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1 May 2019

Please respond in detail with an example, Thank you! (please provide the source)

“Financial intermediaries play a crucial role in an economic crisis–they are responsible for both causing the market to crash and then helping it recover from the crisis.” Is this statement true? Discuss with an example.

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Reid Wolff
Reid WolffLv2
2 May 2019

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The Statement of Cash flows have become one of the most important financial documents. It is possible to a huge net loss while still generating significant positive cash flows (using depreciation as an example). It is even possible to have billions of dollars in net losses with no effect on the cash position by merely writing off a single item (such as goodwill). It is possible to have a rapidly growing profitable business and become insolvent because one did not manage their cash flow. As it can be seen, the statement of cash flows is extremely important in helping the analyst determine what is happening with corporate finances.

The Statement of cash flows is broken down into three major parts: cash flow from operating activities, cash flow from financing activities and cash flow from investing activities. By carefully studying these documents you can determine the source and use of corporate funds.

Corporations have numerous methods of “manipulating” their books. Some methods are legal some methods are not legal. Based upon your reading in the book, your research on the internet and previous classes please discuss the methods you, as a financial manager could improve gross profit, operating profit and net profit margins.

essay questions from the list.

A. The “Supply and Demand” analysis for bonds offers a theory for how interest rates are determined.

1. List the Demand factors that affect interest rates.

2. List the Supply factors that affect interest rates.

3. Which factors do you believe are most important in determining interest rates?

B. Issuing bonds are an important mechanism for attracting capital into the financial markets.

1. What is the importance of Credit-Rating Agencies?

2. List at least two (2) credit-rating agencies in the US.

3. Explain how they affect the efficiency of Capital Markets.

C. Junk bonds are common in the secondary market.

1. Explain what is a “Junk” bond.

2. If they are NOT “Investment” grade, then why are they popular with investors?

3. Discuss an example of a “Junk” bond that would be a very profitable investment.

D. It is hard to avoid “conflicts of interest” in financial markets.

1. Why is it so important to identify a conflict of interest?

2. Discuss a specific finance example.

3. Explain how financial markets operate to minimize “conflicts of interest.”

E. Financial Engineering has been blamed as an important cause of the 2008 Financial Crisis.

1. Explain the advantages of “Financial Engineering.”

2. Explain the disadvantages of “Financial Engineering.”

3. Provide an example of “Financial Engineering.” Who benefited the most from this financial innov

A. Trillions of dollars in asset value disappeared after the peak of the 2006 Asset Bubble.

1. What factors do you think were most important in the 2008 Financial Meltdown?

2. How did they impact the confidence in the financial markets?

3. What policies do you think are most important in preventing a future financial crisis? Explain.

B. Financial Innovation and Liberalization contributed to the Global Financial Crisis.

1. Explain how specific examples of “Financial Innovation” negatively impacted financial markets during this period.

2. Explain how specific examples of “Financial Liberalization” negatively impacted financial markets during this period.

3. How did consumer lending and bank supervisory regulation contribute to the Financial Crisis? Could it Happen Again? Explain.

An organization’s finances are closely linked to local and global markets. Therefore, regular monitoring of economic factors, such as employment, inflation, supply and demand, and interest rates is sure to provide beneficial information. Therefore, it is important to understand the impact of economic factors upon an organization’s current and future operations and finances.

Using the module readings, Argosy University online library resources, and the Internet, research two to three articles on the importance of analyzing economic factors for organizations.

Then respond to the following:

Why should companies pay attention to economic factors when managing the organization’s current and future financial information?

Consider an organization you are familiar with. Identify the economic factor that has had the most impact on the organization’s earnings in the past 5 years.

How has this factor impacted the organization and how has the organization dealt with the impact in a positive or negative manner?

Please put the following income statement and balance sheet terms in the proper order:

Taxes, interest, gross profit, selling, general and administrative expenses, sales, depreciation, net income, cost of goods sold, and EBITDA.

For the balance sheet, please categorize the following as short-term assets, long-term assets, short-term liabilities, long-term liabilities, or owner’s equity:

Cash, accounts payable, accruals, property, plant and equipment, inventory, accounts receivables, paid in capital, retained earnings, notes payable, mortgage, and accounts payable.

Please explain in which order the four major financial statements need to be prepared, and why.

Please also explain the three major categories of the statement of cash flows and under which category the following items belong. Also explain whether or not each item would be considered a source or use of cash for the period in question:

Inventory-increased for period
Net income-increased for period
Accounts receivables increase for period
Accounts payable decrease for period
Accruals decrease for period
Depreciation-increases for period
Stock issued
Property purchased
Bonds paid off
Inventories increase for period
Cash decreases
Notes payable increase for period
Bonds redeemed for period

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