Audit Quality and Cost of Debt Capital for Private Firms: Evidence from Finland Jukka Karjalainen Department of Business University of Eastern Finland April 10‚ 2010 Abstract The purpose of this paper is to examine the value relevance of the perceived audit quality in terms of who audits‚ as well as the audit outcomes in terms of the auditor’s opinion and accruals quality‚ in the pricing of debt capital for privately-held firms by examining a large sample of privately-held Finnish firms. The
Premium Audit Auditor's report Financial audit
contract staffs to tackle this problem. However‚ this leads to increase in the manpower costs and preventing the company from expanding and exploiting new businesses. The second problem is the accounting treatment for dredging cost incurred by Green Port. The CFO‚ Hafiz Hashim had fully expensed the cost in the financial year it incurred. However‚ General Manager of the company‚ Anita Osman preferred the cost to be amortized in order to improve the profit of the subsidiary. The third problem
Premium Generally Accepted Accounting Principles Subsidiary Free cash flow
just completed its fourth full year of operations on December 31‚ 2007. Ending Year Balances for the prior year that ended on December 2006 were as follows: Retained Earnings: $ 225‚000 Common Stock at par: $ 500‚000 Additional Paid-in Capital: $1‚000‚000 Treasury Stock: $ 200‚000 Income before taxes for 2007 totaled $240‚000 Effective Tax Rate was 40% for all years of operation including 2007 The following information relates to 2007: 1. An error was discovered during 2007
Premium Balance sheet 1921 Generally Accepted Accounting Principles
along with the further clarification on the cost of capital using DCF approach. The cost of capital is a term used in the field of financial investment to refer to the cost of a company’s funds‚ both debt and equity‚ or from an investors’ point of view‚ the shareholders required return on a portfolio of a company’s existing securities. It is used to evaluate new projects of a company as it is the minimum return that investors expect for providing capital to the company‚ thus setting a benchmark that
Premium Discounted cash flow Net present value Investment
Part A McDonald’s and Burger King are two famous fast food firms in the world. Both of them sell the same type of food‚ such as hamburger and fries. However‚ the operating systems of them are different. 1. The Differences in Processes (1) Process Maps of McDonald’s and Burger King BunHeels Bun Crownsns Patties Put in Toaster Put in Toaster Put on Grill Dress Turn Remove‚ Lay on Crown Clean Grill Add Heels Remove Remove Sear Burgers Up
Premium Hamburger Operating system
Moreover‚ at a cost of roughly $500‚000 per Megawatt (MW) for a BB rated company with total assets of only $1.7 billion and a debt-to-capitalization ratio of 79%‚ financing would not be easy. To get to 15‚000 MW in five years‚ they needed to raise at least $4.5 billion from debt and equity markets assuming Calpine generated $1.5 billion of cash from operations as projected. In the near term‚ however‚ they needed to finance four merchant plants with a total capacity of 2‚265 MW at a cost of $300 million
Premium Finance Debt Vertical integration
Services divisions. The hurdle rate is the cost of capital based on an estimate of the corporation’s WACC. 2. Please estimate the segment WACCs for Teletech (see the worksheet in case Exhibit 1). As you do this‚ carefully note the points of judgment in the calculation. Corporate Telecommunications Products & Systems MV asset weights 100% 75% 25% Bond rating A-/BBB+ A BB Pretax cost of debt 5.88% 5.74% 7.47% Tax rate 40% 40% 40% After-tax cost of debt 3.53% 3.44% 4.48% Equity beta
Premium Weighted average cost of capital Investment
Executive Summary The business world is very competitive‚ so every business decision should be taken carefully. When a company is facing a problem‚ it usually uses a problem solving process to identify a problem and analyze pros and cons among possible solutions. This paper is an analysis in regard to Citigroup Inc in order to identify possible problems that the company is facing. We are going to set out the problem-solving process based on PSU SBA framework. PSU SBA represents six steps in problem-solving
Premium Bank Financial services Bank of America
INTRODUCTION In the case of Biopure‚ the issue is to decide whether to launch Oxyglobin and how to launch it without jeopardizing the potential of Hemopure. Oxyglobin is a substitute to animal blood while Hemopure is a substitute to human blood. The CEO need to identify the influence of the launch of Oxyglobin bring to Hemopure. If the company is launching Oxyglobin‚ the CEO need to decide the price‚ identify the target client‚ choose distributing method and consider the production capacity. The
Free Blood Blood transfusion Veterinary medicine
Harnischfeger Corp 1. Describe clearly the accounting changes Harnischfeger made in 1984 as stated in Note 2 of its financial statements. On page 17‚ note 2 states that in 1984 Harnischfeger altered their depreciation from a direct method to the straight-line method for financial reporting purposes. They also included the products purchased from Kobe Steel‚ LTD and sold by them in their net sales instead of stating only the gross margin per unit. An adjustment of the residual values on certain
Premium Revenue Generally Accepted Accounting Principles Depreciation