Capital asset Essays

Beta. Beta constitutes a tool to measure the volatility or the regular risk, of a security or a portfolio in parallel to the whole market. The use of Beta focus in the capital asset pricing model, which determines the return of an asset based on the expected market returns. Another name to Beta is the beta coefficient. Beta index on January 2016 was 0.79% while in 2015 was 1.01%. A low beta stock will protect a company in a general downturn. ROE Return on Equity. Return on equity (ROE) is the

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

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

is 2.2. Therefore, Cracker Barrel has enough current assets to cover their liquidity ratio, so they are providing themselves an excellent financial stability. Above all, the current ratio and acid test ratio includes immediate access to convert to cash. On the other hand, Cheesecake Factory has a financially stronger company with a greater amount of current ratio to cover their liabilities. Working Capital The working capital is the money

following questions. 1. Explain the components of a financial market and its relevance to Jagdambay Exports. Be explicit and explain to the CFO how financial markets differ from markets for physical assets and why that difference matters to Jagdambay Exports. 2. Explain the relevance of money markets and capital markets for Jagdambay Exports. 3. Analyze Jagdambay exports and advise how the CFO should consider the primary market and secondary market in the expected transaction. Base your advice, in part

The management of working capital is essential for the company to remain liquid enough to meet its short term creditors. But can proper working capital management make a company more profitable than a competitor who does not manage its working capital? What are the different metrics and processes that need to be improved to increase profitability through working capital management? This thesis is restricted to the different processes around working capital management and will concentrate on a few

Newmont is a faster turnover at 21 Days and Freeport is slightly longer at 52days. In the case of this industry specifically the faster they are able to turn over inventory the more money the company is able to free up allowing for a better working capital for the

show the shareholders three major things: • Assets (These are things that are owned by ASDA) - Materials that an entity has acquired or purchased, and that has money value (its cost, book value, market value, or residual value). An asset can be physical, such as cash, machinery, inventory, land and building. Assets shown on their ASDA’s balance sheet are usually classified according to the ease with which they can be converted into cash. • Fixed assets are owned by ASDA and are expected to be retained

pricing and costing principles. 4. Identify resources to obtain start-up capital. Introduction - Handy financial terms Accounts payable A current liability representing the amount owed by a business to a creditor for the merchandise or the services purchased on open account, i.e. Without giving a note or other evidence of debt. Accounts receivable Money owed to a business enterprise for merchandise bought on open account. Asset Anything owned by an individual or business that has commercial or exchange

2.2 Opportunities (advantages) associated with real estate Companies and citizens consider real estate as one important financial asset. One good reason for the entry and increasing popularity of real estate in an investor’s portfolio is the observed protection from inflation. In order to show the advantages of investors in real estate, it is important to compare real estate to stocks or bonds. In case of stocks the real returns have a negative response to inflation in a short-term period as

The following example will provide further explanation: some entities, for instance a supermarket, may have a lot of cash trade. Due to this reason, it is a possibility that their current assets ratio of less than 2 : 1. This is not likely to be an issue for them because sufficient amounts of cash is probably collected daily through the checkouts. On the other hand, the airline industry, a low current ratio may not necessarily mean that a

assess the capital structure of Modern Technology. Debt ratio: Modern Technology’s is decreased from year 2014 to year 2015. The lower debt ratio usually implies the company has a financially stable business and that the company is performing well. Times-interest earned: Modern Technology’s has increased from year 2014 to year 2015. This suggests the company’s income is able to pay for its interest payment when it comes due. Under asset management efficiency ratios, we look at total assets turnover

This includes, reduction in costs & capital spending, improving operational efficiencies through continued focus on innovative technology, shifting focus to premium locations that generates 30% rate of return at $40 per barrel of oil prices and improving balance sheet. Let us look at these initiatives in details. Reduction in costs and capital expenditure In the low commodity price environment, EOG remains grounded in terms of reduction in operating as well as capital expenditure. After having reduced

the business by equating the amount of current assets to current liabilities. Although current ratio fluctuates from industry to industry, is preferred to have at least one dollar of current assets for every dollar of current liabilities. Kohl's has the advantage over J.C Penney, as Kohl's current ratio is 1.87 in comparison to J.C. Penney?s ratio of 1.67. Kohl?s Corporation can pay all of its current liability and still have a positive working capital better than J.C.

much current asset one firm has against its one dollar worth of current liabilities. It shows us how efficiently and quickly one firm can convert its assets into cash paying the short term liabilities. From the table, we can see that at the year of 2017 RAK Ceramics Ltd. has a current ratio of 1.97. Current ratio shows us how much current assets the firm has against its current liabilities. However, too much current ratio means there’s is idle assets available and the use of assets is inefficient

This is because, the funds that used to be paid to and received from such investments will no longer form part of the cash flow streams. Such investments are very important in boosting the working capital of the business. Increase in furniture and fittings Furniture and fittings are part of fixed assets and their increase has a negative impact on the liquidity of the company. They are seen to have increased from $300,000 in the first year to $500,000 in the last year. This means that money is now

the financial statements and can judge how risky a business is by fluctuating profits. Lenders and Other Creditors (institutions like banks and other lending institutions) use financial statements to decide whether to help the company with working capital or to issue debt security to it. 2. The three committees established by the board are the Audit, Nomination & Governance and Compensation committees. The audit committee is charged with the oversight of financial reporting and disclosure. A nomination

measure the company's ability to pay off its short-term debts as they come due by using the company's current or quick assets, • Current ratio= current assets current liabilities AVP= 1.34 ULTA= 2.9 REVLON= 15.86 • Quick ratio = ( current assets - inventory) current liabilities AVON= .94 ULTA= 1.12 REVLON= 15.26 The safe rate for current ratio is 1 or up, that means the current assets can cover the current liabilities, we see that the current ratio for AVP is 1.34 which means it is it has ability to

Capital lease equipment recorded as an asset, depreciation, and books. Because is to pay on the loan, payment record for the account of overall loan time limit. Operating lease record for operating expenses, no relevant expenses. In the review, in a capital lease, the equipment has been booked and the corresponding assets, long-term liabilities and operating leases, it is recorded as expenses. Lease equipment advantage, most enterprises, do one of two ways, either through the financing lease or

relationship between profit and capital budget expenses. Capital budgeting is a step by step process that is used to determine the merits of investment opportunities. Deciding whether or not to accept an investment opportunity involves determining the investment rate of return that such a project will generate. (Gad 2012). New opportunities are evaluated in terms of does it contribute to the mission of the HCO. Within a HCO the finance department is who will prepare the capital budget. It will show