Showing posts with label financial. Show all posts
Showing posts with label financial. Show all posts

Analysis of foreign financial reports

CHAPTER 9

ANALYSIS OF FOREIGN FINANCIAL REPORTS

Chapter outline

I. reasons to analyze the financial statements of foreign companies include:
• making foreign portfolio investment decisions,
• making foreign merger and acquisition decisions,
• credit decisions on foreign customers,
• evaluate foreign suppliers, and
• benchmarking against foreign competitors.

II. There are several problems analysts can encounter in analyzing foreign financial reports, including:
• Search and to obtain financial information on a foreign company,
• understand the language in which the financial statements are presented,
• the currency in which the monetary amount,
• terminology differences that lead to uncertainty as to the information,
• differences in format that leads to confusion and missing information,
• lack of sufficient information;
• financial statements are not made available in good time,
• accounting differences that prevent the cross-country comparisons, and
• differences in business environments that can make the ratio comparisons meaningless even though the accounting differences eliminated.

III. some of the potential problems can be removed by company through their preparation of convenience translations in any language, currency and possibly even accounting principles are translated for the convenience of foreign readers.

IV. A significant number of investors find that differences in accounting practices in countries prevent their financial analysis and affect their investment decisions.   Some analysts manage this problem by translating foreign financial reports to a familiar result, such as US GAAP.
A. a different coping mechanism is to base the analysis on the measure of performance that many accounting issues have been removed, such as EBITDA.

V. analysts should exercise caution in the interpretation of the ratios calculated for foreign companies.   What is considered ...

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Sutherland Global Services Is A Financial Corporation Marketing Essay

For any business excellent customer service is the income. Bringing back the customers is the best customer service. And in relation send them away pleased – happy enough to pass encouraging criticism about the business alongside others, who may perhaps then attempt the merchandise or service you recommend for them and in turn into repeat clients. You can offer advancement and cut prices to bring in as many fresh customers as you want, but unless you can search out some of those customers to come back, there will no profit for a long time in your business. If the firm truly wish for having good customer service, all you have to do is make sure that your business constantly does these things:

Respond to the customers’ phone call.

Don’t give the customer promises unless you will fulfil the promise.

Listen to your customers patiently while they are talking and make appropriate responses to show the customers that we are listening.

After listening to the customers’ issue, we have an idea how to deal with complaints.

Be helpful towards the customers even if there are no instant financial gains in it.

If you have any staff, give training to be always supportive or helpful, knowledgeable, and chivalrous.

By taking the extra steps does not mean that you have to tell the customer to search for it, you have to guide them to the right path and wait if they have any queries.

Throw in some additional information about the product that the customer buys.

Following these eight steps, ones business will be known for their good and excellent customer service. The irony of the excellent customer service is that this will increase the number of new customers is the best part. (Ward 2010)

For dealing with the customer service, I have opted Sutherland Global Services for doing the research, as the firm is widely known and personally I was a member of the customer service team in this BPO firm.

Sutherland Global Services is a financial corporation headquartered in Rochester, New York. There are 22,000 employees employed in this business process outsourcing firm and operations in seven countries including India, the Philippines, Canada, Mexico and Bulgaria. Sutherland cherishes their customers or clients as their business companions. They are enthusiastic and keen to provide the highest quality service to the customers and will treat their target and objectives as company’s own. The firm will boost their aggressive benefit by constantly higher than the expectations.

Globalization, expertise promotion, lesser telecommunications expenses, and the adulthood of outsourcing facility providers are motivating companies to influence business process outsourcing (BPO) as a tactical move towards the enhancement of efficiency and taken as a whole functional efficiency. Industries that serve a large number of customers are the most important beneficiaries of a BPO. Because of the physical scenery of the business processes that are mandatory to attain, sustain and retain their customers, companies in these industries are outsourcing a variety of customer-facing and back-office operation.

For more than two decades, Sutherland Global Services has built and managed outsourced operations for 1000 companies’ crossways numerous industries. Over the course of 20 years of experience, Sutherland has urbanized a demonstrated method for supervising outsourced operations that is applied to BPO whereabouts athwart any industry. By sternly clinging to this evolution on each commitment, the company is able to trim down start-up and changeover endangers, accomplish beleaguered objectives more rapidly, and run a more reliable steady-state operation on the clients’ behalf.

Sutherland offers specialized BPO services for the following industries: (i) Retail/e-Retail (ii) Insurance (iii) Mortgage

(iv) Banking/Financial services (v) Healthcare (vi) Telecommunication

(vii) Technology (viii) Energy/Utilities and (ix) Travel and hospitality.

Retail/e-Retail: Retailers function in a globe of tremendous market volatility, cost pressure and supply-chain intricacy. Sutherland supplies incorporated customer-facing and significant back-office support services to a high-speed increasing roll of key leaders in the vend space. Sutherland’s services are geared in the direction of conventional trade, online/e-commerce and direct to customer oriented companies looking for an incorporated resolution. For each client or customer, the firm designed a personalized explanation built just about their explicit needs - together with safety, skill and equipment, procedure, quality and exposure. Leveraging the firm’s field knows how, expertise, processes, and infrastructure, Sutherland helps worldwide retail firms concentrate on end-to-end dare.

Insurance: Sutherland furnishes public and private Insurance companies an end- to-end scheme to perk up their functioning efficiencies and enables them to vie more capably which in turn facilitate them to innovate and generate a eternal aggressive benefit. In particular, Sutherland delivers:

cost lessening and a changeable cost replica

income increases through various allocation channels

go around time upgrading for field force and members/consumers

the aptitude to bring a steady customer skill

Mortgage: Mortgage originators must productively deal with outlay in the phizog of altering technological, operational, and personnel demands. Sutherland’s Mortgage Origination services drastically lesser the risks and expenses linked with a multiplicity of business processes rise above the entire instigation sequence. Sutherland can considerably improve a lender’s output, customer satisfaction, and income generating occasion.

Banking/Financial services: Financial or Banking services companies in each section are beneath strong stress to stay on beneficial. Customer expectations keep on increasing as business leaders features expenditure challenges. Sutherland Global Services suggests a BPO model for contact centre and back-office processes. Delivery options comprise North American aground, work at home, offshore service delivery via the facilities in the Bulgaria, Canada, India, Mexico, Nicaragua, Philippines, United Kingdom and United States.

Healthcare: Generally in customer-focused industries, Health Insurance companies are appraising tactical sourcing alternatives that will consent to them to improved control costs, diminish resource expenditures and get better level of overhaul they deliver to their customers. One way, Health Insurance companies can achieve these objectives is to deem choosy Business Process Outsourcing (BPO) for definite sales, customer service, claims organizational and back-office processing functions.

Technology: Sutherland has about two decades of experience with building and controlling sales, advertising and customer support operations for the technology industry. Sutherland Global is branded and recognized in the industry for knowledge, realm skill and track-record of grades working with some of the most flourishing names in the hi-tech industry.

Energy/Utilities:

Travel and Hospitality: Sutherland understands that travel and hospitality companies’ functions multifaceted organizations with many global business units overseeing separate P&L responsibilities. As business and individual journey experience stable quantity increases, every company faces passionate rivalry to supply astonishing customer service while controlling outlay. Companies must swiftly take action to varying consumer demands, which requires litheness and flexibility in operations, customer relationship management and back office processes.

Telecommunication: It habitually seems hard to locate a business with the aim of more competitive than telecommunications. Service providers are quickly escalating an innovative service skill and insistently entering fresh markets, blurring the lines connecting voice, data, cable, IP and wireless. Exceptional cost and rigid pressure is making it trickier for providers to nurture market share and deal with a healthy profit image.

For numerous telecommunications service providers, outsourcing definite client contact centre and back-office procedure is a reasonable and significant way to stay competitive and nurture their industry. That is why the top telecommunications companies have trusted on Sutherland for more than a decade to experience a variety of aspects of their customer lifecycle management errands.

Sutherland’s has formed for the following types of service providers for outsourcing services for the telecommunications industry. Those are as follows:

• Traditional wire line

• Wireless/mobile

• Cable

• Satellite

• Data network operators

• Internet & online service providers (Sutherland Global Services 2009)

Why Sutherland Global succeeds?

How others make benefit?

How does Sutherland Global make impact on various sectors?

It is very essential for a company to make a good relationship with the customer and the company. This should be the main motto of the company to make a customer happy after getting solved all the issues of the customer. The important factor to set up nonstop or long term achievement is by giving importance to the customers. The main advantage of the company is to deliver quality services to customers and will certainly increase the selling opportunities for a happy customer. By this the company will grow autonomously. Some companies only focus getting new customers and ignore the value of the old customers. They forget that these old customers has helped them the chance to grow. They knew that getting new clients instead of the old ones will be more profitable. But they forget that generating new clients will be more expensive than they are already in the asset. (Customer Service BPO 2008)

Customer service always helps to make an industry more profitable. By keeping the old customers and gaining new ones, brilliant customer service is crucial to any business replica. Human resources professionals must be able to give explanation for the importance of customer service teaching and extract from organization broad support for a complete programme. (Reheer 1999)

The researcher establishes assumption, examines and analyzes the active facts and synthesizes the substantiation into a feasible hypothetical sculpt. Nuisance dealing with objectives, syllabus, course content, desires and style are but a small number of the vital issues that can be determined only through the theoretical or philosophical mode of crisis solving.

Even though a few authors give emphasis to the distinction among science and philosophy, the philosophic process of study follows fundamentally the similar steps as other methods of technical means of solving. The philosophic approach uses systematic facts as the foundation for formulating and test to do research suggestion. (Jerry R. Thomas 2005)

Business process outsourcing or else recognized as BPO is the procedure of leveraging skill vendors in a variety of third worlds or developing countries for doing a career which was on one occasion the dependability of the venture. Or in simple thoughts, it is the method of shifting an internal occupation practice to an outside or external corporation which might have an entirely dissimilar ecological locality. The reassigning of internal business processes, for instance, customer relationship organization, investment & secretarial, human resources and acquisition , to an external service source that improves these processes and administers these functions to an approved service criterion and, classically, at a abridged expenditure.

In general, the processes being outsourcing as division of BPO are backend works like call centres, medical transcription, billing, payroll processing, and data entry and so on. Most of these jobs are outsourced by first world nations like USA and UK to third world nations like India, Philippines, China, Malaysia and some eastern European countries. These nations have a good number of English speaking youth who are given accent and job related training before they are inducted at a salary which is much lesser than what their counterparts in first world nations would require. This allows first world organizations to get advanced profits and offer improved services by lowering the prices and by recruiting more work than they could possibly do. In addition to promoting the first world nations’ economic standard, business process outsourcing has also benefited third world nations by generating much needed jobs.

In the early days, BPO typically consisted of outsourcing processes such as payroll. Then it grew to take in employee reimbursement management. Now it includes a number of functions that are measured "non-core" to the primary business strategy. Now it is common for organizations to outsource fiscal and management processes, human resources functions, accounting and payroll and call centre and customer service performance. These outsourcing deals commonly engross multi-year contracts that can run into hundreds of millions of dollars. Frequently, the people performing the work within for the client firm are transferred and have converted into employees for the service provider. Leading outsourcing service providers in the BPO fields include US companies are Sutherland Global Services, IBM, Accenture, and Hewitt Associates, as well as European and Asian companies Capgemini, Genpact, TCS, Wipro, Infosys and many more and some of which also dominate the IT outsourcing business. (Ritu Thapar. 2010)

Business ethics is fairly ancient as a subject of personage and social apprehension, but it is comparatively newly fangled as an area of social logical analysis. The late 20th century was a deafening instance for business ethics. (Treviño and Weaver 2003)

No access to information: As doing the research, there was any access to information while browsing because of the company policy. The firm will only give access to their company policy only if t helps their employees, agents and trusted third party service providers. (Privacy Policy, 2010)

Lack of knowledge: It could be difficult completing the coursework with no knowledge about the sector or subject you have chosen.

Resistance in companies and people for sharing knowledge



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Tradde, Financial Liberalisation and Proverty

1. International Trade
Today there are so many issues which needs to be reformed, one of which is International Trade otherwise known as globalization.
International Trade is simply referred as the exchange of goods and services across national boundaries. International trade accounts for a significant share of gross domestic product (GDP) in most of the countries. The value of international trade in 2010 was $19 trillion which is 30% of the world GDP. It means about one third of the goods and services are exchanged globally around the world.
According to "Global Policy Forum", till 2030, 60% of the world economy will exchange their goods and services internationally.
Theories of International Trade

      2.1 Trade Liberalization
When countries are interested in International Trade they need to follow trade liberalization or free trade.
Over 200 years two opposing forces: the promotion of free trade and protectionism has been the main challenge of International Trade. Trade liberalization is the removal of the restriction or the reduction of barriers on the free movements of goods and services across countries. The main objective of trade liberalization is to remove tariff and non-tariff barriers. It includes the removal or reduction of both tariff and non tariff obstacles. The easing of such restrictions is often referred to as promoting "free trade." Trade liberalization encourages and facilitates countries to specialize and benefit from the principle of Comparative Advantage. Further, it has helped to increase the world output by which competition has increased and consumers are able to get products and services at lower prices.
The UK is an extremely open economy with a long history of promoting trade openness. By 2009, trade accounted for around 60% of the UK's national income. (Source: Statistics.gov, 2009.)
2.2 Poverty
Poverty simply means lack of income or consumption. According to World Bank, almost half the world, over three billion...



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Financial Markets

Abstract
Financial markets play an important role in contributing to the health and efficiency of an economy.   The combination of well-developed financial markets and institutions, as well as a diverse array of financial products and instruments, suits the needs of borrowers and lenders and therefore the overall economy.

Running head: FINANICAL MARKETS
Financial markets are - any type of financial transaction that you can think of that helps businesses grow and investors make money.   Financial markets such as those that trade stocks or bonds, and institutions provide opportunities for investors to specialize in particular markets or services, diversify risks, or both.   Together financial markets and financial institutions contribute to economic growth.  
The U.S. Federal Reserve System known as the Fed was established to provide an independent means to help ensure the stability of the financial system and set monetary policy by determining the size of the money supply and various interest rates.   Federal Reserve Chairman Bernanke is responsible for guiding monetary policy for the U.S. economy.   The Board of Governors oversees the operation of the Federal Reserve System and exerts a great deal of control over the financial side of the macroeconomy.    
Today, the U.S. economy continues to recover at a moderate pace, but unemployment remains unacceptably high. Monetary policy is supporting economic growth, but monetary policy has limits. In current circumstances, it would be particularly helpful if fiscal and regulatory policies were among the forces supporting economic growth. Central banks worldwide are facing economic circumstances that are similar to those in the U.S., and are taking innovative monetary policy actions that may influence the theory and practice of monetary policy in years to come. I believe that our accommodative monetary policy stance is keeping the U.S. economy on the path of economic recovery, and is contributing to both U.S. and...



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TEXT: Corporate Financial Management, Third Edition, by Douglas R.Emery, John D.Finnerty, and John D.Stowe.Published by Prentice Hall.Copyright ©2007 by Pearson Education, Inc 






CH17:





A1. (Coverage ratio) A firm’s latest 12 months’ EBIT is $30 million, and its interest expense for the same period is $10 million. Calculate the interest coverage ratio.







A4. (WACC with rebalancing) Nathan’s Catering is a gourmet catering service located in



Southampton, New York. It has an unleveraged required return of r = 43%. Nathan’s rebalances its capital structure each year to a target of L = 0.52. T * = 0.20. Nathan’s can borrow currently at a rate of rd = 26%. What is Nathan’s WACC?





CH18:



A2. (Extra dividend) Sensor Technologies pays a regular dividend of $0.10 per quarter plus an extra dividend in the fourth quarter equal to 40% of the amount that annual earnings per share exceeds $2.00.





a. If annual earnings per share are $2.80, what is the fourth-quarter extra dividend?





b. If annual earnings per share are $1.75, what is the fourth-quarter extra dividend?





B6. (Extra dividends) Alcoa recently announced a new dividend policy. The firm said it would pay a base cash dividend of 40 cents per common share each quarter. In addition, the firm said it would pay 30% of any excess in annual earnings per share above $6.00 as an extra year-end dividend.





a. If Alcoa earns $7.50 per share next year, what percentage of next year’s earnings would it pay out as cash dividends under the new policy?





b. For what types of firms would Alcoa’s new dividend policy be appropriate? Explain.





CH20:



A1. (Bond covenants) Dallas Instruments has a large bond issue whose covenants require: (1) that DI’s interest coverage ratio exceeds 4.0; (2) that DI’s ratio of tangible assets to longterm debt exceeds 1.50; and (3) that cumulative dividends and share repurchases not exceed 60% of cumulative earnings since the date of the issuance of the bonds. DI has earnings before interest and taxes of $70 million and interest expense of $14 million. Tangible assets are $400 million and long-term debt is $175 million. Since the bonds were issued, DI has earned $200 million, paid dividends of $40 million, and repurchased $40 million of common stock. Is DI in compliance with its bond covenants?





CH21:



A1. (Net advantage to leasing) Arkansas Instruments (AI) can purchase a sonic cleaner for $1,000,000. The machine has a five-year life and would be depreciated straight line to a $100,000 salvage value. Hibernia Leasing will lease the same machine to AI for five annual $300,000 lease payments paid in arrears (at the end of each year). AI is in the 40% tax bracket. The before-tax cost of borrowing is 10%, and the after-tax cost of capital for the project would be 12%.





a. What cash flows does AI realize if it leases the machine instead of buying it?





b. What is the net advantage to leasing (NAL)?


        The Haverly Company expects to finish the current year with the following financial results, and is developing its Annual Plan for next year.


 



HAVERLY COMPANY



THIS YEAR



INCOME STATEMENT



($000)



                                                                            $                                    %               



                            Revenue                                    $73,820                      100.0



                            COGS                                 31,743                              43.0



                                   Gross Margin                               $42,077                              57.0



 



                            Expenses:



                                  Marketing                                 $17,422                              23.6



                                  Engineering                       7,087                                9.6



                                  Fin & Admin                      7,603                              10.3



                                Total Expense              $32,112                              43.5



 



                            EBIT                                            $  9,965                              13.5



                            Interest                                   $  2,805                  3.8



                            EBT                                             $  7,160                   9.7



                            Income Tax                                 $  3,007                   4.1



                            EAT                                             $  4,153                   5.6



  



HAVERLY COMPANY



THIS YEAR



INCOME STATEMENT



($000)



                                       ASSETS                 LIABILITIES & EQUITY



Cash                                           $  8,940                            Accounts Payable                 $ 1,984



Accounts Rec.                            $12,303                            Accruals                                    $    860



Inventory                                 $  7,054                    Current Liabilities                 $ 2,844



    Current Assets               $28,297



                                                                              Long Term Debt                $22,630



Fixed Assets                                                        Equity



    Gross                                    $65,223                   Stock Accounts                  $18,500



    Accum. Deprec.        ($23,987)                  Retained Earn.              $25,559



    Net                                           $41,236                    Total Equity                              $44,059



 



Total Assets                              $69,533                            Total L&E                                   $69,533



 



     The following facts are available



       1. Payables are almost entirely due to inventory purchases, and can be estimated through COGS, which is approximately 45% purchased material. 



       2. Currently owned assets will depreciate an additional $1,840,000 next year.



       3. There are two balance sheet accruals.  The first is for unpaid wages.  The current payroll of $32 million is expected to grow by 12% next year.  The closing date of the year will be six working days after a payday.  The second accrual is an estimate of the cost of purchased items that have arrived in inventory, but for which vendor invoices have not yet been received.  This materials accrual is generally about 10% of the payables balance at year end.



       4. The combined state and federal income tax rate is 42%.



       5. Interest on current and future borrowing will be at a rate of 12%.



 



PLANNING ASSUMPTIONS



Income Statement Items



       1. Revenue will grow by 13% with no change in product mix.  However, competitive pressure is expected to force some reductions in pricing.



       2. The pressure on prices will result in a 1.5% deterioration in next year's cost ratio.



       3. Spending in the marketing department is considered excessive and will be held to 21% of revenue next year. 



       4. Due to a major development project, expenses in the engineering department will increase by 20%. 



       5. Finance and administration expenses will increase by 6%.



 



Assets and Liabilities



       6. An enhanced cash management system will reduce cash balances by 10%.



       7. The ACP will be reduced by 15 days.  (Calculate the current value to arrive at the target.)



       8. The inventory turnover ratio (COGS/Inv.) will decrease by .5.



       9. Capital spending is expected to be $7 million.  The average depreciation life of the assets to be acquired is five years.  The firm uses straight-line depreciation, and takes a half-year in the first year. 



      10. Bills are currently paid in 50 days.  Plans are to shorten that to 40 days.



      11. A dividend totaling $1.5 million will be paid next year.  No new stock will be sold.



 



     Develop next year's financial plan for Haverly based on these assumptions and last year's financial statements.  Include a projected income statement, balance sheet and a statement of cash flows.