...Comparing and Contrasting Lease verses Purchase Options Bridgette Chambers ACC/400 Accounting for Decision Making November 20, 2013 Frederick Thull Comparing and Contrasting Lease verses Purchase Options In order for one to explain the difference between leases verses purchase option one would need to explain both options. One would explain what is debt financing, and provide two examples. Also, one would need to explain what equity financing is as well as giving two examples and last which alternative capital structure is more advantageous and why. If one decided that they do not wanted to take on investors and wanted total control of the business yourself, one may want to pursue debt financing in order to start up a business. One would tap your own sources of funds first by using personal loans, home equity, and even credit cards. A business loan is another option. Debt financing is when a company borrows money that must be repaid but with interest. This will not affect the ownership of the company. Two examples of such would be Issued Bonds and Line of credit. With a line of credit, this is a bank loan where a business can draw out funds whenever money is needed. In Issue Bonds the business can issue bonds as for of debt financing these bonds are marketable securities. Debt financing allows one to have control of your own destiny regarding the business. If you finance your business using debt, the interest you repay on your loan is tax-deductible. This means that...
Words: 955 - Pages: 4
...Cash Flow Statement Definitions A financial statement that reflects the inflow of revenue verses the outflow of expenses resulting from operating, investing and financing activities during a specific time period. Cash flow statements and projections express a business's results or plans in terms of cash in and out of the business, without adjusting for accrued revenues and expenses. The cash flow statement doesn't show whether the business will be profitable, but it does show the cash position of the business at any given point in time by measuring revenue against outlays. Cash flow is determined by looking at three components by which cash enters and leaves a company: core operations, investing and financing. Operations- Measuring the cash inflows and outflows caused by core business operations, the operations component of cash flow reflects how much cash is generated from a company's products or services. Generally, changes made in cash, accounts receivable, depreciation, inventory and accounts payable are reflected in cash from operations. Investing- Investing activities focuses on the purchase of the long-term assets a company needs in order to make and sell its products, and the selling of any long-term assets. It reports changes in equipment, assets or investments relate to cash from investing. Financing- Financing activities include the inflow of cash from investors such as banks and shareholders, as well as the outflow of cash to shareholders as dividends as the...
Words: 903 - Pages: 4
...Financial Analysis Financial Statement Analysis On AT&T, Inc. Financial Management Financial Analysis on AT&T, Inc. This report has been intended to analyze and evaluate AT&T’S financial performance by looking at its most recent financial statements. AT&T is a company that provides telecommunication services to a large number of customers, businesses and other services providers worldwide. The company was first known as SBC communication Inc. but it changed its name in 2005 due to the merger with AT&T Corp. It was formed in 1983 and its headquarter is currently located in Dallas, Texas. A variety of products and services are offered by this company. Here is a brief description of its services—wireless voice communication services, including local wireless communications service, long-distance service, and roaming services. This company also sells various handsets, wirelessly enabled computers, and personal computer wireless data cards; and accessories comprising carrying cases, hands-free devices, batteries, and other items. The company manages its sales through its own stores, through agents and through third party retail stores. Furthermore, this company also offers Internet access and network integration for local, interstate, and international wholesale networking. The information presented in this report such as financial statements, general information, stocks, industry ratios and others is based on Thomson one website. According to...
Words: 3341 - Pages: 14
...Excel in Accounting by Rex A Schildhouse E1-15, Classify items as assets, liabilities, and stockholders’ equity and prepare accounting equation. The following items were taken from the balance sheet of Nike, Inc. All dollars are in millions. $2.291,1 $2.357,0 1 Cash 7 Inventories 2.883,9 86,3 2 Accounts receivable 8 Income taxes payable Common stock 2.874,2 Property, plant, and equipment 1.957,7 3 9 342,9 5.818,9 4 Notes payable 10 Retained earnings 3.759,9 2.815,8 5 Other assets 11 Accounts payable 1.311,5 6 Other liabilities Instructions: Perform each of the following. (All dollars are in millions.) (a) Classify each of these items as an asset, liability, or stockholders’ equity and determine the total dollar amount for each classification. (All dollars are in millions.) Assets Account title Amount Account title Amount Account title Amount Account title Amount Account title Amount Total assets Formula Liabilities Account title Account title Account title Account title Total liabilities Stockholders' Equity Account title Account title Total stockholders' equity Amount Amount Amount Amount Formula Amount Amount Formula (b) Determine Nike's accounting equation by calculating the value of total assets, total liabilities, and total stockholders' equity. Title Title Title = + Amount = Amount + Formula (c) To what extent does Nike rely on debt verses equity financing? Enter text answer here. TEMA_1_NIKE, Page 1 of 1 Page(s), 25/02/201501:09...
Words: 256 - Pages: 2
...................................... 4 Question No. 1). What is Islamic Banking? ................................................................................................ 4 Question No. 2). What is the philosophy of Islamic banking?.................................................................... 4 Question No.3) What is Meant By Riba? .................................................................................................... 5 Question No.4) What is interest? Is there any difference between interest and Riba? ............................ 5 Question No. 5) What are the different kinds of Riba?.............................................................................. 6 Question No. 6). What are the revelations/verses in Holy Quran regarding prohibition of Riba/interest? ........................................................................................................................................................................ 7 Question No. 7) What are the sayings/Ahadith about Riba/Interest? .................................................... 10 Question No.8) Are there any injunctions against Riba/usury in religious texts other than Holy Quran? ...................................................................................................................................................................... 12 Question No. 9) Does interest/Riba is related only to consumption loans or it applies to commercial loans also?...
Words: 17157 - Pages: 69
...International Journal of Business and Social Science Vol. 2 No. 2; February 2011 Differences and Similarities in Islamic and Conventional Banking Muhammad Hanif Assistant Professor, National University of Computer & Emerging Sciences, Islamabad PhD-Finance Scholar at International Islamic University, Islamabad, Pakistan E-mail: muhammad.hanif@nu.edu.pk Abstract Islamic Banking is growing at a rapid speed and has showed unprecedented growth and expansion in last two decades in spite of mismatching of existing financial framework and business practices. By the end of 2008 volume of Islamic banking has reached to US $ 951 Billion with operation in more than 50 countries. Middle East is the centre of Islamic banking with contribution of approximately 80% while 20% share is contributed by rest of the world. In Pakistan Islamic banking is at infant stage although last 6 years growth is marvelous. Islamic banking has grown at an average annual rate of 76% in the last six and half years (12/03 - 06/10) in Pakistan. Although Islamic banking faces multi challenges however three of them are very vital for its existence. First is Sharia compliance in its operations in an environment which is dominated by interest based practices even in Muslim societies. Second is perception of financial industry practitioners about its performance whether the system is able to serve the total needs of trade and industry. Third is the perception of a large majority of Muslims whether existing practice...
Words: 7423 - Pages: 30
...Liquidity and Debt Analysis Determining profitability of any given company is important when making any decisions about the company or organization. Profitability simply refers to the ability of the organization to make profits through its operations which is the main objective of any business (Palepu, & Healy, 2008). To know and analyse the profitability of an organization, various ratios such as the profit margin, return on assets and return on equity can be used to analyze the profitability. Liquidity on the other hand simply refers to the ability with which the company’s assets can be converted into cash. This is always calculated and analyzed using various ratios of liquidity (Palepu, & Healy, 2008). Debt analysis of a company simply refers to analysis of the company’s debt in relation to the assets of the company. This is done using debt ratio analysis whereby a debt ratio that is more than 1 means a company has more debts than assets while a ratio less than 1 means the company has more assets than debt. Particulars DATA IN MILLIONS OF US DOLLARS 2,012 2,011 Total Revenue-Sales 12,985 17,260 Cost of Sales (COGS) 8,919 11,042 Net Income -985 -152 Gross Profit 4,066 6,218 Inventory 2,341 2,916 Cash 930 1,507 Total Current Assets 3,683 5,081 Long Term Debt 2,868 2,868 Total Equity 3,171 4,010 Total Assets 9,781 11,424 Current Liabilities 2,583 2,756 Ratio Calculations of profitability, liquidity and debt Ratio Type...
Words: 943 - Pages: 4
...company’s revenue is obtained as well as on what the company is spending its money. These statements are prepared by qualified persons such as CPAs, or certified public accountants, according to GAAP or Generally Accepted Accounting Principles ("Quickmba", 1999-2010). There are four basic financial statements used by businesses in accounting. Each statement is prepared in a specific order. This is because information from the previous is needed to populate the latter. The first statement is the Income Sheet. This statement shows activity over a specific period of time (Weygandt, p. 21, 2008). It speaks to the company’s profitability over that specific period of time. Managers would use this statement to monitor income of revenue verses the expenses of the department or company they are responsible for. The income sheet will allow investors to see if the business is profitable and a good place to invest money. Creditors would use this statement to evaluate credit worthiness by looking as the amount of expenses compared to revenue. Finally, employees would find this statement useful to see if a future reduction in headcount is on the horizon based on the expense/revenue ratio. The second financial statement would be the Retained Earnings Statement. This statement shows a company’s changes in retained earnings for a specific period of time (Weygandt, p. 21, 23, 2008). . This statement is used by managers to decide how to reinvest profits back into the business or...
Words: 800 - Pages: 4
...mobilizing our world AT&T Inc. 2013 AnnuAl RepoRT AT&T ONLINE ANNUAL REPORT Experience how we’re mobilizing our world at www.att.com/annualreport2013 TO OUR INVESTORS AT&T Inc. We’ve entered 2014 with our industry on the cusp of a dramatic expansion. And once again, our company is poised to lead. Over the past few years, AT&T has been a major driver of the global, mobile Internet revolution. We have invested and executed aggressively, and today our network is best in class, reaches hundreds of millions of people and comes out on top in all sorts of third-party tests for speed and reliability. We also moved early to open our network to outside innovators and broke new ground with our AT&T Foundry innovation centers, allowing us to deliver more apps and solutions to our customers faster. All of this has helped our company create new growth platforms. And more broadly, it has helped ignite a global wave of innovation that’s transforming how we manage our lives, connect with others and operate our businesses. It’s hard to overstate the impact of this revolution, or our company’s role in it. Simply put, we have created the framework for the fastest, largest technology transformation in our lifetime. But the fact is, as impressive as the past several years have been, the opportunities ahead are many times greater. This next wave is being powered by a combination of ultra-fast mobile communications with access to content located in the cloud. This means that just about...
Words: 47286 - Pages: 190
...approach to address income inequalities and poverty. The microfinance scheme has been proven to be successful in many countries in addressing the problems of poverty. The World Bank has also declared 2005 as the year of microfinance with the aim to expand their poverty eradication campaign. The main aim of the paper is to assess the potentials of Islamic financing schemes for micro financing purposes. The paper argues that Islamic finance has an important role for furthering socio-economic development of the poor and small (micro) entrepreneurs without charging interest (read: riba’). Furthermore, Islamic financing schemes have moral and ethical attributes that can effectively motivate micro entrepreneurs to thrive. The paper also argues that there is a nexus between Islamic banking and microfinance as many elements of microfinance could be considered consistent with the broader goals of Islamic banking. The paper, first, introduces the concepts of microfinance, and presents a case for Islamic microfinance to become one of the components of Islamic banking. The paper then discusses, the potentials of various Islamic financing schemes that can be advanced and adapted from microfinance purposes including techniques to mitigate the inherent risks. Finally, the paper concludes with the proposals to accommodate the Islamic microfinance within the present Islamic banking structure. 2. Principles of Microfinance Microfinance grew out of...
Words: 7977 - Pages: 32
...Introduction A few very powerful providers control the mobile communications industry. The industry is forever evolving and changes can be dramatic. Just recently AT&T announced their plans to acquire T-Mobile, Google announced plans to purchase Motorola Mobility and new LTE technologies are making waves in the mobile data sector. Since these providers rely on advanced technologies only the most innovative and reliable networks survive. Verizon currently dominates the market and services 31.9% of American mobile users. The company was established in 2000 as a joint venture between Vodafone and Verizon Communications. One of the Verizon’s largest acquisitions was the purchase of Alltell Wireless in 2009 for $28.1 Billion; this purchase expanded their network coverage and increased their market share. Verizon operates a CDMA Radio network which does not require the use of SIM cards. The company’s service quality is a competitive advantage and Verizon invests about $5.7 Billion per year to expand and upgrade their network services. Verizon boasts “America’s largest and most reliable network” and has over 160.3 Million subscribers. They recently added the iPhone to their product line in early February which has allowed the company to take a significant portion of sales away from AT&T. Verizon is one of the most expensive networks and appeals to customers who are willing to pay a premium for advanced network technology. In other news the FCC has accused Verizon of...
Words: 10350 - Pages: 42
...IB2001of Part 2 of Certified Islamic Finance Professional (CIFP) INCEIF September 2008 Critical assessment of four financial instruments in the Islamic financial markets Raja Shahridatul Dewa Binti Raja Musa Abstract There has been remarkable growth in the Islamic finance industry and seen double-digit growth in recent years. Increasing numbers of Islamic financial institutions are attempting to penetrate the international markets in meeting the global demands for Islamic finance. This calls for the development of innovative Islamic financial instruments which are shariah compliant that represent as alternatives to conventional instruments covering areas of Islamic banking, Islamic insurance, Islamic equities and Islamic bonds/sukuk. A parallel development of Islamic financial markets should also take place that look into the aspect of liquidity and cash flow management. At the same time legal and regulatory requirements are needed to ensure the smooth functioning of Islamic financial institutions. Given the uniqueness of the operations and transactions comprising contractual arrangements and instruments, it is critical for Islamic financial institutions to identify specific risks and to price the instruments based on the basic principle of risk and return. Critical assessment of four financial instruments in the Islamic financial markets 1. Introduction A financial system is defined as a...
Words: 8010 - Pages: 33
...In the following paper, it is discussed how accounting is a strong part of a company. Through research, this paper states the many parts of accounting such as the four basic financial statements and the purpose of accounting. Business is restricted to processes and reports to make decision making with accurate information through the accounting practices of bookkeepers. Through analysis, the following paper, describes a small glimpse of the accounting process and how they relate to each other. Purpose of Accounting The purpose of business accounting is to identify and record activities that will impact the organization or company financially. These activities can include sales, purchases, the interest earned from investments, and acquisition of other capital. Activities like these can be categorized in terms and posted as an accounting record. The accounting cycles typically is recorded in ledgers and journals and is part of the process. Systems and processes are developed by accountants to analyze different transactions. Each transaction that involves the sale of goods and services needs to be recorded in a general ledger which needs to be evaluated and analyze. As they are posted to their specific account, bookkeepers use this function of accounting to help maintain each transaction as debits and credits. Bookkeepers are responsible for specific types of financial activities which are typically used to analyze the value of accrual method of accounting, providing reports...
Words: 843 - Pages: 4
...[pic] [pic] Income Statement/Profit and Loss Account- PART 1 – Based on a case study relating to book 3 Session 3 & 5 1 (a) Shows the overall actual income, verses costs of a business for a given period of time-: 1. The breakdown of expenses -indirect and direct. 2. Increases/decreases in specific areas. 3. Increases/decreases in income for a period of time. 4. The net profit of a business (N.B, this does not include the value of assets/chattels, just profitability). 5. Enables managers and shareholders to view the company’s performance during a set period of time. The cost/income ratio of business shows it’s profitability and efficiency. 6. Enables managers to determine possible cost savings/ income streams that could be exploited further. 7. Investors can determine if there is a viable investment opportunity or disclose a risk assessment. 8. Can be used in regulatory financial reporting such as, Inland Revenue for Tax purposes. 1 (b) Concerns relating to City Florists – loan application for £120.000 identified in Income Statement. There is already a loan outstanding but this is a minor issue. The marketing expenses have increased by 9.7% in 2011 but with limited results in the increase of sales- 0.88% The cost income ratio is high in 2010 but even higher in 2011- Which could highlight a potential problem with the efficiency/profitability of the business- The Net profit is down by 15% year on...
Words: 1319 - Pages: 6
...CHAPTER NO. 01 1-PROBLEM & ITS BACKGROUND 1.1 Introduction In any economy banks play very important role. A bank is a reliable financial institution, which has core business of mobilizing the savings of people for investment purposes. It receives the money from one group and lends to other group of people. So bank performs the duty of financial intermediary. Usually there are two types of banks, conventional banks and Islamic banks. In simple words Islamic banks operate in interest free system. Prohibition of interest is ordained in Islam in all forms and intent. This Prohibition is strict, absolute and unambiguous. The Holy Qur'an in verse 278 of Surah Al-Baqarah states: "O ye who believe! Fear Allah and give up what remains of your demand for Riba, if ye are indeed believers." Verse 2: 279 says: "If you do it not, take notice of war from Allah and His Messenger. But if ye turn back, ye shall have your capital sums. Deal not unjustly and you shall not be dealt with unjustly." It therefore, follows that interest is prohibited as it leads to injustices and Islam is against all forms of injustices and exploitations and pleads an economic system, which aims at securing extensive socio-economic justice. The Islamic law of prohibition of Riba, which includes interest, was originally not based on economic theory but on Divine Authority, which considers the charging of interest as an act of injustice (Dr. Siddiqui). Islamic banks appeared on the world scene as active players...
Words: 21336 - Pages: 86
