Supply And Demand Essays (361 words) - American Football League

Supply And Demand On January 30, millions of televisions will be tuned in to the American Broadcast Company's live coverage of the Super Bowl. The three hour-plus event draws as many as 130 million viewers at one time. According to NFL Research, sixty eight percent of Super Bowl viewers say they pay attention to the commercials and fifty two percent said they discussed the ads the next day. With so many people watching the event, businesses see the Super Bowl as a golden opportunity to lure in profits by utilizing the commercial air time available. Due to the unlimited wants and limited resources, an economic condition called scarcity results. Another economic principle, called investment, is exemplified in this article. Scarcity is a condition that exists because society has unlimited wants and needs, but there are limited resources for their satisfaction. During the three hour-plus football game, there will be opportunities for large businesses (and even some small businesses who have gambled on this form of advertising) to display their product or service to over a hundred million people. At an even greater expense, some companies are sponsoring pre-game, half-time, and post-game shows. Why does it cost so much money? Commercials during the Super Bowl are very powerful means of advertising. Companies can appeal to a larger audience by advertising during an event that is widely watched among all different groups. The commercials are also quite expensive because of the limited quantity. Advertising during the Super Bowl is a very smart investment. Investment is defined by the sacrifice of current benefits to pursue an activity with expectations of greater future benefits or rewards. Does this apply to the Super Bowl? Yes. Companies will dish out millions of dollars for 30-second blocks of air time. Some companies may even purchase more than that. The short term result is a loss of millions. That money invested in advertising, however, should return much more than that which was invested. The commercial air time during the Super Bowl is such a valuable commodity, that although it costs millions of dollars, those who invest in this form of advertising believe they will make a much greater profit in return. 380 Words Bibliography Catherine Valenti, (January 16,2000), War of the Web Sites, ABCNEWS.com, http://www.abcnews.go.com/sections/business/dailynews/superbowl_netads_000113.html

King Louis XVI, Deposed in the French Revolution

King Louis XVI, Deposed in the French Revolution Louis XVI (born Louis-Auguste; August 23, 1754–January 21, 1793)  was the French king whose reign collapsed because of the French Revolution. His failure to grasp the situation and to compromise, coupled with his requests for foreign intervention, were factors that led to his execution by guillotine and the creation of the new republic. Fast Facts: King Louis XVI of France Known For:  King of France at the time of the French Revolution, executed by guillotineAlso Known As:  Louis-Auguste, Citizen Louis CapetBorn:  August 23, 1754 in Versailles,  FranceParents: Louis, Dauphin of France and Maria Josepha of SaxonyDied:  January 21, 1793  in Paris,  FranceSpouse: Marie AntoinetteChildren: Marie-Thà ©rà ¨se-Charlotte, Louis Joseph Xavier Franà §ois, Louis Charles, Sophie Hà ©là ¨ne Bà ©atrice de FranceNotable Quote: I die innocent of all the crimes laid to my charge; I pardon those who have occasioned my death; and I pray to God that the blood you are going to shed may never be visited on France. Early Life Louis-Auguste, the future Louis XVI, was born on August 23, 1754. His father, Louis, Dauphin of France, was the heir to the French throne. Louis-Auguste was the oldest son born to his father to survive childhood; when his father died in 1765, he became the new heir to the throne. Louis-Auguste was a keen student of language and history. He excelled at technical subjects and was deeply interested in geography, but historians are unsure about his level of intelligence. Marriage to Marie Antoinette When his mother died in 1767, the now-orphaned Louis grew close to his grandfather, the reigning king. At age 15 in 1770, he married 14-year-old Marie Antoinette, daughter of the Holy Roman Emperor. For uncertain reasons (possibly related to Louis’ psychology and ignorance, rather than a physical ailment), the couple did not consummate the marriage for many years. Marie Antoinette received much of the publics blame for the lack of children in the early years of their marriage. Historians postulate that Louis initial coolness to Marie Antoinette was due to his fear that she might have too much influence over him- as her family actually desired. Early Reign When Louis XV died in 1774, Louis succeeded him as Louis XVI, aged 19. He was aloof and reserved, but possessed a genuine interest in the affairs of his kingdom, both internal and external. He was obsessed with lists and figures, comfortable when hunting, but timid and awkward everywhere else (he watched people coming and going from Versailles through a telescope). He was an expert on the French Navy and a devotee of mechanics and engineering, although this may be overemphasized by historians. Louis had studied English history and politics and was determined to learn from accounts of Charles I, the English king who was beheaded by his parliament. Louis restored the position of the French parlements (provincial courts) which Louis XV had tried to reduce. Louis XVI did so because he believed it was what the people wanted, and partly because the pro-parlementary faction in his government worked hard to convince him it was his idea. This earned him public popularity but obstructed royal power. Some historians deem this restoration as one factor that helped lead to the French Revolution. Weak Ruling From the Start Louis was unable to unite his court. Indeed, Louis’ aversion to ceremony and to maintaining a dialogue with nobles he disliked meant that court took on a lesser role and many nobles ceased to attend. In this way, Louis undermined his own position among the aristocracy. He turned his natural reserve and tendency to be silent into an act of state, simply refusing to reply to people with whom he disagreed. Louis saw himself as a reforming monarch but took little lead. He allowed the attempted reforms of Turgot at the start and promoted the outsider Jacques Necker to be finance minister, but he consistently failed to either take a strong role in government or to appoint someone like a prime minister to take one. The result was a regime riven by factions and lacking a clear direction. War and Calonne Louis approved support of the American revolutionaries against Britain in the American Revolutionary War. He was eager to weaken Britain, Frances longtime enemy, and to restore French confidence in their military. Louis was determined not to use the war as a way of grabbing new territory for France. However, by refraining this way, France accrued ever greater debts, which dangerously destabilized the country. Louis turned to Charles de Calonne to help reform Frances fiscal system and save France from bankruptcy. The king had to call an Assembly of Notables in order to force through these fiscal measures and other major reforms because the traditional cornerstone of Ancien Regime politics, the relation between the king and the parlement, had collapsed. Open to Reform Louis was prepared to turn France into a constitutional monarchy, and in order to do so, because the Assembly of Notables proved to be unwilling, Louis called an Estates-General. The historian John Hardman has argued that the rejection of Calonne’s reforms, which Louis had given personal backing, led to the kings nervous breakdown, from which he never had time to recover. Hardman argues that the crisis changed the king’s personality, leaving him sentimental, weepy, distant, and depressed. Indeed, Louis had so closely supported Calonne that when the Notables, and seemingly France, rejected the reforms and forced him to dismiss his minister, Louis was damaged both politically and personally. Louis XVI and the Early Revolution The gathering of the Estates-General soon turned revolutionary. At first, there was little desire to abolish the monarchy. Louis might have remained in charge of a newly created constitutional monarchy if he had been able to chart a clear path through the momentous events. But he was not a king with clear, decisive vision. Instead, he was muddled, distant, uncompromising, and his habitual silence left his character and actions open to all interpretations. When his eldest son fell ill and died, Louis divorced himself from what was happening at key moments. Louis was torn this way and that by court factions. He tended to think long about issues. When proposals were finally put forward to the Estates, it had already formed into a National Assembly. Louis initially called the Assembly â€Å"a phase.† Louis then misjudged and disappointed the radicalized Estates, proving inconsistent in his vision, and arguably too late with any response. Attempts at Reform Despite this, Louis was able to publicly accept developments like the Declaration of the Rights of Man and his public support increased when it appeared he would allow himself to be recast in a new role. There is no proof Louis ever intended to overthrow the National Assembly by force of arms- because he was afraid of civil war. He initially refused to flee and gather forces. Louis believed France needed a constitutional monarchy in which he had an equal say in government. He disliked having no say in the creation of legislation and he was only given a suppressive veto that would undermine him every time he used it. Forced Back to Paris As the revolution progressed, Louis remained opposed to many of the changes desired by the deputies, privately believing that the revolution would run its course and the status quo would return. As general frustration with Louis grew, he was forced to move to Paris, where he was effectively imprisoned. The position of the monarchy was further eroded and Louis began to hope for a settlement that would mimic the English system. But he was horrified by the Civil Constitution of the Clergy, which offended his religious beliefs. Flight to Vergennes and Collapse of the Monarchy Louis then made what would prove to be a major mistake: He attempted to flee to safety and gather forces to protect his family. He had no intention, at this moment or ever, of starting a civil war, nor of bringing back the Ancien Regime. He wanted a constitutional monarchy. Leaving in disguise on June 21, 1791, he was caught at Varennes and brought back to Paris. His reputation was damaged. The flight itself did not destroy the monarchy: Sections of the government tried to portray Louis as the victim of kidnapping to protect the future settlement. His flight did, however, polarize people’s views. When fleeing, Louis left behind a declaration. This declaration is often understood as damaging him; in fact, it gave constructive criticism on aspects of the revolutionary government that deputies tried to work into the new constitution before being blocked. Recreating France Louis was now forced to accept a constitution neither he, nor few other people, really believed in. Louis resolved to execute the constitution literally, in order to make other people aware of its need for reform. But others simply saw the need for a republic and the deputies who supported a constitutional monarchy suffered. Louis also used his veto- and in doing so walked into a trap set by deputies who wished to damage the king by making him veto. There were more escape plans, but Louis feared being usurped, either by his brother or a general and refused to take part. In April 1792, the French newly elected Legislative Assembly declared a pre-emptive war against Austria (which was suspected of forming anti-revolutionary alliances with French expatriates). Louis was now seen increasingly by his own public as an enemy. The king grew even more silent and depressed, being forced into more vetoes before the Paris crowd were pushed into triggering the declaration of a French Republic. Louis and his family were arrested and imprisoned. Execution Louis’ safety came further under threat when secret papers were discovered hidden in the Tuileries palace where Louis had been staying. The papers were used by enemies to claim the former king had engaged in counter-revolutionary activity. Louis was put on trial. He had hoped to avoid one, fearing that it would prevent the return of a French monarchy for a long time. He was found guilty- the only, inevitable result- and narrowly condemned to death. He was executed by guillotine on January 21, 1793, but not before ordering his son to pardon those responsible if he had the chance. Legacy Louis XVI is generally portrayed as the fat, slow, silent monarch who oversaw the collapse of absolute monarchy. The reality of his reign is generally lost to public memory, including the fact that he tried to reform France to a degree few would ever have imagined before the Estates-General was called. An argument among historians persists as to what responsibility Louis holds for the events of the revolution, or whether he happened to preside over France at a moment when much greater forces conspired to provoke massive change. Most agree that both were factors: The time was ripe and Louis faults certainly hastened the revolution. The ideology of absolute rule was collapsing in France, but at the same time it was Louis who consciously entered into the American Revolutionary War, incurring debt, and it was Louis whose indecision and mangled attempts at governing alienated the Third Estate deputies and provoked the first creation of the National Assembly. Sources EyeWitness to History. The Execution of Louis XVI, 1793. 1999.Hardman, John. Louis XVI:  The Silent King. Bloomsbury Academic,  2000.  Hardman, John. The Life of Louis XVI.  Yale University Press,  2016.

Woodrow Wilson 28th President of the United States

Woodrow Wilson 28th President of the United States Woodrow Wilsons Childhood and Education: Born on December 28, 1856 in Staunton, Virginia, Thomas Woodrow Wilson soon moved to Augusta, Georgia. He was taught at home. In 1873, he went to Davidson College but soon dropped out due to health issues. He entered the College of New Jersey which is now called Princeton in 1875. He graduated in 1879. Wilson studied law and was admitted to the bar in 1882. He soon decided to go back to school and become an educator. He earned a Ph.D. in Political Science from Johns Hopkins University. Family Ties: Wilson was the son of Joseph Ruggles Wilson, a Presbyterian Minister, and Janet Jessie Woodrow Wilson. He had two sisters and one brother. On June 23, 1885, Wilson married Ellen Louis Axson, the daughter of a Presbyterian minister. She died in the White House while Wilson was president on August 6, 1914. On December 18, 1915, Wilson would remarry Edith Bolling Galt  at her home while he was still president. Wilson had three daughters by his first marriage: Margaret Woodrow Wilson, Jessie Woodrow Wilson, and Eleanor Randolph Wilson. Woodrow Wilsons Career Before the Presidency: Wilson served as a professor at Bryn Mawr College from 1885-88 and then as professor of history at Wesleyan University from 1888-90. He then became a professor of political economy at Princeton. In 1902, he was appointed President of Princeton University serving until 1910. Then in 1911, Wilson was elected as the Governor of New Jersey. He served until 1913 when he became president. Becoming the President - 1912: Wilson desired to be nominated for the presidency and campaigned for the nomination. He was nominated by the Democratic Party with Thomas Marshall as his vice president. He was opposed not only by incumbent President William Taft but also by Bull Moose candidate Theodore Roosevelt. The Republican Party was divided between Taft and Roosevelt which meant that Wilson easily won the presidency with 42% of the vote. Roosevelt had received 27% and Taft and won 23%. Election of 1916: Wilson was renominated to run for the presidency in 1916 on the first ballot along with Marshall as his Vice President. He was opposed by Republican Charles Evans Hughes. At the time of the election, Europe was at war. The Democrats used the slogan, He kept us out of war, as they campaigned for Wilson. There was much support, however, for his opponent and Wilson won in a close election with 277 out of 534 electoral votes. Events and Accomplishments of Woodrow Wilson’s Presidency: One of the first events of Wilsons presidency was the passage of the Underwood Tariff. This reduced tariff rates from 41 to 27%. It also created the first federal income tax after the passage of the 16th Amendment. In 1913, the Federal Reserve Act created the Federal Reserve system to help deal with economic highs and lows. It provided banks with loans and helped smooth out business cycles. In 1914, the Clayton Anti-Trust Act was passed to help labor have more rights. It allowed important labor tools like strikes, pickets, and boycotts. During this time, a revolution was occurring in Mexico. In 1914, Venustiano Carranza took over the Mexican government. However, Pancho Villa held much of northern Mexico. When Villa crossed into America in 1916 and killed 17 Americans, Wilson sent 6,000 troops under General John Pershing to the area. Pershing pursued Villa into Mexico upsetting the Mexican government and Carranza. World War I began in 1914 when Archduke Francis Ferdinand was assassinated by a Serbian nationalist. Due to agreements made among  the European nations, many eventually joined the war. The Central Powers: Germany, Austria-Hungary, Turkey, and Bulgaria fought against the Allies: Britain, France, Russia, Italy, Japan, Portugal, China, and Greece. America remained neutral at first but eventually entered the war in 1917 on the side of the allies. Two reasons were the sinking of the British ship Lusitania which killed 120 Americans and the Zimmerman telegram which revealed that Germany was trying to get an agreement with Mexico to form an alliance if the U.S. entered the war. America officially entered the war on April 6, 1917. Pershing led American troops into battle helping to defeat the Central Powers. An armistice was signed on November 11, 1918. The Treaty of Versailles signed in 1919 blamed the war on Germany and demanded huge reparations. It also created a League of Nations. In the end, the Senate would not ratify the treaty and would never join the League. Post-Presidential Period: In 1921, Wilson retired in Washington, D.C. He was very sickly. On February 3, 1924, he died of complications from a stroke. Historical Significance: Woodrow Wilson played a huge role in determining if and when America would get involved in World War I. He was an isolationist at heart who attempted to keep America out of war. However, with the Lusitania, the continued harassment of American ships by German submarines, and the release of the Zimmerman Telegram, America would not be held back. Wilson fought for the League of Nations to help avert another World War which won him the 1919 Nobel Peace Prize.

Advanced Computer Integrated Manufacturing Essay

Advanced Computer Integrated Manufacturing - Essay Example CIM is also known as integrated computer aided manufacturing.3. Applications software and hardware, including material planning and control, quality systems, inspection and vision, computer-aided design/computer-aided manufacturing, and computer aided process planning/computer-aided engineering ."Another scholar described CIM as an "integration tool which uses information and automation hardware and software for production control and management".A different perspective of CIM is that it is a "management technology that makes feasible the fully-automated factory-of-the-future".GT is a manufacturing philosophy in which the parts having similarities are grouped together to achieve higher level of integration between the design and manufacturing functions of a firm.The aim is to reduce work and improve performance by reducing lead times.GT emphasizes the principle that many problems are similar to each other and by grouping similar problems together; we can find a single solution to a s et of problems. The group of similar problems is known as part family and the group of machineries used to process an individual part family is known as machine cell. This type of manufacturing in which a part family is produced by a machine cell is known as 'Cellular Manufacturing'. Group Technology can: Enable Cellular Manufacturing Reduce Engineering Cost Accelerate Product Development Improve Costing Accuracy Simplify Process Planning Reduce Tooling Cost Simplify Purchasing Help With Value Stream Mapping BENEFITS OF GT GT benefits manufacturing in many ways. It reduces the number and variety of parts. Computer Aided Process Planning (CAPP) is an important tool for this. It uses the coded similarities to plan consistently, standardize and accurately estimate costs. It then assigns the part to a GT manufacturing cell. It also reduces throughput time and Work-In-Process. They simplify schedules, reduce transportation and ease supervision. Some of the more dramatic and tangible savings come from improved setups and tooling cost. Setup time reductions bring smaller lot sizes and smaller queues which mean faster throughput, shorter lead times and decreased inventory. Moreover, GT sometimes eliminates the need for expensive NC equipment. Combined with NC, GT simplifies programming, fixturing and tooling. FLEXIBLE MANUFACTURING SYSTEM (FMS) "A system that consists of numerous programmable machine tools connected by an automated material handling system" (Russell). FMS has following

Obesity Essay Example | Topics and Well Written Essays - 750 words - 2

Obesity - Essay Example Advances in technology and processes in the last decade for transforming health food (e.g. corn and potatoes) have improved output in food manufacturing. One critical author identifies the manufacturing processes of infusing unnatural flavors into the common potato as a means of enhancing taste for customers. Schlosser offers, â€Å"taste is a method of differentiating food which is good for us from foods that are not† (Schlosser, 122). Thus, the food manufacturing industries recognize that their products are more likely to sell if different artificial flavors are infused into relatively common health agriculture. With more efficiency in these design and process systems, companies are able to add these flavors, consisting of unhealthy artificial ingredients and added fats, at a much cheaper price with faster distribution to retail shelves and fast food restaurants. Such changes in cheaper and more efficient product modification are a marketing tactic which creates a perceived better quality of food over the unmodified health agriculture, such as with the potato processing example. Businesses have learned that such additions of flavor and added fats provide much better profit margins and, in the process, longer shelf and freezer life of these enhanced products over the original agricultural output. It is because of the cheaper production processes and the higher profit by essentially fooling consumers into believing modified foods are a better alternative that enhanced and unhealthy products continue to flood many different food markets. There is also a significant over-reliance on economic models in the food system that leads to obesity problems in the United States. Food producers and agricultural industries do not have the ability to perform their systems autonomous of broader macro-economic conditions. Rising gasoline prices, higher increases in base salaries for manufacturing workers, rising costs of insurance, and other economic circumstances contin ue to raise the price of healthy agricultural output. The Consumer Price Index, a measure of consumer incomes as compared to product pricing, estimates that food inflation will continue at a pace of approximately 2.5 to 3.5 percent through the end of 2012 (Bloomberg, 1). In 2011, it was estimated that food inflation increased by 0.4 percent each month, representing a total food inflation in 2011 at 4.8 percent (Hauser, 1). In total, this represents an increase of approximately 8.3 percent in just two years. These inflationary costs are dictated by all of the aforementioned economic conditions that do not allow businesses to create healthy agricultural output without influence of multiple economic situations. What happens in this over-reliance is that fast food and other processed foods that are able to be distributed at a lower cost actually become more appealing to the strapped consumer in terms of price (Stacey, 1). As one example, the McDonald’s Extra Value Menu priced at $1 significantly outperforms the pricing of healthy grocery store substitutes by nearly 300 percent (or more). The costs of producing a home-cooked meal using health products, such as starches, proteins and vitamin rich vegetables are highly superior to the cheaper and much less healthy fast food alternative. This is why

Languages :: Personal Narrative Foreign Papers

Languages i'm torn/rejecting outfits offered me/regretting things i've worn -Ani Difranco, "Pale Purple" Bilingual people make me feel guilty. I read somewhere that in Sweden as well as many Asian countries schoolchildren are required to learn two languages at the very least, one of them English. I feel proud as a speaker of excellent English. This is in part because the United States is such a powerful entity (the "dominating world power"), but I don't want to think about that. However, when I spent time in Brazil with my Portuguese-speaking native mother, I was a gringa; my English forming gravel in the mouth, harsh and jarring against the smooth samba-based rhythms of Portuguese. I was the colonialist, the military colossus, the politicians and baby-kisser. I was the United States. This feels deja vu. I have written this essay before. It got me into New York University. Then it was about finding a cultural niche during a four-week tourist vacation in Rio, Sao Paulo, and Bahia one summer. I postulated, "Up until the summer of 1998, the culture limb of my body sculpture was not yet carved. Rio took up the chisel, and Bahia the hammer. . . I . . .danced the samba. . .and gained a cultural identity." The power of the mind is overwhelming: I cannot distinguish whether I truly believed that I became Brazilian on that trip to my motherland or if I just thought such a "poignant" essay-where I come to the realization that I do not need to speak the language to be Brazilian-would get me into college. My mother is trilingual; she speaks Spanish, Portuguese, and English fluently. She has this uncanny ability to recognize the rhythms of foreign languages (foreign. . . what an alienating word that is). "What language are they speaking, mommy?" became a common question whispered when walking down the street. At one point, she worked for the New York City court system as a translator. And I, I speak but English. Only English. Beautifully, but still. As I wrote in that fateful essay, "When I was two I knew more Portuguese than I know now." I picked up a few basic phrases when I visited-"where's the bathroom?" and "I like chicken"-but the only thing I've retained is how to introduce myself. Eu me chamo Lila. I blame most of this on my father. His line was "speak English to her.

Managerial Finance Essay

ASSIGNMENT BMMF5103 MANAGERIAL FINANCE 15 July 2013 QUESTION 1 a) Maximizing shareholder wealth is a â€Å"moral imperative† for financial manager means managers are supposed to work for shareholders who are the actual owners of a company or corporation. Shareholders elect company directors who in turn hire managers to run the company on day to day basis with the view to make profit for the company. Managers are paid for their services rendered to the company whereas the shareholders own the company. As such morally managers should pursue policies that enhance shareholder value with the primary objective focused on stockholder wealth maximization. b) Managers make key day-to-day decisions to maximize shareholder value. But how do the owners of a business know that managers are operating to maximize shareholder value? This lack of information is known as the principal-agent problems. The agent performs the tasks on shareholders’ behalf yet the shareholders cannot ensure that the agent performs precisely the way the shareholders would like. Agency costs as related to a corporation refers to the costs of preventing agents (e.g. managers) pursuing their own interests at the expense of shareholders. There might be conflicts between shareholders and the company managers. Shareholders who are owners want the managers to make decisions which will increase the share value. Managers who receive salaries prefer to expand the business with the view to increase their salaries which may not necessarily increase the share value. Thus, agency costs tend to decrease the value of a corporation because the rising costs make the share price low when there is substantial debt involved. Costs of monitoring will increase and thus reduce wealth maximization of shareholders. c) Business ethics is the acceptable set of moral values and corporate standards of conduct in running a business organization. It includes proper business policies and practices such as corporate governance, as a check against insider trading, bribery, discrimination and covers corporate social responsibility and fiduciary responsibilities. Business ethics is a basic framework providing proper conduct, it may be guided by law or put in placeso as to gain public confidence and acceptance. An example of business ethics is when an employee lie to a potential client to get him to sign for services or purchase the product offered. Business ethics is important to a corporation because it will determine its reputation. It will give public confidence towards the corporation. It is essential for the long-term survival and success of the corporation in business. Implementing an ethical program will foster a successful corporation culture, values and enhanced profitability. Business ethics will also influence the way the corporations conduct its business and affect all including customers, employees, suppliers, competitors, etc. d) Advantages i) There is no maturity period in common stock. Thus, eliminating future repayment obligation and enhances the desirability of common stock financing. ii) There is no obligation for repayment of the funds. Instead, there are others to share the risk of the business investment with. Since there is no debt obligation, there is no finance fee. iii) Issuing common stock can increase firm’s borrowing power.The more common stock is sold, the larger the firm’s equity base. Therefore, the more easily and cheaply long-term debt financing can be obtained. iv) Once capital is raised through stock, the corporation is free to use the proceeds in any way it pleases. Disadvantages i) Involves high cost.It may be the most expensive form of long-term financing. Dividends are not tax-deductible and common stock is a riskier  security than either debt or preferred stock. ii) Potential effects of dilution on earnings and voting power. When a company or corporation issues more shares, its financial results must be divided by a larger number of shares, causing dilution. This is because selling of shares of the company means giving each investor a piece of ownership. Because they own the share of the company, the investors have the right to demand explanations and justifications for business decisions. iii) Market perception that management think. Management issues involve examining perceptions about management and perceptions by management. It includes various judgments regarding the competence of current and future management team as well as issues related to insider buying such as future strategies to increase operations and market share.When management makes large purchases of their own stock with private funds, investors may feel that the company is undervalued or that a favorable company event will occur soon. e) The three main users of ratio analysis i) Owners: The owners of a firm are mainly interested in the firm’s profitability, liquidity and hence survival. Therefore, they need financial ratios to test the performance of their company such as profitability ratios to find outwhether management is able to convert sales dollars into profits and cash flow. The common ratios are gross margin, operating margin and net income margin. The gross margin is the ratio of gross profits to sales. The operating margin is the ratio of operating profits to sales and net income margin is the ratio of net income to sales. The return-on-asset ratio, which is the ratio of net income to total assets, measures a company’s effectiveness in deploying its assets to generate profits. The return-on-investment ratio, which is the ratio of net income to shareholders’ equity, indicates a company’s ability to generate a return for its owners. These ratios are useful to owners of companies. ii) Creditors Creditors are interested in a firm’s ability to pay their debts over a short period of time.The ratio analysis will evaluate the firm’s liquidity  position. Creditors use liquidity ratio, which is the ratio of current assets to current liabilitiestogauge the ability of the company to pay its short-term bills. A ratio of greater than one is usually a minimum because anything less than one means the company has more liabilities than assets. iii) Management Management team comprising financial managers regularly use ratio analysis to evaluate financial policies and decisions they have made. It is the overall responsibilities of the management team to make sure available resources are used most effectively and efficiently and that the financial positions of the company is sound.Management uses profitability ratios to analyze the company’s ability to convert sales dollars into profits and cash flow. For example, the return-on-investment ratio, which is the ratio of net income to shareholders’ equity, indicates a company’s ability to generate a return for its owners. Examples of ratio formula: Example 1: Gross margin ratio Gross Margin = Gross Profit Revenue Gross profit and revenue figures are obtained from the income statement of a business. Alternatively, gross profit can be calculated by subtracting cost of goods sold from revenue. Thus gross margin formula may be restated as: Gross Margin = Revenue − Cost of Goods Sold Revenue Example 2: Operating margin ratio Operating income is same as earnings before interest and tax. Operating income and revenue figures is available from the income statement of a company. Operating Margin = Operating Income Revenue QUESTION 2 a) There are five different categories of financial ratios. They are: i) Liquidity ratio is used to measurecompany’s ability to pay its short-term debt obligations. As such, they focus on the firm’s current assets and current liabilities on the balance sheet.The most common liquidity ratios used is the current ratio mainly to give an idea of the company’s ability to pay back its short-term liabilities such as debt and payables with its short-term assets such as cash, inventory and receivables. ii) Debt ratio is used to measure company’s ability to meet its long-term debt obligations. The ratio indicates what proportion of debt a company has relative to its assets. The measure gives an idea to the leverage of the company along with the potential risks the company faces in terms of its debt-load. iii) Financial leverage ratio measure the extent to which a business or investor is using the borrowed money. A company having high leverage is considered to be at risk of bankruptcy in the event the company is unable to repay the debts. The most common financial leverage ratio is the debt-to-equity ratio calculated as total debt divided by shareholders equity iv) Asset efficiency or turnover ratios measure the efficiency a company uses its assets to produce sales. The most common asset efficiency ratios are the inventory turnover ratio, the receivables turnover ratio, the days’ sales in inventory ratio, the days’ sales in receivables ratio, the net working capital ratio, the fixed asset turnover ratio, and the total asset turnover ratio. v) The profitability ratios measure the company’s ability to generate a profit and an adequate return on assets and equity. The ratios measure how efficiently the firm uses its assets and how effectively it manages its operations. An example is the Net profit margin ratio is a ratio of profitability calculated as after-tax net income (net profits) divided by sales (revenue). It shows the amount of each sales dollar left over after all expenses have been paid. Limitations of financial ratios i) Although financial ratios can be effective tools for gauging financial performance and managerial effectiveness, they rarely provide answers. Ratios will not say why something is going wrong and what to do about a particular situation; they only pinpoint where a problem is. ii) There is no international standards on the use of financial ratios. Limitation of ratios interpretation emerges when a particular set of ratios of a company is compared to other company or business. For example, for calculating the inventory turnover one company may use the cost of goods sold as the numerator, while another may use its sales figures. A company may use the operating profit to calculate its total assets turnover, while another may use the net income after taxes. iii) Benchmark for assessing company’s financial position is needed. Different operating methodologies may be employed to run a company may render the comparison of financial ratios irrelevant. Example, a company prefers to lease most of its assets while another company may own them. Thus, some of the ratios, such as debt to total assets, fixed-charge coverage, total assets turnover, and return on total assets, would be unrelated. iv) The inflation factor can make the ratio of a particular company look good or bad. Inventory turnover may have deteriorated over a three-year period; the problem may not due to the increase in physical inventory, but rather, to increase in the cost of the goods. b) Effect of an increase in a company’s debt ratio to its return on equity. An increase on debt-ratio will be increase in the return of equity. If a company finances itself through debt, the creditors shoulder the risk. If the debt results in increased earnings, the return on shareholder investment is exponential. Total liabilities include both the current and non-current liabilities. The formula to calculate the debt ratio is: Debt Ratio = Total Liabilities Total Assets Return on Equity is expressed as a percentage and calculated as: ROE = Net Income/Common Equity c) Long-term interest rate = (RM13,000,000) (8/100) = RM1,040,000 Short-term interest rate = RM1,300,000 – RM1,040,000 = RM260,000 Short-term interest rate = RM260,000/RM1,546,000 = 0.168 Rate of interest on notes payable is 16.8% d) Changes in value of equity (in millions) (RM in millions) Shareholders’ beginning equity 537 Shareholders’ ending equity 485 Difference beginning & ending equity 52 Net income 128 Less: Paid dividends 57 Difference 71 Stock/shares purchased in the year (52+71) 123 Shares purchased throughout the year is RM123 million e) If the current ratio of corporation is 5.65 when industry average is 1.42, this disparity means that the corporation is having: i) an excess build-up in inventory. When the corporation holds a high level of inventory, it ties up business funds that could have been used in other areas such as in development or marketing. The cost of the inventory is not recovered by the corporation until it sells the inventory. ii) aged account receivables which is the amounts owed to the company by its customers. The corporation’s account receivables reports will identify problems with receivables management process and identify accounts that require collection action. QUESTION 3 a) Although ownership of stock represents ownership in a company, not all stock is created equal. Therefore there are two basic types of stock: common stock and preferred stock. Preferred stock is sometimes referred to as a hybrid security because it has features of common stocks and bonds. A company’s preferred stock trades independently of its common stock and offers preferred stockholders a different set of benefits. Preferred stocks paid amount of dividends just as fixed interest bond. It is not debt but equity like common stocks. b) Preferred stock par value of RM100 with annual dividend 10%. Annual rate of return is 11.5%. i) RM100 X10/100% = RM10. Yield of 11.5% 11.5%/100 = 0.115 = RM86.96 ii) As the risk-free rate increases, the required rate of return will increase and the price will drop. When rates increase, the price of the preferred stock will likely fall. If price falls, the issuer will likely call the preferred stock and replace it with a new preferred stock issue at a lower rate, conventional debt, or perhaps even common stock c) RM4.63(1+0.05)/(0.12-0.05) = 4.8615/0.07 = 69.46 The value of the company’s stock if the required rate of return is 12% is RM69.46 d) Before change in price per share, r =5% + (8% -5%) beta 1.3 = 8.9% After change in price per share, r = 4% + (10% – 4%) 1.5 = 13% Therefore, the change in price per share is RM4.87 e) Formula for constant growth is rs = r RE + (rm – rRE)b = 6% + 5% (1.4) = 13% 2013 = RM0 dividen 2015 = RM1.00 2016 = RM1.00 (1.2) = RM1.20 2017 = RM1.00 RM1.44 2018 = RM1.00 RM1.728 2019 = RM1.00 RM1.849 Calculate growth between constant rate = The price of the stock is RM20.16 QUESTION 4 a) Needs RM40,000/year during retirement period n = 10 yrs, i = 9 % PVA = PMT (PVIFA) = RM40,000 (9.129) = RM365,160 PV = RM365,160 (0.422) = RM154,097.52 The Mirians should deposit RM154,097.52 b) Model A: PV = PMT (PVIFA) = RM5,000 (3.993) = RM19,965 Model B: Year Payment (RM) PVIF PV 1 7,000 0.926 6,482 2 6,000 0.857 5,142 3 5,000 0.794 3,970 4 4,000 0.735 2,940 5 3,000 0.681 2,043 Total: 20,577 I would purchase/buy model A because it is cheaper by RM612 compared to model B. c) Which option to be chosen? Option 1 PMT = RM3,500/2.487 = RM1,407,318.05 Option 2 PMT = RM3,500/3.102 = RM1,128,304.32 Option 3 PMT = RM3,500/3.605 = RM970,873.79 The company should choose option 3 because lower by RM157,430.53 compared to option 2 which is second lowest d) Present value is exact invest of the compound interest calculations. Applying compound interest calculation is to find the future value of a present amount. Using the present value calculation a present value amount is found to be received in future. e) Over certain period the principle amount increases as a result of the installment payments resulting in lower amount of interest that is charged by the bank. QUESTION 5 a) When an investor buys a bond, the investor is lending money to the bond issuer, which could be a government, corporation, etc. The issuer promises to pay a specified rate of interest during the life of the bond and to repay the principal, also known as face value or par value of the bond, when it â€Å"matures,† or comes due after a set period of time. Thus bonds provide interest payment and principal payment. Payment of interest is done annually or semi-annually. Coupon payments are paid periodically. When bond matures a principal sum is paid which is a lump sum payment. b) Bond prices and interest rates are related. Interest rates and bond prices have â€Å"inverse relationship†, when one goes up, the other goes down. If interest rates is high enough, bond prices would fall. If interest rates is low, bond prices would rise. Prices of short-term bonds do not fluctuate  more often compared to long-term bond. Premium bond is sold when the stated rate of interests exceed the required rate of return. Example, if rates dropped to below original coupon rate of 7% for RM1,000 bond, it would be priced at a premium since it would be carrying a higher interest rate than what was currently available in the market. A bond will sell at a discount when the stated rate of interest is less than the required return. Bond is sold equal to the par value when the stated rate of interest is equal to the required return. c) Param does not have enough money to buy 10 bonds if the required rate of return is 9%. This is because the required rate of return which is 9% is less than the coupon rate of the bond which is 10%. The price of the bond is greater than the par value of RM1,000. Considering there are 10 bonds, the total price is greater than RM10,000. That is the reason why Param would not have enough money to buy the 10 bonds. d) FV = RM1,000 PMT =150 N = 10 PV = RM1,250 1/YR = 10.79% e) Interest rate risk is the risk of decline in bond values due to the increase in interest whereas reinvestment risk is the risk of an income decline due to a drop in interest rates. Bond holders who bought long-term bond is greatly at risk to the interest rate risk. QUESTION 6 a) [(RM18+RM4+RM3+RM2-RM24)/24] X 100% = 12.5%. Therefore, Billie jean’s realized rate of return during the three years holding period is 12.5% b) (i) Stock 1 8 + 0.8 (12 – 8) = 11.2% Stock 2 8 + 1.2 (12 – 8) = 12.8% Stock 3 8 + 0.6 (12 – 8) = 10.4% (ii) Stock 3 is undervalued due since E (R) ≠¥ RR c) Beta is the measurement for market risk which is non-diversifiable. The risk must be dealt with by the portfolio manager. Diversifiable risk should be diversified away by portfolio manager so that it would not pose a problem to the investment. As such all market risks is all relevant to the portfolio manager since it is his job and responsibility in balancing the likely risk and return. d) The situation suggest that investors are more risk adverse compared to before the shift taking place. On the portfolio, a risk premium of 11% (16% – 5%) is required whereas previously 10% (15% – 5%). If slope were to change downward, it means investors are less aversion to risk. e) Expected return: 0.9(12%) + 0.1 (20%) = 12.8% Beta: 0.9(1.2) + 0.1(2.0) = 1.28%