Free Essay

Finance Assignment

In: Business and Management

Submitted By austiwilliams
Words 3668
Pages 15
Through my research and examination of the financial statements and reported performance of Google Incorporated’s, I will provide a detailed analysis of Google’s financial information. In addition, I will describe Google as a publicly traded company in the United States and explain its current financial situation (please see Appendix for financial statements). This description will include information on the company’s business goals, its operations, locations, markets and line of business. Then I will assess Google’s vulnerability to specific financial threats as well as explain how certain financial trends will influence future financial performance. Lastly, I will analyze the company’s stock and determine how it will perform in future periods.
Google Incorporated is a global technology company that helps people to connect information from various locations around the world. Larry Page and Sergey Brin founded Google Inc. in 1998. The company was incorporated on September of the same year. Google’s initial public offering was 19,605,052 shares of Class A common stock. This initial public offering took place on August 18, 2004. Google Inc. has revolutionized how the internet is used and perceived. Google’s main source of revenue is advertising and most of this business comes from the United States.
They have several different aspects to their business. It started with the simple www.google.com search engine. Now Google has an email service, mapping and directions site, various applications, and other aspects. One aspect is Gmail. Gmail was launched on April 1, 2004 as an emailing system that is able to receive and store large amounts of messages. In addition, after their acquisition of a digital mapping company called Keyhole, Google created Google Maps and Google Earth. One of Google's most popular segments is YouTube. Google acquired YouTube in 2006. Lastly, in 2007, Google opened the Android system, which is a platform for mobile devices.
In addition to their various services for individuals, Google offers businesses support to optimize their business potential. Examples of these include advertising, publishing, business management and business applications. These aspects help businesses to run more efficiently without having to come up with these solutions on their own. They can rely on Google for their outsourcing needs. If those businesses were to run into any problems, they would look to Google for help rather than have to maintain their own group of specialized IT personnel. All of this helps businesses to work more efficiently and save money.
Google is a corporation that is recognized by millions of people. Their business has spanned past just internet applications. Google’s operations span to offices all around the world. According to Google’s website, they have more than 70 offices in more than 40 countries. As of the end of the second quarter of 2012, Google reported 54,604 employees (Google Finance). Currently Google’s headquarters is located in Mountain View, California. They also have their hands in mobile technology. Google has been able to design mobile smart phones and tablets. Their technology has caused much buzz around the mobile technology arena. In addition, Google’s mobile technology has been in rivalry with top mobile contenders, such as Apple, Inc. Google has pioneered the Android market in which provides mostly free access to mobile applications. Google’s website had this to say about their mobile technology and endeavors:
“We’re pioneering new technologies and offering new solutions for mobile services that help people all over the globe to do any number of tasks on their phone, from checking email and calendar events to watching videos, not to mention the several different ways to access Google search on a phone. In addition, we’re hoping to fuel greater innovation for mobile users everywhere with Android, a free, open source mobile platform. Android brings the openness that shaped the Internet to the mobile world. Not only does Android benefit consumers, who have more choice and innovative new mobile experiences, but it opens up revenue opportunities for carriers, manufacturers and developers.”
Google’s income statements for the last three years have shown a net income of (in millions) $9,737, 8,505, $6,520.45 in 2011, 2010, and 2009 respectively. Their earnings per share are $29.76, $26.31 and $20.41 in 2011, 2010, and 2009 respectively. In addition, over the last three years their revenue has steadily increased but so has their expenses. Google’s balance sheet has shown that their total assets at the end of 2011 (in millions) are $72,574 and their total liabilities (in millions) are $14,429. Their total liabilities include a newly obligated long term debt of (in millions) $2,986. The financial information for the last quarter, which is second quarter 2012 includes (in millions) $2,785 net income, $86,051 total assets, $21,330 total liabilities, and a net change in cash total of $5,454.
In the last three years, Google’s cash flow includes -$3,647, $3,432, and $1,540.92 in 2011, 2010, and 2009 respectively. 2011 was the only year where they saw a negative cash flow. This was caused by a huge increase in investing activities in 2011. This increase could have been due to the fact that they were preparing to acquire Motorola Mobility Holdings, Inc. On May 22, 2012 Google Inc. completed their acquisition of Motorola. They assumed all assets and liabilities of Motorola Inc.
Google stocks have been pretty good for the past year (please see appendix for historical stock prices). Since September of 2011, Google’s closing stock price hasn’t fallen below $500.00. Even though the stock market hasn’t been very steady for the past decade, Google stocks have still been one of the best stocks to invest in. Google has been turning out profits, which shows to stockholders that they will be able to receive a return on their investment into the company. This also proves that Google’s stock, even in a rough economy, will continue to hold its pricing. Google’s current stock trends show that they will be able to hold onto the higher pricing.
Google is a large multinational corporation. There are a lot of factors that could influence that outcome of Google’s financial future. These factors include their acquisition of Motorola, any economic issues in countries that Google operates, and the long term debt that they took on in 2011. In addition to these financial factors, non financial factors are in place as well. Examples of these factors would include any regulation compliances, lawsuits, security breaches, and competition. I will analyze and describe a few of these factors.
The biggest financial decision that Google has made that will affect its future finances is the acquisition of Motorola. The reason this will be such a factor is because Google has assumed all of Motorola’s assets and debts. In addition, there may be a positive or negative side to the acquisition. This acquisition could prove to be very beneficial to the company’s finances. On the negative side, it could prove that the acquisition did not prove to help boosts the company’s financial standing. This acquisition could prove to be too much for Google to handle or its explorations into the mobile technology market fail. Another financial factor that could affect Google has to do with the economy. Because Google is a multinational company, any economic issues within any of those countries could affect Google’s future.
Non financial factors that could threaten Google’s business are regulation compliance. Google has to make sure that all of the business they do is in compliance with any regulations or laws within that country. Another non financial factor is lawsuits. Corporations of Google’s size and standing have to face the realities of lawsuits. In their case, lawsuits against them for copyright infringement and other types of lawsuits. Security breaches can potentially be a huge risk for Google because they do pride themselves on security. If there were any security breaches within Google, this could negatively affect them in the public and therefore would negatively affect their bottom line. Lastly, competition could also prove to hurt the company financially. Currently Google’s biggest competitor is Microsoft. Google’s Executive Chairman Eric Schmidt states, “we’re more likely to face competition, and there’s lots coming, in these vertical applications that answer questions” (Russell, 2011). This means that Google could one day have major competition from numerous firms.
The reason Google will be able to handle economic risks stem from the fact that they are very well off financially. Google right now has much more assets than liabilities. If the company had to pay all of it debts today, it would be able to. In addition, they have had increasing revenue for the past four years and the company’s profit margin has been pretty steady over the last few years. Because of all of this, my prediction is that Google will be able to sustain itself despite any financial or non financial risks.

References
Google Company. (n.d.). Google company. Retrieved from http://www.google.com/about/company/

Google Finance. (n.d.). Google inc financials. Retrieved from http://www.google.com/finance?fstype=ii&q=NASDAQ:GOOG

Google Investor Relations. (n.d.). Google inc. announces second quarter 2012 financial results . Retrieved from http://investor.google.com/earnings/2012/Q2_google_earnings.html

Cleland, S. (2011, November 15). The top ten threats to google. Retrieved from http://www.forbes.com/sites/scottcleland/2011/11/15/the-top-ten-threats-to-google/

Google Finance. (n.d.). Google inc historical prices. Retrieved from http://www.google.com/finance/historical?q=NASDAQ:GOOG&ei=aX1PUPD7EImQkwPu7AE

Russell, J. (2011, December 27). Eric schmidt discusses google's competitors, china, acquisitions, and more. Retrieved from http://thenextweb.com/google/2011/12/27/eric-schmidt-discusses-googles-competitors-china-acquisitions-and-more/

Appendix
Google Inc. Income Statement
(http://www.google.com/finance?fstype=ii&q=NASDAQ:GOOG#)
In Millions of USD (except for per share items) | 12 months ending 2011-12-31 | 12 months ending 2010-12-31 | 12 months ending 2009-12-31 | 12 months ending 2008-12-31 | Revenue | 37,905.00 | 29,321.00 | 23,650.56 | 21,795.55 | Other Revenue, Total | - | - | - | - | Total Revenue | 37,905.00 | 29,321.00 | 23,650.56 | 21,795.55 | Cost of Revenue, Total | 13,188.00 | 10,417.00 | 8,844.11 | 8,621.51 | Gross Profit | 24,717.00 | 18,904.00 | 14,806.45 | 13,174.04 | Selling/General/Admin. Expenses, Total | 7,313.00 | 4,761.00 | 3,651.24 | 3,748.88 | Research & Development | 5,162.00 | 3,762.00 | 2,843.03 | 2,793.19 | Depreciation/Amortization | - | - | - | - | Interest Expense(Income) - Net Operating | - | - | - | - | Unusual Expense (Income) | 610.00 | 0.00 | 0.00 | 1,094.76 | Other Operating Expenses, Total | - | - | - | - | Total Operating Expense | 26,273.00 | 18,940.00 | 15,338.38 | 16,258.34 | Operating Income | 11,632.00 | 10,381.00 | 8,312.19 | 5,537.21 | Interest Income(Expense), Net Non-Operating | - | - | - | - | Gain (Loss) on Sale of Assets | - | - | - | - | Other, Net | 65.00 | 11.00 | 2.37 | 4.52 | Income Before Tax | 12,326.00 | 10,796.00 | 8,381.19 | 5,853.60 | Income After Tax | 9,737.00 | 8,505.00 | 6,520.45 | 4,226.86 | Minority Interest | - | - | - | - | Equity In Affiliates | - | - | - | - | Net Income Before Extra. Items | 9,737.00 | 8,505.00 | 6,520.45 | 4,226.86 | Accounting Change | - | - | - | - | Discontinued Operations | - | - | - | - | Extraordinary Item | - | - | - | - | Net Income | 9,737.00 | 8,505.00 | 6,520.45 | 4,226.86 | Preferred Dividends | - | - | - | - | Income Available to Common Excl. Extra Items | 9,737.00 | 8,505.00 | 6,520.45 | 4,226.86 | Income Available to Common Incl. Extra Items | 9,737.00 | 8,505.00 | 6,520.45 | 4,226.86 | Basic Weighted Average Shares | - | - | - | - | Basic EPS Excluding Extraordinary Items | - | - | - | - | Basic EPS Including Extraordinary Items | - | - | - | - | Dilution Adjustment | 0.00 | 0.00 | 0.00 | 0.00 | Diluted Weighted Average Shares | 327.21 | 323.25 | 319.42 | 317.51 | Diluted EPS Excluding Extraordinary Items | 29.76 | 26.31 | 20.41 | 13.31 | Diluted EPS Including Extraordinary Items | - | - | - | - | Dividends per Share - Common Stock Primary Issue | 0.00 | 0.00 | 0.00 | 0.00 | Gross Dividends - Common Stock | - | - | - | - | Net Income after Stock Based Comp. Expense | - | - | - | - | Basic EPS after Stock Based Comp. Expense | - | - | - | - | Diluted EPS after Stock Based Comp. Expense | - | - | - | - | Depreciation, Supplemental | - | - | - | - | Total Special Items | - | - | - | - | Normalized Income Before Taxes | - | - | - | - | Effect of Special Items on Income Taxes | - | - | - | - | Income Taxes Ex. Impact of Special Items | - | - | - | - | Normalized Income After Taxes | - | - | - | - | Normalized Income Avail to Common | - | - | - | - | Basic Normalized EPS | - | - | - | - | Diluted Normalized EPS | 31.23 | 26.31 | 20.41 | 15.80 |

Google Inc. Balance Sheet (http://www.google.com/finance?fstype=ii&q=NASDAQ:GOOG#) In Millions of USD (except for per share items) | As of 2011-12-31 | As of 2010-12-31 | As of 2009-12-31 | As of 2008-12-31 | Cash & Equivalents | 5,271.00 | 8,978.00 | 5,895.01 | 5,326.01 | Short Term Investments | 34,643.00 | 21,345.00 | 14,287.19 | 7,189.10 | Cash and Short Term Investments | 44,626.00 | 34,975.00 | 24,484.78 | 15,845.77 | Accounts Receivable - Trade, Net | 5,427.00 | 4,252.00 | 3,178.47 | 2,642.19 | Receivables - Other | - | - | - | - | Total Receivables, Net | 6,172.00 | 5,002.00 | 3,201.72 | 2,642.19 | Total Inventory | - | - | - | - | Prepaid Expenses | 1,745.00 | 1,326.00 | 836.06 | 1,404.11 | Other Current Assets, Total | 215.00 | 259.00 | 644.41 | 286.11 | Total Current Assets | 52,758.00 | 41,562.00 | 29,166.96 | 20,178.18 | Property/Plant/Equipment, Total - Gross | 14,400.00 | 11,771.00 | 8,130.13 | 7,576.34 | Accumulated Depreciation, Total | -4,797.00 | -4,012.00 | -3,285.52 | -2,342.50 | Goodwill, Net | 7,346.00 | 6,256.00 | 4,902.56 | 4,839.85 | Intangibles, Net | 1,578.00 | 1,044.00 | 774.94 | 996.69 | Long Term Investments | 790.00 | 523.00 | 128.98 | 85.16 | Other Long Term Assets, Total | 499.00 | 707.00 | 678.73 | 433.85 | Total Assets | 72,574.00 | 57,851.00 | 40,496.78 | 31,767.58 | Accounts Payable | 588.00 | 483.00 | 215.87 | 178.00 | Accrued Expenses | 4,356.00 | 3,256.00 | 2,246.52 | 1,824.45 | Notes Payable/Short Term Debt | 1,218.00 | 3,465.00 | 0.00 | 0.00 | Current Port. of LT Debt/Capital Leases | - | - | - | - | Other Current liabilities, Total | 2,751.00 | 2,792.00 | 285.08 | 299.63 | Total Current Liabilities | 8,913.00 | 9,996.00 | 2,747.47 | 2,302.09 | Long Term Debt | 2,986.00 | 0.00 | - | - | Capital Lease Obligations | - | - | - | - | Total Long Term Debt | 2,986.00 | 0.00 | 0.00 | 0.00 | Total Debt | 4,204.00 | 3,465.00 | 0.00 | 0.00 | Deferred Income Tax | 287.00 | 0.00 | 0.00 | 12.52 | Minority Interest | - | - | - | - | Other Liabilities, Total | 2,243.00 | 1,614.00 | 1,745.09 | 1,214.11 | Total Liabilities | 14,429.00 | 11,610.00 | 4,492.55 | 3,528.71 | Redeemable Preferred Stock, Total | - | - | - | - | Preferred Stock - Non Redeemable, Net | 0.00 | 0.00 | 0.00 | 0.00 | Common Stock, Total | 20,264.00 | 18,235.00 | 0.32 | 0.32 | Additional Paid-In Capital | - | - | 15,816.74 | 14,450.34 | Retained Earnings (Accumulated Deficit) | 37,605.00 | 27,868.00 | 20,082.08 | 13,561.63 | Treasury Stock - Common | - | - | - | - | Other Equity, Total | -51.00 | 44.00 | 105.09 | 226.58 | Total Equity | 58,145.00 | 46,241.00 | 36,004.22 | 28,238.86 | Total Liabilities & Shareholders' Equity | 72,574.00 | 57,851.00 | 40,496.78 | 31,767.58 | Shares Outs - Common Stock Primary Issue | - | - | - | - | Total Common Shares Outstanding | 324.89 | 321.30 | 317.77 | 315.11 |

Google Inc. Statement of Cash Flow (http://www.google.com/finance?fstype=ii&q=NASDAQ:GOOG#) In Millions of USD (except for per share items) | 12 months ending 2011-12-31 | 12 months ending 2010-12-31 | 12 months ending 2009-12-31 | 12 months ending 2008-12-31 | Net Income/Starting Line | 9,737.00 | 8,505.00 | 6,520.45 | 4,226.86 | Depreciation/Depletion | 1,396.00 | 1,067.00 | 1,240.03 | 1,212.24 | Amortization | 455.00 | 329.00 | 284.28 | 287.65 | Deferred Taxes | 343.00 | 9.00 | -268.06 | -224.65 | Non-Cash Items | 2,004.00 | 1,270.00 | 1,053.52 | 2,023.53 | Changes in Working Capital | 630.00 | -99.00 | 485.99 | 327.23 | Cash from Operating Activities | 14,565.00 | 11,081.00 | 9,316.20 | 7,852.86 | Capital Expenditures | -3,438.00 | -4,018.00 | -809.89 | -2,358.46 | Other Investing Cash Flow Items, Total | -15,603.00 | -6,662.00 | -7,209.32 | -2,960.96 | Cash from Investing Activities | -19,041.00 | -10,680.00 | -8,019.20 | -5,319.42 | Financing Cash Flow Items | 86.00 | 94.00 | 90.27 | 159.09 | Total Cash Dividends Paid | - | - | - | - | Issuance (Retirement) of Stock, Net | -5.00 | -507.00 | 143.14 | -71.52 | Issuance (Retirement) of Debt, Net | 726.00 | 3,463.00 | 0.00 | 0.00 | Cash from Financing Activities | 807.00 | 3,050.00 | 233.41 | 87.57 | Foreign Exchange Effects | 22.00 | -19.00 | 10.51 | -45.92 | Net Change in Cash | -3,647.00 | 3,432.00 | 1,540.92 | 2,575.08 | Cash Interest Paid, Supplemental | 40.00 | 0.00 | 0.00 | 1.56 | Cash Taxes Paid, Supplemental | 1,471.00 | 2,175.00 | 1,895.97 | 1,223.98 |

Google Inc Historical Stock Prices (Weekly) http://www.google.com/finance/historical?q=NASDAQ:GOOG&ei=aX1PUPD7EImQkwPu7AE# Date | Open | High | Low | Close | Volume | Sep 7, 2012 | 684.55 | 712.25 | 673.50 | 706.15 | 9,878,540 | Aug 31, 2012 | 662.99 | 688.99 | 659.24 | 685.09 | 11,418,935 | Aug 24, 2012 | 675.50 | 680.60 | 662.16 | 678.63 | 9,104,208 | Aug 17, 2012 | 647.42 | 677.25 | 646.68 | 677.14 | 13,236,938 | Aug 10, 2012 | 639.61 | 649.38 | 636.13 | 642.00 | 7,592,271 | Aug 3, 2012 | 636.05 | 643.72 | 623.41 | 641.33 | 9,772,299 | Jul 27, 2012 | 600.48 | 635.00 | 598.25 | 634.96 | 12,634,639 | Jul 20, 2012 | 576.37 | 612.94 | 568.40 | 610.82 | 15,827,024 | Jul 13, 2012 | 584.95 | 592.43 | 562.09 | 576.52 | 11,425,633 | Jul 6, 2012 | 581.82 | 600.06 | 576.50 | 585.98 | 7,354,317 | Jun 29, 2012 | 567.33 | 580.13 | 557.21 | 580.07 | 9,070,259 | Jun 22, 2012 | 562.62 | 584.28 | 559.25 | 571.48 | 11,161,638 | Jun 15, 2012 | 584.21 | 585.31 | 556.52 | 564.51 | 13,188,636 | Jun 8, 2012 | 570.22 | 587.89 | 566.47 | 580.45 | 10,040,334 | Jun 1, 2012 | 595.81 | 599.13 | 568.35 | 570.98 | 10,541,049 | May 25, 2012 | 600.51 | 615.69 | 588.28 | 591.53 | 14,781,250 | May 18, 2012 | 600.78 | 637.85 | 596.70 | 600.40 | 18,095,143 | May 11, 2012 | 595.00 | 616.90 | 595.00 | 605.23 | 10,638,149 | May 4, 2012 | 612.99 | 616.08 | 596.81 | 596.97 | 10,096,618 | Apr 27, 2012 | 592.90 | 618.00 | 590.20 | 614.98 | 9,682,410 | Apr 20, 2012 | 623.00 | 623.81 | 595.83 | 596.06 | 17,743,000 | Apr 13, 2012 | 628.48 | 653.14 | 623.54 | 624.60 | 20,788,475 | Apr 5, 2012 | 640.77 | 647.95 | 628.57 | 632.32 | 8,276,684 | Mar 30, 2012 | 645.00 | 658.58 | 639.54 | 641.24 | 10,605,639 | Mar 23, 2012 | 623.12 | 648.80 | 621.24 | 642.59 | 10,534,041 | Mar 16, 2012 | 600.00 | 625.91 | 599.26 | 625.04 | 12,339,384 | Mar 9, 2012 | 620.43 | 622.49 | 593.84 | 600.25 | 10,050,310 | Mar 2, 2012 | 606.59 | 625.70 | 605.06 | 621.25 | 11,610,476 | Feb 24, 2012 | 603.87 | 617.88 | 600.35 | 609.90 | 8,441,069 | Feb 17, 2012 | 610.50 | 613.83 | 597.73 | 604.64 | 11,027,452 | Feb 10, 2012 | 595.01 | 614.50 | 594.01 | 605.91 | 10,362,666 | Feb 3, 2012 | 578.05 | 597.07 | 573.40 | 596.33 | 12,378,565 | Jan 27, 2012 | 586.00 | 588.66 | 564.55 | 579.98 | 18,304,446 | Jan 20, 2012 | 631.98 | 640.99 | 581.70 | 585.99 | 21,554,632 | Jan 13, 2012 | 646.50 | 647.00 | 616.91 | 624.99 | 14,497,771 | Jan 6, 2012 | 652.94 | 670.25 | 651.76 | 652.73 | 11,350,312 | Dec 30, 2011 | 632.00 | 645.90 | 632.00 | 645.90 | 5,311,777 | Dec 23, 2011 | 628.01 | 631.88 | 618.96 | 631.88 | 8,854,683 | Dec 16, 2011 | 621.88 | 636.55 | 612.49 | 625.96 | 16,988,321 | Dec 9, 2011 | 627.64 | 631.90 | 615.30 | 627.42 | 12,965,427 | Dec 2, 2011 | 579.37 | 624.00 | 576.50 | 620.36 | 15,766,123 | Nov 25, 2011 | 587.76 | 588.50 | 561.33 | 563.00 | 6,969,586 | Nov 18, 2011 | 608.00 | 618.30 | 593.75 | 594.88 | 15,256,263 | Nov 11, 2011 | 593.32 | 614.37 | 591.56 | 608.35 | 16,945,231 | Nov 4, 2011 | 595.09 | 599.74 | 576.75 | 596.14 | 13,309,960 | Oct 28, 2011 | 586.72 | 602.70 | 572.86 | 600.14 | 15,130,552 | Oct 21, 2011 | 583.72 | 592.75 | 577.40 | 590.49 | 17,515,901 | Oct 14, 2011 | 525.18 | 599.60 | 523.20 | 591.68 | 22,574,478 | Oct 7, 2011 | 509.85 | 520.50 | 480.59 | 515.12 | 19,448,415 | Sep 30, 2011 | 527.25 | 547.05 | 513.25 | 515.04 | 13,540,851 | Sep 23, 2011 | 540.35 | 558.52 | 514.00 | 525.51 | 14,945,862 | Sep 16, 2011 | 517.96 | 546.84 | 517.50 | 546.68 | 14,216,106 |

Similar Documents

Premium Essay

Finance Assignment

...JOURNAL OF ECONOMICS AND FINANCE EDUCATION  Volume 9  Number 2  Winter 2010 29 Using Microsoft Corporation to Demonstrate the Optimal Capital Structure Trade-off Theory John C. Gardner, Carl B. McGowan Jr., and Susan E. Moeller1 ABSTRACT In this paper, we apply the trade-off theory of capital structure to Microsoft. We use data for bond ratings, bond risk premiums, and levered CAPM betas to compute the cost of equity and the weighted average cost of capital for Microsoft at different debt levels. This study shows the impact of increasing financial leverage on WACC. As financial leverage increases, the WACC decreases until the optimal debt ratio is reached, after which, the WACC begins to rise. At this debt ratio, the value of Microsoft will be maximized. Our results indicate the optimal debt ratio for Microsoft is 37.5 percent. Introduction One of the most difficult concepts for finance students to learn and for faculty to teach is how a firm determines its optimal capital structure. While most corporate finance textbooks stress the importance of maximizing the value of the firm by minimizing its opportunity cost of capital, how a firm can actually achieve the appropriate debt–to–capital ratio is often a mystery. Brigham and Ehrhardt (2008) in Financial Management: Theory and Practice outline a framework that can be used by financial practitioners to determine a firm’s optimal capital structure. Modigliani and Miller (1958 and 1963) provide the basis for the......

Words: 4181 - Pages: 17

Free Essay

Finance Assignment 1

...Complexity of the US Financial System Michelle Bates Professor: Ahmad Zia Rawish Strayer University May 6, 2015 Principle of Finance 100 Complexity of the US Financial System How does the US financial market impact the economy? The financial market has different financial products including derivatives, bonds, and stocks among others. Derivatives are very complicated financial products that gain value from stocks and bonds (Altig, Christiano, Eichenbaum & Linde, 2011). These financial products are futuristic in the sense that they are based on future investments. Their effect on the economy is that they reduce its volatility. How does the US financial market impact business? One of the most significant impacts of financial markets on businesses is access to credit (Garbade, 2014). When the financial markets are not doing well, the general access to credit for businesses is also affected. Banks and financial institutions reduce their lending rates as a precautionary measure to avoid defaulters. As a result, businesses cannot get access to loans hence impeding their ability to continue running and expanding. How does the US financial market impact individual? When the financial markets are failing, the borrowing rates increases while the number of investors reduces (Garbade, 2014). Due to the raised borrowing rates, the prices of commodities go up reducing individuals’ purchasing power. As the prices go up, people are left...

Words: 733 - Pages: 3

Premium Essay

Finance Group Assignment

...Subject Code Subject Name Assessment Type Due Date Submitted via ACC 201 Finance Group Assignment (maximum 3 students) Friday of Week 11 before mid-night 1st June 2012 Email shagunkhemka@hotmail.com Weight 30% of the total assessment You are required to ANSWER THE FOLLOWING QUESTION. The assignment must be typed, and you must attach a cover sheet duly signed and dated. Students are encouraged to use excel spreadsheets for their calculations. Students are reminded to follow the Plagiarism Guidelines, and any suspicious assignments would be further investigated. The lecturer will discuss the plagiarism guidelines during the semester. If the students need any assistance with regards to referencing, or understanding plagiarism, they should contact the lecturer directly. Any queries regarding this assessment task should be directed towards your lecturer. Page 1 of 3 One year ago, your company purchased a machine for $210,000. You have learned that a new machine is available that offers many advantages; you can purchase this new machine for $260,000 today. It will be depreciated on a straight-line basis over ten years and has a salvage value of $10,000. You can expect that this new machine will produce a gross margin (revenue minus operating expenses other than depreciation) of $40,000 in the first year and this is expected to grow by $5,000 for the first 4 years (until the end of year 5) after which is expected to remain the same. The current machine is......

Words: 569 - Pages: 3

Premium Essay

Finance Assignment 1

...FIN-516 WEEK 1 – HOMEWORK ASSIGNMENT Problem Based on Chapter 14, Residual Dividends Middlesex Plastics Manufacturing had 2011 Net Income of $15.0 Million. Its 2012 Net Income is forecast to increase by 8%. The company’s capital structure has been 35% Debt and 65% Equity since 2010, and the company plans to maintain this capital structure in 2012. The company paid $3.0 Million cash dividends in 2011. The company is planning to invest in a major capital project in 2012. The capital budget for this project is $12.0 Million in 2012. • If Middlesex increases its cash dividends in 2012 at the same rate of growth as its Net Income rate, what will be the total 2012 dividend payout in Dollars? • What is the 2012 dividend payout ratio if the company increases its dividends at 8%? • If the company follows a residual dividend policy, and maintains its 35% Debt level in its capital structure, and invests in the $12.0 Million capital budget in 2012, what would be the Residual Dividend level (in Dollars) in 2012? What would be this Residual Dividends payout ratio? • How much additional capital (Debt and/or Equity) will the company have to raise from outside sources in 2012 if it invests in this capital project, and follows a residual dividend policy? • What would be the prudent dividend policy for 2012?: Pay dividends at the current dividend growth rate of 8%, or pay the residual dividend amount. 1. If Middlesex increases its cash dividends in 2012 at the......

Words: 764 - Pages: 4

Premium Essay

Corporate Finance Midterm Assignment

...MANAGEMENT DEVELOPMENT INSTITUTE OF SINGAPORE IN TASHKENT (MDIST) ASSIGNMENT SUBMISSION COVER SHEET Course : Year 2 Module : Corporate Finance Lecturer : ShavkatMamatov Assignment Type : Group Due Date : 24.03.12 S/N | Student Name (As reflected in Passport) | ID Number | Student Signature | 1 | | | | 2 | | | | 3 | | | | 4 | | | | Submitted on Due Date (Yes/No) : Yes MDIS Tashkent Chilonzor district, 28, Bunyodkor Ave., Chilanzar district, Tashkent 100185, Uzbekistan MEMO Date: March 03, 2012 To: All Investment Club Members From: Board of Directors Personnel Dept. MDIS Building, Office 427 Ext. 3875 cf@mdis.uz Subject: Analysis and Recommendations for Investment Club Members The objective of the following memorandum is to find out the best proprtion of investment in two asset portfolio and give recommendations based on the calculated outcomes. To begin with, we have gathered the following information pertaining to two companies of your club’s interest. Company Name | Return | Risk | Registon Co | 15.4% | 8.87% | Sharq Co | 14.0% | 4.9% | From the above return and risk information, our investment club has also came out with three potential portfolios of how much to invest in Registon Co and Sharq Co. This is shown below: Portfolio | Proportion of fund invested in | | Registon Co | Sharq Co | A | 0.80 | 0.20 | B | 0.50 | 0.50 | C | 0.25 | 0.75 | Based on the information provided above......

Words: 1147 - Pages: 5

Premium Essay

Corporate Finance Assignment

...ASSIGNMENT 1: DUE SEPTEMBER 23, 2014 Problem 1 (a) “The fact that firms so heavily rely on their internal capital market as a source of financing is strong evidence that internal markets are more efficient than external markets.” ANSWER Although internal capital is preferable to external capital based on the reasons below: * According to the pecking order theory (Myers, 1984; Myers & Majluf, 1984), firms follow a hierarchical financing pattern. Thus, firms would prefer internal funds (retained earnings) to external funds because: * External capital would result in higher cost of capital, due to direct costs such as underwriters’ fees and indirect costs such as under-pricing. * Using internal capital is much easier for managers because the cost of capital is lower and investment decisions do not need to be scrutinised by investors. * Reliance on internal capital/funds is the cheaper source of financing. However, it does not indicate that external markets are less efficient than internal markets in any way. (b) “The stock price of a company paying out a regular dividend can be expected to fall on the payment date, not on the record date or the ex-dividend date.” This statement is false. Investors begin to trade their shares on the ex-dividend date after a company has declared its dividend policy, and this is when the stock price of a company can be expected to change or fall. Thus, stock prices fall on the ex-dividend dates to......

Words: 2055 - Pages: 9

Premium Essay

Corporate Finance Assignment 1

...Assigment 1 Problem 1 a) “The fact that firms so heavily rely on their internal capital market as a source of financing is strong evidence that internal markets are more efficient than external markets.” Firms use internal capital because it is much easier for managers to use profits from previous years to finance their investments, management don´t have to prove their investment decisions to investors. If management would need to finance investment with external capital, the cost of the capital would much higher than using internal capital. Issues would cause direct costs for (järjestämisestä) and take time and effort from the management. Indirect costs could also (accure) when management would need to underprice the issue to make sure it would succeed. Firms rely on their internal capital because it is easier and cheaper way to finance investments. It does not mean that external markets are more unefficent than internal and the (väite) is false. b) “When underwriting equity or bond issues, investment banks are merely acting as financial intermediaries without taking any risk of their own. Therefore, they are charging unrealistically high fees for their services.” Underwriters act in three different roles. Firstly, they provide financial advisory and make careful analysis what the issue is likely to be worth. Underwriters also have dialogies with the potential investors to find out how high the demand is with different prices. Secondly, underwriters......

Words: 700 - Pages: 3

Premium Essay

Week 8-Hsm/240 Assignment (Finances)

...Finances HSM/240 November 24, 2013 These past few weeks, the organization that I have focused my time and effort on would be the Department of Human Services (DHS). This is an organization in Michigan that focuses purely on helping the communities around it. They have many different programs to fit many different needs such as cash assistance, medical assistance, food assistance, even assistance with child support. They strive to reach and help all those that are in need in the area, no matter what the person needs help with. The DHS stretches to help a lot of people as often as it can, so it’s safe to say that they go through a lot of money each month, and this leads back to the question of where the funding comes from. The DHS is a state agency, so it is government funded. They are given an allowance, or budget, from the government. This budget is split up between the programs so that each program is able to thrive and move properly. This agency’s funding comes from what I would consider to be a pretty reliable source. The government sends out the money to the company so unless it was voted that the organization wasn’t needed and didn’t need the funding, the money automatically goes to them. The next question that was asked of us to include the answer to in this paper was regarding the funds. The question was whether or not the organization implemented financial accountability measures to ensure that funds were being used properly. This is a tough one, I spent......

Words: 730 - Pages: 3

Premium Essay

Week 2 Assigment

...Week 2 Assignment: Understanding Effective Money Management Assessment A, Part 1: Creating a Personal Financial Statement - Assets | 1 point | Car: Bluebook value $1250.00Cash: $378.00Savings Accounts: $826.00 | Assessment A, Part 2: Creating a Personal Financial Statement - Debts | 1 point | Rent: $750.00Electric/ Gas bill: $131.75Cable/ internet/ Phone bill: $80.42Credit Card: $31.00Cell phone bill: $72.37 | Assessment A, Part 3: Identify Money Management Tool | 1 point | Explain to Monica how the money management tools were identified. | Students should explain how they evaluated various cash management products and services. | Assessment A, Part 4: Creating a Personal Financial Statement – Steps | 1 point | Drag the steps listed on the right into their correct sequences on the left. When done click the Send button | Step 1: I got all my financial stuff together – bills, loans, bank statements, etc. | Step 2: I balance my checkbook. | Step 3: I decided what were my assets and what were my debts. | Step 4: I enter my assets in the program. | Step 5: I enter my debts in the program. | Step 6: The program gave me a Net worth figure at the end. | Assessment B: Creating a Monthly Cash Flow Statement ...

Words: 255 - Pages: 2

Free Essay

Misconceptions of Algebra

...Diagnostic Algebra Assessment Definitions Categories Equality Symbol Misconception Graphing Misconception Definition Concept of a Variable Misconception Equality Symbol Misconception As algebra teachers, we all know how frustrating it can be to teach a particular concept and to have a percentage of our students not get it. We try different approaches and activities but to no avail. These students just do not seem to grasp the concept. Often, we blame the students for not trying hard enough. Worse yet, others blame us for not teaching students well enough. Students often learn the equality symbol misconception when they begin learning mathematics. Rather than understanding that the equal sign indicates equivalence between the expressions on the left side and the right side of an equation, students interpret the equal sign as meaning “do something” or the sign before the answer. This problem is exacerbated by many adults solving problems in the following way: 5 × 4 + 3 = ? 5 × 4 = 20 + 3 = 23 Students may also have difficulty understanding statements like 7 = 3 + 4 or 5 = 5, since these do not involve a problem on the left and an answer on the right. Falkner presented the following problem to 6th grade classes: 8 + 4 = [] + 5 All 145 students gave the answer of 12 or 17. It can be assumed that students got 12 since 8 + 4 = 12. The 17 may be from those who continued the problem: 12 + 5 = 17. Students with this misconception may also have difficulty with the idea that......

Words: 797 - Pages: 4

Free Essay

Prg/211 Calorie Count Tool

...Team B Calorie Count Tool PRG/211 May 5, 2014 Team B Calorie Count Tool PROBLEM STATEMENT Team B was asked to develop a program which would calculate the user’s daily intake of calories and measure those calories against the overall calories expended. The core purpose of this program will do two primary functions. First, it will record the user intake of calories as acquired through meals throughout the day. Second, the user will record caloric output associated with physical activity. This information will be calculated together to determine the caloric surplus or deficit for the user. In order for the program to execute accurately, and provide customized results, the user will be required to input personal data to include gender, age, weight, and height. This additional information is essential to determine the user’s default caloric burn rate, otherwise known as the basal metabolic rate (BMR). The BMR and the calories burned as a result of physical activity will be calculated against the intake of calories to determine the overall success for the user. As the program is executed it must: * Record user name, age, height, weight to enable more accurate calculations * Record the users specific caloric values entered for each meal * Record the user activity and caloric burn values for that activity * Calculate the basal metabolic rate (BMR) for the individual * Subtotal the total caloric values for the day * Combine the physical activity......

Words: 1524 - Pages: 7

Premium Essay

Student

...Problem Solving with Computing Homework - WEEK 2 [30 points] This is a review of some of the material from Chapter 2 and lectures from class. No credit for answers that are copies or near verbatim transcripts – please use your own words1 and document sources where appropriate. 1 This will apply to all assignments in this class. Answer the following questions: Chapter 2 1. Short Answers [1 point each, 2 points total] 1. What does a professional programmer usually do first to gain an understanding of a problem? The first thing that a professional programmer usually do first to gain an understanding of a program is to closely relate customer (Interview ) to inquire or gather information about the problem. 2. What two things must you normally specify in a variable declaration? The two things normally specified in a variable declaration are the variable type and identifier. 2. Algorithms / Pseudocode [1 point each, 5 points total] 1. Design an algorithm that prompts the user to enter his or her height and stores the user’s input in a variable named height. Declare height Display “Enter Your Height” Input Height Display “Height” 2. Write assignment statements that perform the following operations with the variables a and b. - Adds 2 to a and stores the result in b. - Subtracts 8 from b and stores the result in a Set b=2+a Set a=b-8 3. Write a pseudocode statement that declares the variable cost so it can hold real numbers. Floating......

Words: 1823 - Pages: 8

Free Essay

Mobile Service Provider

...11108944 Name: ASHWINI KUMAR Roll No. : RE3R02B32 PART- A 1. Ans :- (a) unary and ternary operator Unary operator:- It pecedes an operand . The operand (the value on which the operator operates ) of the unary operator must have arithmetic or pointer type and the result is the value of the argument. Example:- If a=5 then +a means 5 If a=0 then +a means 0. If a=-4 then +a means -4. Ternary operator:- It precedes an operand. The operand of the unary operator must have arithmetic type and the result is the negation of the operand’s value. Example:- If a=5 then –a means -5 If a=0 then –a means 0 If a=-4 then –a means 4. (b) Assignment and equalto operator Assignment operator:- Equal to operator: An assignment operator assigns value In this we put the To a variable. value as it is. Example – Example- a*=5 means a=5*5. Int a; a=5 means a is initialized with 5 if(a==5) { return true; } return false; (c) Expression and statement Expression:- An expression is any valid combination of operators , constants , and......

Words: 399 - Pages: 2

Free Essay

Book Report

...Selection statements Selection is used to select which statements are to be performed next based on a condition being true or false. Relational expressions In the solution of many problems, different actions must be taken depending on the value of the data. The if statement in C I used to implement such s decision structure in its simplest form – that of selecting a statement to be executed only if a condition is satisfied. Syntax: if(condtion) statement executed if condition is true When an executing program encounters the if statement, the condition is evaluated to determine its numerical value, which is then interpreted as either true or false. If the condition evaluates to any non-0 value (positive or negative), the condition is considered as a “true” condition and the statement following the if is executed; otherwise this statement is not executed. Relational Operators In C Relational operator | Meaning | Example | < | Less than | age < 30 | > | Greater than | height > 6.2 | <= | Less than or equal to | taxable <= 200000 | >= | Greater than or equal to | temp >= 98.6 | == | Equal to | grade == 100 | != | Not equal to | number !=250 | In creating relational expressions, the relational operators must be typed exactly as given in the above table. Thus, although the following relational expressions are all valid: age > 40 length <= 50 temp >= 98.6 3 < 4 flag == done day != 5 The following are invalid: length =< 50 ...

Words: 1617 - Pages: 7

Free Essay

Study Habits

...STUDY HABITS OF SECOND YEAR BS-AVTECH STUDENTS OF PATTS COLLEGE OF AERONAUTICS S.Y 2013-2014 An Undergraduate Research Presented to The Languages Department of PATTS College of Aeronautics In Partial Fulfillment of the Requirements for the course ENGL 211 – Technical Report Writing By Guevarra, Giorgio Martin C Guevarra, Lorenzo Miguel Jang, Jose, Yosalina, Leo Xander March 2014 ACKNOWLEDGEMENT The researcher would like to express our thanks to the lord. Our God for his guidance towards everything we do In life, including this study that we had made, and for being an inspiration for us all to do our best in life. We give our thanks to Ms. Karen M. Millano, our adviser for ENGL 211, for carefully and patiently guiding us so that we may finish the thesis research, and for supporting us and believing in us, that we can accomplish our task finishing the thesis. To the respondents of this study, we express our gratitude because without them, this thesis research would not have been completed, we thank them for allowing us to conduct a survey during their spare time, and their patience and integrity in answering the survey. To our parents, for their support and everlasting patience and understanding for us. And lastly to our classmates, since they have been with us since the beginning of the semester and they had been our companions in everything we do for the subject ENGL 211. ABSTRACT STUDY HABITS OF...

Words: 413 - Pages: 2