...1 7 p a da y. Accoun t ing ( 513 Essays) Econom ics (1,080 Essays) Fina nce ( 1, 083 Essays) H um a n Re sour ce M a na ge m e nt ( 1,012 Essays) M a na ge m e nt St udie s ( 1, 723 Essays) - I n t e r n a t ion a l Fin a n cia l R.J. Rey nolds I nt er nat ional Financing ( HBS 9- 287- 057) The case is set in t he cont ext of RJR’s 1985 financing of it s $4.9 billion acquisit ion of Nabisco Brands I nc. To finance t he acquisit ion, RJR was pr oposing t he issue of $1.2 billion of 12 year not es and t he sam e am ount in pr efer r ed st ock . I t had alr eady funded $1.5 billion of t he acquisit ion leav ing $1 billion m or e t o finance. Challenges facing RJR: Of t he $1.5 billion t hat had been funded, $500 m illion cam e from cash and t he r em aining was t hr ough bank bor r owings and com m er cial paper. These borrow ings added t o t he debt t hat RJR had issued in 1984 and br ought t heir debt rat ings dow n t o A. The r em aining $1 billion financing w ould hav e t o k eep t his in m ind as w ell as t he $1.2 billion of 12 - y ear not es t o be funded. To det erm ine t he financing, w e need t o consider t he following choices: Debt vs. Equit y : RJR is a m at ur e com...
Words: 4457 - Pages: 18
...Transaction Exposure When conducting business aboard, cash inflows are affected when a variety of currencies are involved. In the case of Nike’s proposal to expand in India, there are ways to migrate exchange rate risks by exposing the possible risks before they affect the company’s profit margin. One method is the transaction exposure. Transaction exposure is the degree to which the value of future cash transactions that are affected by exchange rate fluctuations. According to Madura, “Transaction exposure can have a substantial impact on a firm’s earnings. It is not unusual for a currency to change by as much as 10 percent in a given year. If an exporter denominates its exports in a foreign currency, a 10 percent decline in that currency will reduce the dollar value of its receivables by 10 percent. This effect could possibly eliminate any profits from exporting” (Thomson South-Western 2006). To assess transaction exposure, Nike will need to estimate its net cash flows in each currency and measure the potential impact of the currency exposure. According to Madura, “To measure its transaction exposure, an MNC needs to project the consolidated net amount in currency inflows or outflows for all its subsidiaries, categorized by currency….Estimating the consolidated net cash flows per currency is a useful first step when assessing an MNC’s exposure because it helps to determine the MNC’s overall position in each currency” (Thomson South-Western 2006). The standard deviation...
Words: 606 - Pages: 3
...example using pre numbered invoices, reconciling its bank statements, locking payroll checks up over the weekend, and having two people to interview and approve all new hires. Also the accountants want to purchase an indelible ink machine to print checks is a good idea. I would also suggest that they’re printed on carbon paper, so that the second copy can be submitted to the accountant for verification purposes. I did find some areas where LBJ Company should be concerned. The largest of those concerns are the accountant serving as both the treasurer and controller. This should really be two separate activities. If there were a problem with the money no one would have no way of knowing since one person handles all activities associated with the cash are done by the accountant. The accountant really should handle all the record keeping and reconciling the bank statement and the treasurer issuing money. This way no money is issued without the accountant being aware. The purchasing of supplies should also be broken up into a two part process. One person to decide what needs to be ordered and then submit the order to a second person for approval. The next area of concern is the paychecks being left out for employee...
Words: 651 - Pages: 3
...Customer Service: Providing quality products and customer service are our top priority. We continue to go the extra mile for customer satisfaction. Respect: For us to remain successful we must give and receive respect that is free of harassment and discrimination, so we are all proud to say we are a part of Bob's Hardware team. Goals of the Project: Bob’s Hardware Store uses regular cash registers to ring up their transactions, but would like to move up to using POS so they can also accept credit and debit cards, which will increase their customers. The IT team needs to develop a program so that the store can use POS. This will help make the accounting process easier. Another objective to the POS is to reduce the amount of time it takes to process customer purchases, such as the ability to use credit cards and other forms of payment, keeping track of sales, and generating supply orders. The POS can be linked in to employees bank accounts, which will help with payroll. The POS will be also run through their computer system which will help Bob and his wife to keep better track of cash flow and profit margins. The above objectives will help to reduce the amount of time needed for the many daunting accounting functions, reduce errors occurring during transactions, and increase customer satisfaction. The methodology I am suggesting is Agile, which will allow any new ideas or plans to be introduced, and testing will be easier. This is going to make meeting the goals and mission...
Words: 322 - Pages: 2
...Table of content Introduction Description of business Justification of location Selection of appropriate labor Sources of fixed and working capital Role of the entrepreneur Type of production Levels of production Quality control measures Use of technology Linkages Potential for growth Government regulations Ethical issues Bibliography Introduction The SBA will be on the topic of production, the production will be a sole trader business which is a haberdashery. The SBA will have all answers required to the questions, so then it will give all information about the business. The research was properly done and will tell the establishments about the business also its description, location, selection of appropriate labor, fixed/working capital, role of entrepreneur, Type of production quality control measure, Use of technology, linkages, government regulations and ethical issues all revolving and pertaining to the establishment. Description of the business A haberdashery business will be established by the name of ‘Kash Haberdashery’. The manager of the soul trader business will be Mr. Campbell. The business will supply persons with sewing tools, cottons, towels, kitchen and bedroom sets etc. The objectives of ‘kash haberdashery’ will be to provide top of the line products from good sources, affordable. Best qualities and comfortable settings, affordable for all class. Justification of location ...
Words: 1392 - Pages: 6
...A budget is a quantitative expression of the money inflows and outflows that reveal whether a financial plan will meet the organisational objectives or as a quantitative plan of action relating to a given period of time which may include planned revenues, expenses, assets, liabilities and cashflows. Business budgeting is one of the most powerful financial tools available to any small-business owner. Put simply, maintaining a good short- and long-range financial plan enables you to control your cash flow instead of having it control you. Budgeting is a quantitative expression of a plan or action prepared in advance of the period to which it is related. Budget sets out the costs and revenues that are expected to be incurred or earned in future period. Budgeting is one of the most important skills that you can have. In any economic forecast, planning and budgeting are crucial when it comes to conserving and increasing your resources. The use of a budget can be helpful to not only individuals and families, but companies as well. In order to stay afloat, every company from the small business to the large corporation must keep track of their finances in order to succeed. Often they utilize the services of an accounting professional to keep this information in order. However if you are the owner of a small business or simply trying to deal with your home finances, you may not have the luxury of hiring a professional and need to do the work on your...
Words: 252 - Pages: 2
...controls themselves weak or incomplete, or are the theater’s problem caused primarily because of lack of disciplines in using the existing controls? The controls in the theatre is weak or incomplete i. Taking their jobs for granted: failed to collect cash from known customers; lead to conflict of interest; fail to identify the ticket carefully; either wrong dates or colors. ii. Misuse the power and authority given: give free tickets to customers that he likes by signing on the tickets; didn’t conduct any supervision on his employees. iii. No proper segregation of duties: the one who record the sales also the one who collect the cash. 3. Identify the control improvements you would suggest for Leo’s Four-Plex: Establish code of conduct a. Set up basic principles for employees to understand what is expected and follow the rules b. Manager should take responsibility to set up the code of conduct Monitoring employees work a. Hire someone to supervise the employees work b. Eg: checking the cash register twice per day at the refreshment stand to avoid failure of the stand attendants to collect cash Segregation of duties a. Segregate the cashier duties and the one who will collect the cash b. Probability that fraud to happen will be reduced Authority and responsibility a. The manager should be more responsible towards the company b. Bill Reilly shows the unethical type of behaviour by giving free theatre passes with his signature...
Words: 397 - Pages: 2
...safe is a good security procedure. It limits access company funds and protects it from theft. Have pre numbered checks in my opinion company is a good procedure as well. I would recommend the purchase of the indelible ink machine used for the purpose of printing checks. Using the indelible ink machine applies to the internal control procedure of using physical control. Using that machine to print checks can undeniably help prevent fraud by someone forging someone else signature Unfortunately in my review of the company I have found activities that the company is participating in that violate standard regulated internal procedures. Giving all employees access to the petty cash is in violation of the establishment of responsibility internal control procedure. That leaves any employee the ability to use petty cash for any means. An accountant that is working for the company is currently the controller and the treasure. This activity violates the segregation of duties internal control procedure. There should be different individuals responsible for related duties. Having on individuals responsible for treasurer and controller could boost optional errors and irregularities. I recommend another person share the responsibility in this activity. On payday employee checks should not be left in an office to be picked up. That...
Words: 358 - Pages: 2
...MULTINATIONAL FINANCIAL MANAGEMENT Groupe 5 Case study ASPEN TECHNOLOGY INC.: Currency Hedging Review 1) What are Aspen Technology’s main exchange rate exposures? How does Aspen Tech’s business strategy give rise to these exposures as well as to the firm’s financing need? The main exchange rates exposures are: British pounds, Deutsch Mark, Japanese Yen and Belgian Francs. Aspen faces foreign currency risks due to sales and expenses in those foreign currencies. Expenses include R&D costs (20% of overall R&D are in UK), headquarters, sell force etc. and represent 52% of Aspen expenses. If Aspen sells its products in local currency, it’s because its clients need to plan their P&L and don’t want to see their expenses fluctuate with the currency change. Besides, Aspen grants deferred payment for 5 years, impacting heavily their working capital. They can afford to grant 5 years receivable because their clients are highly rated multinational, which cannot cancel the payment (that carry a huge financing spread) and the market’s demand is inelastic. The market is looking for high quality product: with two years development needed to get a customized software, the switching costs is very high and benefits to Aspen (90% of its clients re-conduct their contracts). However, Aspen succeed to finance its need by selling its receivables to two financial institutions - guarantying a hedge to the currency - depending on the nature of the receivable (where it comes...
Words: 669 - Pages: 3
...Chapter 4 12. The times lines are: | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PV | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | | | 0 | 1 | 2 | 3 | 4 | 5 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PV | $7,000 | $7,000 | $7,000 | $7,000 | $7,000 | | | | | | PVA = C({1 – [1/(1 + r)]t } / r ) At a 5 percent interest rate: X@5%: PVA = $4,500{[1 – (1/1.05)9 ] / .05 } = Y@5%: PVA = $30,306.34 And at a 22 percent interest rate: X@22%: PVA = $4,500{[1 – (1/1.22)9 ] / .22 } = Y@22%: PVA = $20,045.48 17. For discrete compounding, to find the EAR, we use the equation: EAR = [1 + (APR / m)]m – 1 So, for each bank, the EAR is: First National: EAR = [1 + (.1120 / 12)]12 – 1 = First United: EAR = 0.1172, or 11.72% 19. The time line is: | 0 | 1 | | | | … | | | | | ? | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | –$21,500 | $700 | $700 | $700 | $700 | | $700 | $700 |...
Words: 888 - Pages: 4
...1: A: Some employees will make decisions that will grant their own goals, not the company’s goals. When they are in a foreign country the manager might make decisions to benefit them and not the company as a whole. B: The main costs would be because the style and education are different with other countries compared to the home country. Also, the geographic distance between the countries would add costs. There will also be an absence of dedications. 2 A: Increase production efficiency can lead to commodities at a completive rate with better quality. If a company can make something cheaper in another country but still have quality it will make a bigger profit. This leads to higher production at a competitive rate. B: When a company makes a product it them gets demand from international countries. This can be solved by exporting the product. If the market is big enough in a foreign company then they might want to invest in a subsidiary firm. This will make pricing more competitive. 3 A: Companies do not find the perfect mobility dealing with factors of production. If a company cannot find that in its home land, it them searches foreign countries for lower rates. B: They will be similar since all factors are easily available at all places at all times. 6 Since Plak Co. currency is based out of America, it uses the dollar, but its subsidiaries are based out of Europe, which uses the euro. So when a transaction happens the euro has to be converted...
Words: 743 - Pages: 3
...Punjab College of Commerce Financial Accounting ACCT3013 Prof. Hafiz Imtiaz Reg. No. 2035 – Minahil Raza Reg. No. 2030 - Ahmad Waqas Reg. No. 2001 - Syed Faizan Jaffri December 15, 2013 Difference between Accounting & Finance Accounting is an art of recording, classifying and summarizing the transaction in a significant manner, whereas finance is the management of money and other valuables, which can easily be converted into cash. Functions of Finance Department of an Organization * Preparation of Budget Plans It is duty of finance department of company to make the budget before actual providing money to any department. It helps to fulfill each department with minimum cost. * Financial Management In this function finance department gets money from capital market at very low risk and cost. Finance department analyzes all the resources of funds and create a good financial structure of company. In this structure, finance department analyze whether it will decrease the overall cost of capital on Average basis or not. * Management of Investments of Company After making financial structure, finance department invests debenture holders and shareholders money in best projects for getting highest return on investment. For this finance department takes investment decision. These investment decisions can be taken with the help of capital budgeting and investment analysis techniques. * Management of Financial Risks Financial department takes...
Words: 1304 - Pages: 6
...Attempt Any Four Case Study Case 1: Zip Zap Zoom Car Company Zip Zap Zoom Company Ltd is into manufacturing cars in the small car (800 cc) segment. It was set up 15 years back and since its establishment it has seen a phenomenal growth in both its market and profitability. Its financial statements are shown in Exhibits 1 and 2 respectively. The company enjoys the confidence of its shareholders who have been rewarded with growing dividends year after year. Last year, the company had announced 20 per cent dividend, which was the highest in the automobile sector. The company has never defaulted on its loan payments and enjoys a favorable face with its lenders, which include financial institutions, commercial banks and debenture holders. The competition in the car industry has increased in the past few years and the company foresees further intensification of competition with the entry of several foreign car manufactures many of them being market leaders in their respective countries. The small car segment especially, will witness entry of foreign majors in the near future, with latest technology being offered to the Indian customer. The Zip Zap Zoom’s senior management realizes the need for large scale investment in up gradation of technology and improvement of manufacturing facilities to pre-empt competition. Whereas on the one hand, the competition in the car industry has been intensifying, on the other hand, there has been a slowdown in the Indian economy, which...
Words: 2759 - Pages: 12
...Scheduling anticipated cash payments B-21.05 Budgeting cash disbursements…. The equations: 10+40+50=100%; and Qtyx 20 x $5.80 per foot 20 per cost current month prior month two months Units Purchase unit $5.80/ft 10% paid 40% 50% Total January | 0 | 800 | 16,000 | $ 92,800 | $ 9,280 | $ - | $ - | $ 9,280 | February | 800 | 500 | 10,000 | 58,000 | 5,800 | 37,120 | - | 42,920 | March | 500 | 1,200 | 24,000 | 139,200 | 13,920 | 23,200 | 46,400 | 83,520 | April | 1,200 | 700 | 14,000 | 81,200 | 8,120 | 55,680 | 29,000 | 92,800 | May | 700 | 900 | 18,000 | 104,400 | 10,440 | 32,480 | 69,600 | 112,520 | June | 900 | 300 | 6,000 | 34,800 | 3,480 | 41,760 | 40,600 | 85,840 | July | 300 | 600 | 12,000 | 69,600 | 6,960 | 13,920 | 52,200 | 73,080 | August | 600 | 800 | 16,000 | 92,800 | 9,280 | 27,840 | 17,400 | 54,520 | September | 800 | 1,300 | 26,000 | 150,800 | 15,080 | 37,120 | 34,800 | 87,000 | October | 1,300 | 400 | 8,000 | 46,400 | 4,640 | 60,320 | 46,400 | 111,360 | November | 400 | 400 | 8,000 | 46,400 | 4,640 | 18,560 | 75,400 | 98,600 | December | 400 | 600 | 12,000 | 69,600 | 6,960 | 18,560 | 23,200 | 48,720 | January | 600 | | | | | | | | Total payments exceed $100,000 in May and October. As it turns out, May...
Words: 284 - Pages: 2
...As there are different number of client and disbursement for the respected year we can find out cash flows for each client for each year that will be helpful to find out growth rate. Year | Cash flows per client (Disbursement ÷ Client) | 2009 | 1551333.33 | 2010 | 2023333.33 | 2011 | 2089333.33 | So, here the amount received in the earliest year (PV) is 1551333.33 The amount received in the latest year (FV2) 2089333.33 The equation we know, PV=FVn × 1(1+i)n 1551333.33 = 2089333.33 × 1(1+i)2 (here n=2) 1551333.332089333.33=1(1+i)2 0.7429=1(1+i)2 1+i2 = 1.3461 1+i = 1.1602 i = 0.1602 i = 16.02% Year | Client | Disbursement | 2009 | 15 | 23270000 | 2010 | 17 | 30350000 | 2011 | 26 | 31340000 | By using the first year (2009) as a base year, we see that interest has been earned (or growth experienced) for 2 years. As there are different number of client and disbursement for the respected year we can find out cash flows for each client for each year that will be helpful to find out growth rate. Year | Cash flows per client (Disbursement ÷ Client) | 2009 | 1551333.33 | 2010 | 2023333.33 | 2011 |...
Words: 313 - Pages: 2
