by admin | Feb 21, 2023 | Finance
After reading the materials for this module, conduct additional research as necessary within the Saudi Digital Library.
Consider a healthcare organization in Saudi Arabia and assume they have a debt to equity ratio of 1.3.
Address the following requirements:
Is this good performance on this ratio?
Discuss which actions would improve (i.e., increase) this ratio.
Discuss some of the problems encountered when performing financial statements and operating indicator analysis.
by admin | Feb 21, 2023 | Finance
Working capital management involves managing the firm’s liquidity, which—in turn—involves managing the firm’s investments in current assets and in the use of current liabilities.
Explain the determinants of net working capital and the cash conversion cycle. How can these strategies be used in Saudi Arabian companies? Why is working capital so important to a firm when the presence of credit and leverage tend to be utilized more? What advantage does a highly liquid firm have over a highly leveraged firm? Explain.
Embed course material concepts, principles, and theories, which require supporting citations along with two scholarly peer-reviewed references supporting your answer. Keep in mind that these scholarly references can be found in the Saudi Digital Library by conducting an advanced search specific to scholarly references.
Be sure to support your statements with logic and argument, citing all sources referenced.
by admin | Feb 21, 2023 | Finance
Working capital management involves managing the firm’s liquidity, which—in turn—involves managing the firm’s investments in current assets and in the use of current liabilities.
Explain the determinants of net working capital and the cash conversion cycle. How can these strategies be used in Saudi Arabian companies? Why is working capital so important to a firm when the presence of credit and leverage tend to be utilized more? What advantage does a highly liquid firm have over a highly leveraged firm? Explain.
Embed course material concepts, principles, and theories, which require supporting citations along with two scholarly peer-reviewed references supporting your answer. Keep in mind that these scholarly references can be found in the Saudi Digital Library by conducting an advanced search specific to scholarly references.
Be sure to support your statements with logic and argument, citing all sources referenced. Post your initial response early and check back often to continue the discussion. Be sure to respond to your peers’ posts as well.
by admin | Jan 28, 2023 | Finance
Assignment Questions
Would you prefer independent or dependent central bank? Why? (3 points)
What is the role of the central bank on the financial system? What
policies they implement, how would be implemented and their effects on
the financial system. When the central bank should implement those
policies? (4 points)
Contractionary monetary policies in
Saudi Arabia last for more than one year and expected to last further
(but with slower increase in interest rate); how should financial
institution react to this? (3 points).
by admin | Jan 28, 2023 | Finance
Discuss the benefits and challenges for investors if they are investing in international assets. (3 Marks)
(Case Study & Problem solving) Question(s):
Q.1. Abdullah follows the automotive industry, including XYZ Motor Company. Based on XYZ’s 2021 annual report, Abdullah writes the following summary: XYZ Motor Company has businesses in several countries around the world. XYZ frequently has expenditures and receipts denominated in non-U.S. currencies, including purchases and sales of finished vehicles and production parts, subsidiary dividends, investments in non-U.S. operations, etc. XYZ uses a variety of commodities in the production of motor vehicles, such as nonferrous metals, precious metals, ferrous alloys, energy, and plastics/resins. XYZ typically purchases these commodities from outside suppliers. To finance its operations, XYZ uses a variety of funding sources, such as commercial paper, term debt, and lines of credit from major commercial banks. The company invests any surplus cash in securities of various types and maturities, the value of which are subject to fluctuations in interest rates. XYZ has a credit division, which provides financing to customers wanting to purchase XYZ’s vehicles on credit. Overall, XYZ faces several risks. To manage some of its risks, XYZ invests in fixed-income instruments and derivative contracts. Some of these investments do not rely on a clearing house and instead effect settlement through the execution of bilateral agreements.
Based on the above summary, recommend and justify the risk exposures that should be reported as part of an Enterprise Risk Management System for XYZ Motor Company. (5 Marks)
Q2 An investment manager placed a limit order to buy 500,000 shares of Ahmad Corporation at SAR 21.35 limit at the opening of trading on February 8. The closing market price of Ahmad Corporation on February 7 was also SAR 21.35. The limit order filled 40,000 shares, and the remaining 460,000 shares were never filled. Some good news came out about Ahmad Corporation on February 8, and its price increased to SAR 23.60 by the end of that day. However, by the close of trading on February 14, the price had declined to SAR 21.74. The investment manager is analyzing the missed trade opportunity cost using the closing price on February 8 as the benchmark price.
A. What is the estimate of the missed trade opportunity cost if it is measured at a one-day interval after the decision to trade? (2.5 Marks)
B. What is the estimate of the missed trade opportunity cost if it is measured at a one-week interval after the decision to trade? (2.5 Marks)
Q3.Consider some stocks that trade in two markets, with a trader being able to trade in these stocks in either market. Suppose that the two markets are identical in all respects except that bid–ask spreads are lower and depths (the number of shares being offered at the bid and ask prices) are greater in one of the two markets. State in which market liquidity-motivated and information-motivated traders would prefer to transact. Justify your answer. (2.5 Marks)
Q4. Zaid retired from his firm. He has continued to hold his private retirement investments in a portfolio of common stocks and bonds. At the beginning of 2019, when he retired, his account was valued at SAR 453,000.By the end of 2019, the value of his account was SAR 523,500. Zaid made no contributions to or withdrawals from the portfolio during 2019. What rate of return did Zaid earn on his portfolio during 2019? (2.5 Marks)
by admin | Jan 28, 2023 | Finance
1. Discuss the benefits and challenges for investors if they are investing in international assets. [Word limit: 300 to 400 Words]
2. Discuss the opportunities and challenges for the banking industry in Small Business financing in Saudi Arabia.
[Word limit: 300 to 400 Words]
3. constructive comments on the following (Word limit for each comment: 50 to 80 Words)
A) Retail banks, private investment programs, specialized lending institutions, the Saudi Arabia Monetary Authority (SAMA), and the stock market make up Saudi Arabia’s banking system.
The Central Bank of Saudi Arabia (SAMA) was established to oversee banks and financial institutions and oversee the country’s monetary policy.
There are a number of ways the banking industry can help small businesses get financing. Some of these strategies include providing entrepreneurs with access to financing, other options for funding, and new markets. Additionally, banks are capable of issuing loans, credit cards, and other financial instruments. Additionally, banks can provide guidance and assistance to owners of small businesses.
The Saudi banking industry faces numerous challenges when it comes to funding loans to small businesses. The significant risk of lending to owners of small businesses, the absence of small businesses’ collateral, their inaccessibility to international capital markets, and the absence of an efficient banking infrastructure are some of these issues. Additionally, banks don’t have much reason to lend money to small businesses because the costs of doing so may be prohibitive in comparison to the money they gain.
If Saudi Arabian banks want to help small businesses get loans, they need to come up with effective ways to manage risks and offer products and services that meet the needs of business owners. In addition, banks need to work hard to build trusting relationships with owners of small businesses and give them access to global financial markets. Last but not least, the government ought to continue providing banks with incentives to lend money to small businesses. Saudi Arabia’s small business sector will be strengthened and stabilized as a result of this.
B) The financial industry’s future is predicted to be shaped by the disruptive global phenomenon known as fintech. The Saudi Arabian FinTech ecosystem and environment are described in this paper along with their features and traits. Examples of cutting-edge Saudi Arabian financial companies are highlighted, including peer-to-peer lending, internet banking, transfer and payment systems, crowdfunding platforms, and blockchain efforts. Within the ecosystem, there have been a number of changes over the past five years. Saudi banks, for instance, are now acting with greater caution. FinTech projects, on the other hand, are also being created internally, which encourages technology firms and start-ups to concentrate their efforts on innovations that aim to enhance existing procedures rather than novelty. Government efforts are primarily focused on projects involving rules and legislation. The public is intrigued by new products that are convenient and easy to use. We compare the Saudi FinTech ecosystem to the United Arab Emirates’ FinTech ecosystem and conclude with recommendations for the different stakeholders.
