Investment Objective – It is important to know the investment objective of any mutual fund before investing in it. The investment objective describes the objective behind launching a particular mutual fund scheme and how it will be attained. It is vital for investors to read it well because the investment objective of the scheme could be far different than the ones suiting investor’s requirement. Asset Allocation – In this part it is specified how a particular mutual fund scheme will allocate its assets under management to the respective asset classes under normal market conditions. Rather than mentioning a fixed percentage to be invested in a particular asset class, a range is provided indicating the minimum and maximum coverage to that
The accounting was skewed because of two issues. The first is that its trading business involved complex long term contracts which was accounted by using mark-to-market accounting. This accounting methodology was challenging because it overstated its operating income by recognising the present value of stream of future contracts as revenue. The second challenge was the unethical practices being followed in SPE’s to hide debts. • Diversification Strategy Enron always motivated new ideas and innovation in its organization.
The purpose of this study is to differentiate what WACC stands for, what it represents and how it influences management to make decisions. The study seeks answer the research question, Are WACC and ENPV are conected and if so explain everything connected to their interdependence? The goal is to use current knowledge and new discoveries in the field to proove if there is interconnection between these two and to explain how companies can use WACC and ENPV to be more profitable. The WACC stands for Weighted Average Cost of Capital. It is the measure of the average cost of capital a firm is paying for it's debt.
A buy-side engagement shall include the following: Target Identification – it usually requires significant knowledge or market research to assess the potential firms which match the criteria of the buyers. Target Assessment – This involves mandatory research on the financial performance of the target as well as the existing management team for determining if it fits in the overall future plans of the acquirer. Valuation – This typically includes value of the target based on the position in the specific industry or what the buyer is willing to pay. Structuring – This involves making assessment on what capital structure suits best for the buyer while satisfying the expectations of the target. Letter of Intent (LOI) – This step consists of crafting and presenting the LOI on behalf of the buyer.
The higher valuation of the bidders, compared to the true value of the target, would not have been made by rational bidders. Thus, managerial motives are important determinants for the outcome of the M&A as manager may act to maximize their own utility and engage in ‘empire building’ (Trautwein, 1990) instead of their shareholders’ value. Managers may invest the free cash flow in projects such as acquisitions with negative net present value if that would lead to increased personal utility rather than maximize shareholder value. These free cash flows, which are generally found in the reserves, should rather be paid out as to shareholders in the form of dividends if the firm is to be effective and to maximize the stock price (Jensen,
Diversification is the most important component in reaching long-term financial goals. It is important that investors diversify among different asset classes such as stocks and bonds. This decision is usually made in asset allocation served as the core strategic overlay in providing a benchmark before any further tactical or market timing positioning of securities. Diversification could occur across asset classes and geographically too meaning international stocks, allowing for construction of asset combinations with return and volatility characteristics that are acceptable to many investors with different risk tolerance levels and investment goals. When selecting securities to invest in another way of diversifying is to buy securities in the same asset class that are not affected by the same variables such as grocery stores, airline companies, entertainment companies, technology, they are completely different businesses.
To advise Pronto PLC’s management, there are certain key factors which impact the reasons that are responsible for choosing the right source of finance from a long-term and short-term perspective. Financing can come in the form of debt or investment, and finance terms can vary significantly. These decisions are important for the firm’s valuation and assessment of its resources. Therefore, following are some of the important factors that should be considered while deciding on the source of finance: Risk: This should be considered when the company is unable to meet the financial commitments relating to a specific source of finance. When it comes to choosing suitable funding, the company must thrive to minimise the overall risk associated with
Companies tend to struggle and end up being caught in expensive and frustrating cycles of organisational change. The continuous search for new and different organisational forms is driven by the basic changes in the nature of competition and economy. EY organisation has set out the objective of becoming the leading global professional services organization by 2020. This objective was set in response to the changes that have been occurring globally, with the vision that by becoming a leader in professional services, it will allow them to be in a position of success and offer their shareholders more opportunities. The objective, has been communicated throughout the global EY
WHAT OBJECTIVES SHOULD THE STRATEGY SEEK TO ACHIEVE? Setting a new product’s price is tricky as there are no precedents to acquire information from. If the price is set too high, it can have adverse effect on sales volume and if the price is set too low, the sales revenue might not cover the costs. So to establish the price of a new product entrepreneurs can choose from three strategies: penetration, skimming and life cycle pricing. Penetration For a new product to be successful, it must penetrate the market where a lot of similar products are in competition to get accepted.
The decision of entry time is a dilemma between the risks of premature entry and the lost advantages of late entry. If the company enter the market on a small-scale mode, then it builds a footing to learn, if a large-scale mode, then it obtain first mover benefits by the analysis of Aguilera (2004) Environments further analysis the international market entry according to some authors. According to Johnson et al. (2008) one of the major steps that need to analyse before international expansion is environmental analyse. The company exists in political, economical, social, technological, environmental and legal environments where the situations of environments are changing every time.