...Capital Budgeting Analysis Amanda Kocanda, DeUndre’ Rushon, HuongTran,& Morgan Gibreal MBA 612, Financial Strategy October 28, 2014 Bellevue University Abstract Within this paper, an overview of the general capital budgeting process and how it is implemented within organizations is defined and reported. Key terms related to capital budgeting are also defined. Risk analysis based on the Net Present Value (NPV) is performed on the salvage values before and after sales tax values along with the different sale ranges. Keywords: NPV, NPV Profile, NPV, IRR, multiple IRRs, ranking conflict of NPV vs. IRR, payback period, profitability index, discount rate, cost of capital concept, cash flow analysis, cash flow timeline, conventional cash flow stream, non-conventional cash flow stream, sunk cost, opportunity cost, independent projects, mutually exclusive projects Overview of the Capital Budgeting Process Every business requires some source of funds to maintain operation and competitive advantages. Whether it’s a manufacturing or servicing firm, it requires financing. Financing sources can be obtained through debt, bond issuance, bank loan, equity, and issuance of preferred and/or common stock. The amount of debt and equity builds the firm's capital structure. The firm's corporate or business strategy is the proportion of capital structure it needs to finance its operation. The combination of debt and equity totals the cost of capital for the firm. The...
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...FIN/370 March 19, 2012 Christine Gordon Strategic Initiative Wal-Mart Stores, Inc. is a global company that has taken a moral and ethical position on becoming a leader on social issues that each community finds itself dealing with daily. This year Wal-Mart has invested in what they currently call the Global Responsibility Report. This report covers a multi-faceted plan that it plans to deal with over the past year and how it will approach these social issues in the future. What we will be looking at is the strategic planning on the environmental initiatives that Wal-Mart has deemed a priority in the next few years, how these initiatives will affect the financial planning of the company, how it will affect the cost and sales of products not only to the customer but also the vendors and what the financial risk that are associated with the initiatives. As we look at these different pieces of Wal-Mart’s managerial direction it will give us a better understanding of how big businesses are not only leading in their current venue but also trying to be a leader in our social issues of the day. Strategic Planning of Environmental Initiative of Wal-Mart Stores, Inc. When reviewing the annual report of Wal-Mart Stores, Inc. it gives us a vivid look into how corporations are trying to play a larger leadership role in today’s social issues. Per Wal-Mart Annual Report (2011),”This year, we’ve published a Global Responsibility Report, expanding the dialogue to a broader...
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...6/15/12 Moneycontrol.com >> Company Info >> Print Financials This data can be easily copy pasted into a Microsoft Excel sheet PRINT Previous Years » Ramco Industries Balance Sheet Mar '11 12 mths Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 8.67 8.67 0.00 0.00 365.05 0.00 373.72 197.21 41.14 238.35 612.07 Mar '11 12 mths Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs) www.moneycontrol.com/stocks/company_info/print_main.php ------------------- in Rs. Cr. ------------------Mar '10 12 mths Mar '09 12 mths Mar '08 12 mths Mar '07 12 mths 8.67 8.67 0.00 0.00 320.37 0.00 329.04 196.62 51.04 247.66 576.70 Mar '10 12 mths 4.33 4.33 0.00 0.00 273.15 0.00 277.48 188.65 70.55 259.20 536.68 Mar '09 12 mths 4.33 4.33 0.00 0.00 241.61 0.00 245.94 233.17 30.89 264.06 510.00 Mar '08 12 mths 4.33 4.33 0.00 0.00 220.73 0.00 225.06 162.18 63.33 225.51 450.57 Mar '07 12 mths 458.30 227.79 230.51 25.26 202.62 125.84 40.20 22.76 188.80 71.40 0.09 260.29 0.00 81.78...
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...FINANCIAL INFORMATION ANALYSIS Business Policy Analysis Application Exercises Question 3 One of the fastest growing industries is the memory chip industry, which supplies memory chips for personal computers and other electronic devices. Yet the average profitability has been very low. Using the industry analysis framework, list all the potential factors that might explain this apparent contradiction. Concentration and Balance of Competitors • The concentration of the memory chip market is relatively low; • There are many players competing on a global basis, none of which has a dominant share of the market; ==> Frequent price wars as individual firms lower prices to gain market share; Degree of differentiation and Switching Costs • In general, memory chips are a commodity product characterized by little product differentiation; • While some product differentiation occurs as chip makers squeeze more memory on a single chip or design specific memory chips to meet manufacturers’ specific power and/or size requirements, these differences are typically short-lived and have not significantly reduced the level of competition within the industry; • Because memory chips are typically interchangeable, switching costs for users of memory chips are very low, encouraging buyers to look for the lowest price for memory chips; Scale/Learning Economies and the Ratio of Fixed to Variable Costs • Scale and learning economies are both important to the memory chip market; ...
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...Financial Strategy of Marriott The four key elements of Marriott’s financial strategy were: manage rather than own hotel assets; invest in projects that increase shareholder value; optimize the use of debt in the capital structure; and repurchase undervalued shares For the first strategy, Marriott not only identified markets, created development plans, attracted additional capital, and evaluated potential profitability, but also guaranteed a portion of the partnership’s debt. Managing hotels rather than owning them could help Marriott to decrease the assets on book, thus increasing the return on assets and also sharing the same risk with limited partners. Investing in projects that increase shareholder value that Marriott can determine and choose the projects which would have a higher net present value by using the future cash flow, and eventually increase the shareholders’ value. Optimize the use of debt in the capital structure which helps decreasing the debt to equity ratio, and thus attracts more new and existing shareholders, and an optimize structure lead to a higher shareholder value. Repurchase undervalued shares will decrease the shares in the market, since they keep making profits, the profits per share is increasing based on the buyback. But comparing to the competitors of Marriott and the market, this element could not guarantee for increasing the stockholders’ value. Overall, Marriott’s financial strategy followed the growth objective, although planning...
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...Strategies for Small and Medium-Sized U.S. Businesses Interested in Investing in China: Lessons That Can Be Learned from Taiwanese Companies Xun Wang Department of Sociology/Anthropology University of Wisconsin -Parkside David A. Ralston Management Department Michael F. Price College of Business University of Oklahoma Investing in China has been one of the hottest and most critical issues in the ever-changing business world since the early 1980s. Huge amounts of foreign investment poured into China during this period primarily because of China's huge market, plentiful cheap labor, and rapid economic development (Davies, 1998; Luo, 1998; Shi, 1998; Sun & Tipton, 1998; Wang & Ralston, 1995). From 1980 to 1988, the number of foreign-joint ventures approved in China increased from 348 to 15,955, and the amount of foreign capital pledged increased from $1.7 million to $28.2 million (Pomfret, 1991). The foreign investment in China totaled $27.5 in 1993 and that amount rose to $37.5 billion by 1995. At present, there are over 318,000 foreign funded companies in China with the total amount of realized foreign investment from 1978 to 1998 totaling $250 billion (Shi, 1998). While the interest in investing in China is worldwide, two major investors are the U.S and Taiwan (Pomfret, 1991; Shi, 1998; Sun & Tipton, 1998; Walker, 1996; Wang & Ralston, 1995;). What is also interesting to note is that while almost all U.S. companies investing in China are large multinational corporat...
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...Apple Inc Financial Strategy ------------------------------------------------- 窗体顶端 Search 窗体底端 * Home Page » * Business and Management Apple Inc Financial Strategy In: Business and Management Apple Inc Financial Strategy Apple Readers of this blog know that I’m not a huge fan of Apple, but that’s neither here nor there. No matter what you read in the press or business press about Apple and innovation, marketing, or product development, the fundamental business strategy at Apple is a financial one. Apple’s fundamental strategy is to squeeze as much profit as humanly possible from every sale it makes. Apple’s financial strategy, then, is to maximize its margins, a financial strategy it has pursued single-mindedly since Steve Jobs returned to the company. This foundational financial strategy informs every other aspect of its business model. Product development — to maximize margins, Apple has to offer products that consumers can buy nowhere else. This involves one part cutting-edge design, one-part unique, hard-to-emulate features, and several parts marketing. Always be launching – A standard truth about marketing is that early adopters are willing to pay the highest prices – and highest margins. The Apple launch strategy involves super-hyping products in order to build the largest army of early adopters possible. All those nice people who stood in line for an iPad on the day of its launch were willing to pay a pretty penny to get their hands on the device....
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...development, the fundamental business strategy at Apple is a financial one. Apple’s fundamental strategy is to squeeze as much profit as humanly possible from every sale it makes. Apple’s financial strategy, then, is to maximize its margins, a financial strategy it has pursued single-mindedly since Steve Jobs returned to the company. This foundational financial strategy informs every other aspect of its business model. Product development — to maximize margins, Apple has to offer products that consumers can buy nowhere else. This involves one part cutting-edge design, one-part unique, hard-to-emulate features, and several parts marketing. Always be launching – A standard truth about marketing is that early adopters are willing to pay the highest prices – and highest margins. The Apple launch strategy involves super-hyping products in order to build the largest army of early adopters possible. All those nice people who stood in line for an iPad on the day of its launch were willing to pay a pretty penny to get their hands on the device. The second part of the strategy is to continually relaunch products. The Apple financial strategy – maximize margins as much as possible – is wedded to a marketing strategy of maximizing early adoption. Why is Apple so secretive to the point of insanity? Because you can’t maximize early adopters if your product is old before it’s launched. Keep the cash coming – All the press you read about Apple’s product strategy frequently misses the most important...
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...Finance theory and Financial strategy Strategic Planning means several things. But it certainly is a part of the decision-making in resource management of the business benefits. Finance theory has significant advantages in understanding the function of capital markets, the valuation of real assets and financial assets. Discounted cash flow analysis(DCF) is a tool that derived from finance theory which has been widely used. However finance theory also has little effect on strategic planning and there are three differences between financial theory and strategic planning: 1. Traditional financial theory and strategic planning might have some differences in language and culture. 2. Discounted cash flow analysis might be used in an incorrect way of strategy therefore it is not acceptable in terms. 3. Discounted cash flow analysis might fail to apply a strategic, even if it is used properly. The most relevant financial concepts in strategic planning is firms’ capital investment decisions and it is also a critical component of “financial theory”. The theory is focused on cash flow and return on the investment. The tool used in investment decisions is net present valued (NPV) which was calculated from present valued minus required investment or which was reduced to discounted cash flow formula because the net present value is a matter of cash flow that will gain in the future. [pic] ...
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...The purpose of this presentation is to convey the importance and purpose of managerial accounting, how the managerial accountants support the strategic decisions, ways strategies can be implemented by management and strategy implementation steps that managers can take. As the Board of Directors you will be charged with interpretation of information provided by the accountants. As a board using the financial and managerial accountants’ reports and feedback will assist with the planning and execution of decision that will strategically allow all employees from management down to the front line to operate efficiently. The purpose of managerial accounting is to take historical information, such as financial statements, budgets and operations reports to create a plan focus inwardly within the company. Managerial accounting is a system of providing and measuring financial and operational information. The system is designed to motivate behaviors, guides managerial action, and support and create necessary cultural values needed to achieve an organization’s strategic objectives (Geense, 2005). Managerial accounting is comprised of 4 ideas that are the key to its definition. The ideas capture the purpose, scope, attributes and nature of managerial accounting. Cost and operational information, including some financial information define the scope. Reaching the key strategic objectives is managerial accounting's purpose. Managerial accounting by nature is a measurement process. The...
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...» THE HIGH-PERFORMANCE ORGANIZATION 64 HARVARD BUSINESS REVIEW Companies typically realize only about 60% of their strategies' potential value because of defects and breakdowns in planning and execution. By strictly following seven simple rules, you can get a lot more than that. TURNING GREAT STRATEGY INTO GREAT PERFORMANCE by Michael C. Mankins and Richard Steele hree years ago, the leadership team at a major man- ufacturer spent months developing a new strategy for its European business. Over the prior half-decade, six new competitors had entered the market, each deploying the latest in low-cost manufacturing technology and slashing prices to gain market share. The performance of the European unit - once the crown jewel of the company's portfolio-had deteriorated to the point that top management was seriously considering divesting it. To turn around the operation, the unit's leadership team had recommended a hold new "solutions strategy"-one that would leverage the business's installed base to fuel growth in after-market services and equipment financing. The financial forecasts were exciting-the strategy promised to restore the business's industry-leading returns and growth. Impressed, top management quickly approved JULY-AUGUST 2005 65 » THE HIGH-PERFORMANCE ORGANIZATION Chemical, 3M, and Roche, to name a few-develop realistic plans that are solidly grounded in the underlying economics of their markets and then use the plans to drive execution...
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...1 INTRODUCTION PROTON BEHARD is a Malaysian car manufacturing company that was established by the government in 1983. The objective behind the creation of the car company was to aid the attainment of the country’s goal of becoming an industrialized nation through a fortified car manufacturing industries. The country also had the intention of acquiring improved technology and industrial skills through the new manufacturing field which in turn is believed will fortify the status of Malaysia as an industrial Nation Vision The vision of proton is stated thus “to become Asia’s premier automotive brand; a brand that connects with people and provides products which become life companions”. This will be achieved through; • Ensure quality as the Number One work ethics in all operations • Establish an effective and efficient Quality System based on the requirements of ISO9001:2008 standards • Provide adequate skills and knowledge to all levels of personnel through systematic and structured training programmes • Provide a culture and environment of continuous learning, improvement and innovation towards total quality excellence • Provide a conducive, safe and healthy working environment in which people like to work and prosper. 1.1 Performance and challenges For twenty five years Proton has provided Malaysians with a number of award winning models and presently they have the largest factory in the South East Asia region with respectable statute. The company which has grown...
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...Chapter one, What is Strategy? • What is our present situa4on? – Business environment and industry condi4ons – Firm’s financial and compe44ve capabili4es • Where do we want to go from here? – Crea4ng a vision for the firm’s future direc4on • How are we going to get there? – CraBing an ac#on plan that will get us there The Strategy-‐Making, Strategy-‐Execu4ng Process 1 WHAT IS STRATEGY ABOUT? • Strategy is all about – How to outcompete rivals. – How to respond to economic and market condi4ons and growth opportuni4es. – How to manage func4onal pieces of the business. – How to improve the firm’s financial and market performance. WHY DO STRATEGY ? • A firm does strategy: – To improve its financial performance. – To strengthen its compe44ve posi4on. – To gain a sustainable compe44ve. advantage over its market rivals. • A crea4ve, dis4nc4ve strategy: – Can yield above-‐average...
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...Strategies for oil and gas companies There are a variety of challenges facing the energy industry, from decreased access to sovereign reserves, to declining fields, innovation challenges, increased regulation and new energy policies. These challenges pose a threat to the basic industry structure. Oil & gas companies espouse four common industry-wide strategies of Portfolio Management, Operational Efficiency, Financial Management and Sustainability-of which the first three are core operating strategies of oil & gas companies. The companies have derived their profitability, growth, and shareholder returns based on the superior execution of these strategies. Though talk about Sustainability is a business imperative, it is no longer a differentiating factor and is not integrated with the core strategies. The current challenges facing the energy industry, however, necessitate that the companies integrate sustainability, innovation and management of technology strategies with their core strategies of portfolio management, operational efficiency and financial management. In this thesis, we propose two distinct strategic options: Total Life Cycle Management and Management of Technology. Environmental management and organizational efficiency are an integral component of both the strategic options. Through Total Life Cycle Management, the companies address challenges of continued access to easier to develop and produce reserves and legacy fields, efficiencies, costs and hosts expectations...
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...The Determinants of MNE Subsidiaries' Political Strategies: Evidence of Institutional Duality Author(s): Amy J. Hillman and William P. Wan Source: Journal of International Business Studies, Vol. 36, No. 3 (May, 2005), pp. 322-340 Published by: Palgrave Macmillan Journals Stable URL: http://www.jstor.org/stable/3875180 Accessed: 26-02-2015 20:33 UTC Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at http://www.jstor.org/page/info/about/policies/terms.jsp JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. Palgrave Macmillan Journals is collaborating with JSTOR to digitize, preserve and extend access to Journal of International Business Studies. http://www.jstor.org This content downloaded from 193.140.253.100 on Thu, 26 Feb 2015 20:33:00 UTC All use subject to JSTOR Terms and Conditions Studies(2005)36, 322-340 Business journal International of - 2005 Palgrave 0047-2506 $30.00 Macmillan Ltd. Allrightsreserved www.jibs.net The determinants of evidence strategies: Amy J Hillman' and William P Wan2 MNE of subsidiaries' political institutional duality Abstract of State Arizona IDepartment...
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