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Why might firms or commercial or non-profit entities, including municipalities or governments conceivably turn to high-interest borrowing?

Please read the following info and the answer the questions at the bottom.
This discussion allows us to consider financial decisions of individuals, corporations, and commercial and non-commercial entities alongside pricing of financial products valued using time value of money concepts introduced in this module. We learned in Module 1 that all cash flows are inherently risky. In this module, we notice that financial products and services are valued based on the level and timing of cash flows they produce. Riskiness of cash flows affects the probability that payments will be received within planned time periods. Riskiness of cash flows affects the value of a set of cash flows through its effect on the timing of payment. This uncertainty can result in additional fees or other payment penalties or incentives. In this discussion, we consider the effect of uncertainty regarding timing of payment on products and services priced using the time value of money. We conclude by considering how this affects individuals using these products, lenders and investors, and the public more generally.
Module 4: Case Background Transcript
One application of time value of money is the commercial provision of credit to individuals, firms, and commercial and non-profit entities, including municipalities and governments. Payment by Installment (personal or consumer use of credit) is often traced back to between World War I and World War II, when mass production of high-value goods, such as cars and washers and driers, made credit purchases common. Consumer debt has continued to increase (with only minor periods of decline) during the interwar period. According to research, consumers have increasingly used debt to level or smooth consumption between periods of high and low income and to invest in homes and education. These activities require individuals to weigh current and future payments against future benefits in the same way that firms weigh financing costs of debt products against the expected value of cash flows resulting from them.
Unlike firms, which normally employ trained individuals to make financial decisions, individuals may not have the financial tools to think effectively about financial decisions. Consumers with very poor credit may be particularly unprepared to make good financial decisions. An example of lending to consumers with poor credit is Payday Lending, or short-term borrowing of small sums where a lender offers high-interest credit based on a borrower’s income and credit profile. Many states regulate this practice; some states set an interest rate cap. In 2008-2009, a dramatic decline in financial and economic activity took place that has come to be called the “Great Recession of 2008-2009.” As a result of the Great Recession, policymakers realized that credit use can have broad systemic consequences to the flow of funds that power financial activity. A Consumer Financial Protection Bureau (CFPB) was established following the Great Recession. The role of the CFPB is to educate and monitor consumers’ use of credit. The CFPB also regulates financial goods and services offered to consumers commercially. The CFPB regulates Pay Day Loans, for instance. The CFPB notes that a typical two-week payday loan with a $15 per $100 fee equates to an annual percentage rate (APR) of almost 400%, while APRs on credit cards can range from about 12% to 30%. Payday Loans typically require a post-dated check or permission to take repayment automatically from a debtor’s bank account for the full amount owed on a due date. The date of the post-dated check is usually required to correspond to receipt of a paycheck or social security payment.
Firms and commercial and non-profit entities, including municipalities and governments, may make accept high-interest loans for very different reasons. In this module’s required readings (see section 4.5 and p. 128 of Finance: Applications and Theory), we notice that the timing of payments affects the cost of debt products, including credit cards, short term loans, and related products. Regardless of their reasons for borrowing, all borrowers with evidence of poor historical repayment habits or indications of inability or unwillingness to repay debts are charged high interest rates and often encounter additional fees. A credit score is a tool that lenders use to set interest rates offered to consumers. A credit score offers lenders an index describing a consumer’s historical repayment habits. Borrowers with very poor historic payment activity are considered sub-prime or even “deep sub-prime” (defined as having credit scores below 580).
Nationally, lending to deep sub-prime borrowers has risen since the Great Recession of 2008-2009. This is so even while the Great Recession of 2008-2009 exposed the riskiness of lending to sub-prime borrowers and contributed to a broad collapse in credit markets. In 2008-2009, it became apparent that many lenders held risky debt products, making financial institutions unwilling to lend to one another. This perception of wide-spread risk cut the flow of credit to consumers, firms, and commercial and non-profit entities. Consumer borrowing in general has risen steadily since the 1970s. Borrowing—and credit generally—supports consumer spending. A consumer might need gas in their car on Monday when they are not paid until Friday, for instance. Consumers might need to use a credit card to put gas in their cars to get to work. They may need to purchase furniture and appliances on credit, or they may need to promise future income to repay a home mortgage or car loan. These credit “instruments” support spending when current income is insufficient to do so.
Consumers, firms, and commercial and non-profit entities, including municipalities and governments, may all borrow, even when financing costs are very high. According to TransUnion (a credit-reporting agency), sub-prime lending (including lending to deep sub-prime borrowers) constitutes 11% of all non-secured lending, with room for growth. Subprime fees and interest exceeded 40% of borrowers’ year-end balances, according to the Consumer Financial Protection Bureau. Non-secured lending is risky because it is not backed by collateral or an asset that may be sold to compensate a lender if a borrower fails to repay in a timely fashion. In the Great Recession of 2008-2009, even asset-backed lending became risky when asset prices fell. In 2008 and 2009, risky assets – even those backed by collateral – were difficult to sell. This difficulty damaged the liquidity of financial institutions and their ability to keep funds flowing out to consumers and others, even those with very good credit.

Case
Jacquelyn has selected a Payday Lender with fees above those offered to sub-prime borrowers approved for credit cards or other forms of unsecured lending. Once a month Jacquelyn visits a lender willing to offer her an advance on her paycheck. Jacqulyn insists this allows her to meet obligations, including rent and cost of prescriptions, that she would not be able to meet otherwise. Interest rates are compounded daily at a set percentage and, measured annually, may reach above 1,500%. Jacquelyn does not live in a state that caps interest rates. Jacquelyn has had numerous adverse credit events in the past, however her current lender’s fees and other conditions offer enough of a guarantee to allow this lender to extend necessary credit. Because of the high financing costs paid currently, in part, Jacquelyn’s credit is unlikely to improve in the short term. She has been unable to stay current on student loan repayments. Her income has not grown as expected and has been unstable. She has taken temporary positions to supplement her income and is still looking for work in her field.

Case Questions
Initial Post
Based upon this module’s required reading and the background information provided here, form an initial post covering the following four issues:
Section 1
Based upon this module’s required reading, explain briefly how interest rates for borrowers, including high-interest borrowers like Jacquelyn, are determined. You might consider observations on p. 128 of our textbook.
Section 2
Identify and analyze one benefit sub-prime borrowers like Jacquelyn or society receives from high-interest borrowing.
Section 3
Recognizing that some states set interest rate maximums, identify and analyze one cost or negative effect that borrowers, including sub-prime borrowers like Jacquelyn, or society suffers as a result of high-interest borrowing.
Section 4
Why might firms or commercial or non-profit entities, including municipalities or governments conceivably turn to high-interest borrowing?
Section 5
Comment on limitations of lending to individuals and other entities with poor credit that you learned about in reflecting on sections 1-4.

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What can you do to maximize your persuasiveness?

Suppose that you are part of a virtual team and must persuade other team members on an important matter (such as switching suppliers or altering the project deadline).
Assuming that you cannot visit these people in person, and you have no positional authority, what can you do to maximize your persuasiveness? (Remember, you have NO positional authority, so many sources of power are not available to you).
1 page. Need asap.

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What might be the causes of the business’s financial success or failure?

Overview
To prepare for your report in Project Two, you must calculate the financial ratios needed to determine your chosen business’s current financial health. Once you’ve calculated these ratios, you will use the results to analyze the business’s current financial position. This will help you make decisions about how to improve or maintain their financial health. Pay close attention to working capital management. If liquidity is an issue, think about how the company will meet its short-term obligations.
Directions
For the company you chose in the Module Two journal assignment, open the following documents:
The balance sheet, income statement, and cash flow statement from the most recent fiscal quarter (from Mergent Online)
The Ratios Most Recent Fiscal Qtr worksheet in the Project Two Financial Formulas workbook.

For example, if the most recent fiscal quarter available is the third quarter in 2022, you’ll compare those results to the same financial calculations from the third quarter in 2021.

Use the documents to calculate key financial ratios.
Then open the following documents:
The balance sheet, income statement, and cash flow statement from the same fiscal quarter one year ago
The Ratios Same Fiscal Qtr 1 Year Ago worksheet
Use the documents to calculate the same financial ratios. Finally, compare those ratios and analyze your results.
Specifically, you must address the following rubric criteria:
Financial Calculations. Calculate accurate financial formulas to assess the business’s current financial health. Specifically, calculate the following formulas using the Ratios Most Recent Fiscal Qtr and the Ratios Same Fiscal Qtr 1 Year Ago worksheets in the Project Two Financial Formulas workbook:

Working capital
Current ratio
Debt ratio
Earnings per share
Price/earnings ratio
Total asset turnover ratio
Financial leverage
Net profit margin
Return on assets
Return on equity

Fiscal Quarter Comparison. Summarize the differences between the following:

The results from your financial calculations of the most recent fiscal quarter
The results of the same financial calculations of the same fiscal quarter from one year ago

For example, if the most recent fiscal quarter available is the third quarter in 2022, you’ll compare those results to the same financial calculations from the third quarter in 2021.

Comparison Analysis. Explain what your calculations and comparison show about the business’s current financial health. Give examples to support your explanation for the following questions:

Do the results show the business is financially healthy or unhealthy? Which results indicate this?
What might be the causes of the business’s financial success or failure?
Is more information needed to determine the business’s financial health? If so, which pieces of information might still be needed?

Short-Term Financing. Explain how potential short-term financing sources could help the business raise funds needed to improve its financial health. Base your response on the business’s current financial information.
What to Submit
Your submission should be a 2- to 3 page Word document with 12-point Times New Roman font, double spacing, and one-inch margins. You must also submit the following:
The Ratios Most Recent Fiscal Qtr worksheet from the Project Two Financial Formulas workbook
The Ratios Same Fiscal Qtr1 Year Ago worksheet from the Project Two Financial Formulas workbook
The Excel files for your downloaded balance sheet, income statements, and cash flow statements from Mergent Online
Supporting Materials
The following resources can help you complete this milestone:
Video: Mergent Online: Public Company Financials (4:46)
Watch this video from the Shapiro Library to learn more about how to access and use Mergent Online. This video shows information on the As Reported Currency page within the Company Financials tab. For the purposes of this course, however, the best way to see financial data is to click Standardized beneath the Company Financials tab. This will allow you to access the Standardized Annual Balance Sheet.
Shapiro Library FAQ: How Do I Cite a Company Profile From Mergent Online?
Use this resource to help answer any questions you have about citing from Mergent Online.

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Describe simulation and scenario analysis.

Describe simulation and scenario analysis. How do simulation analysis and scenario analysis differ in the way they treat very bad and very good outcomes? What does this imply about using each technique to evaluate project riskiness?
APA format

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What is the benefit of technical analysis? 

Technical analysis may help you understand the historical data. In Week 2 you identified a security and explored standard deviation and beta for this security. Now locate the 50-day, 100-day, and 200-day moving average of this security price at a site such as www.finance.yahoo.com. Based solely on each average, should you be a buyer or a seller? Do all three averages confirm the implied direction of change in the price of each stock?  What is the benefit of technical analysis?  What are its limitations?
Post a brief summary of technical analysis in the context of your findings of moving averages. Can you time buying or selling of stocks based on technical analysis?
APA format

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What is the role and benefit to the organization of a leadership development plan?

This assignment builds upon your work in Unit 1.
In reflecting on Cinco’s current leadership development strategy (which is more of a coaching plan than a development plan), you realize that part of your report to leadership must include a recommendation for updating the leadership development plan.
Part 2 of the report on ethics is to prepare a leadership development plan for the senior leadership team, focusing on practices that the organization can implement, to address the following:
What is the role and benefit to the organization of a leadership development plan?
What are the benefits of a leadership development strategy from both an employee and organizational perspective?
Provide at least 3 strategies that an organization can implement when creating a leadership development program.
How will this strategy change impact the organizational culture from a leadership perspective?
How will this strategy support the goals of the organization?
Deliverable Requirements
The leadership development plan must be at least 5 pages in length. Be sure to cite sources using APA properly; include references and in-text citations.
Submitting your assignment in APA format means, at a minimum, you will need the following:
Title page: Remember the running head. The title should be in all capitals.
Length: 5 pages minimum
Body: This begins on the page following the title page and must be double-spaced (be careful not to triple- or quadruple-space between paragraphs). The typeface should be 12-pt. Times Roman or 12-pt. Courier in regular black type. Do not use color, bold type, or italics, except as required for APA-level headings and references. The deliverable length of the body of your paper for this assignment is 5 pages. In-body academic citations to support your decisions and analysis are required. A variety of academic sources is encouraged.
Reference page: References that align with your in-body academic sources are listed on the final page of your paper. The references must be in APA format using appropriate spacing, hanging indent, italics, and uppercase and lowercase usage as appropriate for the type of resource used. Remember, the Reference page is not a bibliography but a further listing of the abbreviated in-body citations used in the paper. Every referenced item must have a corresponding in-body citation.

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Discuss how you will integrate your social media marketing (SMM) tools into the function of your Web site.

Deliverable Length:1,000–1,200 words plus visual aidsExplain your Web site concept. Discuss how you will integrate your social media marketing (SMM) tools into the function of your Web site.
Respond to the following questions:
What kind of content will you create?
With which ideas, brands, and advertisers will you affiliate?
What is your search engine optimization (SEO) strategy?

Optimization
Organic or nonorganic
Keywords
Paid advertising
Mobile searches

Note: You must also use visual aids to illustrate your ideas.

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Discuss the similarities between a corporate income statement and balance sheet and the documentation required of a mortgage loan applicant.

In this activity, we link personal and corporate finance to understand why people sometimes behave like corporations, and vice versa. We begin by asking why firms issue financial statements. Firms that sell ownership shares to the public are required by law to issue financial statements (see SEC, “The Laws That Govern the Securities Industry”), but many other firms also publish similar financial information describing income, assets, and liabilities. Individuals are asked to produce some of the same information as they apply for loans and credit. In this Discussion, we think about the mortgage loan application process to better illuminate information gleaned from a firm’s four key financial statements. Similarities exist between documentation requested of an individual applying for a loan and a firm accepting funds from investors. We explore why this may be true to understand the key financial statements.
Case Study:
Jucheng’s Loan Application
You are a loan offer at a community bank. You are working with a client Jucheng, who is referred by Dave. Dave is a friend of Jucheng, and Jucheng is now working with you to secure his first home loan. With acceptance of Jucheng’s offer on a home, he must secure financing.
Jucheng is currently applying for a home loan while Dave applied recently. Differences in Dave and Jucheng’s financial situations distinguish them as loan applicants. Both loan applicants are buying homes of similar value and their income is similar.
Jucheng’s Profile:
Jucheng only recently accepted employment offering stable income, something he has not had in the past. Jucheng finds it harder to show a record of stable income and employment to meet income documentation requirements. Jucheng’s income has historically been irregular. He supplemented his earnings with the sale of imported Asian Medicinal products but revenues from Jucheng’s supplemental income have also been historically irregular. Jucheng manages each of his business enterprises as Sole Proprietorships. Family contributed funding. He also has personal responsibility for business debts, including a business line of credit with balances and payments that are high in relation to his business income. Jucheng’s amount of savings is low.
Dave’s Profile
Dave has had a stable source of income and has not moved between firms for many years. He has low debt in relation to his assets. Investments listed on Dave’s mortgage loan application counterbalanced the liability of the mortgage loan. The origin or his down payment is savings from past earnings, so his financial “claim” to these funds is clear. He had made no major purchases in recent years and had no major changes in his financial situation. Always having stable income, Dave pays his debts on time. His debt to income ratio is low.
From the perspective of the lender, Jucheng’s request for a loan is more problematic than Dave’s because Jucheng is less able to document his income, assets, and liabilities. The bank needs information to prove that a borrower is likely to repay a loan. Investors considering investing in a firm are interested in similar issues.
You are in a trusted position, aiding community members seeking mortgages, but also assuring that interests of savers of this small bank are safeguarded by your due diligence. You work closely with underwriters Links to an external site.to ensure documentation of consumer credit applications is in place at loan origination Links to an external site.. You notice Jucheng is new to the process guaranteeing a borrower’s ability for repayment and general financial stability. You are torn between empathy for Jucheng and an ethical regard for your fiduciary duty as an agent for this small bank. As a loan officer you recognize that Jucheng has difficulty documenting claims to his assets, including the origin of his down payment and his income. You wonder how you will explain the disappointing news that Jucheng may not qualify for a mortgage, even though he has enough income to cover payments currently.
Luckily, you are involved in a Financial Management course offering insight into the four key financial statements and measures derived from them used by firms to justify access to obtain capital markets. Using financial ratios derived from these statements as illustrations, you thus explain to Jucheng the reasoning behind documentation of income and earning ability, solvency, assets and debt, savings, and origins of assets that financial statements offer investors.

Instructions
Speaking as a loan officer, you may use the case of these two borrowers to illustrate the points you make in this discussion.
Briefly discuss why firms issue financial statements, considering any one category of user interested in these statements.
Using any one type of financial ratio as an illustration, explain how financial statements offer a picture of a firm’s ability to serve as a good manager of invested funds.
Discuss any one financial ratio that a financial institution might use to evaluate the the suitability of an applicant for a personal loan (as an example of one ratio, search for the term “debt-to-income ratio”).
Discuss the similarities between a corporate income statement and balance sheet and the documentation required of a mortgage loan applicant.

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Discuss the factors that determine whether an asset or liability should be classified as current or long-term in a balance sheet.

The usefulness of the balance sheet is enhanced with assets and liabilities are grouped according to common characteristics.  The broad distinction made in the balance sheet is the current versus long-term classification of both assets and liabilities.
Required:
Post at least 150 words answering the following questions:
Discuss the factors that determine whether an asset or liability should be classified as current or long-term in a balance sheet.
Identify six items that under different circumstances could be classified as either current or long-term.  Indicate the factors that would determine the correct classification.
Read a selection of your colleagues’ postings.

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Explain how causal inference and root cause analysis are used in problem detection.

Chapter 7. Basic Methods for Establishing Causal Inference
Chapter 8. Advances Methods for Establishing Causal Inference
Initial Postings: Read and reflect on the assigned readings for the week. Then post what you thought was the most important concept(s), method(s), term(s), and/or any other thing that you felt was worthy of your understanding in each assigned textbook chapter.Your initial post should be based upon the assigned reading for the week, so the textbook should be a source listed in your reference section and cited within the body of the text. Other sources are not required but feel free to use them if they aid in your discussion.
Also, provide a graduate-level response to each of the following questions:
Causal inference is used as a secondary or tertiary tool in root cause analysis. Please explain how causal inference and root cause analysis are used in problem detection. Respond to this discussion board (DB) in the context of your field of employment. For example, if you are in I.T., respond to this DB by explaining the cause of a network failure; or if you are the in the food industry, use this DB to explain the cause of a recent decline in customer satisfaction. Please address each component of the discussion board. Also, cite examples according to APA standards.
[Your post must be substantive and demonstrate insight gained from the course material. Postings must be in the student’s own words – do not provide quotes!]
[Your initial post should be at least 450+ words and in APA format (including Times New Roman with font size 12 and double spaced). Post the actual body of your paper in the discussion thread then attach a Word version of the paper for APA review]