...(resource allocation) To become advanced users To become advanced preparers … The “users” of accounting information Primarily “external” oriented Financial Accounting Managerial Accounting Primarily “internal” oriented Tax Accounting Primarily “external” oriented Financial Accounting and Reporting Generally Accepted Accounting Principles (GAAP), International Accounting Standards (IAS), International Financial Reporting Standards (IFRS) Financial Statement / Annual Report Balance Sheet / Statement of Financial Position Income Statement / Statement of Comprehensive Income Statement of Cash Flows Statement of Changes in Equity Notes Statement of financial position: contents and structure STATEMENT OF FINANCIAL POSITION (current/non current criteria) Non-current assets Property, plant and...
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...02N Kaplan University October 4, 2011 Table of Contents I. Abstract………………………………………………………………………2 II. Meet Pepsico……………………………………………………………….3 III. Capital Structure Issues……………………………………………3-4 IV. Business and Financial Risks……………………………………4-6 V. Growth Opportunities………………………………………………6-7 VI. Modigliani and Miller’s Capital Structure Theory……….…7 VII. Criticisms of the MM Model and Assumptions……………7-8 VIII. PepsiCo’s Capital Structure……………………………………….8-9 IX. Conclusion…………………………………………………………………..9 X. Refrences…………………………………………………………………..10 ABSTRACT The following research will examine the capital structure of Pepsico and how the choices that the company makes affects their return on investment and their risk profile. The traditional theory of capital structure theorizes, “when the Weighted Average Cost of Capital (WACC) is minimized, and the market value of assets are maximized, an optimal structure of capital exists.” Pepsico analyzes their capital structure annually with their Board, including dividend policies and share repurchase activity. Long-term debt and solvency analysis will also be used to examine their capital structure in terms of financing sources and their ability to satisfy long-term debt and investment obligations. A review of Pepsico’s decisions in recent years will be able to help determine some of the reason’s why the company’s return on equity (ROE) deteriorated from 2008 to 2009 and from 2009 to 2010. Pepsico...
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...structured process implemented in an organization to solve fields of concern such as client criticism, economic affairs, and functional research by accumulating appropriate facts and clearly defining an answer which in turn amplifies the organization’s profits, performances, and opportunities. In addition, the role of an organization is to invest time and resources in gathering related material and by making decisions which correlates with the desired outcome for the advancement, welfare and growth of the organization. For instance, a mobile company is associated with a risk on their new product cost and services, this is where the business research process comes to play. These issues are resolved by making right decisions by collecting relevant information. For example, either by conducting survey from ‘n’ number of customers or through direct feedbacks or comments posted by the product users on the company’s webpage. Q.2 You have received a business research report done by a consultant for your firm, a life insurance company. The study is a survey of the customer satisfaction based on a sample of 600. You are asked to comment on its quality. What will you look for? Answer: With the projected survey record, I would discover and examine all possible features which were considered by the consultant to measure the quality. Also I would research and review the reason for choosing a sample of 600. Before going into the survey report I would study whether the consultant is professional...
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...Accounting Information Doing accounting takes expert knowledge, considerable experience and continuous attention to new problems and solutions. Concepts and principles are important, as they form logical structure that practising accountants use every day to consider problems to make recommendations GAAP (Generally Accepted Accounting Principles) applied differently for different entities Rules, standards and usual practices that companies are expected to follow when preparing financial statements Stock market crash of 1929 brought GAAP AASB (Aust Accounting Standards Board) IASB (International Accounting Standards Board) AASB uses IASB as foundation, but includes more details applicable to Aust environment SACS – Statement of Accounting concepts SAVS established for general concepts and principles to be used in preparing financial statements SAC 1 – Definition of a Reporting Entity SAC 2 – Objective of General Purpose Financial Reporting SAC 3 – Qualitative Characteristics of Financial Information SAC 4 – Definition and Recognition of the Elements of Financial Statements Now, SAC 3 and SAC 4 is replaced with “Framework for Preparation and Presentation of Financial Statements” FYI: Difficulties that face accounting and managers by GAAP Difference in company structures – e.g. ABC = not for profit, publicly owned. Should ABC use same methods as other profit seeking organisations? Qantas / UNSW – employees are not assets. But for sports team...
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...the relation between the cost of equity capital and seven attributes of earnings: accrual quality, persistence, predictability, smoothness, value relevance, timeliness, and conservatism. We characterize the first four attributes as accounting-based because they are typically measured using accounting information only. We characterize the last three attributes as market-based because proxies for these constructs are typically based on relations between market data and accounting data. Based on theoretical models predicting a positive association between information quality and cost of equity, we test for and find that firms with the least favorable values of each attribute, considered individually, generally experience larger costs of equity than firms with the most favorable values. The largest cost of equity effects are observed for the accounting-based attributes, in particular, accrual quality. These findings are robust to controls for innate determinants of the earnings attributes (firm size, cash flow and sales volatility, incidence of loss, operating cycle, intangibles use/intensity, and capital intensity), as vi/ell as to alternative proxies for the cost of equity capital. W I. INTRODUCTION e investigate the association between attributes of accounting earnings and investors* resource allocation decisions, using the cost of equity capital as a .summary indicator of those decisions. Specifically, we analyze the extent to which We are grateful to Alon Brav for access...
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...Mekelle University College of Business and Economics Department of Accounting and Finance THE DETERMINANTS OF CAPITAL STRUCTURE Evidence from Commercial Banks in Ethiopia By K i b ro m M e h a ri F i s s e h a Reg.No.-CBE/PR0025/01 Research Project Submitted to the Department of Accounting and Finance, College of Business and Economics, Mekelle University, for the partial fulfillment of the degree of Master of Finance and Investment Under the Guidance of Aregawi Gebremichael (Ph.D. Candidate) Assistant Professor May, 2010 Mekelle, Ethiopia i THE DETERMINANTS OF CAPITAL STRUCTURE Evidence from Commercial Banks in Ethiopia By Kibrom Mehari Fisseha Reg. No. CBE/PR0025/01 ii DECLARATION I, Kibrom Mehari Fisseha, hereby declare that the project work entitled “The Determinants of Capital Structure: Evidence from Commercial Banks in Ethiopia” submitted by me for the award of the degree of Master of Science in Finance and Investment of Mekelle University, is original work and it hasn’t been presented for the award of any other Degree, Diploma, Fellowship or other similar titles of any other university or institution. Place: Mekelle Signature: Date: May, 2010 ………………….. KIBROM MEHARI FISSEHA iii CERTIFICATION I certify that the project work entitled “The Determinants of Capital Structure” is a bona-fide work of Mr. Kibrom Mehari who carried out the research under my guidance. Certified further, that to the best of my...
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...1. Snyders of Hanover, which sells more than 78 million bags of pretzels, snack chips, and organic snack items each year, had its financial department use spreadsheets and manual processes for much of its data gathering and reporting. Hanover’s financial analyst would spend the entire final week of every month collecting spreadsheets from the heads of more than 50 departments worldwide. She would then consolidate and re-enter all the data into another spreadsheet, which would serve as the company’s monthly profit-and-loss statement. If a department needed to update its data after submitting the spreadsheet to the main office, the analyst had to return the original spreadsheet and wait for the department to re-submit its data before finally submitting the updated data in the consolidated document. Assess the impact of this situation on business performance and management decision making. First, it is easy to see that Snyders of Hanover needs to be updated, with the use of modern systems and technology, or better to update it. For example, how long it takes to do all these activities and how long it takes to making decisions? So, it is evident that the organization of this company is based in a manual system, the management department needs to work in to introduce a new IT. Imagine paying salaries for employers, to pay providers, to pay services, etc. It is important to plan a technological change after a deep study of the functioning in this company. So to apply the management...
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...Literatures Review……………………………………………………..14 Methodology and Model…………………………………………….... 16 Findings………………………………………………………………….18 Conclusion……………………………………………………………….19 References………………………………………………………………20 Financial Accounting INTRODUCTION Financial accounting refers to information describing the financial resources. Obligation and activities of an economic entity (either an organization or an individual). Accountants use the term financial position to describe an entity’s financial resources and obligations at appoint in time and the term results of operations to describe its financial activities during the year. Financial Accounting encompasses the record-keeping aspect of accounting and therefore provides much of the data to which accounting principles are applied in the preparation of financial statements and other financial information. Personal record keeping often uses a simple single-entry...
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...Apple Computers Strategic Audit Guillermo Magana Embry-Riddle Aeronautical University Abstract This paper analyzes Apple Computers current state as a business and industry leader. Each part of their strategic audit is dissected and broken down to have a better understanding of it. From the company’s current performance and strategic posture to its leader, Steve Jobs, and the team that drives the company to its incredible success. Strengths, Weakness, Opportunities and Threats (SWOT) analysis is discussed to determine how External and Internal factors affect the decisions being made by management. Finally and attempt is made to provide alternatives and a strategy to further the success Apple currently enjoys. So kick back play your favorite song on iTunes, check your stocks on your iPad and make sure to put your iPhone on silent before we start. Apple Computers Strategic Audit Current Situation Current Performance: Strong financial results for the third fiscal quarter in 2011; no debt. Best quarter ever recorded with $28.57 Billion in revenue. Record $7.31 Billion in net profits. The number of retail stores amounted to over 300 retail stores worldwide. Strategic Posture: The company strategic posture is clearly stated, and is also backed up by its strong performance. Mission, Apple is committed to bringing the best personal computing and music experience to its customers. The company has a unique ability to design and development its own hardware and software...
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...Competency modelling: A better approach in contemporary HRM practice? Introduction In the contemporary human resource management (HRM) practice, the process of human resource assessment and selection is shifting from the traditional job-based system of HRM to a newly-established competency approach. According to Dubios’ work (1998), more and more medium-sized and larger organizations are adopting the competency approach to replace the traditional job-oriented method to select and assess their employees in the USA and around the globe. This change happens mainly for the reason that the traditional job-based personnel management systems have shown a tendency to break down when jobs are dissolving under more flexible working conditions and simplification of the bureaucratic hierarchies of the contemporary organizations (Lawler, 1999). Based on the works of Nyboe (2004), in principle there are two distinct approaches to align work and competencies: to start with the work and adjust people and their qualifications to work requirements (job or production approach) or, alternatively, to start with the worker and assign tasks to workers according to their skills (competency or training approach). On one hand, in the job approach, tasks are grouped into individual jobs according to what is regarded a rational division of labor, and workers are recruited and trained to meet the requirements of those tasks. On the other hand, a competency approach has a shift of focus from...
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...One of the most important decisions that must be taken when selecting from a range of projects is which method(s) of Capital Budgeting a company will opt for in order to arrive at the final proposed solution. “Investment decisions must be consistent with the objectives of the particular business. For a private sector business, maximising the wealth of the owners (shareholders) is usually assumed to be the key financial objective.” (Atrill and McLaney, 2009, p. 259) As a company exists primarily to increase the wealth of the stakeholders it should only invest capital to implement a project when the outcome will result in benefits that exceed the cost of the investment. Appraisals need to be carried out in order to select the project which provides the best return on that investment. Capital Budgeting is the process of appraising these projects in order to select the project most suited to the company‟s strategy. The purpose of this report is to discuss four methods of appraisal (Payback Period, Accounting Rate of Return, Net Present Value and Internal Rate of Return). A case study describes each of these appraisal processes when applied to the requirement to purchase one printing press, to be selected from two qualifying contenders. This is achieved through an in-depth appraisal analysis coupled with a review of sensitivity analysis, in turn followed by an assessment of installation risks that could adversely affect the appraisal process. “Budgeting and cost management is the...
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...534: Financial Management Hannah Fox Dr. Dana Leland August 30, 2015 The U.S. publicly traded company that I have selected is Kroger. Kroger is a grocery retail chain in the US. It operates supermarkets and multi-department stores under a number of banners including Kroger, Harris Teeter, Ralphs, Fred Meyer, Food 4 Less, Fry's, King Soopers, Smith's, Dillons, Jay C, QFC and City Market. According to The (Kroger Co. SWOT Analysis, 2015), the company holds the largest or the second largest market share position in 41 of the 49 major markets in which it operates. It ranks among the largest corporations in the US. Kroger's size provides it with significant pricing power over food producers, giving the company economies of scale over smaller supermarket operators. Kroger follows a strategy which has evolved to incorporate more elements of differentiation on factors other than price. The company has tried to identify various factors that drive customer visits and loyalty and has made several targeted investments to achieve the same. One such move is the increase in gasoline stations. The company has increased the number of stores with fuel centers to 1,240 in FY2014 from 376 in FY2003. Having more than 1,000 fuel centers is a key advantage for Kroger, enabling the company to drive traffic to its stores. In 2010, the company partnered with Shell to roll out the grocer rewards program in Cincinnati, Dayton, Knoxville, Nashville and San Diego. This program allows customers in participating...
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...Market-Timing Theories of Capital Structure: a Review Anton Miglo University of Bridgeport 2010 Online at http://mpra.ub.uni-muenchen.de/46691/ MPRA Paper No. 46691, posted 6. May 2013 19:07 UTC The Pecking Order, Trade-off, Signaling, and Market-Timing Theories of Capital Structure: a Review Anton Miglo Associate professor, University of Bridgeport, School of Business, Bridgeport, CT 06604, phone (203) 576-4366, email: amiglo@bridgeport.edu. This version: 2013 Initial version: 2010 Abstract. This paper surveys 4 major capital structure theories: trade-off, pecking order, signaling and market timing. For each theory, a basic model and its major implications are presented. These implications are compared to the available evidence. This is followed by an overview of pros and cons for each theory. A discussion of major recent papers and suggestions for future research are provided. Introduction The modern theory of capital structure began with and the famous proposition of Modigliani Miller (1958) that described the conditions of capital structure irrelevance. Since then, been changing these conditions to explain factors driving capital many economists have structure decisions. Harris and Raviv (1991) synthesized major theoretical literature in the field, related these to the known empirical evidence, and suggested promising avenues for future research. They argued that asymmetric information theories of capital structure are less promising than control-based...
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...their function and in order to monitor them. It is not added on to an entity’s activity, but it should rather be “built-in” in order to be most effective. It is also critical to the success of quality programmes and to cost containment and response time (i.e. not adding new procedures but focusing on existing one and building internal control into them). PEOPLE: internal control is effected by the BoD, management and other personnel. People establish objectives, responsibilities, limits of authority and then put control mechanisms in place. Internal control recognizes that every individual brings in different abilities, needs, priorities, which affect internal control and are in turn affected by internal control itself. The BoD does not only oversee, but it also provides directions and approves transactions and policies, so it is an important element of internal control. REASONABLE ASSURANCE: internal control does not provide absolute assurance. Limitations regard faults in human judgment, human failures, errors and mistakes; but also collusion of two or more people and overriding of the internal control system by management. OBJECTIVES: objectives can relate to the business as a whole or to specific activities within it. Objectives fall into three main categories: - Operations, i.e. the effective and efficient use of the entity’s resources; - Financial reporting, i.e....
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.... Moreover, regardless of the wide acceptance of the marketing philosophy in principle and the appreciation of its significance to modern day business, it appears that, in practice, only a limited number of firms implement the marketing concept effectively. It is therefore not surprising that most of the firms there have been called to enhance their overall degree of marketing effectiveness. We should also notice that the most significant predictor of the customer based performance measure (customer retention) and profitability (profit margin) is customer philosophy. All the other four marketing effectiveness dimensions - operational efficiency, strategic orientation, adequate marketing information, and integrated marketing organisation also exert a significant impact on customer retention. However, the regression analysis also indicates that, with regard to the growth based performance measure (sales growth), adequate marketing information replaces customer philosophy as the strongest determinant of performance. Thus, the emphasis placed upon each dimension of marketing effectiveness appears to be determined by the performance objective set by the financial services firm. However, one can deduce from the research findings that customer philosophy is of primary importance in a financial services context. The practice of the industry market has shown that there is a strong positive relationship between the kind of marketing culture a service firm has and its degree of marketing...
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