Walden WMBA6070 full course (all discussion and assignments)

D Discussion 1: Aligning Stockholder and Management Interests

 

Stockholders and managers want the same thing, don't they? Theoretically, yes, but in reality, it does not always work that way. Too often, managers' personal goals compete with shareholder wealth maximization. Sometimes, managers pay themselves excessive salaries or bonuses that are at odds with the idea of shareholder wealth maximization. How many times have you seen in the news examples of CEO excesses or outlandish spending on events or things that definitely do not help the overall goal of stockholder wealth maximization?

To prepare for this Discussion, think about a time in your professional experience when a decision was made that seemed to benefit a specific manager or small group of managers and not the overall corporation. If you do not have professional experience directly related to this topic, research a situation in the news where this theme is demonstrated. Consider the outcomes of such an imbalance between manager and stockholder interests, and research how to avoid such a situation.

Week 1 Discussion 2

iscussion 2– Shared Practice: A Culture That Supports Financial Acumen

Note: This Discussion continues into Week 2.

Keeping abreast of financial measures and metrics employed by a company allows employees to better understand its health and position at any time.

To prepare for this Discussion: Shared Practice, take a moment to view the video "Creating Financial Acumen Within Your Company."

Note: This Discussion has slightly different due dates than what is typical for this program. Be mindful of this as you post and respond in the Discussion. Your post is due on Day 7, and your response is due on Day 3 of Week 2.

By Day 7

Post:

· Analyze the benefits of establishing solid financial acumen in a company. Tell your colleagues about your personal experiences in one or two situations in which financial acumen was either not supported as an organization hallmark or was actually built into the company's culture.

· Analyze how creating a culture of financial acumen in your organization might contribute to the overall success or failure of the organization.

Read a selection of the posts submitted by your colleagues. You are required to respond by Day 3 of Week 2 to two or more of your colleagues in one or more of the following ways:

· Provide insights or contrasting observations regarding financial acumen that you gained from reading their posts.

· Offer other examples, based on your experience or research, of when financial acumen was effectively used or when decisions were made without it, and explain the results.

· Describe trends about financial acumen you observe from the posts of your colleagues and why those trends are important.

 

WEEK 1

 

ASSIGNMENT

Time value analysis has many applications. For example, you use time value of money concepts in valuing stocks and bonds, establishing loan payment schedules, and deciding whether or not to invest in a new plant and/or equipment. As one of the more important topics in finance, time value of money underlies many other concepts covered in this course, so it is very important to not only understand the concept, but also to be able to compute time value of money problems that involve compounding and discounting skills. As you read through the examples in your readings, you might feel this is a very difficult topic. You may have difficulty relating to time value analysis because the context of the problems is presented in a textbook. Learning tends to be richer and long lasting when you can define your own problems and background contexts.

For this Assignment:

Think of four examples in your organization or from your personal life, or a combination of both, that demonstrate the following:

· Present Value (PV) of a lump sum

· Future Value (FV) of a lump sum

· Present Value (PV) of an annuity

· Future Value (FV) of an annuity

Explain your examples, including why they are relevant to your organization and/or personal life. Provide a rationale for interest or discount rates used in your examples.

Your paper should be at least 2 pages, not including Excel output. Use appendices for showing your Excel output. Be sure to have a conclusions section that documents what you learned from this exercise. Finally, be sure to use citations and related reference materials as appropriate.

 

WEEK 2

ASSIGNMENT

Prepare a performance report on Barry Computer Company. (Problem 4-23 on pages 131-132 of the course text provides a balance sheet and an income statement for the company.)

· Prepare your performance report to show calculations for the eleven ratios listed on page 131-132, as well as a comparison of your computed ratios with the listed industry averages.

· Write a short memo to your supervisor explaining your findings and your recommendations for improvement.

· Suggest some ways in which the company can plan to improve below industry average ratio performance.

· Explain why your recommendations would be effective.

· Be sure to list your computations in an appendix to your report.

 

DISCUSSION 2

· Analyze the differences among accounting profit, operating cash flow, net cash flow, and free cash flow.

· Identify the key stakeholders in cash flow planning and profit estimation processes in the organization, and explain how they are involved in the processes.

· Analyze the impact of accounting profit, operating cash flow, net cash flow, and free cash flow concepts on decisions in the organization for which you currently work, one that you would like to work for in the future, or a small business you hope to start one day.

 

WEEK 3

ASSIGNMENT

Decisions involving capital expenditures often require managers to weigh the costs and benefits of different options related to the financing of a project. For instance, deciding when to call a bond before maturity due to changing interest rates can lower the overall cost of a project significantly through refinancing. So, it is important to be able to understand the real interest rate being paid out to your bondholders (yield) at any given time.

For this Assignment, review the information presented in Problem 7-18 on page 255 of your course text. You will utilize the information in this week's readings and media to make a recommendation with regard to when to call a bond.

· Prepare a spreadsheet using Excel or a similar program in which you compute the items listed in parts a, b, and d. Be sure to compute the Yield-to-Maturity (YTM) and Yield-to-Call (YTC) for each of years 5, 6, 7, 8, and 9.

· Utilizing Word, prepare a written report to your finance director:

o Include a detailed explanation of the conclusion you reached concerning whether or not to call the bond before maturity.

o If your recommendation is to call the bond early, explain when to call the bond and your rationale.

o Discuss the advantages and disadvantages of using a long-term loan instead of a bond.

 

DISCUSSION

· Describe two to three macroeconomic factors that influence interest rates in general. Explain the effects of each factor on interest rates.

· Now think about the industry in which you are employed or one in which you have past experience. To what macroeconomic factors is your industry most sensitive?

· Describe two contemporary factors that seem to be impacting your industry today, and identify their impacts on the interest rates experienced within your chosen industry.

 

WEEK 4

ASSIGNMENT

As a manager, it is important to understand how decisions can be analyzed in terms of alternative courses of action and their likely impact on a firm's value. Thus, it is necessary to know how stock prices can be estimated before attempting to measure how a particular decision might affect a firm's market value.

To prepare for this Assignment, choose a publicly-traded company, and then estimate your company's common stock price, using one of the valuation models presented in the assigned readings or outside readings. (If you want to analyze a dividend paying company, you can find a robust list at http://www.dividenddetective.com/big_dividend_list.htm.)

 

DISCUSSION

Develop an argument as to why your suggested project has the potential to reduce the organization's overall risk. Be sure to identify at least two risk measurement tools used in the readings that you would deploy to measure the overall risk in the organization, and explain why your choices are appropriate for the situation.

 

In your readings this week, you explored how companies compute their cost of capital by computing a weighted average of the three major components of capital: debt, preferred stock, and common equity. The firm's cost of capital is a key element in capital budgeting decisions and must be understood in order to justify capital projects.

For this Discussion, imagine the following scenario:

You are the director of operations for your company, and your vice president wants to expand production by adding new and more expensive fabrication machines. You are directed to build a business case for implementing this program of capacity expansion. Assume the company's weighted average cost of capital is 13%, the after-tax cost of debt is 7%, preferred stock is 10.5%, and common equity is 15%. As you work with your staff on the first cut of the business case, you surmise that this is a fairly risky project due to a recent slowing in product sales. As a matter of fact, when using the 13% weighted average cost of capital, you discover that the project is estimated to return about 10%, which is quite a bit less than the company's weighted average cost of capital. An enterprising young analyst in your department, Harriet, suggests that the project be financed from retained earnings (50%) and bonds (50%). She reasons that using retained earnings does not cost the firm anything, since it is cash you already have in the bank and the after-tax cost of debt is only 7%. That would lower your weighted average cost of capital to 3.5% and make your 10% projected return look great.

By Day 3

Post your reactions to the following questions and concerns:

What is your reaction to Harriet's suggestion of using the cost of debt only? Is it a good idea or a bad idea? Why? Do you think capital projects should have their own unique cost of capital rates for budgeting purposes, as opposed to using the weighted average cost of capital (WACC) or the cost of equity capital as computed by CAPM? What about the relatively high risk inherent in this project? How can you factor into the analysis the notion of risk so that all competing projects that have relatively lower or higher risks can be evaluated on a level playing field?

By Day 5

Respond to two or more of your colleagues in one or more of the following ways:

• Provide insights or contrasting observations regarding use of weighted average cost of capital that you gained from reading your colleagues' posts.
• Describe an example in which the use of weighted average cost of capital was effective or when decisions were made without adequate understanding of the weighted average cost of capital. Explain the results.
• Describe important findings about weighted average cost of capital that you observe from your colleagues' posts and how you might be able to use the lessons learned in your organization.

 

To prepare for this Discussion: Shared Practice, review the evaluation methods utilized by organizations for decision making. Consider your professional experience, knowledge gained from this week's resources, and/or additional research.

By Day 5

Post:

• Evaluate the advantages and disadvantages of the various decision-making tools listed (e.g., regular payback, discounted payback, net present value (NPV), internal rate of return (IRR), and modified internal rate of return).
• Describe a project scenario in which you would recommend one method, or a combination of methods, as being more effective than others. Draw from your professional experience and/or additional research, and provide a rationale for your recommendation.

By Day 7

Respond to two or more of your colleagues in one or more of the following ways:

• Provide insights or contrasting observations regarding the various alternatives discussed from reading your colleagues' posts.
• Comment on a project scenario presented, and provide additional insight into the method(s) used. Or, propose a different method for making the decision, along with your rationale for choosing that method.

Support your comments with your own experiences, the weekly resources, and/or additional research.

 

Close to 50% of the typical industrial and retail firm's assets are held as working capital. Many newly minted college graduates work in positions that focus on working capital management, particularly in small businesses in which most new jobs are created in today's economy.

To prepare for this Discussion: Shared Practice, select two of the following components of working capital management: the cash conversion cycle, the cash budget, inventory management, and credit policies. Think about scenarios in which your selected topics were important for informing decision making. Be sure to refer to your Learning Resources for this week, research in the Walden Library, and your professional experience on working capital concepts to help develop your scenarios.

By Day 3

Post:

• Explain how the first selected topic impacted an organizational decision.
• Explain how the second selected topic impacted an organizational decision.

By Day 5

Respond to two or more of your colleagues in one or more of the following ways:

• Comment on the scenarios presented by your colleagues, and explain new insights gained.
• Comment on the scenarios presented by your colleagues and on how the content might be used to help with an upcoming organizational decision.
•  

In your accounting course, you learned about the income statement that provides a record of what led to net income for the year. Just as you might develop a forecast of the future year's budget, financial professionals forecast future income by developing a one-year forecast of the firm's income statement, more commonly known as the pro forma income statement. Taken together with assumptions about future assets, liabilities, and retained earnings, one can estimate future long-term financing needs for the corporation.

For this Assignment, complete Problems 17-7 (one year pro forma statement) and 17-8 (total liabilities estimation and forecast of long-term debt financing need) in your course text. In addition, provide two or more suggestions on what Ambrose Inc. could do to reduce the forecasted debt financing (the managerial part of financing). Be sure to provide rationales as to why your suggestions will be effective in reducing the forecasted debt financing need.

By Day 7

Submit your Assignment (both your Excel and Word files).

General Guidance on Application Length:

Your Assignment, due by Day 7, will typically be 2–3 pages in length as a general expectation/estimate. Refer to the rubric for the Week 6 Assignment for grading elements and criteria. Your Instructor will use the rubric to assess your work.

 

Over the past two decades, the economy has increasingly become global in nature. Companies have consistently been able to generate more income from overseas operations. If fact, companies such as General Electric, 3M, and Caterpillar are earning more than half of their annual revenues from overseas operations.

For this Discussion, imagine the following scenario:

You are the director of new business development for your company, and your vice president wants to expand into new markets overseas. Your company's core competency is in the area of constructing, staffing, and operating customer call centers. Your VP reasons that since the cost of labor is cheaper overseas, the company will automatically generate a higher rate of return by investing overseas.

By Day 3

Post your reactions to the following questions and concerns:

• What is your reaction to the vice president's premise? True? False? Why? Is it really that simple?
• Describe other types of risk that play a role in making such a decision to expand internationally.
• Should you always assume that foreign projects need to generate higher returns when compared with equivalent projects in the U.S.? Why or why not?
• Be sure to support your arguments from the readings and outside research.

By Day 5

Respond to two or more of your colleagues in one or more of the following ways:

• Provide insights or contrasting observations regarding foreign investment risk management that you gained from reading your colleagues' posts.
• Describe an example in which investment in foreign markets was effectively implemented or when decisions were made without adequate understanding of foreign markets.
• Describe important findings about foreign investment risk management that you observed from your colleagues' posts and how you might be able to use the lessons learned in your organization or an organization with which you are familiar.

 

How do international factors affect decision making? Although the same basic principles of capital budgeting apply to both foreign and domestic operations, there are some key differences. For example, cash flows must be converted into the parent company's currency, so they are subject to exchange rate risk. In addition, the cost of capital may be different for a foreign project compared with an equivalent domestic project.

For this Assignment, complete Problem 19-17, Parts a, b, and c on page 680 of your course text. This case examines the effects of exchange rates on net present values and rates of return.

In addition to solving for the rates of return from the U.S. and Swiss points of view, write a paragraph that summarizes your key learning points from this case. Be sure to include your calculations as an appendix.

By Day 7

Submit your Assignment (both your Excel and Word files).

General Guidance on Application Length:

Your Assignment, due by Day 7, will typically be 2–3 pages in length as a general expectation/estimate. Refer to the rubric for the Week 7 Assignment for grading elements and criteria. Your Instructor will use the rubric to assess your work.

 

There is a growing body of knowledge indicating that organizations that act in a socially responsible manner and follow ethical standards outlast and outperform companies that pursue profits at all costs. This connection between value and ethics has been around for a long time, but several studies have confirmed it. In fact, according to research conducted by Dr. Curtis Verschoor, "Of the 87 companies where an ethics code was clearly stated, the average Market Value Added (MVA) was 2.5 times larger than those not mentioning a code of ethics or conduct" (Verschoor, 1999).

For this Shared Practice Discussion, review this week's resources and the "Code of Ethical Conduct for Financial Management" from Eli Lilly and Company.

By Day 3

Post:

• Assess how comprehensive this organizational ethical code appears to be and what you feel may be missing.
• Compare this code with a similar code from your organization or one with which you are familiar.
• Assess the value of ethical codes for financial management in general.

By Day 5

Respond to two or more of your colleagues in one or more of the following ways:

• Compare your observations with those of your colleagues by:
  • Asking a probing question, substantiated with additional background information, evidence, or research.
  • Providing additional insights about the value of organization ethics codes for financial management.

As you begin this assignment, review the broad range of topics presented throughout the course related to using financial information for decision making. Clearly, 8 weeks does not provide enough time to explore all the topics of this course as deeply as you might have liked.

For this final Reflection, select concepts or topics that resonated with you during this course, and commit to learning more about them. To bring this commitment to life, identify concrete action items that support your goal to deepen your personal learning experience in the coming year. Then, consider the following:

• What can you do now to integrate the experiences and insights you had in this course with your personal and professional development goals?
• What are the most important things you are taking from this course that will shape your future and enable you to make a positive difference?

All components of this Assignment must be submitted as one document:

1. Executive Summary: Write an Executive Summary of the course (2–3 paragraphs) that addresses the following questions:
   • Which content and assignments in this course improved your understanding of using managerial financial information to make decisions for your organization (or one with which you are familiar)?
   • What impact has your improved understanding of financial management concepts had or do you anticipate it will have on the value you will bring to your role within an organization?
   • How have the content and assignments in this course changed the way you think about the manager's role within the organization in terms of financial management and the way you will specifically support financial management in your organization (or one with which you are familiar)?
   • In what ways does the content from this course affect a manager's ability to create positive change within an organization?
   • To what extent can the content from this course contribute to social responsibility and positive social change?
   • How have the content and assignments shaped your goals now, and how do you anticipate they will shape your goals in the future?
2. In this course, you have expanded your understanding of finance in terms of the applications studied (e.g., weighted average cost of capital, bond and stock valuation, cash conversion cycle, etc.). You have also thought about the ways that financial management fits into the larger managerial framework of an organization. For this part, answer the following questions:
   • How would you integrate knowledge of financial management in your overall assessment of a business's health and in your planning for growth?
   • How will your effectiveness as a manager increase as a result of your stronger understanding of managerial finance?
   • What ethics-based practices would you, as a manager, expect of your finance department?
   • How can financial management areas within your organization (or one with which you are familiar) effect positive social change within the organization's serviced communities?
3. Action Plan: Write a detailed Action Plan for one new goal for professional and personal development (you will continue to build on the list of goals you selected in your previous courses). Include the following in your Action Plan:
   • Your specific goal for professional and personal development, with an explanation as to why you selected this goal. Be sure to provide concrete and specific examples of why the goal is important, the extent to which this goal enables you to be an agent for positive social change, the personal or professional value you expect from achieving each goal, and how the goal relates to the resources reviewed in the course.
   • At least two objectives for the goal you have identified: Provide a rationale that explains how your objectives support the goal.

General Guidance on Application Length:

Your Assignment should be comprised of the following:

• Executive Summary: Typically 2–3 paragraphs in length and no more than 1 page if single spaced
• Analysis of how financial management fits into the larger managerial framework of an organization: Typically 1 to 2 pages (0.5 to 1 page if single spaced)
• Action plan: Typically 1 to 2 pages (0.5 to 1 page if single spaced)

Refer to the Week 8 Individual Reflection Rubric for grading elements and criteria. Your instructor will use the rubric to assess your work.

When developing your Blueprint for Professional and Personal Growth (BPPG) for this course, you may find that you are utilizing some information that you presented in the discussions or assignments in this course or information that you have presented in previous courses, including previous BPPG submissions.  Walden recognizes this situation with the caveat that you may use only small portions of your previously submitted work as background or foundational material for additional development in a subsequent assignment or research project Refer to Section 3 of the Student Handbook, Academic Integrity section in the Code of Conduct: found at http://catalog.waldenu.edu/content.php?catoid=155&navoid=51011. However, when doing so, you must be careful not to commit a form of academic integrity known as self-plagiarism.  If you reuse sections of your previously submitted work without providing the proper citation and reference, you are committing self-plagiarism.  This is a violation of Academic Integrity as defined in the Student Code of Conduct. 

To ensure that you follow the Academic Integrity standards you must take care to properly cite and reference any reused sections of previously submitted work. For example, if Johana Smithe reuses a section of their BPPG from the previous class, they would cite this section as a quotation: (Smithe, 20xx, p.y) and provide a reference in the Reference page: Smithe, J. (20xx). Blue print for professional growth for WMBA60xx. Unpublished manuscript, Walden University.  Please take some time to review the information at the Writing Center concerning self-plagiarism and how to properly cite yourself.

Link to the Writing Center on Citing Yourself: https://academicguides.waldenu.edu/writingcenter/apa/citations/citingyourself. 

By Day 7

Submit your Assignment of this week.

Submission and Grading Information

To submit your completed Assignment for review and grading, do the following:

• Please save your Assignment using the naming convention “WK8Assgn+last name+first initial.(extension)” as the name.
• Click the Week 8 Individual Reflection Rubric to review the Grading Criteria for the Assignment.
• Click the Week 8 Assignment link. You will also be able to “View Rubric” for grading criteria from this area.
• Next, from the Attach File area, click on the Browse My Computer button. Find the document you saved as “WK8Assgn+last name+first initial.(extension)” and click Open.
• If applicable: From the Plagiarism Tools area, click the checkbox for I agree to submit my paper(s) to the Global Reference Database.
• Click on the Submit button to complete your submission.