Week 7 Assignment


  • Financial management applies to personal as well as business financial decisions. In this week’s assignment, you will lay the groundwork for creating a personal retirement plan in Week 9.This week’s analysis requires you to apply what you have learned using the textbook, as well as additional Internet and SU Library research. Also, please refer to the assignments in Weeks 2 and 4, in which you evaluated stocks and bonds as investment options and applied the concept of present value.Scenario
    For this assignment, you take on the role of a personal retirement planner who is preparing a memo for your client. In the memo, explain to the client the financial and risk considerations that go into planning for retirement.Instructions
    Write a 4–5 page paper using the following instructions:

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    Describe the importance of factors to consider when developing a retirement plan. These will include age, marital status, number of dependents, health, life expectancy, and other sources of income such as social security and pensions.
    Examine the relationship between risk and return and its impact on decisions about saving for retirement. Provide examples of the relationship.
    Explain how risk factors (such as age and personal risk tolerance) impact the allocation of assets included in a retirement plan. Support your explanation with examples of how asset allocation changes as the risk factors change.
    Analyze how fiscal and monetary policies may impact retirement plans.

    Research how changes in fiscal policy and monetary policy can impact retirement savings.
    This research should include how changes in policies, including interest rates, tax rates, and policies that impact savings (IRAs, 401k), can impact retirement plans.

    Evaluate the implications of the time value of money with respect to saving for retirement. Support the answer with specific examples and explanations.
    Use 4–5 sources to support your writing. Choose sources that are credible, relevant, and appropriate. Cite each source listed on your source page at least one time within your assignment. For help with research, writing, and citation, access the library or review library guides. 
    This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course. Check with your professor for any additional instructions. The specific course learning outcome associated with this assignment is as follows: 

    Determine the suitability of an investment strategy that considers external risk factors and a literature review. 
    Create investment recommendations based on research that includes the rationale and risk mitigation for the chosen strategies. 




FIN 534: Financial Management

Strayer University

Dr. Black

July 15, 2022:


Stock exchanges are majorly involved in trading financial instruments such as securities, derivatives, and commodities (Dogru et al., 2020). In the U.S., there are two major financial securities markets, which are New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotation System (NASDAQ). NYSE is, undoubtedly, the largest stock exchange in the world. It provides entrepreneurs and icons with the opportunity of raising capital. NASDAQ, on the other hand, is the biggest electronic screen-based market and is popularly known for its relatively modern and computerized system. Additionally, it provides lower listing fees compared to NYSE, which explains why giant companies such as Microsoft, Amazon, Google, and Apple trade with NASDAQ.

According to Dogru et al. (2020), free cash flow helps businesses in measuring and monitoring their present value towards tracking growth, encouraging expansion, and avoiding failure. This implies that free cash flow is the amount of money remaining after a business pays for such expenditures as rent, plant, fixed assets, employees, expenses, and debts, among others (Dogru et al., 2020). Therefore, free cash flow is utilized in expanding operations, contributing to additional employees, or facilitating the acquisition of additional assets. The growth in free cash flow as a result of debt elimination, dividend distributions, share buybacks, cost reductions, efficiency improvements or revenue growth contributes to a positive company growth.

One of the companies listed in NYSE is ExxonMobil while Apple Inc. is listed in NASDAQ. In 2019, ExxonMobil’s free cash flow for the year was $5.355 billion, which was a remarkable 67.43 percent decline from 2018. The company recorded a free cash flow of $ $-2.614 billion in 2020, representing an unimpressive 148.81 percent increase from 2019 (Macrotrends, 2022). On the other hand, Apple Inc. had an annual free cash flow of $58.896 billion in 2019, a decline of 8.15 percent recorded in 2018. However, the decline was reverted in 2020 as the company witnessed a jump in its free cash flow of $73.365 billion, representing a 24.57 increase from 2019 (Macrotrends, 2022).

An analysis above, it is clear that Apple recorded a magnificent increase in its free cash flows from 2019 to 2020. Therefore, the inference is that the company had the cash that may be utilized towards expanding, developing new products and services, buying back stock, paying dividends, or reducing their debt. The increase in free cash flow for Apple is an indication of a healthy financial position in the prevailing environment. Thanks to the rise in free cash flow, the implication is that the companies have a strong foundation to their stock pricing in the future. The decline in free cash flow for ExxonMobil is a serious concern for the company. To address the issue, the company may need to restructure its debts to lower interest rates as well as optimizing repayment schedules. The company should also seek to reduce, limit, or delay capital expenditures.

Financial Ratios for Apple (Al Mheiri, Al Hosani & Saif, 2021).

Liquidity Rations

1. Current Ratio (2019) = Current Assets/Current Liabilities

= $163.23 billion/$102.16 billion

= 1.60

1. Current Ratio (2020) = $154.11 billion/$132.51 billion

= 1.16

1. Quick Ratio (2019) = (Current Assets – Inventory)/Current Liabilities

= $159.13 billion/$102.16 billion

= 1.56

1. Quick Ratio (2020) = $149.13 billion/$132.51 billion

= 1.56

Asset Management Rations

1. Inventory Turnover Ratio (2019) = Cost of goods sold/Average inventory

= $161.78 billion/$4.11 billion

= 39.4

1. Inventory Turnover Ratio (2020) = $169.56 billion/$4.06 billion

= 41.75

1. Accounts Receivable Turnover Ratio (2019) = Net sales/Average accounts receivables

= $260.17 billion/$22.93 billion

= 11.35

1. Accounts Receivable Turnover Ratio (2019) = $274.52 billion/$16.12 billion

= 17.03

Profitability Ratios

1. Operating Profit Margin (2019) = Operating Income/Net Sales*100

= $63.93 billion/$260.17 billion*100

= 24.57%

1. Operating Profit Margin (2020) = $66.29 billion/$274.52 billion*100

= 24.15%

1. Net Profit Margin (2019) = Net Income/Net Sales*100

= $55.26 billion/$260.17 billion*100

= 21.24%

1. Net Profit Margin (2020) = $57.41 billion/$274.52 billion*100

= 20.91%

Financial Ratios for ExxonMobil (Asadbayli, 2020).

Liquidity Rations
1. Current Ratio (2019) = Current Assets/Current Liabilities

= $50.05 billion/$63.99 billion

= 0.78

1. Current Ratio (2020) = $44.89 billion/$56.36 billion

= 0.80

1. Quick Ratio (2019) = (Current Assets – Inventory)/Current Liabilities

= $31.52/$63.99 billion

= 0.49

1. Quick Ratio (2020) = $26.04 billion/$56.36 billion

= 0.46

Asset Management Rations
1. Inventory Turnover Ratio (2019) = Cost of goods sold/Average inventory

= $211.15 billion/$18.75 billion

= 11.26

1. Inventory Turnover Ratio (2020) = $150.56 billion/$18.69 billion

= 8.03

1. Total Asset Turnover (2019) = Sales/Total Assets

= $264.93 billion/$362.60 billion

= 0.73

1. Total Asset Turnover (2020) = $181.50 billion/$332.75 billion

= 0.55

Profitability Ratios
1. Operating Profit Margin (2019) = Operating Income/Net Sales*100

= $20.06 billion/$53.79 billion*100

= 37%

1. Operating Profit Margin (2020) = $28.88 billion/$30.94 billion*100

= 93%

1. Net Profit Margin (2019) = Net Income/Net Sales*100

= $14.34 billion/$53.79 billion*100

= 26.66%

1. Net Profit Margin (2020) = $22.44 billion/$30.94 billion*100

= 72.52%

In examining the financial ratios for Apple and ExxonMobil, one of the key strengths is that the values obtained may go a long way in comparing different companies. This is important as it helps investors in evaluating stocks within a given industry.


Al Mheiri, R., Al Hosani, N., & Saif, E. (2021). Ratio Analysis of Apple. Available at SSRN 3895231.


Asadbayli, Y. (2020). Financial Ratio Analysis as a Tool of Evaluating the Performance of Companies for Investment Decision: The Case of ExxonMobil and Chevron (Doctoral dissertation, szte).


Dogru, T., Kizildag, M., Ozdemir, O., & Erdogan, A. (2020). Acquisitions and shareholders’ return in restaurant firms: The effects of free cash flow, growth opportunities, and franchising. International Journal of Hospitality Management, 84, 102327.


Macrotrends (2022). Apple financial statements 2010-2022. Retrieved from


Macrotrends (2022). ExxonMobil financial statements 2010-2022. Retrieved from




FIN 534: Financial Management

Strayer University


r. Black

July 27, 2022

Returns and Bonding Ratings

You have just won the Strayer Lottery jackpot of $11,000,000. You will be paid in 26 equal annual installments beginning immediately. If you had the money now, you could invest it in an account with a quoted annual interest rate of 9% with monthly compounding of interest.

Calculate the present value of the payments you will receive. Show your calculations using formulas in your paper or in an attached spreadsheet file.

Basic Information

Jackpot = $11,000,000

Annual Installments = 26

Interest Rate = 9%



PV=Present Value

FV=Future Value

r=Nominal Interest rate

n=Number of periods

k= Yearly compounding times


Monthly Compounded

Installments (k) = 12

Nominal interest rate (r) = 9%

Number of periods (n) = 26

Future Value (FV) = 11000000


PV = 1068896.32.

Explain why there is a difference between the present value of the Strayer lottery jackpot and the future value of the 26 annual payments based on your calculations and the information provided.

The present value is greater than the winner of the jackpot would receive if annual installments were chosen as an option. In this regard, monthly compounding of interest means that each month, the interest rate is added to the initial investment. The present value allows comparing the current value of the money with the sum that the individual will receive upon investment. The difference is attributed to the time value of money.

Compare the information about risk and return indicated by different bond ratings. Support your answer with references to research. Use various bond websites to locate one of each of the following bond ratings:






, and D. Research the differences between the bond ratings, the required interest rates, and the risk. List the websites used as sources for this research.

Credit ratings play a fundamental role in helping investors make informed decisions towards investing in securities and or/bonds (Shi et al., 2019). The ratings include AAA, BBB, CCC, and D. Bonds that are rating AAA have the highest degree of worth and quality, which implies that they are capable of easily meeting its financial requirement and have the least risk of default.

BBB rating bonds are also referred to as investment graded bonds, and are capable of meeting of the obligations for its payments, thus giving banks the liberty to invest in (Shi et al., 2019). CCC bonds rating are highly risky to invest in (Hajek, Olej & Prochazka, 2016). Therefore, banks do not have an appetite to invest in the CCC bonds. On the other hand, D rating bonds have a very small value or no value. This element makes the bonds susceptible to default.

Identify the strengths and weaknesses of each rating.





High credit quality

High safety level

Lowest credit risk

Potential for false credit rating

Challenge of liquidation


Moderate safety

Timely payment of debt

Moderate credit risk

Bond issuer liable in case of default


High rate of return

High default probability


Lowest value/short term default

Lowest ratings

High likelihood of default


Hajek, P., Olej, V., & Prochazka, O. (2016, December). Predicting Corporate Credit Ratings Using Content Analysis of Annual Reports–A Naïve Bayesian Network Approach. In FinanceCom 2016 (pp. 47-61). Springer, Cham.


Shi, B., Zhao, X., Wu, B., & Dong, Y. (2019). Credit rating and microfinance lending decisions based on loss given default (LGD). Finance Research Letters, 30, 124-129.


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