Capital Management

Working Capital Management

 

Unit outcomes addressed in this Assignment:

·      Analyze working capital management in a healthcare organization.

·      Describe the tools that an organization manager can use to manage the revenue cycle.

 

Course outcome addressed in this Assignment:

 

Describe the overall planning process and the key components of the financial plan.

Instructions

Solve the following financial problems from your textbook, and submit the answers, including your work, in a Word or Excel document:

Problem 16.5 from page 602, Chapter 16 (Gapenski, 2012)

 

Defense Electronics

How long does it take $1,000 to quadruple in value if you have an 11% annual return? Assume annual compounding, and express your answer in years (to two decimals)
2) Assume the following spot and forward rates for the euro ($/euro).
Spot rate: $1.6277
30 day forward rate: $1.6330
90 day forward rate: $1.6353
120 day forward rate: $1.6387
A) What is the dollar value of one euro in the spot market?
B) Suppose you issued a 120-day forward contract to exchange 200,000 euros into Canadian dollars. How many dollars are involved?
C) How many euros can you get for one dollar in the spot market?
D) What is the 120-day forward premium?
3) The MacHardee Plumbing Company has common stock outstanding. The stock paid a dividend of $2.00 per share last year, but the company expects that earnings and dividends will grow by 25% for the next two years before dropping to a constant 9% growth rate afterward. The required rate of return on similar common stocks is 13%.

What is the per-share value of the company’s common stock?

4) Defense Electronics Corporation is considering building an overseas manufacturing facility to produce radar detection systems. As a consultant to DEC, you have the contract to determine the appropriate discount rate for evaluating this project.
Current information regarding DEC includes:
Debt: 25,000 bonds outstanding, each with a coupon rate of 6.5% paid semi-annually, par value of $1,000, maturity of 20 years, and current value of 96% of par.
Common Stock: 400,000 shares outstanding with a current value of $89/share. An annual dividend of $4.74 has just been paid, and dividends are expected to grow by 9% annually into the foreseeable future.
Preferred Stock: 35,000 shares of 6.5% stock with a par value of $100/share, and a current value of $99/share.
Tax rate: DEC’s combined tax rate is 34%.
Other liabilities: DEC has the usual accounts payable and accruals on its balance sheet, but does not regularly utilize any interest-bearing debt other than the bonds described above.
Risk Adjustment: Since the new manufacturing facility is to be built overseas, management is suggesting an adjustment factor of +2% to account for the increased riskiness.
Showing your work, recommend an appropriate discount rate for DEC’s proposed venture. You must show your work to receive any credit.

the slope of a regression line

1. Beta is estimated as the slope of a regression line fit to pairs of periodic returns, (rx, ry), where: (Points : 1)

rx is the return for a market index such as the S&P 500 Index. rx is the return for the stock being analyzed—for example, IBM’s return if we are estimating IBM’s beta. the slope measures the average return for the market portfolio for each percentage change in the value of the security of interest. ry is the return for the market index such as the S&P 500 Index.

Question 2. 2. Weights used in calculating the WACC should: (Points : 1)

sum to 1.00. always include Wd. be based on the book value of each source of financing. be calculated according to the price of each security—so if the price of a bond is $1,000, and the price of common stock is $50, then the weight of debt would be .20.

Question 3. 3. Which of the following statements regarding the cost of preferred stock is true? (Points : 1)

It is typically found by solving for an annuity’s discount rate. It is typically found by solving for an annuity due’s discount rate. It is found similarly to a perpetuity’s discount rate but with irregular spacing of the dividends. It is typically found by solving for a perpetuity’s discount rate.

Question 4. 4. In the Capital Asset Pricing Model, the market risk premium is best approximated by: (Points : 1)

the most recent one-year return on the S&P 500 Index (or another market index). the long-term historic return on a stock market index such as the S&P 500 (or another market index). the long-term average spread of the S&P 500 (or another market index) over the yield of long-term government bonds. the return of the S&P 500 (or another market index) over the current yield of long-term government bonds.

Question 5. 5. In the Capital Asset Pricing Model, the risk-free rate: (Points : 1)

links the CAPM to current market conditions. is the historic long-term average rate of government bonds. can be approximated by using yields on high-rated corporate bonds. is always the current yield on 30-year US government Treasury bonds.

Question 6. 6. Total risk is measured by: (Points : 1)

the standard deviation of returns. the firm’s beta. Moody’s, Standard & Poor’s, and Fitch ratings. the variability of EBIT.

Question 7. 7. The Hamada Equation allows the firm to: (Points : 1)

solve for a company’s total risk. adjust the beta of a pure-play firm for its use of debt financing. estimate its asset beta. Both b and c are correct.

Question 8. 8. Using the Capital Asset Pricing Model, estimate the required rate of return for Caterpillar Incorporated stock if the company’s beta is 1.87 (as of February 1, 2013). Use a risk-free rate of 3% and a market risk premium of 6%. (Points : 1)

8.61% 11.22% 14.22% 16.83%

Question 9. 9. The financing mix reflected in the WACC should: (Points : 1)

reflect the desired mix and not necessarily the mix being used to finance a specific project. vary from project to project, depending on how they are financed. always reflect the firm’s current capital structure. None of these answers is correct.

Question 10. 10. Chapter 9 discusses three different types of returns. Identify the item in the list below that is NOT one of those three types of returns. (Points : 1)

the actual rate of return the expected rate of return the risk-free rate of return the required rate of return

0

15

0

663841601

MultipleChoice

25

663841593

MultipleChoice

9

0

663841594

MultipleChoice

17

0

663841595

MultipleChoice

19

0

663841596

MultipleChoice

12

0

663841597

MultipleChoice

11

0

663841598

MultipleChoice

7

0

663841599

MultipleChoice

27

0

663841600

MultipleChoice

incorporate all responses

1.              Suppose the weighted average cost of capital of the Gadget Company is 10%. If Gadget has a capital structure of 50% debt and 50% equity, a before-tax cost of debt of 5%, and a marginal tax rate of 20%, then its cost of equity capital is

The below problem relates to question 2, 3, 4 and 5 below. You can incorporate all responses on one Excel spreadsheet

Barbara Andrade is an equity analyst who covers the entertainment industry for Greengable Capital Partners, a major global asset manager. Greengable owns a significant position with a large unrealized capital gain in Mosely Broadcast Group (MBG). On a recent conference call, MBG’s management states that they plan to increase the proportion of debt in the company’s capital structure. Andrade is concerned that any changes in MBG’s capital structure will negatively affect the value of Greengable’s investment. To evaluate the potential impact of such a capital structure change on Greengable’s investment, she gathers the information about MBG given in Exhibit A.

 

EXHIBIT A Current Selected Financial Information for MBG

Yield to maturity on debt 8.00%
Market value of debt $100 million
Number of shares of common stock 10 million
Number of shares of common stock $30
Cost of capital if all equity-financed 10.3%
Marginal tax rate 35%
   

 

Andrade expects that an increase in MBG’s financial leverage will increase its costs of debt and equity. Based on an examination of similar companies in MBG’s industry, Andrade estimates MBG’s cost of debt and cost of equity at various debt-to-total capital ratios, as shown in Exhibit B.

 

EXHIBIT B Estimates of MBG’s Before-Tax Costs of Debt and Equity

 

Debt-to-Total Capital Ratio Cost of Debt Cost of Equity
20% 7.7% 12.5%
30% 8.4% 13.0%
40% 9.3% 14.0%
50% 10.4% 16.0%

 

 

2.              MBG is best described as currently: A. 25% debt financed and 75% equity financed. or B. 33% debt financed and 66% equity financed. or C. 75% debt financed and 25% equity financed.

 

3.              Based on Exhibits A and B, the current after-tax cost of debt for MBG is:

 

Current after-tax cost of debt = 5.2%

 

 

4.                Based on Exhibits A and B, MBG’s current cost of equity capital is:

Current Cost of Equity Capital = 10.3%

 

5.              Based on Exhibits A and B, what debt-to-total capital ratio would minimize MBG’s weighted average cost of capital? A. 20% or. B. 30%. or C. 40%.

Garza and Neely, CPAs, are preparing their service revenue (sales) budget for the coming year (2012). The practice is divided into three departments: auditing, tax, and consulting. Billable hours for each department, by quarter, are provided below.

Department    Quarter 1    Quarter 2    Quarter 3    Quarter 4
Auditing        2.420    1.920    2.150        2.500
Tax        3.130    2.620    2.200        2.600
Consulting        1.740    1.740    1.740        1.740

Average hourly billing rates are: auditing $84, tax $93, and consulting $104.

Prepare the service revenue (sales) budget for 2012 by listing the departments and showing for each quarter and the year in total, billable hours, billable rate, and total revenue.

Stanton Company is planning to produce 1,300 units of product in 2012. Each unit requires 3.50 pounds of materials at $5.00 per pound and a half-hour of labor at $13.60 per hour. The overhead rate is 90% of direct labor.

(a) Compute the budgeted amounts for 2012 for direct materials to be used, direct labor, and applied overhead.
(b) Compute the standard cost of one unit of product. (Round answer to 2 decimal places, e.g. 2.75.)
In Harley Company it costs $28 per unit ($18 variable and $10 fixed) to make a product that normally sells for $52. A foreign wholesaler offers to buy 4,770 units at $26 each. Harley will incur special shipping costs of $1 per unit. Assuming that Harley has excess operating capacity.

Indicate the net income (loss) Harley would realize by accepting the special order. (If an amount reduces the net income for Increase (Decrease) column then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). Enter all other amounts in all other columns as positive and subtract where necessary.)

Reject Order        Accept Order        Net Income
Increase
(Decrease)

Vintech Manufacturing incurs unit costs of $7 ($4 variable and $3 fixed) in making a subassembly part for its finished product. A supplier offers to make 11,100 of the part at $6.30 per unit. If the offer is accepted, Vintech will save all variable costs but no fixed costs.

Prepare an analysis showing the total cost saving, if any, Vintech will realize by buying the part. (If an amount reduces the net income for Increase (Decrease) column then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). Enter all other amounts in all other columns as positive and subtract where necessary.)

Make        Buy        Net Income
Increase
(Decrease)

Ridley Company has a factory machine with a book value of $89,100 and a remaining useful life of 4 years. A new machine is available at a cost of $201,000. This machine will have a 4-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $617,100 to $429,300.

Prepare an analysis showing whether the old machine should be retained or replaced. (If an amount reduces the net income for Increase (Decrease) column then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). Enter all other amounts in all other columns as positive and subtract where necessary.)

Retain
Equipment         Replace
Equipment         Income
Increase
(Decrease)

resolve the situations

Assignment 2: LASA 1—The Time Value of Money

By Wednesday, October 15, 2014 submit a 4-5 page report based on the following problem:

Mary has been working for a university for almost 25 years and is now approaching retirement. She wants to address several financial issues before her retirement and has asked you to help her resolve the situations below. Her assignment to you is to provide a 4-5 page report, addressing each of the following issues separately. You are to show all your calculations and provide a detailed explanation for each issue.

Issue A:
For the last 19 years, Mary has been depositing $500 in her savings account , which has earned 5% per year, compounded annually and is expected to continue paying that amount. Mary will make one more $500 deposit one year from today. If Mary closes the account right after she makes the last deposit, how much will this account be worth at that time?

Issue B:
Mary has been working at the university for 25 years, with an excellent record of service. As a result, the board wants to reward her with a bonus to her retirement package. They are offering her $75,000 a year for 20 years, starting one year from her retirement date and each year for 19 years after that date. Mary would prefer a one-time payment the day after she retires. What would this amount be if the appropriate interest rate is 7%?

Issue C:
Mary’s replacement is unexpectedly hired away by another school, and Mary is asked to stay in her position for another three years. The board assumes the bonus should stay the same, but Mary knows the present value of her bonus will change. What would be the present value of her deferred annuity?

Issue D:
Mary wants to help pay for her granddaughter Beth’s education. She has decided to pay for half of the tuition costs at State University, which are now $11,000 per year. Tuition is expected to increase at a rate of 7% per year into the foreseeable future. Beth just had her 12th birthday. Beth plans to start college on her 18th birthday and finish in four years. Mary will make a deposit today and continue making deposits each year until Beth starts college. The account will earn 4% interest, compounded annually. How much must Mary’s deposits be each year in order to pay half of Beth’s tuition at the beginning of each school each year?

Turn in your completed work to the M3: Assignment 2 Dropbox by Wednesday, October 15, 2014.

Assignment 2 Grading Criteria
Maximum Points
Calculated the compounded interest over 20 years and evaluated the value of the savings account upon closing. (CO 1)
32
Calculated the bonus payout over 20 years vs. a one time payout with interest and distinguished which bonus option would be better for the client. (CO 1)
32
Calculated the present value of the bonus and analyzed the difference in bonus for the client. (CO 2)
32
Analyzed the tuition costs for the client and determined what the future costs will be and determined how these funds can be accumulated over time. (CO 4)
60
Written Components: Organization, usage and mechanics, APA elements, style
44
Total:
200

Calculating Returns and Variability

Assignment 5 Text edition 7: Chapter 12 – Questions and Problems – 5, 7, 8, 9, 12, 13. Rubric Assignment 5: Calculation Questions. Show your work – include formulas and step by step calculations. 5. Nominal versus Real Returns: What is the average annual return on Canadian stock from 1957 through 2008: a. In nominal terms? b. In real terms? 7. Calculating Returns and Variability: Using the following returns, calculate the arithmetic average returns, the variances and the standard deviations for X and Y. Returns Year X Y 1 6% 18% 2 24 39 3 13 -6 4 -14 -20 5 15 47 8.

Document Preview:
Assignment 5 Text edition 7: Chapter 12 – Questions and Problems – 5, 7, 8, 9, 12, 13. Rubric Assignment 5: Calculation Questions. Show your work – include formulas and step by step calculations. 5. Nominal versus Real Returns: What is the average annual return on Canadian stock from 1957 through 2008: a. In nominal terms? b. In real terms? 7. Calculating Returns and Variability: Using the following returns, calculate the arithmetic average returns, the variances and the standard deviations for X and Y. Returns Year X Y 1 6% 18% 2 24 39 3 13 -6 4 -14 -20 5 15 47 8. Risk Premiums: Refer to the table attached and look at the period from 1970-1975. a. Calculate the arithmetic average returns for large-company stocks and T-Bills over this period. b. Calculate the standard deviation of the returns for large-company stocks and T-Bills over this period. c. Calculate the observed risk premium in each year for the large-company stocks versus T-Bills. What was the average risk premium over this period? What was the standard deviation of the risk premium over this period? d. Is it possible for the risk premium to be negative before an investment is undertaken? Can the risk premium be negative after the fact? 9. Calculating Returns and Variability: You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past 5 years: 2 percent, -8 percent, 24percent, 19 percent and 12 percent. a. What was the arithmetic average return on Crash-n-Burn’s stock over this 5-year period? b. What was the variance of Crash-n-Burn’s returns for this period? The standard deviation? 12. Effects of Inflation: Look at table 12.1 (same table from Q8) and the attached figure (12.4), When were T-bill rates at their highest over the period of 1957 through 2008? Why do you think they were so high during this period? What relationship underlies your answer? 13. Calculating Investment Returns: You bought one of Great White Shark Repellant Co’s 7 percent…

Percent shares traded

120 100 80 64 48

32 24 20 16 12

8

Percent shares traded

30 20 10

Target Price Range 2019 2020 2021

ORACLE NYSE-ORCL 38.46 14.7 14.614.0 0.81 1.6% TIMELINESS 3 Lowered 9/11/15 SAFETY 1 Raised 5/22/09 TECHNICAL 3 Lowered 11/11/16 BETA 1.05 (1.00 = Market)

2019-21 PROJECTIONS Ann’l Total

Price Gain Return High 60 (+55%) 13% Low 50 (+30%) 9% Insider Decisions

D J F M A M J J A to Buy 0 0 0 0 0 0 0 0 0 Options 4 1 2 4 2 1 6 7 2 to Sell 3 1 1 4 3 1 3 1 2 Institutional Decisions

4Q2015 1Q2016 2Q2016 to Buy 586 621 597 to Sell 760 745 741 Hld’s(000)245015124749762408086

High: 14.5 19.8 23.3 23.6 25.1 32.3 36.5 34.3 38.3 46.7 45.3 42.0 Low: 11.3 12.1 16.0 15.0 13.8 21.2 24.7 25.3 29.9 35.4 35.1 33.1

% TOT. RETURN 10/16 THIS VL ARITH.*

STOCK INDEX 1 yr. 0.5 6.4 3 yr. 19.5 15.7 5 yr. 24.4 76.0

CAPITAL STRUCTURE as of 8/31/16 Total Debt $54056 mill. Due in 5 Yrs $16150 mill. LT Debt $53057 mill. LT Interest $1800 mill.

(53% of Cap’l) Leases, Uncapitalized Annual rentals $328.0 mill.

No Defined Benefit Pension Plan Pfd Stock None

Common Stock 4,105,567,000 shs. as of 9/12/16

MARKET CAP: $158 billion (Large Cap) CURRENT POSITION 2015 2016 8/31/16

($MILL.) Cash Assets 54368 56125 68396 Receivables 5618 5385 3407 Inventories (FIFO) 314 212 286 Other 2883 2591 2362 Current Assets 63183 64313 74451 Accts Payable 806 504 551 Debt Due 1999 3750 999 Deferred Revenue 7245 7655 9462 Other 5241 5299 4130 Current Liab. 15291 17208 15142

ANNUAL RATES Past Past Est’d ’13-’15 of change (per sh) 10 Yrs. 5 Yrs. to ’19-’21 Sales 15.5% 12.0% 7.0% ‘‘Cash Flow’’ 17.5% 14.0% 6.5% Earnings 18.0% 13.5% 6.0% Dividends – – 39.0% 7.5% Book Value 20.5% 15.0% 3.5%

Fiscal Year Ends

Full Fiscal Year

QUARTERLY SALES ($ mill.)A Aug.Per Nov.Per Feb.Per May.Per

2013 8209 9113 8970 10961 37253 2014 8381 9283 9315 11326 38305 2015 8599 9608 9334 10712 38253 2016 8452 8996 9014 10594 37056 2017 8613 9150 9250 10487 37500 Fiscal Year Ends

Full Fiscal Year

EARNINGS PER SHARE AB Aug.Per Nov.Per Feb.Per May.Per

2013 .53 .64 .65 .87 2.68 2014 .59 .69 .68 .92 2.87 2015 .62 .69 .68 .78 2.77 2016 .53 .63 .64 .81 2.61 2017 .55 .61 .65 .82 2.63 Cal- Full

endar Year QUARTERLY DIVIDENDS PAID E

Mar.31 Jun.30 Sep.30 Dec.31 2012 .06 .06 .06 .24 .42 2013 – – – – .12 .12 .24 2014 .12 .12 .12 .12 .48 2015 .12 .15 .15 .15 .57 2016 .15 .15 .15 .15

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1.80 1.94 1.78 1.81 1.96 2.36 2.82 3.57 4.39 4.69 5.38 7.07 7.59 8.02 .44 .52 .48 .50 .56 .73 .85 1.09 1.37 1.53 1.75 2.32 2.65 2.91 .35 .46 .39 .43 .50 .68 .80 1.01 1.30 1.44 1.67 2.22 2.46 2.68 – – – – – – – – – – – – – – – – – – .05 .20 .20 .24 .30

.05 .06 .05 .06 .04 .04 .05 .06 .05 .11 .05 .09 .13 .14 1.15 1.12 1.13 1.21 1.55 2.11 2.87 3.31 4.47 5.01 6.13 7.85 8.91 9.61

5615.1 5592.4 5431.0 5233.0 5171.0 5145.0 5232.0 5107.0 5150.0 5005.0 5026.0 5068.0 4905.0 4646.0 NMF NMF 36.8 24.6 25.1 17.9 16.3 17.0 15.8 13.1 13.7 13.0 12.0 12.0 NMF NMF 2.01 1.40 1.33 .95 .88 .90 .95 .87 .87 .82 .76 .67

– – – – – – – – – – – – – – – – – – .3% .9% .7% .8% .9%

14771 18208 22609 23495 27034 35850 37221 37253 41.9% 42.1% 43.9% 47.3% 47.2% 45.3% 47.5% 48.7% 223.0 249.0 268.0 263.0 298.0 368.0 486.0 546.0

4246.0 5295.0 6799.0 7393.0 8494.0 11395 12520 12958 29.7% 28.6% 29.5% 28.7% 27.1% 25.3% 24.0% 23.0% 28.7% 29.1% 30.1% 31.5% 31.4% 31.8% 33.6% 34.8% 5044.0 3496.0 8074.0 9432.0 12313 24982 24635 28820 5735.0 6235.0 10235 9237.0 11510 14772 13524 18494 15012 16919 23025 25090 30798 39776 43688 44648 20.9% 23.6% 21.0% 22.3% 21.0% 21.6% 22.6% 21.2% 28.3% 31.3% 29.5% 29.5% 27.6% 28.6% 28.7% 29.0% 28.3% 31.3% 29.5% 28.5% 24.3% 26.0% 25.9% 25.8%

– – – – – – 3% 12% 9% 10% 11%

2014 2015 2016 2017 © VALUE LINE PUB. LLC 19-21 8.58 8.81 8.97 9.50 Sales per sh A 12.30 3.10 3.04 2.93 3.20 ‘‘Cash Flow’’ per sh 4.15 2.87 2.77 2.61 2.63 Earnings per sh AB 3.65 .48 .51 .60 .64 Div’ds Decl’d per sh E .76 .13 .32 .29 .25 Cap’l Spending per sh .25

10.50 11.21 11.45 11.65 Book Value per sh D 13.10 4464.0 4343.0 4131.0 3950.0 Common Shs Outst’g C 3450.0

12.5 15.1 14.8 Avg Ann’l P/E Ratio 15.0 .66 .77 .78 Relative P/E Ratio .94

1.3% 1.2% 1.6% Avg Ann’l Div’d Yield 1.4%

38305 38253 37056 37500 Sales ($mill) A 42500 48.9% 47.3% 44.9% 45.5% Operating Margin 47.0% 608.0 712.0 871.0 900 Depreciation ($mill) 1000 13214 12489 11236 11785 Net Profit ($mill) 13375 22.5% 23.6% 23.2% 25.5% Income Tax Rate 24.0% 34.5% 32.6% 30.3% 31.4% Net Profit Margin 31.5% 33749 47892 47105 50000 Working Cap’l ($mill) 50000 22667 39959 40105 53000 Long-Term Debt ($mill) 53000 46878 48663 47289 46000 Shr. Equity ($mill) 45250 19.7% 14.7% 13.7% 13.0% Return on Total Cap’l 14.5% 28.2% 25.7% 23.8% 25.5% Return on Shr. Equity 29.5% 23.5% 21.0% 18.3% 20.0% Retained to Com Eq 23.5%

16% 18% 23% 22% All Div’ds to Net Prof 20%

Company’s Financial Strength A++ Stock’s Price Stability 75 Price Growth Persistence 70 Earnings Predictability 85

(A) Fiscal year ends May 31st. (B) Diluted earnings. Excl. nonrec. items: ’00, 70¢; ’05, d13¢; ’06, d12¢; ’07, d20¢; ’08, d24¢; ’09, d35¢; ’10, d46¢; ’11, d55¢;

’12, d50¢; ’13, d60¢; ’14, d49¢; ’15, d56¢; ’16, d54¢. Next earnings report due mid-Dec. (C) In millions. (D) Incl. intang. In 2016, $34.6 bill., $8.38 a share.

(E) Initial div’d paid May 8, 2009. Div’ds paid late January, April, July, and October. Div’ds ($0.06 ea.) for February, May, and August of CY2013 were paid in December, 2012.

BUSINESS: Oracle Corporation develops, manufactures, markets, distributes, and services database and middleware software, app- lications software, and hardware systems, primariy consisting of computer server and storage products. 2016 revenue breakdown: new software licenses, 19.6%; cloud SaaS, PaaS, & IaaS, 7.7%; software license updates and product support, 50.9%; hardware

systems & support, 12.6%; services, 9.2%; foreign sales, 53.4%. R&D, 15.6% of 2016 sales. Employed 136,000 at 5/31/16. Stock owners: Lawrence J. Ellison, 28%; other off. & dir., 1% (9/16 proxy). Exec Chrmn & CTO: Lawrence J. Ellison; Co-CEOs: Safra A. Catz and Mark V. Hurd. Inc.: DE. Addr.: 500 Oracle Parkway, Redwood City, CA 94065. Tel.: 650-506-7000. Internet: www.oracle.com.

Oracle Corporation began fiscal 2017 with mixed financial results. (Years end May 31st.) The company continued to register strong growth in cloud services, with its software-as-a-service (SaaS) and platform-as-a-service (PaaS) offerings remaining on a rapid advance. Nonethe- less, revenue from new software licenses once again found progress elusive, as large enterprises continue to work their way to finding a balance between their on- premise requirements and the advantages afforded by cloud architecture. That said, overall software revenues advanced mod- erately, benefiting from the combination of progress at license updates and support and the strength in cloud services. Finally, although the margin widened in the hardware business, profits declined. We have made adjustments to our es- timates for fiscal 2017. Although SaaS and PaaS should remain on a steep trajec- tory, growth in overall software revenue may well turn out to be more modest than earlier anticipated, reflecting the likely decline in new software licenses and slow- ing progress in software updates and sup- port. Accordingly, despite the steep ascent

of Oracle’s cloud offerings, our revenue call is now $37.5 billion, down $500 million. Meanwhile, we have also reduced our earnings target, with our non-GAAP es- timate now at $2.63 a share, versus the previous $2.83. When completed, the ac- quisition of NetSuite should be accretive. The transition to cloud computing remains front and center at Oracle. Billings for cloud offerings SaaS and PaaS are advancing rapidly, with profit margins widening on a sequential basis. In addi- tion, Oracle will be placing more emphasis on its infrastructure-as-a-service (IaaS) business, leveraging the offering with its strong position in the enterprise database arena and the services that can be pro- vided as a result. Amazon Web Services and Microsoft are keen competitors in this arena, and both are also trying to estab- lish some level of differentiation in what is basically a commodity-type business. Add- ing it all up, Oracle should prosper as the secular move to cloud architecture and computing unfolds. Accordingly, these shares should provide respectable risk- adjusted returns for patient accounts. Charles Clark November 11, 2016

LEGENDS 13.0 x ″Cash Flow″ p sh. . . . Relative Price Strength

Options: Yes Shaded area indicates recession

© 2016 Value Line, Inc. All rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind. THE PUBLISHER IS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREIN. This publication is strictly for subscriber’s own, non-commercial, internal use. No part of it may be reproduced, resold, stored or transmitted in any printed, electronic or other form, or used for generating or marketing any printed or electronic publication, service or product.

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catastrophic failure

Paper on the Lingering Impacts of Lehman Brothers’ Bankruptcy. The great thing about this assignment is the fact that you have already completed so much preparatory work with your first writing assignment – the literature review, which is the basis for your entire discussion in this paper. You will note that the assignment rubrics are located in the writing assignment link. All you need to do is click the “rubric” link. I have listed below some guidelines that will help you focus on the what I expect to be included in each rubric section. I encourage you all to familiarize yourselves with the rubrics and my expectations so you submit the very best paper you can!

Guidelines:

Rubric 1

Please include a heading for this section. This rubric is very self-explanatory. You should have already reviewed research that explores the impacts the Lehman Brothers Bankruptcy had on other financial institutions throughout the US and the world. If your literature review was thorough, you should be able to provide a general theme regarding the overall impacts, as well as discussing some specific examples, based on the research. Be extremely careful to use correct reference citations!

Rubric 2

Please include a heading for this section. Your literature review should have specific data on industries that may have benefited from Lehman’s failure or those that were especially negatively impacted by their demise. Pick one (or both) and discuss in specific detail what the impacts were in each case. I am not looking for generalities here; I am looking for in-depth discussion of the benefits or the damages. Be extremely careful to use correct reference citations!

Rubric 3

Please include a heading for this section. Your literature review should have researched the managerial problems, ethical lapses, and lack of transparency with regard to the Lehman Brothers failure, so these are the types of points you should focus on when formulating your discussion on the third rubric. What are the lessons that should have been learned?  Be extremely careful to use correct reference citations!

Rubric 4

Please include a heading for this section. Based on the groundwork presented in your literature review, discuss whether or not it is likely that a similar catastrophic failure like Lehman Brothers could occur again, in today’s financial environment, given the regulations that were put in place following Lehman Brothers’ collapse and the ensuing financial crisis. Remember, it is NOT appropriate to make a statement of personal opinion. Any conclusion you present MUST be supported by the sound data and research by your references, as presented in your literature review.  Be extremely careful to use correct reference citations!

Rubric 5

Please include a heading for this section. Be very careful NOT to express your personal opinion here! You are to present conclusions based on the sound data and empirical research you reviewed in the first writing assignment. Based on your research, you should discuss in detail the data that supports the American economy being either stronger or weaker as a result of the reforms that have been put in place following Lehman Brothers’ bankruptcy. You should list those reforms and explain how each was intended to change the system, and then provide support that either they have or they have not accomplished their intended goals.  Be extremely careful to use correct reference citations!

Rubric 6

Please include a heading for this section. This rubric is tricky because you are to relate the credit crisis to your own personal experience or that of someone with whom you are acquainted. But, you should NOT write this in the first person active voice! This is NOT a personal essay; it is academic research writing. This means that you should not discuss this as a personal experience, but rather you should use your experience as the context for the general experiences of many Americans during that time. So, what you should do is take this experience (either yours personally or someone else’s) and write about it as if you were a journalist reporting on the effects the credit crisis had on the average American. You will use the details of the experience you are familiar with, but you will relate them as if they were experienced by an anonymous individual. For instance, let’s say your uncle owns a specialty bakery shop and during the credit crisis he was not able to obtain the financing he needed to replace an old and faulty specialty oven for the business because the banks were not making loans. Perhaps he also noticed that clients did not want to spend as much as they used to for party and wedding baked goods, and there were fewer customers than before. What you should do is take the general impacts faced by this type of small business and describe them with enough specificity to clearly exemplify the far-reaching implications of the crisis. If you use specific references for this, be extremely careful to use correct reference citations!

Rubric 7

This rubric is completely self-explanatory, but I will elaborate a bit. You should all have reviewed five high-quality references in your literature reviews. If you did not use appropriate references for that assignment, it is essential that you make sure the references you use for this paper comply with the standards. References must be high-quality academic journals and/or peer-reviewed research papers. ANY Internet websites used will NOT count as references, and points will be deducted for any Wikipedia, Investopedia, commercial financial websites, or financial blog sites. This should not be a problem for those of you who did appropriate literature reviews. If you choose to use additional references, that is fine, as long as they are appropriate. The bottom line is there must be at least FIVE high-quality academic references.

Rubric 8

I am a stickler for writing mechanics; however, because my classes are so large, I am no longer able to mark each individual paper for spelling, grammatical and sentence structure errors. I will, however,  deduct points for those errors and make a general statement in the rubric feedback cells if those issues are a problem. So, it is incumbent on each of you to make sure you check your paper as many times as necessary to ensure that there are no such errors when you submit the assignment. I also encourage you to use Grammarly to check for writing mechanics errors as well as originality, because each paper will be automatically analyzed. If English is not your first language, you may feel more comfortable asking a friend or colleague to read through your final draft to help you catch grammatical errors that you may have overlooked.

specific APA writing guidelines I have previously provided for you.

SEE ATTACHED FOR SPECIFICS