Technological How important is leading-edge technology to H-D? 5. Global Given what you know about H-D motorcycles, why does a global market exist for this product? Industry Analysis 1. Suppliers Has H-D managed to reduce the power of suppliers?
Nike, Inc.: Cost of Capital - QUESTIONS 1. Why is it important to estimate a firm’s cost of capital? What does it represent? Is the WACC set by investors or by managers? The cost of capital is rate of return required by a capital provider in exchange foregoing an investment in another project, assets or business with similar risk.
Ratios can tell if the business is using its assets appropriately, and if liabilities of the company are well-managed. It shows whether a business can invest in more capital, or if there is room for business growth. It shows whether a business will be able to pay off its debts or their short-term expenses or their daily expenses. It basically shows the strength and weaknesses of the business. It helps for forecasting on making certain financial decisions.
Consider both DJC’s performance in Kawasaki and it’s potential in the United States. (3). What accounts for these differences? How much of the difference is inherent in the way each of the two companies competes? How much is due strictly to differences in the efficiency of the operations?
Discuss the advantages and the limitations of “ratio analysis” There are several advantages and limitations of accounting ratios, I will address some of the key ones in this section Advantages * Accounting ratios can be used by investors to make decisions on whether or not to invest in a company or sell existing shares. * Accounting ratios can be used by management to give an indication of a company’s financial health i.e. is the company profitable? Can they meet creditor obligations? Are stock levels being efficiently managed?
Examine the financial summaries for information about the fiscal condition of the company. Did the company show a profit? What sorts of recommendations are made and what suggestions are made regarding business activities for the up-coming year? If possible, find a copy of the Annual Report from the previous year. Compare the 2 and report on whether the projections from the first report were accurate.
Managerial Decision-making using Financial Ratios MGMT640 Managerial Decision-making using Financial Ratios Abstract: Background: Financial statements allow stockholders and management to determine the financial health of a business. Using ratio analysis businesses can gain a snapshot of their durability compared to other companies within their industry. Managerial decision-making skills are a direct correlation on the financial wealth of a business, and can identify strengths and weakness within an organization. Results: Quantitative results are shown though using financial ratios and financial statements. The financial ratios can be divided between five core categories.
Which firm do you think is Ducati’s closest rival prior to the turnaround? (Note: “performance” refers to racing performance, hence there is a trade-off with comfort. “function” refers to emphasis on tangible aspects of the bike, “lifestyle” on intangibles – again, a trade-off is assumed). [pic] Add a brief paragraph to explain your graph, and answer the following: how intense is rivalry in the motorcycle industry? Which firm do you think is Ducati’s closest rival prior to the turnaround?
Ratio Analysis enables managers to compare its performance and condition with the average performance of similar businesses in the same industry. This is done by comparing the ratios of the company with the average of other similar businesses for several years, concentrating on any unsuccessful changes that may be beginning. Ratio analysis may also provide the early warning factors that could resolve problems before they increase and completely destroy the business. (Harold, 2009) Ratio analysis detailed calculations are shown below: Rate of Return on Net Sales: Is Net Income ÷ Net Sales Rate of Return on Total Assets: Net Income + Interest Expense ÷ Average Total Assets Return on Stockholders Equity: Net Income – Preferred Dividends ÷ Average Common Stockholders’ Equity (Horngren, Harrison, 2008) Working Capital: Current Assets – Current
Finally, a benchmarking analysis with a comparison to the same two companies mentioned above will be presented. Financial Statements Each statement gives the reader important information about the company, but the reader must also look at how the information flows from one statement to another through a ratio analysis. The Inernational Financial Reporting Standards and International Accounting Standards Board (2008) have proposed the use of the same section names and categories in each of the statements. Figure A shows details of their proposal, which is currently under consideration by the Financial Accounting Standard Board (FASB). This section will look at each statement and then an analysis between them using ratios.