...presentation. In this chapter, the concepts and assumptions which form the basis of management accounting will be formulated in a comprehensive management accounting decision model. The formulation of theory in terms of conceptual models is a common practice. Virtually all textbooks in business administration use some type of conceptual framework or model to integrate the fundamentals being presented. In economic theory, there are conceptual models of the firm, markets, and the economy. In management courses, there are models of organizational structure and managerial functions. In marketing, there are models of marketing decision‑making and channels of distribution. Even in financial accounting, models of financial statements are used as a framework for teaching the fundamentals of basic financial accounting. The model, A = L + C, is very effective in conveying an understanding of accounting. Management accounting texts are based on a very specific model of the business enterprise. For example, all texts assume that the business which is likely to use management accounting is a manufacturing business. Also, there is unanimity in assuming that the behavior of variable costs within a relevant range tends to be linear. The consequence of assuming that variable costs vary directly with volume is a classification of cost into fixed and variable. A description of the managerial accounting perspective of management and the business enterprise will help put in focus the subject matter to be presented...
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...HealthCare Financial Management Financial Forecasting Case Study 31 U04A1 December 9, 2014 Mary Wilsie MBA 6273 Professor Wolfe In statistics, regression analysis is a statistical process for estimating the relationships among variables. It includes many techniques for modeling and analyzing several variables, when the focus is on the relationship between a dependent variable and one or more independent variables. More specifically, regression analysis helps one understand how the typical value of the dependent variable changes when any one of the independent variables is varied, while the other independent variables are held fixed. Most commonly, regression analysis estimates the conditional expectation of the dependent variable given the independent variables – that is, the average value of the dependent variable when the independent variables are fixed. In all cases, the estimation target is a function of the independent variables called the regression function. In regression analysis, it is also of interest to characterize the variation of the dependent variable around the regression function which can be described by a probability distribution. Regression analysis is widely used for prediction and forecasting, where its use has substantial overlap with the field of machine learning. Regression analysis is also used to understand which among the independent variables are related to the dependent variable, and to explore the forms of these relationships....
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...Financial Modeling Templates Financial Forecasting (Pro Forma Financial Statements) http://spreadsheetml.com/finance/financialplanningforecasting_proformafinancialstatements.shtml Copyright (c) 2009, ConnectCode All Rights Reserved. ConnectCode accepts no responsibility for any adverse affect that may result from undertaking our training. Microsoft and Microsoft Excel are registered trademarks of Microsoft Corporation. All other product names are trademarks, registered trademarks, or service marks of their respective owners Table of Contents 1. Financial Planning and Forecasting ................................................................................... 1-1 1.1 Pro Forma Financial Statements ............................................................................... 1-1 1.2 Financial Statements Modeling .................................................................................. 1-1 Financial Planning and Forecasting Spreadsheet ............................................................. 2-2 2.1 Financial Statements Inputs ....................................................................................... 2-2 2.1.1 Income Statement ......................................................................................... 2-2 2.1.2 Balance Sheet ............................................................................................... 2-3 2.2 Common Size Financial Statements ..................................................................
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...1. [ROA and ROE models and Ratio Components] The Salza Technology Corporation successfully increased its “top line” sales from $375,000 in 2012 to $450,000 in 2013. Net income also increased as did the venture’s total assets. You have been asked to compare the financial performance between the two years. Salza Technology Corporation Annual Income Statements (in $ Thousands) | 2012 | 2013 | Net sales | $375 | $450 | Less: Cost of goods sold | -225 | -270 | Gross profit | 150 | 180 | Less: Operating expenses | -46 | -46 | Less: Depreciation | -25 | -30 | Less: Interest | -4 | -4 | Income before taxes | 75 | 100 | Less: Income taxes | -20 | -30 | Net income | $ 55 | $70 | Cash dividends | $ 17 | $ 20 | Balance Sheets as of December 31 (in $ Thousands) | 2012 | 2013 | Cash | $ 39 | $ 16 | Accounts receivable | 50 | 80 | Inventories | 151 | 204 | Total current assets | 240 | 300 | Gross fixed assets | 200 | 290 | Less accumulated depreciation | −95 | −125 | Net fixed assets | 105 | 165 | Total assets | $345 | $465 | Accounts payable | $ 30 | $ 45 | Bank loan | 20 | 27 | Accrued liabilities | 10 | 23 | Total current liabilities | 60 | 95 | Long-term debt | 15 | 15 | Common stock | 85 | 120 | Retained earnings | 185 | 235 | Total liabilities and equity | $345 | $465 | A. Calculate the net profit margin and the sales-to-total assets ratio for Salza for 2013 using average total...
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...MACROECONOMIC MODELS There are three macroeconomic models in which to analyze the effects of changes in fiscal policy: Keynesian, Monetarist and Classical. Keynesian Model The Keynesian model focuses on attempting to manage the “Demand” side of the economy by using taxation and spending to redistribute income and wealth. The rationale is that redistribution of income and wealth via taxation and use of transfer payments [government spending] will drive the “Demand” function thereby driving the overall economy. The Keynesian model makes no distinction between tax rates and tax revenues and assumes that government spending in the form of transfer payments will increase or decrease demand based on the level of spending AND the spending multiplier. The spending multiplier can be expressed mathematically as: Spending Multiplier = 1 / (1 – MPC) in which MPC is the “marginal propensity to consume.” Keynesian economics is based on the view that lower income brackets have higher MPC, while higher income earners have lower MPC. Accordingly, the transfer of income and wealth to lower income earners will transfer into increased economic growth because every dollar of transfer payments in theory will have a higher multiplier effect. The increase or decrease of “taxes-and-spending” should accelerate [or decelerate] economic growth depending on how it is applied. Observations: Keynesian economics ignores or does not take into account that changes in tax rates and income/wealth...
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...2011 FRM EXAM TRAINING SYLLABUS PART I Introduction to Financial Mathematics 1. Introduction to Financial Calculus a. Variables – Discrete and Continuous b. Univariate and Multivariate Functions – Dependent variable and Independent variable c. Physical representation of a function d. Linear and Non-Linear functions e. Limits of a function f. The number e and Natural Logarithm g. Differential Calculus – Differentiation, Interpretation - Slope of a tangent, using derivatives to calculate function values and deltas. Linear functions - 1st order derivative. Non-linear functions – 1st and higher order derivatives, interpretations and usage. Rules of derivatives. h. Functions – Differentiation and Taylor Series Expansion i. Introduction to Partial Derivatives j. Introduction to Integral Calculus 2. Introduction to Bond Mathematics a. Finance and the Time Value of Money b. Concept of Zero Coupon (Discount) Bonds and Coupon Bonds. c. Bond Characteristics d. Bond Types – Fixed Rate, Floating Rate, Inverse Floater Rate, etc. e. Interest Rates – Discrete and Continuous Compounding f. Bond Pricing – using ZCYC or YTMC with discrete compounding or continuous compounding g. Difference between bond coupon rate and bond yield h. Calculating Bond Yield (YTM, CY, MMY, ZCY/Spot, Par Yield, etc.) i. Price Yield Relationship Introduction to Financial Statistics and Econometrics 1. Introduction to Financial Statistics a. Frequency distributions b. Measures of Central Tendency/Location (Mean/Mode/Median)...
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...Subject CT1 Financial Mathematics Core Technical Syllabus for the 2013 Examinations 1 June 2012 Institute and Faculty of Actuaries Subject CT1 – Financial Mathematics Core Technical Aim The aim of the Financial Mathematics subject is to provide a grounding in financial mathematics and its simple applications. Links to other subjects Subject CT2 – Finance and Financial Reporting: develops the use of the asset types introduced in this subject. Subject CT4 – Models: develops the idea of stochastic interest rates. Subject CT5 – Contingencies: develops some of the techniques introduced in this subject in situations where cashflows are dependent on survival. Subject CT7 – Business Economics: develops the behaviour of interest rates. Subject CT8 – Financial Economics: develops the principles further. Subjects CA1 – Actuarial Risk Management, CA2 – Model Documentation, Analysis and Reporting and the Specialist Technical and Specialist Applications subjects: use the principles introduced in this subject. Objectives On completion of the subject the trainee actuary will be able to: (i) Describe how to use a generalised cashflow model to describe financial transactions. 1. For a given cashflow process, state the inflows and outflows in each future time period and discuss whether the amount or the timing (or both) is fixed or uncertain. Describe in the form of a cashflow model the operation of a zero coupon bond, a fixed interest security, an index-linked security, cash on deposit...
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...| The Walt Disney Company Financial Document | Analysis &Forecast | | | 2011-11-1 | Executive Summary From the analysis and calculations in the report, we forecast that in the future, Walt Disney will face more fierce competition from their rivals, like Universal, Fox; There is a lack of new impressive cartoon imagines besides these classic ones; Acquisition of Pixar in 2009 still needs the reality to check. In conclusion, our suggestion for investors is to short their stock | The Walt Disney Company Financial Document The Walt Disney Company (NYSE: DIS) (commonly referred to as Disney) is the largest media conglomerate in the world in terms of revenue. Founded on October 16, 1923, by Walt and Roy Disney as the Disney Brothers Cartoon Studio, Walt Disney Productions established itself as a leader in the American animation industry before diversifying into live-action film production, television, and travel. The company is best known for the products of its film studio, the Walt Disney Motion Pictures Group, and it is one of the largest and best-known studios in Hollywood today. Disney also owns and operates the ABC broadcast television network; cable television networks such as Disney Channel, ESPN, and ABC Family; publishing, merchandising, and theatre divisions; and owns and licenses 14 theme parks around the world. The company has been a component of the Dow Jones Industrial...
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...------------------------------------------------- Chapter 9 ------------------------------------------------- Financial Planning and Forecasting Financial Statements ------------------------------------------------- ANSWERS TO BEGINNING-OF-CHAPTER QUESTIONS We like to use discussion questions along with relatively simple and easy to follow calculations for our lectures. Unfortunately, forecasting is by its very nature relatively complex, and it simply cannot be done in a realistic manner without using a spreadsheet. Accordingly, our primary “question” for Chapter 9 is really a problem, but one that can be discussed. Therefore, we base our lecture primarily on the BOC model and we use the class period to discuss forecasting and Excel modeling. We cover the chapter in about 2 hours, and then our students work a case on the subject later in the course. 9-1 The major components of the strategic plan include the firm’s purpose, the scope of its operations, its specific (quantified) objectives, its operating strategies, its operating plan, and its financial plan. Engineers, economists, marketing experts, human resources people, and so on all participate in strategic planning, and development of the plan is a primary function of the senior executives. Regional and world economic conditions, technological changes, competitors’ likely moves, supplies of resources, and the like must all be taken into account, along with the firm’s own R&D activities...
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...relates accounting numbers to market measures of systematic equity risk was largely undertaken in the 1970s and early 1980s. More recent proposals on changes in accounting disclosure of risk mean that a rigorous theoretical model of the relationship between accounting measures and market measures of risk is timely. In this paper such a model is developed. In addition, the assumptions required to develop the model are explicitly identified. By so doing it becomes possible to identify the potential cross-sectional differences which drive the empirical relationship between accounting and market based measures of risk. The model developed highlights a clear relationship between accounting and market measures of risk which can be exploited in situations where accounting data alone is available. It also provides a framework within which the environmental factors leading to cross-sectional differences between companies can be further explored. On Accounting Flows and Systematic Risk I. Introduction Work that relates accounting numbers to market measures of systematic equity risk was largely undertaken in the 1970s and early 1980s (Ryan, 1997). More recent proposals on changes in accounting disclosure of risk (Scholes, 1996) mean that a theoretically sound model of the relationship between accounting measures and market measures of risk is timely. In addition, the...
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...risk part of interest rate risk? If an FI funds long-term fixed‐rate assets with short‐term liabilities, what will be the impact on earnings of an increase in the rate of interest? A decrease in the rate of interest? Refinancing risk is the uncertainty of the cost of a new source of funds that are being used to finance a long‐term fixed‐rate asset. This risk occurs when an FI is holding assets with maturities greater than the maturities of its liabilities. For example, if a bank has a 10‐year fixed‐rate loan funded by a two‐year time deposit, the bank faces a risk of borrowing new deposits, or refinancing, at a higher rate in two years. Thus, interest rate increases would reduce net interest income. The bank would benefit if the rates fall as the cost of renewing the deposits would decrease, while the earning rate on the assets would not change. In this case, net interest income would increase. What is reinvestment risk? How is reinvestment risk part of interest rate risk? If an FI funds short‐term assets with long‐term liabilities, what will be the impact on earnings of a decrease in the rate of interest? An increase in the rate of interest? Reinvestment risk is the uncertainty of the earning rate on the redeployment of assets that have matured. This risk occurs when an FI holds assets with maturities that are less than the maturities of its liabilities. For example, if a bank has a two‐year loan funded by a 10‐year fixed‐rate time deposit, the bank faces the risk that it might...
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...Risk and Return “Believe me! The secret of reaping the greatest fruitfulness and the greatest enjoyment from life is to live dangerously!” —Friedrich Wilhelm Nietzsche Are You the “Go-for-It” Type? The financial crisis has people buzzing about “systematic risk.” This term means different things in different contexts. Traditionally, systematic risk has referred to the non-diversifiable risk that comes from the impact the overall market has on individual investments. This risk is also known as “market risk” according to the Capital Asset Pricing Model (CAPM) described in this chapter. With the financial crisis, however, people have been using the term systematic risk in a somewhat different way. Many companies, especially financial firms, are connected to each other in significant ways. With a financial instrument known as a swap, for example, one company may have a contract with another company that calls for large payments to be made by one to the other according to specified terms. If the company that is obligated to pay does not, then the company that was supposed to receive the funds might fail. If that company that was supposed to receive the funds fails, then other companies that it owed money to according to other swaps might also fail. This chain reaction of default, failure, default, failure could affect a large number of firms. The larger the firm, the more such relationships it is likely to have and the greater the chain reaction failures that...
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...Face-to-face hand-in #4 Topic: Capital Assets – Part 2- Continued Walid Siyam (100530872) PART 1 FINANCIAL STATEMENTS For Part 1, use Westjet’s Group’s 2013 consolidated financial statements and the Annual Report. 1. What amount of intangible assets does Westjet report on December 31, 2013? What is the change over the prior year? On December 31, 2013 WestJet reported an amount of $58,691 for the Intangible assets. Has changed to an increase of $7,883 (58691-50,808 = 7883) from the prior year. 2. Types of intangibles-What is the composition of intangible assets? Prepare a table that details the categories and percentage/weightings of each type of intangible asset. For December 31, 2013 Types of Intangible assets | Details of categories | Percentage/weightings | Software | $25,833 | 44.02% | Landing Rights | $16,372 | 27.90% | Other | $5,785 | 9.86% | Assets under development | $10,701 | 18.23% | 3. What are WestJet’s 2 most significant components of Intangible assets? WestJet’s 2 most significant components of Intangible assets are * Software * Landing rights As both these assets weigh the most from the total Intangible assets and are 71.92% from the total weight of assets 4. Which of these intangible assets are amortized? On what basis? All of them are Amortized except for the ‘’assets under development’’. 5. What characteristics distinguish intangible assets from PPE? * PPE: Value...
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...MSCI leading provider of investment decision support tools to investment institutions Products include indices, portfolio risk, and performance analytics - for use in managing equity, fixed income and multi-asset class portfolios - and governance tools. Our principal sales model in both of our business segments is to license annual, recurring subscriptions to our products and services for use at specified locations, often by a given number of users or for a certain volume of services, for an annual fee paid up front. Our Governance business is a leading provider of corporate governance and specialized financial research and analysis services to institutional investors and corporations around the world. In June 2004, we acquired Barra, Inc. (“Barra”), a provider of portfolio risk analytics tools that launched its first risk analytics products in 1975, broadening our product range beyond index products. In November 2007, we completed an initial public offering (“IPO”) of approximately 16.1 million shares of our class A common stock In June 2010, we acquired RiskMetrics, a leading provider of risk management and governance products and services, in a cash-and-stock transaction valued In July 2010, we acquired Measurisk, LLC (“Measurisk”), a provider of risk transparency and risk measurement tools for hedge fund investors, to aid us in developing a broad platform and setting the standard for analyzing and reporting hedge fund risk in response to our clients’...
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...J.KAU: Islamic Econ., Vol. 19, No. 2, pp: 23-36 (2006 A.D./1427 A.H.) A Panel Data Analysis of Fee Income Activities in Islamic Banks SHAHIDA bt. SHAHIMI Candidate of Islamic economics and assistant lecturer of Islamic economics, banking & finance, Email: shahida@pkrisc.cc.ukm.my, ABD. GHAFAR B. ISMAIL Professor of banking and finance, Email: agibab@pkrisc.cc.ukm.my and SANEP B. AHMAD Lecturer of Islamic economics and statistical economics, Email: nep@pkrisc.cc.ukm.my Islamic Economics and Finance Research Group School of Economics Universiti Kebangsaan Malaysia, Malaysia ABSTRACT. In recent years, commercial banking worldwide has experienced a significant decline in its traditional business of accepting deposits and offering loans. Simultaneously, banks have become more involved in nontraditional activities that provide financial services and generate fee income. As a result, income from nontraditional activities has risen relative to income from traditional activities. This article presents an empirical investigation of Islamic banks’ involvement in various fee income activities. Our theoretical hypotheses relate the level of fee income activities at an individual bank to asset size, profitability, core deposits, capital risk as well as credit risk. These hypotheses are tested empirically using bank-specific information from a panel of Malaysian Islamic commercial banks for the years 1994 to 2004. The results imply that banks with higher levels of fee-generating activities...
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