Corporate finance & treasury management Flashcards
What are the factors that influence share price?
Future Earnings Risks of Business Dividends Rumors and events affecting the business Industry growth and outlook Investment market and sentiment
How does future earnings effect share price?
Market value assumed to be related to PV of future earnings (free cash flow)
Past earnings may be used as a basis or indicator for this forecast.
How does risks of the business effect the share price?
Potential for unanticipated increases (hope) or falls (problems) in earnings or value
Capital structure of the business
Exposure to external events that impact on its business model
How does rumors and events affecting the business effect the share price?
Changes of management or strategy
Major client wins or product discoveries
Speculation about acquisition activity
Potential for favorable or adverse regulations coming into force
How does industry growth and outlooks effect the share price?
Growth rate of the industry as a whole
External impacts affecting the industry (costs, exchange rates, competition)
How does investment market sentiment effect share price?
Poor economic outlook will reduce all share prices
High market liquidity (cash) and low interest rates will boost all share prices
What is the objective of financial reporting?
provide information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity.
What does integrated reporting do?
Reflects the broad and longer-term consequences of the decision organizations make, based on a wide range of factors, in order to create and sustain value.
Enables an organization to communicate a clear, articulate way how it is drawing on all the resources and relationships it utilizes to create and preserve value in the short, medium and long term, helping investors to manage risks and allocate resources most efficiently.
What is the overall aim of the GRI?
Suggests entities report performance indicators so that users can monitor their performance from economic, environmental and social persepectives.
What is integrated reporting?
New approach to corporate reporting founded on integrated thinking, which helps demonstrate interconnectivity of strategy, strategic objective, performance, risk and incentives and helps to identify sources of value creation
What are the key purposes of integrated reporting?
Creation of value
Telling the story to win trust and secure reputation
What are the six capital of IR?
Better measure of sustainable value than annual performance measures such as Triple Bottom Line (People, Planet, Profits)
- Financial
- Manufactured
- Human
- Intellectual
- Social and relationships
- Natural
What are the seven principles of IR?
- Strategic focus and future orientation
- Connectivity of information
- Stakeholder relationships
- Materiality
- Conciseness
- Reliability and completeness
- Consistency and comparability
What are the eight content elements of IR?
- Organizational overview and external environment
- Governance
- Business Model
- Risks and opportunities
- Strategy and resource allocation
- Performance
- Outlook
- Basis of preparation and presentation
What are the general standard disclosures of IR?
Strategy and Analysis Organizational Profile Identified Material Aspects and Boundaries Stakeholder Engagement Report Profile Governance Ethics and Integrity
What are specific standard disclosures of IR?
Disclosures on Management approach
Indicators
What are disclosures on management approach (DMA)?
Intended to give the entity the opportunity to explain how the economic, environmental and social impacts related to material aspects are managed.
Provides context for the performance reported by indicators.
What are some examples of economic disclosures under the G4 guidelines?
Proportion of spending with local suppliers
Proportion of local workforce employed by the entity
Wage rates
Pensions and other benefits
Levels of taxes paid and subsidies received
What are some examples of environmental disclosures under the G4 guidelines?
Percentage of recycled material used in production
Levels of greenhouse gas emissions
Levels of organic ingredients used in products
What are some examples of social disclosures under the G4 guidelines?
Human rights policies
Breakdown of workforce by ethnic background
Policies in respect of working hours and labor practices
Benefits provided to employees such as healthcare, gym membership
What are economic aspects in the G4 guidelines?
Economic performance
Market presence
Indirect economic impacts
Procurement practices
What are environmental aspects in the G4 guidelines?
Materials Energy Water Biodiversity Emissions Effluents and waste Products and services Compliance Transport Overall Supplier Environmental Assessment Environmental Grievance Mechnaisms
What are social subcategory aspects in the G4 guidelines?
Labor practices and decent work
Human Rights
Society
Product Responsibility
What is stakeholder inclusiveness under the G4 guidelines?
The reporting entity should identify its stakeholders and explain in the report how it has responded to their expectations and interests
