Finance

REPORT STRUCTURE – Part 1 – 1,000 words (excluding tables, references, appendices) Use Headings – to separate the sections 1. Introduction – state the aim of your report and variables you have selected 2. Sampling Method: ? Explain the process of sample selection with reference to an appropriate sampling method. Here you need to explain and justify your sampling procedure using references from books. ? Provide brief details about your target population and state whether your sample is likely to be representative of your target population ? Discuss advantages and disadvantages of your sampling method in relation to other sampling methods. For example, a random sample is appropriate in statistics because it gives every firm in the population equal chance of being selected; however, random sampling does not stratify the population and, therefore, certain attributes/characteristics of firms can be over- or under-represented (e.g. firms in certain industries). ? Apply discussion of the sampling method to your assignment (do not merely paraphrase book’s material). It is not a very good justification to mention that simple random sampling method was chosen because it is ‘simple’, ‘less time-consuming’ and ‘cheap’. 3. Data & Variables – explain the meaning of variables you have selected (including the source of data) and what transformations were made. Here you need to show formulas and explain the ratios chosen (i.e. explain what your ratios show/indicate). Use this file for further explanation of the ratios: Ratios Description.docx You can create a table with the main variables Table 1: Definitions of the main variables Variables Measure/Formula Explanation Profitability ROCE/ROA/Profit Margin 4. Histograms and Descriptive Statistics – Produce histograms and descriptive statistics (min/max, mean/median, standard deviation, skewness and kurtosis) for profitability (ROCE or ROA or Profit Margin) and the other two variables you have (e.g. Firm Size, Liquidity, Tangibility, Asset Growth, Debt Ratio). Present your Histograms and Descriptive Statistics within the main text: ? Histograms: comment on the shape of the distribution. Additionally, you can comment on: o How many companies made a profit and how many made a loss. Are there any outliers? o How many companies have liquidity ratio of above and below 1. Are there any outliers? o If you choose firm size, you can show both the original variable (Sales in th GBP) and the LN(Sales). This can help your interpretation for firms size, i.e. the largest company had £Xm of Sales in 2018. o Do your histograms and statistics show any outliers? ? Descriptive Stats: comment on mean/median/min/max/standard deviation/skewness & kurtosis If there is any outlier and you have made adjustments to the variables (i.e. created a new variable and removed the outlier), please mention and justify how & why you did 5. Conclusion – a brief summary of what was done and what results were obtained. ? ‘This report examines….’ ? ‘The main results from histograms show that most companies in the sample [here you can briefly comment on profitability and other variables]’ REPORT STRUCTURE – Part 2 – 1,500 words (excluding tables, references, appendices) Use Headings to separate the sections • Introduction – state the aim of your report and the variables you selected to conduct the analysis (see Assignment part 2 to find the aim of the report) – approx. 100 words. Outliers and Adjustments – discuss any adjustments that were made to your variables. approx. 200-300 words (depends on the number of outliers in your dataset). If there are any outliers and you have made adjustments to the variables (i.e. created a new variable and removed the outlier), please mention and justify how & why you did it. To provide justification use your descriptive statistics (skewness/kurtosis) as well as histograms. You can relate your discussion to the assumptions of correlation and regression analysis (sensitive to outliers). Refer to material uploaded in week-6&7 resources – there are references you can use as well. If your data does not have outliers, you can discuss/justify that there are no outliers in your data and explain why adjustments were not required (based on skewness and kurtosis values and assumptions of correlation and regression analysis). • Correlation Analysis (Approx. 250-350 words) Produce Scatterplots. The first step in the correlation analysis would usually involve producing scatter plots to visually identify whether there is any linear association between profitability (ROCE, ROA or profit margin) and each of the other two variables you have (LNSales, Liquidity (Current Ratio), Tangibility, Asset Growth, Debt Ratio). If you removed any outliers, you can show the scatter plot with and without outliers and compare the results. Produce correlation table and comment on the results. Your correlation table should have one profitability ratio (ROCE, ROA or profit margin) and the other two variables you have (e.g. Firm Size (LNSaless), Liquidity (Current Ratio), Tangibility, Asset Growth, Debt Ratio). Present your Tables within the main text. – Discuss/comment on the relationship between profitability and each of the other two variables. – Check whether there is any potential problem of multicollinearity (if you perform multiple regression analysis). At this stage you need to choose whether you will conduct simple or multiple regression analysis. It would be good to justify your choice (for example, based on multicollinearity (relationship between Xs); number of observations; articles you read). Excel file (if you use Excel for your analysis): FTSEALLSHARE_AllFirms_ANALYSIS Example.xlsx ? • Regression Analysis – either simple or multiple: approx. 400-500 words. ? State the hypotheses that are tested in this report ? Discuss the main results in relation to the significance levels and the sign of the relationship. State whether your results show evidence in support of the hypothesized relationship. Here you can also discuss R2 and Adj. R2 (and F test for Multiple Regression). ? You may wish to discuss whether your result was expected. Here you could provide a comparison of your results with the results obtained from the correlation analysis and previous findings (i.e. use articles uploaded on Canvas under “Articles for Reading”). • Limitations – Discuss limitations of your study (e.g. sample size, variables used, limitations of correlation and linear regression methods used) approx. 250-350 words. • Conclusion – approx. 100-150 words. – Based on your results, draw a conclusion on the factors influencing firm profitability. ‘This report examines….’ ‘The main results from correlation and regression analysis show……’ [comment on the main factors related to profitability according to your results] – You can also make suggestions for further research in relation to factors that could influence firm performance (i.e. what improvements could be made in future study – more observations; more years; more variables).

Your probationary period at the Cosmo K Manufacturing Group continues. For this week’s project, Gerry has asked you to consider two mutually exclusive investments and incorporate risk considerations into the process of evaluation. The Cosmo K Manufacturing Group is considering the addition of a new smelting machine or a new paving machine. The two investments are mutually exclusive; if one is selected, the other is rejected. The annual cash flows after taxes and the effects of depreciation, which begin one year from project start, and their respective probabilities are given below: Smelting Machine Paving Machine Probability Net Cash Flows per Year Probability Net Cash Flows per Year 0.2 $14,100.00 0.2 $2,000.00 0.5 $16,000.00 0.5 $16,000.00 0.2 $17,000.00 0.2 $22,000.00 0.1 $20,000.00 0.1 $33,000.00 Each project has an expected life of 4 years and will cost $45,000. The riskier project will be evaluated at the company’s WACC plus 3%, and the less risky project will be evaluated at the company’s WACC. Cosmo K has the following capital structure: Debt: 30% Preferred stock: 16% Common stock: 54% This capital structure is current and consistent with the company’s objectives and so will be used to raise any new funds. All new debt will be raised using long-term bonds, with no short-term debt being used for the new project. New bonds will have a coupon rate of 13%. The company’s common stock is currently selling for $65 per share, paid a dividend of $4.25 last year, and has an expected growth rate of 6% indefinitely. There will be no floatation costs on new common stock. Preferred stock can be sold for $90 per share and pays a dividend of $10, with a floatation cost of $2 per share. Currently, the market risk premium is 5% and the risk-free rate is 8%. Cosmo K’s beta coefficient is currently 1.23 and is expected to be consistent for the foreseeable future. The tax rate is expected to be 40% for the next decade. Tasks: Answer the following questions: What is the component cost of capital for the company? Calculate using the CAPM. What is the company’s WACC? What are the expected cash flows for the investments? What is the standard deviation for each investment? What is the coefficient of variation for each investment? Given the data above, which investment has the higher risk? What is the expected net present value (NPV) for each investment? What is the internal rate of return (IRR) of the investments? According to the decision rules for the NPV and those for the IRR, is there an acceptable project? Explain your answer. Is there a conflict between the two decision methods? If so, what would you use to recommend a project?

Present Marketing Strategies   Instructions Your company’s marketing department promotes the products and interacts with the customers, sales force, and supply chain. They are also in charge of forecasting sales for the company. In a PowerPoint presentation that you will deliver at the next corporate board meeting, analyze the marketing strategies used by the company: 1.   Use this week’s course readings and supplemental readings to define and describe marketing and marketing strategies. 2.   Examine your marketing strategies in the CAPSIM simulation, and then describe the marketing decisions that you had to make, including specific examples. 3.   Discuss the results of your marketing efforts. 4.   Conclusion Length:  Your presentation should be 7–10 slides and should have a minimum of 100–150 words in the Notes area of each slide to further provide substance and support for the outline information on the slide. In addition, you must record your actual presentation to show your oral communication skills.  Resources:  Supplement this weeks’ readings with a minimum of three additional scholarly articles.

Go to sec.gov and click on “Filings”; you will see a drop-down box. Click on “Company Filings Search.”  In the Fast Search box (right side), type in USB to get the SEC filings for U.S. Bancorp AND PNC Bank. Find the most recently filed 10K (interactive data), and then click on “financial statements.”  From here you can open the firm’s Consolidated Balance Sheet and the Consolidated Statement of Income. Notice that you can access 2 to 3 years of data. Compute the following ratios (using exhibit 3.6 on page 92 of the text as a guide) for the most recent two years, showing your numerator and denominator, as well as the ratio result:   Return on equity Return on assets Tax ratio Expense ratio Asset utilization ratio (total revenue/total assets) Equity multiplier (total assets/total stockholders’ equity). Complete the following:   Create a table that shows the final results of all these ratios for the past two years for both U.S. Bancorp and PNC Bank. Write an essay analyzing the ratios,  indicating strengths and weaknesses discovered when examining the ratios over time, as well as the ratios compared to a competitor.

Research the development, components and the analyses of the statement of cash flows. You will need to become very familiar with the statement of cash flows and the components in order to successfully respond to the questions listed below. Your analysis of cash flow should address the following points: Present and describe the components of the statement of cash flows. Use illustrative numerical examples to clarify the discussion. Describe the two alternative methods to develop and present the statement of cash flows. Using one of the two methods, discuss how the different components of the statement of cash flows either serve to increase or decrease the cash account. Discuss what meaning this can have for the analyst. Identify two Statements of cash flow for two different companies. You might find these companies within the textbook or more basically gather the information from the financial statements of two known companies by looking through their web sites (investor relations) Compare the two statements and offer insight for which of the statements seems to represent a stronger company. Discuss. Support your paper with a minimum of five (5) external resources In addition to these specified resources, other appropriate scholarly resources, including older articles, may be included. Length: 5-7 pages not including title and reference pages Your paper should demonstrate thoughtful consideration of the ideas and concepts presented in the course and provide new thoughts and insights relating directly to this topic

When studying capital structure and dividend decisions, multiple theories were presented that influence capital structure decisions or dividend policy decisions affecting the price of a stock. Choose one of these theories and explain its strengths and weaknesses.

Your task is to offer a detailed critique of a peer-reviewed article you locate in the CSU Online Library. The article must be related to explaining how the needs of certain groups of individuals or institutions (e.g., veterans, the elderly, the poor, hospitals, or clinics) can determine how government on the local, state, or federal level spends their money. Using the first few pages of Chapter 1 as a guide, select a specific group of individuals or institutions in our society as part of your search. In your critique, address the following questions/points: What are the main points and arguments of the author(s)? What is your opinion of the article? How does the article relate to your experience or current job in the public or nonprofit sector? How can the points and arguments of the author(s) be applied to the public sector in a practical sense? Describe how positive and negative externalities could affect the efficiency with which governments can allocate their resources to provide for the needs of citizens.

This section of the report is important because it provides a big picture of how the chosen company is managing their investments in the future value of their organization through purchases and research and development. Carefully review the information you have included in your drafted section and create your video. Carefully review the information you have included in your drafted section and click on the Submit Assignment button above to create your 3-5 minute video explaining your approach to your instructor. In your 3-5 minute video address the following points. Explain what the results of your calculations say about the overall health of the company and its future value. (1 – 1.5 minutes) Describe the data points you found in the annual report that relate to the company’s capital constraints and spending trends. (1 – 1.5 minutes) Interpret the data points and explain whether or not the company is making appropriate capital expenditure allocations. (30 seconds – 1 minute) Pose any questions you have regarding the content and/or assignment so your mentor can provide you with assistance to improve your work this week. (30 seconds – 1 minute)

U.S. oil benchmark crashes below $0 a barrel to mark historic plunge A pumpjack operates above an oil well at night in the Bakken Formation in North Dakota.Bloomberg News/Landov A futures market is a central financial exchange where people can trade standardized futures contracts. A futures exchange provides physical or electronic trading venues, which can be organized as non-profit member-owned organizations or for-profit organizations. Futures exchanges can also be integrated under other types of exchanges, such as stock markets, options markets and bond markets. Futures contracts are sometimes used by corporations and investors as a hedging strategy. Hedging refers to a range of investment strategies that are meant to decrease the risk experienced by investors and corporations. Questions; The futures market is referred to as an auction market, whereby producers and suppliers of commodities endeavour to avoid market volatility; in other words, producers and suppliers negotiate contracts with an investor who agrees to take on probable risk and reward, based on the expected volatility of the market. 1. Critically discuss the theoretical concept of futures contracts as a risk management tool, used by any would be investor to decrease future risk exposure or market volatility. (15 marks) 2. Review and discuss the collapse of the Futures Oil Market, which fell into the negative realm in May 2020. (15 marks) What were the main reasons for this fall into the negative realm? Critically discuss. (20 marks) Total 35 marks 3. After May 2020, what are the prospects of futures contracts as a significant risk management tool for firms? Discuss critically. (30 marks) Students are requires to reference all your material, inclusive of books, journals, articles, web articles and relevant web sites, via footnotes and relevant citations must be in the APA format. The practice of plagiarism is prohibited in this course and attracts a penalty. See Course Page under Quicklinks at https://courses.open.uwi.edu/ on the policy on plagiarism. Any breaches of this policy will be severely dealt with. Word limit is 2500- 3000 words. Total marked out of 80 to be converted into 45 marks. Dimension Excellent Good Satisfactory Poor Introduction (5 marks) The introduction and objectives are clearly stated. Background and context are clearly articulated and linked to objectives effectively. (5 marks) The introduction and objectives are clear. Background and context are partially described and mostly linked to objectives. (4 marks) The introduction and objectives are clear but the background and context are not well described nor clearly linked to objectives. (3 marks) The introduction is vague. Background and context are vague or absolutely lacking and there are no clear links to objectives. (0-2 marks) Profiles (10 marks) Profiles meet all requirements. (9-10 marks) Profiles meet most requirements. (7-8 marks) Profiles meet some requirements. (5-6 marks) Profiles meet few or no requirements. (0-4 marks) Analysis (30 marks) Analysis is highly relevant to the assignment requirements and presented clearly and logically. Very strong link made between theory and practice. (27-30 marks) Analysis is relevant to the assignment requirements but is not always presented clearly and / or logically. Strong link made between theory and practice. (21-24 marks) Analysis is somewhat relevant to the assignment requirements. At times, the analysis is not clearly or logically presented. Fair link made between theory and practice. (15- 18 marks) Analysis is not relevant to the assignment requirements. Analysis is vague and illogical. The link between theory and practice is unclear and illogical or has major errors. (0-12 marks) Evaluation (20 marks) Evaluation is highly relevant to the assignment requirements and presented clearly and logically. Very strong link made between theory and practice. (18-20 marks) Evaluation is relevant to the assignment requirements but is not always presented clearly and / or logically. Strong link made between theory and practice. (14-16 marks) Evaluation is somewhat relevant to the assignment requirements. At times, the analysis is not clearly or logically presented. Fair link made between theory and practice. (10-12 marks) Evaluation is not relevant to the assignment requirements. Analysis is vague and illogical. The link between theory and practice is unclear and illogical or has major errors. (0-8 marks) Conclusion (5 marks) Conclusion is clearly stated and connections to the arguments and positions are clear and relevant. The underlying logic is explicit. (5 marks) Conclusion is clearly stated but connections to arguments and positions are not always clear and relevant – some aspects may not be connected or minor errors in the underlying logic are present. (4 marks) Conclusion is fairly well stated and connections to arguments and positions are somewhat unclear / irrelevant (3 marks). Conclusion is very poorly stated and the connections to the arguments and positions are incorrect, unclear, irrelevant or presented without explanation. Underlying logic has major errors. (0-2 marks) Writing (5 marks) The Project is coherently organized and easy to follow. There are no spellings or grammatical errors and technical terms are clearly defined. (5 marks) The Project is generally well organized and mostly easy to follow. There are only a few minor spelling and/or grammatical errors, and technical terms are not clearly defined. (4 marks) The Project is fairly well organized and somewhat easy to follow. There are a few minor spelling and / or grammatical errors and technical terms are not defined. (3 mark) The Project is poorly organized and difficult to read – does not flow logically from one part to another. It is not easy to follow. There are several spelling and/or grammatical errors; technical terms are not defined or are poorly defined. (0-2 marks) Referencing (5 marks) Four or more references were used/ cited. References were: 1. Appropriate for the context of the Project. 2. Were very current where applicable using references produced during the last 5 years 3. Used effectively in the Project. 4. Written using the latest APA style format (5 marks) Three references were used/ cited. References were: 1. Mostly appropriate for the context of the Project. 2. We’re not always current, using references produced during the last 6 years 3. Used mostly effectively in the Project. 4. Written using the latest APA style format for the most part (4 marks) Two references were used/ cited References were: 1. Somewhat appropriate for the context of the Project 2. Were for the most part, outdated, using references produced during the last 7 years 3. Used somewhat effectively in the Project. 4. Written using the latest APA style format was inconsistent throughout (3 marks) Only one reference or no references were used/ cited. References, if used were: 1. Not appropriate for the context of Project. 2. Were for the most part, outdated, using references produced during the last 8 years or more 3. Ineffectively used in the Project. 4. Not written using the Latest APA style. (0-2 marks)

For this assignment, create a PowerPoint presentation in which you define each component of the GNP and NI equations, and then explain how each of the GDP variables is influenced by the Federal Income Tax Act of 2017. Include speaker notes on each slide as if you were actually delivering a presentation. Alternatively, you can record your voice on the PowerPoint or Kaltura Capture. These resources can be viewed in this week’s Books and Resources folder. Be sure to cover the following points in your paper: Define the components of each variable in the GNP spending, or demand equation (i.e., C, I, G, & X- M). Explain how each of these variables is estimated. Explain how changes in each of the variables are influenced by changes in governmental income tax policies. Define the components of each variable in the NI (national income) equation (W, T, and S). Explain how each of these variables is estimated. Explain how governmental changes in the income tax rate influence the value of the other two variables. What does an increase in wages with a resulting decrease in income taxes likely mean for Consumer Spending (C) and Business Investments (I)? Research and plot on a graph the U.S. private, unemployment rates by quarters for 2016, 2017, and 2018. Explain how the reductions in tax rates introduced by the 2017 Federal Tax Act of 2017 likely contributed to the continued reduction in unemployment for 2018 Quarters. Research and plot on a graph the corporate profits reported in the U.S. for each of the quarters in 2016, 2017, and 2018. Explain how corporate profits were likely positively influenced in growth by the Federal Tax Act of 2017 during 2018.