Helping the poor essay: January 2020

Sunday, January 26, 2020

Volunteer Management Has Become An Important Issue Management Essay

Volunteer Management Has Become An Important Issue Management Essay In a letter declaring September 11th a National Day of Service and Remembrance, President Barack Obama stated, No force for change is more powerful than that of Americans who are making a difference in their communities (Stewart, 2009, p. 28). Individuals who donate their time and expertise to help organizations address a need or concern are examples of these Americans who are making a difference in their communities (Stewart, 2009). Organizations over the past decade have seen a great deal of change in competition from globalization and market demands, causing them to rethink the way they are managed. This applies to both private sector and non-profit/public sector organizations, if they wish to survive in todays economy. Due to the United States economic downturn, non-profit and public sector organizations must find ways to efficiently manage their scarce resources. One of these scarce resources is a well trained and faithful volunteer workforce. Restricted budgets often make it ha rd for management to hire the sufficient number of employees needed to carry out the organizations mission, so a volunteer workforce can help fill those gaps. Volunteer workforces have become essential to fully performing everyday operations from basic office clerical work to arranging and holding fundraising events. Background Volunteer management has become an important issue today because organizational leaders must recruit, retain and motivate their volunteer workforce effectively. A number of organizations report that more volunteer assistance is needed, despite the fact that many Americans are already donating their time. This is why organizations must rethink the way they manage volunteers to recruit and retain the best individuals available. If organizations fail to look at the management of their volunteer workforce, they run the risk of losing their volunteers or not finding new qualified volunteers. In the past, a number of non-profit and public sector organizations had an abundance of individuals who were willing to lend a helping hand. However, times have changed in todays society. With a growing number of organizations needing volunteers and peoples lack of available free time, it has become essential to recruit and retain the appropriate volunteer candidates for the right jobs. Volunteers hav e a number of organizations to choose from, and they will choose the organization whose mission and values most closely align with their mission and values. Over the years a number of authors and researchers have introduced techniques and/or explored issues related to volunteer recruitment, retention and motivation. When developing a way to recruit volunteers, one might look at the talent management approach or a marketing plan that includes the four Ps (Product, Price, Place and Promotion). If improving volunteer satisfaction and retention is a priority, then the human resource management approach and the constructive feedback approach might help. However, neither recruiting the right volunteer nor retaining them is going to matter if the organizations cannot keep them motivated. This is where the psychological contract perspective comes into play, by ensuring volunteers feel appreciated and valued for their donated time. These techniques and approaches help organizations to recruit, retain and motivate volunteers. Purpose The intention of this study is to closely examine the management styles of volunteer programs and how they affect volunteers motivation, recruitment and retention. Today a number of individuals are volunteer coordinators, or responsible for managing volunteers, at organizations located throughout Central Illinois. Unfortunately, there are times that they feel ill equipped to fully understand how to manage volunteers in a way that maximizes retention and reduces turnover. At the same time, the findings of this study can help other volunteer managers and organizational leaders in the Central Illinois community improve their work with volunteer workforces. Ultimately, the individuals who volunteer will be impacted and/or helped by this study because the organizations that enlist their help will be better equipped to manage their needs. By managing the needs of volunteers, an organization can strive to maximize retention and minimize turnover. Direction A survey distributed to volunteers at local non-profit or public sector organizations in Central Illinois would have been the desired method to explore this topic. Answers to a set of survey questions would need to be analyzed in order to see if a particular management style had any effect on a volunteers decision, satisfaction, or motivation at a certain organization. Volunteers being defined as people who willingly and without pay perform a service or undertaking for an organization, and the management style being defined as the methods and techniques organizations use to recruit, retain and motivate volunteers. A case comparison between Central Illinois organizations would be needed to fully address the extent of the studys research question. However, this type of data was either nonexistent or unable to be collected in the time allotted and because of IRB approval. So this study will look at secondary data from the Current Populations Surveys volunteer supplement, two surveys con ducted of volunteers and the perspectives of two individuals who work with volunteers on a daily basis in Central Illinois. The variables from these sources includes the following: volunteers by annual hours, volunteers by number of organizations for which activities were performed, volunteers by type of organization for which volunteer activities were performed, main volunteer activity for organization, volunteers by how they became involved and items that motivate volunteers. By looking at these variables, this study will explore the question: is there a correlation between the management styles in volunteer programs and the effect they have on volunteer motivation, satisfaction and retention in Central Illinois? Literature Review When people think about volunteer management, they usually think about the supervision and selection of volunteers. However, it involves so much more! Volunteer management is an important tool used by organizations to leverage resources to accomplish designated results. It ensures that the community is involved in current issues and ensures that there is buy-in of the organizations mission. At the same time, it strengthens the credibility of the organization in the publics eyes. A number of different authors discuss that good volunteer management must encompass three key areas: (1) volunteer recruitment, (2) volunteer satisfaction/retention and (3) volunteer motivation. Together these three things can create an effective volunteer management system. Without a good balance of the three, organizations could experience high volunteer turnover and dissatisfaction. A number of different methods and techniques have been studied and/or introduced to improve volunteer management. Volunteer Recruitment To have a strong team to assist in their endeavors, first volunteer managers need to recruit good volunteers. Like everything else in volunteer management, there is more to the process than meets the eye. Volunteers do not grow on trees. Most of the time the volunteer manager has to actively search for the right person for the job. This requires the ability to reach out and even educate people about the organizations volunteer needs. On the other hand, sometimes volunteer managers have to weed through a number of interested volunteers to find a good organizational match. Eisner, Grimm, Maynard and Washburn (2009) suggested that a talent management approach be used when recruiting volunteers. With this approach, Eisner and his fellow colleagues felt that the proper volunteer, with the appropriate talent, would be recruited (Eisner et al., 2009). At the same time, it is important to create the proper infrastructure that will not only recruit the appropriate volunteers for the jobs, but place, develop and retain them as well (Eisner et al., 2009). Karl, Peluchette and Hall (2008) observed that volunteers responded positively towards organizations that know how to have a fun workplace. This fun workplace can be created by recruiting the right volunteers through a marketing strategy. Their marking strategy creates an internal marketing plan based on the four Ps (Product, Price, Place Promotion) of the marketing mix (Karl et al., 2008). By conducting a study of their marketing strategies, Karl, Peluchette and Hall (2008) found that organizations had a better success rate when they recruited volunteers by advertising the psychosocial benefits offered for their time (Karl et al., 2008). They also observed that recruitment advertisements that emphasized the personal benefits gained from volunteering were just as effective as the altruistic (i.e. wanting to help out) advertisements (Karl et al., 2008). Basically, volunteers can be recruited by showing the benefits received in lieu of money. It is also important to make sure that the organization has a staff member in the organization that can handle volunteer recruitment efforts. The recruitment techniques can only take the organization so far if it does not have a dedicated staff member to develop the relationship between the organization and interested volunteers. The Urban Institute in 2004 confirmed that there was a correlation between the amounts of time a staff member spent on volunteer management and the ability of the organization to handle additional volunteers (p. 17). However, only three out of five organizations in this study had a staff member devoted to volunteer coordination, despite the fact that a large percentage of organizations report how beneficial volunteers are to their operations (Urban Institute, 2004, p. 8). Volunteer Satisfaction and Retention When it comes to the retention and satisfaction of volunteers within an organization, the way that they are managed can determine whether they stay or find another organization where they can donate their time. In a study by Cuskelly, Taylor, Hoye and Darcy (2006), the implementation of the Human Resource Management (HRM) approach to volunteer management and retention of volunteers was observed. The HRM approach seeks to professionalize and create a business like approach to the management of people. When the approach was implemented, fewer volunteers were reported leaving an organization because of management problems (Cuskelly et al., 2006). When improved planning and orientation was used for volunteers, fewer problems were reported, therefore improving the retention and job satisfaction of volunteers within an organization (Cuskelly et al., 2006). Communication between paid staff and volunteers also plays a major role in volunteer satisfaction and retention. Garner and Garner (2010) found that organizations that encouraged their volunteers to give constructive feedback and keep the lines of communication open had a lower turnover rate than organizations that did not encourage it. Garner and Garner (2010) stated, volunteer satisfaction made little difference in participants communication choices, but participants motivations to volunteer did influence how they communicated problems to paid staff (p. 826). By allowing volunteers to address a problem, and giving them the freedom to figure out a solution, managers are giving them empowerment (Garner Garner, 2010, p. 815). This can increase the volunteers satisfaction with an organization because they can see how their contributions help the organization achieve its mission. However, sometimes it is hard to avoid volunteer turnover in the current economy. Lesley Hustinx (2008) found that in todays society, volunteers motivation for quitting can be caused by both outside and inside pressures. In a survey of ex-volunteers, Hustinx (2008), found a number of pressures that caused individuals to give up their volunteer work. Some of the outside pressures included: time pressures, family commitments and regular job or school schedules (Hustinx, 2008, p. 245). Managers can do little to address these issues. The inside pressures included: management differences and organization of volunteer work (Hustinx, 2008, p. 248). Volunteer Motivation In order to improve volunteer motivation, it is important to make sure that volunteers feel valued and appreciated. It helps them to know that the organization has a genuine concern about their efforts and well-being. Farmer and Fedor (1999) studied the Psychological Contract Perspective approach and how it could motivate volunteers. The Psychological Contract Perspective helps volunteer managers understand volunteer behaviors and motivators. Farmer and Fedor (1999) confirmed that a number of organizations were not meeting the expectations of their current volunteers. However, if the organization was meeting their expectations, then the levels of participation increased (Farmer Fedor, 1999). In a couple of instances the volunteers were willing to overlook their unmet expectations if they shared common values with the organization (Farmer Fedor, 1999). Shortly afterwards, however, Farmer and Fedor (1999) reported that the volunteers would develop a sense of separation from the organ ization because they felt the organization did not care about their well-being. Occasionally, the expectations of volunteers can change as the volunteer activity grows and changes. Wu Luping (2011), in an interview with 24 young volunteers, found that when developing a volunteer activity, special attention should be given to the possibility that people might advance and expand their abilities during the activity (p. 190). This means that more prominence should be placed on the enjoyment received when publicizing volunteer activities (Wilson, 2012). These authors have introduced a number of studies and techniques that volunteer managers and organizational leaders should consider when creating and implementing a volunteer management system. However, most of the authors only focused on one element of a good volunteer management system. In order to have a truly effective system, managers need to encompass these best practices in the recruitment, retention and motivational processes. This is why a study needs to be conducted that can explore all three key areas together, while also looking at what methods and techniques work best to develop a strong and well rounded volunteer management system. Looking at data collected in the past years will help to examine if any of these ideas introduced still have any validity in the current volunteer market. Much like everything else in society, interests and motivations change from generation to generation, so it is important to discover what techniques work best on different demographics. Fur thermore, a technique that works well in one community might not work in another. This is why it is important to study the populations that are in the community. Methodology It is important for individuals who work with volunteers to discover what suitable motivational tools are required for each volunteer when recruiting and retaining the best individual available. When taking into consideration the purpose, and the available data, this study will examine if there is a connection between the management style in volunteer organizations and the effect it has on volunteer recruitment, satisfaction/retention and motivation in Central Illinois. In order to study the areas of volunteer recruitment, retention/satisfaction and motivation, this study will look at the published data collected in the Current Population Surveys volunteer supplement of 2007 through 2011, a research project by Esmond and Dunlop (2004) on developing the volunteer motivation inventory in Western Australia and the 2012 Ronald McDonald House Charities of Central Illinois Volunteer Survey. However, using this secondary data has limitations of only representing the individuals who answered the survey, and it might not represent the population in Central Illinois. Also, a sample of the population might differ from the entire population results. In order to address reliability and validity issues of this data, the perspectives of professionals who work with volunteers on a daily basis at the Abraham Lincoln Presidential Library and Museum and Ronald McDonald House Charities of Central Illinois will also be incorporated. The Current Population Surveys Volunteer Supplements The Current Population Surveys (CPS) volunteer supplements for 2007 through 2011 is a national household survey administered by the U.S. Census Bureau (Census) for the Bureau of Labor Statistics (BLS). According to the Bureau of Labor Statistics (2011), the CPS is a survey of about 60,000 households that obtains information on employment and unemployment among the nations civilian population age 16 and over (p. 1). The volunteer supplement is an annual set of questions specifically aimed at gaining information on the rate of volunteering and the characteristics of volunteers in the United States. The survey defines volunteers as persons who did unpaid work (except for expenses) through or for an organization (Current Population Survey, p. 1). This data will examine volunteer recruitment, retention/satisfaction and motivation by looking at the number of hours spent volunteering, type of organization for which volunteer work was performed, volunteer activity performed and how the volun teer became involved with an organization. Developing the Volunteer Motivation Inventory to Assess the Underlying Motivational Drives of Volunteers in Western Australia In the Developing the Volunteer Motivation Inventory to Assess the Underlying Motivational Drives of Volunteers in Western Australia study a total of 2,444 volunteers and 15 organizations participated in a five-stage research process (Esmond Dunlop, 2004). Esmond and Dunlop (2004) also collected the demographic details, such as age, gender, occupation and time spent volunteering from each participant to observe trends (p. 22). The volunteer manager of each organization distributed the survey via mail or internally. How individuals answered the survey questions will allow me to examine what factors motivate volunteers. Ronald McDonald House Charities of Central Illinois Volunteer Survey The 2012 Ronald McDonald House Charities of Central Illinois is small nonprofit located in Springfield, Illinois that uses volunteers to provide a temporary home away from home for families who have a child seeking medical treatment at a nearby medical facility. In the first quarter of 2012 the House Manager and Executive Director conducted a survey of about twenty-two current house volunteers. The survey was conducted via Survey Monkey and consisted of twenty-five questions. These questions were designed to give the organization a better understanding of their current volunteer pool and the volunteers general satisfaction with the organization. This study will examine selected answers to explore volunteer motivations at a Central Illinois non-profit organization. Together the data collected from these three sources will help in analyzing the current retention, satisfaction and motivation of a sampled population of volunteers. Looking at the percent of the population that volunteers, how many hours they volunteered and what types of activities they performed, this study will explore what methods and techniques work on recruiting and retaining volunteers. The survey results from Developing the Volunteer Motivation Inventory to Assess the Underlying Motivational Drives of Volunteers in Western Australia study and the 2012 Ronald McDonald House Charities of Central Illinois can be used to explore volunteer motivations at fifteen organizations in Western Australia and from a Central Illinois non-profit organization. Having data samples from various individuals from completely different communities and parts of the world will show if viewpoints differ from community to community. Analysis The analysis of this study will be divided into three sections: (1) volunteer recruitment, (2) volunteer satisfaction and retention and (3) volunteer motivation. Each section has a number of graphs and/or tables that represent the data collected from the sources identified earlier. These graphs and tables will help to better understand the motivations and current volunteer statistics of the sampled population. However, it is important to keep in mind that this only represents the sampled population at the time of collection and not the entire population as a whole. Volunteer Recruitment Table 1 Volunteers by How They Became Involved with Organization Years Percent distribution of how volunteers became involved Approached the organization Was asked by Other Not reporting Boss or employer Relative, friend, or co-worker Someone in the organization/school Someone else 2011 41.6 1.3 15.3 23.8 1.2 13.0 3.8 2010 41.6 1.4 14.9 24.9 1.2 12.4 3.6 2009 40.9 1.7 14.8 26 1.2 12.3 3.1 2008 40.8 1.4 14.2 26.8 1.2 12.6 3 2007 40.1 1.3 14.8 27.2 1.2 12.7 2.7 Note. Percent Distribution of How Volunteers Became Involved with Organization. Adapted from Volunteering in the United States, Bureau of Labor Statistics, 2007, 2008, 2009, 2010, 2011 Table 1 shows the percent distribution of how volunteers became involved with their main volunteer activity organization. This information comes from the Current Population Surveys (CPS) volunteer supplements from 2007 to 2011. Over the past five years the way that volunteers have become involved with organizations has stayed relatively the same. This graph shows that volunteers are either recruited by approaching the organization themselves, being asked to volunteer by someone or other forms of volunteer recruitment. Volunteers that approached the organization have steadily stayed around forty percent over the past five years. Additionally, the percentage of volunteers who became involved due to someone asking them has also stayed relatively steady. Adding the percentages of those asked by boss or employer; relative, friend, or co-worker; someone in the organization; or someone else, the total is consistently a higher percentage than the percentage of volunteers who approached the o rganization on their own. This indicates that a greater number of volunteers were recruited by someone asking them to participate, with largest percent being asked by someone within the organization. Figure 1 Figure 1. 2011 Volunteer Rates by Organization. Adapted from Volunteering in the United States, Bureau of Labor Statistics, 2011 Figure 1 shows the percentage of volunteers within selected organizations. This data comes from the CPSs volunteer supplement for 2011. In the survey, participants were asked to identify the type of organization where most of their volunteer time was spent. They were given the list of sport, hobby, cultural, or arts organizations; civic, political, professional, or international organizations; educational or youth service; environmental or animal care; hospital or other care; public safety; religious; social or community service; and other (Current Population Survey (CPS), 2011). The results show that the greatest percentage of volunteers spends their time with religious organizations at thirty-three percent and educational or youth service organizations at twenty-six percent. Volunteer Satisfaction and Retention Figure 2 Figure 2. Number of Volunteers Percent of Population. Adapted from Volunteering in the United States, Bureau of Labor Statistics, 2007, 2008, 2009, 2010, 2011 Figure 2 shows the number of reported volunteers from 2007 to 2011 and the percentage of the general population that make up this volunteer core in the United States. Again this data comes from the CPSs volunteer supplements for 2007 through 2011. The results show that over the past five years the number of volunteers has steadily stayed around sixty million, with a slight dip between 2009 and 2011. The volunteer rate rose 0.2 percent from 2007 to 2008, 0.4 percent from 2008 to 2009 and dropped 0.5 percent between 2009 and 2010. However, it rose again 0.5 percent from 2010 to 2011. The data shows that the percentage of the population that volunteered has stayed steady (around twenty-six percent) over the past five years. Figure 3 Volunteers By Annual Hours of Volunteer Activities Figure 3. Volunteers by annual hours of volunteer activities. Adapted from Volunteering in the United States, Bureau of Labor Statistics, 2007, 2008, 2009, 2010, 2011 Figure 3 shows the results from the CPSs volunteer supplements for 2007 through 2011. In the survey participants were asked to fill in their average hours spent on volunteer activities for the year. The data was then coded into the categories: not reporting hours, 1 to 14 hours, 15 to 49 hours, 50 to 99 hours, 100 to 499 hours and 500 or more hours (Current Population Survey (CPS), 2011). This graph represents the percentage results of their responses. The results show that the greatest majority of volunteers, at about twenty-nine percent, are spending between 100 to 499 hours on their activities. However, it significantly drops from 500 or more hours. Figure 3 also shows that from 2007 to 2011 each category of reported hours has stayed fairly constant. Figure 4 Figure 4. Main volunteer activity for organization. Adapted from Volunteering in the United States, Bureau of Labor Statistics, 2007, 2008, 2009, 2010, 2011 Figure 4 represents the percentage of main volunteer activities for organizations. The results were collected from the CPSs volunteer supplement for 2007 through 2011, in particular the questions that dealt with the type of volunteer activities conducted at their main organization. The main organization is defined as the organization where the volunteer worked the greatest amount of hours during the year (Current Population Survey (CPS), 2011). The results show which activities had the greatest percentage of volunteers over the past five years, with the highest percentage being in the category of other activities, and the next highest in fundraising or selling items to raise money. Over the past five years each category, except collecting food and teaching/tutoring, has stayed at the same percentage of participation from volunteers. Collecting/serving food has seen a slight increase, while teaching/tutoring has seen a slight decrease from 2007 to 2011. Volunteer Motivation Table 2 Distribution of Responses to Volunteer Motivation Inventory Motivational items Survey question Percentage of Responses Disagree Undecided Agree Values I volunteer because I believe I am meeting a need in the community in my volunteering role 1.4 2.8 95.8 I volunteer because I feel that volunteering makes the world a better place 4.7 5.3 90 I volunteer because I believe everyone should volunteer 39 20.3 40.7 Self-Esteem I volunteer because I feel that volunteering is a feel-good experience 14.1 10.4 75.5 I volunteer because volunteering makes me feel like a good person 25.4 17.3 57.3 I volunteer because volunteering makes me feel useful 10 8 82 Personal Growth I volunteer because I feel that volunteering gives me a better understanding of what life is about 10.7 10.4 78.9 I volunteer because I feel that volunteering has given me the opportunity to appreciate the differences in people 16.6 14.3 69.1 I feel more settled in myself after volunteering 26.4 23.5 50.1 Career Development I volunteer because I feel that I make important work connections through volunteering 70.8 13.5 15.7 I volunteer because I feel that volunteering will help me to find out about employment opportunities. 77 12.7 10.3 I volunteer because volunteering gives me an opportunity to build my work skills. 56 14.1 29.9 Social Interaction I volunteer because the social opportunities provided by the agency are important to me. 53.2 20.7 26.1 I volunteer because I feel that volunteering is a way to build ones social networks. 54.1 19.8 26.1 I volunteer because volunteering provides a way for me to make new friends. 40.7 16.7 42.6 Recognition Being appreciated by my volunteer agency is important to me. 10 11.6 78.4 Being respected by staff and volunteers at the agency is not important to me. 75.3 8.2 16.5 I feel that it is important to receive recognition for my volunteering work. 50.4 18.6 31 Note. Distribution of Responses to Volunteer Motivation Inventory. Adapted from Developing the Volunteer Motivation Inventory to Assess the Underlying Motivational Drives of Volunteers in Western Australia, by P.J. Esmond P. Dunlop, 2004 Table 2 represents the percentage of responses from some motivational questions that were pulled from the Developing the Volunteer Motivation Inventory to Assess the Underlying Motivational Drives of Volunteers in Western Australia. The responses to questions related to volunteer motivational factors were coded on a one to five scale, with one being strongly disagree, two disagree, three undecided, four agree and five strongly agree (Esmond Dunlop, 2004). Table 2 shows the percentage of responses to the selected survey questions, with strongly disagree and disagree combined into one category, and the same with agree and strongly agree, while undecided was a separate category. The results indicate that most of the respondents are motivated by their values, self-esteem, personal growth, and recognition. It also indicates that social interaction and career development have significantly lower impact on their motivation to volunteer. Values such as believing that they are making a difference in the community play a highly significant role in volunteer motivation. Volunteering because it makes them feel good also plays a significant role in volunteer motivation. Being appreciated by the volunteer agency and receiving recognition was also regarded highly for volunteer motivation. (Continued on Next Page) Table 3 Distribution of Responses to RMHCCI 2012 Volunteer Survey Survey question Percentage of Responses Good Average Poor

Friday, January 17, 2020

ChinaÃ¢â‚¬â„¢s Current Foreign Investment Environment Essay

Since the reform and opening up, ChinaÃ¢â‚¬â„¢s utilization of foreign investment is developing constantly. Along with the continuous improvement of the investment environment, the scale of foreign investment into China has been continuing expanding, which making China became the worldÃ¢â‚¬â„¢s second largest inflow of funds country. In the backdrop of ChinaÃ¢â‚¬â„¢s own economic development, in 2010, China became the second largest economy in the world, with a 5878. 6 billion dollars GDP at the same year.? Inside the country, foreign investments forming a large-scale foreign economy, and made important contribution to ChinaÃ¢â‚¬â„¢s economy and pushed it into the international economic system. I would like to talk about my own views about ChinaÃ¢â‚¬â„¢s current foreign investment environment, and analyze its opportunities and challenges. The quality of investment environment is directly related to the ability to attract high-quality foreign capital investment. Investment environment affected by many factors, and these factors work together, such as national macroeconomic policies, the basic anagement system of national government, the level of infrastructures and so on. First, IÃ¢â‚¬â„¢d like to analyze the advantage of ChinaÃ¢â‚¬â„¢s current foreign investment environment, which directly related to the opportunity for China to attract foreign investment. Advantage: Good economic environment A countryÃ¢â‚¬â„¢s economic environment determines the future direction and development of the countryÃ¢â‚¬â„¢s economy, while China is in a good momentum of economic development stage. ChinaÃ¢â‚¬â„¢s macro-control policies become more and more mature after years of development, and have accumulated a lot of valuable experience. These policies have played a catalytic role for the countryÃ¢â‚¬â„¢s overall economic development. In order to develop an opening-up economy, in 2001, China became a member of the WTO, provided a good opportunity to make ChinaÃ¢â‚¬â„¢s economic more opening to the outside world and provide better investment environment. By accepting new things and developing ChinaÃ¢â‚¬â„¢s own economic growth model, the level of ChinaÃ¢â‚¬â„¢s economic grows rapidly. China has a strong domestic purchasing power, which reflects ChinaÃ¢â‚¬â„¢s huge market size and market potential. According to the effective demand theory of Keynes, due to the economic crisis, there is a lack of effective demand in western countries. Effective demand makes up with consumer demand and investment demand. Diminishing marginal propensity to consume, diminishing marginal efficiency of capital and liquidity preference is the three major social and psychological factors resulting in lack of consumption demand and investment demand, and then reduce the investment rate in developed countries.? Thus, more foreign investors would turn to find a better place to invest, it is the opportunity of ChinaÃ¢â‚¬â„¢s foreign investment environment. Advantage: Stable political environment Since ChinaÃ¢â‚¬â„¢s reform and opening up, peopleÃ¢â‚¬â„¢s living standards continue to improve, ChinaÃ¢â‚¬â„¢s international status and international influence also has been enhanced at the same time. China could maintain a stable developing social environment. This is the basic guarantee of the investment environment. For example, the reason why Wal-Mart invested a large amount of money on shopping plaza, Sam shops, and community shops in China, is that Wal-Mart believed China has a stable political and social environment. A stable political and social environment is an important factor that can nsure the safety of foreign investments. Advantage: Acceptable infrastructure China has the worldÃ¢â‚¬â„¢s largest infrastructure construction. After years of development, the level of ChinaÃ¢â‚¬â„¢s infrastructure has been significantly improved. For example, the government invested a lot of money on the construction of transportation, electricity, water, and natural gas supply. The ability to provide materials and efficient transportation are favorable factors for attracting foreign investment. For example, Wal-Mart relies on its efficient logistics and distribution, and Wal-Mart decided to locate its distribution center in Tianjin. Tianjin is a coastal city, it not only reflects the natural advantage of Tianjin, but also reflects that in recent years, TianjinÃ¢â‚¬â„¢s tremendous achievements in constructing infrastructure. Advantage: Abundant labor China has the largest population in the world, and also provides a lot of cheap labor resources. Companies could enjoy cost advantages because of the cheap labor cost, especially in labor-intensive industries. China also has a comparative advantage in labor-intensive industries. Wal-Mart has 50,000 employees in China. The company gives their employees necessary training to meet the needs of high-tech industries and enjoys low cost of labor. Labor and capital are substitutes. In China, Wal-MartÃ¢â‚¬â„¢s development relies heavily on a lot of cheap labor. Imagine Wal-Mart has such a large number of employees in developed countries, the labor cost is much higher than in China, therefore, the actual profit must be affected. In this way, invest in China is a good choice for War-Mart. I have talked about the advantages of the foreign investment environment in China, and then I would like to talk about the disadvantages. Disadvantage: The laws of the market economy system are not perfect China joined the WTO in 2001, which means that China can be on an equal footing with the developed countries. However, ChinaÃ¢â‚¬â„¢s current economy is a market economy with Chinese characteristics, which has some differences with the mature market economies in developed countries. ChinaÃ¢â‚¬â„¢s market economy has been accepted for a short time, with little experience, many laws and regulations are unreasonable. ChinaÃ¢â‚¬â„¢s legal basis, the legislative process, operational mechanism is still not completely turned to erve market economy. Some existing laws and regulations confront with the principles of market economy. In terms of implementation, many laws and regulations are not uniformed in the implementation process, which have caused lots of problems for foreign investors. The imperfect legal system also affects employeeÃ¢â‚¬â„¢s rights. For example, Wal-Mart, Dell, Kodak and other foreign companies are refused to establish union in China. Actually, there are few laws to protect employeeÃ¢â‚¬â„¢s rights in China. These foreign companies are not afraid of these imperfect laws. Foreign companies like Wal-Mart, has a long operation history in many countries around the world, has many experiences of how to deal with workers in many countries, the legal basis in China is still very weak. Disadvantage: Low government efficiency Bureaucracy and corruption is a significant problem of the government. In the Chinese government system, the institutional settings are bloated, some departmentÃ¢â‚¬â„¢s functions are unclear, policies and regulations are not uniformed between the various departments. These problems are particularly serious in recent years, greatly limits the improvement of the foreign investment environment. Foreign investors lack of a complete understanding of the Chinese government, they will face a lot of problems but do not know how to deal with it. Disadvantage: The low efficiency of the financial sector According to a survey conducted by the World Bank, ChinaÃ¢â‚¬â„¢s financial resources are concentrated on state-owned enterprises. For some companies with high potential, especially for some small and medium-sized private companies, they can not get strong financial support from the bank in a short time. Lack of support also leads these companies to the slow development or even the bankrupt. This is also a disadvantage to foreign investors. Foreign investors in China want to get the financial support have to face cumbersome procedures, mainly because of the financial institutions system is not perfect. At the same time, the interest rate is not determined by the market, which limits the flow of credit funds to the foreign companies, the private sector, and small enterprises. Disadvantage: The investment environment and labor distribution has regional differences China has large land area, but because of the natural causes, history and other factors, the investment environment and labor distribution are various from region to region. In the southeast coastal areas, infrastructure, labor resources, and policies are attractive to foreign investors. In the central and western regions, due to the geographical conditions and the limitations of natural resources, economic development is relatively slow, the policy is not attractive to foreign investors. For example, Wal-Mart opened 191 stores in China are mostly located in the southeast coastal areas. As shown below: Wal-Mart China mainland outlets maps Disadvantage: Resources and environmental constraints China is a big country. However, the resources for every person rank very low around the world. With the economic development, social development and the improvement of the consumption level, there are some limitations in the energy, land and other natural resources. ChinaÃ¢â‚¬â„¢s economic growth mainly depends on high pollution industries, and has not fundamental changed. Environmental pollution makes retail enterprises such as Wal-Mart faces a lot of problems in the procurement process. A lot of goods can not enter the mall because of the pollution. ChinaÃ¢â‚¬â„¢s foreign investment environment and also be limited, therefore, the transformation of economic growth mode is the top item of ChinaÃ¢â‚¬â„¢s current economic development. Summary In summary, the entry of foreign capital is an inevitable trend in China, which has made more demands on ChinaÃ¢â‚¬â„¢s investment environment. How to use the opportunities and advantages of the ChinaÃ¢â‚¬â„¢s investment environment are important issues need to be considered by the government. Only by analyzing the advantages and disadvantages of ChinaÃ¢â‚¬â„¢s investment environment, developing relevant policies and regulations, increasing the anti-corruption efforts and transforming the economic development mode, China could improve the foreign investment environment to the next level. In this way, China could receive a more important role in the world economy.

ChinaÃ¢â‚¬â„¢s Current Foreign Investment Environment Essay

Thursday, January 9, 2020

Analysis Of Frater Ltd - Free Essay Example

Sample details Pages: 13 Words: 3991 Downloads: 7 Date added: 2017/06/26 Category Business Essay Type Research paper Did you like this example? Frater Ltd. is a private and family owned company, functioning in a electronic industry, formed by two brothers James and John Frater eight years ago when they resigned from their university posts, to use their academic research background in the manufacturing of electronic circuits. So they financed the company through legacy and through selling shares to other family members. DonÃ¢â‚¬â„¢t waste time! Our writers will create an original "Analysis Of Frater Ltd" essay for you Create order Aerospace industry included both military and non-military as the prime customers of the Frater Ltd. Recently James and John invested in new robotics technology because they followed the market opportunity in developing new circuitry for flight control systems. But, due to their planned expansion they need more investment. So they consulted this idea with Kemp Sons (Chartered Accountants), the financial advisor of Frater Ltd and came up with the solution by asking their financial advisor to find the company which can take over and also invest the necessary capital required. Lastly, they found the large diversified company listed on London Stock Exchange, namely Global PLC which found to be interested in take over and also in injecting the necessary cash. Finally, in behalf of Global PLC we will be acting as an acquisition advisor and approach in the way to illustrate the possibilities of about acquiring Frater Ltd by comparing and analysing the performance of the company th rough the financial statements of last two years, with the help of ratios and will comment on its financial position and also will calculate its share valuation by using different methods. A brief overview Before we start our detailed look at the ratios for Frater ltd, it is helpful to take a quick look at what information is obvious from the financial statements. This will usually pick up some issues that the ratios may not be able to identify. It may also highlight some points that could help us in our interpretation of the ratios. The following points can be noted: Expansion of fixed assets These have been increased by about 43 per cent (from Ã‚ £1,893k to Ã‚ £2,702k). This could mean that not much benefit was reflected in terms of the additional sales revenue (turnover) or cost saving during 2009. Sales revenue, in fact, expanded by about 48 per cent (from Ã‚ £5,941k to Ã‚ £8,756), greater than the expansion in non-current or fixed assets. Major expansion in the e lements of working capital Inventories increased by about 64 per cent (from Ã‚ £338k to Ã‚ £554k), trade receivables (debtors) by about 73 per cent (from Ã‚ £191k to Ã‚ £330k) and trade payables (creditors) by 56 per cent (from Ã‚ £352k to Ã‚ £550k) between 2008 and 2009. These are the major increases and which are linked because the inventories are all sold on debt and bought on credit. Reduction in the cash balance The cash balance fell from Ã‚ £8k (in funds) to a Ã‚ £2k between 2008 and 2009. This could mean the overdraft (short-term borrowings or loan) fell by about 86 per cent (from Ã‚ £70k to Ã‚ £130k). The bank may be putting the business under pressure to reverse this, which could raise difficulties. Apparent dept capacity Comparing the fixed assets with the long-term loans or borrowings implies that the business may not well be able to offer security on further loans. This is because potential lenders usually look at the value of assets that can be offered as security when assessing loan requests. Lenders seem particularly attracted to land and, to a lesser extent, buildings as security. For example, at 31 December 2009, fixed assets had a balance sheet value of Ã‚ £2,702k, but a long-term borrowing was Ã‚ £2,730k (though there was also as overdraft of Ã‚ £130k). On the other hand, land and building tend to have a market value same than their balance sheet value due to inflation in property values. Increase in operating profit Though sales revenue expanded by 48 per cent between 2008 and 2009, both cost of sales and operating expenses rose by a greater percentage as 34 per cent (from Ã‚ £4,568k to Ã‚ £6,113k) and 85 per cent (from Ã‚ £1,024k to Ã‚ £1,895k), respectively. The gross profit and, particularly, operating profit (profit before interest and tax) massively increased. Having had a quick look at what is fairly obvious without calculating the normal ratios, we shall now go on to calculate and interpret them. PROFITABILITY RATIOS: Financial Health check of Frater Ltd, Using Profitability ratios. 1) Return on ordinary shareholders funds (ROSF): The purpose of ROSF ratio is to show the profitability of the company in terms of the capital provided by the owners of the company, i.e. the ordinary shareholders. The ratio (which is normally expressed in percentage terms) is as follows: ROSF = Net profit after long-term interest and tax * 100 Ordinary share capital + Reserves The profit for the year (less preference dividend (if any)) is used in calculating the ratio, as this figure represents the amount of profit that is left for the owner. In case of Frater ltd, the ratio for the years ended 31 December 2008 and 2009 is: The ratio for 2008 is: ROSF = 268 * 100 = 20.2% 1000+326 The ratio for 2009 is: ROSF = 484 * 100 = 21.9% 1500+710 In view of this, the return on ordinary shareholders funds (ROSF) ratio is increasing in 2009 over 2008 by about 8 per cent; these means sufficie nt profit is available to shareholders. Broadly, business seeks to generate as higher value as possible for this ratio, provided that it is achieved at the expense of potential future returns by, for example, taking more risky activities. In Frater ltd the things are going nicely in 2009 in comparison to 2008. 2) Return on capital employed (ROCE): The ROCE ratio is a fundamental measure of profitability both for external assessment of the companies performance and for internal assessment of the efficiency of management. It measures the return on the total capital of the business regardless of how it is financed. The ratio is expressed in percentage terms and is as follows: ROCE = Profit before interest and tax * 100 Total assets less current liabilities Note, in this case, that the profit figure used is the operating profit (that is, the profit before interest and taxation), because the ratio attempts to measure the returns to all suppliers of long-term finance bef ore any deductions for interest payable on loans, or taxations (as the tax rules change from one year to the next), or payments of dividends to shareholders, are made. The ratio for the Frater ltd, for the years 31 December 2008 and 2009 is: The ratio for 2008 is: ROCE = 349 * 100 = 17.38% 1893 +115 The ratio for 2009 is: ROCE = 748 * 100 = 25.72% 2702+206 This ratio tells much the same story as ROSF; namely a good performance of Frater ltd as it is increased by 48 per cent in 2009 as in comparison to 2008. It indicates that the return on assets being more than the rate that the business has to pay for most of its borrowed funds. The ROCE is increased in the year 2009 because the Frater ltd improved their profit margins and made the same amount of capital as that generated more sales. 3) Net profit margin (NPM): The NPM ratio relates the operating or net profit for the period to the sales during that period and is expressed as follows: NPM = Operatin g profit *100 Turnover The operating or net profit (that is, profit before interest and taxation) is used in this ratio as it represents the profit from trading operations before the interest payable expense is taken onto account. This often regarded as the most appropriate measure of operational performance, when used as a basis of comparison, because differences arising from the way in which the business is financed will not influence the measure. For the year ended 31 December 2008 and 2009, Frater ltd NPM ratio is: The ratio for 2008 is: NPM = 349/5941 *100 = 5.87% The ratio for 2009 is: NPM = 748/8756 *100 = 8.54% As we can see the NPM is increased by about 45 per cent in year 2009, compared with that of 2008. The reason for rich net profit margin ratio is low level of opearting expenses relative to sales revenue. 4) Gross profit margin (GPM): The GPM ratio expresses a companys gross profit as a percentage of its sales revenue and is calculated as follows: GPM = Gross profit * 100 Turnover It would be very misleading to compare GPM ratio of two totally dissimilar businesses (e.g. a jeweller and a supermarket) but It is meaningful to calculate this ratio here because it compares a profitability in buying (or producing) and selling goods before any other expenses are taken into account. Cost of sales represents major expenses for many businesses; a change in this ratio can have a significant effect on the bottom line (that is, the profit for the year). For the year to 31 December 2008 and 2009, the ratios for Frater Ltd are: The ratio for 2008 is: GPM = 1373/5941 *100 = 23.11% The ratio for 2009 is: GPM = 2643/8756 *100 = 30.19% The huge increase in this ratio by about 45 percent means that gross profit was higher relative to sales revenue in 2009 than it had been in 2008 as well as this means that the cost of sales was lower relative to the sales revenue in 2009 than in 2008. This could mean that sal es prices were higher and that the purchase cost of goods sold had decreased. CONCLUSION OF PROFITABILITY RATIO: 2008(%) 2009(%) ROSF 20.2 21.9 ROCE 17.38 25.72 NPM 5.87 8.54 GPM 23.11 30.19 We can see that the increase in NPM was 45%, whereas that of GPM was 30 per cent. This can only mean that operating expenses were lower, compared with sales revenue, in 2009 than they had been in 2008. The increase in both ROSF and ROCE by about 8 per cent and 48 per cent, respectively were caused partly, therefore, by the business incurring lower inventories purchasing costs relative to sales revenue and partly through lower operating expenses to sales revenue. Therefore, profitability ratios tell that the opportunities for efficiencies in the future for Frater Ltd. B) LIQUIDITY RATIOS: Liquidity ratios are concerned with the ability of the business to meet its short-term financial obligations. The two major ratios are: Current ratio: It compares the liquid assets (that is, cash and those assets held that will soon be turned into cash) of the business with the current liabilities. The ratio calculated as follows: Current ratio = Current assets Current liabilities We are calculating this ratio here as if higher the ratio, the more liquid the business is considered to be. As liquidity is vital to the survival of a business, a higher current ratio might be thought to be preferable to a lower one. If a business has a very high ratio, however, it may be that funds are tied up in cash or other liquid assets and are not, therefore, being used as productively as they might otherwise be. As at 31 December 2008 and 2009, the current ratios of Frater Ltd are: The ratio as at 31 December 2008 is: Current ratio = 537/422 =1.27 : 1 The ratio as at 31 December 2009 is: Current ratio = 886/680 = 1.30 : 1 This means if all short-term creditors demand their money immediately then thir claim could be met higher in 2009 as 1.30 times if the current assets could be converted into cash immediately. While this is clearly unreasonable it does give an indication of liquidity, because under normal trading circumstances short-term creditors are unlikely to demand immediate payment. Though for an electronic company 2:1 is considered as standard which Frater Ltd has not maintained in both of the years which means it has not maintained its current assets efficiently and also was not efficient in meeting its liabilities. Although this is increased in 2009 but still not meet the standard one. So from current ratio point View Company is not performing well to meet its obligation. Acid test ratio (Quick ratio): This gives a better measure of liquidity as it eliminates stock the least liquid asset (that is, the most difficult to convert into cash quickly), from the current ratio, so providing a measure of the most liquid assets against short-term claims. The ratio is expressed as: Acid test ratio = Current assets Stock Current liabilities The acid test ratio for Frater Ltd as at 31 December 2008 and 2009 is: The ratio as at 31 December 2008 is: Acid test ratio = 537-338/422 = 0.47 : 1 The ratio as at 31 December 2009 is: Acid test ratio = 886-554/680 = 0.49 : 1 We can see that in 2009 the acid test ratio is almost constant as in 2008 and also it is not meeting the standard ratio as 1:1. It means that liquid assets do not quite cover the current liabilities so the Frater Ltd may be experiencing some liquidity problems. So it is said that stock cannot be easily converted into cash so company might not be able to meet its current liabilities on time. CONCLUSION OF LIQUIDITY RATIO: 2008 2009 Current ratio 1.27:1 1.30:1 Acid test ratio 0.47:1 0.49:1 Frater Ltd showed an unfavourable liquidity position in both of these ratios and to have weak current and acid test ratio, because long-term finance is difficult to acquire. The apparent liquidity problem may, however, be planned, short-term and linked to the expansion in fixed assets. It may be that when the benefits of the expansion come on stream, liquidity will improve. On the other hand, short-term claimants may become anxious when they signs of weak liquidity. This anxiety could lead to steps being taken to press for payment, and this could cause problems for Frater Ltd. C) EFFICIENCY OR ACTIVITY RATIOS: It examines the ways in which various resources of the business are managed. The main ratios are: 1) Assets turnover ratio: This ratio examines how effectively the assets of the business are being used to generate sales. It is calculated as follows: Assets turnover ratio = Turnover (sales) Total assets current liabilities For the year ended 31 December 2008 and 2009 this ratio for Frater Ltd is: The ratio for 2008 is: Assets turnover ratio = 5941/2008 = 2.96 times The ratio for 2009 is: Assets turnover ratio = 8756/2908 = 3.01 times This seems to be a significant improvement, since in 2009 as because assets are being used more productively in the generation of revenue. It provided that overtrading is not an issue and that the additional sales are generating an acceptable profit, this is to be welcomed. 2) Debtors collection period: A business will usually be concerned with amount of funds tied up in credit given and try to keep this to a minimum . The speed of payment can have a significant effect on the businesss cash flow. This ratio calculates how long, on average, credit customers take to pay the amounts that they owe to the business. The ratio is as follows: Debtors collection period (in days) = Trade debtors *365 Credit sales Debtors collection period for the year ended 31 December 2008 and 2009 this ratio for Frater Ltd is: The ratio for 2008 is: Debtor collection period = 191/ 5941 * 365 = 12 days The ratio for 2009 is: Debtor collection period = 330/ 8756 * 365 = 14 days It shows a increase in the collection period which is not good sign for Frater Ltd. It means that more cash was tied up in trade receivables in 2009 than in 2008. This increased in days may have been due to not chasing customers vigorously or as a result of incurring lower expenses, such as no discounts allowed to customers who pay quickly. 3) Stock holding period: Inventories often represent a significant investment f or a business. The stock holding period is a measure of the average days which elapse between acquiring an item of stock (inventory) and selling that item. The ratio is calculated as follows: Stock holding period (in days) = Stock held * 365 Cost of sales In the case of Frater Ltd, this ratio for the year ended 31 December 2008 and 2009 is: The ratio for 2008 is: Stock holding period = 338/ 4,568 *365 = 27 days The ratio for 2009 is: Stock holding period = 554/ 6,113 *365 = 33 days Frater Ltd is electronic company therefore stock holding period of about 30 days is reasonable. There has been a consistency in 2008 which tells it has efficient in turning its stock, than in 2009. This 33 days excessive stock should be avoided because these tie up the companys money unnecessarily and may require costly warehousing. CONCLUSION OF EFFICIENCY RATIO: 2008 2009 Assets turnover ratio 2.96times 3.01times Debtor collection period 12 days 14 days Stock holding period 27 days 33 days It shows that the increased assets turnover ratio seems beneficial, provided that the business can manage this increase. On the face of things, a greater receivables collection period is not desirable as these may have been achieved at the cost of a loss of the goodwill of the customers. The stock turnover period at the 2008 level might be reasonable but in 2009 it is increased that should be keep as little as possible. D) FINANCIAL GEARING RATIOS: Financial gearing occurs when a business is financed, at least in part, by borrowing instead of by finance provided by the owners (the shareholders) as equity. A businesss level of gearing is an important factor in assessing risk. The main ratios are: 1) Debt to equity ratio: It measures the contribution of long-term lenders to the long-term capital structure of a business and is calculated as: Debt to equity ratio = Dept * 100 Equity The gearing or debt to equity ratio for Frater Ltd, as at 31 December 2008 and 2009, is: The ratio for 2008 is: Debt to equity ratio = 158/ 1850 * 100 = 8.54% The ratio for 2009 is: Debt to equity ratio = 178/ 2730 * 100 = 6.52% Frater Ltd represents a low-risk investment for the ordinary shareholders in year 2009 than in 2008. So the company need not pay the loan interest and the preference dividend may mean that the ordinary shareholders will receive dividend at all. Furthermore, if Frater Ltd forced into liquidation, t here may be sufficient funds to repay the ordinary share capital after the loans. 2) Interest cover ratio: It measures the amount of operating or net profit available to cover interest payable and is calculated as follows: Interest cover ratio = Operating profit Interest payable The ratio for Frater Ltd for the year ended 2008 and 2009 is: The ratio for 2008 is: Interest cover ratio = 349/ 23 = 15.17 times The ratio for 2009 is: Interest cover ratio = 748/ 38 = 19.68 times The ratio shows the 4.51 times high figure in 2009 than with comparison to 2008. This indicates that lenders are in relatively secure position and that the companys profits could fall substantially before there was any likelihood that interest payments could not be met. Furthermore, lenders (and potential lenders) might gain confidence in the company. CONCLUSION OF FINANCIAL GEARING RATIO: 2008 2009 Debt to equity ratio 8.54% 6.54% Interest cover ratio 15.17times 19.68times This shows that the Frater Ltd becoming more low-geared as the debantures are redeemed. The interest cover ratio increased from a position where operating profit covered interest 15.17 times in 2008, to one where operating profit covered large interest 19.68 times in 2009. This was partly caused by the decrease in borrowings in 2009, but mainly caused by the increased profitability in that year. The gearing ratio at 31 December 2009 would necessarily be considered to be very low for Frater Ltd that was trading successfully. It is the high profitability for Frater Ltd. E) INVESTMENT RATIOS: This is mainly of interest to investors and may help these users to decide whether or not a business represents a worthwhile investment. The main ratios are: 1) Earnings per share (EPS): The EPS ratio relates the earnings generated by the business, and available to the shareholders, during a period to the number of shares in issue. This is calculated as: EPS = Profit after interest and taxation Number Of ordinary shares In the case of Frater Ltd we will assume the Ã‚ £1 for each ordinary shares. So the EPS ratio for the year ended 31 December 2008 and 2009 for Frater Ltd is: The ratio for 2008 is: EPS = 268/1000 = 0.27 or 27pence per share The ratio for 2009 is: EPS = 484/1500 = 0.32 or 32 pence per share The EPS has gone up 5 pence in 2009 which is a positive sign for the investors and it indicates an increased financial performance of the Frater Ltd in 2009 than in 2008. The increase in EPS may be the fact of as company decrease in the number of ordi nary share and made more profit. 2) Dividend cover: It is a measure of the number of times that the ordinary dividend for a year could have been paid out of the available profits. This is calculated as follows: Dividend cover = Net profit after tax and preference dividends Ordinary shares This ratio for Frater Ltd for the year ended 31 December 2008 and 2009 is: The ratio for 2008 is: Dividend cover = 268/ 84 = 3.19 times The ratio for 2009 is: Dividend cover = 484/ 104 = 4.65 times This is to say that the profit available for dividend cover the actual dividend increased in 2009 that is 4.65 or 4 times which indicates the company is retaining a substantial part of its profits. High level of cover in 2009 means that profits are more and Frater Ltd is having no difficulty in maintaining an acceptable level of dividend. CONCLUSION OF INVESTMENT RATIO: 2008 2009 EPS 27p 32p Dividend cover 3.19times 4.65times Virtually EPS and dividend cover, both ratios indicate that the Frater Ltd is a good investment. The EPS goes up by 5p per share and dividend cover ratio also has shown improvement in 2009 which attract the investors to invest. And the reason for good investment in company may be due to the fact that Frater Ltd has controlled their expenses more in 2009 than in 2008. F) CASH FLOW INDICATOR RATIOS: It is designed ti aid users in making judgements on the amount, timing and degree of certainty of future cash flows. It has a further purpose that of helping to indicate relationship between profitability and cash generating ability, and thus the quality of the profit earned. The main ratios which are helpful in Frater Ltd analysis are: Cash margin ratio: It focuses the attention on the companys ability to generate cash as opposed to profit and shows the proportion of profits actually earned as cash. This is calculated as: Cash margin = Operating cash flows *100 Net sales For Frater Ltd this ratio for the year ended 31 December 2008 and 2009 is: The ratio for 2008 is: Cash margin = 769/ 5,941 *100 = 12.94% The ratio for 2009 is: Cash margin = 1,282/ 8,756 * 100 = 14.64% The ratio has increased considerably in 2009 from the previous year 2008, means greater the amount of cash margin, is better. This ability to generate a consistent or improving percenta ge comparisons are good sign for Frater Ltd in positive investment qualities. Interest Cover: This ratio tells how many times interest can be met from the profit of the company. Thus, telling how easily a firm can is able to cover its interest payment obligation. This is calculated as: Interest cover ratio = Operating cash flow Interest paid For Frater Ltd this ratio for 31 December 2008 and 2009 is: The ratio for 2008 is: Interest cover ratio = 769/ 23 = 33.43 times The ratio for 2009 is: Interest cover ratio = 1282/ 38 = 33.74 times It means the interest cover ratio is increased by about 1 per cent in 2009 than in 2008, means it is a good indication for Frater Ltd; they paid their loan and there is no interest due because of profit earned. Also they will gain the confidence of their lenders. Cash return on capital employed (CROCE): It measures cash return on total capital of the business and this is equivalent measure of ROCE and expressed as: Cash return on capital employed = Operating cash flow * 100 Capital employed In case of Frater Ltd, this ratio for the year ended 31 December 2008 and 2009 is: The ratio for 2008 is: Cash return on capital employed = 769/ 2008 * 100 = 38.3% The ratio for 2009 is: Cash return on capital employed = 1,282/ 2,908 * 100 = 44.1% This shows a huge improvement in Frater Ltd performance from 2008 to 2009 which means company used their capital in a productive and profitable way. The returns on capital to the investors are much higher in 2009. Cash flow ratio: The purpose of this ratio is expressed as the excess of cash revenues over cash outlays in a given period of time. This is calculated as: Cash flow ratio = Operating cash flow Current liabilities For Frater Ltd this ratio for the year ended 31 December 2008 and 2009 is: The ratio for 2008 is: Cash flow ratio = 769/ 71 = 10.83 times The ratio for 2009 is: Cash flow ratio = 1282/ 258 = 4.97 times. It indicates that Cash flow per share: This ratio tell us that the amount of cash which has been generated for each ordinary shares. Cash flow per share = Net cash flow Number of ordinary shares This ratio for Frater ltd for 31 December 2008 and 2009 is: The ratio for 2008 is: Cash flow per share = 688/ 1,000 = 0.69 or 69pence per share The ratio for 2009 is: Cash flow per share = 1,018/ 1,500 = 0.68 or 68pence per share The cash flow per share has gone down by about 1p in 2009 which is not a positive sign for investors. This may also lose confidence of their investors for the Frater Ltd. CONCLUSION OF CASH OF CASH FLOW INDICATOR RATIOS: 2008 2009 Cash margin ratio 12.94% 14.64% Interest cover 33.43times 33.74times CROCE 38.3% 44.1% Cash flow ratio 10.83times 4.97times Cash flow per share 69p 68p Virtually Frater Ltd performed better in 2009 than in comparison to 2008 except in case of cash flow per share ratio which has gone down in 2009 by about 1pence.

Wednesday, January 1, 2020

Health and Happiness Gives Us All the Wealth We Need

Ã¢â‚¬Å"If you have health, you probably will be happy, and if you have health and happiness, you have all the wealth you need, even if it is not all you want.Ã¢â‚¬ Ã¢â‚¬â€œ Elbert Hubbard. What would it feel like to have obesity related illnesses claim over 2.8 million lives a year? It is important to maintain a healthy lifestyle because you have less of a chance to get sick, when youÃ¢â‚¬â„¢re healthy you feel mentally and emotionally happier, and you are more of a good and kind-hearted person. It is extremely important to live happy and healthy. To begin with, it is important to live a healthy lifestyle because thereÃ¢â‚¬â„¢s less of a chance of getting sick. When you have less of a chance of getting sick it doesnÃ¢â‚¬â„¢t necessarily mean that you have less of a chance of dying, it will just lessens the worry. If you get sick, thereÃ¢â‚¬â„¢s pain and plenty of worry that comes with it. If you donÃ¢â‚¬â„¢t live a healthy life style thereÃ¢â‚¬â„¢s a possibility of getting obese, when you become obese thereÃ¢â‚¬â„¢s a possibility of being diagnosed with Coronary heart disease. Coronary heart disease (CAD) is the most common type of heart disease and cause of heart attacks. The disease is caused by plaque building up along the inner walls of the arteries of the heart, which narrows the arteries and reduces blood flow to the heart. For example, just a few weeks ago my best friendsÃ¢â‚¬â„¢ brother died from Coronary heart disease. He was obese and struggling because he never ate well nor exercised. Being healthy gives you the cha nce to live aShow MoreRelatedAristotle on the Nature of Happiness and Virtue1265 Words Ã‚ |Ã‚ 5 Pagesnot clear for many people but, for me it is. Happiness does not depend on what we have; happiness comes from us our soul. Aristotle enshrines happiness as a central purpose of human life and a goal in itself. 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This includes the perspective of utility. While I have no idea what Mill himself would have suggested Sarah do, I do believe that if we follow his line of thought we are presented with an answer. Admittedly, good logic could arrive at either possible answer and perhaps this is the greatest flaw of MillÃ¢â‚¬â„¢s theory. In any case, taking all things into consideration, given my lack of knowledge regarding details of this hypothetical situation, I believe that Mill would endorse Sarah if sheRead MoreWealth Envy in Richard Cory, by Edwin Arlington Robinson Essay1408 Words Ã‚ |Ã‚ 6 Pages All too often, those who have little money envy people with more. This is depicted in Ã¢â‚¬Å"Richard CoryÃ¢â‚¬ written by Edwin Arlington Robinson, the narrator describes Richard as if he were royalty; rich, worldly, well spoken, and educated (677). He wished he could be Richard, and live with all the pleasures afforded the wealthy. 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