Each question is required to have organized and well thought out responses in Es
ID: 2806626 • Letter: E
Question
Each question is required to have organized and well thought out responses in Essay format with a minimum of 2 paragraphs.
6- What would happen to the U.S. standard of living if people lost faith in the safety of the financial institutions? Explain.
7- How do airlines benefit from acquisitions of other airlines? How does it affect the market? How does it affect the consumer? How does it affect the share holders?
8- What is the function of Financial Statements? Who is interested in Financial Statements?
9- There are Four Key Financial Statements:
Income Statement (also known as Profit / Loss, or Statement of Operations)
Balance Sheet
Cash Flow Statement
Stockholders' Equity Statement
10- Please describe what each statements details.
“Cash is King” and operating cash flow is the lifeblood of a company and the most important barometer for investors.
A company that does not generate cash over the long term is on its way out. Which 3 Strategies to increase cash flow do airlines utilize?
11-Explain the aspects of financial diversification and why Companies use financial diversification to limit business risk. Is financial diversification the only cure-all for the disease known as business risk?
Explanation / Answer
What would happen to the U.S. standard of living if people lost faith in the safety of the financial institutions? Explain.
The standard of living is affected by various factors. it can be health, financial issues, GDP rate. if we lose our sight on any of the options then we may get wrecked with the effects.
The same would have an impact on the economy, since firms will not be able to upgrade the amounts, source of capital would be affected. The same will affect the output of good and services and similarly the gap RATE WILL FALL DOWN.
It impacts in various way to capture the utmost we can list it down as-
High Unemployment
Lesser Investment
Lower productivity
High rate of inflation
So above mentioned are the points to take care . When people do not have trust in the financial institution, people will invest less, lesser income generation. Home buyers gets no money to purchase home. Accordingly rate of interest will be affected
How do airlines benefit from acquisitions of other airlines? How does it affect the market? How does it affect the consumer? How does it affect the share holders?
The airline company is a big giant industry, There are many challenges that are faced by the same. First of all, it has expensive things to buy or lease airplanes. This is one of the fixed costs , its whether you fly a plane or not. The high fixed costs of running an airline make it tricky to adjust supply—the number of airline seats available—when demand falls during a recession or travel slowdown.Then there's the volatile price of oil, a major cost that airlines can do nothing to control.
If we consider an example, then we can count on the bankruptcies back in 90’s. ll those bankruptcies allowed the airlines to trim an excess supply of jets and cut labor costs that got inflated during the late 1990s, when the carriers were flush and the unions for pilots, flight attendants and machinists had the leverage to demand generous contracts. They also set the stage for a spate of mergers, including American and TWA in 2001; U.S. Airways and America West in 2005; Delta and Northwest in 2008; and United and Continental in 2010. Once American and U.S. Airways have merged, the industry will have shrunk from eight or nine big carriers in 2000 (depending on how you count) to just four. Delta, United, Southwest and the new American will control about 85 percent of all domestic air travel.
affect to consumers-
Better pricing of the flights
Better services by merging
Better use of the technology for better comfort
Effect Shareholders-
Price of share will be affected
better technology used better shares are rated
Better growth
Profitable market
8- What is the function of Financial Statements? Who is interested in Financial Statements?
Financial statements are the window from which a user can access to the financial health of the company. they gives us the idea how company is performing the business.
the financial statements showcase the amount of the expenses and income that a company has made in its income statement.
Under balance sheet we can look at the assets and the liabilities of the company. The equity and debt raised can be concluded from the same
Who are interested-
The most common financial statements include the balance sheet, the income statement, the statement of changes of financial position and the statement of retained earnings. These statements are used by management, labor, investors, creditors and government regulatory agencies, primarily.
10- Please describe what each statements details.
“Cash is King” and operating cash flow is the lifeblood of a company and the most important barometer for investors.
Cash is the lifeline of any business, it is a need of the business and without cash no business can make profits. So Cash is the “thing” through which we can make trades. It is more valuable than any other form of investment tool. The "cash is king" phrase is typically used when prices in the securities market are high and investors decide to save their cash for when prices are cheaper.
Operating cash flow is the lifeblood as we need the operation cash for day to day activities.There is a cash inflow and outflow and when we manage the same efficiently we make the business subtle, It is one of the important task to make the business vitalise and make optimum use of cash in resourceful way.
A company that does not generate cash over the long term is on its way out. Which 3 Strategies to increase cash flow do airlines utilize?
3 Strategies to increase cash flow do airlines utilize?
1, Pricing strategy
2. Cost management
3. Optimal capital structure.
One reason that cash flow from operations is often lower than ideal is due to interest expense, which is directly related to a company’s debt obligations. Companies with lower amounts of debt typically have lower interest expenses, and thus have more cash available from operations and higher free cash flow. Remember, it may also be difficult for your company to obtain a loan or line of credit if the company does not generate enough net income to cover the debt payments. As a result, optimizing a company’s debt and equity structure can be beneficial for future financing needs as well.
Effectively managing cash flow is a challenge for many small companies. By hiring the right CFO, obtaining an optimal capital structure and/or investing appropriately for growth, you may be able to generate free cash flow—a performance metric that may influence a company’s valuation and ability to sustain itself over time.
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