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The Impact of Accounting Treatment of Research and Development Costs: Evidence from Chemring Group Plc
Murtala Zakari,
Sani Saidu
Issue:
Volume 2, Issue 3, August 2017
Pages:
92-97
Received:
28 May 2017
Accepted:
23 June 2017
Published:
25 July 2017
DOI:
10.11648/j.ijafrm.20170203.11
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Abstract: This study seeks to examine the accounting treatments of Research and Development (R&D) costs and to assess the impact of the treatments on the statement of profit or loss, and financial position of Chemring Group Plc using secondary data for 2015 financial year. To achieve this, data were obtained from Chemring Group’s 2015 annual reports and accounts, and analyzed using content analysis such as tables, walk through accounting illustration and key financial ratios, this is the major contribution of this study demonstrating practically the impact of the treatments of R&D costs, which to the best knowledge of the researcher has not been analyzed before. Findings from the analysis show that expensing all R&D costs has reduced the value of non-current asset and equity at the same proportion to the tune of the initial capitalized amount of development costs. This has impacted the financial position and the balance sheet size negatively by £36.1m. Due to the decline in profit and the balance sheet size in terms of assets and equity, the efficiency ratios have indicated down ward trend while the long term solvency ratio indicates the company is more geared. The study concludes that expensing all R&D costs reduces net asset and equity thereby reducing the size of the balance sheet, and potential investors and other users of financial statement evaluating the company would note that the assets appearing on the balance sheet are incomplete because the huge amount spent to create future benefits are not recognized and reported in the statement of financial position of the company.
Abstract: This study seeks to examine the accounting treatments of Research and Development (R&D) costs and to assess the impact of the treatments on the statement of profit or loss, and financial position of Chemring Group Plc using secondary data for 2015 financial year. To achieve this, data were obtained from Chemring Group’s 2015 annual reports and acco...
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Effect of Dividend Policy on Share Price Performance: A Case of Listed Insurance Companies at the Nairobi Securities Exchange, Kenya
Joseph Kurwo Chelimo,
Symon Kibet Kiprop
Issue:
Volume 2, Issue 3, August 2017
Pages:
98-106
Received:
3 June 2017
Accepted:
27 June 2017
Published:
27 July 2017
DOI:
10.11648/j.ijafrm.20170203.12
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Abstract: The purpose of this study was to determine the effect of dividends policy on share price performance of insurance companies listed at the Nairobi Securities Exchange (NSE). This study was guided by the following objectives: to determine the effect of dividend payout on share price performance of insurance companies listed at the Nairobi Securities Exchange (NSE), to examine the effect of dividend yield on share price performance of insurance companies listed at the Nairobi Securities Exchange (NSE), to analyze the effect of earnings per share on share price performance of insurance companies listed at the Nairobi Securities Exchange (NSE) and to determine the effect of inflation on share price performance of insurance companies listed at the Nairobi Securities Exchange (NSE). This study was underpinned by two theories namely; Modigliani and Miller, and Gordon's Model. This study adopted a combination of descriptive design and historical research design. The target population was six insurance companies listed at the Nairobi Securities Exchange namely; Jubilee holdings ltd, Pan Africa Insurance holdings, Kenya Re-Insurance Corporation limited, Liberty Kenya Holdings, British American Investment company ltd and CIC Insurance groups. Secondary data was collected from the companies’ past financial reports for ten year period between 2006-2015. Panel data was evaluated and analyzed using stata. Dynamic regression analysis was used to establish the relationship between dividend policy on share price of the listed insurance companies. This study established that dividend payout, dividend yield, earnings per share and inflation are jointly significant in predicting the value of share price. Therefore the study recommended that insurance firms should consider their dividend policy accurately since they have a great power on influencing share price, because they affect share price by making stocks prices move either up or down depending on dividends announced by management hence management should be prudently responsive in declaring dividends. Further, the study recommended that management of insurance firms should strive to declare higher dividends to spur share price upwards. The findings of this study benefits insurance firms and regulators like CMA, IRA and NSE in decision making. Further studies to be conducted regarding dividend policy on share price with expanded time frame on all listed companies at NSE.
Abstract: The purpose of this study was to determine the effect of dividends policy on share price performance of insurance companies listed at the Nairobi Securities Exchange (NSE). This study was guided by the following objectives: to determine the effect of dividend payout on share price performance of insurance companies listed at the Nairobi Securities ...
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Analysis of Relationship Revaluation of Property, Plant and Equipment Company on Stock Prices and the Rate of Return on Stock on Indonesian Stock Exchange
Issue:
Volume 2, Issue 3, August 2017
Pages:
107-112
Received:
26 April 2017
Accepted:
22 June 2017
Published:
3 August 2017
DOI:
10.11648/j.ijafrm.20170203.13
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Abstract: This study determined the relationship revaluation of property, plant and equipment on stock prices and the rate of return on stock in the manufacturing company. The population included the manufacturing companies included in the index LQ45 in Indonesia Stock Exchange in January 2011 to December 2013. The descriptive method utilized and the data were analyzed using multiple regression. The data were gathered from a yearly financial report in Indonesia stock exchange, data collection, data analysis, statistical analysis. The result of this research has shown that 1) There is the relationship between the financial asset classes of property, plant and equipment at fair value with reliability, 2) Reporting of fixed asset property, plant and equipment at fair value biased and unreliable especially for SE (The difference between the change in value of assets) and PPNINC (the increase of the value of property, plant, equipment company in period t), and 3) The fair value has ability to explain the explanatory power which is quite significant to the stock price, exceeds that can be presented with the historical cost. Based on the result, it can be concluded that asset reporting at fair value did not show a reliable quality. This was due to a difference in reporting an overvalued increase in the value of company asset in certain periods and increase in value property, plant and equipment in certain periods. And the changes in the value of property, plant, and equipment were reported together with the assessment made by investors and had a value of reliability.
Abstract: This study determined the relationship revaluation of property, plant and equipment on stock prices and the rate of return on stock in the manufacturing company. The population included the manufacturing companies included in the index LQ45 in Indonesia Stock Exchange in January 2011 to December 2013. The descriptive method utilized and the data we...
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Effect of Debt Finance on Financial Performance of Savings and Credit Cooperative Societies in Maara Sub-county, Tharaka Nithi County, Kenya
Peter Njagi Kirimi,
Justo Simiyu,
Murithi Dennis
Issue:
Volume 2, Issue 3, August 2017
Pages:
113-130
Received:
23 May 2017
Accepted:
29 June 2017
Published:
3 August 2017
DOI:
10.11648/j.ijafrm.20170203.14
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Abstract: Debt financing is the acquisition of funds through borrowing. Most Sacco’s results into borrowing to finance their increased customer’s demands thus increasing the leverage if not controlled. This study determined the effects of debt finance on financial performance measured ROE. The study investigated the effect of interest rate, loan tenure, debt/equity ratio, and interest coverage ratio on financial performance of savings and credit cooperative societies in Maara Sub-County, Tharaka Nithi County, Kenya. Causal research design and a target population of 10 Sacco’s and census survey were used. Secondary data from the Saccos financial statements for the last eight years used. Descriptive and inferential statistics were used with help of Statistical Package for Social Sciences (SPSS) and results presented in tables. A strong positive relationship of 0.984 between debt and ROE was revealed. A negative relationship existed between interest rate, loan tenure and ROE while a positive relationship was revealed between debt equity ratio and interest coverage ratio on ROE respectively. Interest rate, loan tenure and debt equity ratio had significant effect on ROE at t-statistics of 3.474, -2.938, 9.217 and 8.728 respectively with their P-values 0.018, 0.032, 0.000 and 0.000 less than 0.05 respectively.
Abstract: Debt financing is the acquisition of funds through borrowing. Most Sacco’s results into borrowing to finance their increased customer’s demands thus increasing the leverage if not controlled. This study determined the effects of debt finance on financial performance measured ROE. The study investigated the effect of interest rate, loan tenure, debt...
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