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    Conducting Financial Analysis with Microsoft Excel

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    Practice Questions - Prepare in Word Document

    1. You are asked to prepare a financial forecast for Joan Roberts, the Managing Director and owner of a retail fashion line, whose market share and profits have been steadily dropping over the last two years. Ms. Roberts claims to be "bored" with financial jargon and says she only cares about her mission of funding social change. What is your response to Ms. Roberts about the role we "money-conscious finance people" play in achieving her goals? How would you go about preparing her financial forecast?

    2. The CEO of Dewers LLC has been focused on increasing the size of the company and maximizing current profits. A coworker, aware of your expertise in the field of finance, asks you if the CEO's actions are creating an agency problem, and if so, the options that are available to the shareholders to resolve this problem. How would you answer your coworker?

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    https://brainmass.com/business/finance/conducting-financial-analysis-microsoft-excel-558177

    SOLUTION This solution is FREE courtesy of BrainMass!

    1. You are asked to prepare a financial forecast for Joan Roberts, the Managing Director and owner of a retail fashion line, whose market share and profits have been steadily dropping over the last two years. Ms. Roberts claims to be "bored" with financial jargon and says she only cares about her mission of funding social change. What is your response to Ms. Roberts about the role we "money-conscious finance people" play in achieving her goals? How would you go about preparing her financial forecast?

    The most important financial goal of an organization is wealth maximization. Wealth maximization is concerned with shareholder's welfare. It is achieved by maximizing the cash flows of the organization. Hence by achieving financial goal, Ms. Roberts will also be able to achieve her mission of funding social change.
    One should prepare a realistic financial forecast for the organization, but it should be aimed at maximizing the shareholder's wealth. Moreover one can consider balanced scorecard as a tool to implement the strategy of the organization. Kaplan & Norton introduced the balanced scorecard to have a more holistic perspective of assessing the performance of the organization. BSC "translates an organization's vision and strategy into a comprehensive set of performance measures that provides the framework for a strategic measurement and management system." Following parameters prove beneficial- Financial, Customer, Internal and operational.

    2. The CEO of Dewers LLC has been focused on increasing the size of the company and maximizing current profits. A coworker, aware of your expertise in the field of finance, asks you if the CEO's actions are creating an agency problem, and if so, the options that are available to the shareholders to resolve this problem. How would you answer your coworker?

    The agency problem arises because of differences in the objectives of the shareholders and the management. There can be a conflict of interest. This conflict of interest can be because of the disparity between the objectives of shareholders and the organization. The main objective of the shareholder is to maximize the wealth and the objective of the top management can be a different one. Top management can work for its own personal objectives. In this case The CEO of Dewers LLC has been focused on increasing the size of the company and maximizing current profits and may ignore the long term profit. One can resolve this problem by making employee shareholders of the company.

    References:
    http://www.bmgindia.com/balanced-scorecard-consulting.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

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    https://brainmass.com/business/finance/conducting-financial-analysis-microsoft-excel-558177

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