Finance

Critique this statement:  1.) “The use of debt financing lowers the net income of the firm, and hence debt financing should be used only as a last resort.”   2.) Discuss some factors that health services managers must consider when choosing between debt and equity financing.  Consider both investor-owned and not-for-profit firms in your answer. 3.) What capital components are typically included when estimating a firm’s corporate cost of capital? Is the corporate cost of capital the same for all firms? Explain your answer. LECTURE NOTES BELOW: Capital Structure Lesson 12 Lecture Notes COST OF CAPITAL Capital refers to the funds invested in a business. The capital can come from different sources.  All capital has a cost. However, it varies from one sources of capital to another, from one company to another, and from one period of time to another. Cost of capital may be defined as the company’s cost of collecting funds. This is equal to the average rate of return that an investor in a company will expect for providing funds. It is the minimum rate of return that the project must earn to keep the value of the company intact. The minimum rate of return is equal to cost of capital. The cost of capital is always expressed in terms of percentage. Proper allowance is made for tax purposes. This is done to get a correct picture of the cost of capital. The concept of cost of capital is a major standard for comparison used in financial decisions. Acceptance or rejection of an investment project depends on the cost that the company has to pay for financing it. Good financial management involves selection of projects which are expected to earn returns higher than the cost of capital. Therefore, it is important for the financial manager to calculate the cost of capital which the company has to pay and compare it with the rate of return which the project is expected to earn. In capital expenditure decisions, financial managers typically accept projects arranged in descending order of rate of return. They stop at the point where the cost of capital equals the rate of return offered by the project. That is, the financial manager finds out the break-even point of the project. Accepting any project below the break-even point will cause financial loss for the company. The cost of capital is a guideline for determining the optimum capital structure of a company. In order to calculate the overall cost of capital, a financial manager should take the following steps: Determine the type of funds to be raised and their share in the capital structure. Determine cost of each type of funds. Calculate combined cost of capital of the company by giving weights to each type of funds in terms of proportion of funds raised to total funds. (Patil, 2013) DEBT FINANCING Debt is borrowing money from an outside source with the promise to return the principal, in addition to an agreed-upon level of interest. Although the term tends to have a negative connotation, startup companies often turn to debt to finance their operations. In fact, even the healthiest of corporate balance sheets will include some level of debt. In finance, debt is also referred to as “leverage.” The most popular source for debt financing is the bank, but debt can also be issued by a private company or even a friend or family member. Advantages to Debt Financing Maintain ownership: When you borrow from the bank or another lender, you are obligated to make the agreed-upon payments on time, but that is the end of your obligation to the lender. You can choose to run your business however you choose without outside interference. Tax deductions: This is a huge attraction for debt financing. In most cases, the principal and interest payments on a business loan are classified as business expenses, and thus can be deducted from your business income taxes. Drawbacks to Debt Financing Repayment: As mentioned above, your sole obligation to the lender is to make your payments. Unfortunately, even if your business fails, you will still have to make these payments. If you are forced into bankruptcy, your lenders will have claim to repayment before any equity investors. High rates: Even after calculating the discounted interest rate from your tax deductions, as explained above, you may still be faced with a high interest rate. Interest rates will vary with macroeconomic conditions, your history with the banks, your business credit rating, and your personal credit history. Impacts your credit rating: It might seem attractive to keep bringing on debt when your firm needs money, a practice knowing as “levering up,” but each loan will be noted on your credit rating. The more you borrow, the higher the risk to the lender, and the higher interest rate you’ll pay. Cash and collateral: Even if you plan to use the loan to invest in an important asset, you’ll need to make sure your business will be generating sufficient cash flows by the time loan repayment starts. You’ll likely be asked to put up collateral on the loan in case you default on your payments. Alternatives to Debt Financing Equity financing: This involves selling shares of your company to interested investors, or putting your own money into the company. Mezzanine financing: Lenders who set up this debt tool offer the business unsecured debt (no collateral is required). The trade-off is a high interest rate, in the 20- 30 percent range. The lender has the right to convert the debt into equity in the company if the company defaults on payments. Despite the high interest rate, mezzanine financing appeals to entrepreneurs because it offers quick liquidity, and even though it can be converted to equity, the issuing bank usually does not want to be an equity holder, meaning they’re not looking to control the company. Hybrid financing: Most likely you’ll turn to a combination of debt and equity financing to fund your venture. The question then becomes: What is the proper combination? When to Use Debt Financing As mentioned above, the lender will be seeking installment payments on his loan shortly after the money is lent. That means in order to begin making payments you will need cash. Even a thriving business can be short on cash if its money is tied up in equipment, or customers aren’t paying. When considering debt, ask yourself: Am I using this money to invest in fixed or variable costs? If you’re investing in fixed costs, such as a new piece of equipment, then you likely won’t see any cash returns from it in the short-term. If you need the money to invest in variable costs such as materials for the product you make or costs associated with each new client, than the debt investment should have associated cash inflow. What are my customers like? Customers who consistently pay on time are critical to cash flow and the ability to repay debt. How quickly will you receive cash from your payers, most of whom are insurance companies?  Check with professional associations on statistics such as accounts receivable aging and Days Sales Outstanding (DSO). Where am I in my business lifecycle? In the early stages of a firm, debt financing can be dangerous. You will likely be losing money at first, thus hurting your ability to make payments. Since your net income will be low, the tax advantages of debt will be minimal. As your business grows and matures, debt becomes a stronger option. The tax advantage will be greater, your cash flow will be more predictable, and the risk you face in bankruptcy decreases since you have been operating longer. (Richards, n.d.) LECTURE NOTS BELOW:

Capital Budget Analyze the following scenario: River County is planning several capital acquisitions for the coming year. These include the purchase of two new garbage trucks at $150,000 each, one new bulldozer at $240,000, three new riding lawn mowers at $16,000 each, and construction of an activity center in the part for $650,000. The expected lifetime of the various capital items is 10 years for the garbage trucks, 8 years for the bulldozer, 5 years for the lawn mowers, and 40 years for the activity center. Prepare a capital budget for the items to be acquired, showing their estimated lifetimes, and their per unit and total costs. Clearly label the calculations for the required components of the capital budget using Excel. Use formulas to show the interrelationships and format the cells to insert a comma if there is more than three numbers and round to the nearest whole number. Explain your budget to the county council. Submit to your instructor your two-to-three page Word document (not including the title and reference pages) and your Excel worksheet. Your paper should be formatted according to APA style as outlined in the approved APA style guide, and you must cite at least two scholarly sources

Which of the required financial statements explain the difference between two balance sheet dates? Describe how these financial statements explain the difference between two different balance sheets completed on different dates. Do you agree or disagree with the statement: “Because many estimates are used in the preparation of financial statements, the statements are not a meaningful and accurate measurement of the financial position of a company.” Why/why not? Is the use of estimates in accounting ethical? Why/why not?

My Research Topic is Capital Market. My Course teacher instructs me to include the model in my research findings. I am unable to do it.  He just had told me that your research findings will be “stock market is runs with of Consumer confidence and Institutional support”. I never heard the name of Estimated model.

Conduct a face-to-face or online interview with a Healthcare Finance professional (i.e. VP Finance, CFO, controller, business office manager, auditor, accountant, etc.).   ·      Describe their career path ·      Education ·      Major responsibilities ·      Measures of performance success and other key attributes.  ·      Ask the financial leader you interview how the Income statement is generated, w ·      What their role, if any, involves the revenue cycle, ·      Role in the statement of cash flows at their institution. ·      Ask them about the budget cycle and how it affects all departments.  ·      Ask their opinion on the current state of finance in our economy and its impact to their organization. ·      Seek their opinion on future trends in healthcare and its impact on their financial responsibilities.   The paper should be 5 to 7 pages in length in APA style.  The paper will be evaluated using the Healthcare Finance Interview rubric. The paper should include the following parts: 1.   Title page 2.   Introduction (including purpose of the paper/interview) 3.  Application of theory to practice (use a real-world situation to illustrate theory) 4.   Closing/Summary

compare and contrast financing options. When financing a home, it is important to understand your options. Each option comes with pros and cons, some of them are short-term and some of them are long-term. The purpose of this assignment is to demonstrate your ability to understand a variety of financing options and develop amortization schedules and then use a series of subjective and objective criteria to analyze the short-term and long-term pros and cons to justify a decision. Choose a piece of real estate (residential, commercial, warehouse, land) using a resource such as realtor.com, zillow.com, etc. Provide the listing sheet or link. – Here is the link to the property I am using for this and other projects – 150 Hillside Ave, Milford, CT (realtor.com)  https://www.realtor.com/realestateandhomes-detail/150-Hillside-Ave_Milford_CT_06460_M30473-29954?view=qv Determine a down payment percentage. A standard down payment is 20%. You may choose another percentage.  a. Provide a justification for the down payment percentage you choose Research two different financing options. For example, 15-year. fixed, 30-year. Fixed, 5-1 ARM, VA loan, etc.  a. Use Excel, or another approved spreadsheet, and create a complete amortization schedule for the life of both financing options Compare and contrast the two financing options.  a. Explain any background information and/or further description of loan types selected Identify the financing option you would choose.  a. Provide a justification for your financing option selection. Numbers 1, 2, 4, 5 should be in a Word document. Number 3 should be an Excel, or another approved spreadsheet.  Professional communication is expected, which includes proper spelling and grammar, and providing source information when using outside resources.

Write a short paper discussing the importance of using financial reporting to formulate a firm’s goals. Additionally, provide a summary of how ethics and SOX compliance play a role in financial reporting. Address your paper to the ethics of properly reporting earning, debt, and cash flow. As you continue in the course, you will learn about the value of financial statements as they connect with strategic planning internally for the company and how these statements affect stock valuation. Company valuation and stock valuation are related and companies are often measured against their competitors in the marketplace. If companies provide ethical and honest reporting of earnings, then investors have the information needed to successfully invest in stocks. The measure of one company’s stock is measured in conjunction with other companies in groups or indexes of stocks. The Dow Jones Industrial Average is just one of the indexes that rely on the honest and ethical reporting of corporate earnings.  Your response should demonstrate thoughtful consideration of the ideas and concepts presented in the course and provide new thoughts and insights relating directly to this topic. Your response should reflect scholarly writing and current APA standards.  Length:1 page (not including cover page and references)   References: Your paper should include no less than five scholarly references.

This assignment asks you to “reflect” onyour overall experience in this course. For instance, if someone were to ask you to describe this course, what would you tell him or her first, second …in other words, what elements of this course were most memorable? The second part of your exercise should reflect on Why these things came to mind first or second… I would like for you to combine an analysis of one or more of your favorite readings along with your reflection of those readings which I expect to be more personal…tell me what you have received from this class, why the topic and associated readings you selected may remain with you for longer than the week after final exams, and relate that reflection to the description you provided for the first part of this essay…or even more personal,by incorporating any memories that may have been triggered by anything we read or discussed. I would like for you to make this both a personal reflection as well as an essay where you research your topic and relate it to something we read or discussed this semester. readings W.E.B. DuBois: “Criteria of Negro Art” Alain Locke: “The New Negro” Octavia Butler, Bloodchild, David Walker, pgs. 159 – 171, http://www.pbs.org/wgbh/aia/part4/4h2931.html Begin Parable of the Sower by Octavia Butler The Autobiography of an Ex-Colored Man by James Weldon Johnson Introduction to Harlem Renaissance In this course, we will examine some of the major debates and central texts of African American literature from many different perspectives. The central themes of this course include the relationships between justice, race, representation and identity. The issues taken up by the writers and artists we will consider over the semester are still important and unresolved for us hundreds of years later. This course is designed to offer you an overview of African American literature from just before the turn of the 20th century until near the present. It will incorporate several thematic aspects that, through our readings and discussions, will help shed light on themes relevant to African American life and culture as well as why various ideas are presented to the public as fact today. This semester, we will examine the social construction of African American literature of the 20th century contextualized within a framework of American history. We will also explore the ways that authors expressed themselves through various artistic genres as they sought to establish a unique identity within an oppressive, racist, gender biased and capitalistic society. Through our discussion, we will also deconstruct power, class, gender, race, sexuality and politics as they each relate to what may have inspired African American artists to create and to which many responded in a variety of ways prior to and during the 20th century as well as into the 21st century.

Explain how successful you think that company is, and discuss the strategic reasons behind that success.Your explanation will include analysis of the contribution made by the leadership of the company, and will go on to suggest strategies and/or actions for ensuring future success in a sustainable manner.

The topic would be NYC school budget cuts for past year into this year (2019-2020).   Write a 1,050- to 1,400-word paper about how the political process and changing public policy at the federal, state, and municipal levels influence budgeting. Include details on how the change came about and its effect on the resulting program. Ensure you: o   Identify political, economic, social, and cultural influences that caused the change in the budget. o   Identify the interaction among the federal, state, and municipal levels with regard to your selected program. o   Specify the limits of the agency budget office and how they may try to compensate for those limits. o   Identify some strategies and agencies politicians might use to justify increasing or decreasing the budget for the program you selected.   Format your paper according to APA guidelines.