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Finance Essay Topics & Paper Examples

Turkey: Finance and Current Account

Case Study Questions 1. Where in the Current Account would the imported telecommunications equipment be listed? Would this correspond to the increase in magnitude and timing of the Financial Account? The imported telecommunications equipment would be listed in the Current Account as an imported of good. The other vendors that sold the equipment would be includee in the net other investment. This would correspond to the increase in net other investment so the Financial Account would have a large negative balance in 2000. 2. Why do you think that net direct investment declined from $571 million in 1998 to $112 million in 2000? I think that the decline was caused because the lack of confidence in Turkey’s long-term growth prediction…

Butler Lumber

After thorough review and analysis of Butler Lumber’s financial reports, I believe that it is in the best interest of Northrup National Bank to not only approve the requested $465,000 loan, but look to increase the loan amount. A review of the 5 C’s will show in more detail the decision to approve this loan: 1. Capacity/Cash Flow: Butler runs a lean operation that has allowed them to have success due to competitive pricing. They have met their financing needs by increasing their debt (notes payable) in order to keep up with the demand. However, their borrowing had led conjunctly to an increase in sales. Net sales have increased 59% over the 1988-1990 timeline and have been projected to increase…

Models for Interest Rate Risk

Interest risk is the possibility of unexpected adverse changes in interest revenues and expenses. It can be shown that interest rate changes are unpredictable almost 100%. They depend on monetary policy; supply and demand, inflation etc. These in turn depend on many other factors. So how do financial institutions manage the risk of fluctuating interest rates give that they cannot predict it? The immunization of a portfolio against interest rate risk means that the portfolio will neither gain nor lose value if interest rates change. In this essay we will look at some of the different models used by financial institutions for managing interest rate risk. They are the re-pricing model, the maturity model and the duration model. We will…

American Chemical Corporation

Statement of the problem In October of 1979, the American Chemical Corporation (ACC) began looking for a buyer for the Collinsville, Alabama plant after successfully acquiring 91% of the shares of Universal Paper Corporation. Dixon Corporation, a specialist chemical company with customers primarily in the paper and pulp industry agreed to the possibility of purchasing the Collinsville plant for $12 million. This purchase will diversify Dixon’s product line, adding the sodium chlorate chemical, produced at the Collinsville plant, needed by its existing customers. Dixon is evaluating different streams of cash flows for the possibility of purchasing the Collinsville plant. Discussion The decision to acquire Collinsville’s plant will translate into strategic and economic benefits. Dixon could increase their supply of chemical…

Personal Finance

Without financial knowledge, a budget and/or a financial plan in place you can have an income of 100,000 thousand dollars a year and still be living paycheck to paycheck and eventually end up in financial ruin. If a budget is not in place it is very likely to spend more money than you are making. By accounting for all income you receive and spend you are able see you’re spending habits. To assess whether you’re spending habits are good or bad, need to be improved or adjusted. For instance my family loves to eat out. If I noticed that my family spends $400 dollars a month on fast food/eating out then I need to decide what’s essential to my household…

Boeing 777 Finance Case Study

Boeing is currently operating with the majority market share of the commercial sector of aircraft manufacturing. Frank Shrontz, our CEO, has recently stated his goal to increase the company’s return on equity from its current average of 12%. The following summary will delve into the most appealing project for the future of this firm: the 777 aircraft. The purpose of this new product is to maintain our competitive advantage in commercial airline production by completing a family of Boeing airplanes. The following net present value analysis will be used to determine the potential profitability of the 777 project. Our analysts concluded that a levered equity beta of 1.2939 was appropriate for the commercial division of Boeing. The levered equity beta…

Wht Kyc Is Required

In these days of frauds ,terrorism, KYC has become the buzz word in financial sector. Before the implementation of KYC Policy, banks used to ask for an introduction from an existing customer to open a new account, even though an introducer cannot be sued or otherwise held responsible for any mishap, and it became a very common practice to introduce anyone to the bank without knowing its consequences. In 2002, RBI directed all banks to meticulously follow the KYC guidelines to curb the financial frauds effectively and to make banks comfortable with the bonafide and integrity of customers. Objective: Objective of KYC is to prevents banks from being used, intentionally or unintentionally,by criminal elements for money laundering or financial terrorism…

The Effects of Cfo Balanced Scorecard

The responsibilities of CFO include maintaining the financial stability of the organization, ensuring both short-term and long-term obligations such as adequate capital for operations and capital investment decision, and supporting potential expansion. We are also responsible for external financial reporting such as SEC filings, and federal, state and local tax compliance. “The CFO scorecard is a management tool that does more than collect and report key performance metrics… with the proper design, the scorecard reduces the time spent on discussing the issues and allots more time on solutions” (Toppazzini, 58). For the scorecard, there are four major levels to which the CFO is evaluating on. The financial level of Hedrick Company includes the return on total assets ratios, return on…

The Cash Connection

The payday lending industry is a very competitive industry established in the 1990’s, designed to give citizens the option to receive a quick fix regarding financial issues, in an effort to make ends meet. The main objective for those in the payday loan industry “should be to serve customers in compliance with the rules of the industry and better educate them on the services and products they offer” (Personal Communications, 2012). This industry raises the controversial topic of ethical, or unethical, and to this day is still being disputed. Cash Connection’s strategy is “to provide financial products and services to the unbanked and financially underserved customers”(CashConnection. eu), also to set themselves apart their competition with the intention of becoming the…

DICOM VS Captiva Case Study

1. What are the key business success factors and risks for DICOM and Captiva? DICOM is a Swiss company that has sales in Europe, Asia, and the United States. They provide services ranging from structured, semi-structured, and unstructured information capture products. DICOM also sells hardware, primarily scanners, through its group sales force. DICOM has differentiated their product offering for the different regions that it operates. And the products that are provided are developed through research and development and also acquisitions. This allows DICOM to provide a diverse set of products that can cover many markets and many different users. DICOM operates in the U.S. under Kofax capture software that was bought in 2004 and primarily offers the information capture software’s…

Roles of Financial Markets and Institutions

This continuing exercise focuses on the interactions of a single manufacturing firm (Carson Company) in the financial markets. It illustrates how financial markets and institutions are integrated and facilitate the flow of funds in the business and financial environment. At the end of every chapter, this exercise provides a list of questions about Carson Company that require the application of concepts learned within the chapter, as related to the flow of funds. Carson Company is a large manufacturing firm in California that was created 20 years ago by the Carson family. It was initially financed with an equity investment by the Carson family and ten other individuals. Over time, Carson Company has obtained substantial loans from finance companies and commercial…

Auto World Inc

Auto World Inc. (AWI) is a leading automotive retail and service chain. They have many operating segments comprised of two different centers 10 miles apart from each other. Pit Stop Centers (PSC) offer service labor, installed merchandise, and tires while their Auto Boyz Centers (ABC) sells automotive merchandise. AWI has a plan to close their operating segment PSC to change their current operating structure to improve and efficiently deliver retail products and automotive services by providing their customers with a ‘one stop’ shopping for ‘do-it-yourself’ retail customers and ‘do-it-for-me’ customers” (PSC Case). AWI expects this change to enhance their ability to increase market share, improve sales, and company earnings. This change in restructuring will have an effect on current earnings…

Apex Investment

AccessLine’s initial financing came in the form of strategic alliances. In 1989, McCaw Cellular Communication invested in AccessLine, providing a considerable amount of their intial capital. This funding secured the strategic partnership between AccessLine and McCaw Cellular. This launched further alliances between AccessLine and other phone company carriers, in which AccessLine granted them an exclusive franchise in the market for a set fee. The carriers were permitted to market AccessLine’s service under their own company name. AccessLine also developed partnerships with equipment manufacturers such as Stratus Computer and Motorola, also providing them with a franchise in exchange for funding. However AccessLine’s growth prompted the need for larger investments. Thus, in 1994, AccessLine diversified their financing to professional equity investors. Providing…

Internal Control

(1) If the LJB Company should decide to become a publicly traded company, a few internal controls should be implemented to comply with the Sarbanes-Oxley Act (SOX). * Management will need to provide periodic quarterly reports to evaluate the effectiveness and reliability of LJB’s internal controls over financial reporting procedures. * Management should certify the accuracy and fairness of presentation of their financial statements. * Independent auditor(s) outside of LJB will need to attest to management’s assessment of said internal controls. Additionally, non-audit services between these two parties (LJB and said independent auditor) are prohibited. (2) There are a few internal control measures that LJB already has in effect and are better for it: the use of pre-numbered invoices by…

Introduction to Export Finance

Credit and finance is the life and blood of any business whether domestic or international. It is more important in the case of export transactions due to the prevalence of novel non-price competitive techniques encountered by exporters in various nations to enlarge their share of world markets. The selling techniques are no longer confined to mere quality; price or delivery schedules of the products but are extended to payment terms offered by exporters. Liberal payment terms usually score over the competitors not only of capital equipment but also of consumer goods. The payment terms however depend upon the availability of finance to exporters in relation to its quantum, cost and the period at pre-shipment and post-shipment stage. Production and manufacturing…

Optimal Capital Structure

The optimal capital structure for a company should be the mix of equity, debt and hybrid instruments that minimizes the overall cost of funding, i.e. it should minimize the company’s weighted average cost of capital. In practice, however, it is not possible to specify this optimal capital structure exactly, for any individual company. It clearly makes sense to obtain funds at the lowest possible cost. In the long run, debt is cheaper than equity. However, when a company’s financial leverage increases as it takes on more debt capital, there is an increasing risk for stockholders. The cost of equity therefore will rise, perhaps offsetting the benefits of raising cheap debt capital. Although management cannot be specific about the optimal capital…

Categorizing Funding Requirements

Each requirement should be funded in different ways. In other words, the nature of the funding requirement dictates the preferred type of funding. For example, core funding needs as a general rule will be satisfied by equity funding and, if available, long-term debt. Short-term cyclical funding and contingency requirements usually are satisfied by shorter-term bank lines. Analyzing the total funding needs of the business into these three categories calls for judgment as to which requirements are core and which are cyclical and of short-term or medium-term duration. There is no one correct answer, and much depends on the nature of the company’s business. For example, a property investment company might categorize funding to pay for completed property developments as core…

Internal and External Sources of Finance

Internal sources of finance for Tesco Tesco’s main internal source of income will be their retained earnings. Retained earnings are the amount of net income that Tesco have retained and not paid out. Retained earnings are what are paid to the business owners. Fixed assets are another form of an internal source of finance; this form of finance is a lot harder to convert into cash as fixed assets tend to be things such as vehicles, machinery, buildings and factories. Fixed assets can take a while to convert into cash so Tesco would not rely on them to be a short-term access to finance. Current assets are a key source of finance for Tesco; current assets are cash and things…

Financial statement analysis

Financial statement analysis is a process which examines past and current financial data for the purpose of evaluating performance and projecting future risks and potential of a company. Financial statement analysis is used by various people and companies for different reasons, e.g. investors, creditors, lending officers, managers, employees and many other parties who rely on financial data for making economic decisions about a company. The objective of this David Jones financial statement analysis is to identify the company’s performance issues, to provide suggestions and recommendations by employing the Ratio Analysis method and analysing Profitability, Efficiency, Short and Long term Solvency, and by using Market Based Ratios. The following report outlines the financial performance of David Jones Limited based on the…

Star Appliance Company

The methods that could be used to determine the cost of capital of Star Appliance Company would be to calculate the cost of equity of the company and then using that in finding another discount (hurdle) rate. Being that the currently used discount rate of 10 percent has been used since the company’s first years before the depression it should be recalculated in order to get a more appropriate discount rate in the time of the decision of for the dishwasher, trash compacter, or the food disposal. After increasing the discount rate to a more appropriate percent for the current time, you would then want to reevaluate the net present value of the three proposed investments in order to determine…

Capital Asset Pricing Model

The capital asset pricing model (CAPM) is an important model in finance theory. CAPM is a theory or model use to calculate the risk and expected return rate of an investment portfolio (normally refer to stocks or shares). All stocks have 2 risks: Systematic Risk (also called Market Risk which affect every stocks) and Unsystematic Risk (also called Specific or Unique Risk that only affects individual stocks). To diversify unsystematic risk, we selected and combined different stocks, which are negatively correlated with one another into one portfolio. In this way risk are eliminated greatly. See diagram below. CAPM Equation The general formula used for Capital Asset Pricing Model is: re = rf + [ ß (rm – rf) ] where…

The Economics of Money, Banking, and Financial Markets

1. What is the typical relationship between interest rates on three-month Treasury bills, long-term treasury bonds, and Baa corporate bonds? The interest rate on three-month Treasury bills fluctuates more than the other interest rates and is lower on average. The interest rate on Baa corporate bonds is higher on average than the other interest rates. 2. What effect might a fall in stock prices have on business investment? The lower price for a firm’s shares means that it can raise a smaller amount of funds, and so investment in plant and equipment will fall. 3. What effect might a rise in stock prices have on consumers’ decisions to spend? Higher stock prices mean that consumers’ wealth is higher and so…

Behavioral Economics

Introduction Behavioral Economics is an extremely important field of psychology; it seeks to expand the current tools that researchers use in economics and finance to introduce new models of human behavior that are adequately founded in psychological research. The Behavior Economics is crucial in business decision making process. The knowledge in Business and Financial Literacy is very important for their direct application to Business and Consulting Psychology. Understanding Financial Management which includes: profit & loss, cash flow, balance sheets, ratios, ROI, working capital, budgeting, financial planning, and corporate finance; and Business Management that includes: business strategy, strategic market management, micro-economic analysis, sustainable competitive advantage, strategic positioning, diversification, acquisitions, mergers, and technology management, will allow the consultant to help businesses increase…

Lease Versus Purchase Option

In this essay I will try to explain or compare and contrast lease versus purchase option. In this explanation I will talk about what is deb financing, and will provide two examples. I will also talk about what is equity financing and provide two examples and last which alternative capital structure is more advantageous and why. In order to give two examples of what is debt financing I will give a brief description of what is debt financing. Debt financing is when a company borrows money that must be repaid but with interest. This does not dilute the ownership of the company. With that being said the two examples are Issue Bonds and Line of Credit. In the line of…

Commercial Accounting

Commercial accounting is an accurate account of business transactions, it can only be acquired if both cash and credit transactions are performed, recorded, and recognized in such a way that there can be no duplication and the transactions are recorded under commercial accounting. The system known as double entry book keeping or the commercial accounting system that records both aspects of transactions, also it records credit transactions in cash accounting the day of the receipt. The single entry in accounting for example: there is a sale, where the transaction is complete after the exchange of cash for goods. In commercial accounting the date in which the transaction was made needs to be recorded regardless to whether it was paid or…

Why James I Had Financial Problems at the Start of His Reign

Some financial problems were inherited from his predecessor Elizabeth I; due to the fact even though Elizabeth had been careful with her money she also liked to live in luxury and had the famous Spanish Armada which cost a large fortune (as most wars do and although Parliamentary subsidies were still coming in to cover this) which meant that things looked relatively stable (financially) in the short term but the long term was shaky and had potential problems looming. However inflation, which James obviously had no power over, meant that the subsidies and rents on Crown Lands were not keeping pace with the increasing prices of everything else effectively making the Crown poorer. With a family to support James had…

Personal Finance

Personal finance refers to the principal that is applied to the monetary decisions of an individual or a family unit. It addresses issues such as the ways in which the individuals or families obtain finance, budget, save and spend the monetary resources of a company over a given period of time while at the same time taking in account the financial risks and the future life events that are related to the businesses activities. The profits or loss of a company are derived by determining the incomes of a company and the expenses that are incurred by a company. If the incomes are more than the expenses the company generates profit for the company. If the expenses of the company…

Financial Management

Part A There are three main areas of decision making for the corporate financial manager: Investment: The choice of projects or assets in which to invest company funds. Competing alternatives have to be assessed using a number of techniques. This type of decision will also be of concern to the private individual when making choices about which shares to buy. Finance: How these investments should be financed. It is necessary to evaluate the possible sources, external and internal, and the effect they will have on the capital structure of the company. Dividend: Whether corporate earnings should be retained or paid out in the form of dividends, and if the latter, when the dividends should be paid. Otherwise, we will cover…

Access to Bank Credit to Small and Medium Enterprises

Finance function is the most important of all business functions. It remains a focus of all business activities. Financing SMEs has acquired enormous importance in contemporary world of finances. This is primarily due to the national focus and priority of various countries – developed and developing ones as well. In the Sri Lankan context , the government has provided impetus to the authorities to increasingly cater to the emerging financial needs of the SMEs. Bank and Institutional finance are expected to be made available on easy and flexible terms and conditions and on priority basis. Small and Medium Enterprises(SMEs) are hit by poor access to funds. This can be overcome if financial institutions are able to assess firm- specific and…

New Government Accounting Systems

Don’t snoop. Not only does going through your roommates’ belongings violate their privacy, but it can also destroy the trust between the two of you if they find out. Have a place to put your own mail, personal photos and other items that you don’t want your roommate going through to avoid conflict over privacy issues. Personal Items According to Huffington Post, borrowing personal items is a main cause for tension between roommates. Refrain from borrowing anything without your roommates’ permission, and don’t allow your guests to touch or borrow anything of theirs, either. If you do obtain permission, return the item promptly and in the same condition that you borrowed it. If you break it or damage it, replace…