Category: 金融论文代写

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review article是什么？应该怎么写？

review article怎么写

review article，也就是评论文章，是对发生的某一个特定的事务进行评论的常用文体，我们常见的有评论员文章、重要评论或者短评等，当然还有文学评论、艺术评论等等，这里我们重点学习的是文学评论。对review article有这么一段解释：

An article review is both a summary and an evaluation of another writer’s article. Teachers often assign article reviews to introduce students to the work of experts in the field. Experts also are often asked to review the work of other professionals. Understanding the main points and arguments of the article is essential for an accurate summation. Logical evaluation of the article’s main theme, supporting arguments, and implications for further research is an important element of a review. 文学评论是同学们常常遇到的一种写作，旨在学生的批判性观点，为大论文写作的literature Review打基础。那么写好一篇review article要注意哪些方面呢？

评论文章时，评论的内容根据材料的内容自己决定，可能但不一定包括：论证在概念界定上是否清楚；论证方法是否正确；论据是否成立；论据是否足以支持结论；有无支持结论的更为有力的论据；推理有无错误或漏洞；论证的成立是否需要另外的条件；有无另外的解释反对或削弱该论证，作何种修改可以使论证更为有力等。论文是议论文的一种文体，但评论文很容易被狭隘的写作成驳论文。因此，评论文章需要有以下几方面的特点：一是要有正确而鲜明的观点（论点）。我们对某个特定事件发表议论，总要有个基本看法：是好还是坏？是基本上好的还有缺点，还是基本上不好但尚有某些可取之处？这个基本看法就是文章的中心论点，而这个论点必须是正确的、鲜明的。二是要有准确、充分而有说服力的论据。论据主要应从特定的材料、情节和来龙去脉中去找，从而引用足以说明自己论点的材料来作为论据。这些论据一定要准确可靠，不能想当然，更不可曲解，甚或断章取义，攻其一点不及其余。三是要运用科学的符合逻辑推理的论证方法。是用归纳法，还是用演绎法，或者是类比法，应深思熟虑。而且，是写成一篇立论的评论，还是一篇驳论的评论，也需要根据写作目的和读者需要出发来确定。四是要具有批评的当代意识，能按照社会规律和特性结合事件实际进行写作。必须运用学过的理论知识、常识等，针对具体事件进行具体分析。否则，在文章中尽讲外行话，或者提出不切实际的要求，这样的评论肯定难以服人。

评论文特征就是对于具体材料或现象的评论，所以我们在思考时一定要围绕材料本身来展开，切不可抛开所阅读材料，另起炉灶，一般情况下，我们应从下面几个角度来展开思考：（1）表态度，要明确你对这一事件的态度和看法，赞同或者不赞同；（2）说现象，由特殊到一般，联想同类现象或事件，分析这一特殊事件的典型性与代表性；（3）探本质、论特征，透过现象看本质，探究其本质属性；或分析其特征； （4）看问题，思考这一问题或现背后存在或反映出的问题；（5）析原因，分析持此态度的原因，或产生或出现这一现象的原因等；（6）论影响、后果、危害，谈这一事件可能产生的影响或导致后果，以及可能产生的危害；（7）谈价值、意义，从正面或反面思考价值意义；（8）想办法、提措施，针对问题，指出应该怎么办。

此外评论文章需要以下几个基本功要扎实：一是评论文章需要一定知识积累，也就是个人的文化素养要高。这点很重要，评论文章不是胡思乱想出来的，每天去关注你所喜欢的领域是必不可少的，有了大量发的文学积累你才有话题的评论，才能使你对某件事有自己的想法和看法。二是基本的结构是“总—分—总”，但是合理的构设文章还是需要一定的功底。这是通过的文字表达方式，写一篇评论文章常用的思路和写作文一样，都是由（总—分—总）这样的套路来写作的。大体路子是，开篇的（总）：引用或描述某一件 事。（分）：对这件事进行拆分，用各种观点，尤其是自己的观点来进行描述、佐证。（总）：也就是文章最后的总结，发表些个人总结等等。具体来讲，一般常用的是五段式的评论结构。一般第一段是概述你评论的对象，以概叙的方式让读者了解事件的前因后果，接着发表你的基本观点，作为中心论点。第二段至第四段结构基本一致，分论点、论据、分析论证，三部分，一步不能少。其基本模式为：分论点+论据+分析+总结。第五段：总结陈述。在这一部分我们要解决这么几个问题，照应开头，辩证看问题，提出解决问题的方法或方向。总括起来，也就是提出问题（中心论点）、分析问题（二至四段）、解决问题。或者叫“总分总结构”。这只是一个基本模式，具体有无穷的变化。三是要有自己的观点，也可以理解为自己的见解独特、深刻，不能人云亦云，坚持自己的原则立场。这一点很重要，可以说，有自己的见解和观点是整篇评论文的灵魂，失去了这些也就没有思想性，没有什么品位的文章不值得被人去品读。四是写好评论文章要能够透过现象看本质，也就是看问题是否透彻，角度是否独到。看问题要看到实质，在此基础上，要做到人无我有，人有我新，也就是特立独行地提出自己的观点。这不仅是文章视角的问题、评论角度的问题、新颖的问题，而且是透过现象看本质的问题，也就是要有自己独特的看法与对现象深刻分析。看问题的实质其实已经涉及写作问题了，那就是写评论文章，必须观点先行，观点先行者，中心论点先确立也。自己观点就是你所看到的问题的实质，就是你要弘扬的，你要批判的，或者是你要怒骂的。确立中心论点还有一个我们要注意的问题，根据自己的驾驭能力选择比较小的角度确立中心观点，角度越小，我们就越能驾驭，越容易写好。角度越大我们就越不能驾驭，就越有可能把文章写砸的可能。也就是什么都想要说，反而什么都说不清。五是评论文不仅仅是议论，一般给人以启发思想，或者给出解决问题之道。也就是说评论文不是我们个人对所阅读文章好坏的一个评价，而是从具体的文章内容谈起，让读者明白你要分析论证的对象，提出所阅读文章的作者对世间万象的看法，然后，分层论证，以让读者信服于你，在这样的基础上辩证分析问题，并提出作者解决问题的建议或方向，好让读者易于理解。夸夸其谈，是不起作用，对理解所阅读论文的思想内容没有任何意义。

那么，评论文章该如何写作呢？一般来讲，评论文的写作一般有四种常用方法。分别是：一是驳论法，事件或现象总是会有正反两面的意见，我们可以选择相反的观点做为靶子，用驳论的方法来增加论述的力量。但这种手法往往不用于全篇，而只是用于文章中的某个局部，与其它的论述方法综合运用。二是综合分析法，从两个或三个角度进行分析，按照认知逻辑安排全文结构与层次，开成层层深入的思维与结构形式，析原因（或本质）——论危害——想办法，这是最常见的一种形式。三是平面分析法，文章的主体从一个角度进行分析，或析实质，或谈特征，或析原因，或谈问题，或论危害，或谈价值（意义）等，总之，要分析出三条，使文章形成并列式结构，这样的结构方式，在评论性文章中，仍然是最受老师青睐的。四是正反分析法，正面，从意义、价值角度思考，反面，从问题危害角度探讨，但不平均用力，以其中一个方面为主，以另一方面为辅，形成对比。这样的方式，对比鲜明，结构清晰。

当然，我们在写评论文章时，需要注意几个方面。一是要详尽了解所阅读文章和内容和核心思想，在没有详尽了解之前，请不要撰写评论类文章，因为你的评论一定会偏离轨道。二是不夹带个人情感，要做到这点很难，真的很难。我们在写文章时，要时时记得这点，尽量以客观的眼光去看待文献中涉及的问题。如果你认为，写不好，太容易夹带个人情感，那么就请尽早放弃，在这种情况下，就算写完，也不会是一篇有意义的文章。三是是观点明朗，写评论类文章，要有自己的观点，同一篇文章中的观点绝对不能自相矛盾。树立观点时，思路要清晰，树立的观点必须是自己能阐述得清的，以免到时候东扯西扯，扯了半天也没有将观点说清楚。

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圣安德鲁斯大学论文代写 – Overvaluation of the Stock Market

圣安德鲁斯大学论文代写

股票市场是投资者最喜欢的投资平台之一，因为它有着高投资回报。造成这种高回报的原因有很多，其中之一可能是股票市场上金融商品的估值。一些金融分析师认为，股票市场被高估了。另一个学派的观点是股市的估价是合理的；而一些人则认为他们被低估了。由于这些观点的差异，很难确定股票市场被高估的程度。

Introduction

Stock markets are considered to be among the most preferred investment platforms by investors, as they generate a high return on investment (Fong, 2014). There are many underlying reasons for this high return, one of which may be the valuation of the financial commodities traded in the stock market (Chang, 2005). Some financial analysts believe that the stock markets are extremely overvalued (Phoenix, 2014), while there are others who consider them as being slightly overvalued (Rosenberg, 2010). Another school of thought has a viewpoint that they are fairly valued (Wolf, 2008); while, some hold the opinion that they are undervalued (Pan, 2009). Due to these differences in viewpoints, it becomes difficult to gauge the extent to which stock markets are overvalued. The reasons for these differences in opinions are the different geographical locations (Tan, Gan and Li, 2010) and the different assumptions made in comparisons (Cheng and Li, 2015). The difference in the methods used for valuation also turns out to be one of the reasons, as every method has its merits and demerits (Khan, 2002). Stock market overvaluation may have severe negative effects including a market crash or increasing organisation’s agency costs, which need to be considered by managers in organization-wide strategic management (Jensen, 2005).

Methods used for Stock Valuation

Various methods are used for stock valuation; some of the common ones include Price to Earnings ratio (Stowe et al., 2008), Knowledge Capital Earnings (Ujwary-Gil, 2014) and Dividend Discount Model (Adiya, 2010). The price to earnings ratio is the most common method used to evaluate stock markets, whereby the company’s current stock price is compared with the predicted earnings it will yield in future (Stowe et al., 2008). Knowledge Capital Earnings – KCE is another method through which a company’s intellectual capital can be gauged and interpretation of the extent to which it is overvalued can be given (Ujwary-Gil, 2014). The KCE method, however, is specifically subjective if the analyst is interested in estimating the potential future earnings of an organization (Ujwary-Gil, 2014).

The Dividend Discount Model is based on the assumption that the price of a stock at equilibrium will be equal to the sum of all its upcoming dividend yields discounted back to its current value (Ivanovski, Ivanovska and Narasanov, 2015). One of the shortcomings of this model is with the company’s growth estimation, in which the averaged historical rates do not provide an accurate picture, as they ignore the ongoing economic conditions and the changes that take place in the company (Ivanovski, Ivanovska and Narasanov, 2015). Another issue identified by Mishkin, Matthews and Giuliodori (2013) is related to the accuracy of dividends forecasted based on the company’s past performance and the predicted future trends of the market; critics cast doubts on the accuracy of these figures, as they are purely based on estimation of analysts and may not be always correct.

Stock Markets are Extremely Overvalued

Hussman (2014), who is well-known for his accurate insights about the financial markets, comments in one of his speeches that due to their Zero Interest Rate and Quantitative Easing policies, the central banks have driven the stock prices up to twice as high as they are supposed to be. This imparts the stock markets to be overvalued by 100%. While different authors argue that every evaluation metric has its merits and demerits, which makes it difficult to conclude whether stock markets are overvalued when calculated via a specific metric, a Phoenix (2014) report provides evidence of the fact that stock markets are overvalued by almost every metric used for valuation. According to Autore, Boulton and Alves (2015), short interest rates are also a determinant of stock valuation; the lower the short interest rate of the initial stock, the more overvalued the stock will be.

An example could be that of the U.S. stock market which is analysed to be overvalued by 55% (Lombardi, 2014), while it is estimated to be overvalued by 80% according to another research (Heyes, 2015). Lombardi (2014) identifies it to be overvalued to such an extent due to the increasing presence of bullish stock advisors as compared to bearish advisors, which results in the investors being complacent without being anxious about a huge market sell-off. By evaluating the market through various methods, Tenebrarum (2015) established an opinion that the U.S. stock market is valued at its highest peak to date. Additionally, Lombardi (2014) recognises these indicators to be similar to those before the stock market crash in 2007. Hence it may lead us to a prediction that history might repeat itself, as specialists have already expected the forthcoming crash (Heyes, 2015).

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finance论文代写范文- Costing of Income Statements

income statement

本文旨在研究如何使用边际和吸收成本法编制损益表。吸收成本核算方法收取产品成本的所有直接成本以及间接成本的份额。间接成本使用单一间接费用吸收率计入产品，该费用通过将总成本中心间接费用除以预算生产总量计算得出。（ACCA，2006; Drury，2006; Blocker等，2005）。另一方面，在边际成本计算下，只有可变成本按成本单位计算。固定成本作为期间成本从损益账中扣除。（Drury，2006; Blocker等，2005）。下面的a）和b）部分分别显示了在2006年和2007年结束的年份中生产和销售单一产品的H有限公司的边际和吸收成本收益表。假设公司使用先进先出（FIFO）方法来估算库存。此外，假设公司每年根据预算单位和实际单位采用单一的管理费吸收率，两年的预算单位完全相等。 

This paper aims to look at how income statements are prepared using marginal and absorption costing. The absorption costing method charges all direct costs to the product costs, as well as a share of indirect costs. The indirect costs are charged to products using a single overhead absorption rate, which is calculated by dividing the total cost centre overhead to the total volume of budgeted production. (ACCA, 2006; Drury, 2006; Blocker et al., 2005). On the other hand under marginal costing, only variable costs are charged to cost units. Fixed costs are written off the profit and loss account as period costs. (Drury, 2006; Blocker et al., 2005). Sections a) and b) below show the marginal and absorption costing income statements respectively for H Ltd that manufactures and sells a single product during the years ending 2006 and 2007. It is assumed that the company uses the first-in-first-out (FIFO) method for valuing inventories. In addition it is assumed that the company employs a single overhead absorption rate each year based on budgeted units and actual units exactly equalled budgeted units for both years. 

Marginal Costing

H Ltd Income Statement (Marginal Costing)2006 2007
  £’000 £’000
Sales Revenue 3000 3600
Cost of Sales:    
Opening Stock0 400 
Production cost (W1, W2)700 500 
Variable Marketing and Admin1000 1200 
Cost of Goods available for sale1700 2100 
Ending inventory (W3, W4)200 100 
   1500 2000
Contribution Margin 1500 1600
Less Fixed costs    
Marketing and Admin400 400 
Production overheads700 700 
   1100 1100
Operating profit 400 500

Absorption costing.

H Ltd Income Statement (Absorption Costing)2006 2007
   £’000 £’000
Sales  3000 3600
Cost of Sales    
Beginning Inventory0 400 
Production Cost (W5, W6)1400 1200 
Ending Inventory (W7, W8)400 240 
   1000 1360
Gross Profit 2000 2240
Marketing and Admin Expenses    
Fixed 400 400 
Variable 1000 1200 
   1400 1600
Operating profit 600 640

Reconciliation of net income under absorption and Marginal Costing.

Reconciliation 2006 2007
  £’000 £’000
Absorption operating profit 600 640
Less Fixed overhead cost in ending inventory (W9)200 140
Marginal Costing net income 400 500

Under marginal costing inventory of finished goods as well as work in progress is valued at variable costs only. On the contrary, absorption costing values stocks of inventory of finished goods and work in progress at both variable costs and an absorbed amount for fixed production overheads. (ACCA, 2006; Lucy, 2002). In the case of H Ltd, under marginal costing, only variable costs are included in the ending inventory figure. This results in a profit figure of £400,000. On the other hand absorption costing includes additional £200,000 as fixed overhead in the ending inventory for 2006. As a result absorption operating profit is overstated by £200,000 in 2006. In like manner, the absorption profit under absorption costing is overstated by £140,000 due to an inclusion of £140,000 of fixed overhead cost in the ending inventory figure for 2007. To reconcile the profit under absorption costing and marginal costing, we may either subtract the fixed overhead included in ending inventory from the absorption cost operating profit to arrive at the marginal cost operating profit or add the fixed overhead costs in ending inventory to the marginal cost operating profit to arrive at the absorption cost operating profit.

Stock Build-ups

Stock build-ups may result from using absorption costing for performance measurement purposes because inventory is valued at both fixed and variable costs. Firstly, profit is overstated. In fact absorption costing enables income manipulation because when inventory increases fixed costs in the current year can be deferred to latter years and as such current net income is overstated which in effect results in financial statements that do not present fairly and as such affect users’ decisions on the financial statements. Secondly, maintaining high levels of inventory may result in obsolescence and as such declines in future profitability resulting from the loss in value of the inventory. (Blocher et al., 2005; Storey, 2002).

Advantages of Absorption Costing and Marginal Costing

According to ACCA (2006) the following arguments have been advanced for using absorption costing:

  1. It is necessary to include fixed overhead in stock values for financial statements. This is because routine cost accounting using absorption costing produces stock values which include a share of fixed overhead. Based on this argument, financial statements prepared using absorption costing present a true and faithful representation of the actual results of operation of the company.
  2. For a small jobbing business, overhead allotment is the only practicable way of obtaining job costs for estimating and profit analysis.
  3. Analysis of under/over-absorbed overhead is useful to identify inefficient utilisation of production resources. 

ACCA (2006) also identifies a number of arguments in favour of marginal costing. Preparation of routine cost accounting statements using marginal costing is considered more informative to management for the following reasons:

  1. Contribution per unit represents a direct measure of how profit and volume relate. Profit per unit is a misleading figure.
  2. Build-up or run-down of stocks of finished goods will distort comparison of operating profit statements. In the case of closing inventory, the inventory is valued only at the variable cost per unit. This makes the profit under a situation where there is closing inventory to be the same as the case when there is no closing inventory thereby enabling the comparison of operating profit statements over time.
  3. Unlike under absorption costing, marginal costing avoids the arbitrary apportionment of fixed costs, which in turn result in misleading product cost comparisons.

Bibliography

  • ACCA (2006). Paper 2.4 Financial Management and Control: Study Text 2006/2007. www.kaplanfoulslynch.com
  • Blocher, E., Chen, K., Cokins, G., Lin, T. (2005). Cost Management A Strategic Emphasis. 3rd Edition McGraw Hill.
  • Drury, C. (2004). Management and Cost Accounting. 6th Edition. Thomson Learning, London.
  • Lucy, T (2002), Costing, 6th ed., Continuum.
  • Storey, P (2002), Introduction to Cost and Management Accounting, Palgrave Macmillan
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金融论文代写范文-财务利率分析

financial ratio

Financial statements are useful as they can be used to predict future indicators for a firm using the financial ratio analysis. From an investor’s perspective financial statement analysis aims at predicting the future profitability and viability of a company, while from the management’s point of view the ratio analysis is important as it helps anticipate the future conditions in which the firm should expect to operate and facilitates strategic decision making (Brigham and Houston 2007, p. 77).

Profitability analysis

Harry’s Hamsters Limited (HHL) experienced growth in its profitability from 2007 to 2008; however, the net income reduced significantly during 2009. The return on equity (ROE) was 4.24 percent in 2007, increased to 14.68 percent in 2008 and decreased back to 5.10 percent in 2010. Similarly, the return on assets (ROA) also initially increased and later declined in 2009; the decline was sharper compared to the decline in ROE as the ROA in 2009 of 1.73 percent is lower than 2.08 percent in 2007. The ROE comprises of two main components: the return on net operating assets (RNOA) and the return on debt (ROD). RNOA for HHL has also deteriorated during 2008 decreasing from 16.61 percent in 2008 to 5.08 percent in 2009. The RNOA is used to weigh the overall performance of the HHL management. The ROD component of the ROE has also deteriorated from 13.68 percent in 2008 to negative 3.32 percent in 2009 (Kemsley 2009, pp. 12-16).
The ROCE was the highest in 2008 estimated 11.39 percent. It implies that the capital employed by HHL yielded high returns before the expansion period and that the company was significantly profitable. A considerable decline in 2009 to 4.82 percent can be unfavourable for the investors; however, as the company has not sold its shares to the public a reduction in this ratio for a temporary period is not a major concern for the current owners. 
The operating profit margins for HHL initially increased from 10 percent in 2007 to 17.45 percent in 2008; however, the company reported lowered margins of 8.53 percent in 2009. The decline in the operating profit margins of HHL is largely attributed to the increase in costs associated with the expansion of the business. The operating margins are expected to recover over the next year assuming that the new operations will become profitable as sales increase. The cost of goods sold have increased in absolute terms but the overall gross profit margins for the company have improved from 35 percent in 2007 to 42.01 percent in 2009. This implies that the company is effectively managing its relations with suppliers and has kept a control over the costs attached to buying the hamsters for breeding; but the operating costs have increased due to the low sales activity in the new operations.

Liquidity analysis

The current ratio of HHL remains above the minimum threshold of one and is currently 1.22; historically, the ratio has remained between 2.73 and 3.25 times. However, the quick ratio for the company reveals serious concerns as it has decreased from 1.67 in 2008 to 0.22 in 2009. The low quick ratio implies that a considerable portion of the current assets of the company are tied up as part of its inventory (Bragg 2007, pp. 14-16). This could also mean that HHL might be unable to sell the hamsters and sales might be suffering. The company must increase its working capital to meet its near term current liabilities and retain its solvency (Brigham and Houston 2007, pp. 42).

Efficiency analysis

The firm’s efficiency has not necessarily decreased during the last year; an analysis of the efficiency ratios suggests a trend that is different from what is seen through the profitability and liquidity ratios. The inventory turnover has slightly deteriorated from 3.00 in 2007 to 2.89 in 2009; similarly impacting the day’s inventory on hand from 121.67 to 126.35 during the same period. The long inventory holding period suggests that the company needs to improve its liquidity position to maintain its efficiency and aim to reduce its inventory turnover significantly (Brigham and Ehrhardt 2008, pp. 57-62). The days of accounts receivables have reduced from 45.63 in 2007 to 40.05 in 2009 and at the same time the days of accounts payables have reduced even more drastically from 40.56 to 28.08. The operating asset turnover for HHL has deteriorated considerably from 0.87 in 2007 to 0.60 in 2009, owing to a long inventory holding period and a quick payment of the accounts payables.

Capital structure analysis

The capital structure has significantly changed over the past two years as HHL has increased its financial leverage and is using a considerable debt to finance its expansion activities. The debt ratio of the firm has increase from 0.47 in 2007 to 0.60 in 2009; imply that HHL is now funding 60 percent of its assets through debt (Berry 2006, pp. 68-71). The interest coverage ratio of the company had improved considerably in 2008 and was 4.29, but it has deteriorated to 1.89 raising additional concerns for the banks. The ROD for the company has reduced considerably but remains positive implying that the current level of financial leverage is generating additional returns for the company. Operating cash flows (OCFs) for the company remain negative being typical of young firms experiencing a high growth rate, but the ability of HHL to raise additional financing is limited; therefore negative OCFs raise serious concerns for the bank management.

Report to credit committee

Analysis for reasons of results

HHL avails a long-term debt facility of £ 0.45 million and has also utilised an overdraft of about £ 35,000 from its current facility. The company performed exceptionally well during 2008, which led to an increase in its debt facility from £ 0.275 million to £ 0.45 million recently. The recent financial results revealed a tightening credit position of the company during 2009, which led to concerns regarding the excess usage of the overdraft facility by the company. Recent communication with the company reveals that it is facing liquidity problems due to its ambitious expansion program; however, the problem can be solved depending on the ability of the management to realise the seriousness of the situation (Madura 2006, pp. 17-32). 
The company is running an overdraft without any immediate plans regarding its understanding to pay back the short-term loan. The overdraft is being utilised to fund the working capital needs of the company, which it did not anticipate during its expansion into southern England. The success or failure of the new operations is yet to be seen and the position will only be clear by next year. The current assets are largely financing the inventory requirements of the company, while the inventory cycles are long and not in a position to be liquidated on urgent need. The company needs to introduce additional capital in order to solve its working capital problems.
The working capital position of HHL can also improve by increasing the days of accounts payable ratio to higher levels or by reducing the inventory cycle if possible (Myers 1984, pp. 126-128). However, both options seem unlikely leading us to prescribe alternative solutions. The company has seen deterioration in the profitability ratios, which has reduced its ability to pay the interest commitments on the outstanding loan. However, the company still maintains an interest coverage ratio of 1.89 and should be able to regain its position once the new operations become profitable.
The efficiency ratios of the firm have remained relatively stable with a slight decrease in the inventory turnover, an improvement in the accounts receivables turnover and a significant drop in the operating assets turnover. The company maintains a high debt ratio and about 60 percent of its assets are funded using debt; however, this is typical of most firms under the initial expansion phase.
The company remains committed to making profits but has not considered rising outside capital by going public in the near future; the only way to maintain its current pace of growth will be either through an injection of personal equity or through the offering of company stock to the public (Ronen and Yaari 2007). The owners have invested most of their life savings into the business and the company cannot possibly raise any further internal financing.

Recommendations regarding bank arrangements

The credit committee is recommended to raise concerns regarding the current liquidity position of the company and to prepare a schedule for the repayment of the overdraft amount over the next six months. The company is expected to recover from the current situation during the next year, but it is important to remain cautious until the sales position appears to improve. Also developing a degree of pressure on the management should clearly communicate the banks position to the firm (Gibson 2009, pp. 212-216). The intention is to educate the company management about the gravity of this situation and ensuring that it is able to recover smoothly from the liquidity crunch, while at the same time minimising the bank’s exposure to the business risk HHL is facing.
The Managing Director of HHL is consistent in maintaining regular contact with the bank; therefore we need to educate him with the possible solutions for recovering from the credit crunch faced by the company. The recommended solutions include a consolidation of the business before considering any further expansion projects, a reduction in the days inventory on hand, increase in the days accounts payables, the retention of profits into the business allowing for no dividend payments over the next quarters, an injection of equity from any other sources available, an increase in collateral to support the bank’s claims and a phasing out of the bank overdraft over the next six months as revenues from the sales are realised (Harvard Business School 2006, pp. 3-12).

Recommendations to management about improving finances of the company

Mr. Michael,
Thanks for a quick response pertaining to the overdraft issue. We have analysed the situation faced by HHL based on the recent financial statements and the qualitative information that we received during our recent correspondence. It is understood that your company has recently gone a major expansion and the short-term impacts are apparent on the financial results in terms of lowered profitability as anticipated. The concern raised by the bank is not directly related to the profitability of your company and we remain concerned about the liquidity position of HHL in months to follow (Bissessur 2008, pp. 142-146).
The understanding between the bank and the company was that the expansion will be fully funded by the increase in the loan facility. This increase in loan was to support both the fixed investment in the expansion project as well as the working capital needs of HHL. However, as it is seen the actual expansion investment has exceeded the anticipated amounts and the company is facing a severe liquidity crunch that needs to be resolved.
The credit committee is concerned regarding the profitability of the expansion project and is not prepared to enhance the overdraft limit until the latest results for the company become available. HHL would have to independently solve this liquidity crunch by either an injection of equity to facilitate the increased working capital requirements or to raise additional external capital. The intention of the company to continue towards is expansion projects can be best facilitated through a public listing of the company to raise additional capital (Hill and Jones 2009, pp. 28-29).
The bank would require the company to pay the entire overdraft drawn in instalments over the next six months. This payment schedule has been drafted after a careful consideration of the credit history of your firm with the bank; in usual circumstances we would have required the repayment of the whole overdraft instantly. Moreover, it must be understood that this correction is in the best interest of your company as it serves to facilitate your understanding of the gravity of the situation faced by HHL.
A large proportion of the current assets held by HHL are tied up in the inventory and the company has no cash reserves available to pay for the maturing current liabilities including the bank’s interest payments. It is important to understand that the company would have filed for bankruptcy if the current overdraft was not available. Therefore, it is a very serious concern which should be resolved as soon as possible (Capon 1990, p. 1145).
The company can adopt some emergency measures to immediately improve its cash position, including a maximum delay in the payment to creditors that might be possible without significantly harming the supplier relations, a quicker recovery of accounts receivables without significantly harming the sales position and an immediate sale of ready inventory on a cash payment discount (David 2006; Ebert and Griffin 2005). Moreover, the company must not withdraw any retained earnings in the form of dividends until the liquidity position is resolved. 
Waiting for your response,
Nick Cameron

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