DB 9
Topic: Modigliani and Miller: A Challenge to Capital Budgeting Strategies
Financing corporate purchases and overall capital budgeting usually require
the finance manager to assess tax rates, dividend payout policy, weighting of
capital sources, and more. However, the Modigliani and Miller propositions
state that, in most situations, it does not matter if the firm’s capital is raised
by issuing stock or selling debt.
As a student, you might assume studies of capital budgeting strategies will no
longer be reviewed in coursework.
Before coming to that conclusion, please discuss the principles presented by
Modigliani and Miller, what they are trying to prove within their theory, and if
you agree or disagree with the theory’s premise.
Your initial discussion post must include one outside resource, which may
include the Internet or Library, and must be cited according to current APA
formatting.
DB 10
Topic: The Finance Manager and Global Considerations
Most people unwittingly purchase many imported goods. It might be an
interesting exercise to check your recent purchases to see how many items
include a “Made in China” tag. The U.S. has long criticized Beijing’s
policymakers for keeping the yuan (Chinese currency) artificially cheap to give
Chinese exports an unfair advantage in global markets.
• Explain how China has been able to devalue their currency. The more
specific your explanation, the better.
Your initial discussion post must include one outside resource, which may
include the Internet or Library, and must be cited according to current APA
formatting.
Assignment
Negotiations and Contracts
This assignment will assess your knowledge based on the following Outcome:
Discuss the mechanisms of creating and establishing formal relationships with vendors.
Instructions
A successful negotiation is a complicated process, which requires research about the other
side, preparation on how key elements that may be negotiated rank in significance for the
company and what sorts of risks exist. In this assignment, you will analyze these elements.
• Items negotiated in a sourcing negotiation are not limited to just price. Describe three
non-price issues that may be negotiated. Explain how each may impact the
discussion on price and how each may impact the buyer and the seller.
• What are some key pieces of information that a buyer should gather about a
potential supplier before entering negotiations? List at least three, including where
this information may be found.
• Describe the risks to suppliers associated with each of the different types of
contracts (fixed- price, incentive, and cost-based contracts)?
Critical Elements:
• Write your original response in Standard English, paying special attention to
grammar, style, and mechanics.
• Respond to the questions in a thorough manner, following the prescribed format and
citing your sources using current APA guidelines. Include a title page and reference
page in your paper. Review the APA formats found in the Writing Resources
accessed through the Academic Success Center within the Academic Tools area of
the course.
• Ensure that your viewpoint and purpose are clearly stated.
• Demonstrate logical and appropriate transitions from one idea to another.
DB 9
Evaluating Transportation Providers
For a mail order company, such as Amazon® or Dell©, transportation
performance is critical. These companies employ other companies to perform
this service for them. There are various ways to characterize the performance
element.
For this Discussion, select a company that relies on excellent transportation
performance. Review the criteria listed in exhibit 17.4 and select the one that
you think is the most critical for that company. Then suggest another
criterion that is not in the list that you think this company can use to
evaluate the performance of their transportation function.
Everyone cannot do everything. It is very important for companies to understand where to
focus and which services they need to outsource. You will cover best practices used in the
procurement of transportation and logistics services, indirect spending, and other
professional services. In addition, supply managers must expand their use of information
technology to increase both individual and functional performance.
JOURNAL
Based on your readings in this unit, answer the following questions, with
explanations (do not simply name concepts and move on):
1) Among the concepts you have learned, which do you think is most useful to you or your
organization?
2) Which concept(s) caused the most confusion in this unit?
3) Which concept(s) did you wish went into further detail, either because you are interested
or because it’s too complex for the coverage it received?
DB 10
The 2-Minute Pitch
Suppose you were at a lunch meeting with your organization’s executives, or
you were interviewing with a large organization for a management position.
How would you convince them, in about 200 words or so, that you would be
able to make a positive contribution in their supply management efforts based
on what you have learned regarding purchasing and vendor management? On
which two topics would you concentrate your short speech and why?
READING
MEASURING SUPPLY PERFORMANCE
You will focus on purchasing and supply chain performance evaluation systems, which are
systematic approaches to monitor and evaluate purchasing performance. Although this
sounds easy, it is often difficult to develop measures that direct behavior or activity exactly
as intended. It is important that you avoid measures that could be harmful, depending on
performance objectives, rather than supporting long-term performance.
JOURNAL
Based on your readings in this unit, answer the following questions, with
explanations (do not simply name concepts and move on):
1) Among the concepts you have learned, which do you think is most useful to you or your
organization?
2) Which concept(s) caused the most confusion in this unit?
3) Which concept(s) did you wish went into further detail, either because you are interested
or because it’s too complex for the coverage it received?
ASSIGNMENT
Evaluating Performance
In this assignment, you will develop a plan to evaluate the performance of your organization
and its performance with respect to its supply chain.
This assignment will assess your knowledge based on the following Outcome:
: Evaluate supply chain connectivity and effectiveness.
Instructions
Suppose you were asked to develop a plan to evaluate the performance of your
organization and its performance with respect to its supply chain. (If your organization is not
suitable, you may use another well-known company for your analysis). You will follow the
process shown in Exhibit 19.4.
1. Evaluate the 5th tier in Exhibit 19.1. Which of the ten categories are most critical for
your organization? Select two and explain why these should receive the most
attention when evaluating performance. How do these tie into the organization’s
strategic goals?
2. For each category you selected, recommend three metrics that you think would best
measure performance in that category with respect to your organization. Explain
each one in detail.
3. For each of these metrics (six total), what would be the performance objectives?
How would you arrive at these figures? Describe the methodology you would use to
calculate the targets and explain where the information would come from.
Critical Elements:
• Write your original response in Standard English, paying special attention to
grammar, style, and mechanics.
• Respond to the questions in a thorough manner, following the prescribed format and
citing your sources using current APA guidelines. Include a title page and reference
page in your paper. Review the APA formats found in the Writing Resources
accessed through the Academic Success Center within the Academic Tools area of
the course.
• Ensure that your viewpoint and purpose are clearly stated.
• Demonstrate logical and appropriate transitions from one idea to another.
-
READING
PURCHASING AND E-SERVICES
PART ONE
There are two written assignments due this week.
Unit 9 Assignment 1:
In this assignment, you will be assessed based on the following Course Outcome:
Assess investment options based upon cost of capital and expected returns.
Read the scenario and address all of the checklist items.
Scenario: A new product manager presents to you, the chief financial officer, a proposal to
expand operations that includes the purchase of a new machine. The product manager is
certain that the positive cash flows, which exceed the initial outlay by $30,000 by the end of
Year 4, will bring both praise and approval. You explain the company uses a 13% discount
rate for cash flows and project-related budgeting. You take the time to present the details of
the net present value (NPV) model used to assess product proposals. The data is below.
Project Outflows to Buy Machine
Day 1 Cash Out -$90,000 13% discount rate applied.
End Year 1 Cash Repayment $30,000
End Year 2 Cash Repayment $30,000
End Year 3 Cash Repayment $30,000
End Year 4 Cash Repayment $30,000
To educate the new manager, and as CFO, you take the time to evaluate the following:
Checklist:
• Evaluate how the Time Value of Money concept results in a discounted cash flow in
year 4 (an amount less than $30,000).
• Assess the investment option using a 13% cost of capital discount rate by applying
the NPV model. Include values in your assessment. Provide the NPV at a 13% cost
of capital discount rate. Include values in your assessment.
• Assess the investment option with an 8% cost of capital discount rate.
Directions for Submitting Your Assignment
Submit a 2–3-page paper with an additional title page in APA format. Please label your
assignment as “Unit 9 Assignment 1— your name” and submit it to the Unit 9 Assignment 1
Dropbox.
PART TWO
Assignment 2: Off- Balance Sheet Accounting an Ethical Study
In this assignment, you will be assessed based on the following Course Outcome:
GEL-7.02: Apply ethical reasoning to ethical issues within the field of study.
Companies use off-balance sheet accounting so that they do not have to include certain
assets and liabilities in their financial statements. Off-balance sheet accounting is often
used to make the balance sheet look like the company has less debt than it actually does.
One method used by companies to achieve off-balance sheet accounting is classifying
capital leases as operating leases.
New GAAP accounting rules and the Sarbanes- Oxley Act now require that capital leases
must be included on the balance sheet as both an asset and liability. However, leases with a
duration of less than 12 months and other long-term leases are still excluded from this
reporting.
Off-balance sheet accounting benefits companies as it eliminates both assets and debt from
the balance sheet, improves companies’ liquidity ratios such as its current and quick ratios,
and lowers leverage ratios such as debt to equity and debt to asset.
You are a new accountant for a company and have discovered that the company’s
management has formed a new corporation that will build a new corporate headquarters for
the company and then lease the asset to the company on a 30-year lease, thus allowing the
company to employ off-balance sheet accounting for the new assets. The arrangement will
also allow management to make additional income from their new venture.
Scenario: The board of directors, shareholders, and stakeholders are just now learning of
this arrangement to employ off-balance sheet accounting for the new office building and of
management’s profit arrangement from the new company.
An alternative to this arrangement would be a sale leaseback. Read more about sale
leasebacks at the following site:
Singer, R., Winiarski, H., & Coleman, S. (2020). Accounting for sale and leaseback
transactions. Journal of Accountancy. https://www.journalofaccountancy.com/issues/2020/jul/
accounting-for-sale-and-leaseback-transactions.html
Checklist: Address the following items:
• Explain to what extent the corporation’s shareholders might feel the corporation
breached any measures of an entity of the highest ethical standards.
• Explain to what extent the corporation’s board of directors might ever feel that
management breached any measures of an entity of the highest ethical standards.
• Use at least two of the ethical viewpoints presented in ethical approaches to provide
the ethical reasoning to address your company’s use of off-balance sheet accounting
and management’s profiting from the arrangement. Specify the approaches you use.
DIRECTIONS FOR SUBMITTING YOUR ASSIGNMENT
https://www.journalofaccountancy.com/issues/2020/jul/accounting-for-sale-and-leaseback-transactions.html
https://www.journalofaccountancy.com/issues/2020/jul/accounting-for-sale-and-leaseback-transactions.html
https://kapextmediassl-a.akamaihd.net/business/Media/MT480/MT480_2101A/EthicalApproaches/story.html
Submit a 2- to 3-page paper with an additional title page in current APA format. Please label
your assignment as “Unit 9 Assignment 2_ your name” and submit it to the Unit 9
Assignment 2 Dropbox.
Reference
Individual tax reform and alternative minimum tax: 115th Congress public law 97. (2017).
https://www.congress.gov/bill/115th-congress/house-bill/1
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