...efficient market hypothesis suggest that they cannot. This hypothesis asserts that the security markets are so efficient that the current prices of a stock properly reflects earnings and dividends. When funds are invested in the financial market, the aspiration is to produce a return on the investment. Many shareholders try not only to make a lucrative return, but acquire substantial gains and beat the market. Nevertheless, market efficiency - campaigned in the efficient market hypothesis (EMH) originated by Eugene Fama in 1970, suggests that at any given time, prices fully reflect all available information on a specific securities and the market. The hypothesis asserts that the market adjusts security prices as new information is disseminated. In the modern world of advanced communication, information is precipitously distributed in the investment community. The market then adjusts security prices in harmony with the impact of the news on the firm’s future earnings and dividends. By the time that the individual investor has obtained the information, security pricing probably will have already changed. Thus, the investor will not be able to profit from acting on the data. The quality of data does not have to be constrained to financial news and investigation only; undeniably, data about political, fiscal and social outcomes, pooled with how investors perceive such data, alleged or not, will be reflected in the market price. As per the Efficient Market Hypothesis,...
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...I lived in New Hampshire for over 20 years. That is the place where we raised our six children. We were also very fortunate to have also lived in Europe for many years. While living in NH, I was always intrigued with the story of a small resort village, Bretton Woods, and the global impact it had on Europe and the rest of the world. Bretton Woods institutions were created in 1944 during the United Nations Monetary and Financial Conference at the Mount Washington Hotel (The Bretton Woods Committee, n.d.). The Bretton Woods institutions created an international basis for exchanging one currency for another. It also led to the creation of the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development, now known as the World Bank (Stephey, 2008) and the General Agreement on Tariffs and Trade (GATT)—the precursor to the World Trade Organization (WTO). In addition to establishing the World Bank, the Committee chose the U.S. dollar as the pillar of international monetary exchange. The meeting provided the world post World War II currency stability which was desperately needed. The Bretton Woods system itself may have collapsed in 1971, when President Richard Nixon severed the link between the dollar and gold — a decision made to prevent a run on Fort Knox, which contained only a third of the gold bullion necessary to cover the amount of dollars in foreign hands. By 1973, most major world economies had allowed their currencies to float freely...
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...PRACTICE FINAL EXAM (Answers provided at practice test’s end) The following questions are worth 3 points each. Provide the single best response. 1. The primary goal of a publicly-owned firm interested in serving its stockholders should be to |a. |Maximize expected total corporate profit. | |b. |Maximize expected EPS. | |c. |Minimize the chances of losses. | |d. |Maximize the stock price per share. | |e. |Maximize expected net income. | 2. Which of the following actions are likely to reduce agency conflicts between stockholders and managers? |a. |Paying managers a large fixed salary. | |b. |Increasing the threat of corporate takeover. | |c. |Placing restrictive covenants in debt agreements. | |d. |All of the statements above are correct. ...
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...MGMT*3320, Financial Management Class Notes: Financial Ratios © F.Braga, 2015 WE START THIS “DRY” PART BY SHOWING THAT IN FACT EVEN THE MOST ADVANCED STOCK MARKETS DO USE THESE RATIOS AS STANDARDIZED TOOLS USED TO CONVEY FINANCIAL INFORMATION. SO : IT MAY FEEL DRY BUT IT IS THE REAL STUFF, SO TO SPEAK. WE WILL LOOK (AS AN EXAMPLE) AT THE SIX SWISS EXCHANGE (THEIR TSE) AND WHAT THEY PUBLISH FOR THE LISTED COMPANIES. SPIN: THIS IS INFORMATION. MANAGEMENT USED RAW DATA, COMPILED ACCORDING TO PROPER METHODOLOGICAL STANDARDS TO PRODUCE STANDARDIZED INFO WHICH IS UNDERSTOOD BY ALL BECAUSE IT IS DEVELOPED IN A STD MANNER MGMT*3320 F15, © F. Braga 2015 146 Nestlé: compare 2015 (left) with 2011 (right) http://www.six-swiss-exchange.com/shares/security_info_en.html?id=CH0038863350CHF1, access Sep 17 2011 http://www.six-swiss-exchange.com/shares/security_info_en.html?id=CH0038863350CHF1 access Sep 11 2015 MGMT*3320 F15, © F. Braga 2015 147 Novartis: compare 2015 (left) with 2011 (right) http://www.six-swiss-exchange.com/shares/security_info_en.html?id=CH0012005267CHF1 access Sep 17, 2011 http://www.six-swiss-exchange.com/shares/security_info_en.html?id=CH0012005267CHF1 access Sep 11, 2015 MGMT*3320 F15, © F. Braga 2015 148 UBS: compare 2015 (left) with 2011 (right) http://www.six-swiss-exchange.com/shares/security_info_en.html?id=CH0024899483CHF1 accessed Sep 17, 2011 http://www.six-swiss-exchange.com/shares/security_info_en...
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...Getting Started with Research Cases (Case #1): 1. WHAT IS THE PURPOSE OF THE RESEARCH CASES THAT YOU WILL COMPLETE IN THIS COURSE? The purpose of these cases is to provide you with experience solving an unstructured problem that requires searching accounting standards and financial statements. In your future careers in public accounting or in financial reporting, you will encounter financial accounting problems for which there may not be a clear-cut accounting treatment. Instead, you will need to conduct research to arrive at an appropriate answer. In Case 1, I am providing you with exposure to some of the resources available for you to conduct research, download financial statements, and increase your general knowledge about current accounting issues. In Cases 2 and 3, you will solve unstructured problems like you will do in the real-world. 2. HOW DO I USE THE DATABASES? Download the Accounting Research Handbook that is now available on WebCampus. Included in this booklet are detailed instructions on how to use these databases. This handbook will give you enough information to get you started. (The following pages may be turned into me – you do not need to type up your responses in a separate document. If you are working with a partner, make sure BOTH of your names appear on the assignment). ACCOUNTING RESEARCH CASE 1 – PART A: SEC EDGAR DATABASE This first exercise involves EDGAR, the SEC’s database. You will use EDGAR to find out information...
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...Program/initiative as listed in YPPB 2013 Strategic Plan (file YPPB 2013 Plan v1.0.ppt – slide 8-10). The relevant department must complete the items below for each program/initiative. Program/Initiative | Corporate Social Responsibility | Department | Corporate Services | Brief Description | To reach out to more to the public and extend assistance and at the same time introduce branding Yayasan further | Target Launch Date | Jan 13/Mar13/Dec13 | Duration | 1 Day Per Event | | Program Objective | Objective must be measurable (target achievement) and can be basis for KPIs 1. To expend CSR initiative for YPPB every quarter | Target Participants / Group | Target No. of Pax | 20-30 (YPPB Staff & Volunteers) | 1. For the Hereafter – Aid to Surau/Musolla/Madrasah outside KL 2. Clean & Go – Community service at nursing home/pet shelter 3. Childrens Day 4. Buka Sekolah Drive – Orphanage/Children Single Mother Group/Children from Underprivileged background | Activities | Duration | List of activities to be carried out during the program/initiative in chronological order including decision required 1. For the Hereafter – Upgrade of amenities (carpets/curtains/abulation area etc) 2. Clean & Go – Gotong-royong/mural painting/recreational area 3. Childrens Day 4. Buka Sekolah Drive – School registration fee and equipment to 100 Primary and Secondary School kids. | 1 Day1-2 Days1 Day1 Day | Potential Partner / Vendor | Scope of...
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...State University of New York BINGHAMTON UNIVERSITY School of Management Fall 2011 Class: Mgmt 501 Accounting for Managers Mondays: 4:25 – 5:50 pm LN 2403 Wednesdays: 4:25- 5:50 pm SL206 Instructor: Anna M. Addonisio, CPA, MBA Email: aaddonis@binghamton.edu Phone: 777-4941 Office: Library North Room 2430 Office Hours: by appointment Text: Financial and Managerial Accounting, by Needles, Powers, & Crosson, 9e edition, Houghton Mifflin Co. (required) Cases: Harvard Business School Cases (required) Wall Street Journal (recommended) Financial Calculator: Texas Instruments BAII Plus is required Course Objective: This course integrates financial accounting and managerial accounting. The objective is to provide students with an understanding of accounting information from the managers’ perspective and develop students’ ability and analytical skills necessary to use accounting information to make decisions in the business world. The first part of this course introduces financial accounting with the emphasis on financial statement preparation by accountants, selection of reporting strategies by managers, and interpretations by users of corporate financial reports. The second part of this course introduces managerial accounting, which is primarily concerned with data gathering and presentation for purpose of internal management evaluation and decision-making. The objective is to understand the determination of cost structure and develop techniques for...
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...Recognized Courses in Accounting/Tax Research and Analysis and Accounting/Business Communications September 3, 2014 The Texas State Board of Public Accountancy requires each candidate to complete a minimum of two semester hours in accounting research and analysis or tax research and analysis from a recognized college or university. The semester hours may be obtained through a discrete course or offered through an integrated approach. If the course content is offered through integration, the college or university must advise the Board which course(s) contain the research and analysis content. Courses identified through integration must dedicate 1 semester hour, or quarter hour equivalent, to research and analysis. Courses used to meet this requirement may not be used to meet the requirement for accounting or business communications described below. Course(s) identified by a university to meet the requirements for research and analysis in accounting or taxation should primarily address the identification, organization, and integration of diverse sources of information such as authoritative literature and pronouncements, to reach a conclusion or make a decision; and should analyze accounting and taxation issues by reviewing information, using empirical data and analytical methods, recognizing data in patterned activities, forecasting, and integrating data. CPAs may be asked to conduct research and analysis when providing attest services, professional accounting...
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...Analyzing Financial Statements Rebecca Hunter HSM/260 January, 29, 2012 Jan Bridgeford-Smith Analyzing Financial Statements Ratios | 2002 | 2003 | 2004 | Current ratio | 104,296/139,017=0.75 | 82,058/93,975=0.87 | 302,902/337,033=0.89 | Long-term solvency ratio | 391,270/310,246=1.26 | 359,863/259,979=1.38 | 699,004/338,937=2.06 | Contribution ratio | 617,169/1,165,065=0.5 | 632,889/1244261=0.51 | 1,078,837/2,191,243=0.49 | Program/Expense ratio | 834008.20/ 1,185,008=0.58 | 795,579.77/1,316,681=0.60 | 1,376,311.72/1,972,131=0.70 | General/Mgmt. ratio | 351,000/1,185,008=0.29 | 371,101/1,316,681=0.28 | 445,819/1,972,131=0.23 | Revenue/Expense ratio | 1,165,065.00/1,185,008.00=0.98 | 1,244,261/1,316,681=0.94 | 2,191,243/1,972,131=1.11 | Fixed cost | 150,000+24,000=174,000 | 150,000+24,000=174,000 | 150,000+24,000=174,000 | Variable cost | 417,004+125,101.20+117,903+351,000=1,011,008.20 | 520,069+171,622.77+79,888+371,101=1,142,680.77 | 915,787.20+320,525.52+115,999+445,819=1,798,130.72 | Break Even point | | | | Using the RATIOS, write an evaluation of the organization’s financial picture over the 3-year period specified in Appendix D. Be sure to indicate which ratios support your conclusions. The picture that I get from the ratios is that the company is that all the ratio’s go up over the years except the general management which went down, the revenue expense ratio going up is good it means that the company has more coming in...
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...Benetton S.p.a Why Diversification into Financial Services makes sense? HAIDER SADIK Mgmt. Policy, Rl June 30, 1995 The diversification into financial services may best be looked at as a reflex of the Benetton entrepreneurial sensibility to seek out profitable opportunities while addressing the long-term impact of global changes on its existing business. With the developed nations reaching saturation levels in industrial growth, and the developing markets experiencing a capital investment boom, the Benetton subcontractor network, primarily in Italy and Europe, will eventually get incapacitated based on cost competition. Thus, a critical element of the Benetton textile retail business will eventually go under. To hedge against this risk, Benetton would have to establish relationships with suppliers in the Asian and other emerging markets. The big difference now, however, is that the balance of power would shift more in favor of these subcontractors, who will be more competitive, making it harder to negotiate exclusive contracts and exert control on as before. Thus, a key ingredient for maintaining rapport with piece-makers would be owning shares in several of these firms located globally while helping the subcontractors with equipment and machine supply. And once the Benettons have a vested interest in these firms, they would like to monitor and exert financial control over them. The above scenario is sufficient for re-focusing the business strategy to diversify into investment...
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...University of phoenix | Interpreting Financial Results | MGMT-571 FINANCE | | Mario Medina | 3/11/2014 | | Financial ratios play a key role in determining how a company is doing financially either for the good or the bad. Financial Ratios can be used internally or externally to determine how financially stable a company is. For this assignment we will use three common ratios to determine how financially stable and how Under Armour is over the last three years. Current Ratio “To calculate the current ratio, we divide current assets by current liabilities. More liquidity is better because it means that the firm has a greater ability, at least in the short term, to make payments” (Parrino, Kidwell, & Bates, 2012). Below is a breakout of UA’s three year current ratio. Current Ratio=Current Assets/Current Liabilities * 2011:689,663/183,607=3.76 * 2012:903,598/252,228=3.58 * 2013:1,128,811/426,630=2.65 For any company no matter the industry no one wants a current ratio less than one because this suggests that the company has more liabilities than assets meaning that in the short run they will be more likely not able to pay their debts. UA from 2011 to 2012 had a pretty steady ratio on average around 3.7 meaning that they have 3.7 times more assets that liabilities means that in the short run they will be able to meet any debt they should have. From 2012 to 2013 there current ratio did decrease to 2.65 because they did add more current liabilities...
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...associated with the client -Client issues that, if known, could threaten compliance with the fundamental principles include, for example, client involvement in illegal activities (such as money laundering), dishonesty or questionable financial reporting practices. -A professional accountant in public practice shall evaluate the significance of any threats and apply safeguards when necessary to eliminate them or reduce them to an acceptable level. b) responsibility of director - try to make the co. a success, using your skills, experience and judgment - follow the co’s rules, shown in its AOA - make decisions for the benefit of the co. - tell other shareholders if you might personally benefit from a transaction the co. makes - make sure the co’s accounts are a true and fair view of the business’ finances. c) – auditing is the analysis of the financial accounts/records, by a qualified accountant, and procedures of a firm organization. - this is essential in order to gain a fair perspective on the co’s financial statement - potential investors and creditors can look at financial statement to decide whether to invest in a business o not - important as it also protects the public from scams and corrupt business procedures d) Financial Audits,Compliance Audits, Information Technology Audits, Departmental Audits e) – duty to carry out...
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...The Outcome Assuming the Merger is Completed Per Share Market Value of BT at Merger Completion 60.00 50.50 45.00 Gain / (Loss) on Long Position: Value of each BT share received 60.00 50.50 45.00 x Number of BT shares received 1.30 1.30 1.30 Value of consideration received 78.00 65.65 58.50 - Basis in MCI stock (62.00) (62.00) (62.00) Gain / (Loss) on Long Position 16.00 3.65 (3.50) Gain / (Loss) on Short Position: Price of BT at time of short sale 50.50 50.50 50.50 - Market value at merger completion 60.00 50.50 45.00 (9.50) 0.00 5.50 x Number of BT shares shorted 1.30 1.30 1.30 Gain / (Loss) on Short Position (12.35) 0.00 7.15 Total Gross Spread at Merger Completion 3.65 3.65 3.65 Source: Note on Risk Arbitrage No matter at what prices the deal closed, merger arbitrageurs are be able to lock-in a risk-free profit. And the only risk of the merger arbitrage is the completion risk. MCI & BT Controversy The two companies were expected to gain the benefit from global communication merger by using each other competency; such as, a large multinational customer base in MCI and the local market expertise in BT. To merge the new global communication company, BT agreed to offer .54 of American Depository Share (ADSs) for each MCI share, plus $6 cash per MCI shares, and also gave a dividend with a total...
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...USB RATIOS 2013 2012 2011 Return on Equity =5,732/41,113=13.9% =5,490/38,998=14.1% Return on Assets =5,732/364,021=1.57% =5,490/353,855=1.55% Net Interest Margin 1681/12285=13.7% 2138/12883=17% 2516/12639=20% Net non-interest margin =5,732/9,104=63% =5,490/9,608=57% Net profit margin 5732/364,021=1.57% 5490/353855=1.55% Net operating margin .0157/364,021=0% .0155/353855=0% Tax Mgmt. efficiency ratio 5,732/9,104=63% =5,490/9608=57% Expense Control Efficiency ratio 10,274/9,104=1.13 10456/9608=1.09 Asset utilization ratio =9104/364,021=2.5% =9608/353,855=2.7% Equity Multiplier =364,021/41,113=8.85 =353,855/38,998=9.07 Earnings spread 12285-1681/364,021-156,165=5.1% 12883-2138/353,855-145,972=5.2% The following paper will discuss the strengths and weaknesses of the ratios of U.S. Bancorp. And will compare it to a competitor, Wells Fargo in certain areas. It is important to understand the different ratios to have a complete overview of the bank’s performance. Bank’s not only need to stay profitable, but remain competitive in the market (Schaeck & Cihak, 2012). The first ratio is the return on equity. The return on equity ratio is classified as a profitability ratio and shows the amount of return that goes to the shareholders (Rose & Hudgins, 2013, p. 172). USB went from 14.1% in 2012 to 13.9% in 2013 on their return on equity. Due to the small change in one year is not indicating any increase or decrease in amount of return to the stakeholders...
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...MGMT 5136: International Business and Public Policy |Burgeoning International markets and evolving domestic public policy have had a dramatic impact on the American banking industry. In my current role| |at Bank of America I have been able to witness the affects of these two contingent factors with my industry, my firm, and directly with my job. The | |effects of international business and public policy related to banking have been widely observed of late. With the recent media focus on financial | |service firms it is widely accepted that policy changes fundamentally alters firms’ operating environment and mark transitions to a new era of | |financial reform. As an industry, banking is simultaneously embedded in and affected by these two external conditions and the effect of one on the | |industry is often contingent upon the other. | |Banking has recently seen exponential domestic and foreign growth that can be attributed to expanding international trade policies and evolving | |public policy. This liberalization of trade in financial services has been a visible result from international economic and financial integration. | |International trade has been spurred on by economic and technological developments that facilitate the flow of goods, services, capital, and even | |people. This rapid expansion is evident at the bank when you recognize...
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