Stockholders may assume when reading the financial statements that they would be receiving a higher return each month or quarter when in reality that would not be the case especially if they are planning on switching to LIFO. It is unethical to make a huge financial decision based on only short term goals. The Sabarnes-Oxley act of two-thousand and twelve, contains 11 sections detailing rules and regulations for financial reporting. The SOX act section 404 requires that management of
The correlation between price and how much good/service is supplied to the market is known as supply relationship. In the case of Bodyline in Table 6, as the price goes up, the quantity of Californians would go down. This seems to be logically correct because as the price of a good goes up, people would naturally avoid buying a product that will force them to abstain expenditure of something else they value more. The data in Table 6 is plotted in the graph shown below. According to Price (£) vs. Demand of Californians graph, it shows the negative relationship between price and quantity demanded.
There are certain steps that need to be taken to insure that CanGo can make profit from year to year. CanGo also operates at a high debt ratio. This means that it is imperative for CanGo to produce efficiently and not lag and any quarter of any year. This will prevent possible bind for cash or losing shareholders trust. CanGo has very low profitability ratios, low turnover ratios and a high debt equity ratio.
Having ruled out other causes for the flat sales, we were left with one inference that was probably but not certainly the cause: a poorly executed promotion. (Pg. 151) 3) A. Stimulus-response -- We had to increase price in our product due to the lack of
This inevitably raised its leverage, allowing the company to take risks and outperform the market and its competitors. 3. What does Marriott estimate their equity beta to be? Using this estimate and other details reported in the case, what do you predict the equity beta of Marriott would be if they had no debt in their capital structure? Marriott estimates its equity beta to be 1.11.
• Significant debt issue is a concern as it is risky and in conflict with the company’s culture and managerial of low-risk attitude. Hence, 20% debt-to-capital restructure is recommended as it is not significant amount as opposed to other alternatives. • Other effects, including financial distress, signaling, investment and clientele considerations, are difficult to measure but predictable to balance out to a mildly optimistic set of considerations. • An alternative approach is to increase debt in order to use the proceeds to pay dividends, however it is not recommended. In conclusion, if Hill Country were to engage in the leveraged recapitalization, this report would highly recommend the 20% debt-to-capital ratio be used to repurchase shares.
Lower risks and higher chances for maximized earnings proved to be a major concern in this decision (University of Phoenix, 2004). Castor Standard has lower deductibles that fall into the suitable range for what ConstructIt’s employees can afford (University of Phoenix, 2004). Castor Standard carries a lower risk factor when provided to a company with ConstructIt’s statistics and demographics. Castor Standard does not cover pre-existing conditions and is suitable for ConstrucIt but this does not provide much revenue for CCHP (University of Phoenix, 2004). The total cost of premiums charged to ConstructIt are $3,428, the earnings from this are $3.43 million (University of Phoenix, 2004).
Memorandum To: Kimi Ford From: xxxxx Date: 6 July, 2001 Subject: Nike’s cost of capital The firm’s cost of capital is the opportunity cost of an investment, which provides a benchmark of firm uses of capital against the capital market alternatives. It is important to estimate a firm’s cost of capital because there will be no economic value created for the investors if the firm earn below its cost of capital. In another word, cost of capital is the minimum required rate of return set by the investors. WACC, as a common practice of expressing a firm’s coast of capital, calculates the weighted average of the cost of individual sources of capital employed. My evaluation of Nike’s share price is based on Joanna Cohen’s analysis.
Owning the best available technology is aligned to high cost-expenditures, therefore i.e. 80% of cellphone consumers tend to resell their less technological developed products at the end of year one, in order to reinvest their proceeds in the latest model. Recommerce providers require to implement differentiation strategy in order to distinguish from competitors by: 1. creating value for buyers that is not easily imitated or matched The buyer pays for the service offered by the recommerce provider, which resells the product and offers the buyer a lower price in order to operate profitable. The value of the buyer of using the providers services requires to be greater than the loss through purchasing the service. Moreover the customer and the seller realize the value of "right-sizing".
Ahold can better spread his risk. b) ING has a high equity beta and a low asset beta. They had to have a lower asset beta because they can’t get customers if they have a big risk to fail. A bank has to be reliable. Vraag 4 a) Debt beta measures the sensitivity of the return on debt to the returns of the market.