Write 2 paragraphs per each of the following subject below:
Subject 1 – Standard Industry Classifications, How are you doing compared to others?
Standard Industry Classification codes (SIC) are used for financial statement “benchmarks” analysis. Your company’s financial results would need to be compared to others. SICs provide the format to compare a particular company’s financial data to their respective SIC-industry averages.
Explain how you would use SIC codes to analyze a Company Xs Accounts Receivable Turnover of four times per year versus a SIC rate of eight times per year.
Subject 2 – Monitoring the Cost of Money: Interest Rates
Interest rates, the cost of money, influence most all factors related to personal and corporate capital budgeting. The more obvious personal information for the cost of money is the rates associated with a mortgage or car loan. As a CFO you would “shop” interest rates to find the best rate for your financing needs.
• Would you, as the CFO, finance your projects as soon as possible if cost of capital was expected to drop? Please explain.
• More importantly where do you find the information to analyze expected changes in interest rates?