THIS QUESTION IS DUE IN EXACTLY 1 HOUR AND 45 MINUTES. I WILL PAY EXTRA 10 DOLLARS IN TIP IF SOMEONE TYPES THE EXACT ANSWER REQUESTED.

PLEASE RESPOND TO THE EACH AND EVERY QUESTION IN A TOTAL OF 3-4 COMPLETE THOROUGH PARAGRAPHS (ALL TOGETHER) IN YOUR OWN WORDS. SEE ATTACHED FOR THE EXTRA INFORMATION ABOUT THE COURSE AND A SUMMARY OF OBJECTIVES.

?1.Propose two (2) applications of knowledge that you have learned in ADVANCE CORPORATE FINANCE COURSE that you could apply to your current career as a retail store manager.

?2. Rate the three (3) most important concepts that you learned in ADVANCED CORPORATE FINANCE in order of importance (one [1] being the most important). Provide a rationale for your ratings.

Go to Yahoo! Finance's Website, located at http://finance.yahoo.com/. Select a publicly traded company in which you are interested, and figure out its symbol (e.g.: Apple-AAPL). Insert the company symbol into the search bar on the left-hand side where it reads \"Quote Lookup\" and click \"Go\". Once on the stocks trading page, look for the vertical blue menu on the left of the page. Scroll down to \"COMPANY,\" click on the link titled \"Key Statistics,\" and review basic financial metrics for the chosen company. Discuss two (2) key financial metrics used by investors to evaluate the riskiness of a stock. Select the financial metric that you would be most likely to use and explain your reasoning. Support your selection with one (1) real-world example. Examine the concept of risk and return as it applies to financial instruments. Determine the relationship between the two (2) and whether or not the relationship between risk and return always holds true. Provide a rationale for your response. Apple is one of the leading firms operating in international arena, its business involves designing, creation and marketing of mobile phones, personal computers related services and software. Apple is known for its innovation; its major revenue comes from sales of smart phones. Apple market share across the world in Smartphone market is around 17% which is second highest in one of the fastest growing industry. Apple also has the highest profit share in smartphone industry by taking approximately 57% of the entire industry profits. Apple's IOS also has the second highest market share in smartphone OS sector. Apple has fully clad profit margin of 22% while profit margin of Black Berry for example has unceasingly dropped and it has negative profit margin in the earlier year in which displays that company is not able to produce profit due to the fierce competition in mobile phone market. Apple has been able to maintain its margin because of great product lines, respectable customer service and faithful customers which are ready to pay high prices for its worth products. Apple also has provided reliable return on equity of approximately 31% to its shareholders. Apple has smaller amount debt responsibility in its capital structure which makes it free from haphazard risk which is allied with financial agony that is the risk of company being bankrupt. Overall, the company is solvent and has lower debt than industry average. Apple has rigorous financial health and it has provided good return to the stockholders. The company provides motivation to make long term investment to have higher returns. Risk and return are the two most important pieces evaluating any financial mechanism. Return on financial mechanism is calculated by considering both cash flows received on instrument and capital appreciation on it, whereas risk is measured as standard deviation on those returns. 1. Most analysts agree AAPL is driven by iPhone sales. Penetration into new markets, particularly the success of its venture in China, will largely determine if the company is able to produce strong year-over-year growth. The company can also explore new arenas, such as game consoles, streaming services, watches, other \"wearables,\" and the TV/DVD/set-top box markets. And while these may produce avenues of future growth, they will not drive near-term (the next 18 months-two years) earnings growth like the expected growing domestic demand for the iPhone. 1. In April 2014, the company announced a large capital return program in the form of share repurchases and dividend increases that rewarded shareholders. The expectation is that will be another similar announcement in 2015, the impact of which will be felt into 2016. 2. Apple's trailing price-to-earnings ratio is 17.1x (just slightly above the Standard & Poor's valuation) with expected growth to outpace the market's, making it an extremely attractive valuation. 3. A strong cash position on its balance sheet is cited by many as a catalyst for growth, or at the very least, continued share repurchases. It is hard to compete with strong stock appreciation and anticipated continued strong growth, but there may be risks investors are overlooking. Again the focus is on the iPhone for near-term risks. A slowdown in the growth and penetration of the smartphone market could be exponentially more painful for Apple, as over half its current revenues come from its iPhone products. A slowdown in any of the following could materially reduce Apple's multiple and stock price: overall smartphone market growth, iPhone market share growth, or penetration into China. Considering that analysts' predictions for iPhone sales are bullish for this year, next year could show negative comps or a year-over-year decline, which would effectively knock down the stock's multiple. Future growth is dependent on new product categories or on a product that would redefine a current category. Some skeptics wonder why the company is so keen on returning its cash via share repurchases and dividends instead of re-investing into research and development or making acquisitions. There is the risk that the company will be unable to sustain its \"innovative\" strategy in the future because it is not putting that cash to work today to discover the technology of tomorrow. Examine the manner in which investment banks previously used leverage to multiply profits and thus endanger the entire global financial system. Determine the role that the 1999 elimination of the Glass-Stegall Act played in endangerment of the global financial system. Discuss the role of Special Purpose Entities (SPEs) in the fall of Enron. Examine the method in which Enron used SPEs to hide its liabilities. Determine the key reasons why accountants, investors, and creditors found it challenging to determine the real assets and liabilities of the company. In short, prior to 1933 and specifically during the time of the stock market crash and Great Depression that started in 1929, banks were using depositor dollars to invest in increasingly risky equities. The investment bank and commercial bank activities had no firm delineation, which occurred once again after the repeal of the Glass-Steagall Act in 1999. This act was designed to keep bank deposits away from investments. More specifically, Investment Banks and Commercial Banks were clearly delineated; Commercial Banks could \"accept depositor's money and make loans but could not become involved in selling or trading securities or underwriting\" (Peavler, n.d.). The repeal of the Glass-Steagal Act allowed commercial banks to again enter into risky investments with depositor dollars as they attempted to increase profits. It's a fact: investment banks did AGAIN and continue to use depositors' money to make risky investments (Peavler, n.d.). Thank goodness at least for the small $100K insurance provided by the FDIC, an organization created with the Glass-Steagal Act. High risk mortgages, loans issued to those that could not afford them, were packaged and repackaged and sold on the market. Investment banks were actually borrowing in order to invest in even higher risk securities. Eventually the defaulted loans could not be ignored and many investment banks with strong ties and partnerships to commercial banks went under. Since the 1970s Special Purpose Entity (SPE) transactions provided a specific and legitimate purpose for corporations: isolating financial risk and providing less-expensive financing. In historical practice, because SPEs do not engage in business other than the ones for which they are created, and their activities are backed by their corporate sponsors; they are able to raise funds at lower interest rates than those available to their parent company. Enron used these offbalance sheet arrangements for more devious purposes. Enron's demise began when investors became aware of subsidiary companies created solely to hide large liabilities for the corporation. In reality, Enron had created around 500 such Special Purpose Entities (SPE) to deceive shareholders by hiding the parent corporation's liabilities and creating additional income (when no wealth actually existed), both of which made the preparation and publishing of high performing financial statements possible (Reinstein & Weirich, 2002). The initial publicity of these facts soon made Enron stock worthless and damaged the confidence of investors, having a far reaching impact on the stock market as a whole. Faced with both a Securities and Exchange Commission and Congress investigation, along with numerous angry shareholders, Enron soon filed for bankruptcy and closed its doors. Former CEO Jeffrey Skilling was eventually convicted on 19 counts, including money laundering, bank fraud, insider trading and conspiracy, and sentenced to over 24 years in prison (Forbes, 2013). Kenneth Lay was eventually convicted on 6 counts of fraud and faced up to 45 years in prison, but passed away in 2006 before the final sentencing hearing (Forbes, 2013). Go to Yahoo! Finance's Website, located at http://finance.yahoo.com/, and navigate to the page of the publicly traded stock you chose in Week 1. Then, click on the \"SEC Filings\" link on the left-hand side of the page under \"COMPANY\". Review the debt structure of the company you have chosen by reading the company's latest quarterly report and determining whether it has any convertible bonds or long-term debt. Recommend two (2) actions that the selected company can take in order to optimize its capital structure. Provide a rationale for your recommendation. Recommend two (2) uses of a tax shield that can improve return on the equity of a firm. Determine what the optimal degree of leverage would be as far as the firm's capital structure is concerned. Suggest two (2) strategies you would use to optimize shareholder value by altering the firm's capital structure. Long-Term Debt is essentially the debt that is due in more than a year. Apple Inc's long-term debt for the quarter that ended in Dec. 2015 was $53,204 Mil. Apple Inc's total assets for that quarter that ended in Dec. 2015 was $293,284 Mil. Apple Inc's long-term debt to total assets ratio for the quarter that ended in Dec. 2015 was 0.18. Apple Inc's also increased from Dec. 2014 (0.12# to Dec. 2015 #0.18) and this may suggest that Apple Inc is progressively becoming more reliant on debt to grow their business. The order book for Cupertino, California-based Apple's offering, a device of investor demand for the debt, reached about $50 billion. Average profits on investmentgrade debt worldwide dropped to a record-low 2.45 percent yesterday from 3.37 percent a year ago, according to Bank of America Merrill Lynch's Global Corporate Index. Apple's $1 billion of floating debt due 2016 pays 5 basis points, or 0.05 percentage point, more than the three-month London interbank offered rate, and its $2 billion, five-year floater yield 25 basis points. Apple is moving towards a capital structure that primarily uses equity as the revenues to finance operations. In 2004, Apple paid off all of their long term debt, basically making equity the sole source of capital for the company. This allows the organization of Apple as low geared and solvent-long term. This gives itself litheness in obtaining long term debt if necessary to finance future operations. the company has convertible bonds. The company can optimize its capital structure by using all the amount of money it has as onshore on its buybacks. another way is by raising a very significant debt for the company to engage in very large buybacks. The rationale for this is that this is ideal for offering the required balance between the company's debts and its range of equity. The debt tax shield has stimulated decades of debate regarding firm valuation and the cost of capital. In 1963, Modigliani and Miller ~hereafter MM! first hypothesized that the tax benefits of debt increase firm value and decrease the cost of using debt capital. In 1977, Miller countered that firms pass out the tax benefits of debt to creditors through high interest rates to compensate them for the personal tax disadvantage of debt. Others have proposed that the financial distress costs of debt offset at least some of the tax benefits, e.g., DeAngelo and Masulis, 1980. A priori, therefore, the firm valuation and capital structure implications of the debt tax shield are unclear, so empirical investigation is required. For most companies, financial structure and capital structure change by a small amount unceasingly. This is because the stated values of several structural mechanisms may be especially liquid from time to time: short term liabilities, long term liabilities, and even retained earnings. For the short term, a company can purposefully increase leverage by taking out loans or issuing bonds. It can shortly decrease leverage and increase equity by issuing and selling new shares of stock. if these actions were to not be done, a lucrative profit-making company will gradually reduce leverage as long term loans and bonds are paid off, and as reserved earnings from profits grow. Debt Financing' or 'Issuing of Debenture' results in interest expense for the borrower which is a tax deductible expense. A company can claim interest as an expense against its profits whereas dividends paid to equity or preference shareholders are paid out of net profits after taxes. In short, debt financing such as debentures, term loans etc. avails tax benefit to the borrower which is not there in case of equity. Cheaper Source of Finance: As discussed above, the interest cost incurred on debt financing such as debentures or term loans enjoys a tax shield which indirectly lowers the cost. Effective interest cost of a 12% debenture with current tax rate of 30% is 8.4% {12% * (1-30%)}. Underlying assumption behind the calculation is that the entity is making profit at least to the tune of total interest payment. Use the Internet to research the role of credit default swaps (CDSs) and other derivatives in the financial collapse of 2008. Examine the derivatives that were involved in the financial collapse of 2008. Speculate on the most likely cause(s) of the collapse. Support your position with one (1) example. Swaps The subsidiaries market includes more than simply put and call choices. There are likewise contracts including swapping altered loan cost installment streams for flexible or drifting financing cost installment streams. An organization may have acquired cash under a flexible loan fee security, for example, a home loan and is currently dreadful that the financing cost is going to rise. It needs to ensure itself against ascends in the loan fees without experiencing the renegotiating of the mortgage. The organization or individual at risk for a flexible rate searches for somebody who will pay the customizable interest installments consequently for receipt of settled rate installments. This is known as a swap. The starting point of swaps can be distinguished as an arrangement made amongst IBM and the World Bank. For additional on swaps and their history see Swaps. Other Derivative Securities There are numerous different contracts that organizations may discover of interest. A top is an agreement that secures against ascends in the loan cost past some point of confinement. Moreover a few organizations may need insurance against a value drop past some level. This kind of agreement is known as a story. A swaption (alternative on a swap) gives the holder the privilege to go into or the privilege to counteract of a swap. Likewise there are subtitles and floortions (alternatives on tops and choices on floors). Forward Contracts and Futures Swaps, tops, and floors are late advancements in the subordinates' markets. The subsidiaries advertise customarily included forward contracts notwithstanding choices (puts, calls, warrants). A forward contract included a pledge to exchange a predetermined thing at a predefined cost at a future date. For instance, if an American organization will have need of 1 million British pounds six months from now they may stay away from introduction to conversion scale hazard by going into a forward contract for the pounds now. The forward contract takes whatever frame the two gatherings consent to. There is additionally a business opportunity for institutionalized forward contracts, which is known as the prospects market. The institutionalization makes conceivable a more extensive business sector with more noteworthy liquidity and productivity. Frequently the fates markets dispense with the ties between particular gatherings, the gathering and the counterparty, and the danger that the other won't not satisfy the agreement. In the fates market everybody manages the clearinghouse who ensures satisfaction. Alternatives In the alternatives market there has built up some phrasing that is to some degree scaring to the uninitiated. A call alternative is the privilege to purchase an offer of a stock, the fundamental security, at a predefined cost, called the activity cost or the strike cost. A put choice is the privilege to offer an offer of a stock at a predetermined value, the activity cost or the strike cost. There is a constrained time for the activity of the call alternative. An American alternative can be practiced whenever up to and including the termination date. A European alternative must be practiced on the close date. The estimation of a call choice whenever relies on. At the point when organizations got to be included theory in the subordinates market it was very little not the same as in the event that they were out-and=out betting. Assume organizations started to wager intensely on the Kentucky Derby. Envision GM putting down a $500 million wager on the Derby and Microsoft gambling $100 million et cetera. At that point on Derby day there may be some real organizations that would go belly up as a consequence of their betting misfortunes. Others may be coming in cash. There could be a money related emergency on Derby day if Wells Fargo and the Bank of America et cetera wager the wrong way. Faulting the monetary emergency of 2008 for CDS's eventual like accusing a Derby Day emergency in the speculative circumstance depicted above on the Kentucky Derby. The issue was not the instruments but rather the organizations being vigorously included in betting. Rather than a speculative case consider what happened when American organizations in the 1980's found that they were liable to a danger because of their managing in outside exchanges. Ordinarily in remote exchanges there are crevices between when a business contract is gone into and when the cash shows up in their records in dollars. Some organizations set up divisions to handle the exchange chance and made numerous a large number of dollars in hypothesis in the outside coin markets. Others were wary and quickly sold the future outside coin installments for dollars now. Those that theorized found to their distress that a gigantic benefit in one year did not imply that they could rely on benefits in ensuing years. Numerous caused dissolvability undermining misfortunes in their outside money hypothesis. Question two Feeble and fake guaranteeing rehearses Affirmation given to the Financial Crisis Inquiry Commission by Richard M. Bowen III on occasions amid his residency as the Business Chief Underwriter for Correspondent Lending in the Consumer Lending Group for Citigroup (where he was in charge of more than 220 expert financiers) proposes that by the last years of the U.S. lodging bubble (2006-2007), the breakdown of home loan guaranteeing principles was endemic. His affirmation expressed that by 2006, 60% of home loans obtained by Citi from about 1,600 home loan organizations were "deficient" (were not endorsed to strategy, or did not contain all approach required reports) - this, in spite of the way that each of these 1,600 originators was contractually mindful (guaranteed through representations and warrantees) that its home loan starts met Citi's measures. Additionally, amid 2007, "blemished home loans (from home loan originators contractually bound to perform endorsing to Citi's models) expanded... to more than 80% of production". In discrete affirmation to Financial Crisis Inquiry Commission, officers of Clayton Holdings the biggest private credit due constancy and securitization observation organization in the United States and Europeaffirmed that Clayton's survey of more than 900,000 home loans issued from January 2006 to June 2007 uncovered that hardly 54% of the advances met their originators' guaranteeing models. The investigation (directed in the interest of 23 speculation and business banks, including 7 "too huge to come up short" banks) moreover demonstrated that 28% of the tested credits did not meet the insignificant gauges of any backer. Clayton's investigation further demonstrated that 39% of these advances (i.e. those not meeting any backer's insignificant endorsing principles) were hence securitized and sold to investors. There is solid proof that the GSEs - because of their expansive size and market power - were significantly more successful at policing endorsing by originators and constraining guarantors to repurchase flawed credits. By difference, private securitizes have been far less forceful and less compelling in recouping misfortunes from originators for the benefit of investors. Savage loaning Savage loaning alludes to the act of corrupt banks, luring borrowers to go into "perilous" or "unsound" secured advances for wrong purposes. An exemplary draw and-switch strategy was utilized by Countrywide Financial, publicizing low financing costs for home renegotiating. Such advances were built into broadly itemized contracts, and swapped for more costly credit items upon the arrival of shutting. Though the ad may express that 1% or 1.5% interest would be charged, the shopper would be put into a customizable rate contract (ARM) in which the interest charged would be more noteworthy than the measure of interest paid. This made negative amortization, which the credit customer won't not see until long after the advance exchange had been culminated. Countrywide, sued by California Attorney General Jerry Brown for "uncalled for business rehearses" and "false promoting" was making high cost home loans "to property holders with frail credit, movable rate contracts (ARMs) that permitted mortgage holders to make interest-just payments". When lodging costs diminished, mortgage holders in ARMs then had minimal motivation to pay their regularly scheduled installments, since their home value had vanished. This brought about Countrywide's monetary condition to break down, at last bringing about a choice by the Office of Thrift Supervision to grab the moneylender. Previous representatives from Ameriquest, which was United States' driving wholesale lender, depicted a framework in which they were pushed to distort contract records and after that offer the home loans to Wall Street banks willing to make quick profits. There is developing proof that such home loan cheats might be a reason for the emergency. Deregulation Additional data: Government approaches and the subprime contract emergency Faultfinders, for example, financial expert Paul Krugman and U.S. Treasury Secretary Timothy Geithner have contended that the administrative structure did not keep pace with money related advancement, for example, the expanding significance of the shadow managing an account framework, subsidiaries and wobbly sheet financing. A late OECD study propose that bank direction in light of the Basel agrees support flighty business practices and added to or even fortified the money related emergency. In different cases, laws were changed or implementation debilitated in parts of the monetary framework. Key illustrations include: Jimmy Carter's Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) eliminated various limitations on banks' money related practices, widened their loaning powers, permitted credit unions and reserve funds and advances to offer checkable stores, and raised the store protection limit from $40,000 to $100,000 (accordingly possibly decreasing contributor examination of moneylenders' danger administration policies). In October 1982, U.S. President Ronald Reagan marked into law the Garn-St. Germain Depository Institutions Act, which accommodated customizable rate contract advances, started the procedure of managing an account deregulation, and added to the reserve funds and credit emergency of the late 1980s/mid 1990s. In November 1999, U.S. President Bill Clinton marked into law the Gramm-Leach-Bliley Act, which canceled procurements of the Glass-Steagall Act that forbid a bank holding organization from owning other monetary organizations. The annulment adequately evacuated the division that beforehand existed between Wall Street speculation banks and safe banks. Most experts say that this annulment specifically added to the seriousness of the Financial emergency of 2007-2010. However, there is point of view that nullification had little effect on the grounds that the establishments that were incredibly influenced did not fall under the ward of the demonstration itself. In 2004, the U.S. Securities and Exchange Commission loose the net capital standard, which empowered venture banks to generously build the level of obligation they were tackling, powering the development in home loan sponsored securities supporting subprime contracts. The SEC has yielded that self-direction of speculation banks added to the crisis. Money related organizations in the shadow keeping money framework are not subject to the same control as storehouse banks, permitting them to accept extra obligation commitments in respect to their budgetary pad or capital base. This was the situation regardless of the Long-Term Capital Management failure in 1998, where a profoundly utilized shadow establishment fizzled with systemic ramifications. Controllers and bookkeeping standard-setters permitted vault banks, for example, Citigroup to move critical measures of advantages and liabilities wobbly sheet into complex lawful elements called organized speculation vehicles, veiling the shortcoming of the capital base of the firm or level of influence or hazard taken. One news organization evaluated that the main four U.S. banks will need to return between $500 billion and $1 trillion to their asset reports amid 2009. This expanded vulnerability amid the emergency in regards to the money related position of the major banks. Off-monetary record elements were additionally utilized by Enron as a feature of the outrage that cut down that organization in 2001. As ahead of schedule as 1997, Federal Reserve director Alan Greenspan battled to keep the subordinates market unregulated. With the guidance of the President's Working Group on Financial Markets, the U.S. Congress and President Bill Clinton permitted the self-direction of the over-the-counter subordinates market when they sanctioned the Commodity Futures Modernization Act of 2000. Subordinates, for example, credit default swaps (CDS) can be utilized to support or theorize against specific credit dangers without essentially owning the fundamental obligation instruments. The volume of CDS remarkable expanded 100-fold from 1998 to 2008, with evaluations of the obligation secured by CDS contracts, as of November 2008, going from US$33 to $47 trillion. All out over-the-counter (OTC) subordinate notional worth rose to $683 trillion by June 2008. Warren Buffett broadly alluded to subsidiaries as "money related weapons of mass pulverization" in mid 2003. Use the Internet to locate four (4) different recent bankruptcy filings from publicly traded corporations. Then, use the Internet to locate information on Altman's Z-Score. Propose two (2) steps that a company could take in order to avoid bankruptcy. Provide a rationale for your proposals. Analyze the components of Altman's Z-Score. Suggest at least two (2) decisive measures that a company could take in order to lower its probability of bankruptcy. Restructure or liquidate assets and debt are the 2 steps that a corporation will soak up in order to avoid bankruptcy. At the same time, the company requires a technique for operations which will increase revenue. The Altman's Z-score consists of 5 weighted performance ratios as follows: Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E Where: A = working capital / total assets B = retained earnings / total assets C = EBIT / total assets D = Market value of equity / total liabilities E = sales / total assets The lower the value obtained, the higher the probability that bankruptcy are an attractive possibility for the company (Computerized Investing, 2012). As the components counsel, assets, liabilities, working capital, earnings, sales, and market value of equity area unit all powerful elements of this score. The lower the assets as compared to the sales, working capital and earnings, the better off the corporate are. Liabilities must conjointly be below the market price of equity. In short, maintaining a higher level of sales and earnings with a strictly controlled debt ceiling will lower a companies' chance of bankruptcy. In other words, expenditures for growth must be fastidiously weighed against the expected sales and earnings. For example, if I manufacture electronics and finance with debt two further producing plants, I should expect that my product can sell in a timely manner with a healthy quantity of profit. This profit margin will permit the business to pay its debt with the next Z-Score yielded. Some of the recent cases of publicly traded company filling bankruptcy include Rhythm and Hues studios in 2013, Circuit City in 2008, Adelphia Communication Corporation in 2002 and Delphi Corporation in 2008(Arnold & Earl, n.d., p. xx). Bankruptcy can be avoided by public traded companies if they carry out the following. The first step is to determine how much you need to pay your creditors debt burden, bare minimum, in order to avoid bankruptcy. For instance, say you need to pay your creditors $1,000 a month to stay out of bankruptcy. This will help a company to know exactly how much debt is owed to the creditors. Therefore the company will know whether to pay down debt or investment (Sindik, 2015, p. xx). The second step is to determine how much is needed by a company for operations every month in order to continue to operate the business. For example the company needs at least $5,000 to sustain it operational expenses. This will ensure the company has its basic operational funding. It is advisable to also include a small 20 percent cushion in this amount to be safe. Altman's Z-Score has three main components: 1. Earnings before interest and tax, this ratio looks at the company's ability to generate profits from its assets before deducting interest and taxes. 2. Working Capital / Total Assets. This question is given by Working Capital/Total Assets = (Current Assets - Current Liabilities)/Total Assets. It this ratio provides information about the short term financial position of the business. 3. Retained Earnings / Total Assets. This is the dividends a Company uses to operate the business whether it is used to be reinvested or pay off debt. 4. Net Sales / Total Assets. This ratio is an indicator of business quality when comparing it with previous years. 5. Market Value of Equity / Total Liabilities. This ratio is used to show how much of the company's market value could decline before liabilities exceed assets. Some of the measures that companies can take in order to reduce the risk of bankruptcy may include: 1. The choice of financing. This is a very important aspect to put into consideration when a company wants to reduce bankruptcy (Sindik, 2015, p. xx). Choice of financing through equity and debt usually depends on the environment the business is operating in. There is a greater probability of bankruptcy when debt finance is used by a business since it has so many costs associated with it. The company can decide to reduce or even avoid debt financing in order to reduce the chances of bankruptcy. 2. Collaboration with shareholders (Roland, Beckermann, & Brezinski, 2004, p. xx). Since managers and shareholders have the same interest, managers should involve shareholders to be able to invest in high risk ventures with the support of shareholders. This will ensure that if the ventures are successful, the shareholders will reap more and if the venture is unsuccessful the shareholders will stand by the company. Imagine that one (1) of your clients has $100,000 to invest. Propose the manner in which you would apply portfolio theory to this scenario. Justify your response. Speculate on where your client would be on the efficient frontier and if your client's preference curve would be more vertical or more horizontal. Provide a rationale for your response. Since we assume that an investor is risk averse under portfolio theory, I will consider investing the $100,000 in two combinations of assets that are not perfectly positively correlated. For example investing in two companies; one is manufacturing umbrellas (asset A) and another producing ice-cream (asset B). In other words, I will be able to reduce exposure to individual asset risk by holding a diversified portfolio of assets. The return for asset A is 10% and a risk of 3% on the other hand the return for asset B is 9% and a risk of 2%. I will take more risk only if rewarded by higher expected returns. Portfolio return under this model is the proportion- weighted combination of the component assets' returns. The risk for the two assets on the other hand is a function of the correlations of the component assets (Markowitz, 1952). These two assets will yield a lesser return for the same risk as those on the efficient frontier. For instance, if an investor did not want to assume any greater risk than that offered by Asset A and Asset B, then I would prefer Asset A over B, because both have the same risk, but Asset A returns 10% while Asset B returns only 9%. The maximum return portfolio consists only of Asset A. It is worthwhile to note that the minimum variance portfolio not only has a greater expected return, but also a lower risk than a portfolio consisting only of Asset B. My client's preference curve would be horizontal rather than vertical. This is because of the existence of risk free assets such as government securities. The presence of the risk-free asset makes it possible to have a portfolio that has improved the range of risk-expected return combinations obtainable. This is so because everywhere apart from at the tangency portfolio the half-line gives a higher expected return than the hyperbola does at every probable risk level (Merton, 1972). Imagine you are an entrepreneur with a new idea and would like to start a business with your idea, but lack capital. Go to the U.S. Small Business Administration's Website, located at http://www.sba.gov/content/sbic-program, and read about the Small Business Investment Companies (SBIC) Program. Also, explore the Website for information regarding sources available for providing venture capital. Provide an overview (two to three [2-3] paragraphs) of your start-up company. In the overview of your company, describe its products, historical financial performance, major capital investments in the last five (5) years, past sources of financing, and plans for future expansion. Analyze two (2) sources that might be available to provide venture capital for your startup. Compare and contrast the major advantages and disadvantages of one (1) over the other. Select the source that you believe is a better fit for your start-up and justify your selection. As an entrepreneur, I would like to start a new business for the finance, the funding and investment companies improvise the company's business aspects. Financing is dependably the primary enormous sympathy toward any business pioneer. Youthful business people have no business foundation, and this is the first occasion when they are attempting to begin a business. It can appear to be difficult to get the cash you require in these traditionalist times. The important choice is constantly traditional lenders. It could be a bank or a credit union. The standard course is frequently hated by business visionaries today, yet banks are as yet loaning cash to new companies and small organizations. What they aren't doing is financing test thoughts. (kmurray, 2015) For the chance that your business idea has a sensible shot of achievement, and it's not totally not the same as whatever else ever found on the planet some time recently, banks might just listen to you. To introduce the traditional leader in our finance company would be very beneficial economically. The traditional bank knows that it is so critical to helping little business in the US. Government banks are customary loan specialists working with government arms like the Small Business Administration (SBA). The SBA helps loan specialists to give more cash to business visionaries by taking without end a portion of the danger. There is a scope of prominent projects over the state, and these change regularly, so you must be set up to do your exploration to see what's substantial in your part of the nation. (sba, n.d.) Venture capitalists are the pioneers and the experimentalists of the business world. They are searching for business visionaries who have thoughts with enormous benefit possibilities. For whatever length of time that you can demonstrate your thought works at a small level, you might have the capacity to persuade a financial speculator to back you. There are even financial speculator organizations putting resources into individuals by offering business person grants. And also cash to get your organization off the ground, they will furnish you with access to qualified business tutors with an abnormal state of learning in their commercial ventures. Not just will you have the capacity to dispatch your endeavour yet you will do it under the direction of somebody who recognizes what they are doing. Select a successful publicly traded company that you are interested in and use the Internet to research its use of inventory management systems and technology. Examine the inventory management system of the selected publically traded company. Determine the key ways that inventory management systems and technology have given the selected company a competitive advantage in the marketplace. Evaluate the efficiency of two (2) common inventory control systems. Determine the ways in which they provide a firm with a competitive advantage in the marketplace. Justify your response. According to Malakooti and Behnam,(2013), Inventory management is goods and the materials that the business holds for the ultimate resale purpose. Inventory management is basically a science about specifying the placement of the stocked goods and their shape. It is required at the different locations in the facility or in many locations of the supply network to precede the planned and the regular course of production and the stock of the materials. The following are elements of a good inventory management: Well-organized location names Location labels those are easily readable and unambiguous. Unique, short and unmistaken able item numbers. A good starting count Software that tracks all the inventory activities. People who know and follow good policies. I would choose to use the Invar Kamprad (IKEA), multinational group of companies. This is a Swedish company who functions are to design and sell ready assemble furniture such as the chairs, beds and desks. IKEA's inventory management According to Clara L., (2014), IKEA is the world largest home furnishing retailer which has 298 stores in the given 37 countries. This company impresses not only the consumers with the affordable, high quality furniture but also companies and competitors around the world, mostly with the supply chain and inventory management techniques. Each IKEA store is very huge and holds more than 9,500 trading products. How IKEA does manage to offer many products with low prices while being able to keep items in the stock? IKEA has established the following in its management of its inventory: Vision IKEA has a clear vision to give well designed, functional home furnishings at a low prices so that as many as possible people are able to afford them. Its various functions such as the supply chain operations and the inventory management systems are included, work together to enable its distinctive value proposition. Cost Savings In Furniture Design IKEA designs very unique products that are of the low manufacturing costs while meeting strict requirements for the function, quality, efficient distribution and the effects to the environment. According to a case study produced by the Times of London, more than 50% of the products are made from recycled products. IKEA seeks to use a few materials possible in the making of the furniture, with no compromising on the quality or the durability. By using fewer materials, the company reduces transportation costs to receive materials and ship products. Sustainable relationships with the Suppliers A main part of the IKEA's success is made through its communications and relationship management with the materials manufacturers and suppliers to get good prices on what it procures. Although IKEA has a code of conduct known as the IKEA Way of Purchasing Home Furnished Products (IWAY), consisting guidelines and minimum rules that help manufacturers to reduce the effect of the organization's activities to the environment. The requirements within the IWAY raise the standards by ensuring development of sustainable business activities and leaving positive impacts on the business surrounding in which the suppliers operate. This also underline the IKEA's commitment to 'low price but not at any price' vision. Though IKEA wants its customers to benefit from the low prices, this should not occur at the expense of its business principles. Do-It-Yourself Assembly Lowers Packaging Costs Majority of IKEA's furniture is designed and sold for the customers to assemble e.g. beds. The prices for the customer are placed into the efficient and convenient, flat packages for low-cost transport because they take up less room in the trucks when transporting, maximizing the number of the products that are being shipped. Combining Retail And Warehouse Processes Each IKEA store has a warehouse on the premises. On the main showroom floor, buyers can browse for the items. They therefore obtain the products by themselves from the floor location pallet with racking as high as the typical person could reach, whereby the furniture can be bought and taken home. Inventory is set down to the lower slots at night which is commonly called, \"forklifts and pallets jacks are not used in store hours for purpose of the safety of the business.\" About a third of the lower level is comprised of the warehouse off the limits to the customers. Ways in which Inventory Management has given IKEA competitive advantage Inventory management systems have given IKEA competitive advantage through the following ways or methods: Usage of the High-Flow & Low-Flow Warehouse Facilities, Maximum/minimum settings As Proprietary System, In-Store Logistics, Cost -Per-Touch Inventory. Usage of the High-Flow & Low-Flow Warehouse Facilities IKEA's store operations are aided by the high-flow facilities and the low-flow warehouses that are mostly manual. In its high-flow warehouses, IKEA uses automatic storage and the retrieval systems that drives down its cost-per-touch. Products stocked in the low-flow facility are not highly demanded, and operations rely mainly on the manual processes because workers will not be moving and shifting inventory around too much. Maximum/Minimum settings As Proprietary System 1. 2. 3. 4. 5. The in-store logistics managers use an inventory replenishment process of management to develop by IKEA known as , \"minimum/maximum settings, \"to respond to the store-level inventory reorder products and reorder points. Minimum settings: The minimum amount of the products available before reodering is done. Maximum settings: The maximum amount of the particular product ordered at a time. In-Store Logistics IKEA also relies on something unique and rare concerning its logical management of the reorderimg of the products, it uses in-store logistics personnel to handle inventory management in its stores. According to the ARC Advisory Group, there is an in-store logistics manager responsible for the process of ordering and the store of the goods manager responsible for the material handling logistics at all the stores of IKEA. two (2) common inventory control systems According to Delvrd,(2015).,Noticed that there are two main kinds of the inventories which includes; Warehousing inventory Stock control software or computer inventory Computerized or software inventory gives organizations competitive advantage by: Ensuring that the components or the products are on the shelf in the shops in the right quantity required by the customers. Recognizing when the customer has bought a product. Automatically signaling when more products need to be put on the shelf from the stockroom. Automatically reordering stock at the appropriate time form the main warehouse. Automatically producing information for management reports that could be used by the local managers and at head office. How warehousing improves firms' competitiveness? Andel, Tom and Daniel A. Noted that, the trend in toward automation in the inventory management naturally has gotten into the warehousing as well. Warehousing improves the organizations' competitiveness since it reduces or minimizes the transportation cost, and also empowers the employees to take actions that achieve results immediately. Real-time processing in the warehouse uses combination of the hardware including material handling and data collection technologies. A well-organized warehouse which si user's friendly should be of enormous benefits to the owners, most importantly if they are used in the processing of large quantity of goods and materials. Conclusion A good inventory management should create, and maintain effective and sensible warehousing which is well designed. In today's business environment, even the smallest and the mid-sized businesses have reliance on the computerized inventory systems. Use the Internet to locate information on recent changes to pension laws and the effects that these changes are having on pensioners. Analyze one (1) recent change that has been made to pension laws designed to protect consumers and pensioners. Provide two (2) examples that illustrate how this change has either improved or worsened the economic situation for many pensioners. Imagine that you have a choice between a defined benefit plan and a defined contribution plan. Determine two (2) advantages and two (2) disadvantages of each. Select the plan that you prefer and justify your answer with an explanation. Question 1 The deal struck that allows retiree's pension benefits cut as part of the federal spending bill has had an impact on the US retirement system. The provision in the legislation aims to head off a looming implosion of multiemployer pension plans because traditionally defined plans were funded by employers (Dyck, I. J., & Pomorski, L. 2011). The legislation will have no impact on the private sector pension in that they are governed by the retirement income security act that prevents cuts for retirees and to workers in single employer plans. The employees and retirees in the public sector pension schemes are not affected by the law. The change guarantees that pensioners are safe regardless if the pension benefit guaranty corp may, in the long run, becomes cash stripped. The agency insures private sector pensions with it's collapse pensioners would be left with no benefits although opposition the law is an advantage to the pensioners (Shrestha, L. B. 2011). The law applies to pensioners with multiemployer plans but limited to the retirees and also prohibits any cuts for beneficiaries over 80 or those receiving a disability pension. It has an impact on retirees on well-paid union workers who receive excellent retirement benefits with some terming the size of cuts proposed as dramatic and unmanageable. The plan requires inputs from employees to make cuts thus the risk of losing benefits is minimal in that pensioners are assured of their benefits. Full pension benefits should be guaranteed for retirees so that putting money away is meant to secure a bright future. Question 2 Defined benefit plan identifies that would be payable to one at retirement, and the basic retirement benefit is based on a formula that takes into consideration several factors that include years of service and the participants salary. The retirement benefit is provided regarding regular payments over one's lifetime beginning typically at age 65 referred to as normal retirement age. The stream of periodic payments is known as pension or annuity this guarantees income even as one retire thus secures a bright future. Employees have little control over the funds until they are received in retirement and the employer bears investment risk ensuring defined benefit amount to be paid, The risk accrues due to the complexity of the actuarial projections and insurance for guarantees thus making the cost for administration high (Lusardi, A., & Mitchell, O. S. (2011). Defined contribution plan on its part specifies how monies will go into the retirement plan; it's a percentage of an employee's salary or a specific dollar amount. The amount of the participants depends on the employee's contribution to the plan, and the funds are invested in mutual funds. Employers are enrolling to it due to the expense and long-term obligations attributed to the defined benefit plan. The contributions can be invested at the participant's direction into mutual funds, money market funds and stocks offered by the plan (Lusardi, A., & Mitchell, O. S. 2011). The employer has no obligation on the accounts performance after the funds are deposited and requires little work, minimal risk to the business. The employee has to direct contributions and investments to grow assets adequate for retirement. Propose two (2) techniques that a nonprofit can use to measure management and employee efficiency within its organization. Speculate on the major benefits that these techniques may have on the organization. Determine whether or not traditional financial and management evaluation ratios such as return on assets (ROA), return on equity (ROE), economic value added (EVA), and market value added (MVA) apply to nonprofits. Support your response with at least two (2) examples of these instances. Non Profit Organizations 1. It is well aware that nonprofit organizations work in a different way. The main objective of the nonprofit organizations is to address the economic, social and educational needs of the public. The success of the nonprofit organization depends on its leadership, efficiency of the employees and its outcomes. So it is very important that a person should have the skills, abilities and knowledge to run the nonprofit organization effectively and efficiently. There are lots of techniques which are used by nonprofit organization to measure the management and employee efficiency within the organization. But two most important techniques are the nonprofit budgeting and accounting and fundraising and grant writing. Nonprofit budgeting and accounting defines the financial situation of the company. Generally, the nonprofit organizations have the advantage of receiving the tax exemption. Nonprofit organizations have to use the special method of reporting and accounting because it receives the funds from various sources. It helps in monitoring and using the cash flow in proper way and executing all the predefined activities in a predefined way. Second the employee efficiency is measured in terms of getting the funds and grants. It is very important for the nonprofit organization to raise the appropriate funds to run the organization and executing the services. So if it is important that employees should be talented enough in raising the funds from the different sources and in writing the grant. If a nonprofit firm has enough number of funds, it means the firm is capable of surviving in the market. 2. Actually, financial and management evaluation ratios such as return on assets (ROA), return on equity (ROE), economic value added (EVA), and market value added (MVA) do not apply to nonprofit organizations. All these ratios are the profitability indicators that show the status of the company. These financial and management evaluation ratios are used to calculate how the management is performing to earn the profits. But nonprofit organizations work in favor of the society. These firms identify the social problems and resolve it. So these firms have to generate the funds from the different sources to achieve its goal and use these ratios in different ways. These ratios are very helpful for the non-profit organizations to calculate its efficiency in terms of its financial stability. Economic value added ratio helps in calculating the revenue and cost. It includes three main components - increased revenue, decreased cost and time. It is very important for the nonprofit organization to calculate it. For example - it may be difficult or impossible to calculate the economic value added for the nonprofit organizations like the zoo, and museum etc. But these services are considered important for the community because it creates the intrinsic value. So the non-profit organizations use time and energy as the important factor to calculating the economic value of their services. Like economic value added, market value added is also used in different ways in nonprofit organizations. If the value is not available, the resources receive from the government or other services are used for calculating the market value added in the form of the voluntary contribution or in-kind donations. Then the value of the non-market items adds to the financial resources that is received to come up with a proxy for market value