Financial Accounting [Instructor Name] Q1: (i) Components of Financial Strategy Two components of financial strategy are 1. The funds required by organizations and most appropriate methods for raising these funds. This involves evaluation of the funding requirements of the business and then approaching different venues for raising capital that is either through borrowing or issuing equity in the capital markets and collecting funds from shareholders’ investment in the company’s shares (Bender & Ward, 2012)…
Decisions that can be prescribed in financial terms are covered in the financial strategy (Bender & Ward, 2012). Thus, it could be stated that the financial decisions are different from business decisions that the company may undertake however, they are related to each other and have implications for them. (iii) There are four reasons that market value might differ from fundamental value which are given below: a. The share price often reflect future prospect of the company’s performance (Bender & Ward, 2012). If the market expects that the financial results of a company will exceed the expected growth rates than the share price will react positively in advance (Bender & Ward, 2012). This is usually reflected by high price to earnings ratio. It is understood that companies’ stock which have higher price to earnings ratio are likely to show increase in the market value of their shares as the market develops an expectation that these companies are likely to outperform their expected targets. For example, a recent launch of iPhone 5 pushed the market value of Apple’s stocks higher. b. ...
ecomes mature and better view of the company’s performance becomes clearer the market value of shares will begin to coincide with the fundamental value of business per share. c. The company announces a future investment project which is expected to yield higher returns for the company and thus, the market reacts positively to the news. Although, the investment is yet to be placed by the positive sentiments about the projections that the company makes for its investment decision can have positive impact up on the market value of the company’s shares. For example, a company Medinah Minerals announced its exploration project in South America which lead to major interest by shareholders in its stocks and the market value went up above the fundamental value of the company. d. If a company approaches to takeover another company then managers or shareholders of the target company may enter in the market to alter the market value of its shares so that higher bid can be achieved. In this case, the market value of shares will be higher than the fundamental value of the company. This is a strategy to prevent takeover bids by other entities. For example, this defense tactic is very much common in the US as compared to the UK. Q2: (i) Year 0 1 2 3 NPV Project A Cash Flows (240,000.00) - - 325,000.00 Discount Factor 1.00 0.90 0.81 0.73 Discounted CF (240,000.00) - - 237,637.20 (2,362.80) 0 1 2 3 NPV Project B Cash Flows (198,000.00) 110,800.00 82,500.00 45,000.00 Discount Factor 1.00 0.90 0.81 0.73 Discounted CF (198,000.00) 99,819.82 66,958.85 32,903.61 1,682.28 NPV is the sum of future cash flows discounted to the present time and it is understood that only those projects which result in positive NPV must be accepted by companies and all those projects which have negative NPV ...
Cite this document
(“Answer All Questions Assignment Example | Topics and Well Written Essays - 2000 words”, n.d.)
Retrieved from https://studentshare.net/finance-accounting/81748-answer-all-questions
(Answer All Questions Assignment Example | Topics and Well Written Essays - 2000 Words)
“Answer All Questions Assignment Example | Topics and Well Written Essays - 2000 Words”, n.d. https://studentshare.net/finance-accounting/81748-answer-all-questions.
The belief or attitude that one`s sex is more superior than the other and that the superior sex has rights, prerogatives and status greater than those of the inferior sex whether female/male is considered to be gender
For example, if the height and weight of twenty people are considered to check the correlation between these two variables, the existence of perfect correlation would imply the tallest person would also have the highest
2. If sedimentary layers (beds) are steeply inclined in an exposure (outcrop) of rock, the principle allows you to assume that the beds were tilted after they were deposited is the Principle of Original
The strategic focus, therefore, affects five critical major developments in various departments. First, it is vital to acknowledge the cross-functional boundaries that define business units used by suppliers. It means a purchasing function
You have two options to submit it your test. You can submit it either in CMS online by the due date or, alternatively, you can also turn in the test before class on the due date. Please copy the following pledge and sign it in your answer book
2. Suppose you are 22
So, the factor of power was used to a staggering extent in all three revolutions to reach the desired objectives. Though goals were reached to varying extents, less loss was suffered by the French and Haitians in
For example, the apparel line has a breadth of three products that differ in comfort, mobility and weather conditions. Also, the company makes footwear for various types of sports such as football, basketball, running and training. The points indicate that the company values a
ects; that though the knowledge used in the operation was somehow rudimentary, for there were no established institutions of learning, the principles employed in the limb reattachment resembled those used by orthopedic surgeons in modern day medicine, which to a great extent
2 Pages(500 words)Assignment
GOT A TRICKY QUESTION? RECEIVE AN ANSWER FROM STUDENTS LIKE YOU!
Let us find you another Assignment on topic Answer All Questions for FREE!