Overview

Students,

Please see below for a further explanation of the case report. Please feel free to work in groups on the report, but your answers must be submitted individually without plagiarism!

• Students will need to purchase access to the Case File (Links to an external site.) through Harvard Business Review.

The goal of this assignment is to see how a successful European retail banking organization confronts the opportunities and challenges of globalization.

Assignment Questions

1. Please describe and evaluate the Country/Political Risk faced by this organization and describe its successes and failures.
2. What has been the lending strategy followed by Santander? Our lending decisions are based on the credit background of the borrower, or on the riskiness of the venture? How do they manage risk? How do they finance their loans? Why is there so little cross-border borrowing?
3. How is the lending strategy different from US commercial banks?
4. As a consultant to the CEO, what would you suggest Magda Salarich do now? Please obtain, identify and evaluate the data and conduct a multi-perspective analysis of the evidence to make a logical recommendation for solving the problem from a global perspective.
5. Defend your recommendation and communicate your beliefs clearly and accurately.
   

Case Study Resources

Usually, business writing incorporates APA format. Case length is not an important consideration in my grading strategy.

The questions posed are meant to guide you in developing an analytical framework that you must present in a case report. Usually, you can incorporate your responses in sections C and D described below. I cannot prescribe a single outline or template, but I can identify “building blocks” that are essential to building a logical structure that will stand up to critical scrutiny, and serve as a useful guide to presenting the results of your in depth case analysis. Essential building blocks and structure are as follows:

• Executive Summary
• Section A. Introduction and Overview of the Situation
• Section B. Assumptions and Methods
• Section C. Business Impacts
• Section D. Descriptions of Sensitivity, Risks, Successes, Failures, Contingencies and Strategies
• Section E. Conclusions and Recommendations

This is a good resource but parts may not be relevant (this is not a group report): Business Resources for Students: Writing a Case Study (Links to an external site.)

Case Study Resources Attached Below

• Appendix AActions: Suggested Questions (attached below is the case you must read in order to answer these questions)
• Appendix BActions: Shows how you are getting the tools of Global Learning for Global Citizenship by answering the above questions and their weighting in the project.
• Appendix CActions: This the rubric that highlights what I am looking for and can be matched to the questions above.
• HBP Case Analysis Worksheet.Actions
• Steps for Effective Case Analysis.

 discussion 

( Despite all of the regulations against UAS at airports, many airports in the U.S. and around the world are using UAS for airport operations. Find an example of an airport using UAS for airport operations and share your findings. How is this airport using UAS? How is it improving operations at that airport? )

Pewer 1

 The Golden Triangle Regional Airport in Columbus Mississippi is one of the many airports that have adopted the use of unmanned aerial vehicles for airport operations. Having the technological advantage of a bird’s eye view of the airport is a unique advantage to the sponsor or municipality. “The Golden Triangle Regional Airport has used drones to examine buildings, rooftops, parking lots, security fencing, windsocks, safety areas, signage and even taxiway and runway markings (Guillot, B. & Dowell, M., 2019)”. Some UAVs also have the availability of infrared, low light, and thermal vision. These models are extremely useful in aiding with wildlife hazard assessments and in nocturnal security investigations on airport property.In similar fashion, the NTSB has adopted the use of drones when investigating accident sites on the airfield. “We first got involved with unmanned aircraft back in 2006 on the other end, when we were investigating an MQ-9 Predator crash in Arizona. That brought the whole idea of unmanned aircraft to the forefront for us (Karpowicz, J., 2017)”. The use of UAV technology allows for a rapid aerial observation of the crash site. This can help investigators to quickly film the site and assist with accident investigation. It also increases the safety of operations around the critical area by identifying potential threats such as pooling aircraft fluids or smoldering fires.

Peer 2:

     I found this topic interesting and was eager to research the topic. When the FAA was searching for airports to do this research, Huntsville had to plead its case in why they would be a good choice. But first, what was the research the FAA was looking for? The FAA stated, “The Federal Aviation Administration (FAA) today selected five host airports to evaluate technologies and systems that could detect and mitigate potential safety risks posed by unmanned aircraft” (FAA, 2021). What better way to mitigate safety risks than getting the best view possible and that would be from an aerial view. There was a couple of reason why the FAA choose Huntsville for research and they are the FAA UAS Center of Excellence for Research, DARPA programs Gremlins and Mobile Force Protection, US Air Force MEDUSA, US Army UAS Detection, and Mitigation Testing along with Threat development, FBI TEDAC, Global War on Terrorism and UAS Research/Training Facilities, US Army Future Vertical Lift Program, and Medium Altitude Endurance Program, Small UAS Product Office. (Fly Huntsville, 2021). With the five airports that are involved with this research and development, the process will continue on through the year 2023. During this time frame, proper research will be developed and provide details that will further advance our airport’s capabilities. Huntsville makes for a great location for a multitude of activities of civilian and military events. As we move forward, UAS will be a vital asset for most airports to ensure all safety and security risks are being supervised.

Ratio analysis is a type of financial statement analysis used to obtain a quick indication of an organization’s financial performance in various key areas. This assignment will measure your understanding of ratio analysis and will mainly focus on the content of chapters 4-7 and 9 from the Accounting 302 course and the corresponding learning outcomes.

Please note that you are required to complete all four of the following problem sets. You will need to utilize correct formulae, including headings and to show how calculations are done. Before beginning the assignment, please read the rubric carefully to understand the expectations and how your work will be graded.

Problem Sets

Problem #1

Refer to Dino’s information below and calculate the following ratios: Working capital ratio, quick ratio/acid test, earnings per share, price-earnings ratio, debt-equity ratio, and return on equity. Clearly provide each formulae, numbers and work associated, along with the answers.

For each ratio you calculated, provide an analytic statement in which you comment on how the ratio can affect specific decisions that need to be made within the organization.

Notes:

• Each statement must be at least one full paragraph, explaining the ratio results in isolation along the scale, then application to the specific business.
• Specifically include throughout your analyses, decisions regarding inventory management, depreciation of company assets, employee wages, government taxes, and investment prospects.

Problem #2

1. Using your own explained, numerical, practical examples, differentiate between periodic and perpetual inventory systems. You may apply your examples to the case of Dino’s After School.
2. Using your own explained, numerical, practical examples differentiate between LIFO, FIFO, and Weighted Average as forms of inventory valuation.
3. On April 12, 2017 Dino’s After School purchased $6,000 in inventory. Sales began to slow-down, so on May 12 they purchased only $2,000 worth of inventory. In June, with the start of summer when more customers are purchasing their inventory, they purchased $9,000 worth of inventory – June 20, 2017. If they had $4,780 of inventory remaining at the end of the first quarter, and sold $17,500 worth of inventory during the second quarter:

• What is the ending inventory for Dino’s After School at the end of June, 2017?
• If there was no ending inventory from the first quarter, with the same levels of sales, what would have been the cost of goods sold during the second quarter?

Problem # 3

Dino’s After School has an asset, a workstation where customers can find school homework assignments and hints for the correct answers. Its original cost was $12,700 and it has a salvage value of $1, 270 and 7 years of useful life.

1. Calculate the annual depreciation expense under the straight-line method.
2. Assume depreciation rate under the Double Declining Balance Method to be 30%, then calculate the annual depreciation for each year (using the Double Declining Balance Method), and find the book value of the asset at the end of the 7th year
3. Explain how the depreciation amount is included on the balance sheet, and why it is needed for the balance sheet. (50-100 words)

Problem # 4

Explain, in your own words, the concepts of adjustments and closing entries as covered in the Accounting 302 course. In your explanations, use examples (with numbers) to demonstrate your understanding of the concepts. For this assignment, please include 1-3 sentences discussing the relationship between the two concepts.

Valuation and Feasibility Analysis
DEAL OF THE CENTURY

New York City of 1978 is a bad place where crime rates are high, and business have spent the last 10 years fleeing to the surrounding suburban areas. Based on the high levels of crime and business leaving, the New York City office market is not liquid. However recently (1977 and 1978) suburban rents have increased, and the suburban communities have not invested in the necessary infrastructure.  As a result, suburban based office workers are having problems getting to work on time because of the massive increase in local traffic.  Olympia and York (O&Y) based on their market reconnaissance, believes there might be an opportunity to buy in the New York City office market.  However, based on the current market conditions in New York City O&Y needs a very high level of returns to make such a risky bet. O&Y determines that it would need an unlevered internal rate of return of 35% to take on this outsized risk.      

On December 31, 1978, O&Y purchased 11 million square feet of Class A office space in Manhattan.  O&Y believes the buildings have been severely mismanaged and that by 1989 the portfolio could generate a combined Net Operating Income of $250 Million and that by year end 1988 residual cap rates should pencil out at 7.35%. Currently Annualized Net Operating Income (before debt service) $24.2 million exists as of 1/1/79 with market rents for new tenant leases being $12 psf while existing rents for space occupied averaged $8.50 psf. Additional operating expenses for each new square foot occupied are $2 psf per year and the average landlord-paid build-out will cost $15 psf during the next ten years.  20% of the office space was vacant in the buildings as of January 1, I979.  All existing tenant leases expire evenly over the sixty months beginning 1/1/79.  New leases and renewal leases are all signed for an average of seven-year terms for the rents listed below.  Annualized operating expenses for the properties (including insurance and taxes), but exclusive of variable expenses, for space vacant on January 1, 1979, are $50.6 million per year and are assumed not to increase during the next ten years.

Assume that 75% of existing tenants (now and in the future) renew and 25% move-out but are immediately replaced with new tenants.  No build-out cost is spent for renewal tenants’ space.  Leasing commissions are 6% of the total of new tenant’s rent payable in the first 5 years of their lease and 2% of a renewal tenants total rent payable during the first 5 years of the renewal tenant’s term. All commissions are payable on the first day of the new/renewal lease.

Calculate the actual 1979-1988 Cash Flow or deficit after capital expenditures but before debt service.  Assume that by the end of 1981, the buildings reached 95% occupancy and stayed that way through 1988.  Leases signed in each year were at the following rates:

1979……………………$12
1980……………………$15
1981……………………$19
1982……………………$25
1983……………………$28
1984……………………$30
1985……………………$32
1986……………………$34
1987 and after…….$36

2. Please determine the price (“Investor Value”) O&Y paid for the office portfolio on December 31st, 1978. You will need to utilize the Income Approach with the Yield Capitalization methodology.  

What is the problem with using only financial measures of performance? and List four advantages related to decentralization of a firm’s operations.

Please respond to my classmate

Student 1

There are several problems that can occur when only using financial measures of performance. As mentioned in the textbook, management may overinvest or underinvest in projects trying to make themselves look better while ultimately hurting the company’s stakeholders (Jiambalvo, 2020). Management can also focus too much on the ROI of past projects because depreciation has occurred on older equipment which makes the current ROI higher for an older project.

Financial measurements alone cannot determine whether an organization is “healthy” and is being led by a quality management team (What Are Some of the Problems Associated with Using Financial Ratios?, 2020). Making sure that the staff is taken cared of and given an enjoyable work environment helps towards achieving company goals when management feels that they can work to improve the entire organization and not just themselves. Financial measurements give a great explanation of what happened in the past, but those same measurements cannot predict the future and determine the same success as before (Financial Measurement Limitations).

As stated in the textbook, four advantages related to decentralization of a firm’s operations include: better information between top management, faster responses to changing circumstances, decentralized managers are often more motivated, and decentralization helps train management and prepare them to be future executives (Jiambalvo, 2020). The first two advantages mentioned prove that decentralization can majorly increase the efficiency of a firm which strengthens a company’s competitive advantage. The last two advantages of decentralization focuses on the benefits of internal growth which can make a firm more successful in the long term.

Student 2

When strictly relying on financial performance measures, the opportunity to over emphasize positive measurement is possible. Measurements such as profit can be misleading if a firm is spending a high amount on investment; or alternatively, measurements such as return on investment (ROI) can cause managers to underinvest or overinvest against the benefit of the shareholders. Depending on what the preferred financial measurement of performance that a firm relies on, the tendency will always make itself available in the managers of the company, and at times in contradiction to the best interest of the firm.

“Perhaps of even more concern to accountants are the numerous examples in the literature of managers making decision in response to the accounting system, even though the decisions are contrary to the goals of the organization. For instance, a manager who was reluctant to replace equipment, even when it was in the company’s economic interest, because of the heavy book losses which would be unfavorably reflected in his current performance reports,” (Hopwood, 1972). Such is the case when looking at ROI, where a firm would benefit from purchase of new equipment, but the investment would weigh down the liabilities through increased depreciation and thus encourage a manager that is judged on ROI to stick with old equipment.

In response to the four advantages of having a decentralized firm, Jiambalvo (2020) states the following:

1. Better information, leading to superior decisions
2. Faster response to changing circumstances
3. Increased motivation of managers
4. Excellent training for future top-level executives