By the end of this Unit, you will be able to:
About the Course
Because of the range and scope of the topics in Financial Management, several textbooks are assigned to the course. We will not be reading all of the sections of each of the books, but rather, from selected sections of these books and a variety of other sources. These e-file references will be yours to keep, and therefore you will be able to use them as a refresher and further expand your knowledge over time. Although finance courses are notorious for being highly quantitative, the subject can be approached without raising undue anxiety. The course requires the performance of several computations. However, the calculations presented will be at a level where knowledge of basic arithmetic and mathematics will be sufficient. You will not need a financial calculator for this course. A basic calculator found on your computer or phone will serve you well in addition to Microsoft Excel and its formulas. Furthermore, answers that require calculations should also reflect justification as to how the answer was solved. New knowledge must be supported by applying the American Psychological Association (APA) standard into your assignment answers.
We will begin by reviewing some accounting skills that you have acquired in previous courses. These skills include being able to read and interpret financial statements and the use of financial ratios. You may recall this is the point from which you left Managerial Accounting, the prerequisite for this course. In addition, the unit will also cover capital structure and how it impacts a business in distress (bankruptcy).
What is financial ratio analysis, and why would I use it?
Financial ratios are comparative measurements, a financial variable from relative values of two or more, which allows an individual to compare information that in its raw form could not be otherwise compared. Financial ratios can be used to identify a firm’s strengths and weaknesses. Bankers, for example, may look at ratios to ascertain whether a firm is bankable.
What is capital structure and why should management be concerned about it?
Capital structure shows the extent to which companies use debt and preferred stock as opposed to common equity.
Bottom lines and market values are impacted by the scale companies finance their assets through debt. A firm’s structure of equity and debt is contained on the right-hand side of the balance sheet (known as capital structure). Companies face heavy risk with their decisions regarding their capital structure when they take on more debt (known as financial risk). An optimal capital structure is management’s primary target for their firm’s continued success, which is different for any particular corporation.
The bottom line is affected by additional risk related to the magnitude of a firm’s operations and its fixed assets. This particular phenomenon gives rise to risk in operations (known as operating risk or operating leverage). The higher fixed assets are on the balance sheet, the greater the risk the firm can realize. During an economic downturn, firms will find it difficult to recover large fixed expenses.
All course textbooks are accessible through the Syllabus or through the course’s “Textbook” page. Any additional, non-textbook Reading Assignments will provide text access/location information below.
In the discussion forum, you are expected to engage in deep levels of discourse.
Your Discussion should be a minimum of 250 words in length and not more than 450 words. Please include a word count. Following the APA standard, use references and in-text citations for the textbook and any other sources.
For this discussion use your resources in the Reading Assignments to research the bankruptcy process, capital structure, and legal structure.
Submit a written paper which is 2-3 pages in length, exclusive of the reference page. Papers should be double spaced in Times New Roman font which is no greater than 12 points in size. The paper should cite at least one source independent of the textbook.
Comic book sales have hit record highs due to the volume of comic book-based movies achieving great success. With each new movie and character announcement, collectors and investors feed off the speculation. Many collectors send their books for grading, certification, and encapsulation to protect their investments. The Exceptional Service Grading Company provides those services and wants to expand to assessing other publication formats, such as certifying large magazines and movie posters.What is the company’s financial position? Please refer to the income statement and balance sheet (provided) for the Exceptional Service Grading Company available here. Using the learning resources provided in the Reading Assignment, perform a financial ratio analysis of the company using the following ratios:
Locate two other ratios to calculate. Define them and explain their purpose and how they add value to your analysis.
Select significant lines from the financial statements and provide an observation of their trends. For example, if the account is increasing or decreasing in value, what would that indicate?
Submit a 2-3 page written paper following the APA format, exclusive of the title and reference pages. This means 2-3 body pages of the research and include the title page and reference page. The Abstract is not required or needed. Papers should be double spaced in Times New Roman font and 12-point size. The paper should cite at least one other validated (peer-reviewed) source independent of the textbook.
In this paper, please include the following:
This assignment will be assessed using the Written Assignment (with calculations) rubric.
The Portfolio entry should be a minimum of 250 words and not more than 750 words. Use APA citations and references if you use ideas from the readings or other sources. For this week’s portfolio activity, please advise the instructor of the following:
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