Objectives This course introduces basic financial concepts all business managers should understand regardless of functional specialization. Topics include financial analysis and planning, time value of money, valuation, capital budgeting, risk/return trade-offs, cost of capital, and capital structure. The pedagogical approach used is a mixture of lectures and case examples. Cases are often used as a vehicle for discussing the complexities of real-world financial problems. To benefit most from this
Words: 2362 - Pages: 10
operating divisions and to reward division managers. A summary of the annual reports from two divisions is shown below. The company’s weighted-average cost of capital is 12 percent. Note: Economic Value Added (EVA) (p. 1087) A specific type of residual income that is computed by multiplying the after-tax weighted average cost of capital by total assets minus current liabilities and subtracting that product from the after-tax operating income. -------------------------------------------------
Words: 2063 - Pages: 9
per previous discussions, as SEL continues to grow, we need to look into how it can gain a competitive edge in its market by gaining control of the financial activities of the company. With this growth, it needs to consider how to raise additional capital and how to manage the increase in employees and accounting transactions. Over the last 4 years, SEL has grown its business by 25% in total revenue. There are currently enterprise risks and issues that SEL faces due to the lack of planning, organizing
Words: 1110 - Pages: 5
Chapter 3 1. Capital budgets focus on plans for the acquisition and construction of fixed assets. 2. The accounting cycle for most governments is two to three years, consistent with the terms of elected officials. 3. Most budgets are prepared on a cash or modified cash basis. 4. Neither the GASB nor the FASB sets standards for budgetary accounting. 5. State and local governments must prepare their GAAP budgetary comparisons on the modified accrual basis of accounting. 6. When
Words: 1735 - Pages: 7
Financial Terms and Roles Alvaro Garcia Jr. FIN/370 August 19, 2013 Dr. Rachel Ang Finance – Individuals and businesses evaluate investments and raise capital to fund them. Understanding and having knowledge of finance will benefit both personal and professional life. Efficient market – Investors respond to new information buying and selling their investments the speed with which investors act and the way that prices respond to the information determine the efficiency of the market. Primary
Words: 487 - Pages: 2
present value they offer. This paper, which will include the evaluation of finance concepts from the readings, will identify which alternative is necessary to improve business. It will include an evaluation of possible changes and demonstrate how capital budget analysis can provide the necessary information for the best possible return on investment. However, due to the competition Guillermo is in a situation, which requires an evaluation of processes and find ways to compete. With more competitors
Words: 1118 - Pages: 5
QUESTIONS FOR THE OVERALL ASSIGNMENT 1. What is the best way to estimate the company and divisions’ cost of capital? Answer: The best way to estimate the cost of capital is by using the CAPM (Capital Asset Pricing Model) where the Weighted-Average Cost of Capital (rwacc) is given by the formula Where, D is the market value of the net debt E is the market value of the total equity V is the total market value of debt and equity = D + E T is the corporate tax rate rd is the appropriately
Words: 1628 - Pages: 7
like any other company department. Budget is the basis of human resource planning. HRP should be done within the limits of the budget. There is no use in formulating an excellent plan which cannot be implemented because of financial constraints. HR Budgeting is a powerful financial tool that can estimate the expenditures made by the HR vertical. This strengthens and allows the HR to control the cost rather than letting it control the HR initiative. The budget is drawn parallel to the goals of the organisation
Words: 1834 - Pages: 8
failure on the owner’s part. However, the Real Options Theory is basically, weighing the outcome for expansion or acquisition utilizing capital investments for future ventures. Consider Real Option theory as a method to remove some of the risk in capital investments. Helpful assistance and decision making can be derived using such charts as the Decision Tree. The decision can be extremely tiresome. Use of Real Options Theory in Financial Management/Modeling Long past are the days, where a company
Words: 1775 - Pages: 8
Budgeting OVERVIEW Brief description This toolkit provides guidelines on how to go about developing and monitoring a budget. It will help you with an overall organisational budget as well as with a budget for a specific project. It includes tools for estimating costs as well as tips for ensuring that your budgets meet the needs of your project or organisation. In the examples section we give actual examples of budgets and how they can be monitored. Why have a toolkit on budgeting? Budgeting
Words: 7666 - Pages: 31
