Bus220b_Fall2021 Financial Accounting Prof. Lyons Venislava Vitanova Assignment 2b History of the

Bus220b_Fall2021

Financial Accounting

Prof. Lyons

Venislava Vitanova

Assignment 2b

History of the limited company and the capital structure

Table of contents

Introduction 1

History of the company 1

Strategy and Business Focus 1

Clients and competitors 2

Capital Structure 2

Graphs and Figures 3

References 5

Introduction

The current report will discuss the technology company SAP, its history, current strategy, market position, and financials.

History of the company

SAP is a company established in 1972 in Germany by former IBM employees who wanted to create software that combines all business processes in one. The main goal of the company was to create a standard application that links all divisions of an enterprise in order to build one smooth path for communication, planning, processing, and interaction between different departments. Gradually, by using local and cloud servers, SAP has turned into the biggest business solution for small, intermediate, and big companies. From having just one client when launched, now the company has more than 100 000 employees and 400 000 clients all over the world (SAP, 2021). (SAP History | About SAP SE, n.d.)

Strategy and Business Focus

The main strategy of the company is to offer consistent and smooth business processing while moving everything into a cloud system and improving the customer experience. The business model focuses on intellectual property that helps create a product that can handle tough operations, process big data, and at the same time offer full maintenance, easy support, and simple management. Even though SAP is an IT company, operating also in the cloud-computing sector, the main business focus in terms of clients is mass marketing – no matter of the industry and operations, SAP can be integrated for various businesses and industries. (Google Cloud Tries to Be Top SAP Cloud and Beat Out Microsoft and AWS, n.d.)

Clients and competitors

Some of the current clients come from around 25 different sectors such as retail, transportation, telecommunications, financial, or energy sector. Even though the market share of SAP is pretty stable and broad, some of the main competitors are Oracle, Stage 100 Cloud, Infor ERP, Intuit, FIS Global, etc. The main difference is the structure of the software product but many experts also claim that SAP’s main competitors are not the listed above but IBM and Microsoft since they are also technology companies that provide information technology software worldwide.

Capital Structure

SAP’s capital structure consists of the company’s long and short term debts, common and preferred stock.

In general, debt can be summarized as all the income gained by the company and shall be returned in a specific time frame (loans, bonds, etc.) while equity is all the income that the company gained or will gain from stock or any type of earnings (ex. sales). These figures can be found on the balance sheet of the company found in its Financial Report. Through debt, the company quickly raises the capital needed for current or future investments as the net sales could not be sufficient enough to cover such expenses. According to Yahoo Finance data, SAP’s total debt from 2017 to 2020 has risen from a little more than 6m EUR to more than 13m EUR at the end of 2020 while total assets also risen from 42.5m EUR in 2017 to 58m EUR in 2020 (SAP, 2020).(Services and Support from SAP, n.d.)

In the statement of Liquidity and Financial position can be observed that the company in the third quarter of 2021 has less than $ 5m in net debt that is more than $2m less than the year before. Therefore, the company has not gotten any debt recently. (Download Center | SAP Investor Relations, n.d.)

Graphs and Figures

LIQUIDITY AND FINANCIAL POSITION

 

 

6/30/2021

12/31/2020

FINANCIAL DEBT

 

13 116

13 283

NET DEBT

 

4 568

6 503

 

 

 

 

TOTAL ASSETS

 

63 095

58 472

TOTAL EQUITY

 

34 122

29 928

 

 

 

 

EQUITY RATIO

 

54%

51%

SAP has 1.201B shares on average (around 14% decrease for a year) and the stock price currently is around $140 which is the main source of financing besides the acquired debt. The company’s GEARING (debt to equity ratio) is 13 116/ 34 122 = 0.3844 (in $ millions). This measures the company’s risk for investors. More than 25% indicates risky investments while lower than 25% indicates the opposite. (SAP SE (SAP) Stock Price, News, Quote & History – Yahoo Finance, n.d.)

SAP’s degree of financial leverage is illustrated below

(Degree of Financial Leverage (DFL) For SAP SE (SAP), n.d.)

SAP’s Degree of Financial Leverage (DFL)

Dec 2012

1.0

Dec 2014

1.0

Dec 2016

1.1

Dec 2018

1.12

Dec 2020

1.1

Source: Finbox

Main sources of funding

References:

Degree of Financial Leverage (DFL) For SAP SE (SAP). (n.d.). Finbox.Com. Retrieved November 28, 2021, from https://finbox.com/BIT:SAP/explorer/degree_of_financial_leverage

Download Center | SAP Investor Relations. (n.d.). SAP. Retrieved November 28, 2021, from https://www.sap.com/investors/en/reports.html

Google Cloud Tries to Be Top SAP Cloud and Beat Out Microsoft and AWS. (n.d.). Retrieved November 28, 2021, from https://www.businessinsider.com/google-cloud-sap-microsoft-aws-2021-9?international=true&r=US&IR=T

SAP History | About SAP SE. (n.d.). SAP. Retrieved November 28, 2021, from https://www.sap.com/about/company/history.html

SAP SE (SAP) Stock Price, News, Quote & History—Yahoo Finance. (n.d.). Retrieved November 28, 2021, from https://finance.yahoo.com/quote/SAP/

Services and Support from SAP. (n.d.). SAP. Retrieved November 28, 2021, from https://www.sap.com/canada/support.html

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DB 6

m. (ET) on Monday of the assigned Module/Week. For each thread, students must support their assertions with at least 1 scholarly citations in APA format. Each reply must incorporate at least 1 scholarly citation(s) in APA format. Any sources cited must have been published within the last five years. Acceptable sources include various scholarly/peer to peer sources, the textbook, the Bible, etc.Reply 1:Cost shifting occurs in different conditions and situations one being that hospitals and providers will try to make up the revenue that they had lost on public sector patients by charging patients with private sector more than what the expense was that they incurred. Privately insured patients are paying more for their visits and health care, as this is a way to cater to the lower payments that are received from Medicaid patients. Having cost shifting this allows health care providers to stay in business. However, Cost shifting does go against the basics of economics. Cost shifting can also occur when the cost of carriage has increased with the rising wage along with the rising cost of supplies.”So do not worry, saying, ‘What shall we eat?’ or ‘What shall we drink?’ or “What shall we wear?’ For the pagans run after all these things, and your heavenly Father knows that you need them. But seek first His kingdom and His righteousness, and all these things will be given to you as well. Therefore do not worry about tomorrow, for tomorrow will worry about itself. Each day has enough trouble of its own.” Matthew 6:31-34 Reply 2:  A lot of people consider cost-shirting to be an unfair practice. Cost shifting is the theory that when public payers, such as Medicare or Medicaid, lower what they pay for services to physicians or hospitals, or when a healthcare organization sees an increase in those who are uninsured, a hospital responds to these situations by charging more to those with private insurance. According to Feldstein (2018), “the evidence of cost shifting is based on the observations that different payers pay different prices for similar services” (p.281). Although these numbers are observable, public payers have always paid less than those with private insurance. It wasn’t until the mid-2000’s when more data became available that studies could be done on whether cost-shifting was a common practice with healthcare organizations. These studies that were conducted by the Medicare Payment Advisory Commission and academic economists found that hospitals did not cost shift (Glied, 2021). In fact, according to the study, when Medicare [supanova_question]

DB 6

m. (ET) on Monday of the assigned Module/Week. For each thread, students must support their assertions with at least 1 scholarly citations in APA format. Each reply must incorporate at least 1 scholarly citation(s) in APA format. Any sources cited must have been published within the last five years. Acceptable sources include various scholarly/peer to peer sources, the textbook, the Bible, etc.Reply 1:Cost shifting occurs in different conditions and situations one being that hospitals and providers will try to make up the revenue that they had lost on public sector patients by charging patients with private sector more than what the expense was that they incurred. Privately insured patients are paying more for their visits and health care, as this is a way to cater to the lower payments that are received from Medicaid patients. Having cost shifting this allows health care providers to stay in business. However, Cost shifting does go against the basics of economics. Cost shifting can also occur when the cost of carriage has increased with the rising wage along with the rising cost of supplies.”So do not worry, saying, ‘What shall we eat?’ or ‘What shall we drink?’ or “What shall we wear?’ For the pagans run after all these things, and your heavenly Father knows that you need them. But seek first His kingdom and His righteousness, and all these things will be given to you as well. Therefore do not worry about tomorrow, for tomorrow will worry about itself. Each day has enough trouble of its own.” Matthew 6:31-34 Reply 2:  A lot of people consider cost-shirting to be an unfair practice. Cost shifting is the theory that when public payers, such as Medicare or Medicaid, lower what they pay for services to physicians or hospitals, or when a healthcare organization sees an increase in those who are uninsured, a hospital responds to these situations by charging more to those with private insurance. According to Feldstein (2018), “the evidence of cost shifting is based on the observations that different payers pay different prices for similar services” (p.281). Although these numbers are observable, public payers have always paid less than those with private insurance. It wasn’t until the mid-2000’s when more data became available that studies could be done on whether cost-shifting was a common practice with healthcare organizations. These studies that were conducted by the Medicare Payment Advisory Commission and academic economists found that hospitals did not cost shift (Glied, 2021). In fact, according to the study, when Medicare [supanova_question]

DB 6

Writing Assignment Help m. (ET) on Monday of the assigned Module/Week. For each thread, students must support their assertions with at least 1 scholarly citations in APA format. Each reply must incorporate at least 1 scholarly citation(s) in APA format. Any sources cited must have been published within the last five years. Acceptable sources include various scholarly/peer to peer sources, the textbook, the Bible, etc.Reply 1:Cost shifting occurs in different conditions and situations one being that hospitals and providers will try to make up the revenue that they had lost on public sector patients by charging patients with private sector more than what the expense was that they incurred. Privately insured patients are paying more for their visits and health care, as this is a way to cater to the lower payments that are received from Medicaid patients. Having cost shifting this allows health care providers to stay in business. However, Cost shifting does go against the basics of economics. Cost shifting can also occur when the cost of carriage has increased with the rising wage along with the rising cost of supplies.”So do not worry, saying, ‘What shall we eat?’ or ‘What shall we drink?’ or “What shall we wear?’ For the pagans run after all these things, and your heavenly Father knows that you need them. But seek first His kingdom and His righteousness, and all these things will be given to you as well. Therefore do not worry about tomorrow, for tomorrow will worry about itself. Each day has enough trouble of its own.” Matthew 6:31-34 Reply 2:  A lot of people consider cost-shirting to be an unfair practice. Cost shifting is the theory that when public payers, such as Medicare or Medicaid, lower what they pay for services to physicians or hospitals, or when a healthcare organization sees an increase in those who are uninsured, a hospital responds to these situations by charging more to those with private insurance. According to Feldstein (2018), “the evidence of cost shifting is based on the observations that different payers pay different prices for similar services” (p.281). Although these numbers are observable, public payers have always paid less than those with private insurance. It wasn’t until the mid-2000’s when more data became available that studies could be done on whether cost-shifting was a common practice with healthcare organizations. These studies that were conducted by the Medicare Payment Advisory Commission and academic economists found that hospitals did not cost shift (Glied, 2021). In fact, according to the study, when Medicare [supanova_question]

DB 6

m. (ET) on Monday of the assigned Module/Week. For each thread, students must support their assertions with at least 1 scholarly citations in APA format. Each reply must incorporate at least 1 scholarly citation(s) in APA format. Any sources cited must have been published within the last five years. Acceptable sources include various scholarly/peer to peer sources, the textbook, the Bible, etc.Reply 1:Cost shifting occurs in different conditions and situations one being that hospitals and providers will try to make up the revenue that they had lost on public sector patients by charging patients with private sector more than what the expense was that they incurred. Privately insured patients are paying more for their visits and health care, as this is a way to cater to the lower payments that are received from Medicaid patients. Having cost shifting this allows health care providers to stay in business. However, Cost shifting does go against the basics of economics. Cost shifting can also occur when the cost of carriage has increased with the rising wage along with the rising cost of supplies.”So do not worry, saying, ‘What shall we eat?’ or ‘What shall we drink?’ or “What shall we wear?’ For the pagans run after all these things, and your heavenly Father knows that you need them. But seek first His kingdom and His righteousness, and all these things will be given to you as well. Therefore do not worry about tomorrow, for tomorrow will worry about itself. Each day has enough trouble of its own.” Matthew 6:31-34 Reply 2:  A lot of people consider cost-shirting to be an unfair practice. Cost shifting is the theory that when public payers, such as Medicare or Medicaid, lower what they pay for services to physicians or hospitals, or when a healthcare organization sees an increase in those who are uninsured, a hospital responds to these situations by charging more to those with private insurance. According to Feldstein (2018), “the evidence of cost shifting is based on the observations that different payers pay different prices for similar services” (p.281). Although these numbers are observable, public payers have always paid less than those with private insurance. It wasn’t until the mid-2000’s when more data became available that studies could be done on whether cost-shifting was a common practice with healthcare organizations. These studies that were conducted by the Medicare Payment Advisory Commission and academic economists found that hospitals did not cost shift (Glied, 2021). In fact, according to the study, when Medicare [supanova_question]

DB 6

m. (ET) on Monday of the assigned Module/Week. For each thread, students must support their assertions with at least 1 scholarly citations in APA format. Each reply must incorporate at least 1 scholarly citation(s) in APA format. Any sources cited must have been published within the last five years. Acceptable sources include various scholarly/peer to peer sources, the textbook, the Bible, etc.Reply 1:Cost shifting occurs in different conditions and situations one being that hospitals and providers will try to make up the revenue that they had lost on public sector patients by charging patients with private sector more than what the expense was that they incurred. Privately insured patients are paying more for their visits and health care, as this is a way to cater to the lower payments that are received from Medicaid patients. Having cost shifting this allows health care providers to stay in business. However, Cost shifting does go against the basics of economics. Cost shifting can also occur when the cost of carriage has increased with the rising wage along with the rising cost of supplies.”So do not worry, saying, ‘What shall we eat?’ or ‘What shall we drink?’ or “What shall we wear?’ For the pagans run after all these things, and your heavenly Father knows that you need them. But seek first His kingdom and His righteousness, and all these things will be given to you as well. Therefore do not worry about tomorrow, for tomorrow will worry about itself. Each day has enough trouble of its own.” Matthew 6:31-34 Reply 2:  A lot of people consider cost-shirting to be an unfair practice. Cost shifting is the theory that when public payers, such as Medicare or Medicaid, lower what they pay for services to physicians or hospitals, or when a healthcare organization sees an increase in those who are uninsured, a hospital responds to these situations by charging more to those with private insurance. According to Feldstein (2018), “the evidence of cost shifting is based on the observations that different payers pay different prices for similar services” (p.281). Although these numbers are observable, public payers have always paid less than those with private insurance. It wasn’t until the mid-2000’s when more data became available that studies could be done on whether cost-shifting was a common practice with healthcare organizations. These studies that were conducted by the Medicare Payment Advisory Commission and academic economists found that hospitals did not cost shift (Glied, 2021). In fact, according to the study, when Medicare [supanova_question]