User Account

All Pages

Determine the financial soundness and growth rate

Assignment Help Operation Management
Reference no: EM132164852

Read through the below post and provide any on of the following: APA format 300 Words.

. Ask a probing question, substantiated with additional background information, evidence or research.

· Share an insight from having read your colleagues' postings, synthesizing the information to provide new perspectives.

· Offer and support an alternative perspective using readings from the classroom or from your own research.

· Validate an idea with your own experience and additional research.

· Make a suggestion based on additional evidence drawn from readings or after synthesizing multiple postings.

Beta

The business performance is measured using various parameters to determine the financial soundness and growth rate of a given organization.

It is through this analysis that the strengths and weaknesses of a company are known (Burger & Hawkesworth, 2013). Beta is one of the most important measures of equity market volatility. Beta can be thought of as asset elasticity or sensitivity to market. For example, if the Beta of equity is 2, it will be expected to outperform the market when the market is going up significantly.

The beta of 1 indicates that an asset and market will generate similar returns during over time. Therefore, Beta is a measure of individual stock risk relative to the overall volatility of the stock market and is calculated based on very sound finance theory - Capital Assets Pricing Model (CAPM).

In this case, we are going to look at Amazon's Beta value that is calculated using the following formula. Amazon Beta = Covariance ÷ Variance = 1.81.Other Beta values for other companies include Alibaba 2.37, Walmart 0.51 and eBay with a beta value of 1.01.Different companies have different beta values since they all have varied financial strengths and overall market performance.

Capital Budgeting

It is of importance for an organization to know how it is going to get profits after investing. Different methods can be used, and this includes, Net Present value method and Internal Rate of return method.

In NPV the present values of the cash flows are compared to the initial investments, and if the difference is positive or negative, then it is accepted or rejected. On the other hand in the internal rate of return, the NPV for investment is taken to be zero (Burger & Hawkesworth, 2013).

This method considers the time value of money and relies on proceeds of cash generated from projects. The best approach to use in capital budgeting is the Net Present Value method.

References

Burger, P., & Hawkesworth, I. (2013). Capital budgeting and procurement practices. OECD Journal on Budgeting, 13(1), 57-104. Doi: 10.1787/budget-13-5k3w580lh1q7

Jarrow, R. (2014). Computing Present Values: Capital Budgeting Done Correctly. SSRN Electronic Journal. Doi: 10.2139/ssrn.2383896

Reference no: EM132164852

Questions Cloud

Describe your purpose to impact plan : Describe your Purpose to Impact plan. What is your purpose statement? What is your first critical step to implement your impact plan?
Define the term capital budgeting : Beta is a measure of the risk of a stock when it is included in a well-diversified portfolio, the beta for cisco as of today is 1.26
Develop presentation skills for professional environment : Develop a PowerPoint presentation (12-18 slides in length). It should include a title slide, an agenda slide, body content slides, a closing slide.
Explain what the company as trying to market : Explain what the company as trying to market, what was the outcome, why did it fail and if the company survived it.
Determine the financial soundness and growth rate : The business performance is measured using various parameters to determine the financial soundness and growth rate of a given organization.
How are managers at holden managing the types of changes : Describe the major areas of organizational change that have impacted Holden. How are managers at Holden managing the types of changes?
Why is animal medicine such controversial issue : Why is animal medicine such a controversial issue? Is the stockout rate the only perfomance measure?
How you would address each emotion to benefit both : Assume you are a manager at your current place of employment or at a former employer.
Explain how budget formats channel thought : Explain how formats can direct thought to and highlight general policy matters, budget balancing issues, and improvement of the quality of government management

Reviews

Write a Review

Operation Management Questions & Answers

  Concern for the long-term future of project and or company

Identify at least three conclusions that have potential concern for the long-term future of the project and or company.

  Research typical business plans

My assignment is to research typical business plans,and then develop your first draft of a business plan with a Title/cover page, a Table of Contents, a Mission Statement, a Business Model

  Considering bringing the garage fabrication process

Angels Inc. is considering bringing the garage fabrication process (which is currently outsourced) in-house.

  What specific characteristics of indonesian culture

What specific characteristics of Indonesian culture do you need to know in order to respond appropriately, with this particular cultural context in mind? If you were to respond, offer one specific sentence or strategy that you might take, given what ..

  Brand awareness for recruitment using linkedin analytics

Describe three key ways the company could track brand awareness for recruitment using LinkedIn analytics.

  Draw use-case diagram for college

Draw a use-case diagram for a college that would like to keep track of each graduate. In order to maintain strong ties to its alumni, the college holds various events. The college needs to keep track of which graduates have attended which events. The..

  Suppose you have just joined startup drug delivery company

Suppose you have just joined a startup drug delivery company as the President and CEO.

  Identifies and analyzes the most important external

write a summary of no more than 1400 words that does the followinga identifies and analyzes the most important external

  Probability that three or more people are in the cafeteria

A cafeteria serving line has a coffee urn from which customers serve themselves. Arrivals at the urn follow a Poisson distribution at the rate of five per minute. In serving themselves, customers take about 8 seconds, exponentially distributed. How m..

  Who should be the project sponsor and why

What type of communication plan will likely be needed during the project? What information should be shared with the project stakeholders?

  Compute the composite rating for each location

A location analysis for Temponi Controls, a small manufacturer of parts for high technology cable systems, has been narrowed down to 4 locations.

  The economy starts at long-run equilibrium

Suppose that the economy starts at a long-run equilibrium and that the short-run aggregate supply curve has a positive slope. Now suppose that a negative supply shock hits the US.  No Policy Intervention: Using the model of aggregate demand and aggre..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd