Do you think companies who effectively adhere to these six principles are, in general, better corporate citizens than those companies who do not? Why, or why not?
Do you think companies who have bad news to communicate that do so following these six principles will be rewarded in the marketplace by a smaller stock price drop? Why, or why not?
Reference
United States Securities and Exchange Commission. (1998). A plain English handbook. https://www.sec.gov/pdf/handbook.pdf
Do the discussion first then do response each posted below.
Posted 1
The most recent annual report from the General Electric Company is the GE Annual Report 2020. This letter to the shareholders indicates the clear plan they began the year with. Strength in Aviation, Healthcare, Power and Renewable Energy was quickly changed by COVID-19. The rapid decline in air travel and sudden global supply chain disruption hit the company hard. A show of gratification was greatly expressed for the employee commitment during the difficult time, not only for employees on the front line, but all of the employees that make this company operate. They outlined how they were successful in their adaptation to the situation by first embracing reality, second redefining winning, and third executing the plan. “These steps, combined with the headway we already had been making to improve execution, strengthened our capacity to work through the uncertainties triggered by the pandemic. And they helped us move faster on our journey to transform GE’s performance and culture” (GE, 2022, pp6). The letter continues to provide a detailed and clear overview of the year’s report.
Do you think companies who effectively adhere to these six principles are, in general, better corporate citizens than those companies who do not? Why, or why not?
I do feel that companies who effectively adhere to the six principles are better corporate citizens. I feel that by using these principles to provide clear and transparent language with their clients or consumers, they are looking out for the best interest of the public and not attempting to hide any details in confusing language.
Do you think companies who have bad news to communicate that do so following these six principles will be rewarded in the marketplace by a smaller stock price drop? Why, or why not?
“Even good companies face setbacks, such as litigation and recalls. However, just because a company experiences one negative event doesn’t mean that the company isn’t still fundamentally valuable or that is stock won’t bounce back” (). I think this statement applies to a company that uses the six principles to communicate bad news more than a company that does not. Using clear and understandable language reassures the public that the company has their best interest at heart and is not trying to hide even worse news.
Resources:
GE Annual Report 2020. General Electric. (2022). Retrieved January 13, 2022, from https://www.ge.com/investor-relations/annual-repor…
Posted 2
The most recent letter available for General Electric Company is the 2020 Shareholder Letter from the CEO. I believe this letter does follow the six principles of clear writing. Reading through the letter, there does not appear to be any glaring cases of the use of passive voice. It is written in the active voice, making it easy to follow without having to assume the subject of the sentence. Also, most of the sentences are short, and the sentences that were longer seemed to be out of necessity. They did not include superfluous words and, as the third principle indicates, they used everyday language. Technical terms and products include brief explanations, such as the 12- and 13-megawatt Halicade-X. Had they included only the name of the product, readers that are unfamiliar with Offshore Wind would not know what it was. However, they explain that it is the most powerful offshore wind turbine. At the end of the letter, there are tables presenting comparisons of revenues for 2020 and 2019 for the total company and each sector. They also excluded legal jargon and there were no noticeable multiple negatives (Culp, 2020).
Do you think companies who effectively adhere to these six principles are, in general, better corporate citizens than those companies who do not? Why, or why not?
I do think that companies who effectively use the six principles are generally better corporate citizens. As I mentioned in the first discussion board for this unit, not adhering to these principles makes it easy to hide unflattering details. Even if that is not the intent behind forgoing the six principles, doing so still shows a lack of care and consideration for the reader. If a company does not consider their shareholders when writing documents for them, I question if they are for their shareholders when making other decisions.
Do you think companies who have bad news to communicate that do so following these six principles will be rewarded in the marketplace by a smaller stock price drop? Why, or why not?
I think the company may see a smaller stock price drop. If the company clearly presents bad news, it also allows them to clearly state any plans they have to address the bad news. Hiding bad news in hard-to-read documents delays the inevitable and leads shareholders to feel lied to. This in turn will lead to a greater stock price drop.
References
Culp, H.L. (2020). 2020 Annual Report CEO Letter. General Electric Company. Retrieved from https://www.ge.com/sites/default/files/GE_AR20_Ann…
Posted 3
The shareholder letter is a fantastic place to start when you’re looking for a general overview of a company to invest in or to simply learn more about them. I reviewed the 2020 Berkshire Hathaway Annual Report. The shareholder letter was written by Warren Buffet and I specifically chose this company as Mr. Buffett wrote the preface in A Plain English Handbook (SEC, 1998). His “unoriginal but useful tip was to write with a specific person in mind” (SEC, 1998). Mr. Buffett stated that he imagined he was talking to his sisters when composing the Berkshire Hathaway’s Annual report.
During my analysis of the letter I felt an informal manner in which he wrote. It reminded me of the Christmas letters we receive from loved ones that detail the year in review. He did not use superfluous words and make the data very easy to read. He used short sentences through the 12 page letter, with many paragraphs only having 4 or 5 sentences. The letter was formatted in paragraph style instead of bullet points but it was easy to follow when he changed the topic or information he wanted to convey. He used personal pronoun choice and referred to Charlie Munger (his long-time partner) simply as “Charlie and I” (Berkshire Hathaway, 2021). He closed almost every topic with a one line summary of what he was discussing. For example, “Whatever the obstacles, BHE will be a leader in delivering ever-cleaner energy” (Berkshire Hathaway, 2021). This was simple way for the reader to know the synopsis of the information.
Do you think companies who effectively adhere to these six principles are, in general, better corporate citizens than those companies who do not? Why, or why not?
Utilizing these six principles shows the companies are transparent in their reporting and want their readers to understand what they are reporting. The more honest you are, the better corporate citizen you are. If I was choosing to invest in a company I would want to be able to understand their current operational position and that would be very difficult to do so if I could not understand what they are saying by using superfluous words or jargon.
Do you think companies who have bad news to communicate that do so following these six principles will be rewarded in the marketplace by a smaller stock price drop? Why, or why not?
I think the stock price drop would be a direct correlation to the bad news. However, investors have to be able to take on some type of risk. It is possible for a company to have a lower than average profit margin but still strong compared to its competitors. I think the bigger issue would be if the company repeatedly hid bad news and gave a false sense of achievement only to find out later that the numbers or data they used were masked by unclear language use. This would result in a large stock price drop. Investors and consumers want to know they can trust a company and would appreciate transparency and honesty.
References
BERKSHIRE HATHAWAY INC. 2020 ANNUAL REPORT. (n.d.) https://www.berkshirehathaway.com/2020ar/2020ar.pdf
US Securities and Exchange Commission. (1998). A Plain English Handbook How to create clear SEC disclosure documents. https://www.sec.gov/pdf/handbook.pdf
The ultimate purpose of ERM
“The ultimate purpose of ERM is to increase shareholder value through a risk-return based strategy. In a 3–5 page paper outline the following issues:
Identify the various stakeholders and outline what performance measures each of these groups consider important.
Explain why, as part of an ERM system, communicating performance measures are important.
You may use your textbook and or outside sources to develop your paper. The paper should be a minimum of three pages long, double-spaced. The minimum length does not include the cover page and the reference page. All sources should be referenced as sources cited. Check for correct spelling, grammar, punctuation, mechanics, and usage. Citations should use APA style.
BBA 2301 – Waterways Case Study
Accounting Assignment Help InstructionsWaterways (Chapter 27)For this assignment, you will apply what you have learned from the unit lesson and required unit resources. The Waterways (WP27) case is located on page 27-35 of the textbook.
Waterways puts much emphasis on cash flow when it plans for capital investments. The company chose its discount rate of 8% based on the rate of return that it must pay its owners and creditors. Using that rate, Waterways then uses different methods to determine the best decisions for making capital outlays.
This year, Waterways is considering buying five new backhoes to replace the backhoes it now has. The new backhoes are faster, cost less to run, provide for more accurate trench digging, have comfort features for the operators, and have 1-year maintenance agreements to go with them. The old backhoes are working just fine, but they do require considerable maintenance. The backhoe operators are very familiar with the old backhoes and would need to learn some new skills to use the new backhoes.
The following information is available to use in deciding whether to purchase the new backhoes.
InformationOld BackhoesNew BackhoesPurchase cost when new$90,000$200,000Salvage value now$42,000Investment in major overhaul needed in next year$55,000Salvage value in 8 years$15,000$90,000Remaining life8 years8 yearsNet cash flow generated each year$30,425$43,900Instructions:
In the following methods, evaluate whether to purchase the new equipment or to overhaul the old equipment. (Hint: For the old machine, the initial investment is the cost of the overhaul. For the new machine, subtract the salvage value of the old machine to determine the initial cost of the investment.)Use the net present value method for buying new or keeping the old.
Use the payback method for each choice. (Hint: For the old machine, evaluate the payback of an overhaul.)
Compare the profitability index for each choice.
Compare the internal rate of return for each choice to the required 8% discount rate.
Are there any intangible benefits or negatives that would influence this decision?
What decision would you make, and why?
Write your responses to these questions in a Word document. Your paper should be a minimum of two pages in length. You are not required to support your assignment with outside sources; however, if you do, adhere to APA Style when creating citations and references.
true or false and explain why
1) Profit maximization is not the goal of the firm because accounting profits do not accurately measure the timing and uncertainty of a company’s cash flows.
2) A rational investor would prefer to receive Rs1,200 today rather than Rs100 per month for 12 months.
3) Proper diversification allows corporations to eliminate all of their risk.
4) Capital markets are all institutions and procedures that facilitate transactions in long-term financial instruments.
5) The present value of a single future sum of money is inversely related to both the number of years until payment is received and the discount rate.
6) A rational investor will always prefer an investment with a lower standard deviation of returns, because such investments are less risky.
7) The benefits of diversification occur as long as the investments in a portfolio are not perfectly positively correlated.
8) If a bond is selling below its face value, then its yield to maturity must be less than the bond’s coupon rate.
9) Preferred stock is less risky than common stock, but more risky than debt.
10) Given the constant growth dividend valuation model, the expected percentage growth in value of a stock is equal to the capital gains yield for that stock.