Finance

INCOME STATEMENT Assignment Overview Use the same annual statements for Starbucks as for the prior module. The Starbucks income statements should be used for the first two questions. Do additional research as necessary for the last question. IBISWorld is a proprietary database providing industry research. It is accessible via the Trident library. The database is found under additional library resources and offers a lot of interesting industry information, including financial information. Case Assignment Locate the income statement for the past two years. Prepare a table in good format comparing at least ten revenue and expense items for the two years. Did the numbers increase or decrease? What can we learn from this information? Comment on the changes from one year to another. Is the company doing better or worse? Did revenues and expenses increase or decrease? Are revenues and expenses moving in the same direction? How is Starbucks doing vis-à-vis the industry? Use IBISWorld to answer this question. Investors emphasize earnings per share. Why is this number so important and what are some of the shortcomings of this number? Assignment Expectations Incorporate responses to the questions above in an organized format. Start with an introduction and end with a conclusion/summary. Use headings and subheadings to organize the essay. Do not forget to include references in APA format. Incorporate the required table into the Word document. Do not submit a separate spreadsheet. The suggested length is five to seven pages, including the table.

Top 5 Requirements For A Company To Be Successful: 1)     Balanced capital structure (D/E) 2)     Proper capital budgeting (financial and investment decisions) 3)     Working capital management o   M&A 4)     Management’s intentions o   Long Term planning, i.e. ESG o   Minimizing agency costs o   Making sure managers maximize value 5)     Capital raising (long/short term, internal v external)   Top 5 Things That Surprised Me About Corporate Finance: 1)     How rich the information in a financial statement is and how much it tells you about a company. o   The appropriate financial statements and figures 2)     The advantages to taking on debt/leasing  o   Tax breaks o   More firm value 3)     The importance of projected financials, how they are the only way to value a company 4)     How firms create value from spending  o   M&A 5)     How firm values are adjusted based on expectations (behavioral finance)  QUESTIONS:     1) Prepare a 1-2 paragraph analysis of the top 5 corporate finance requirements. Think critically and intellectually challenge yourself. Demonstrate your corporate finance knowledge.    (800 Words – 2 Paragraphs) 2. Prepare a 1-2 paragraph analysis that expands on top 5 things that surprised you about corporate finance. Think critically and intellectually challenge yourself. Demonstrate your corporate finance knowledge.     (500 Words – 2 Paragraphs) 3) Lastly, prepare a 1-2 paragraph summary of your personal impressions about a potential career in corporate finance. Include how you see yourself as a CFO and a financial leader. Think critically and intellectually challenge yourself. Demonstrate your corporate finance knowledge.    (500 Words – 2 Paragraphs)

Some examples to include: How many months of expenses are recommended for emergency savings? How much should they have saved based on age and income? What asset allocation would you recommend based on age and their stated risk tolerance? How would you determine if they are comfortable with the suggested allocation? What is the expected return on those investments? Whay kind of income could you provide from those investments? Calculate the future value of their investments based on your proposals. Outline thier potential retirement income. What are the rules of FDIC insurance? How can they save on taxes? Can they contribute to IRA? What are the rules. Do they need more life insurance? What is rule of thumb?

Did the bailouts help or hurt the economy? Do you support the idea of the government stepping in to help companies in trouble? Could this promote the moral hazard problem? Fully explain and support your response. What are some of the major bailouts of recent? How are those company’s currently fairing?

Sam Strother and Shawna Tibbs are vice presidents of Mutual of Seattle Insurance Company and co-directors of the company’s pension fund management division. An important new client, the North-Western Municipal Alliance, has requested that Mutual of Seattle present an investment seminar to the mayors of the represented cities, and Strother and Tibbs, who will make the actual presentation, have asked you to help them by answering the following questions.  a. What are the key features of a bond? b. What are call provisions and sinking fund provisions? Do these provisions make bonds more or less risky? c. How does one determine the value of any asset whose value is based on expected future cash flows? d. How is the value of a bond determined? What is the value of a 10-year, $1,000 par value bond with a 10% annual coupon if its required rate of return is 10%? e. (1) What would be the value of the bond described in Part d if, just after it had been issued, the expected inflation rate rose by 3 percentage points, causing investors to require a 13% return? Would we now have a discount or a premium bond? (2) What would happen to the bond’s value if inflation fell and rd declined to 7%? Would we now have a premium or a discount bond? (3) What would happen to the value of the 10-year bond over time if the required rate of return remained at 13%? If it remained at 7%? (Hint: With a financial cal-culator, enter PMT, I/YR, FV, and N, and then change N to see what happens to the PV as the bond approaches maturity.) f. (1) What is the yield to maturity on a 10-year, 9% annual coupon, $1,000 par value bond that sells for $887.00? That sells for $1,134.20? What does the fact that a bond sells at a discount or at a premium tell you about the relationship between rd and the bond’s coupon rate? (2) What are the total return, the current yield, and the capital gains yield for the discount bond? (Assume the bond is held to maturity and the company does not default on the bond.) Reference Brigham, E. F., & Ehrhardt, M. C. (2020). Financial management: Theory and practice [with MindTap] (16th ed.). Mason, OH: South-Western. ISBN-13: 9781337902601 URL: https://www.gcumedia.com/digital-resources/cengage/2020/financial-management_theory-and-practice_16e.php

The purpose of this assignment is to analyze an annual SEC report in order to evaluate the financial strength, efficiency, and effectiveness of an organization. Visit the “EDGAR Company Filings” search page of the U.S. Securities and Exchange Commission’s EDGAR database website (SEC.gov), provided in the study materials. Search publicly traded companies and choose one to use for this project. Submit your selected company to the instructor for approval. Locate the company’s most recent annual report (10K) and download it. Read and analyze the “Management Discussions and Analysis of Financial Condition and Results of Operations” and “Financial Statements and Supplementary Data” sections of your selected company’s annual report. Based on the information found, calculate one relevant ratio from each of the following five categories (covered in Chapter 14), and write an analysis providing an assessment of the following with a determination of whether your company of choice is favorable or unfavorable: Liquidity Asset Management Financial Leverage Profitability Market Value Conclude with an evaluation of the overall financial strength, efficiency, and effectiveness of the organization based on your findings.

Enrons collapse, the biggest Chapter 11 bankruptcy in U.S. history, has been attributed in part to the company’s reckless use of derivatives. Is this a valid accusation? Fully explain and support your response. Using real-world examples, discuss two other financial derivatives used by domestic and/or multinational firms to hedge risk. What are the advantages and disadvantages of using derivatives?

Question to answer:  What insight does ROI give into investment performance? Is it acceptable to lose profit on one product, if that product is vital to the sale of an extremely profitable product?  Why? As you think about these questions, also consider what other measures beside ROI might be help in analyzing solutions to business problems – or opportunities.

Read the article: “Silicon Valley Adjusts to New Reality as $100 Billion Evaporates” and answer the following questions: 1)    WeWork postponed its IPO and the valuation of the company plunged from $47B to $8 billion, describe all the parties/agents/stakeholders that were affected by this massive change in valuation and how they were affected.   2)    How the plummeting values of the unicorns can be explained? Why were they value higher just a couple of months ago and now they are value lower? (think about what we learned about valuating business and stocks and which variables affect the valuations)   3)     Now that the Venture Capitalists and the stock markets are more reluctant to open their wallets for investments in unicorns, the article mentions that some companies will try to source funds through debt instead of equity. What risks could involve that path of action for the company and for current shareholders?   4)    In the article there are mentions several “unicorns”, some of those companies will fail and some will be winners, which one do you believe has the best odds to be successful and why? Read the article: “The repurchase revolution” and answer the following questions: 1)    In class, we have seen that stock repurchases are a good “signaling” that companies provide to the market, but the article thinks that in this case is otherwise, explain why.   2)    The article mentions that some companies are being rewarded with higher stock prices without a need to pay a dividend or repurchase stock, just by reinvesting their profit back in their business, how can you explain this? (hint: think about the type of companies (Amazon), cost of capital vs returns of a project, etc.)    3)    In the article is mentioned that a corrupt manager can take advantage of a share-buyback, how this work? Create a simple example showing how this scheme can work. Read the extract from the book “The Dhandho Investor” by Mohnish Pabrai[1] and answer the following questions: 1.What is intrinsic value of a business and how you can calculate it? 2. What does the Efficient Market Hypothesis say? (to answer read your notes when we viewed this topic in class and the textbook) 3. What does the author think about it and what do you think about the EMH?   [1] Mohnish Pabrai is an Indian-born entrepreneur, successful value investor, author, and philanthropist. A bit of an investing late bloomer, Pabrai is a devout follower of Warren Buffett, although he had never heard of him until he was 30. So intent was he to pick the brain of his idol, Pabrai once spent over $650,000 just to have lunch with Buffett.Putting Buffett’s principles to work for himself has brought him great fortune, which he gladly invests in the lives of the poorest in India.

Few related articles should be referred to which were worked on the topic dematerialization of Shares – Indian Capital market and then provide the gaps or recommendations gained from the same. Please include measures and statistics wherever possible. And include a questionnaire as part of the research which should be in the Appendix. Title, abstract, an overview of research aims and explanation of its importance- 10% Identification, evaluation, and synthesis of relevant literature      – 30% Discussion and justification of research objectives/questions/hypotheses- 30% Description and justification of the research method -20% Referencing, research of literacy, quality of sources – 10%