...New Business or Investment? Great Deal or a trap? American Public University New Business or Investment? Great Deal or a trap? Are you buying a business because the price seems right? Double think prior to investing your hard earned money into any firm. If you are looking into buying small business or looking to invest in a firm, the most important area that should be checked prior to doing so is the financial statement of the company. For small business as well as large firms, Investors and Creditors use a company’s financial statement to understand and analyze the financial condition of the firm and to see how well the firm is performing. Per Way, J. (n.d.), managers give great importance to the financial statements since publishing financial statements can provide management or senior leadership with tools to be able to communicate regarding the company’s accomplishments with interested outside parties. There are many ways to evaluate a firm’s performance, but the best way to do so, is by looking at actual numbers of profits and loss which is clearly reflected in the financial statement of the firm. Thus, a financial statement should be used an optimal tool to evaluate a firm’s financial standing before buying or investing in it. A firm’s financial statement consists of many different components. There are various ways a firm can evaluate their financial accomplishments. One such way is via an Income Statement. A typical income statement would consist...
Words: 842 - Pages: 4
...FIN10708 Finance and Investment for Business Topic 7 Tutorial Questions 1. Problem 8, p. 383 of the textbook = on excel document 2. Problem 9, p. 383 of the textbook. 0.72 x 0.1062+0.32 +0.15652+2.07 x 0.3 x 0.48 x 0.06 x 00.185 then square root 3. Using information in Questions 1 and 2 above: (a) Calculate the portfolio’s returns in each of the years 2007 through to 2012 (b) Calculate the portfolio’s average annual return (c) Calculate the portfolio’s standard deviation using your results from (a) and (b) and check that this standard deviation equals the one you calculate in Question 2 above. 4. Problem 16, p. 384 of the textbook. 5. A market analyst predicts that the expected return on the All Ordinaries Share Price Index will fall by 10% this year. Telstra has a beta of 0.51 and BHP Billiton has a beta of 1.17. (a) What would you expect to happen this year to the return on an investment in (i) Telstra and (ii) BHP Billiton? (b) If you accept the analyst’s prediction, should your investment portfolio contain shares with mainly high value or low value betas? 6. Problem 21, p. 385 of the textbook. 7. Problem 22, p. 385 of the textbook. 8. Problem 28, p. 385 of the textbook. 9. Company A has a beta of 0.7 and Company B has a beta of 1.4. If the risk-free rate is 4% and the market risk premium is 7%, according to the CAPM what is the expected return on an equally weighted portfolio of A and B? Show how this can be calculated in two different ways...
Words: 325 - Pages: 2
...Kudler Fine Foods is a foods specialty store located in the greater San Diego area. The business was founded by Kathy Kudler with the intention of providing gourmet style preparation of meals for the everyday consumer. After opening the first store in La Jolla, Kudler has stood up two additional stores and is growing its loyal customer base. The original business plan developed by Kathy Kudler is built around expansion into marketable areas. The intent for the business is not simply focused on physical properties of business growth, but also information and knowledge properties relevant to marketing and customer mobility needs (Kudler Fine Foods, 2011). Since its inception Kudler Fine foods has outsourced its information technology needs through the use of Service Requests and Contracting of solution-oriented professionals. Some of the requests made by Kudler Fine Foods include Internet and ecommerce capabilities, a database for customer resources, a database for inventory tracking, another database for the accounting department, Hardware and software upgrades, and analysis concluding with upgrades of the company network capabilities. Team A is prepared to analyze the business practices of Kudler Fine Foods and assist in a Small to Medium Business (SMB) solution that will propel Kudler Fine Foods into a focused and efficient means of growth through the embrace of new technologies. Problem Definition Kudler Fine Foods currently uses legacy Window based systems in its three...
Words: 2296 - Pages: 10
...Business Ethics – Case Study 2. In your view, should government prohibit economic activities like growing and selling marijuana? What ideology does your view imply? From an ethical point of view, I personally advice Brian to continue pursuing his business ventures in Holland, where the overall climate and the indoor farms allow growers to evade detection while maintain controlled temperatures that allow harvests clearance permits it. The only ethnical problems with continuing an operation in North America arise when growers resort to guns rushed other forms of violence to protect their crops which being stolen or from the police. Other than marijuana, harvest growing is ethical even if it is illegal. Breaking the law in this case they did not represent a breach the Government ethical code, because the law itself is unethical. Laws are generally formed in response to the society’s environmental ethical code. This is how does people demonstrate moral relativism even if it is highly liberal; however it does confide wreath ethical principles of marx and utilitarianism, Brian’s franchise is hurting no one. Which support his right to pursue a good career. Beside business would only harm himself which he chose to pursue the business in such hostile climate of the United States, where he would certainly. Marijuana dependence occurs in 9 percent of Americans who have ever used the drug, and between 33 percent and 50 percent of those who smoke it daily. Approximately 3.6 million Americans...
Words: 646 - Pages: 3
...Business Plan Financial forecasts Agenda of the second part of the course Financial forecasts – importance and structure Pro forma income statement Profitability analysis and Break-Even Point analysis Pro forma balance sheet and financial need assessment 1 Business Plan Financial feasibility Pro forma balance sheet and financial need assessment: • Pro forma balance sheet • Financial needs assessment • Sources of funds 2 Pro forma balance sheet - Structure RECLASSIFIED BALANCE SHEET 1) CONVERTIBILITY INTO CASH / MATURITY DATE Assets Liabilities and shareholders’ equity time required to be converted into cash 2) BY AREA OF BUSINESS ACTIVITIES By area of business activities held to maturity 3 Pro forma balance sheet- 1) Cash / Maturity ASSETS High CURRENT ASSETS LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Short term * Cash and marketable securities * Bank overdraft * Accounts receivables * Accounts payable * Inventory * Income tax payable NON CURRENT LIABILITIES * Long term financial debt FIXED ASSETS * Investments in affiliates STOCKHOLDERS' EQUITY * Property plant and equipment * Common stock * Intangible assets Low * Staff Severance Pay fund * Retained earnings TOTAL ASSETS * Net Income TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY Long term 4 Pro forma Balance Sheet- 2) Area of business activities INVESTED CAPITAL DEBT...
Words: 1886 - Pages: 8
...Running Head: ESL INVESTMENT IN CHINA Investment in ESL Education Business in China: Making Decisions through Comparison Analysis Karen Ning University of Delaware When English has been recognized as the universal language in globalization (Nunan, 2003), English language service has become a lucrative business in Asian emerging markets, especially in China. A large number of professionals have conducted research regarding English language service in nations where students learn English as a Second Language (ESL). However, it appears that research has stopped since investors started making money from the ESL business. Although private ESL courses have been well received by both children and adults in China in the recent decade, entrepreneurs usually prefer to invest their money in one project to test its market potential in the beginning. Hence, businessmen should at least undertake a comparison analysis involving children’s and adults’ courses before investing their capital in the ESL education business in China. According to Jules Dupuit, a famous economist in nineteenth century (Boardman, Greenberg, Vining, & Weimer, 1996), the evaluation before making a sound investment decision involves comparing the total expected cost of each option against the total expected benefits. Without a doubt, cost, sales record, and long-term benefits are vitally important for ESL education business investors in China today. Low cost is crucial for any competing business. It appears...
Words: 1263 - Pages: 6
...Beyond the Business Case: New Approaches to IT Investment As IT becomes more closely tied to business objectives, successful investment must consider two dimensions: technology scope and strategic objectives. Jeanne W. Ross and Cynthia M. Beath When senior managers at United Parcel Service (UPS) first decided more than 15 years ago that package tracking had become a competitive necessity in the package-delivery industry, they discovered that developing the capability was not as simple as writing or buying a package-tracking application. The company needed to develop networks, databases and processing capacity before it could even begin to offer tracking services.1 At about the same time, Delta Air Lines began focusing essentially all its information-technology spending on rebuilding its airport systems and infrastructure, in part to address Y2K concerns. But shortly after Jan. 1, 2000, in what the CIO described as a “land rush,” line managers submitted requests for IT investments that totaled almost three times what Delta could allocate. Each request presented a business case that promised significant positive returns on investment. But combined, they far exceeded the ability of the IT unit to deliver.2 Such experiences are not unusual. In the last 15 years, a tidal wave of ITenabled initiatives, from business-process reengineering to enterpriseresource planning, has elevated the importance of investing strategically in IT. Jeanne W. Ross is principal research scientist...
Words: 5258 - Pages: 22
...Number: 25 of 2007 CONCERNING INVESTMENT Logo BKPM THE INVESTMENT COORDINATING BOARD (BADAN KOORDINASI PENANAMAN MODAL) Jl. Gatot Subroto No 44, Jakarta 12190, Indonesia Tel.: (62-21) 5252008, 5254981, 5253866 Fax: (62-21) 5254945, 5253866 Website: http://www.bkpm.go.id E-mail: sysadm@bkpm.go.id PRESIDENT OF THE REPUBLIC OF INDONESIA LAW OF THE REPUBLIC OF INDONESIA Number: 25 of 2007 CONCERNING INVESTMENT IN THE NAME OF ALMIGHTY GOD PRESIDENT OF THE REPUBLIC OF INDONESIA, Considering : a. that, to realise prosperous an community impartial, based on Pancasila (National Ideology) and the 1945 Constitution of the Republic of Indonesia, it is necessary to develop sustainable national economy based on economic democracy in order to achieve the objective of having a state; b. that, pursuant to mandate written in the Decision of the People Consultative Assembly of the Republic of Indonesia Number: XVI/MPR/1998 concerning Political Economic in the framework of Economic Democracy, investment policy should properly be -2- based on people economy by involving the development of micro, small and medium-sized enterprises, and cooperatives; c. that, to accelerate national economic development, as Indonesian well as political sovereignty, it to and is economic necessary increase investment for economic potential ...
Words: 8428 - Pages: 34
...Fulfillment of the Course Requirements for Professor Seam Saheri Managerial applications 02/18/2016 Table of contents Abstract ……………………………………………………………………………………………………………………………..3 Brief company background………………………………………………………………………………………………….3 Business problem………………………………………………………………………………………………………………..5 High level of solution…………………………………………………………………………………………………………..5 Benefits of solving the problem…………………………………………………………………………………………..9 Business Approach……………………………………………………………………………………………………………..11 Business process changes……………………………………………………………………………………………………11 High level implementation plan …………………………………………………………………………………………11 Business practices used to augment the solution………………………………………………12 Conclusion and overall recommendations………………………………………………………..12 Summary approach…………………………………………………………………………………....12 Abstract The Capital Group is one of the leading investment management companies. After many years of evolving, they are now at 23 office locations around the world. . The company manages money for government, any pension plans as well as equity investments. Most of the company clientele are clients which are trying to invest for their retirement. Capital Group describe themselves as a private investment company, which is able to invest through all markets making it their independent charter and balance sheet. There are four different types of benefits and compensation plans when being part of The Capital Group. There is compensation and bonuses, Health...
Words: 2990 - Pages: 12
...these life stages, you will have different needs. As a parent, you would want your children to learn the value of money and how to manage it wisely. As a retiree, you would want to enjoy perks that reward you for your years of hard work. Whether you are single with a career, married with kids, working as an OFW or empty nesting, BDO has a variety of deposit accounts tailor fit to your needs. What’s more, our extended banking hours enables you to keep your money at hand, throughout the hours of your day. BDO continues to find ways for you, keeping your money safe, managing and growing your funds so that through rainy and sunny days, your money’s growth potential is maximized. Trust and Investments- peso-denominated UITF’s, dollar-denominated UITF’s and customized portfolio mngt.=> Unit Investment Trust Funds. Unit...
Words: 2311 - Pages: 10
...trade and commerce, business firm have to decide from where they will raise fund, where they will invest and how much of the profit will be distributed among the shareholders. “Finance” Came from Latin word “finis” means “dealing with the money”.finace is called the art and science of managing money. At the micro level, finance is the study of financial planning, asset management and fund raising for business and financial institutions. At the macro level, finance is the study of financial institution and financial markets and how they operate within the financial systems in both the domestic and global economics. Scholar’s view: “Finance consists of providing and utilizing the money, capital rights, credit and funds of any kind which are employed in the operation of an enterprise.” _George R Terry “Finance is concerned with the process, institutionsmarkets and instruments involved in the transfer of money among and between individuals, business and governments”. _Lawrence J Gitman From the above discussion, it can be said that finance is the process of financial planning, identification of sources of fund raising, investment of fund, protection of fund, distribution of profit to achieve the goal of the organization. Question-2: What is business finance? Ans:...
Words: 7921 - Pages: 32
...what extent do you think the UK’s potential exit from the EU is the main factor delaying business’ long term investment decisions? Justify your answers with reference to external factors and/or businesses that you know. (40 marks) The external environment is a factor that businesses need to consider before making long term investment decisions. They need to consider the current and future economic state, competitor’s decisions and legal and political issues that may concern them e.g. a change in the minimum wage would affect businesses who have a large workforce. There are some external factors that may have a larger effect on delaying a business’s long term investment decisions than others. Factors related to the UK leaving the EU that will delay business investments are: exporting goods to the EU that may have tariffs imposed (terms of trade changing) and a possible reduction in skilled labour. UK business who have high demand in other countries may have to delay their long term investments. If the UK left the EU imports and exports would no longer be free and a common external tariff could be charged on all goods. This would increase costs for these business which would inevitably reduce their profits as they would either have to absorb the extra costs, or pass them on to customers which may reduce the demand, especially on elastic products. Masters Pharmaceuticals Ltd is a business that specialises in treating rare diseases in developing countries. Around 30% of their products...
Words: 913 - Pages: 4
...Executive Summary The Real Estate Investment in China is considered a growing business in the future. China being one of most populous place, people are seeking better living places. By seeing this investment opportunity in China, our group was highly interested. We believe that China has considerable amounts of land for this opportunity and our business to grow. Real Estate demand is raising in China since their economy continues to increase as well as people is becoming more wealthier. With our resources and experience in the field, our investment will be on its way. This report outlines the investment specifications. It is outlined in these categories: Country Analysis, Real Investment Analysis, Specific Components of the Project, the Best Mode of Entry, and the investment Risks Involved. Each outline analyzes the investment’s specific opportunity given the condition of the country. Based on this analysis, our group made a conclusion. A final recommendation of the proposed investment is given below. Country Analysis China is a developing country that has a great opportunity for foreign investors 5to establish their international business and make profits. China has a booming investment market and based on our research, the Livecast states that China’s investment environment is improving in recent years. Take an example from the Livecast, many enterprises transferred their business to China and trying to reduce the investment loss during the economic crisis in 2008...
Words: 2768 - Pages: 12
...Finance theory and Financial strategy Strategic Planning means several things. But it certainly is a part of the decision-making in resource management of the business benefits. Finance theory has significant advantages in understanding the function of capital markets, the valuation of real assets and financial assets. Discounted cash flow analysis(DCF) is a tool that derived from finance theory which has been widely used. However finance theory also has little effect on strategic planning and there are three differences between financial theory and strategic planning: 1. Traditional financial theory and strategic planning might have some differences in language and culture. 2. Discounted cash flow analysis might be used in an incorrect way of strategy therefore it is not acceptable in terms. 3. Discounted cash flow analysis might fail to apply a strategic, even if it is used properly. The most relevant financial concepts in strategic planning is firms’ capital investment decisions and it is also a critical component of “financial theory”. The theory is focused on cash flow and return on the investment. The tool used in investment decisions is net present valued (NPV) which was calculated from present valued minus required investment or which was reduced to discounted cash flow formula because the net present value is a matter of cash flow that will gain in the future. [pic] ...
Words: 1179 - Pages: 5
...prospects of alternative investments. The assessment of each investment is often based on two variables: expected return and risk. Expected return refers to the increase in the investor’s wealth that is expected over the investment’s time horizon. This wealth increase is comprised of two parts: (1) increases in the market value of the investment and (2) dividends (periodic cash distributions from the firm to its owners). Both of these sources of wealth depend on the firm’s ability to generate cash. Accordingly, financial statements can improve decision making by providing information that helps current and potential investors estimate a firm’s future cash flows. Risk refers to the uncertainty surrounding estimates of expected return. The term expected implies that the return is not guaranteed. For most investments, numerous alternative future returns are possible. For example, an investor may project that a firm’s most likely return for the upcoming year is $100,000. However, the investor recognizes that this is not the only possibility. There is some chance that the firm might generate returns of $90,000 or $110,000. Still other possibilities might be $80,000 and $120,000. The greater the difference among these estimates, the greater the risk. Financial statements help investors assess risk by providing information about the historical pattern of past income and cash flows. Investment selection involves a trade-off between expected return and risk. Investments with high expected returns...
Words: 1348 - Pages: 6
