2010. Thus, although the company is trading without any financial risk, but since it is not using the available debt resources, it is letting go the advantages offered by debt financing in the form of tax shield. Thus, the treasurer should consider including debt financing as it will only add value to the company ...

Introduction

The report is prepared with the objective of conducting the financial analysis of Domino Pizza Enterprise Ltd that is listed on Australia Stock Exchange under the ticker symbol of ‘DMP. The report carries great significance for us to attain the knowledge of financial analysis and how the financial ratios and other multiples can affect our investment decision relating to a company. To simplify the analysis and to facilitate the reader, we divided the report in multiple sections relating to ratios, intrinsic value calculation and calculation of cost of capital.

i)Liquidity Ratios: i)Current Ratio: Current Assets/ Current Liabilities 2012:74/52= ...

Abstract

This paper discusses in detail a proposed change is company’s capital structure from 0 debt to 25% of the market value of the current Equity. The plan is to issue bonds for $ 3 375 000 at 9% interest and use the raised funds to repurchase 125 000 outstanding shares at the current market value of $ 27. This move will bring the total equity down from 10 000 000 to 6 625 000 and will increase the cost of equity from 11 to 13%. This will also bring our debt to equity ratio from 0 to 0.51. This level of ...

Introduction

Capital structure is a blend of debt financing and equity and is a crucial factor in the organization’s valuation. The levels of debt and equity financing affect the cash flow and risk hence the amount that investors would be willing to pay for a company. Thus, Capital structure is of concern and matters to investors and value because it affects the cost of an organization’s capital. On the other hand, the organization’s attraction to investors is based on a number of factors including its risk management, competitiveness and performance in terms of return to equity. (Damodaran, 2010) In that view, ...

Financial Analysis: Microsoft

Introduction: For the purpose of the project and adhering to the requirements, we have selected Microsoft Corporation as the company to be analyzed. The company is a renowned name in the computer industry around the globe and is listed on NASDAQ under the ticker symbol of ‘MSFT’. Headquartered in Washington, the company is primarily involved in manufacturing and distributing of computer software, consumer electronics and personal computers. Microsoft is the world’s largest software maker in terms of revenue and is also one of the most valuable companies in the world. Below are some of the products of Microsoft ...

Introduction

The actions taken by the Reserve Bank of Australia to influence the cost and supply of money in the economy are referred to as the monetary policy. The main tools through which the monetary policy influences the market operations is the interest rate that is paid on the loans from the money market. Manipulating the interest rate is the main tool of RBA to influence its monetary policy. RBA is the central bank of Australia; and it is the role of the central bank to ensure price stability by controlling the supply of money. So, a stabilizing role is played ...

(Professor Name)

25th, November, 2013

Comparison and Financial Analysis of Starbucks Corporation and Dunkin Donuts Introduction: Our analysis of a company listed on US Stock Exchange is based on Starbucks Corporation, while for the purpose of comparison with the competitor within same industry, we shall be analyzing financial statements of Dunkin Donuts. Atlthough the valuation will be based on 1st November, 2013 but for ratio analysis we will be using 202 annual report of both the companies to facilitate comparison.

The concerned industry is of Speacility Eateries.

Starbucks Corporation is a leading marketer and retailer of coffee, having its outlets in 60 countries around the world. The stock of ...

It is rather difficult for businesspeople to make informed and wise decisions involving the risks, opportunities, and profitability of their ventures unless they have knowledge on the right tools and techniques to utilize. Entrepreneurs and corporations alike need not worry though because they are always take advantage of financial statements whenever they feel the need to examine the performance of their respective enterprises. Through income statements and balance sheets, for instance, businesses can immediately assess their profits, losses, assets, liabilities, and net worth at a given time. Nevertheless, evaluation of companies’ performance should never be limited with these fiscal records ...

Ford Motors Co: Financial Analysis

Property, Plant and Equipment The property, plant and equipment valued at $ 24813 which shows an increase of 11 % as compare to 2011. Property, plant and equipment includes land, buildings and manufacturing plants and other machinery and tools and other assets that are used by the company in their routine business operations. Ford Motors Co. records all its assets at cost net of depreciation and other impairments. The company has a policy of capitalizing newly acquired assets when they intend to utilize them for longer periods which is usually more than one accounting year. The cost of maintaining assets and ...

Introduction:

Our analysis of a company listed on US Stock Exchange is based on Starbucks Corporation, while for the purpose of comparison with the competitor within same industry, we shall be analyzing financial statements of Dunkin Donuts.

Starbucks Corporation is a leading marketer and retailer of coffee, having its outlets in 60 countries around the world. The stock of the company is listed on NASDAQ Stock Exchange with the tick symbol of ‘’SBUX’’. Apart from selling coffee, the company is also involved in tea, beverages and variety of fresh food items. Today, Starbucks is a leading and most recognized coffee brand in the ...

Executive Summary

Wal-Mart Stores Incorporation boasts of market leadership in the provision of retail products and services to clients located across the globe. According to Walmart (2013), the retailer relies upon its 10,900 retail units spread across 27 countries to increase its share of the retail market. The retailer, listed on the New York Stock Exchange, is the largest in the United States of America. Essentially, the company provides all products under a single roof. This ability appeals to customers who have limited time to shop around for consumer and commercial products. The company has grown its internal operations to ...

- Company Background Morgan Stanley is a band holding company founded in 1935 that provides financial services worldwide. The Company serves both individual and institutional investors offering securities globally. Morgan Stanley also operates an asset management business and serves investment banking clients. There are three segments Morgan Stanley is currently operating: institutional securities, asset management, and global wealth management (Reuters, 2013). Morgan Stanley was a pioneer in global expansion to capital markets broadening horizons of strategic transactions. It serves individual, corporate, government, and institutional clients in 40 countries. Morgan Stanley has a number of affiliates and subsidiaries. The Company issues ...

Introduction

Mayo’s Clinic is a health organization that is based in Rochester in Minnesota. It was founded in 1899 and has grown tremendously over the years. Today, it employs approximately four thousand physicians and scientists and 60 thousand allied health staff. Similarly, Erie County Medical Centre is a health organization located in New York City. It has a hospital facility with 550-bed capacity and more than thirty outpatient service centres. This paper seeks to analyse the financial viability of the two entities. In addition, it seeks to analyse the financial viability of merging these two entities. To this end, this paper will ...

Pearson’s Air Conditioning & Service

Summary statement The Pearson Air Conditioning and Service is a business that is based in Dallas. The business is owned by a father and his son; Scott and Bob Pearson respectively. Scott is the president of the business while Bob is the general manager. The firm engages in selling general electric equipment, carriers, York air conditioning and heating systems. Their main customers are local customers although the firm also sells to commercials.

Strengths of the business

The business makes good profits The firm’s equity state is well above the initial status when it was acquired The business maintains a balance of $15, ...

Introduction

Morrison supermarket is the among the largest food retailers in UK. The company success in the market over years has been attributed to establishing its own manufacturing facilities which allows it to control quality of its food. The company keeps its accounting records under the guidance of generally accepted accounting principles (GAAPS). In addition, its financial statements are prepared and presented in accordance with IFRS. The company financial records are audited by independent external auditors. This implies that the financial reports relied in calculating financial ratios are reliable. The ratio analysis of the company shows that the company profitability, ...

The operations of Kudler Fine Foods have been improving over years since 2003. The financial ratios for the business provide a clear picture whether the management has been working around the clock to ensure prosperity of the company. In addition, the horizontal analysis which compares the company 2009 performance and 2003 performance is used to show how the operations of the business have improved overtime

Liquidity ratios

Current ratio= current assetscurrent liabilities = 1971,000116,920 = 16.94. This ratio is used as an indicator to suppliers whether the company will be able to pay its current liabilities especially credit purchases. The ratio ...

Introduction

According to Michell, financial statement analysis is a procedural, keen and a very necessary step taken by interested parties in any business undertaking as a measure to scratch beneath the surface what can be seen by any person concerning the business’. This will set a very important platform for analysing very important parameters like risks the business is facing, returns and many others (Michell, 2010). A business has many stakeholders whose interests revolve around the operations and sustainability of the business as a going concern. This perspective narrows down to the fact that every interested party aims to see the business posting improved ...

Introduction

Rolls Royse is a global leader in the provision of power systems and services at sea, on land and also in the air. Over the years, the company has established a very strong position in defense aerospace, energy and nuclear production and also civil airspace. The company is headquartered at Buckingham Gate in England but has operations in the regional offices in the US, Europe, Middle east, Asia and recently, Australia. In evaluating the performance of Rolls Royse, we shall gather both qualitative and quantitative information regarding the company and carry out a number of operations to gauge the company’s performance. ...

Introduction

The performance of a company is gauged by the evaluation of both qualitative and quantitative information regarding the company. Some of the qualitative information that is used in this evaluation of the company could be the experience of the management, macro and micro environment in which the company operates among other metrics. In making a decision as to whether a company is doing well, an in-depth analysis of the company’s financial information is particularly important. The comparison of the company’s financial data with its previous year’s performance and also with its peers and industry at large would shade ...

Staples Inc.

Staples Inc has become the world’s largest office products company. The company produces a wide range of products including office supplies, copy and print, technology, facilities and breakroom and furniture. According to the 2011 annual report, Staples recorded sales of twenty five billion dollars in the last financial year. In the financial circles, by revenue base, Staples ranks second in ecommerce worldwide. This company is among the top Fortune 500. The company operates on an international level having a total of eighty eight thousand associates all over the world. As at 2011, it had operation bases in twenty six countries ...

Amongst the various sources of finance, like sale of financial instruments, or even borrowing loans from banks and other financial institutions, a very popular method is lease or lease financing, that is defined by the Leases Exposure Draft of the International Accounting Standards Board (IASB) & Financial Accounting Standards Board (FASB) as “a contract in which the right to control the use of a specified asset (the underlying asset) is conveyed to a customer, for a period of time (throughout the lease term), in exchange for some consideration (periodic rental payments), if the customer has the ability to direct the use, and receive benefit ...

PepsiCo Inc. is a publicly traded multinational corporation in the USA with its headquarters in New York, USA. PepsiCo Inc. is the consumer goods industry. PepsiCo manufactures markets and distributes beverages, snack foods and other products. This paper seeks to analyze the long term debt of PepsiCo Inc. This paper also seeks to analyze the debt-to-equity ratio and the times interest earned ratio of PepsiCo Inc. for the last three years, and compare the respective ratios with the most recent industry ratios. Information on the long term debt, debt-to-equity ratio and times earned ratio was obtained from the annual report ...

Answer ot question #1: Not provided as we agreed to check it by yourself.

Answer to question #2: B Explanation: Expected return and mean return are completely two different concepts. Expected return is the weighted average of the possible returns, where the weights correspond to probabilities. In contrast, mean return is the average of all of the historical returns over a particular time period. So the statement B is not correct.

Answer to question #3: A

Answer to question #4: B Explanation: Dividend yield is the return on investment in the form of dividend. It measures the dividend income earned for each dollar invested. Here General Electric Company stock was purchased at the price of S14.64 on ...

The paper is devoted to the analysis of financial ratios of Continental Tire AG and its two competitors in the world market – Michelin and Goodyear. Full ratio analyses include Liquidity, Leverage, Profitability, and Management Ratios analyses which will be represented in this research proposal. Companies’ balance sheets and income statements as of 2011 will be analyzed for the purposes of this paper. Input data for analyses of the three companies is included in Appendix 1, full ratio analyses is in Appendix 2. The first group of the ratios belongs to the liquidity financial analysis. There were three ratios ( ...

Abstract

This paper is devoted to the Clorox Company financial research. The research includes analysis of financial statements, analysis of financial ratios, bonds and stock valuation methods, calculation of dividends growth rate, description of constant-growth model, calculation of beta coefficient of stock, calculation of standard deviation of stock, calculation of weighted average cost of capital. The computations are based on the data collected from annual reports for the years 2007-2011. Calculations were made using appendices and excel spreadsheets. The arguments are supported by analysis of financial performance of the Company.

Introduction

In accordance with Bloomberg (2012), Clorox Company is a large manufacturer ...

Introduction

The International House of Pancakes is a large company in the hospitality sector where its major operations are carried out through franchises. It is owned by the Dine Equity company which also owns other subsidiaries in the hospitality sector. Financial ratios are used by internal and external users to judge the financial health of the company.

Liquidity Ratios

Current Ratio (2010) = Current Assets = 325,720 = 1.68 Current Liabilities 193,353 (2009) = Current Assets = 337, 144 = 1.3

Current Liabilities 257, 967

Acid Test Ratio (2010)= (Current Assets- Inventory) = 325,720- 11,977 = 1.623 Current Liabilities 193,353 (2009) = (Current Assets- Inventory) = 337, ...

State

Executive summary Royal Dutch Shell PLC commonly known as shell is oil and Gas Company operating in many parts of the world. London it is second largest energy company in the world whose registered office is in London. It engages in both renewable and non renewable energy. It is a vertically integrated oil company which engages in all oil activities from exploration to refining and trade. However, the company has entered into partnership with many international organizations to conserve the environment. The company shares are listed in London stock exchange and its financial statement are presented in accordance to ...

Long-Term Financing

Question 1 Suppose that a firm is operating with neutral corporate and personal taxes in an otherwise perfect capital market and Equation (I6.7) currently holds. In such a world, a firm would never take on any risky debt. Why not? (Hint: Consider what would happen in financial distress). When a firm is operates in an environment with neutral corporate and personal taxes imply that the source of financing has no impact on the tax liability of the firm. Normally, companies usually borrow debt to reduce their tax liability by deducting interest expense. Interest expense is an allowable expense for tax purposes, ...