WEEK 7

Please respond to the following:

• Explain the difference between financial statements and pro forma financial statements. Describe how these statements are developed and used in financial management and planning.

Be sure to respond to at least one of your classmates’ posts.

According to Advani (2012) financial statements consist of the normal balance sheet, income statement and cash flow statement. To be more detailed financial statements are any of the forms that can be publicly filed such as the 10-K, Annual Report, Proxy Statements, 10-Q, Form 8-K and Form 144. Pro Forma statements in general are just adjusted financial statements that fall into two categories:

1. Adjusted Earnings
2. Projections

In essence Pro forma Statements are mostly used for forecasting and planning. I will leave you with this small bit of information so that you can expand on the second part of the question.

References:

Advani, R., & Greene, D. (2012). The Wall Street MBA. McGraw-Hill.

WEEK 8

Please respond to the following:

• Contrast the differences between a stock dividend and a stock split.
• Imagine that you are a stockholder in a company. Determine whether you would prefer to see the company that you researched declare a 100% stock dividend or declare a two-for-one split. Provide support for your answer with one real-world example of your preference.

Be sure to respond to at least one of your classmates’ posts.

For this question the main difference between stock dividend and stock split is that a dividend is normally a percentage to purchase more common shares for stakeholders whereas a stock split is two or more new shares for every existing share an investor holds. The shareholder does not pay any additional money. Dividends are also mostly done annually but many companies do not do them because small dividends create more paperwork, expenses, and bookkeeping problems. I would prefer stock split over dividend as it would make more shares and more affordable for those that want more as well as those that might now have been able to afford it otherwise. For example, Microsoft’s stock was almost $175 per share currently. If split I would have 2 shares and they would both value $87.50 meaning I have not lost anything. I can buy more and others that are not willing to spend over $100 per share can now invest as well. In the long run I will gain more money from a split. There are many other companies that each share cost way more for example Tesla. Currently Tesla’s stock price was almost $800 per share. Would you be more willing to buy stock in Tesla if it were to split? Or would you buy at its current price and hope for dividends at the end of the year? The following article provides a little more on stock split and stock dividends.

Week 9 Discussion

Please respond to the following:

• Determine the key reasons why a multinational corporation might decide to borrow in a country such as Brazil, where interest rates are high, rather than in a country like Switzerland, where interest rates are low. Provide support for your rationale.

Be sure to respond to at least one of your classmates’ posts.

Many of us are risk adverse as we have discussed in previous chapters. Since we are risk adverse, do we carry this over into business transactions? Multinational corporations are in business to make money. That being said they want the biggest bang for their buck. When looking at getting the biggest bang for the buck one would instantly say lower interest rates are better. However, multinational corporations have many factors to consider such as inflation, purchasing power parity, interest rates, and other qualifications. It would make more sense to borrow at higher interest rates from Brazil because when it is time to pay it back, the Purchase Power Parity for its currency is low. It would also make more sense to borrow from Brazil because if the U.S. is going to do business with them as far importing the risk of loss due to exchange rates may decrease. The most important reason to borrow from Brazil than Switzerland would be the fact that Brazil has less terms and conditions. Brazil is trying to build the economy more and by having higher interest rates they can get their money back faster. Switzerland does not need the money. So, they have lower rates to attract borrows but they do not have flexible terms or conditions. It is like the example of taxes in the textbook where Yogi Berri was asked how he wanted his pizza sliced. He responded that he wanted six because he is not hungry enough for eight (Higgins, Koski, & Mitton, 2019). No matter how many slices you make the pizza is still the same size. How can you apply this to getting loans from different loan institutions?

Answer rating: 100% (QA)

Financial Statement Vs Proforma financial statements Financial statements indicate the amount made overall by a business either annually or quarterly Proforma earnings tell how much was made throughou... View the full answer