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23 Sep 2018

a) identify the ethical issue in this scenario.

b) identify the affected stakeholders in the construction of thepower planet .

c)analyze the alternative and possibe consequence of eachalternative .(note you should apply the capital budgeting decisiontools and include the result as part of your discussion)

d) choose a course of action for the company and justify yourdecision.

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Hubert KochLv2

25 Sep 2018

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Larry has been the chief financial officer (CFO) of Maxima Auto Service for the past 10 years. The company has reported profits each year it's been in business. However, this year has been a tough one. Increased competition and the rising costs of labor have reduced the company's profits. On December 30, Larry informs Robert, the company's president and Larry's closest friend for the past 10 years, that it looks like the company will report a net loss (total expenses will be greater than total revenues) of about $50,000 this year.

The next day, December 31, while Larry is preparing the year-end reports, Robert stops by Larry's office to tell him that an additional $75,000 of revenues needs to be reported and that the company can now report a profit. When Larry asks about the source of the $75,000, Robert tells him, âEarlier in the month some customers paid for auto services with cash, and with this cash I bought additional assets for the company. That's why the $75,000 never showed up in the bank statement. I just forgot to tell you about this earlier.â When Larry asks for more specifics about these transactions, Robert mumbles, âI can't recall where I placed the customer sales invoices or the purchase receipts for the assets, but don't worry; I know they're here. We've been friends for a lot of years and you can trust me. Now, let's hurry and finish those reports and I'll treat you to dinner tonight at the restaurant of your choice.â

Required:

Discuss the ethical dilemma Larry faces: What is the issue? Who are the parties affected? What factors should Larry consider in making his decision?

Each analysis will include a minimum of four sections:

1. Ethical situation and people who will be affected

2. Options for alternative courses of action

3. The impact of each option on the stakeholders

4. Decision and reasoning underlying the decision.

You must read the case below (Financing Tuxedo Airâs Expansion Plans with a Bond Issue) carefully. Various assigned readings in this course lean toward value investing. Concepts related to financial statements and long-term financial planning (chapter 3) and valuation and future cash flows (chapter 7) will help you analyze the cases. Preparing the Case Analysis Step 1. Define the problem (15% of assignment grade) Be sure to identify the problem and not the symptom of a problem. For example, a decline in sales is a symptom of a problem; you must identify the actual cause of the decline in sales.

Step 2. Formulate alternative solutions to the problem (20% of assignment grade) It may be helpful to brainstorm as many solutions as you can and then narrow your list down to three or four solutions you feel are the strongest.

Step 3. Evaluate and compare the alternative solutions (35% of assignment grade) To evaluate alternative solutions you should consider their strengths (e.g., increased productivity) and their weaknesses (e.g., increased cost).

Step 4. Recommend and justify an effective solution (30% of assignment grade) Be sure to record the reasons why the chosen solution is most effective. In your analysis you must provide a recommendation that is supported by your analysis. Note: Your analysis may require that you identify more than one problem and develop a set of recommendations.

THE MINI CASE

Financing Tuxedo Airâs Expansion Plans with a Bond Issue

Mark Taylor and Jack Rodwell, the owners of Tuxedo Air, have decided to expand their operations. They instructed their newly hired financial analyst, Ed Cowan, to enlist an underwriter to help sell $35 million in new 10-year bonds to finance construction. Chris has entered into discussions with Suzanne Lenglen, an underwriter from the firm of Raines and Warren, about which bond features Tuxedo Air should consider and what coupon rate the issue will likely have. Although Ed is aware of the bond features, he is uncertain about the costs and benefits of some features, so he isnât sure how each feature would affect the coupon rate of the bond issue. You are Suzanneâs assistant, and she has asked you to prepare a memo to Ed describing the effect of each of the following bond features on the coupon rate of the bond. She would also like you to list any advantages or disadvantages of each feature:

1. The security of the bondâthat is, whether the bond has collateral.

2. The seniority of the bond.

3. The presence of a sinking fund.

4. A call provision with specified call dates and call prices.

5. A deferred call accompanying the call provision.

6. A Canada plus call provision.

7. Any positive covenants. Also, discuss several possible positive covenants Tuxedo Air might consider.

8. Any negative covenants. Also, discuss several possible negative covenants Tuxedo Air might consider.

9. A conversion feature (note that Tuxedo Air is not a publicly traded company).

10. A floating-rate coupon.

apricotleopard382

Prepare a Project Proposal that includes the nature of the project, the sources of information you plan to use, and the most important concepts and techniques to be applied.

The outline topics should include the following:

A brief summary of the company you have chosen, such as business lines, and its industry;
Information sources (e.g. industry studies, market share reports, financial statements, etc.);

The analyses you will include in your study. This will likely require a summary review of the material in later sections of the course, such as competitor analysis;

If you have access to, and permission to use, internal company documents, please discuss so in the outline.

You are required to complete a course project that reveals mastery in application of the strategic managerial accounting and performance management concepts emphasised in the course. This involves reporting on a specific organisation within an industry, analysing the firmâs competitive position (e.g., market position, cost competitiveness, market power, innovation, SWOT, etc.), its managerial accounting approach, and the non-financial performance metrics should be used in monitoring firm performance, all aligned with value creation for the chosen firm.

This project should be a formal business report that covers all elements of the strategic management process: mission statement, strategic goals, strategic objectives, actionable plans (if available, analyse the specific budget planning process used by the Firm; if not, search for relevant articles for the subject company and recommend a process that you believe is appropriate for the company), and performance monitoring processes employed by the Firm, including its board of directors. These processes and strategies are to be supported with managerial accounting and performance management concepts.

In selecting a company to analyze, first focus on information availability. If you work for the company, ensure that you can obtain the information required to do a proper job on this assignment. If you choose a company you do not work for, begin your search among larger public companies with ample information available. Company websites are often the best place to begin, in particular the investor relations site. Look for annual reports, quarterly reports, press releases, white papers, and other sources of information (e.g., public filings, such as for the U.S. Securities & Exchange Commission at http://www.sec.gov./

Your tasks are to:

Â· Briefly describe the business of the Firm (i.e. industry segments, geographic service area, market position, and size as measured by revenues, employees, and market capitalisation). Describe the mission statement and strategic objectives of the Firm.
Â· Analyse the behaviour of expenses of the business, distinguishing between variable costs and fixed costs (or estimates thereof), describe the relationships between sales volume, costs, and profit. Estimate a break-even point for the Firm and support with relevant calculations and discussion.

Â· Discuss the level of the Firmâs operating leverage.

Â· Assess the budgeting process and procedures for the Firm, bearing in mind the context of the business and its characteristics. Identify methods employed for budgeting, managerial reporting, and control, and make recommendations for improvement. Justify your recommendations.

Â· Summarise the Firmâs performance over the past five years in terms of sales and earnings growth, return on equity, return for shareholders, and non-financial performance measures (e.g. market share, recognition, customer satisfaction).

Â· Analyse the fixed capital needs (i.e. capital expenditures) of the company, and discuss significant capital projects, how they fit with the strategic goals of the Firm. Evaluate risks associated with major capital projects and suggest risk mitigation strategies. Justify your suggestions.

Â· Briefly profile two or three key competitors and analyse the basis for competition (e.g., is it cost? Innovation? Capital intensity? Branding?). Compare the Firm with these key competitors on key performance metrics (e.g., revenue growth, profit margins, return on equity, financial leverage, receivables turnover, payables turnover, asset turnover, operating costs, market share, market share growth, etc.). Identify areas where the Firm may outperform or underperform the peer group, and suggest improvements for weaknesses.

Â· Design a Balanced Scorecard for the Firm.

This project should follow a structured approach and should be prepared and presented as a professional business report.