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Executive SummaryA comprehensive financial analysis report will always helps to provide the knowledge about the strength and weakness factors of a company or two or more companies. The report always helps to maintain chained and superior communication with the investors for a company to take a clear idea of their investment into the particular company by giving them the clear concept about the company’s weak points and strength sector in a truthful and honest manner. That is why the investors are convinced in many ways by reviewing the financial report of a company. As per the financial analysis made on the company’s financial data, it always provides performance for the company in a particular time and reflects financial health of the same company. It is one of the major reasons that draw the attention of the investors and attract them highly of their interest by reflecting a clear appraisal about the financial health of particularly chosen company /companies. Now as per the case of this present report, the main intention is to provide the apparent and precise idea about two airline companies, which named as Emirates Airline and Turkish Airline. The comprehensive evaluation and also the financial analysis is conducted based on the two above mention airline services and this is done after retrieving the additional support by reviewing the annual financial statement or report that the airline companies published in every end of their financial or fiscal years. This reporting will concentrate on the financial ratios of the particular companies each individually by taking into consideration of the balance sheets and statement of profit & loss separately for each of the company for a minimum of three financial years as per the required criteria. The analysis of different ratios will suggest the clear concept about each of the company’s financial position and health for the mentioned time period. The overall motto of creating this report is to elaborate and create study that will deal with the understanding between both selected companies and help to supply reasonably comparative analysis of the airline companies, reflect their future as per the market and at last provide a supportive recommendation for the best opportunities therein.

Table of Contents

TOC o “1-3” h z u HYPERLINK l “_Toc392775806” Executive Summary PAGEREF _Toc392775806 h 2

HYPERLINK l “_Toc392775807” Introduction PAGEREF _Toc392775807 h 6

HYPERLINK l “_Toc392775808” Analysis PAGEREF _Toc392775808 h 9

HYPERLINK l “_Toc392775809” Financial Statement PAGEREF _Toc392775809 h 10

HYPERLINK l “_Toc392775810” Importance of Ratio PAGEREF _Toc392775810 h 11

HYPERLINK l “_Toc392775811” Financial Ratios PAGEREF _Toc392775811 h 13

HYPERLINK l “_Toc392775812” Profitability Ratios PAGEREF _Toc392775812 h 13

HYPERLINK l “_Toc392775813” Gross Profit/Operational Profit PAGEREF _Toc392775813 h 14

HYPERLINK l “_Toc392775814” Net Profit PAGEREF _Toc392775814 h 16

HYPERLINK l “_Toc392775815” Return on Shareholder’s Fund PAGEREF _Toc392775815 h 18

HYPERLINK l “_Toc392775816” Return on Capital (ROCE) PAGEREF _Toc392775816 h 21

HYPERLINK l “_Toc392775817” Efficiency Ratios PAGEREF _Toc392775817 h 23

HYPERLINK l “_Toc392775818” Sales Revenue to Capital Employed (SRCE) PAGEREF _Toc392775818 h 23

HYPERLINK l “_Toc392775819” Sales Revenue PAGEREF _Toc392775819 h 23

HYPERLINK l “_Toc392775820” Asset Turnover PAGEREF _Toc392775820 h 23

HYPERLINK l “_Toc392775821” Debtor Turnover PAGEREF _Toc392775821 h 25

HYPERLINK l “_Toc392775822” Stock Turnover PAGEREF _Toc392775822 h 26

HYPERLINK l “_Toc392775823” Liquidity Ratios PAGEREF _Toc392775823 h 28

HYPERLINK l “_Toc392775824” Current ratio PAGEREF _Toc392775824 h 28

HYPERLINK l “_Toc392775825” Acid Test PAGEREF _Toc392775825 h 30

HYPERLINK l “_Toc392775826” Gearing Ratio PAGEREF _Toc392775826 h 32

HYPERLINK l “_Toc392775827” Horizontal Analysis PAGEREF _Toc392775827 h 33

HYPERLINK l “_Toc392775828” Horizontal Analysis of Income Statement PAGEREF _Toc392775828 h 34

HYPERLINK l “_Toc392775829” Horizontal Analysis of Balance Sheet PAGEREF _Toc392775829 h 36

HYPERLINK l “_Toc392775830” Vertical Analysis PAGEREF _Toc392775830 h 41

HYPERLINK l “_Toc392775831” Current Asset PAGEREF _Toc392775831 h 43

HYPERLINK l “_Toc392775832” Current and Non Current Asset PAGEREF _Toc392775832 h 43

HYPERLINK l “_Toc392775833” Current Liabilities PAGEREF _Toc392775833 h 44

HYPERLINK l “_Toc392775834” Liabilities and Equity PAGEREF _Toc392775834 h 44

HYPERLINK l “_Toc392775835” Summarizing PAGEREF _Toc392775835 h 44

HYPERLINK l “_Toc392775836” Conclusion PAGEREF _Toc392775836 h 45

HYPERLINK l “_Toc392775837” Recommendation PAGEREF _Toc392775837 h 46

HYPERLINK l “_Toc392775838” References PAGEREF _Toc392775838 h 47

HYPERLINK l “_Toc392775839” Appendix PAGEREF _Toc392775839 h 50

IntroductionFinancial report always had been vital statistic of a company over the financial performance for a particular time period, so it has a great importance for the company. Company creates it for the purpose of giving the investors and auditors the added support to review and take their decision on the company’s aspect and also to make the comparison with the same kind of companies in the market i.e. the market competitors to get a proper idea about their own financial standings. This is one of the superior way to spot the weaknesses that the company have by thoroughly reviewing the financial statement of the overall time period and take positive measure to overcome those odds and weaknesses (Lambert and Larker, 2008). The main purpose it to identify the loopholes and try to eliminate those by taking some proper steps and also to secure the future of company. The financial position of Emirates Airline and Turkish Airline will be disclosed in this financial report and their financial health residing in airline financial market will be reflected on the basis of analysis done entirely in this report. It should be remembered that a financial reporting statement or annual report for an airline company or any other companies will be made on the basis of three particular things which are balance sheets, statement showing profit or loss and also the income statement. Balance sheet is a statement that helps to provide clear concept about value and distribution of assets and liabilities of the company as well as the capital structure of the airline company as what is the figure of equity for the shareholders, what is the amount of borrowed capital for the company. Balance sheet of a company is mostly important as it will help to calculate the important ratios which used to determine the solvency or liquidity of the company and also open up the facts regarding the risk factors of the business. On a given time period the statement of balance sheet is useful to gather the concept behind the efficiency of the firm. Next it is income statement which is other valuable record of the company that should be maintained on a time to time interval to keep track of the expenses incurred or income gained by the airline company throughout the financial year. So this process of recording and storing data by the income statement, it symbolizes as a significant aspect for the company. In the end of each financial year it reflects the profit earned or loss suffered by the company over the entire economic time period. Thus a clear and refined image of the company developed by assessing the income statement and also some of the important ratios also extracted during the reviews, which are as gross profit ratio, net profit ratio, return on capital employed etc. These ratios help to determine the overall structure of the company in term of the profit and loss scenario and reveal the margin of profit or loss that the company is currently carrying with it. One of the primary aspects of the company is its statement showing cash flow of the company, as each and every company forecast the cash flow statement into their each annual financial statement. The structure of a cash flow statement is basically focus on operating, financial and investing activities of the company over its given time period (Bierman and Smidt, 2009). The financial statements of the company like balance sheet or income statement often used to calculate the financial ratios of that same company and the profitability of the airline company is analyzed and derived out of the income statement. So in this report the net profit margin, gross profit margin and capital employed of both Turkish and Emirates Airline each will be calculated separately and later the comparison also can be made simply by deciding the better of the two scenarios. By this way the one set of proper ideas consisting of the understandings can be prepared for further usages. Balance sheet of the company can be analyzed to extract the liquidity, gearing and efficiency of the company to make the further evaluation. Then there will be the usage of horizontal and vertical methods for going to the dept of the analysis. Horizontal analysis always deals with the analysis of balance sheet and income statement and on the other side vertical analysis only capitalizes with the balance sheet only. The financial analysis is made on this report based on three years of financial performance by both of the airline companies starting from 2011 to 2013. Every company like the airline companies have their issues and challenges regarding the internal structure which concentrate on the financial activities of the company, so this report is purpose to make the solutions to those odds by suggesting the recommendation to be followed and also forecasting the future probable based on the investment for both of the companies (Bierman and Smidt, 2009).

So the key idea of writing this report is to be shortened here in this section. The main objective of writing the report is to provide the exact and accurate idea about the financial position of the selected company and also evaluate the performance level of the company by analyzing the values obtained from ratios, such as profitability, liquidity, efficiency and gearing ratios. This is done in order to examine the particular company’s financial stability in the current financial year based on the comparison of previous financial years (Lewellen, 2008). The financial standings and positions of two companies named Emirates Airline and Turkish Airline is to be evaluated on the purpose of giving their reviews to the favor of company as well as the financial stakeholders. So the analysis is based on the annual financial statement of the both companies as they published those copies annually at the end of each financial year. Three years will be considered to give the effect of the needed requirement and to do the comparative analysis. The ratios in this section will be calculated on the basis of financial data derived in each year for the companies (Weygandt and Kieso, 2009). The financial data that will be derived from the income statements and balance sheets of the respective companies for their corresponding accounting years will be taken into the analysis purpose. The ratios are calculated on the basis of the values generated into those statements. The financial years of 2011, 2012 and 2013 will be considered for the review purpose. So it is necessary for the report to look thoroughly the information obtained from the financial annual reports of Emirates Airlines and Turkish Airlines (Anacoreta and Silva 2005). The sectors that will be critically concentrated based on the analysis are the revenue earning capabilities of the firm, management of liquidity and credit status of the company, management related to the inventories and the management of company’s short term debt and their management or settlement to clear off. These aspects are done in order to weakness and strengths of the entire business operations involving in a present airlines market (Berry and Waring, 1995). Lastly based on the ongoing analysis of the same the following reviews and highlights will be made for the concept of offering explanation and some needed sector-wise changes. This report’s major section is to take into consideration about the analytical report and comment on the prospect of company after finding the comparative benefits between Emirates Airlines and Turkish Airlines. This all will give access to the recommendation section which is the primary result of creating the report and that will consist of the further development and improvement of performance of both companies (Curran and Blackburn, 2001). Limitations of pursuing the study based report and organizing the necessary information are always there as it is always a tough task to rely on the sources of information that can be manipulated for accessing and taking into the analysis purpose. But apart from the analysis the section of business report will give advantage on how a cash flow statement will be carried forward for the favor of business and how well it can be demonstrated to travel into the depth of transactions (Bierman and Smidt, 2009).

AnalysisThis financial report is the conductive form of the report that is entirely concentrated and based upon the annual financial document of each of the company during their end of the financial year (Ingram and Albright, 2009). The importance of the statement showing income of the airline company or the balance sheet is helpful in many ways as possible as told earlier in the reporting section. These documents or statements are the basics to calculate the ratios of the company to take further decisions for the favor of multiple parties like shareholders, stakeholders, investors of the company, financial analysts from different levels and also the auditors of the firm and used to deliver the fact behind the investment issues, whether or not the investment on the following company will be justified or not based on the profitability criteria. Also the needed strategies, the future proposal and set of collective decisions are taken on the basis of proper analysis. In this report the financial analysis has been done mostly on the aspect of statement reflecting the financial positions of the company and income statement of both Emirates and Turkish Airline (Lewellen, 2008). This collective analysis is collaborative of the set of two separate analysis combined to show the effect of profitability of these selected company of the ground of airline market.

Financial StatementThe financial statement includes the balance sheet and the income statement both of which is taken into consideration for giving effect based on the calculation of different financial ratios of these two companies and also based on that the results are put into the horizontal and vertical analysis to go into the depth of the report and reaching the conclusion portion (Lewellen, 2008). The statement showing the financial position of the company i.e. balance sheet is the one which will give the report the idea about the utilization of available resources of the and how well they able to make the proper usage in a particular time period. For this purpose the total assets, total current assets and total liabilities, total current liabilities are been considered majorly for right calculation of the necessary elements. Another financial statement is the income statement which supplies a clear views on the incomes gained or profit earned and expenses incurred or losses suffered by the both companies within a examined accounting year (Ingram and Albright, 2009).

Importance of RatioDifferent level of financial users and analysts are helped by the vital roles played by the financial ratios. Financial statement helps in many ways and that’s why its users are from different levels and their purpose of using is also different in kind. Shareholders needs to get the help of financial statement to get themselves knowledge about the company’s profitability and facts about revenues to make decision on holding shares to that particular organization or company as they get determined about the issues and challenges in the areas of profit and revenue of the company (Ingram and Albright, 2009). The purpose of investors is always clear as they followed the financial statement of the company to get alerted about the company’s profitability structure to make the investment profitable for them. So, all the strategies behind the stakeholders of the company and strategies of the company itself have to depend on the financial statements to make the company more profitable by accomplishing the possible and needed changes. Financial ratios are the ones that are the short result or effect of that particular financial statement of a company, that’s why the importance of ratio and analyze of it is a mandatory step and should be performed with great care and skills. Some of the key ratios are profitability ratios, liquidity ratios, gearing ratios and efficiency ratios which are calculated and discussed in this report knowing its importance to take necessary decisions and completing the task that is on hand (Lambert and Larker, 2008).

After discussing the advantages of ratio and its usage it is important to know about what effects it could bring to the organization or company for creating their business report and making the available resources useful. So ratio plays a important role in the financial sector of a company’s internal structure and that is why ratio analysis method or tool is one important tool that plays a significant role for measuring company’s financial performance. Accounting ratios and their advantages is the basic thing that should be discussed (Pitman 2003).

Financial Statement Analysis – as mentioned earlier that ratio is the basic for doing the financial analysis and creating the statement regarding that. For understanding the financial state of a particular company, accounting ratios are needful thing. It is often useful for the stakeholders of company like creditors, bankers, managers and investors have an exact idea of the company’s present situation based on the financial market and to take their effective decision regarding the knowledge of the company (Porter and Norton, 2010).

Judgment of Efficiency – in term of the manager’s capabilities to handle situation at the critical times and operations of business, the efficiency also can be judged by using the ratios. The efficiency of the company can be judged and decided by the smart utilization of their assets and profit earning capacity.

Spotting the Weaknesses – even the overall performance of the selected company is quite satisfying and doing good business in the market, there always can be the loopholes existed in the operation of business’s internal activities and financial positions; these all can be spotted using the calculation and analysis of ratios (Weygandt, and Kieso, 2009). The primary purpose of this is to pay attention of the manager to spot out those weaknesses separately and take effective measures to rectify them as in to progress more.

Formation of Plans – financial ratios of a business or a company is used to analyze the company’s financial performances that they are maintaining for the previous period of time. But the ratios are also useful measure up the company’s performances to make recommend it for some future trends that will do better improvement of the business activities and improve the financial performances (Lambert and Larker, 2008). So this will fall a direct impact to the company to formulate the strategic plan for doing the business operation and make the needed changes.

Comparison of Performance – this is one valuable step that entirely will be done over this entire business report using the ratios and their analysis. It is always an essential element for the company to know how they are running their business operations and how well their performances are comparative to the other similar natured companies in the same business environment. Beside that it is also significant for the business to learn about how well the performance of company during the different financial years as a comparison (Khan and Rehman, 2012). Such comparative analysis is facilitated by ratio analysis.

Financial RatiosProfitability RatiosAs by the name, the term profitability always signifies about the facts that how well the firm can able to make the profit presenting on the same environment or market. Profitability ratios help to reflect the rate and ability to make profit by the firm in different financial years that they are in based on the current condition and their ongoing business operations that time (Lambert and Larker, 2008). Also they easily help to reflect the financial position of the company and efficiency that they are having into the given accounting year. In the heads of profitability ratios different number of ratios comes under and these are to be calculated to give effect on the basis of sales and investment of the airline company (Anacoreta and Silva, 2005).

Gross Profit/Operational ProfitGross profit and the ration relating the gross or operational profit always reflects the relationship and the bonding between the net sales of the company for that given accounting year with the gross profit of the particular financial year. So the formula of gross profit or operational profit ratio is shown below:

Gross Profit Ratio = Gross Profit /Net Sales x 100

Where gross profit = Net Sales – Cost of Goods Sold

And net sales = Gross Sales – Sales Return

So the comparison should be shown with giving the effect based on calculation of the gross profit ratio of Emirates Airline and Turkish Airline for different financial years staring from 2011 to 2013. The calculation table is presented below:

Gross Profit Ratio for Emirates Airline

Items 2013 2012 2011

Net Sales 19375.9 16,748.01 14,416.39

Gross Profit 673.01 455.54 1,509.85

Gross Profit Ratio 0.03473 0.0272 0.104731

Gross Profit Ratio for Turkish Airline

Items 2013 2012 2011

Net Sales 18,776.80 14,762.10 11,812.50

Gross Profit 3,466.00 3,036.20 2,006.80

Gross Profit Ratio 0.184589 0.205675 0.169888

The above is a graph chart which represent Emirates and Turkish Airline company’s individual line of growth on the aspect of gross profits that these two company able to maintain during their financial years.

Gross profit ratio always defines the margin on which the airline companies are deciding to make their profit after maintain the rate during the last few financial or accounting years. It also able to determine the level of skills and abilities that the management section of the company need to improve their sales figure to achieve more profit on the basis of the business activities. As per the summary of this section the comparison will be done on the basis of this graph char where the better performance by the Turkish airline can be seen than the gross profit margin of Emirates Airline. it signifies that Turkish Airline able to improve their rate of gross profit by increasing the sales target of the company as comparing to the Emirates Airline (Anacoreta and Silva, 2005).

Net ProfitNext part of the report will analyze upon the net profit ratio of the two companies. Net profit ratio deals with the sales margin of any particular company that is why it is also called as the sales margin ratio. The main purpose of the ratio is to reflect the concise idea about the ability of the business to improve their part of the profitability residing on a business environment and the reflection is shown in a profitable manner (Ingram and Albright, 2009). The outcome of Net Profit ratio is determined by the difference of the net profit to the sales of the organization and that is presented in a percentage figure. Net profit comes in two different parts as before tax and either tax and both of the kinds are related with sales of the company by net profit ratio as it able to build the bridge between these two components. It is one of the best methods that considered for deciding upon the company’s overall structure of profitability and liquidity of the company as entire business operation and efficiency of the company is taken into the account in this method of calculation.

Net Profit Ratio for Emirates Airline

Items 2013 2012 2011

Net Profit after Tax 655.67 441.11 1,488.61

Sale 19376 16,748.01 14,416.39

Net Profit Ratio 0.0338 0.026338 0.103258

Operating Profit Turkish 1,240.00 1,490.50 122.6

Non Current Asset        

Year 2013 2012 2011 2010

Emirates 16050 13,885.16 11,523.86 9,786.92

Turkish 20864 14896.4 12362.2 7157.1

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This pictures graph represents the idea of the Turkish and Emirate Airline where it can be seen that Turkish Airline has slightly more efficiency level than the Emirates Airline as it able to utilize its available resources quite well to make the firm’s overall profitability more improved as per the comparison (Bierman and Smidt, 2009). The whole picturised scenario suggests that the Turkish company able to generate more profit out of the invested capital they have utilized. On the other side of the analysis, the managers of Emirates company needs to be more efficient on taking the collective decisions carefully on utilization of the available resources as the competitor company is generating more income than them.

Return on Shareholder’s FundReturn of Shareholders’ fund is all about the investments in a business or company and in the views of a company it is considered as the shareholder’s fund, most of the capital gathered and structured with the investments of shareholders. That is why it is also called as the return on investment. It is considered as the return generated from the given investment in the business’s capital structure by its owner or the shareholders. This ratio is used to show the relationship between the owner and shareholders’ investment with EAT (net profit after interest and tax) and the ratios able to reflect the percentage of return the entire investment can give to the investors of the company (Ingram and Albright, 2009). So the ratio is the key to measure the effectiveness of the investment and the amount of return that it can generate through the company’s capital structure and business activity.

The formula generated during the calculation ratio is:

Return on Shareholders’ Fund = Net Profit (after interest and tax) /Shareholders’ Equity

So two individual tables of both the airline company can easily be made out of the formula and reviewing their financial statement for the respective years. These tables are shown below:

Return on Shareholder Fund Emirate Airlines

Year 2013 2012 2011

Net Profit 655.674 441.11 1,488.61

Shareholder Equity 6689.621 5,844.98 5,667.17

Net Effect 0.098014 0.075468 0.262673

Return on Shareholder Fund Turkish Airlines

Year 2013 2012 2011

Net Profit 682.7 1,155.70 18.5

Shareholder Equity 25,399.30 18,757.90 16,404.90

Net Effect 0.026879 0.061611 0.001128

On the basis of the above two tables graph chart on the following two companies of Turkish Airline and Emirates Airlines can easily be made. And that graph will be used to easily judge the two companies according to their shareholders fund structure (Bierman and Smidt, 2009).

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This is the pictures representation of the graphical chart for both of the companies to identify some of the business-concerned issues. The importance of the above graph will be valued as per the detailed brief over here. This graph about the return on shareholders’ fund help the analysts and other stakeholders to ascertain about the company’s effectiveness and profit making capacity as the line is when in high position. But the comparative lower position of the chart indicate that the firm needs to go through the risk assessment as the risk factor is there in investing into the company and on the other hand the shareholders are not getting the return as per their expectations (Khan and Rehman, 2012). So it directly signifies that the business eventually needs to consider some effective decision immediately to sort out the problem solving measures. So this graphic presentation as per the analysis makes a clear view that the Turkish company is achieving with lower profit than the Emirates profit in term of the investments.

Return on Capital (ROCE)As per the term suggests this ratio makes the relationship between the profit and total capital invested or employed in the business.

So, two tables will be shown separately in the below portion to give the effect of ROCE for both of the airline companies.

Return on Capital Employed Emirate Airlines

Year 2013 2012 2011

Net Profit 655.674 441.11 1,488.61

Gross Capital Employed 25813.9085 20,989.76 17,723.36

ROCE 0.02540003 0.021015 0.083991

Return on Capital Employed Turkish Airlines

Year 2013 2012 2011

Net Profit 682.7 1,155.70 18.5

Gross Capital Employed 25,399.30 18,757.90 16,404.90

ROCE 0.02687869 0.061611 0.001128

Now based on the above table and for making the summary more prominent, a graph chart must be presented after calculating the data.

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The main purpose of ROCE is to give the effect of how much return can be generated from the total capital invested into the business operation by its owner and it also helps to collect information about the profit portion of that individual company (Khan and Rehman, 2012). Here as per the analysis of both the companies, it is reflected that Emirates Airlines has well structured ROCE than the Turkish Airlines, as the line of ROCE is higher than the later company. as per the scenario and the given analysis report on the basis of this particular element, it is clear that the company of Emirate is producing more capital in against the capital employed into the company, which is a good sign indeed for making further investment.

Efficiency RatiosEfficiency ratios are a bunch of important ratios which with its various elements measure up the efficiency of the firm and able to identify the strength factors of the company with considering its multiple variables. So out of the multiple ratios under this head few of the important ones are selected for doing the analysis.

Sales Revenue to Capital Employed (SRCE)This ratio is the purposed to check the efficiency level the firm is able to utilize it available capital to the favor of firm to produce more revenues. As per the analysis made on the both companies it is found that SRCE of Turkish Airline had raised by 57% in 2011 to 2012 but after the next level during the year of 2013 it had dropped to 50%.

But in the case of Emirates airline the sales revenue had increased by 8% in 2911 but in the same year shareholders’ fund decreased by 3% and non-current liabilities had increased by 14%. So the increase and decrease effect had an offset effect to increase the SRCE for the company of Emirates as compared to Turkish Airlines Company.

Sales RevenueOne of the significant and also important ratio for doing the part of analysis as the main function of it is to indicate the amount or quantity of revenues that

Financial crisis and banking industry

Name

Institutional affiliation

Financial crisis and banking industry

Introduction

The U.S banking industry has severely weakened as a result of the current financial crisis. The number of banks falling is rising, as financial crisis continues, and bank stocks are plummeting. As a result of this crisis, banks are tightening their lending standards and terms to exceptional levels. The tightening experienced could be detrimental as it could derail or even undermine the recovery of the economy. Financial crisis is the period when financial assets lose a greater fraction of their nominal value. Financial crisis leads to paper wealth loss but mainly not the real economy (Cao, 2012). The essay will explain how financial crisis affects the banking industry.

The current global economic downturn and financial affected world’s economy negatively and increased uncertainty. Financial crisis may have an important and the country and may lead to inflation and cause huge risks to the environment. Ciro states that the greatest organizations affected by financial crisis are the smaller banks. Banks face risks as a result of economic growth slowdown including credit risks. Default loans are small, but are increasing, and this is expected to grow tremendously. Various signs associated with credit risks include the bankruptcies reported (2012).

Financial crisis also provides a platform for banks to tighten their loan lending. The current financial crisis has made banks tighten their loan rates by lowering the discount on huge loans and increasing the risk premium for more risky loans. The price for non- commitment loans was also significantly higher in comparison to commitment loans. Financial crisis also affects shareholder’s equity (Cao, 2012). During the current financial crisis, many banks had to reduce shareholder’s equity as a way of sustaining the business cycle. Financial crisis leads to the banking industry to assume a better risk management program.

According to Ciro, credit evaluation is an important factor in banks. The current financial crisis made it possible for banks to evaluate their credit evaluation plan critically. The evaluation plan requires banks to obtain more information regarding the borrower to reduce the risks involved (2012). Financial crisis also makes banks eliminate some loan products to new loan borrowers. Financial crisis has also proved difficult to banks due to the creation of competition. The competition is attributed to deposits made making larger banks benefit and offer huge interests. Financial crisis also brings success to commercial banks as it offers them the opportunity to claim their deposits lost to huge institutions (Cao, 2012).

Conclusion

The current financial crisis proves difficult to all institutions, regardless of their conservative strategies and their capitalization. The current crisis thus brings better news and opportunities to various banks. Banks can increase their deposits, better themselves, and even gain new customers, if they strive to serve customers without drifting away from traditional practices.

References

Cao, J. (2012). Banking regulation and the financial crisis. Abingdon, Oxon: Routledge.

Ciro, T. (2012). The global financial crisis: Triggers, responses and aftermath. Farnham, Surrey: Ashgate Pub.

Financial Feasibility of Flying Cars

Name

Institution

Total Startup Cash Needed (to Make First Sale)

Capital Investments Amount

Capital Investment Amount ($)

Property 1,125,000

Furniture & Fixtures 1,131,000

Computer Equipment 1,150,500

Other Equipments 1,120,000

Vehicles 1,170,000

TOTAL 5,696,500

Feasibility Analysis

Operating Expenses Amount

Operating Expenses Amount Amount ($)

Legal, accounting, and professional services 12,000

Advertising and promotions 15,500

Deposits for utilities 115,500

Licenses and permits 112,000

Prepaid insurance 153,000

Lease payments 124,000

Salary and wages 148,000

Payroll taxes 118,500

Travel 12,500

Tools and supplies 15,000

Starting inventory 110,000

Cash (working capital) 1,200,000

Miscellaneous Expense 17,200

Total Startup Cash 2,152,000

Comparison of the Financial Performance of Proposed Venture to Similar Firms

Assessment Tool

Annual Sales

Sales Year 1 Year 2

Annual Sales 1,395,000 3,348,000

Comparison with HYPERLINK “http://www.google.co.ke/url?sa=t&rct=j&q=&esrc=s&source=web&cd=8&cad=rja&ved=0CH4QFjAH&url=http%3A%2F%2Fblogs.wsj.com%2Fspeakeasy%2F2013%2F01%2F23%2Fterrafugia-flying-car-is-fast-as-a-porsche-at-stopping%2F&ei=DnOFUpjzLbTA7AbH7oHABw&usg=AFQjCNFODJTl_zNh8aJPxWjnyKaQKW07rA&sig2=kLpM0-UEjAmcdQ_JGMAeNQ&bvm=bv.56643336,d.ZGU” Terrafugia

Terrafugia 2011 2012

Total Sales 13,950,000 12,624,000

The company estimates that each flying car would be sold at the prevailing market prices that is current at $279,000

In the first year of operation, the company targets selling 5 flying cars only and the number is expected to rise to 12, thus generating $3,348,000 sales revenue during the second year of operation. The company’s market share is expected to increase in the coming years and therefore more revenue will be generated from its sales.

Being a new company in the industry, it would be very hard for the firm to break-even especially over the first few years of its operations. The company must therefore be ready to spend more resources in promoting and advertising its new flying cars in order to gain market penetration. The limited but potential market is currently dominated by others manufactures with strong and sound financial strengths, hence relying on their economies of scale to restrict entry of new firms. For this reason new errant must spent more financial resources on its operations thus the $2,152,000 allocated for operational expenses of the firm.

Medical Superintendent and Doctors

Financial Impact on Universal Healthcare in the U.S

The following letter is written to pass the information that the touches on ethical practices that touch on healthcare professionals particularly with regard to financial, accounting and audit obligations. Professional ethics in healthcare go beyond what is usually emphasised in terms of practice and patient care related issues, to include more indirect practices that may compromise deliver of quality service. Besides medical profession integrity, practitioners are expected to observe other integrity issues that are incidental to the quality of health services delivered to the patients. An interdisciplinary perspective is advocated in the modern healthcare provision, which encompasses more responsibilities. With the recent developments in the interactions that healthcare providers have with drug suppliers, financial and accounting regulations have been given emphasis than ever before. In what has evolved to be commonly known as Physicians-Industry Relations, it is clear that there are a number of risks that the healthcare practitioners might be exposed to regarding dealing with the pharmacy industry. In terms of the two industries interactions, it has been observed that several financial flaws have been happening in several healthcare settings. As a result, serious accounting and audit flaws that consequently emanate from the malpractice compromise the integrity of the healthcare professionals.

Generally, the procurement of drugs for use in the healthcare facilities is conducted depending on the availability of the drugs as offered by pharmaceutical companies. Competition among drugs supplying companies has led to an environment where drugs salespeople and medical representatives for other pharmaceutical products are deployed to woo clients from the healthcare environment. In a competitive market, unfair business deals always find their way into the market in an attempt to keep off competitors. Among the major unprofessional practices that such deals apply is the bargaining element that forces salesmen to supply products at the expense of business fairness regulations. Supply of substandard healthcare products is often embarked on in order to win sales, which compromises the level of healthcare service delivered by healthcare professionals. It therefore implies that colluding is almost impossible to be avoided by healthcare facility management in order to benefit in certain ways. Due to certain conflicts of interests between the suppliers and the healthcare professionals, loopholes in internal control standards guiding procurement of pharmaceutical products are encouraged.

Healthcare professional are misguided to delivering specific medication and prescriptions in order to sustain the deal engaged with the suppliers. In terms of healthcare provision, this practice does not only expose the patients to improper treatment and the associated risks but also exposes the entire healthcare facility to financial crimes. Through the basic internal audit and accounting control standards, healthcare facilities are guided in dealing with procurement and tendering procedures. The aim of the accounting and financial standards outlined in the facility’s policy is intended to facilitate a smooth running of the ordinary operations without challenges such as running into bankruptcy. When such standards are involved in the healthcare setting, it implies that more powerful forces of patient’s health status are involved. Identification of possible conflict of interest in the procurement procedures is the mandate of every healthcare professional. This financial and accounting aspect of the healthcare industry is incidental to the delivery of services with integrity and accountability. Due to the magnitude of the financial and accounting regulations in the healthcare industry, patients’ protection and care which is the sole responsibility of the medical profession is implicated by such conflict.

In light of the above issues, all healthcare professional affected by the financial and accounting element of this matter are advised to ensure that the challenge is handled with the importance that it deserves. However, a number of the practising professionals are aware of the procurement intricacies involved due to the pharmaceutical companies’ presence and lobbying through medical representatives in the healthcare facility. There are legal provisions that may guide the public to act against such improper conduct through legislation such as the False Claims Act, the Medicare and Medicaid Patient Protection Act and Stark Law in the US. Both the healthcare providers as well as pharmaceutical suppliers are bound to act in the protection of the health of the patient as financial, accounting and audit provisions support. It is important that everyone affected by these standards is advised accordingly, in order to remain focused to the medical profession. It is therefore important that any knowledge of this indecorum is corrected with immediate effect and support afforded to the management in order to eliminate improper conduct within our facility.

Work Cited

Coyle, Susan L., “Physicians- Industry Relations.” Annals of Internal Medicine, 136.5(2002):396-402

Financial Information of Kellogg Co

Author

Institution

Introduction

Financial statements have gained considerable significance in the recent times. They are mainly used to present information pertaining to the financial position of a company, which is presented to the shareholders, employees and the general public, as well as government agencies. Needless to say, the compilation and calculation of financial information in financial statements involves some level of expertise, especially considering that an individual would have to consider the existing systems, regulations and standards set by the accounting bodies of the country within which they operate. This gets even more complicated in instances where a company operates in different countries as is the case for Kellogg Company. Kellogg Company refers to a multinational food manufacturing company whose headquarters are situated in Battle Creek, Michigan. It is involved in the production of cereals, as well as convenience foods such as crackers, cookies, cereal bars, toaster pastries, frozen waffles, vegetarian foods and fruit-flavored snacks. The manufacture of its products is carried out in 118 countries while it is marketed in more than 180 countries all over the world. While its financial statement is bound to be undoubtedly complex, the accounting standards and procedures used in compiling it is always bound to be the same as any other company.

Day’s sales in Accounts Receivable

This refers to the average number of days that a company takes in order to collect the payments on the goods that it has sold. It may be used to determine whether there are any collections problems, as well as the pressure that is placed on the cash flows of the company. Numbers that exceed 40 to 50 days come as an indication of collection problems, thereby outlining considerable pressure being placed on cash flows. On the other hand, numbers that are way below the 40 to 50 range would underline overly-strict credit policies than may be preventing higher sales revenue (Wood & Sangster, 2005). These days are also referred to as debtor days or day sales in receivables. These are calculated using the formula: Average Accounts Payable x 365/sales revenue

Yearly accounts payable for Kellogg Company = 1402,000,000

Average accounts payable = 1402, 000,000/365

Day’s sales in accounts receivable = (1,402,000,000/365 x 365)/14,197,000,000= 0.0987 days x 365 = 6 days.

Days Sales in Inventory

Days’ Sales in Inventory (DSI) refers to a technique for measuring the average amount of time that is required in order for a company to convert its inventory to sales. This may also be defined as the financial measure pertaining to the performance of the company that informs or gives the company’s investors an idea as to the length of time that the company would take to turn or convert its inventories or stock into sales. This inventory would not only include the goods themselves but also the work in progress in cases where such is applicable. In general, scholars note that it is better for a company to have a lower or shorter Days’ Sales in Inventory than a long one. This, however, does not negate the fact that there will be variations between the average Days’ Sales in Inventory in one industry and the others thanks to the variations in the operations. For instance, a business enterprise that deals with perishable goods such as raw vegetables and fruits is bound to have an extremely value pertaining to Days’ Sales in Inventory as compared to business enterprises that deal with non-perishable or long-term goods such as machinery and cars, which would have high values of the Days’ Sales in Inventory (DSI). On the same note, companies such as Kellogg Co. is bound to have a higher value of Days’ Sales in Inventory (DSI) than business enterprises that deal with raw fruits, vegetable and other consumer goods especially considering that it manufactures and packages them, thereby increasing the length of time within which they would perish or expire. A significant small number of days’ sales in inventory comes as an indication that the company is extremely efficient in selling off its inventory. A significantly large number of days, on the other hand, shows that the company may have made too much investment on inventory and may be incorporating obsolete inventory in its stores (Wood & Sangster, 2005). This may also be an indication that the management of the company has made a decision to keep high levels of inventory in order to attain high rates of order fulfillment. The figure represented by the days’ sales in inventory is used by external financial analysts to estimate the company’s performance using the ratio analysis. It is rarely used within the company as the employees have access to detailed reports that reveal the inventory items whose sale is worse or better than average (Wood & Sangster, 2005). In calculating the days’ sales in inventory, the annual average inventory is divided by the annual cost of goods sold then multiplied by 365.

(Opening inventory + Cost of goods sold – Closing inventory)/ Cost of goods sold x 365

(1,174 + 8763 – 1365)/ 8763 x 365 = 357 days.

This means that the company is keeping too much inventory in its subsidiaries, probably, to ensure capacity to fulfill its high rates of order.

These may be compared with the financial statements for a multinational company such as Cracker Barrel Old Country Store, Inc. Cracker Barrel Old Country Store, Inc is a multinational company with subsidiaries in varied countries (Cracker Barrel Old Country Store Inc., 2012). It mainly deals in restaurants and gift shops unlike Kellogg Co. which deals with food manufacturing. However, both of them are multinational companies, in which case the compilation of their financial statements is bound to be more or less equally complicated or complex (Cracker Barrel Old Country Store Inc., 2012).

The company’s Days’ Sales in Accounts Receivable would, therefore, be computed as bellow. (Average Accounts Payable x 365/sales revenue)

Yearly Accounts Payable for Cracker Barrel Old Country Store, Inc = 39,704,000/365

Average Accounts payable= 108778.082

Days’ Sales in accounts Receivable = 108,778. 082/ 2,580,195= .04215886×365= 15

This means that the company has strict collection procedures, rules and regulations, which is expected for a restaurant especially considering that such enterprises would rarely provide goods and services for credit.

For the company’s Days’ Sales in Inventory

(Opening inventory + Cost of goods sold – Closing inventory)/ Cost of goods sold x 365

In ‘000

(2,532+ 827,484 -1720)/ 827,484 x 365= 365 days

The Day’s Sales in Inventory for Cracker Barrel Old Country Store, Inc are quite high, which is surprising for a company that deals with perishable goods. This, however, may be as a result of the operations pertaining to the gift shops. Nevertheless, it means that the multinational company buys in bulk, probably to ensure that it has a steady supply of items even in instances where the gods used in its operations are in short supply. On the same note, it could be dealing in manufactured or packaged goods that have a long period before their expiry.

The financial statements of Kellogg Company are extremely complex especially considering that they incorporate the operations and entries of the subsidiaries. This is the same case for Cracker Barrel Old Country Store, Inc. On the same note, it is noted that the financial statements of both Kellogg Co and Cracker Barrel Old Country Store, Inc were prepared in line with the accounting principles that are fundamentally accepted in the United States of America, especially with regards to estimates, where the management of the company is required to make assumptions and estimates that affect the amounts of liabilities and assets that are reported, as well as the disclosure of the company’s contingent liabilities as at the financial statements’ date alongside the reported expenses and revenues in the reported periods (Kellogg Company, 2012) . As it is noted, the actual results could be different from the estimates underlined in the financial statements. The financial statement captured the period between December 31st 201 and December 29th 2012 (Kellogg Company, 2012). It is worth noting that there were varied modifications in policy that were undertaken within the year, which were reported via retrospective application of new policies to all the presented periods. On the same note, the financial statements undertook a consideration of the effect of recast pension, as well as postretirement benefit expense on the balances of capitalized inventory in prior periods (Kellogg Company, 2012).

References

Kellogg Company, (2012). Kellogg Company // Form 10-K For Fiscal Year 2012 (Ended December 29, 2012).

Wood, F., & Sangster, A. (2005). Frank Wood’s business accounting 1. Harlow: Financial Times Prentice Hall.

Cracker Barrel Old Country Store, Inc (2012). Cracker Barrel Old Country Store, Inc Form 10-K (Ended 3rd August 2012)

Name

Instructor

Course

Date

Courses Structures

Accounting and Financial Management

Learning Structure This Week

19 hours per week –from Monday to Friday Classes

Weekly assessment every Friday afternoon as segment of classroom period

5 hours of organized learning weekly

Amount of Hours in General for This Course10 weeks of 20 hours each/ 200 hours

Amount Hours for Every Day

4 hours daily

I hour well-structured learning dailyAdmission Conditions

Least age of sixteen years

Elementary Accounting and Finance management Start Date and End Date

Start Date: 26th May

Closing Date: 12th SeptemberCourse Fee and other charges

Registration Fee: $150.00Tuition Fee: $950Our Teachers Skills for This Course

The credential and expertise of the teachers in this particular field is typically undisputable regarding that most of them are trained in developed and established universities abroad and also hold impeccable documents regarding their specializations.

Economics

Academic Structure starting Week

30 hours mp3 per week-entailed in the course of undertaking the week

Day-to-day assessment after each economics

3 hours of ordinary activities weekly

Amount of Hours in Common for This Course22 weeks of 35 (+2) hours all/ 800 mp3 hours and 40 hours of video

Amount of Hours for Each Day

7 hours daily

0.5 hour of video watching daily for four daysCharges Requirements

Entrance at learner level

There is no admission trial taken

Commencement Date and End Date

Initial Date: Every Monday

Ending Date: After 20 weeksCourse Fees

Registering Fee: $90.00Our Teachers Skills for This Course

This course has well distinguished and acknowledged panel of teachers on economics who have shown the desire to combine structured abilities in designing and innovating new ideas

Management

Academic Structure This Week

4 hours per week – from Monday to Friday Classes

Beginning test on every Monday afternoons as part of classroom hours

Sunset classes offered for transitional level

Amount of Hours common for This Course9 weeks each with 5 hours/ 40 hours

2 semesters – 90 hours

Pauses between semesters

Amount of Hours for Each Day

1 hour daily

Admission Requirements

Pre-intermediate managementcommencement Date and Ending Date

Commencing Date: September 1st each year

Ending Date: End FebruaryCourse Fees

Registration Fee: $300.00Early membership: $290.00

Our Teachers Expertise for This Course

The teaching staff members of course are well trained with expansive range of experience in teaching the segmented course following long time of exposure in the field.

Global HYPERLINK “http://www.efagcollege.co.uk/index.php/en/courses/detail/4-business-classes/10-marketing”Marketing

Academic Structure This Week

8 hours per week – Tuesday, Thursday and Friday Classes

Mid-week CAT on every Thursday

Evening lessons and early morning classes offered

Amount of Hours in General for This Course14 weeks each with 4 hours/ 76 hours

12 weeks for transitional leaners/ 60 hours

Amount of Hours for Each Day

3 hours for learning daily

Admission Requirements

No background education needed

No least age requirementcommencement Date and Ending Date

Starting Date: September 20th each year

End Date: End February 23th yearlyCourse Fees

Admission Fee: $350.00Early registration: $300.00

Our Teachers expertise for This Course

The teachers in this sector hold expansive experience in the marketing s field with relations to undertaking marketing in the conventional world.

Electronic Marketing

Academic Structure This Week

4 hours per week – Monday to Thursday Classes

Electronic marketing tests after every second week

Morning and evening classes for advanced levels

Number of Hours in General for This Course14 weeks each with 3 hours/ 45 hours

Extra 14 office hours for consultation with instructor

Number of Hours for Each Day

3 hour for each day

Admission Requirements

Advanced level or technology in marketing

English placement test before admission account for close to 70% performanceStarting Date and Ending Date

Start Date: June 4th 2014

End Date: End MarchCourse Fees

Registration Fee: $720.00Tuition Fee: $1490.00

Our Teachers qualifications for This Course

Conventionally designed tutorials are availed by the teaching staff on this

segment and the teaching fraternity has well and elaborate background regarding the wider electronic marketing

. All the teaching staff members have PHDs and master in this field.

Finance

Academic Structure This Week

6 hours/ classes Monday to Wednesday

Office management practices Wednesday

Early morning lessons for advanced level students

Number of Hours in General for This Course11 weeks each taking 6 hours/ 60 hours

Amount of Hours for Each Day

2 hours for each day

Systematic classes – 1 hour in the morning, one in the afternoon

Admission Requirements

Advanced level in finance entry tests

Start Date and End Date

Start Date: July 2st 2014

End Date: September 18 2014Course Fees

Registration Fee: $700.00Early membership: $800.00

Our Teachers expertise This Course

Teachers in this course are experienced in diverse methods of instruction including the use financial tools in the market.

Human Resources

Academic Structure This Week

6 hours per week – Monday, Wednesday and Thursday Classes

Classes on weekends and evenings for advanced levels

Amount of Hours in General for This Course19 weeks each with 5 hours/ 74 hours

Additional seven hours for practical sessions

Amount of Hours for Each Day

3 daily hours

Admission Requirements

Understanding of the critical thinking unit

Human Resource Management test upon admissionStarting Date and End Date

Start Date: July 15th 2014

End Date: October 12th 2014Course Fees

Registration Fee: $800.00Early membership: $400.00

Our Teachers Skills for This Course

Our teachers are trained both in human resource management making and in the areas they teach.

This will enable comprehensive understanding of terms so as to diverse the same understanding to students.

Project Management

Academic Structure This Week

6 weekly hours – classes from Monday to Thursday

Principles & Practice of Project Management tests on every Wednesday

Morning and evening classes for all levels

Number of Hours in General for This Course6 hours for 17 weeks/ 60 hours total

3 hours for practical session in the use of medical terms

Amount of Hours for Each Day

2 hour per schooling day

Admission Requirements

Elementary Principles & Practice of Project Management

Elementary Principles & Practice of Project Management related area within the college

Elementary Principles & Practice of Project Management placement test before admission – required 40% or above performanceStart Date and End Date

Start Date: 30th June 2014

End Date: October 20th 2014Course Fees

Registration Fee: $660.00Early registration: $630.00

Tuition fee: $ 700

Our Teachers expertise for This Course

All teaching staff holds PhD and Master’s Degrees .These qualifications are held in Project Management related fields and additional language qualifications in the English language.

Most of the staff PHDs and none of them have qualifications below masters.

Management & Operations

Academic Structure This Week

6 hours per week – Monday, Thursday to Friday

Weekly assignments on Thursday

Whole day classes entailed

Amount of Hours in General for This Course22 weeks each with 6 hours/ 110 hours

Amount of Hours for Each Day

2 hour per day

Admission Requirements

Leaving certificate or equivalent qualifications

Age 23 and above

Start Date and End Date

Start Date: January 31st 2014

Ending Date: End of AprilCourse Fees

Registration Fee: $150.00Tuition fee: $1760.00

Our Teachers expertise for This Course

The teaching staff has diverse experience in the Management & Operations

They are all assessed to ensure that they help the students develop a critical approach to Management & Operations history.

Their qualifications are also certified by famous institutions as a prerequisite before they join the institution.

Banking concepts

Academic Structure This Week

4 hours per week – 5 lectures per week

Banking assessment test on Wednesday

Full time classes for all levels

Number of Hours in General for This Course13 weeks each with 2 hours/ 34 hours

Four semesters of 12 weeks

Total of 146 hours

Amount of Hours for Each Day

1 hour on Monday and two hours on Thursday

Admission Requirements

Pre-intermediate level banking

Start Date and End Date

Start Date: February 22th 2014

End Date: November, 23th 2016Course charges

Registration Fee: $340.00Tuition Fee: $1970.00

Our Teachers Skills for This Course

The teachers are all trained by prominent institutions in their practiced banking focus areas. They have exposed experience in ensuring their students develop a critical perspective towards their studies. This is supported by the provision of course materials in their practice.

Banking & Finance Security

Academic Structure This Week

4 hours per week – 1hours Tuesday and 1 hour Friday

Principals of Banking & Finance Security on Wednesday

Full time classes for all students

Amount of Hours in General for This Course

Four semesters for the full course

11 weeks per semester with 4 hours each week/ 36 hours

Total 143 hours

Duration of Hours for Each Day

Two or 3 hours for each day

Admission Requirements

Intermediate Principals of Banking & Finance Security

Principals of Banking & Finance Security test before admission with 60% performance

Excellent A levels or equivalentStart Date and End Date

Start Date: Spring 2015

End Date: Autumn 2017Course Fees

Enrolment Fee: $760.00Early enrollment: $9700.00

Our Teachers Skills for This Course

The instruction entails the use of the professional peers and practical application

. While the peers are picked from the best performing students, the teachers are qualified staff and approved by the administrative board.

Financial Management DB1 

Name

Institution

Financial Management DB1 

In order to realize success, corporations, organizations, institutions and businesses must know what is happening around them and what is likely to happen in future. They should them proceed to position themselves to take advantage of future changes and as well as handle challenges. The process of this positioning is known as strategic planning. In this process the organization determine where it is, where it wants to go and how to get there. A strategic plan is a product of a strategic planning (Haines & McKinlay, 2007).

In this regard the function of a strategic plan is to provide a road map for achieving the long-term objectives of the organization. Is stipulates the process and the resources that will be used to achieve the objectives. The objectives of a strategic plan are the deliverable that the plan hopes to deliver within a specific time. The scope of such a plan is unlimited. It takes into account all the facets of the organization to ensure that objectives are realized. The scope may cover the objectives; the process of achieving the objectives such as sales forecasts; the resources required like financial forecasts; and the proper organization for optimal results (Grünig & Gaggl, 2011).

On the other hand, operating plans are short-term but very detailed plans formulated to achieve various objectives within the scope of the strategic plan. Operational plans are tactical and thus serve to organization the tactical components of the strategic plan.

Financial planning process is also important and involves six critical steps: determination of the current financial situation; developing financial goals; identification of alternative courses of action; evaluation of alternatives; creation and implementation of a financial action plan; and reevaluating and revising the plan.

Sales forecasts are also a critical component of a strategic plan. Sales forecasts are a product of looking ahead at the market and determining how a product will perform. Sales forecasts can inform various process and decisions such as promotional mix, required employment levels, and the required production capacity.

General forecasting involves looking ahead at various aspect of the organization to determine future opportunities, challenges, and threats such as changes in market trends, technological developments and completion. Forecasting determines financial needs, employment needs and organizational need. It serves to create a clear picture of where an organization needs be and how the path to the realization of its objectives looks like (Grünig & Gaggl, 2011).

Other factors external to the business can affect how a business exercises the above practices. This can clearly be seen on the way businesses responded to the September 11 terrorism attacks. Planning for a rainy day became part of long term strategic planning. Business forecasts have become more concerned of the unpredictable just as much as they are concerned with the predictable. Therefore, when making finical plans and strategic plans manager take into account social political dynamics that can negatively affect a business.

References

Grünig, R., & Gaggl, R. (2011). Process-based Strategic Planning. Berlin Heidelberg Springer.

Haines, S. G. & McKinlay, J. (2007). Reinventing Strategic Planning: The Systems Thinking Approach. San Diego, Calif.: Systems Thinking Press.

Financial Management IP1

Name

Institution

Financial Management IP1

Horizontal analysis

Horizontal analysis plays an important function in financial policy and business strategy. Horizontal analysis is used to enhance investigations into a firm’s performance data thus facilitating managers to study the origin and development of specific information. Emphasis is mainly laid on how information on performance fluctuates from time to time (Needles et al, 2011). The analysis of horizontal data facilitates the examination of operating procedures impacts once they are developed and implemented by the personnel.

Vertical analysis

Vertical analysis is used mostly by accountants to make a comparison of specific performance indicators with numerical standards. For instance, the accountants may compare sales against the net income. In the formulation of a financial policy and business strategy, managers depend on this analysis to determine the financial value of different resources in an organization’s operation (Kozami, 2005). For instance, they can determine value of a production machine on the operations of the organization. The knowledge generated by this evaluation facilitates planning for long-term acquisition of assets and setting appropriate financial policies to ensure a successful posterity.

Raito analysis

Ratio analysis is the study of financial data using metrics (Moyer et al, 2012). Planners and strategists can isolate areas that need improvement in a business using a comparison of cooperate performance statistics to peers’ results. The same process can be used to pinpoint segments of the business that consume enormous amount of company finances. Ration analysis uses financial ration such as current ration and net profit margin.

Profitability ratios

Profitability ratios measure the effectiveness of the management in making profits from the company’s assets and the investments by the owners. The most frequently used ratios are net profit margin ratio, gross profit margin ratio, return on equity ratio, and return on fatal asset ratio (Moyer et al, 2012). Ratio help determined the productivity of the company and can be benchmarked again the industry to find out the general performance of the company and areas that need improvement.

Liquidity ratio

Liquidity ration us used to determine the liquidity level of a company. Liquidity is the ability of a company to meet its current obligation and levels of cash. Some financial ratios can provide critical information about a company’s liquidity ratios (Needles et al, 2011). Liquidity rations facilitates determination of the bill of payment, availability of financial resources for future investments, the company’s ability to pay dividends, determination of the cash balance which is the level of cash at the moment and the ideal level.

Asset utilization ratio

Asset utilization is used to determine the efficiency of a business in using its assets to make money. A firms incoming turnover, which is realized through division of credit sales by the amount receivable from clients, show the ability of a business to convert goods and services it sales onto finances or many that can server other purposes (Kazmi, 2008). Inventory turnover is also an asset utilization ration. It is a product of the division of cost of the products sold in a specific period by the mean value of the firm’s product inventory under the same period. Asset utilization is used by strategists to determine whether a business if being managed properly and how it is likely to perform in future by assessing its ability to sell its products make money on these sales.

Debt utilization ratio

This is the comparison between a firm’s total available debts with the total debit balances. It determines the companies credit score (Kazmi, 2008). Strategies used debt utilization ratio to determine the amount of debt a business is carrying the volume of available credit that is being utilized this ration can be used to determine long term viability for loans from fancier and ability to used the loans appropriately.

Benchmarking

Benchmarking is useful in improving performance and can be used to compare the performances of similar organizations (Kozami, 2005). It entails pinpointing areas the need improvement, setting benchmark indicators for quantitative evaluation of the achievements and assembling information for comparison to inform performance improvement. Strategist can use this process to find and strengthen weak points of a farm by comparing the firm to competing firms.

References

Kazmi, A. (2008). Strategic Management and Business Policy. New Delhi : Tata McGraw Hill Education.

Kozami, A. (2005). Business policy and strategic management. New-Delhi : McGraw-Hill Published

Moyer, R et al. (2012). Contemporary Financial Management. Mason, OH: South-Western, Cengage Learning.

Needles, B. E et al. (2011). Financial and Managerial Accounting. Mason, OH: South-Western Cengage Learning.



Financial Markets and Institutions

Name

Institution

Financial Markets and Institutions

Introduction

The financial system consists of all instruments, institutions and financial markets. Financial structure is specifically of significance in relocating funds hence offering a foundation for continuous reorganizing of economy that is required to support development. Countries that have well advanced financial system do observe greater portion of investment allocated in fast developing sectors.

Roles

The basic role for many financial institutions is to offer liquidity to economy and allow for higher rank of economic task than it would be. These may be achieved through the following ways managing markets, offering credits and pooling of risk between customers (Madura, 2011). On the other hand, financial markets play a crucial role in capital accumulation and processing of products and services. The value of credit and gains on investment give signals to consumers and producers. The signals assist to direct funds to businesses, governments, consumers and investors who would need to borrow cash through linking those who rate funds highly too willing lenders. The existence of a developed financial institutions and markets facilitates global flow of funds among countries (Madura, 2011). In addition, effective and efficient financial institutions and markets tend reduce transactions and search costs in an economy. By offering an extensive collection of financial products through varying risk and mode of pricing structures as well as maturity, when the financial market system is well developed it provides products to market participants which offer lenders and borrowers equivalent for their requirements. Governments, individuals and businesses in need of capital may easily determine which financial markets or institutions can offer funding and the cost borrower will incur. This permits investors to be able to compare cost of funding to expected gain on investment, thus creating investment alternative that suits their requirements.

An example is in the integrated European Union (EU) financial markets. The EU through its single currency and banking market Euro has developed a Europe base financial institutions and markets. These markets utilizes Euro to promote saving, borrowing, lending and investment. Euro dominates bond, stock and all derivative markets that serve EU countries using Euro (Madura, 2011). In addition, Euro increases the attraction of Euro centered financial instruments and market to entire world. Euro has eliminated cross border risks of exchange rate, which are portion of transactions among countries having different currencies.

Different between primary capital and secondary capital

The different between primary market and secondary market is in primary market company issues securities to investors who purchase them directly; whilst in secondary market securities are traded between investors themselves, the corporation with securities being traded cannot participate in transaction. When a firm publicly trades new bonds and stocks for its first time in the market then it operates on primary capital market (Graffins, 2016). In most cases, it normally takes shape of IPO (initial public offering). If investors buy securities on primary capital market, firm providing securities has already appointed an underwriting company to review providing and developed a prospectus-summarizing price and other information of securities to be issued.

Secondary market can be termed as a place of purchasing securities after the firm sells its bonds and stocks provided on primary market. Secondary markets range from Nasdag, London stock exchange or New York stock exchange (Graffins, 2016). Secondary market provides a platform for small investors to sell or buy securities, as they do not exclude IPOs because of small capital representation. Secondary market offers a chance to any person who wants to purchase securities as long as they show willingness in price payment for security being purchased. In most instances, an investor needs a broker in trading securities on investor’s behalf. Security price fluctuates with market and investor cost involves broker commission paid. Security volumes sold varies daily as security demands fluctuate (Graffins, 2016). The investor’s price payment is not directly linked to security price initial as concerned by first issuance; also, the firm issuing security should not be in partnership to any purchase between two investors. The firm has a privilege to be involved in secondary market of stock buyback.

Differences between money and capital markets

Money market can be termed as short-term utilization mainly assets taking one year. In contrast, capital markets can be utilized for long period basis incorporating any assets that have maturity over one year (Bagehot, 2013). Capital market consist the stock (equity) market and bond (debt) market (Graffins, 2016). Capital and money market contain a large part of financial market applied in management of risks and liquidity for individuals, governments and companies.

Capital Markets

These are viewed as worldwide followed markets. Both bond and stock markets are closely tracked and daily trends analyzed as proxies to be used for general economic circumstance of global markets (Graffins, 2016). Due to operating institutions for capital markets commercial banks, stock exchanges and all corporation types involving nonbank institutions like mortgage banks and insurance firms are analyzed.

The operating institutions in capital markets acquire them for raising capital in long period purposes like acquisition or merger; enter in a new trade or line expansion, or for capital projects. Firms raising funds for the long period purposes originate from more or single capital markets. Firms in bond markets may provide debt in corporate bonds form. Similarly, firms may opt to raise funds by issuing stock market equity. Government firms are generally not held publicly thus they do not normally offer equity. Government entities and companies that provide debt or equity are seen as market sellers.

Securities buyers in capital market seem to use money targeted for an investment of long-term. Capital markets viewed as risky and not mostly used in investment of short-term monies. Many investors take capital markets in saving their education or retirement since investors have long horizons time that mostly shows that they take risks and are young.

Money Market

Money market mostly access in line with capital markets. Investors willing in taking more risk while acquiring patience in investment are advised to venture in capital markets. The money markets mostly are viewed as the best place to invest funds that require shorter period less than a year (Bagehot, 2013). Financial instruments applied in the capital markets range from bonds and stocks, but instruments applied in money markets include exchange bills, acceptances, collateral loans and deposits. Institutions working in the money markets involve acceptance houses, commercial banks and central banks.

Money market offers various functions for government entities, corporate or individual. Liquidity is termed as the major reason for acquiring money markets. During the issuance of short period debt, for operating expenses purpose, government, or firm working capital and not projects for large scale or capital improvements (Bagehot, 2013). Money market acts a vital function in ensuring governments and firms enhance appropriate liquidity level daily without lacking and requesting expensive loan without having excess monies and losing the chance of gaining funds interest.

In conclusion, investors apply money markets in funds investment while capital markets are seen as low risk; investors have a tendency of accessing them by anticipation that the liquidity is present. Elderly people staying on fixed income normally apply money markets due to safety connected to this investment process.

References

Bagehot, W. (2013). Lombard Street: A description of the money market. Kitchener: Batoche.

Graffins, F. (2016). Issue Information. Financial Markets, Institutions & Instruments, 25(3), 167-168. doi:10.1111/fmii.12058

Madura, J. (2011). Financial markets and institutions. Australia: South-Western College Pub.

Financial Markets And Monetary Policy

STUDENTS

By (Name)

The Name of the Class (Course)

Professor (Tutor)

The Name of the School (University)

The City and State where it is located

The Date

Introduction

This is the Broad word that describes any market whereby there are consumers and vendors who in this case participates in the job of possessions such as shares, bonds and currencies and the derivatives. The markets are however characteristically distinct by taking the clear pricing, the basic rules and guidelines for trading, expenses and fees and the market powers that determine the amounts of securities that are able to trade. However, some financial marketplaces are only giving authority to participants that meet positive standards, which in this case can be found on the issues like the quantity of money that is held, the depositor’s physical location, the information of the marketplaces or the occupation of the member.

Structure of Interest Rates

The connection that occurs amid interest rates or the bond yields and dissimilar terms or developments. The word structure of interest rates can also be known as the yield curve and it shows a vital part in the economy. The word structure reflects expectations of marketplace participants’ almost future variations in interest rates and their valuation of financial policy environments (Greenwood 2010).

Yield curves in the UK from 01.01.2008 to 31.12.2012

As far as Macro Economic Analysis Partition is concerned, the Bank of England estimates the yield curvatures for United Kingdom being on a day-to-day basis and are two types: the first one, customary, is located on yields on UK administration bonds (gilts) and comprises of nominal and real vintage curves and the increase period structure. The second one is founded on (LIBOR) i.e. Interbank rates that are sterling; earns on mechanisms connected to LIBOR, undersized sterling prospects, forward rate bargains and LIBOR-based interest ratio exchanges. These profitable bank liability curves are minimal lone (Addison 1998).

The government obligation nominal yield curves are also derived from the UK gilt prices and it offers an overall Security (GC) repo rates. The actual yield is copied from or they are derived from the UK index-linked bond values. However, by appealing to the Fisher relationship , the oblique inflation terms structure is therefore put in numbers and calculated as the change of rapid nominal frontward rates and rapid real onward real rates (section 2 makes clear exactly what these terms mean). The instruments used in the construction of the commercial bank’s liability curvature are first converted into synthetic bonds, and a similar technique is then used to crop the lucrative bank accountability curve as is used in the nominal inquiry (Gürkaynak 2012).

EMBED Excel.Chart.8 s

Now, we are by means of the repo rate using asan flawed proxy for the riskless rate. In the approach to the end of the year, or the yearly the spread therefore widens. This result is known called the ‘year-end turn’ and can be detected in a number of ways in other markets. Without the three months at the end of the previous two years, the middling spread between the two rates has however, been about 35 basis points. Previously we noted that G Crapo (at least at two-weeks’ development) inclines to be biased on the downwards compared to the Bank’s repo rate. So about 15 base facts of this banquet are likely to be related to the liquidity and contract differences deliberated:

Bonds of Zero-coupon, in order to do the price computation, together with the yield so as to extract the existing price of any fixed coupon instrument.

In order to calculate the price’s yield, discount rates etc. Municipal, the treasury bills, existing bonds are utilized.

To calculate price and extent callable bonds, agency options can be adjusted.

Permanent and floating rates, the range, all are utilized in the computation of accumulated interest rates and the range.

The shape of the yield was quite consistent with the main theories of the term structure, because there was a consistent move from one year to the other. 2008-2012 had a very consistent move. There was a decline from 2009-2011, after which there was an uprising movement from 2011-2012 January.

Conclusion

From this paper we examined on whether the main government interference in the small firm recognition market place yields that is importantly better consequences in the marketplace that are fewer financially established. The government intrusion that we examine is thereby guaranteed loans. The bankrolling minor and average scope enterprises that suggest that minor companies might be visible to a specific form of marketplace disappointment related to credit limiting. And Small and Medium small medium sized enterprises in marketplaces that are also financially established will possibly face a greater degree of this market failure.

The bank interest rates in England have not been very stable over the last three decades. The banks interest rates volatility in the England has made the cost of borrowing for investment purposely very costly and unpredictable. This has made some risk averse investors to shy away hence lowering the investment and economic capacity of the economy. The volatility in the bank’s interest rates have been mainly attributed to unstable economic conditions and circumstances that been characterized by economic booms and recessions at the same time. Following such unpredictable economic conditions in England (influenced by the global economic performance), the cost of borrowing from the leading banking financial institutions have adversely been affected. For instance, the global financial contagion of 1998-99 forced banks to increase their borrowing rates, thus the upward trend in the interest rates over that financial period.

Bibliography

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Anderson, Nicola, and John Sleath, 2001. New estimates of the UK real and nominal yield curves. London: Bank of England.

Fender, John. 2012. Monetary Policy. Hoboken, N.J.: Wiley, 2012.

Greenwood, R., D. Vayanos, 2010. “Price Pressure in the Government Bond Market,” The American Economic Review, 100, Papers and Proceedings, pp. 585-590

Gürkaynak, R., J. 2012. “Macroeconomics and the Term Structure,” Journal of Economic Literature, 50, pp. 331-367

Howells P., K. Bain, 2008. “The Economics of Money, Banking and Finance: A European Text”, 4th edition, FT Prentice Hall.

Mankiw, N. Gregory. 1994. Monetary policy. Chicago: University of Chicago Press. Print.

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Mishkin, Frederic S. 2010. The economics of money, banking, and financial markets. 5th ed. Reading, Mass. McGraw

Ritter L., Silber W. and G. Udell. 2009. “Principles of Money, Banking and Financial Markets”, 12th. Pearson.