Financing the Short Term Obligations Coursework

Financing the Short Term Obligations - Coursework Example Body Paragraphs Task 1 Short term financing is vital for any kind of business in order to meet its financial necessities in a short period of time. Consequently, there are various sources of attaining short term debts. However, the four primary sources of short term finance available to any business comprise of Trade Credit, Bank Credit, Customers’ Advances and Commercial Paper. Trade Credit implies the allowance of credit businesses by the providers of raw materials and other equipment. In this type of financing, though no cash is allotted to the business, but it is given the permission to holdup the payment for the goods up to the extinction of the credit. Bank Credit is another significant source of short term financing which allows businesses to draw credit at once or in phases. There are various sub-categories of Bank Credit such as Loans, Cash Credit, Overdraft and Discounting of Bill. The third short term financing source is Customers’ Advances in which businesse s ask customers to pay a part of their payment in advance. This is often the case when orders are large as it facilitates the company to overcome its short-term necessities (World Academy Online, 2011). The fourth source is Commercial Paper, which is a short term unsecured obligation set out by a large company to investors, with the purpose of financing its immediate needs of inventories and other materials. Maturities on such papers do not exceed 270 days and the interest rate is usually less than that offered in bank loans. Since it is not a secured instrument of debt, therefore it is only acceptable if issued by credible organizations (Kacperczyk, 2010) Task 2 1. McDonald as well as Burger King have financed their short term needs and requirements largely through Bank Credits and Trade Credits. Both the companies have been borrowing capital from banks to buy inventories and goods which are needed urgently. They have also utilized the facility of Trade Credit through their supplie rs. In case of Burger King, short term obligations form around half of the total liabilities, indicating significant dependence on short term financing (Burger King Holdings Inc, 2012). In contrast to Burger King, McDonald’s short term obligations form around 33% of its total liabilities (McDonald’s Corporation, 2012) 2. Burger King Liquidity Ratios 1. Current Ratio = Current Assets / Current Liabilities (2011) = 434,000,000 / 473,000,000 =0.91 x 2. Quick / Acid Test Ratio = (Current Assets – Inventory) / Current Liabilities (2011) = (434,000,000 – 15,400,000)/ 473,000,000 = 0.88 x Efficiency Ratios 3. Debtor Days = Account Receivables / (Sales/360) (2011) = 138,100,000 / (2,502,200,000/360) = 19.87 days 4. Creditor Days = Accounts Payable / (Sales/360) (2011) = (106,900,000) / (2,502,200,000/360) = 15.38 days 5. Stock Turnover Days = (Inventory x 360) / Cost of Goods Sold (2011) = (15,400,000 x 360) / 1,614,800,000 = 3.43 days McDonald Liquidity Ratios 6 . Current Ratio = Current Assets / Current Liabilities (2011) = 4,368,500,000 / 2,924,700,000 = 1.49 x 7. Quick / Acid Test Ratio = (Current Assets – Inventory) / Current Liabilities (2011) = (4,368,500,000 – 109,900,000) / 2,924,700,000 = 1.46 x Efficiency Ratios 8. Debtor Days = Account Receivables / (Sales/360) (2011) = 1,179,100,000 / (27,006,000,000/360) = 15.71 days 9. Creditor Days = Accounts Payable / (Sales/360) (2011) = (943,900,000)/ (27,006,000,000/

Reflective Journal-Ethics Essay Example | Topics and Well Written Essays - 1000 words

Reflective Journal-Ethics - Essay Example By adopting the responsibilities of this one person, I began to imagine the worldview of this person. Focusing on my own responsibilities, as I understood them helped me to see that one of the greatest challenges in making ethical decisions lies in the ability to recognize when a decision actually needs to be made. Following established procedures and adopting a view of the world that is equipped with blinders can lead to unethical decisions. It is easy to say that you faithfully did your job and still act in an unethical manner. Unfortunately, this is all too easy to do when all a person cares about is holding the party line and doing their duties in a way that does not question the outcome of their decision. Another aspect of the simulation game that was especially powerful was the understanding of motivation and perception of others. I felt that the activity where the impact of my decision on all of the other participants was graded from high to low as a very insightful activity. It helped me to see that individuals that have the most to lose from a decision will seek to influence the decision making process the most. They will use whatever power and influence they have to maintain their positions. This is not something that I ever thought about quite in this way. I can see how information that each individual provides might be tainted by their own biases that are coming from the fact that they are trying to maintain their positions. Weighing the impact of a decision on all of the players helped me to identify when I might be open to influence from someone that might lead to an unethical decision. I found the game to be a good teaching tool for creative thinking as well. In most situations involving ethics, the answer or decision cannot be made in a vacuum and there is rarely a black or white answer. Some things are clearly unethical, such as withholding information about a product that has