Tuesday, January 28, 2020
Pak Elektron Limited (PEL) Mission And Vision Statements
Pak Elektron Limited (PEL) Mission And Vision Statements Overview Of PEL Company Pak Elektron Limited (PEL) is one of the pioneer producers of electrical goods in Pakistan. It came into being in 1956 in technical cooperation with M/s AEG of Germany. In 1978, the company was bought by Saigol Group of Companies. Since its foundation, the company has been contributing on the way to the advancement and progress of the engineering sector in Pakistan by launching a range of excellence quality electrical equipments and also home appliances and also by producing hundreds of engineers, expert workers and technicians in the course of its apprenticeship schemes system and training programmes. PEL Company Divisions The PEL Company consist of two divisions: Appliances Division Power Division APPLIANCES DIVISION This Division of PEL consists of appliances manufacturing. PEL Air Conditioners There are two types of PEL Air Conditioners: Window Type Air Conditioners PEL window Type air conditioners were launch in 1981 in technical partnership with General Corporation of Japan. Since of their launch, PEL air conditioners have a top position in Pakistan market. Cooling performance of PEL air conditioners has been tested and approved by Copeland and ITS USA. Split Type Air Conditioners As the time goes on, customers demand changes according to their needs. With the shift of customers preference from window to split -type of air conditioners, PEL has started producing split type air conditioners. PEL Refrigerators Refrigerator manufacturing is also very important invention in the electronic devices history. PEL company started manufacturing of refrigerators in the mid of 1986 and 1987 in the technical collaboration with Ms SILTAL of Italy. PELs refrigerators demand is also very high in market same as the air conditioners. At present, PEL Crystal has more than 30 % market share in Pakistan. PEL refrigerators cooling performance is tested and approved by Germany, Danfoss and also its manufacturing facility is IS0 9002 certified by SGS Switzerland. PEL Deep Freezers In 1987 in technical collaboration with Ms Ariston of Italy PEL introduced Deep Freezers. For the reason that of high quality and durability, PEL deep freezers are the preferred choice of the giant companies like Unilever. PEL Televisions With the passage of time needs of a common man increased. Television becomes very popular in the mid of 19 century, so PEL company decided to manufacture PEL Televisions. Competitor of PEL Appliances Air Conditioners: General Ltd. Daiken Waves National Dawlance Sharp LG Refrigerator: Dawlance Phillips Sharp Samsung LG Deep Freezer Waves Candy Dawlance Television: Sony Phillips Panasonic PEL Power Division PEL Power Division based on three plants. These are Transformer Plant, Switch Gear and Energy Meter Plant. These three plants are now ISO 9001:2000 Certified. PEL Power Division manufactures transformers, Kiosks, shunt capacitor banks, energy meters, switchgears etc. These all electrical goods are assembled under strict quality control and also in accordance with Electric International Standards. PEL is one of the biggest electrical equipment suppliers to the largest power companies of Pakistan: Water and Power Development Authority (WAPDA) Karachi Electrical Supply Corporation (KESC) For many years, PEL Companys electrical equipments have been used in several power scheme of national importance with in Pakistan. PEL Company also has the heritage of getting its equipment agreed and authorized from well-reputed international specialists such as: Preece, Cardew and Rider, England Harza Engineering Company, USA Snam Progeti, Italy Societe Dumezm, France In spite of solid competition from up-and-coming local and multinational brands, PEL Groups Company of appliances and electrical equipments have remained in the attention due to continuous innovation. Strategic affiliation with multinationals of repute have allowed the PEL Group of Companies to incorporate advance technologies into present product ranges, thus providing the Pakistani market entrance to innovative, quality products and affordable. Energy Meters Single-Phase Energy Meters PEL manufactures Electro-mechanical Energy Meters under licence from ABB (USA). The quality of PEL meters has been certified by KEMA Laboratories (Holland) and conforms to IEC 521. Moreover, PEL Energy Meter plant is ISO 9001:2000 certified by SGS Yarsley, U.K. PEL type M8C is a direct connect single-phase meter. The design and constructional features include overload compensation, temperature compensation and self-cleaning, non-aging and tamper resistant magnetic bearing system. Thus providing maintenance-free operation over a longer period and accurate measurement of electrical energy. The frame is sturdy in construction and enclosed in unbreakable high-impact polycarbonate plastic security box. Ratings Voltage Frequency 10(40)A 240V 50Hz Poly-Phase Energy Meters PEL type C8L is a direct connect poly-phase energy meter having improved load performance and accuracy over a wide load range. All meter parts are corrosion protected for long-term reliability. Like single phase energy meters C8L also possesses non-aging, self-cleaning magnetic bearing system, which ensures virtually frictionless operation of the rotor while withstanding abuse from surges and magnetic tampering. The meter is available in high impact polycarbonate security box, which is extended type and completely shrouds service cables. Ratings Voltage Frequency 15(90)A 3*230/400V 50Hz Three Phase Solid State Energy Meter Three Phase Multi-rate Solid State Energy Meter (PE3-D) is used for the measurement of energy in three phase four wire networks. It is a direct connect meter that complies with the IEC 62052-11, IEC 62053-21 (IEC 61036) and optionally with the standards. PE3-D meters are manufactured in compliance with the ISO 9001 standards. Ratings Voltage Frequency 10(100)A 3*230/400V 50Hz Three Phase Solid State LT Type CT and HT Type CT PT Operated Energy Meter PE3-C is 3-phase 4-wire, multi-functional electronic meter with the accuracy of Class 1 for active energy and Class 2 for reactive energy measurement. It is connected Via CTs PTs. Meter complies with the IEC 62052-11, IEC 62053-21 (IEC 61036), IEC 62053-23 ISO 9001 standards. LT Type CT Operated Ratings Voltage Frequency 10(100)A 3*230/400V 50Hz Single Phase Solid State Energy Meter PE1-6 is single phase meter designed to meet the needs of domestic users. It supports single wire operation providing maximum security against tempering. PE1-6 conforms to IEC 62053-21 IEC 62052-11 and ISO 9001:2000 standard requirements. Ratings Voltage Frequency 10(40) A 230V 50Hz PLACE: (DISTRIBUTION) Mostly Producer use intermediaries to bring their products to market. They try to forge a distribution channel a set of inter dependent organizations involves in the process of making a product or service available for use or consumption by the consumer or business user. Channel Levels: Disrtibution Channels can be described by the numbers of channel levels involved. PEL uses both of the two major Marketing channels. Direct Marketing Channel: Its a marketing channel that has a no intermediary levels.  PELs power division uses this type of channels. Its major clients are large organizations and not the end user. So people from these organization directly contact PELs marketing department of power division when tenders are flooded, design, specification and price are discussed. Indirect Marketing Channel: It is a marketing channel containing one or more intermediary levels. PELs appliances division works this way. These products are sole through authorized dealer shops or PELs own outlets. DISTRIBUTION SYSTEM: Appliance Division: PEL has got a very effective distribution system that ensures the widespread supply of companys product through out the country for the sake of proper management. Zone                           Area Covered Northern Zone                       Punjab and N.W.F.P Southern Zone                       Sind and Baluchistan REGIONS The zones have been further divided in to six different regions. Karachi Multan Lahore Gujranwala Rawalpindi Faisal-Abad The distribution process at PEL Appliance is being looked after by the following personal. 1.                 National Manager Sales (NMS) National Manager Sales (NMS) mainly responsible for watching the functioning of all Regional Managers Sales, Area Sales Officer and Sales Office at the National Level. 2.                 Regional Manager Sales (RMS) Managers Sales (RMS) controls sales in his specific region and is the connecting link of all area offices currently the company has two controlling operation in Multan Region. 3.                 Area Sales Officers (ASO) Area sales officer is responsible for making contacts with dealers product display and looking orders in his specific area. The company has at present seven ASOs Managaging operations in Rawalpindi, Gujranwala, Multan, Bahawalpur, Lahore etc. 4.                 Sales Officers (SO) Sales officer (SO) looks after the sale operation in particular city. Currently there are four sales officers two in Lahore, one in Faisalabad and Gujranwala each. 5.                 Assistant Manager Sales (ASM) Assistant Manager Sales (ASM) looks after the proper functions of sales in Southern Zone.    POWER DIVISION: For Power product there are no particular personal to deal with the distribution. Sales procedure for power division is as follow. Sales Procedure Since the major buyer of PEL in Power Product is Government Sector, the sales procedure of Power/marketing department is quite different from Appliance/Marketing Department. The main steps involved in sales/marketing procedure of Power Division are: Bid Submission Bid opening Bid Evaluation Letter of Indent(LOI) Billing PRICE: Power Division Pricing Procedure: First the tender is received which shows the demand of the product. It is send to the production department. They make calculations about material cost, labor costs and Factory overhead, further taxes and duties are also calculated. Investment is calculated Then gross margin is added. Gross Margin= Labor Cost + FOH + Profit+ Financial cost + Miscellaneous cost Financial cost is found out Term and conditions may be different in some cases. Appliances Division Price Procedures Sales tax, Octroi, excise duty is calculated above the cost of production. There is also a pricing trend depending on the models most demanded. Price is charged according to demand. Consumer product forces also show seasonal, variation i.e., their prices raise during wedding season and before Eid-ul Azha and Eid-ul-fitar. PROMOTION MIX Pak Electron Limited uses advertising personal selling, sales promotion and public relations to pursue its advertising and marketing objectives. Appliances Division: To achieve the sales objectives To increase recall To restore the message in the customer mind. PEL has different Advertising messages for different products. Media for Advertising: There are three types of media on which advertisement are given: Electronic Media In the electronic media, POEL is using PTV,STN, PTV World. Print Media National and local Newspaper Magazines and Periodicals Out-Door Media à ¯Ã¢â‚¬Å¡Ã‚ ·Ãƒâ€šÃ‚        Normal Boarding à ¯Ã¢â‚¬Å¡Ã‚ ·Ãƒâ€šÃ‚        Neo-signs Incentive Schemes for Customer and Retailers. BBB.jpeg For attracting dealers and potential customers, Pak Electron Limited (PEL use the Pull and Push Strategy. PEL dont have too many outlets and does its major selling through the dealers and retailers, some of the incentives given to the dealers are: A Credit of 60 days. Rs.400/ set if dealer sells a certain amount of sets in six month. Pel gave a car to the dealers if they achieve the set target. Air Conditioners: à ¯Ã¢â‚¬Å¡Ã‚ ·Ãƒâ€šÃ‚        Against the sale of 50 air conditioners discount is Rs.200/unit à ¯Ã¢â‚¬Å¡Ã‚ ·Ãƒâ€šÃ‚        Against the sale of 50 air conditioners discount is Rs.400/unit. Refrigerator: à ¯Ã¢â‚¬Å¡Ã‚ ·Ãƒâ€šÃ‚        For sale of 150 or more refrigerators, the dealer is awarded with a Dubai Tour. All above schemes are changing according to period. POWER DIVISION Advertising Since power division is involved in industrial or direct selling to some big customers, its Promotional and advertising strategies are quite different from appliance division. Personal Selling:  The other promotional activity that the company takes on is personal relating company representative visit their existing and potential clients and describe the technical aspects and unique selling feature of their products. Public Relation /publicity: PEL tries to build its image among its consumers, personal and general public. This because reputation of the business in recent years considerably tansnished. Almost no segment of business has escaped the attacks of activities identified with the social cause such as consumerism, environmentalism, employees safety etc. Management of (PEL) considers value of public relationing in promotion mix because à ¯Ã¢â‚¬Å¡Ã‚ ·Ãƒâ€šÃ‚        It is quite inexpensive à ¯Ã¢â‚¬Å¡Ã‚ ·Ãƒâ€šÃ‚        Public relations can generated sale leads à ¯Ã¢â‚¬Å¡Ã‚ ·Ãƒâ€šÃ‚        Public relationing has more creditability the advertisement In so far as publicity is concerned (PEL) is not using promotional tool effectively, sometimes press releases are published but there is no as such publicity by PEL. However, some activity is taking place. That consists of sponsorships of school cricket teams. But more needs to be done about it. PRODUCT: PRODUCTS 1. Air Conditioners 2. Refrigerator 3.  Deep freezer 4. Microwaves 5. Washers MODELS Imported (2) National/Sharp Above 40 Models Single-door/Twin 20 Liter to 52 Liter. Spinner Without spinner /Computerized Dawlance has an effective Product Development Division so they bring new and effective changes in their models. They claim that they have first introduces Anti-Moisture Tubes in their refrigerators, first introduced metallic sheet and have a very effective compressor having 5 pipes which give 100% results at 52 Centigrade. So they claim that they have strong RD Division. PLACEMENT: Dawlance also use intermediaries to bring their products to market. Dowlance does not divide the customers into institutional buyer and business/consumer users. They sell for all and treated equally. Distribution channels can be described by the number of channel levels involved. Dawlance uses both of the tow major Marketing channels. Direct Marketing Channels (No intermediary level) Indirect Marketing Channels (Containing one or more intermediary level) Distribution System Dawlance has got a very effective distribution system that ensures the widespread supply of companys product through out the country for the sake of proper management. ZONES Northern Zone Southern Zone REGIONS / BRANCHES 15 Branches all over the country. The distribution process at Dawlance is being looked after by the following personal. à ¯Ã¢â‚¬Å¡Ã‚ ·Ãƒâ€šÃ‚        National Sales Manager (NSM) National Sales Manager (NSM) mainly responsible for watching the functioning of all Branch Managers Sales, Area Sales Officer and Sales Office at the National Level. à ¯Ã¢â‚¬Å¡Ã‚ ·Ãƒâ€šÃ‚        Branch Manager Controls sales in his specific Branch and is the connecting link of all area offices currently the company has 15 Branch Manager all over the country. à ¯Ã¢â‚¬Å¡Ã‚ ·Ãƒâ€šÃ‚        Area Sales Officers (ASO) Area sales officer is responsible for making contacts with dealers product display and looking orders in his specific area. The company has at present having ASOs Managing operations in all the branches. PRICING BASIS Sales tax, Octroi, excise duty is calculated above the cost of production. There is also a pricing trend depending on the models most demanded. Price is charged according to demand. Consumer product forces also show seasonal, variation i.e., their prices raise during wedding season and before Eid-ul Azha and Eid-ul-fitar. PROMOTION MIX Dawlance uses advertising personal selling, sales promotion and public relations to pursue its advertising and marketing objectives. To achieve the sales objectives To increase recall To restore the message in the customer mind. Advertising Dawlance involved in both industrial or direct selling to some big customers, so its Promotional and advertising strategies are quite different from PEL because they also have some specific institutional buyers.      Media for Advertising There are three types of media on which advertisement are given: In the electronic media, Dawlance is using PTV, STN, and PTV World. Print Media National and local Newspaper Magazines and Periodical Executive more focus and give priority to print media because viewer dont change the channels as adds comes. à ¯Ã¢â‚¬Å¡Ã‚ ·Ãƒâ€šÃ‚        Out-Door Media Personal Selling: The Dawlances people claim that they have strong network of financial sound and technical-knowledge parties so their company representative visit their existing and potential clients and describe the technical aspects and unique selling feature of their products. NNN.jpeg Public Relation/publicity: First Dawlance tries to select those dealer and parties who have a strong relations and image among their costumers, personal and general public. This because reputation of the business in recent years considerably tansnished. Almost no segment of business has escaped the attacks of activities identified with the social cause such as consumerism, environmentalism, employees safety etc. Management considers value of public relationing in promotion mix because it is quite inexpensive public relations can geerated sale leads and has more creditability then advertisement. So far as publicity is concerned is not using promotional tool effectively, because they said that control the publicity massage at a certain level what effect it depends. Dawlance have varieties of incentive schemes to its dealer and business parties so they can attract dealers and potential customer efficiently and effectively. .  PRODUCTS PRODUCTS 1.  Deep freezer 2. Refrigerator  3 Air Conditioners 4. Cold Bar MODELS Single door Double door/Glass-door Above 13 Models Cool Heat/cool Both Plastic body (SMALL) Institutional Buyers: à ¯Ã¢â‚¬Å¡Ã‚ ·Ãƒâ€šÃ‚        Pepsi Cola International à ¯Ã¢â‚¬Å¡Ã‚ ·Ãƒâ€šÃ‚        Canteen Stores Department (CSDs) à ¯Ã¢â‚¬Å¡Ã‚ ·Ãƒâ€šÃ‚        Coca-Cola à ¯Ã¢â‚¬Å¡Ã‚ ·Ãƒâ€šÃ‚        Be Be Jan Proteins Ltd. à ¯Ã¢â‚¬Å¡Ã‚ ·Ãƒâ€šÃ‚        Pak. Fruit Juice Co.Pvt.Ltd. à ¯Ã¢â‚¬Å¡Ã‚ ·Ãƒâ€šÃ‚        Hico Ice Creame à ¯Ã¢â‚¬Å¡Ã‚ ·Ãƒâ€šÃ‚        Departmental storesWAVES PROMOTION MIX Waves also uses advertising personal selling, sales promotion and public relations to pursue its advertising and marketing objectives. To achieve the sales objectives To increase recall To restore the message in the customer mind. Advertising Waves involved in both institutional or direct selling to some big customers, so its Promotional and advertising strategies are quite same as PEL because they also have some specific institutional buyers. .      Media for Advertising: There are three types of media on which advertisement are given: Electronic Media In the electronic media, Dowlance is using PTV,STN, PTV World. Print Media National and local Newspaper Magazines and Periodical Out-Door Media Personal Selling: The other promotional activity that the company takes on is personal relating company representative visit their existing and potential clients and describe the technical aspects and unique selling feature of their products. Public Relation/publicity: Waves have completive edge over dowlance and PEL because of its lower prices and having a strong relations and image among their institutions, costumers, personal and general public. This because reputation of the business in recent years considerably tansnished. Almost no segment of business has escaped the attacks of activities identified with the social cause such as consumerism, environmentalism, employees safety etc. Management considers value of public relationing in promotion mix because it is quite inexpensive public relations can generated sale leads and has more creditability then advertisement. PEL have also varieties of incentive schemes for institutions (customers) dealer and business parties so they can attract them on the basis of these pull and push strategies. BBBB.jpeg
Sunday, January 19, 2020
Harriet Tubman Essay -- American History Racism Essays
Harriet Tubman In the 1840 ¹s and 1850 ¹s American abolitionist ¹s were a small minority in every part of the country. Harriet Tubman was one of the women who joined the attack on slavery. She stood out from most of the other abolitionists. The evidence that I will present to you shows how she wasn ¹t satisfied merely to be free or even to give speeches against slavery. Harriet Tubman was important to the abolition movement because she put her ideas to action. Harriet was born a slave in Bucktown, Maryland 1. From the time she was born she was taught to be wary of the white men. Two of her sisters had been sold to a slave trader and she vowed that she would never let that happen to her.2 From my reading, Harriet Tubman seemed different from most of the other slaves around her. She had a rebellious nature, always getting into trouble. Her parents introduced her to religion, thinking maybe it would crush her rebellious nature. One way to deal with a difficult child was religion. Ben and Rit [Harriet ¹s parents] were regular churchgoers and Harriet learned Bible verses. Her favorite was  ³Lo ¹, I am with you always, even unto the end of the world. ² She also liked the Bible verses about deliverance. If she heard of a fugitive slave on his way north, she thought of the verse  ³Hide the outcast; betray him not that wandereth. (Bentley p.16) 3 So, even as a young girl, Harriet was already thinking about deliverance and fugitive slaves going north. She had heard of revolts and rebellions against slavery, and knowing how Harriet was, I ¹m sure she cheered them on. Harriet went to great lengths to protect her fellow slaves. Like every other slave, obviously, she too hated slavery. But I think there was more to slavery than just hate, for Harriet. In one case, she put her life on the line to protect a slave named Jim from getting beaten. She refused to move when a white supervisor asked her to help him tie up Jim for a whipping. When Jim made a run for it, Harriet blocked the supervisor from chasing after Jim. So, he grabbed a 2lb. weight and threw it towards Jim. The weight hit Harriet in the forehead instead, and Jim got away.4 Luckily, Harriet survived her near-death experience.  ³The mark on Harriet ¹s forehead remained a visible scar of the brutality of slavery. The wound went deep into her heart. ² (Bentley p.24) In 1849, Harriet ¹s master, Edward Brode... ...f the inspiration and hope she gave to her people. Harriet was even nicknamed  ³Moses ² by the people she saved. She did what others were too scared to do. It wasn ¹t guaranteed that Harriet would be successful on every single mission. In my eyes she had a lot to lose if she was caught, but I think to her she felt like at least she had saved some slaves. What sacrifice! Harriet Tubman was more than an ex-slave turned abolitionist. She was also a nurse and a spy for the Union Army. Always one to turn dreams into action, she joined the war effort in 1861. Harriet was probably the first women, black or white, to go to the battle front. 9 The army used her as a spy, liaison, and a nurse. So even when she wasn ¹t taking groups of slaves up north, she was still helping others. What an incredible woman! Harriet ¹s diligence to do right, and her determination to keep with it until her purpose was fulfilled, still inspires me today. I do admire Martin Luther King, Jr. and many other abolitionists, but not as much as Harriet Tubman. I don ¹t know of any other woman that accomplished as much as she did, in one lifetime. Harriet Tubman truly is the ultimate hero of the abolition movement. Harriet Tubman Essay -- American History Racism Essays Harriet Tubman In the 1840 ¹s and 1850 ¹s American abolitionist ¹s were a small minority in every part of the country. Harriet Tubman was one of the women who joined the attack on slavery. She stood out from most of the other abolitionists. The evidence that I will present to you shows how she wasn ¹t satisfied merely to be free or even to give speeches against slavery. Harriet Tubman was important to the abolition movement because she put her ideas to action. Harriet was born a slave in Bucktown, Maryland 1. From the time she was born she was taught to be wary of the white men. Two of her sisters had been sold to a slave trader and she vowed that she would never let that happen to her.2 From my reading, Harriet Tubman seemed different from most of the other slaves around her. She had a rebellious nature, always getting into trouble. Her parents introduced her to religion, thinking maybe it would crush her rebellious nature. One way to deal with a difficult child was religion. Ben and Rit [Harriet ¹s parents] were regular churchgoers and Harriet learned Bible verses. Her favorite was  ³Lo ¹, I am with you always, even unto the end of the world. ² She also liked the Bible verses about deliverance. If she heard of a fugitive slave on his way north, she thought of the verse  ³Hide the outcast; betray him not that wandereth. (Bentley p.16) 3 So, even as a young girl, Harriet was already thinking about deliverance and fugitive slaves going north. She had heard of revolts and rebellions against slavery, and knowing how Harriet was, I ¹m sure she cheered them on. Harriet went to great lengths to protect her fellow slaves. Like every other slave, obviously, she too hated slavery. But I think there was more to slavery than just hate, for Harriet. In one case, she put her life on the line to protect a slave named Jim from getting beaten. She refused to move when a white supervisor asked her to help him tie up Jim for a whipping. When Jim made a run for it, Harriet blocked the supervisor from chasing after Jim. So, he grabbed a 2lb. weight and threw it towards Jim. The weight hit Harriet in the forehead instead, and Jim got away.4 Luckily, Harriet survived her near-death experience.  ³The mark on Harriet ¹s forehead remained a visible scar of the brutality of slavery. The wound went deep into her heart. ² (Bentley p.24) In 1849, Harriet ¹s master, Edward Brode... ...f the inspiration and hope she gave to her people. Harriet was even nicknamed  ³Moses ² by the people she saved. She did what others were too scared to do. It wasn ¹t guaranteed that Harriet would be successful on every single mission. In my eyes she had a lot to lose if she was caught, but I think to her she felt like at least she had saved some slaves. What sacrifice! Harriet Tubman was more than an ex-slave turned abolitionist. She was also a nurse and a spy for the Union Army. Always one to turn dreams into action, she joined the war effort in 1861. Harriet was probably the first women, black or white, to go to the battle front. 9 The army used her as a spy, liaison, and a nurse. So even when she wasn ¹t taking groups of slaves up north, she was still helping others. What an incredible woman! Harriet ¹s diligence to do right, and her determination to keep with it until her purpose was fulfilled, still inspires me today. I do admire Martin Luther King, Jr. and many other abolitionists, but not as much as Harriet Tubman. I don ¹t know of any other woman that accomplished as much as she did, in one lifetime. Harriet Tubman truly is the ultimate hero of the abolition movement.
Saturday, January 11, 2020
Stock and Debt
CHAPTER 12 QUESTIONS 12-1Operating leverage affects EBIT and, through EBIT, EPS. Financial leverage generally has no effect on EBITâ€â€it only affects EPS, given EBIT. 12-2Because Firm A has a higher fixed operating costs, its operating income will change by a greater percentage than Firm B’s operating income if sales change. Firm A has a higher degree of operating leverage than Firm B. 12-3If sales tend to fluctuate widely, then cash flows and the ability to service fixed charges also will vary. Consequently, there is a relatively large risk that the firm will be unable to meet its fixed charges.As a result, firms in unstable industries tend to use less debt than those whose sales are subject to only moderate fluctuations. 12-4The tax benefits from debt increase linearly, which causes a continuous increase in the firm’s value and stock price. However, bankruptcy-related costs begin to be felt after some amount of debt has been employed, and these costs offset the benefits of debt. See Figure 12-5 in the textbook. 12-5Carson does have leverage because its EPS increases by a greater multiple than its sales when sales change. According to the information that is given, Carson’s DTL is 4 = 20/5.Because we have no information about either the firm’s operating fixed costs or its fixed financing costs, we cannot state whether the firm has operating leverage, financial leverage, or both. 12-6EBIT depends on sales and operating costs that generally are not affected by the firm’s use of financial leverage, because interest is deducted from EBIT. At high debt levels, however, firms lose business, employees worry, and operations are not continuous because of financing difficulties. Thus, financial leverage can influence sales and cost, hence EBIT, if excessive leverage causes investors, customers, and employees to be oncerned about the firm’s future. 12-7Expected EPS generally is measured as EPS for the coming years, and we typically do not reflec t in this calculation any bankruptcy-related costs. Also, EPS does not reflect (in a major way) the increase in risk and ks that accompanies an increase in the debt ratio, whereas P0 does reflect these factors. Thus, the stock price will be maximized at a debt level that is lower than the EPS-maximizing debt level. 12-8A firm can change the proportion of debt it uses in its capital structure. If the firm has too much (little) debt, it can reduce (increase) the proportion of debt in its capital structure.Such as change should decrease the firm’s WACC, and thus increase its value. 12-9Absolute’s optimal capital structure is 40 percent debt (= $20,000,000/$50,000,000), because the market price of the company’s stock ($130. 75) is maximized at this point. 12-10With increased competition after the breakup of AT&T, the new AT&T and the seven Bell operating companies’ business risk increased. With this component of total company risk increasing, the new companie s probably decided to reduce their financial risk, and use less debt, to compensate.With increased competition the chance of bankruptcy increases and lowering debt usage makes this less of a possibility. If we consider the tax issue alone, interest on debt is tax deductible; thus, the higher the firm’s tax rate the more beneficial the deductibility of interest is. However, competition and business risk have tended to outweigh the tax aspect as we saw from the actual debt ratios of the Bell companies. The Bell companies and the new AT&T lowered their debt ratios, for reasons along these lines. 2-11Several possibilities exist for the firm, but trying to match the length of the project with the maturity of the financing plan seems to be the best approach. The firm might want to finance the R&D with short-term debt and then, if the project’s results are successful, to raise the needed capital for production through long-term debt or equity. Another possibility would be to issue convertible bonds, which can be converted to common stockâ€â€a lower interest rate would be paid now, and in the future (presumably the stock price will increase with the new process) investors would trade in the bonds for stock.One also should keep in mind that this project, and R&D in general, is extremely risky and debt financing might not be available except at extremely high rates. For this reason, many R&D companies have low debt ratios, instead paying low dividends and using retained earnings for financing projects. Under Debt financing the expected EPS is $5. 78, the standard deviation is $1. 05, the CV is 0. 18, and the debt ratio increases to 75. 5%. (The debt ratio had been 70. 6 percent. Under Equity financing the expected EPS is $5. 51, the standard deviation is $0. 85, the CV is 0. 15, and the debt ratio decreases to 58. 8 percent. At this interest rate, debt financing provides a higher expected EPS than equity financing; however, the debt ratio is significan tly higher under the debt financing situation as compared with the equity financing situation. Because EPS is not significantly greater under debt financing, but the risk is noticeably greater, equity financing should be recommended.INTEGRATIVE PROBLEMANSWER: Business risk is the uncertainty associated with a firm’s projection of its future operating income.It also is defined as the risk faced by a firm’s stockholders if the company uses no debt. A firm’s business risk is affected by many factors, including: (1) variability in the demand for its output, (2) variability in the price at which its output can be sold, (3) variability in the prices of its inputs, (4) the firm’s ability to adjust output prices as input prices change, (5) the amount of operating leverage used by the firm, and (6) special risk factors (such as potential product liability for a drug company or the potential cost of a nuclear accident for a utility with nuclear plants).ANSWER: Oper ating leverage is the extent to which fixed operating costs are used in a firm’s operations. If a high percentage of the firm's total operating costs are fixed, and hence do not decline when demand falls, then the firm is said to have high operating leverage. Other things held constant, the greater a firm’s operating leverage, the greater its business risk. [pic] ANSWER: Financial leverage refers to the firm’s decision to finance with fixed-charge securities, such as debt and preferred stock. Financial risk is the additional risk, over and above the company's inherent business risk, orne by the stockholders as a result of the firm's decision to finance with debt. [pic] ANSWER: As we discussed above, business risk depends on a number of factors such as sales and cost variability, and operating leverage. Financial risk, on the other hand, depends on only one factorâ€â€the amount of fixed-charge capital (financing) the company uses. [pic] ANSWER: Here are the f ully completed statements: The expected TIE would be larger than 2. 5x if less debt were used, but smaller if leverage were increased. [pic] ANSWER: The optimal capital structure is the capital structure at which the tax-related benefits of leverage are exactly offset by debt’s risk-related costs.At the optimal capital structure, (1) the total value of the firm is maximized, (2) the WACC is minimized, and the price per share is maximized. [pic] ANSWER: Here is the sequence of events: 1. CDSS must first announce its recapitalization plans. 2. The company’s stock would have some market price before the announcement, in this case, $20 per share. The company would have to estimate (a) the price it would have to pay for the repurchased shares and (b) the method to be used for the repurchase (open market purchases, or a tender offer). 3.For simplicity, we assume that the firm could repurchase stock at its current price, $20, which also happens to be its book value per share. In actuality, investors would probably reassess their views about the firm’s profitability and risk under the new capital structure, and the stock price probably would rise. No current shareholder would be willing to sell at a price very far below the expected new price, although some would be afraid the recap plan might not go through, and those stockholders would sell out at a lower-than-expected price.Therefore, the stock price would adjust quickly to a new equilibrium that reflects the recapitalization. 4. CDSS would purchase stock, then issue debt and use the proceeds to pay for the repurchased stock. After the recapitalization, the company would have more debt but fewer common shares outstanding. A new EPS could be calculated, and the price would settle into its new level. [pic]4. ANSWER: The analysis for the debt levels being considered (in thousands of dollars and shares) is shown below: At Debt = $0: [pic] At Debt = $250,000: Shares repurchased = $250,000/$20 = 12,5 00.Remaining shares outstanding = 100,000 – 12,500 = 87,500. Note: EPS and TIE calculations are in thousands of dollars. ) [pic] At Debt = $500,000: Shares repurchased = $500,000/$20 = 25,000. Remaining shares outstanding = 100,000 – 25,000 = 75,000. (Note: EPS and TIE calculations are in thousands of dollars. ) [pic] At Debt = $750,000: Shares repurchased = $750,000/$20 = 37,500. Remaining shares outstanding = 100,000 – 37,500 = 62,500. (Note: EPS and TIE calculations are in thousands of dollars. ) [pic] At Debt = $1,000,000: Shares repurchased = $1,000,000/$20 = 50,000. Remaining shares outstanding = 100,000 – 50,000 = 50,000. (Note: EPS and TIE calculations are in thousands of dollars. [pic] [pic] ANSWER: We can calculate the price of a constant growth stock as DPS divided by rs minus g, where g is the expected growth rate in dividends: [pic] Because in this case all earnings are paid out to the stockholders, DPS = EPS. Further, because no earnings are plowed back, the firm’s EBIT is not expected to grow, so g = 0.Here are the results: Debt Level DPS rs Stock Price $ 0 $3. 00 15. 0% $20. 00 250,000 3. 26 15. 5 21. 03 500,000 3. 56 16. 5 21. 58* 750,000 3. 86 18. 0 21. 44 1,000,000 4. 8 20. 0 20. 40 * maximum ANSWER: A capital structure with $500,000 of debt produces the highest stock price, $21. 58, hence it is the best of those considered. ANSWER: We have seen that EPS continues to increase beyond the $500,000 optimal level of debt. Therefore, focusing on EPS when making capital structure decisions is not correctâ€â€while the EPS does take account of the differential cost of debt, it does not account for the increasing risk that must be borne by the equity holders. ANSWER: Currently, Debt/Total assets = 0%, so total assets = initial equity = $20 x 100,000 shares = $2,000,000.WACC = ($500,000/$2,000,000)[(11%)(0. 60)] + ($1,500,000/$2,000,000)(16. 5%) = 1. 65% + 12. 38% = 14. 03%. NOTE: If we had (1) used the equilibri um price for repurchasing shares and (2) used market value weights to calculate WACC, then we could be sure that the WACC at the price-maximizing capital structure would be the minimum. Using a constant $20 purchase price, and book value weights, inconsistencies might creep in. [pic] ANSWER: If the firm had higher business risk, then, at any debt level, its probability of financial distress would be higher.Investors would recognize this, and both rd and rs would be higher than originally estimated. It is not shown in this analysis, but the end result would be an optimal capital structure with less debt. Conversely, lower business risk would lead to an optimal capital structure that included more debt. ANSWER: The three degrees of leverage are calculated below: S = $1,350,000 New debt = $500,000 @ 11% VC = 0. 6S F = $40,000 (Note: Calculations are in thousands of dollars. ) [pic] [pic] DTL = DOL x DFL = 1. 08 x 1. 12 = 1. 21. The degree of operating leverage is defined as the percent age change in perating income (EBIT) associated with a given percentage change in sales. Because our company’s degree of operating leverage is 1. 08, this means that a given percentage increase in sales will lead to an 8 percent greater increase in EBIT. For example, if sales increased by 100 percent, then EBIT would increase by 108 percent. The degree of financial leverage is defined as the percentage change in EPS associated with a given percentage change in EBIT. Because CDSS’s degree of financial leverage is 1. 12, this means that if EBIT increased by 100 percent, then EPS would increase by 112 percent.The degree of total leverage shows the combined effects of operating and financial leverage on the firm’s earnings per share. It is defined as the percentage change in EPS brought about by a given percentage change in sales, and it is calculated as DOL x DFL. Because CDSS’s DTL is 1. 21, a 100 percent increase in sales would produce a 121 percent increa se in EPS. The degree of leverage concept is useful for planning purposes, as it gives an idea of what will happen to earnings as sales vary. Investors can use the concept to consider firms with different leverages if they expect sales to rise or fall. [pic]ANSWER: Because it is difficult to quantify the capital structure decision, managers consider the following judgmental factors when making capital structure decisions: (1)The average debt ratio for firms in their industry. (2)Pro forma tie ratios at different capital structures under different scenarios. (3)Lender/rating agency attitudes. (4)Reserve borrowing capacity. (5)Effects of financing on control. (6)Asset structure. (7)Expected tax rate. ANSWER: The following figure presents a graph of the situation: [pic] The use of debt permits a firm to obtain tax savings from the deductibility of interest.So the use of some debt is good; however, the possibility of bankruptcy increases the cost of using debt. At higher and higher leve ls of debt, the risk of bankruptcy increases, bringing with it costs associated with potential financial distress. Customers reduce purchases, key employees leave, and so on. There is some point, generally well below a debt ratio of 100 percent, at which problems associated with potential bankruptcy more than offset the tax savings from debt. Theoretically, the optimal capital structure is found at the point where the marginal tax savings just equal the marginal bankruptcy-related costs.However, analysts cannot identify this point with precision for any given firm, or for firms in general. Analysts can help managers determine an optimal range for their firm’s debt ratios, but the capital structure decision still is more judgmental than based on precise calculations. ANSWER: The asymmetric information concept is based on the premise that management’s choice of financing gives signals to investors. Firms with good investment opportunities will not want to share the benef its with new stockholders, so they will tend to finance with debt. Firms with poor prospects, on the other hand, will want to finance with stock.Investors know this, so when a large, mature firm announces a stock offering, investors take this as a signal of bad news, and the stock price declines. Firms know this, so they try to avoid having to sell new common stock. This means maintaining a reserve of borrowing capacity so that when good investments come along, they can be financed with debt. 12-17Computer-Related Problem a. If the outstanding debt has to be refunded at the new higher interest rate, expected EPS would decline under either financing plan. However, EPS would decline more if debt financing were used. Therefore, ebt financing has become relatively less attractive than stock financing. The output generated by the model is given below:ETHICAL DILEMMA A BOND IS A BOND †¦ IS A STOCK †¦ IS A BONDOCK?Ethical dilemma: Wally is evaluating whether to use a new (to the United States) financial instrument to raise funds to finance Ohio Rubber & Tire’s (ORT) expansion plans. The new instrument, which is called a bondock, has some characteristics of traditional debt and some characteristics that are similar to common equity. The cost of capital associated with bondocks is slightly higher than traditional debt, but significantly lower than common equity.If ORT’s expansion plans are successful, both its bondholders and its stockholders will receive handsome returns. However, if the expansion plans are not successful, then it appears that stockholders can still benefit but at the expense of bondholders. ORT’s executives are some of the company’s major stockholders, so it appears that they would be in favor of issuing bondocks. Discussion questions: ?Is there an ethical problem? If so, what is it? The question here is whether it is appropriate to use a new financial instrument called a bondock to raise funds needed for expansi on.Because the cost of capital associated with a bondock is slightly higher than the cost of debt but significantly lower than the cost of equity, management thinks that it might be appropriate to use this medium to raise funds to invest in risky ventures. If the expansion investment is successful, both the bondholders and the stockholders will benefit. Of course, the benefit to stockholders will be greater than the benefit to bondholders. On the other hand, if the expansion investment is unsuccessful, both bondholders and stockholders will suffer financial losses.But, because the market values of the bondocks will decline significantly, the firm could benefit by repurchasing these financing instruments in the capital markets. In this case, stockholders would benefit at the expense of bondholders. As a result, the ethical question is whether ORT should raise funds using bondocks knowing that there is a possibility that its stockholders will gain at the expense of its bondholders. ?I s it appropriate for ORT to use bondocks to raise funds that are needed for expansion? Is there an ethical dilemma here? Maybe not. Remember that investors take risks when purchasing the stocks and bonds of firms.In this case, ORT would be wise to use bondocks if the purpose is to raise funds for expansion while trying to lower the cost of capital associated with â€Å"going to†the financial markets. It might be argued that it is unethical for ORT to use bondocks if the intent is to benefit executives who receive bonuses and incentives in the form of the company’s stock. It also might be argued that it is unethical if the intent is to harm the position of bondholders.However, if the primary objective is to increase the value of the firm, then it is difficult to argue that issuing this new financial instrument is unethical. What would you do if you were Wally? It seems that the best solution is for Wally to try to get more information about the new financial instrument called a bondock. Because little is known about bondocks and they appear to be rather complex financial instruments, Wally should gather more information about the risks as well as the benefits to ORT associated with using this medium to raise funds for expansion. Once he has performed his due diligence, Wally should determine whether using bondocks will benefit the firm and its investors in general.If the answer is â€Å"no,†then bondocks should not be used. References: The following articles might be assigned for background material: Emily Thornton, â€Å"Gluttons at the Gate,†BusinessWeek, October 30, 2006, pp. 58-66. David Henry, â€Å"Cross-Dressing Securities,†BusinessWeek, March 13, 2006, pp. 58-59
Friday, January 3, 2020
Native Americans And Western History - 1299 Words
Native Americans are the original inhabitants of the West, and have played an important role in Western history and continue to do so in today’s society. Their role has changed many times over, both good and not so good, and most of the time it was not in their favor. The Indians were descendants of ancient hunters that migrated from Asia to America thousands of years ago, and the differences between the Natives and Europeans are monumental. From the Natives lack of individual ownership of land to their religious belief that human beings shared a kinship with all other living things, one can see that the clash between these two cultures was inevitable. But, nonetheless, Native Americans had an enormous impact on the history of America. When Christopher Columbus first discovered America, the first Indians he met were the Tainos. They had no clothes and no weapons, and he believed that they were meant to be ruled and could be set to work and in the end adopt Europeans customs. When the conquistadors arrived, they conquered village after village, bringing with them violence and pestilence. The Indian population was nearly wiped out due to disease. But in the midst of these terrors, many European men had sexual relations with Indian women, and began a new population of mixed ancestry called Mestizos. Though Europeans deemed Native Americans inferior, they helped start a new culture and even played a vital role in trade in the Americas. After Europeans depleted their own wildShow MoreRelatedWestward Expansion and Indian Removal1480 Words  | 6 Pagespreventing American expansion and growth? Although the aboriginal people of America had claimed their land before the settlement of white colonists, the Native Americans proved an impediment towards the ultimate growth in America’s economic and commercial power. 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