...FIN101 Assignment 1 Question 1 – (5 marks) a) Equity markets facilitate the issue of financial securities that represent an ownership interest in an asset. An example of this is the stock market – an ordinary share is an example of equity where the shareholder receives profit from the business by that of a dividend or capital gains. The main characteristic of the equity market is that the equity finance provider gets an ownership interest in a particular asset. Equity is equipped by businesses to fund infrastructure, improve the businesses liquidity and to also ensure that funds are available to cover losses. b) Corporate debt markets are a long-term debt market and it is a vital source of funding for the growth of corporations. This market is based around the idea that there is a financial commitment that requires periodic interest payments to be made over the span of the debt period and then the repayment of the principal. The principal can be paid at the completion of the loan term or in part payments that makes the debt amortised. Examples of these loans include: commercial property finance, term loans and bonds. c) Governments must have very strict control over their cash flows and expenditures and when there is a deficit of funds governments will need to borrow from the Government debt market. If the government’s budget is in surplus, excess funds are used to repay debts that the government has accumulated. When a government is debt they will fund...
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...Week 2: Introduction to the Financial System 1.1 Functions of a financial market * Markets are the process that facilitates the exchange of things of values. These things of value are often categorised as real assets, such as a house or a car, and financial assets, such as a loan to buy a house or car. These could take place in a non-formal market place, non-market exchanges can be very time consuming. * It brings opposite parties together. If not, those with needs must go everywhere to find the items themselves e.g. milk at farms. This enables double coincidence of wants that is necessary before an exchange can take place * Money acts as a medium of exchange and solves the divisibility problem. (e.g. bag of potatoes might be worth half of the left rump, but a person would not just take off a rump from a living cow and directly exchange). Other roles include store of value (saving of individuals’ surplus earning). The funds saved by surplus units- those savers with current excess funds- can be put to use by those whose current demand for goods and services is greater than their current available funds. (Deficit units) * Financial institutions and markets facilitate financial transactions between the providers of funds and the users of funds. * Financial assets are represented by financial instrument that states how much has been borrowed, and when and how much is to be repaid by the borrower. E.g. money invested in a term deposit with a bank, the...
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...Bayasgelan Batgerel, Constance Gully, Lau Renzo, Gauthier Schilling Professor Fillenwarth Finance-52010 July 2013 Financial Analysis of V.F. Corporation (NYSE: VFC) Table of Contents Executive Summary.......................................................................................................................................2 CompanyHistory...........................................................................................................................3 Common Size Analysis.................................................................................................................6 Ratio Analysis...............................................................................................................................7 DuPont Chain...............................................................................................................................9 Cash Conversion Cycle..............................................................................................................11 Cost of Capital...........................................................................................................................13 Company Stock value................................. ..............................................................................17 Works Cited..............................................................................................................................20 Appendix A – Excel workbook.............
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...Chapter 1 A modern financial system: an overview The introduction of money and the development of local markets to trade goods were the genesis of the financial system of today. Money is a medium of exchange that facilitates transactions for goods and services. With wealth being accumulated in the form of money, specialised markets developed to enable the efficient transfer of funds from savers (surplus entities) to users of funds (deficit entities). A modern financial system comprises financial institutions, instruments and markets that provide a wide range of financial products and services. Importantly, a financial system encourages accumulated savings which are then available for investment within an economy. Financial assets, or financial instruments, incorporate attributes of risk, return (yield), liquidity and time-pattern of cash flows. Savers are able to satisfy their own personal preferences by choosing various combinations of these attributes. By encouraging savings, and allocating savings to the most efficient users, the financial system has an important role to play in the economic development and growth of a country. A range of different financial institutions has evolved to meet the needs of financial market participants and to support economic growth. Chapters 2 and 3 examine the major types of financial institutions. At this stage the institutions are categorised by the nature of their principal activities. Depository institutions, such as commercial banks, building...
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...being divisible and a store of value • examples: currency, EFTPOS, digital money. 3. Having recently inherited some money from a rich uncle, you are considering investing the funds in financial assets. You are aware that financial assets exhibit four main attributes. List and discuss these attributes. In your answer give examples to explain your points. Four attributes are: • return or yield • risk • liquidity • time-pattern of the cash flows Examples: 1. Term deposit with a bank: • generally pays a fixed interest rate until maturity • guaranteed by the bank—low risk (low return) • funds usually are not available until maturity (less liquidity) • interest paid periodically; principal repaid at maturity 2. Shares in a corporation: • generally pay a dividend twice a year—amount determined by board • no performance guarantees—higher risk (expect higher return) • usually easy to sell shares at current price through the stock exchange • dividends received half-yearly, if declared 4. The major financial institutions within the international markets fall into five classifications. Identify and briefly explain each of these classifications. Give an example of different...
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...Computer Corporation continues to have successful growth due to its innovative “built to order” business model and customer service focus which includes direct selling. Dell’s ability to maintain low levels of finished goods inventory minimized the cash conversion cycle to a high extent, thus minimizing the need for costly working capital. In past years, Dell has mainly financed its operations internally and secondly through the issuance of shareholder equity and small amounts of long term debt. Statement of Problem Being more flexible and responsive to market demands, Dell will bring new, superior products to market quicker than its competitors. This has created an expectation for large, double-digit growth in the upcoming year. Dell needs a plan for financing the large potential growth. Recommendations Dell has working capital advantages over its competitors which it should continue to pursue. Dell funded its FY 1996 growth both from internal and external funds. It was wise to seek external funding to support Dell’s healthy growth. If Dell were to grow by 50% in FY 1997, it is recommended to seek external funding for the amount not funded internally. Dell should issue debt and continue to take advantage of its strong internal cash conversion cycle to fund its continued growth. Dell should not reduce its external funding as it will limit its growth. Methods of analysis & Discussion (Q1) Dell’s advantageous working capital policy enabled the corporation to face...
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...derivative instruments to hedge against risk, and offer advice and recommendations as required by the scenario in the question. It is also equally important that students understand why corporations manage risk in theory and in practice, because risk management costs money but does it actually add more value to a corporation? This article explores the circumstances where the management of risk may lead to an increase in the value of a corporation. Risk, in this context, refers to the volatility of returns (both positive and negative) that can be quantified through statistical measures such as probabilities, standard deviations and correlations between different returns. Its management is about decisions made to change the volatility of returns a corporation is exposed to, for example changing a company’s exposure to floating interest rates by swapping them to fixed rates for a fee. Since business is about generating higher returns by undertaking risky projects, important management decisions revolve around which projects to undertake, how they should be financed and whether the volatility of a project’s returns (its risk) should be managed. The volatility of returns of a project should be managed if it results in increasing the value to a corporation. Given that the market value of a corporation is the net present value (NPV) of its future cash flows discounted by the return required by its investors, then higher market value can either be generated by increasing the future cash...
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...[pic] 25765 | Corporate Finance AUT | 2014 UTS: FINANCE Discipline group CASE STUDY COVER SHEET |Surname |Initials |Student number |Signature * | |Ng |J.W.C |88340722 | | |Yeung |L |00049344 | | |To |R.E |10576142 | | |Afsahi |E |11364015 | | |Wei |B |11924368 | | * By signing your name, you agree that you have read, understood and followed the advice in the subject guide concerning cheating and plagiarism. Case Company: Super Retail Group (ASX: SUL) Lecturer: Dr Gerhard Hambusch Lecture day & time: Monday 3:00 PM | | Table of Contents 1. EXECUTIVE SUMMARY 2 2. COMPANY AND INDUSTRY OVERVIEW 3 3.1 Historical Company Leverage Financing & Peer Industry...
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...Alternative Financing Options for Small Businesses FINANCING For more information, contact: The Business Link Toll-free: Fax: Email: Website: 1 800 272-9675 780 422-0055 (Edmonton) buslink@canadabusiness.ab.ca www.canadabusiness.ab.ca A Member of the Canada Business Network The Business Link is a not-for-profit organization supported by the Governments of Canada and Alberta, as well as other organizations committed to serving Alberta’s small business community. Disclaimer: The information presented in this document is intended as a guide only, and while thought to be accurate, is provided strictly "as is" and without warranty of any kind. The Business Link, its employees, its directors and members, its agents or contractors will not be liable to you for any damages, direct or indirect, or lost profits arising out of your use of information provided within this document, or information provided within The Business Link's websites. This material may be used, reproduced, stored or transmitted for non-commercial purposes; however, The Business Link's copyright is to be acknowledged. You may not use, reproduce, store or transmit this material for commercial purposes without prior written consent from The Business Link. © 2013 The Business Link ALTERNATIVE FINANCING OPTIONS FOR SMALL BUSINESSES (07/2013) Content Content ........................................................................................................................ 1 Purpose...........................
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...Organizations by Kamilah A’Vant Submitted to MGMT 640 9040 November 13, 2011 EXECUTIVE SUMMARY This paper will outline the similarities and differences between for-profit organizations and nonprofit and organizations. Many view for-profit and nonprofit companies as very different business organizations; however they have many commonalities. Both for-profit and nonprofit organizations are corporations. As a corporation, both are legal enterprises created to operate and transact business. Corporations hire employees to manage day-to-day activities and act in its best interests. For-profit and nonprofit companies work to control spending, find ways to bring in revenue, operate under organizational structures and utilize accounting practices to track and report how efficiently assets are used. Nonprofit organizations fall under a large umbrella in respect to size and mission. The environment under which they do business helps set them apart from for-profit companies. Nonprofit companies have a great need for their services, face cuts in funding and capital limitations. In this paper I will focus on the financial management techniques used by for-profit and nonprofit companies. I will address the following questions: • What are the sources of funds available to for-profit and nonprofit companies? • Is there a conflict between the mission and bottom line of nonprofit companies? • What types of control functions and governance mechanisms face for-profit...
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...Venture Financing in India A. Sahay* Abstract Innovation is stated to be the initiating force for a new venture but venture finance is the life blood for entrepreneurship. Innovation is the fuel for igniting the Entrepreneurial engine, Venture capital revs up the engine fast till it attains sustainable speed to change the gears from idea to entity, eventually reaching IPO stage. The paper starts with Research and Development Cess Act, 1986 and covers the development in the field till 2003 and presents an analysis of venture investments as well as future prospects . The history of Venture capital (VC), its advent in India, Characteristics of VC, Government guidelines on VC, Classification of VC in India, Types of V and their analysis has been dealt in the C paper. . Introduction Since Independence till early1990s, the Government has been playing the role of an entrepreneur as well. This was on account of the policy direction which propounded socialistic society and mixed economy. There was dearth of capital, infrastructure facilities and entrepreneurship in the country. During this period, the Government developed infrastructural base such as roads, railways, electricity, ports, banks, financial institutions, insurance etc through the public sector enterprises which were supposed to attain commanding heights of the economy. The environment thus created resulted in the people of India becoming job seekers and the Government itself became a dominant entrepreneur and job provider...
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...Venture Financing in India A. Sahay* Abstract Innovation is stated to be the initiating force for a new venture but venture finance is the life blood for entrepreneurship. Innovation is the fuel for igniting the Entrepreneurial engine, Venture capital revs up the engine fast till it attains sustainable speed to change the gears from idea to entity, eventually reaching IPO stage. The paper starts with Research and Development Cess Act, 1986 and covers the development in the field till 2003 and presents an analysis of venture investments as well as future prospects . The history of Venture capital (VC), its advent in India, Characteristics of VC, Government guidelines on VC, Classification of VC in India, Types of V and their analysis has been dealt in the C paper. . Introduction Since Independence till early1990s, the Government has been playing the role of an entrepreneur as well. This was on account of the policy direction which propounded socialistic society and mixed economy. There was dearth of capital, infrastructure facilities and entrepreneurship in the country. During this period, the Government developed infrastructural base such as roads, railways, electricity, ports, banks, financial institutions, insurance etc through the public sector enterprises which were supposed to attain commanding heights of the economy. The environment thus created resulted in the people of India becoming job seekers and the Government itself became a dominant entrepreneur and job provider...
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...Contents 1 Venture Capital 4 2 Mechanics of raising equity capital 5 2.1 Equity financing for private companies – Sources for funding 5 2.1.1 Angel Investors 5 2.1.2 Venture Capital Firms 6 2.1.3 Institutional Investors 6 2.1.4 Corporate Investors 6 2.2 Outside Investors 6 2.3 Exiting an Investment in a Private Company 7 3 The process of start-up funding 8 3.1 Idea and co-founder stage 8 3.2 Family and friends stage 8 3.3 Seed or angel round 8 3.4 Venture Capital Round 8 4 The Initial Public Offering 10 4.1 Advantages and Disadvantages of Going Public 10 5 Key Elements for successful Entrepreneurship 11 6 The importance of Silicon Valley in the U.S. venture capital system 13 6.1 Venture Capital Investment in the U.S. 13 6.1.1 Venture Capital Investment since 2006 13 6.1.2 Investment by industry 13 6.1.3 Investment by regions 15 6.2 Evolution of Silicon Valley 15 6.3 Silicon Valley – an advanced high tech entrepreneurial habitat 16 6.4 The Power of Clustering 16 6.5 Features of an advanced high tech entrepreneurial habitat 16 6.6 The high-tech habitat: Value-added support 17 6.7 Impact of Stanford University on Silicon Valley 18 7 Entrepreneurship and Funding - Differences between Europe and U.S. 19 7.1 Venture Capital Investment in Austria and Europe 19 7.2 Development of Private Equity in Austria 20 7.3 Development of Private Equity in Europe 20 7.4 Venture Capital Investors in Europe...
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...White Paper Growing Businesses in Tough Economic Times How a VDR can help steer businesses through the seven stages of the financial lifecycle M E R R I L L D A T A S I T E ® Contents Introduction Funding Planning to grow your business Mergers and acquisitions Seizing international opportunities Post-deal integration Making M&A work Equity Turning businesses into cash Debt financing Getting a cash injection Right-sizing Re-focusing on what you do best Bankruptcy and restructure Restructuring debt 3 4 5 6 7 8 9 10 Growing Businesses in Tough Economic Times Anyone with financial authority over a deal will expect to see a raft of detailed, accurate information about the business in question. Introduction 1 2 3 Striving for growth The ongoing financial crisis has changed the nature of business growth around the world. At one end of the scale, it’s created an unprecedented number of large corporations that are sitting on a healthy pot of funds1. These companies have become cash-rich by being extremely good at what they do – putting them in a powerful position to grow through strategic acquisition, and, thanks to the European sovereign debt crisis, acquisition opportunities are plentiful. Organizations across Europe are divesting their assets, particularly in the financial services sector, where banks and other financial institutions are seeking to remove non-core businesses in order to sharpen their efforts2. Indeed, it’s estimated...
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...in receipt of your letter, and wanted to get back to you with a response to some of your questions. When beginning a business, “YOU” as the owner, must consider what form of business entity to establish. Your business structure determines which income tax return form you have to file. The most common forms of businesses today are the Sole Proprietorship, Partnership, Corporation, and S Corporation. A Limited Liability Company (LLC) is a relatively new business structure allowed by state statute. John, you want to generate revenue of course, but you also have to protect any personal assets you may have in the event of a lawsuit. When I refer to personal assets, I am referring to your house; savings; retirement; car and any other possessions that have significant value that can be attached to a lawsuit. John, it sounds like you are just in the initial stages of formulating your business. I am going to share with you some basic answers to your questions, however, I would recommend highly to develop a business plan for the type of business you finally decide on. Whether you fund yourself or need to secure funding through a private investor, a...
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