FINC 300

Student Name

Colorado

COURSE####: Course Title

Instructor Name

Due Date
 Exercise 3 from Chapter 8

The report represents the accounting report of the company for the last five years. In

the report, we have positive numbers and other years that negatively affect the organization.

The thing that we can observe about the negative numbers is that they are not in a systematic

way. The describes the operating capital subtract the change in working capital. The

organization has to ensure the resources available are on track. This happens because the

working capital keeps on changing the cash flow of their daily operations, depending on their

resources. If the resources are not sufficient, it means the organization’s growth will be

affected.

Exercise 1 from Chapter 9

The electricity producer organization is in the third sector due to higher level

amortization and depreciation than other companies. Due to the increased depreciation and

amortization, the organization cannot cover the cost of replacing the investment because of

rising expenses. Typically, the electric organizations are higher due it is being used by most

people. On the other hand, the supermarket manufacturing organization is for the first sector

due to the varying prices during the buying and selling. The employment agency (temporary)

belongs to the fifth sector due to the high cost of personnel the temporary employment

contains. The costs of personnel are high because of the kind of business they operate. Sector

3 includes specialized retail because the trading profits are high. There is a difference

between the selling and buying price, which is the gross trading profit. Lastly, sector four has

the construction and public agency due to high outsourcing operation expenses.

Exercise 3 from Chapter 10

Break-even point for each year

Operating Breakeven Point for: Year 0 = 69.1, Year 1 = 87.4, Year 2 = 109.6, and Year 3 =

124.1

Total breakeven point for: Year 0 = 72.7, Year 1 = 96.8, Year 2 = 119.0, and Year 3 = 133.3

Views of Schmidheiny is planning a capital expenditure program

Each organization have goals, and one of the common goals is to increase profit, which can

be done by increasing productivity. The capital expenditure program must assist the

organization in increasing productivity threefold; hence it is a practical investment (Rode,

2019).

View of the debt policy the company tends to pursue

I view this as a bad debt policy. The debt policy is not suitable for the company due to the

risk they are facing. Utilizing the debt exclusive to pay off the capital expenditure program

means a high chance of raising the break-even point (Huang et al., 2020).
 References

Huang, Z., Gao, W., & Chen, L. (2020). Does the external environment matter for the

persistence of firms’ debt policy? Finance Research Letters, 32.

https://doi.org/10.1016/j.frl.2018.12.021

Rode, S. (2019). Financing capital expenditure through municipal bond market in Navi

Mumbai Municipal Corporation. Public and Municipal Finance, 8(1).

https://doi.org/10.21511/pmf.08(1).2019.02