Analyses may be criticised for conveying a false sense of accuracy by including quantified values for non-monetary effects such as the value of forecast savings in human lives. Such values are often controversial and may diminish the authority of the analysis as a whole. On the other hand, analyses may be criticised for excluding intangible effects. Downs and Larkey (1988) state
If the cash from operations exceeds cash flows from investment, that reflect a good sign of firm’s performance. Besides, a questionnaire will be created if the cash used from investing activities exceeds the cash provided from operating activities in the short term. However, a problem will rise about whether the ability of the firm could still generate cash if this situation happens too often. Marshall (2014) gives a conclusion that the statement of cash flow delivers important financial data to users that is really difficult to find in other financial statements such as the accrual basis income statement. Although this statement under accrual based accounting is related to revenue and expense, it does not contain information about cash flow form the three above activities.
The most well-known and widely explained models on underpricing is based on asymmetric information among investors. These include the winner’s curse hypothesis, Information Revelation Theories, Principal-Agent Models and underpricing as a signal of firm quality. Others are based on institutional reasons such as legal liability and behavioral explanations like investor sentiment (Ljungqvist, 2004). Theories that may potentially be specific to emerging growth firms, which tend to be lesser known, are the ones based on valuation risk and underpricing as publicity stance. Firms that are less known or could not indicate a long history of profitability may usually be underpriced due to unpredictable risk associated in valuation (Damodaran, 2009).
Delinquency Delinquency refers to a situation when a loan payment to an MFI is past due (CGAP, 2001). Delinquency results in a slower turnover of the loan portfolio and an inability to pay expenses due to reduced cash flow. If the loan principle is not recovered at the scheduled time, loans to other borrowers cannot be made and payment of any expenses may also have to be delayed. Also delinquent loans result in postponing or lost interest revenue (Ledgerwood, 1999) Delinquency is deliberate for the reason that it signifies an amplified risk of defeat, caution of effective problems, and could assist forecast how much of the collection will ultimately be misplaced because under no circumstances get hold of reimbursement. There are various categories
Outline the similarities and differences between the Single Index Model (SIM) and the Capital Asset Pricing Model (CAPM). Justify which of the two models makes a better assessment of return of a security (25 marks). To reduce a firm’s specific risk or residual risk a portfolio should have negative covariance or rather it should have no variance at all, for large portfolios however calculating variance requires greater and sophisticated computing power. As such, Index models greatly decrease the computations needed to calculate the optimum portfolio. The use of such Index models also eliminates illogical or rather absurd results.
Spend down is an inefficient, wasteful, and very costly manner of managing limited Coast Guard resources. It gets even more complicated if the federal government is on a continuing resolution which is more the rule than the exception these days. But that’s an entirely different matter for which we as an organization have no control over anyway. 3. How spend down usually works is that the local comptroller’s office, in conjunction with the command will establish
Conservatism magnifies lower revenue and this is not just considered as a practical reason for the undesirable conservatism, it generates disorders in the process of recognizing revenue. Lafound and Watts, “states that conservatism is a conflict of interest among investors and creditors and they prefer to use less conservative approaches”. However, IASB and FASB conclude that conservatism should be excluded from the qualitative characteristics of accounting information (Chi 2008). Nevertheless, if these demands are carried out, this exclusion can change the development of future accounting standards. If the FASB was successful in eliminating conservatism, then it would increase information asymmetry between investors, not reduce it.
The selection of cost drivers may be problematical. Even with this method, some indirect costs remain difficult to assign to products, such as the chief executive's salary for example. These costs are then unallocated and called ‘business sustaining’. The ABC system is not the perfect solution to allocate every single overhead cost. Some of them remain hard to identify and assign to an activity within the company.
As such government introduces policies like pollution tax, landfill tax, climate change levy etc . For instance by internalizing the firm the externality, i.e making the firm bearing the social cost of production will eventually lead the firm to produce at the optimal output at Q1. However in practice an optimal level of pollution is difficult to determine because accurate estimates are often difficult to obtain specially when technology of pollution is changing and the various new pollutants are unknown . The techniques available for regulating pollution are imperfect in themselves. Even the optimal level of pollution control is known, there are both legal and technical impediments to achieve that level through
One of the journal that I have choose to explain the trade-off theory of capital structure is “A survey of the trade-off theory of corporate financing” which is written by Chikashi TSUJI. According to this journal, the author show that the study of the trade-off theory of capital structure and the survey of the experiential evidence to support the trade-off theory for the US capital market and other international countries. Trade-off theory of capital structure is the theory that a company used to balance the company’s costs and benefits by determining the amount of debt finance and amount of equity finance. The company also control the balance among the tax saving benefits of debt and the dead-weight costs of bankruptcy. The trade-off theory