Bavarian Motor Works

Bavarian Motor Works (BMW)



Bavarian Motor Works (BMW)

Introduction

Accountant plays a key role in any organisation and no matter how much it has developed and the reputation in the market it enjoys; if decision related to finance is taken on the basis of incorrect or distorted data, it will impact the very foundation of the organisation, so much so that the reputational impact it has garnered over the years will be gone in a minute. It would partly be because of the inability of the organisation to pursue the value chain in a way it earlier used to, thus impacting directly the delivery of value to the customers. Thus it becomes of immense importance to address issues related to financial management with critical aspects for it is of significant importance in any companies' success and survival (Smyth & Edkins, 2007, pp. 236). It was the 80's and the 90's era which was characterised by the following of normative approach to implement accounting practices rather than aligning the practices to the organisation on the basis of vision and strategies (Spackman, 2002, pp. 292). Now, with comprehensive accounting tools and techniques prevailing in the market, using conventional approaches even in this era would do nothing other than dragging the firm under the head of failed operations.

Discussion

Answer 1

Sources of Financing

Long-term financing activities are mostly dependent on the long-term liabilities and the shareholders' or the owners' equity that might be acquired by an organisation to finance their business or fuel any expansion project. They usually involve issuance and redemption of shares, bonds, bank loan, mortgages and the likes. This basic information will drive us to understand and evaluate the long-term financing options used by our organisation, Bayerische Motoren Werke AG, which; in English is, Bavarian Motor Works known pre-dominantly by its shortened form of BMW.

The year 2011 posited a setback for the markets operating in the Eurozone through the debt crisis which deeply impacted the performance of all the organisations in some way or the other (Pollocket al., 2007, pp. 130). But due to the invincible strategic planning guiding the financial position of BMW, it was not that much impacted. They underwent their refinancing activity with the same dedication and fervour as they went in the year 2010 (Annual Report of BMW for 2010). BMW used as the long-term financing options the issuance of bond, loan and even some commercial papers were floated into the market. They were also able to get their hands on some additional funds when the world was unable to raise even the basic of the amount for their financing activities. New securitised transaction in addition to the existing transactions that were extended led to the accumulation of hefty amount for the financing activity.

Two bonds that BMW issued in the year 2011 brought in an amount of Euro 2.25 billion in the European market alone. These bonds were also issued in other currencies including Australian dollars and Swiss Francs denoting an amount of euro ...