Identify a new product or service—either recently rolled out or about to be rolled out—in the company

| June 14, 2018

Assignment 2: Project FinancingInvesting in products and services should produce returns so that stockholders, stakeholders, and others are interested in the organization.In this assignment, you will learn about a new product or service.Tasks:For M1 Assignment 3 (“Understanding the Numbers for Better Decisions”), you chose a publicly-traded company and analyzed its financial statements. Use that company to do the following:Identify a new product or service—either recently rolled out or about to be rolled out—in the company of your choice (Note: Information about new products or services can be found on a company’s website or in the management’s discussion and analysis section of the company’s annual report).Analyze the quality of the company’s existing projects. Try answering the following questions about returns on the new product or service of your choice. What is the return on equity earned by the company? Based upon this return, is the company picking good projects?What is the return on capital earned by the company? Based upon this return, is the company picking good projects?Discuss how the company financed the initiative and why it was perceived to be advantageous. To answer this question, you might want to look at the following: How sensitive has this company’s value been to changes in macro-economic variables such as interest rates, currency movements, inflation, and the economy?How sensitive has this company’s operating income been to changes in the same variables?How sensitive is the sector’s value and operating income to the same variables?.0001pt;
text-align:center;line-height:200%;mso-layout-grid-align:none;text-autospace:
none”>Understanding the
numbers for better decisionsMy company of choice is the Bernard L. Madoff Investment Securities
LLC which is a broker and dealer that is registered with the Securities and
Exchange Commission. The company is also a member of the financial industry
regulatory authority and various exchanges. The company is involved in various
brokerage and trading activities with counter parties basically involving
brokers and dealers, banks and other financial institutions. If the
counterparties do not fulfill their parts, the company may be exposed to risks.
The default risk depends on the creditworthiness of the issuer of the
instrument or the counter party. The furniture and the equipment of the company
are stated at a cost with less accumulated depreciation and depreciation as
provided on the MACRS method over the approximated useful life of the asset,
normally five or seven years.The company’s cash and
cash equivalent consists of highly liquid investments and cash itself. These
are not held for resale with maturities when bought of either three months or
less. The company records the securities that are loaned and borrowed at the
amount of cash collateral received or advanced in connection with these
transactions. The assets, income statements and the liabilities accounts that
are denominated in foreign currencies are at the end of the year translated at
the financial year end exchange rates. The losses and gains that are obtained
resulting from the transactions of foreign currencies are included in the net
income.Proprietary securities
transactions in regular trades are recorded on the trade date as if they were
settled. The profits and loss that are obtained from all the transactions of
securities are entered into the account for risk of the company and are
recorded on the basis of trade date. Transactions of customer securities are
reported on a settlement date basis with the related commission expenses and
income reported on a trade date basis. Securities that are sold or owned but
not yet bought are stated at the cited values of the market with resulting
losses and gains that are unrealized included in the operations results.The current ratio which is
the ratio of current assets to current liabilities of the company is:.gif”>$1,093,314,139 $425,314,139 = $2.57060379The asst turnover ratio of the company is
calculated as the ratio of the annual credit sales to the accounts receivable:.gif”>$118,138,56955,333,291 = $2.13503601The debt ratio which is defined as the total
debt divided by total assets of this company is:.gif”>$ 249,818,562 1,093,314,139 = $0.2284966Return on
assets ratio is a quantity of how efficiently the
firm’s assets are being used to produce profits. It is defined as:

Return on Assets

=

Net Income

.gif”>

Total Assets

.gif”> $24,696,565
$ 1,093,314,139 = 0.02258872 The
trends reflected in the financial statement means that the company is in a good
and stable condition since its assets are more than its liabilities though its
ratios are low when compare to other companies that are in the industry and it
is facing stiff competition. The company needs to improve on its sales in order
to remain at a competitive edge with the other companies.ReferencesFriehling & Horowitz (2007). Bernard
L. Madoff Investment Securities LLC: Statement of financial condition. New city: New York.Maureen, O. (1995). Market
microstructure theory. Oxford: Blackwell.

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