Novel effect Essay Example for Free

Novel impact Essay I think Mary Shelley utilized language to grow heaps of environment in part five, I think this is on the grounds that this gigantic develop of air makes you read quicker and quicker, and makes you need to understand more. She utilizes some long, complex sentences, for example, Delighted and astounded, I grasped her; yet as I engraved the main kiss all the rage, they got enraged with the tone of death; her highlights seemed to change, and I felt that I held the carcass of my dead mother in my arms; a cover wrapped her structure, and I saw the grave-worms slithering in the folds of the wool, this makes strain, giving the novel more impact. As she has utilized such a large number of long complex sentences, numerous commas and semi-colons are utilized, this makes the peruser stop a ton while perusing, giving the impact of many short sentences, installed into long, complex ones. Just as these sentences, she additionally utilizes many short sentences, and these progressions lead you to peruse quicker, which makes progressively pressure. A case of one of the short sentences utilized is Beautiful! Another way Mary Shelley may have needed to make air is by utilizing numerous incredible descriptive words, for example, inauspicious, and hopeless. Words like these likewise give the impact of symbolism, just as making gigantic measures of air. Numerous different expressions in the book likewise help fabricate air, a significant number of which are things Frankenstein says, regularly about his beast. Instances of this are hopeless beast, and blackguard. I think Mary Shelly likewise made air another way, without the peruser in any event, acknowledging she is attempting to. In the novel, numerous bygone words and expressions are utilized, similar to weariness, and I observed the achievement of my drudges. These words and expressions suit the gothic awfulness style the novel is written in, and help develop climate. They additionally give the impression something creepy is going on, as they dont sound like words we would utilize today. Additionally, normally, individuals are terrified of things that are new, and Mary Shelley may have utilized these old words to give the book all the more a creepy impact. I feel that part five connects to the key topics in the novel, and I think the fundamental one is the way that Mary Shelley may have been indicating in her novel, that you cannot play god, and in section five, that is the thing that Frankenstein is fixated on doing. His companion, Henry, likewise sees this, and states I didn't before comment how sick you show up; so flimsy and pale; you look as though you had been looking for a few evenings. This infers Frankenstein is an amazingly over the top character, and that he won't rest, until he has satisfied his objective, making life (playing god). The remainder of the novel is about how Frankensteins urgency for power, causes issues down the road for him. I additionally feel that section five connections in with the key subject in the novel in another way. While taking about her novel, Mary Shelley said Frightful must it be; for remarkably shocking would be the impact of any human undertaking to taunt the tremendous instrument of the Creator of the world. I feel that the significance of this expression, is that she is stating just god ought to have the control over life and passing, and any individual who attempts to resist him (by making life), ought to be terrified, as he won't acknowledge it, and rebuff the individual who challenged his right. I believe that in her story, she was subconsciously indicating this, as she continually alludes to god. At the point when Frankenstein is fleeing from the beast, the night it is made, he sees the steeple, its white steeple, and numerous different indications are additionally made. She could be indicating that straight after the beast is made, god has arranged what will occur straightaway. Moreover, this shows in the nineteenth century individuals were very strict, and took care about what they did, as they didn't need god to rebuff them for their activities. Additionally, the expression imbue a flash of being into the dormant thing that lay at my feet, is expressing that he is going to utilize power or the like, to bring the thing, to life. This identifies with galvanism, which is the way toward running charges of power through dead creatures and attempting to breath life into them back, in undeniable reality, the charges were simply making the muscles of the dead creature fit. So the expression shows that in the nineteenth century, numerous individuals were attempting to breath life into dead things back. Mary Shelley got utilizing lightning to breath life into the beast once again from Luigi Galvanis thought of galvanism, we know this on the grounds that just as catching her better half and Lord Byron discussing it, she was additionally extremely in the know regarding logical analyses at that point. Besides, part five likewise gives us a superior comprehension of nineteenth century writing. The words and expressions in part five, are regular of nineteenth century language, for instance, the expression limitless torments and care I had attempted to shape, is an expression we would not utilize these days. Expressions, for example, this reveal to us that in the nineteenth century, essayists would write in a significantly more conventional style. I believe this is on the grounds that in the nineteenth century, any individual who could peruse and compose would be from an amazingly well off family, and books were composed to suit their style of language, not for the white collar class. Another case of a nineteenth century word is face (another word for face), at present time, individuals are continually hoping to discover shortenings, so they can convey quicker, be that as it may, words like face are any longer, and increasingly fit to the formal nineteenth century style of writing. From part five, we can likewise discover that in the nineteenth century, essayists would utilize bunches of incredible descriptors, and nineteenth century works would be extremely elucidating, with loads of symbolism. Instances of incredible elucidating expressions, and descriptors are grave-worms creeping, and demonical. These words add heaps of climate to the story, and there is a solid utilization of symbolism. The last thing I have found out about nineteenth century writing from part five is the utilization of colons and semi colons. Mary Shelley utilizes numerous semi colons and commas in the novel, and her utilization of commas and semi colons permits her to fabricate environment utilizing long and complex sentences, and afterward frequently quickly change to a short one, for instance I took shelter in the yard having a place with the house which I possessed; where I stayed during the remainder of the night, strolling here and there in the best tumult, listening mindfully, getting and dreading each solid as though it were to report the methodology of the demoniacal body to which I had so wretchedly given life, at that point, the primary sentence in the following section is only the word Oh! This shows in the nineteenth century, all the time, a few people would utilize commas and semi colons frequently, rather than full stops.

Characteristics of the Accounting Information Systems

A bookkeeper assumes an essential job in any business; one can even say they are one of the most persuasive specialists. For example, bookkeepers member in creating rules and rules, encouraging everyday business exercises, and even dynamic. While the IT and IS people group are utilized often in numerous organizations, they are not the authors of the qualities of helpful data. The key purpose for this is because of the way that bookkeepers are the clients of IS and IT communities.As being the essential clients, one can anticipate the attributes, rules, and rules for a data framework to be structured by the bookkeepers themselves. In a more extensive view, â€Å"accountants can accept three jobs: creator, client, and auditor† (Gelinas, Dull 27). As an originator, the bookkeeper can offer its information on different standards (bookkeeping standards and evaluating standards), and different strategies and procedures (data framework and framework development).In structuring a bookk eeping data framework (AIS), the bookkeeper can respond to different inquiries that relate back to the seven qualities of valuable data frameworks. A few inquiries may include: â€Å"What will be recorded and in what manner will exchanges be recorded? When will the exchange be recorded and when will they be accounted for? What controls will be important to give substantial, exact, and complete records? What amount of detail will reports need? † (Gelinas, Dull 27). On the off chance that bookkeepers didn't structure the AIS, at that point these inquiries might be left unanswered without their expertise.Accountants perform numerous capacities in an association, for example, a â€Å"clerk, controller, treasurer, charge pro, and budgetary analyst† (Gelinas, Dull 27). Along these lines, it is important for them to utilize the AIS to play out their obligations. As a client, it is basic for the bookkeeper to member in the AIS procedure to ensure it contains the necessary high lights. Likewise, realizing how to utilize the AIS innovation would be exceptionally advantageous in working viably and productively. For instance, a budgetary expert would need to realize how to store the information and access it, and how to introduce the information.Finally, as an examiner, one of their principle advantages in the AIS is the unwavering quality of the information. Without dependability, inspectors can't â€Å"provide a sentiment on the viability and proficiency on inside controls† (Brazel 38). Bookkeepers will remain the primary clients and as a client, an inspector also. In light of the seven qualities, might they be able to have advanced from an earlier time? With innovation not being as effectively open as in today’s bookkeeping world, one can accept that data was not as pertinent, dependable, ideal, or accessible.In connection, present day innovation is so productive in today’s world; in this manner the progression of data can be immediate ly traded whenever. For instance, Internet has permitted organizations to send reports over the globe at some random time. This capacity gives bookkeepers simple access to data and convenient data. Without ideal data, applicable and solid data would be outlandish. In any case, one potential hindrance in today’s bookkeeping world might be the significance of the information. With such simple access to data, it tends to be increasingly hard to limit that data to its essence.Having a lot of data can make AIS progressively hard to comprehend and expand vulnerability. Without having the option to comprehend the AIS, a bookkeeper can't confirm a similar data. Every one of these attributes come connected at the hip; in the event that one trademark falls flat, at that point different qualities will be influenced. In spite of the fact that today’s bookkeeping world has incredibly moved from an earlier time, one can't deny that the bookkeeping network has consistently had a sign ificant effect in producing the qualities of helpful information.Older bookkeeping networks made the structure squares of the attributes. Innovation only upgraded the progression of data and productivity. Records will remain the originator, client, and reviewers of the AIS. Work Cited Brazel, Joseph. â€Å"How Do Financial Statement Auditors and IT Auditors Work Together? † The CPA Journal (2008): 38-41. Print. Gelinas, Ulric J. , Richard B. Dull, and Patrick R. Wheeler. â€Å"Chapter 1: Introduction to Accounting Information System. † Accounting Information Systems. Bricklayer, OH: South-Western Cengage Learning, 2012. 27-28. Print.

Language and linguistic knowledge

Morocco's topographical area as a scaffold among Europe and Africa, and as a home for Arab, Amazing, Andalusia, African and Jewish societies, make of the nation a position of extensive semantic decent variety. In this article, this assorted variety will be drawn closer from an individual point of view, unsparingly because of perusing Chapter 7 â€Å"Language in Society' in â€Å"Introduction to Language†. Topographically, verbally expressed all over Morocco, there are many vernaculars descendents of Arabic and Amazing dialects. The Arabic lingos extend from theHosannas' vernacular verbally expressed In the Southern Sahara Regions, through the diverse casual Arabic tongues of areas like Marshes and Fez, to the Arabic verbally expressed in the Northern Regions near Spain. So also, Amazing language offers ascend to numerous lingos and sub tongues, explicitly Tasteless In the Souses Region, Taming in the High Atlas and Tariff In the North. These territorial tongues don't have unm istakable limits (etiologies) among them, yet unquestionably cover to shape a vernacular continuum. Moroccan speakers of this dissimilarity of lingos appear to arrive at least shared intelligibility.In situations where they neglect to, they resort to the cutting edge Moroccan Colloquial Arabic (Dare) as their most widely used language. Significantly these local tongues show semantic contrasts on various levels. At the phonological level there Is a vowel cancellation In the Hosannas' vernacular for action words following pronoun ‘You†. Kilt (you have eaten) or forsake (you have come) are articulated as kilt and Jilt in different lingos of Arabic. At the Phonetic level, the Arabic speakers of the North uses q; while that of the center areas use g as in CUL (state) and gull especially.At the lexical level, Tasteless and other Amazing vernaculars show numerous abberations. Head in Tasteless is said Agway, sashays in Taming and convey in Tariff. Other than the previously ment ioned vernaculars, most Moroccan utilize French and thusly are bilinguals. Astounding language, albeit a national language announced as of late, has not increased agreeable open and political help. Code-exchanging Is subsequently regular from Arabic or Amazing to French. Arabic speakers and Amazing may separately say wring la nearness exchange f territory; militarily la nearness religious recluse GHz downpour (show me your quality on the ground).Extensively, Moroccan use getting from French or English when they talk. An Arabic speaker may state lobby these Believable dalai . Conduct Is here obtained from English and It gets subject to the Arabic clear article I rather than the. 1 OFF Linguistic variety in Morocco isn't characterized by topography as it were. In spite of the fact that it is difficult to portray social vernaculars in Morocco in term of social classes as society doesn't show clear delineation, there is nearness of various discourse assortments relating to arioso social groups.These are characterized based on sexual orientation, age or religion. Youthful age, particularly in urban regions seem to create distinctive discourse varieties because of the impact of the far reaching media and new telecom implies. Words like deafening (compromise) or water (cash) are to make a great many people disapprove of. Strict gatherings, especially the aggregate (Koran researchers) have built up Jargon's which they are the main ones to comprehend. As respect sex, Moroccan ladies appear to utilize a marginally unique language to men.This is because of the noteworthy social mentalities and social desires fortifying more conversational tolerability among females than guys. A lady would not for the most part be relied upon to make demands without utilizing Allah murder (if it's not too much trouble or ‘ram strolled (God favor you). Truly, an admonition is that the past investigation of the semantic variety in Morocco ought not be considered as any reference since it is an individual reflection dependent on constrained individual information. In any case, it is a greeting for a completely logical and phonetic research which can be of a reference an incentive for language specialists in Morocco and past.

tom sawyer essays

tom sawyer papers Tom Sawyer is a kid who is brimming with experiences. In his reality there is an experience around each corner. A portion of his experiences have lead him into some awful circumstances however with his great heart and brilliant mind he has escaped them. Tom lives with his auntie Polly, his cousin Mary and his trouble Sid. One of the main things to occur in the book is a significant one, the composition of the fence. Tom's auntie Polly made Tom paint her fence on a Saturday as a discipline. Tom simply detested having to chip away at a Saturday while the entirety of the area could ridicule and bug him. After Tom attempted to exchange a portion of his assets for a couple of long periods of opportunity he had a flash of brilliance, rather than him paying individuals to work for him, he made individuals pay him to paint. Tom dealt with this by telling individuals that it isn't consistently that you get an opportunity to paint a fence and he thought it was entertaining. He had individuals imploring him to paint when that he was done his story. He would have taken each kid in the town's riches in the event that he On June seventeenth about the hour of 12 PM, Tom and his closest companion Huck were out in the memorial park attempting to dispose of moles, when they saw a homicide by Injun Joe. At the time Muff Potter was tanked furthermore, snoozing so Injun Joe accused the homicide him (Muff Potter). They knew whether insane Injun Joe discovered they knew, he would without a doubt murder them. Tom composed on a wooden board Huck Finn and Tom Sawyer promise to keep mum about this and they wish they may drop down dead in their tracks on the off chance that they ever tell and decay, at that point in their own blood they marked their initials TS and HF. A couple of days after that episode Tom, Huck and Joe chose to proceed to become privateers on the grounds that no one thought about their organization any longer. They took some food and supplies and afterward they took a pontoon and rowed to an island in the Mississippi River. They stayed and pilfered for a few days, at that point t... <! tom sawyer papers The meaning of an exemplary novel is a book that has been perused and appreciated by progressive ages. It has been passed down from age to age. Another meaning of exemplary writing is that it has been composed by an extraordinary and acclaimed writer. My book (The experiences of Tom Sawyer ) was a bit of American great writing since it was composed by a very notable and remarkable writer (Mark Twain). The experiences of Tom Sawyer was likewise an exemplary novel since it was a very notable and old book. This epic has been perused by numerous individuals since 1867. It additionally has been republished commonly and in twenty-seven unique dialects. The hero in the story The undertakings of Tom Sawyer was Tom Sawyer. Tom was fourteen years of age. Tom was an underhanded kid with a functioning creative mind. Tom burns through the vast majority of the novel getting himself and frequently his companions, in a difficult situation. In spite of his terrible conduct, he normally attempts to make the best choice. Tom was the hero in the story since he saw the homicide of Dr Robinson, and he told the court that Injun Joe was the killer. Injun Joe got away and now was wanting to murder Tom Sawyer. The Antagonist in the novel, The undertakings of Tom Sawyer was Injun Joe. Injun Joe was half Native American and half-Caucasian. He was an exceptionally rough and disgusting man. He was the adversary since he killed Dr. Robinson. Injun Joe was likewise after Tom Sawyer and needed to slaughter Tom for blaming him for homicide in the court. Some other primary characters were Aunt Polly and Huckleberry Finn. Huckleberry Finn was loathed by all the guardians and gazed upward to by the entirety of the kids in St Petersburg. He was the child of the town alcoholic .All of the youngsters begrudged him on account of his opportunity. He was by all accounts ready to do what he needed to without grown-up rules. Huck never appeared to go to class. The guardians thought he was a terrible impact. Toms guardians died and left his Aunt ... <!

Understanding and Using the Law of Attraction

Understanding and Using the Law of Attraction Spirituality Print Understanding and Using the Law of Attraction By Elizabeth Scott, MS twitter Elizabeth Scott, MS, is a wellness coach specializing in stress management and quality of life, and the author of 8 Keys to Stress Management. Learn about our editorial policy Elizabeth Scott, MS Updated on August 17, 2019 PeopleImages/Getty Images   More in Self-Improvement Spirituality Happiness Meditation Stress Management Holistic Health Inspiration Brain Health Technology Relationships View All The Law of Attraction is working in your life whether youre aware of it or not. And it may explain why you are attracting the things in your life that you do. Here is everything you need to know about it. The History of the Law of Attraction While the Law of Attraction is getting quite a bit of publicity these days, the concept has been around for centuries and has been known â€" and used successfully â€" by great minds throughout history. According to books like The Secret, there’s evidence that the law of attraction was used by Beethoven, Einstein, and even Jesus, but you’ve also used it in your own life whether you’re aware of it or not! This is because the Law of Attraction works whether or not you’re aware of it. The main reason for the current focus on it is that if you’re aware that youre using the Law of Attraction, you can control what you attract into your life. How the Law of Attraction Works Basically, the Law of Attraction works like this: you create your own reality. What you focus on, what you emote about, is what you draw into your life. What you believe will happen in your life is what does happen. This isn’t as simple as it seems, however, or everyone would have the lives that they want naturally. For example, people who are in debt and continually tell themselves, “I need more money,” don’t find more money, they continue to attract “need more money” because that is the reality that they create. Why It Works Many people wonder why this works, and there is more than one explanation. The two main schools of thoughts go along these lines: The Spiritual Explanation:  Many people believe that the Law of Attraction works by aligning God or the Universe with our wishes. We are all made of energy, and our energy operates at different frequencies. We can change our frequency of energy with positive thoughts, especially gratitude for what we already have. By using grateful, positive thoughts and feelings and by focusing on our dreams â€" rather than our frustrations, we can change the frequency of our energy, and the law of attraction brings positive things into our lives. What we attract depends on where and how we focus our attention, but we must believe that it’s already ours, or soon will be.The Traditionally Scientific Explanation: If you’re one who needs things to be a little more easy to prove, there is also a different explanation for how the law of attraction works. By focusing on attaining a new reality, and by believing it is possible, we tend to take more risks, notice more opportunities, and open ourselves u p to new possibilities. Conversely, when we don’t believe that something is in the realm of possibilities for us, we tend to let opportunities pass by unnoticed. When we believe we don’t deserve good things, we behave in ways that sabotage our chances at happiness. By changing our self-talk and feelings about life, we reverse the negative patterns in our lives and create more positive, productive and healthy ones. One good thing leads to another, and the direction of a life can shift from a downward spiral to an upward ascent. Proof That the Law of Attraction Works Whatever the underlying reason, reams of anecdotal evidence confirm that the law of attraction works. And, for those science-minded folks out there, research does seem to support the positive effects of the Law of Attraction as well. For example, research on optimism shows that optimists enjoy better health, greater happiness, and more success in life. (The traits of optimists  are that they focus their thoughts on their successes and mentally minimize their failures.) One of the foundations of therapy is that changing your self-talk can change your life in a positive direction. And millions of people have found success with positive affirmations. Law of Attraction Caveats One problem with the book The Secret, and with some peoples interpretation of the Law of Attraction, is that its singularly the belief we hold those good things will come to us that will bring us all that we desire, without any sort of action behind that belief. Studies on optimists show that it is the optimistic viewpoint that drives the proactive behaviors that in turn bring optimists such great results in their lives. Optimists dont receive their benefits from their attitudes alone â€" its the behavior the attitudes inspire that creates real change. More importantly, critics of The Secret and other books about the Law of Attraction point out the very real concern that people may start to blame themselves for negative events that are outside their control, such as accidents and injuries, layoffs due to the financial crisis, or major illnesses. We cant always control our circumstances, but we can control our responses to them. In this vein, the Law of Attraction can provide the optimism and proactive attitude thats associated with resilience in difficult situations, but must not be used as a tool of self-blame. Our responses to the challenges we face can make us stronger in the end, and the Law of Attraction can be used for that end, but should not be applied negatively, or it can be more destructive than helpful. Taking the Next Step Now that you understand the Law of Attraction, you can harness this power in your own life. A first step would be to test your own habitual thought patterns to see whether you tend toward optimism or pessimism and learn more about changing habitual patterns of thought. Additionally, this article on using the Law of Attraction can help you make many positive changes in your life. Now is the time to start; your future is in your hands!

Upholstery Markets - Free Essay Example

Chapter 1 1.1 Introduction 1.1 Market Trend Before the early twentieth century, upholstered furniture was not common household furniture. In the later twentieth century, the household furniture started making headline. In upholstery, there are different types of fabrics and textiles, and there are varieties of product available. 1.2 The Upholstery Markets across the Globe The global market for upholstery furniture, sofa and bed market has gone through series of trends in terms of growth. In recent years, the rate of growth of this industry has been greatly affected by the spending of the consumers and the condition of the housing market. During the period 2000 2002, consumers have experienced a great deal of confidence in this market because of the easy access to housing mortgage. The wooden furniture trade was estimated at $45billions worldwide in 2000, and this was based on the selling price of the manufacturing. This is small when compared with the globe trade of woods that are primarily processed that was estimated at $240billions. Japan and USA are the two main countries where furniture market is substantial. These two countries account for 37% of the global trade. However, the Asia, Eastern Europe, and Latin American are very competitive in the domestic furniture market. Enhancing the industrial productivity is the principal economic goal of a nation. Therefore, a way of doing this is to increase the competitiveness by employing the resources in an efficient manner. The table below indicates the labour productivity figures in different countries in the furniture industry. It explains the value that is being added per employee is not as a result of the production input only, but also market and product ingenuity. In Asia, the value of value added attained is less compared to Italy, Germany, United States, and Taiwan. The cheaper production of raw materials and labour in Taiwan has made it cost sustainable as one of the leading export countries in the world. The main strength in this country is as a result of the structural difference in the manufacturing strategy. In Russia, the market for upholstered furniture is one of the most popular markets during the 2006-2007. The market tries to distinguish its market from other western world, and a main difference of this market from the rest is the fact that the manufacturers are required to think and develop. This makes them to develop and advance in the products they manufacture, and are able to produce varieties of upholstery product in a year and as a result, the sales go up. As a result of this, the number of furniture supermarket in Russia increased. However, the Russian market lacks the clarity. Its main concern is the companies revolution. The market lacks the authenticity of analysing information on manufacturer, as well as furniture realisation. Since the building boom in Russia in 2000, and in 2005, there was increase in the number of constructed apartment and as a result, the upholstery market experienced boom. The United Kingdom upholstery market has experienced series of growth over the years, and in 2004, the rate was estimated to be around 2%. Due to the import rate in some part of the sector, price competition is curbing the growth in both the bed and upholstery market. During the period 2000 2004, the market experiences a high consumer confidence as a result of the buoyant housing market. During the 2003, the market had experience an increase in growth, and 90% of it was from the domestic market while the rest of the 10% was from the hotel and leisure sector. Some parts of the sector are responsible for this growth. 1.3 Analysis of companies in the same industry It is important to analyse three other companies in the same industry as SCS Upholsteries. The companies identified are King Fisher Plc, Carpet Right Plc, and Home Retail Group. These three companies are also in the upholstery furnishing industry and their analysis will help as a bench mark for SCS Upholstery. Kingfisher plc is the leading home improvement retailer in Europe and Asia, and the third largest in the world. Carpet right plc is Europes leading specialist floor covering retailer. Since the first store was opened in 1988 the business has followed a controlled store expansion programme developing both organically and, in recent years, through acquisition within the UK and other European countries. Home Retail Group, the UKs leading home and general merchandise retailer, which comprise both Argos and Home base in the annual report. Its first Annual Report for the financial period ended 3 March 2007. The financial period is shorter than a full year due to the change in year-end and it also includes certain financial impacts of GUS plcs ownership of Home Retail Group up to the point of demerger on 10 October 2006. In 2006, there was a major step in transforming GUS, with significant disposal, acquisitions and organic investment. 1.4 About SCS Upholstery Plc SCS Upholstery Plc is a national retailer that has been in existence for more than 100 years and specialises on selling in lounge room sofas and chairs. They are positioned in the middle-market of the upholstery retail sector offering excellent value, choice and service to their customers. The increased the number of stores from 70 in 2005 to 95 stores nationwide in 2007, 91 of which are in prime out of town retail park locations with a high quality fit out and mezzanine floor. Their branches network has developed through regional clusters supported by 11 distribution centres, designed to deliver cost synergies in distribution and through effective use of national media. The company do not manufacture but source their products from 15-20 principal suppliers with whom they have developed good working relationship. The company employ the best people in whom they invest heavily in training with a focus on customer service. Remuneration packages, which contain significant incentives based upon sales and profits, provide the focus on maximising profits and managing costs and support the successful implementation of strategy. 1.5 Financial Review Financial overview for four years Revenue was 183.8 million for the ten months ended 28 July 2007 (twelve months ended 30 September 2006: 195.8 million), although there has been significant increase compared to 2004 and 2005. The drop in revenue in 2007 reflected the extremely tough trading conditions which prevailed. The balance sheet remained very strong with net assets of 36.1 million (2006: 37.6 million) and no borrowings. Comparing these two years to 2004-2005 net asset, there has been has increase of about 73% in net assets from 2004-2006, and 27% increase from 2005-2007. The increase in the net asset over the years is as a result of acquisition of property, land and equipment. The strong balance sheet and significant operating cash flow generation of the business enabled a continuous expansion strategy and the refurbishment programme whilst supporting the payment of dividends at appropriate levels, all of which is financed from the companys resources. The Group had changed its accounting reference date from 30 September to the nearest Saturday to 31 July in order to alleviate the logistical issues created by annual supplier holidays falling during August and the change has taken effect from the current financial period. As a result the comparative figures in the Income Statement, Balance Sheet for 2007 is for ten months and will be assumed to be for twelve months. Summary Table 2007 2006 2005 2004 Sales (million) 183,794 195,828 158,295 139,503 Trading Profit (million) 6.6 15.9 14.4 13.8 Gross margin 47.40% 48.1 48.08 48.33 Earnings per share (pence) 13.68 35.12 38.15 29.76 Dividends per share (pence) 19.0 9 16.5 14 Dividend as a % of earnings (%) 138.89 54.10 43.25 47.00 net asset 36.1 37.6 29.1 21.7 The trend of the profit before tax and the earnings per share is shown is shown in the diagrams below. The balance sheet remained very strong with net assets of 36.1 million (2006: 37.6 million) and no borrowings. The financial statement select suitable accounting policies and then apply them consistently; make judgments and estimates that are reasonable and prudent; state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and prepare the financial statements on the going concern. Business risk Revenue was 183.8 million for the ten months ended 28 July 2007 (twelve months ended 30 September 2006: 195.8 million). This reflected the extremely tough trading conditions which prevailed during the financial year. The trading profit has dropped for about 58% from 2006 to 2007. The corrective action taken included spare capacity in distribution, which has led increase in the distribution cost to take 5.6% of the 2007 revenue (2006: 4.7%). Also expansion (opening of new stores) and pre-opening and launch cost for the new stores, staff recruitment cost that been taking place has a negative impact on the companys revenue. Chapter 2 2.1 Accounting Policies Basis of preparing the annual reports SCS Upholstery The SCS Upholstery financial statement has been prepared according to the IFRS as adopted for European Union use which applies to the group financial statements for the ten month 28 July 2007 and applied accordance with the provision of the company Act 1985. The full details of the accounting policies can be found on the companys annual report on page 32-34. The following new standards and interpretations are not applied The following standards and interpretations have been issued by the IASB and IFRIC with an effective date after the date of these financial statements: International Accounting Standards (IAS/IFRS) IAS 1: Amendments to IAS 1: Presentation of Financial Statements: Capital Disclosures 1 January 2007 IFRS 7: Financial Instruments: Disclosures 1 January 2007 IFRS 8: Operating Segments 1 January 2009 IAS 23: Amendment to IAS 23: Borrowing Costs 1 January 2007 The Directors do not expect that the implementation of these standards and interpretations will have a material impact on the Groups financial statements. Goodwill Goodwill represents the excess of the cost of acquisition of a business unit over the fair value of the identifiable net assets acquired at the date of acquisition Consolidated goodwill in respect of acquisitions made prior to 1 January 1998 was written off directly against reserves. Future goodwill will be shown as an asset (in accordance with FRS 10) and amortised over its useful economic life. Goodwill previously eliminated would be charged or credited to the profit and loss account on subsequent disposal of the business to which it related. Going concern Having made appropriate enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future and for this reason they continue to adopt the going concern basis in preparing the financial statements. Taxation The taxation expense is calculated on the basis of the Directors estimate of the tax rate (annual) which is added to profit for that period. The effective rate for the period is calculated to be 34.3%, and for 12 months till September 2006 is 31.5%. Operating leases the operating lease is in accordance with IAS 17.Rentals payable under operating leases are charged in the income statement on a straight line basis over the lease term. Carpet Right The company in the past was using the United Kingdom Generally Acceptable Standard (UK GAP). After the European Union issued directive in 2002, the group in July 2002 started preparing its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS). In 2007 the financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and International Financial Reporting Interpretations Committee (IFRIC) interpretations endorsed by the European Union, together with those parts of the Companies Act 1985 applicable to companies reporting under IFRS. Financial statement of Carpet right represents 52 weeks ended 28 April 2007, and for 2006 was 52 weeks ended 29 April 2006. The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and International Financial Reporting Interpretations Committee (IFRIC) interpretations endorsed by the European Union, toge ther with those parts of the Companies Act 1985 applicable to companies reporting under IFRS. Exceptional items Transactions which are material by virtue of their size or incidence such as profits or losses on disposal of property, plant and equipment and investment property are disclosed as exceptional items. Goodwill Goodwill is capitalised based on the excess of the fair value of the consideration paid over the fair value of the separable net assets acquired. It is carried at cost less accumulated impairment losses. King fisher The consolidated financial statement in 2005-2006 is prepared according to the International Accounting Standard Boards (IFRS) as the European Union (EU) directed as well as the International Financial Reporting Standards issued by the International Accounting Standards Board (IASB), and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS. The 2007 consolidated financial statement as also been prepared in accordance with EU standard, as well has IFRIC interpretations and those parts of the Companies Act 1985 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain financial instruments. Home Retail Group The Home Retail Group (then ARG) before prepares its financial statement for 12 months to 31 March except for the results of Home base Limited which were included for the 12 months to 28 or 29 February each year, with adjustments to reflect the balance sheet movements in cash to the end of March. This was done to facilitate comparability of the income statement by avoiding the distortions that would arise relating to changes in the timing of Easter. The accounting policies that are applied to prepare the financial statement are set below. These policies have been consistently applied to all the periods presented, unless otherwise stated, and are in line with the listing particulars. Home Retail Group separated from its parent company, GUS plc in 10 October 2006. Home Retail Group companies which were owned by GUS plc prior to demerger were transferredunder the new ultimate parent company, Home Retail Group plc, and prior to 11 October 2006. The introduction of this new ultimate holding company constitutes a group reconstruction and has been accounted for using merger accounting principles. Therefore, although the Group reorganisation did not become effective until 10 October 2006, these consolidated financial statements of. In the prospectus, funding balances between the Group and GUS plc which were interest bearing and had the characteristics of debt, were presented as debt in the balance sheet, with the interest taken to the income statement. Prior to demerger, the net funding balances were reduced by 240.0m by means of a capitalisation and the financial statements reflect this capitalisation as having taken place just prior to 31 March 2005. Changes in accounting standards A number of new standards, amendments and interpretations have been put in place at the short period ended 3 March 2007, but have had no material impact on the results of the Group. The impact of IFRIC 4 Determining whether an arrangement contains a lease has been reflected through both the current period and prior year within Notes 8 and 31. At the balance sheet date a number of IFRSs and IFRIC interpretations were in issue but not yet effective. The Group has not early adopted IFRS 7 Financial instruments: Disclosures and the Capital disclosure amendment to IAS 1 Presentation of financial statements, which are applicable for accounting periods commencing on or after 1 January 2007. 2.2 Financial Ratios The financial ratio is a simple and better means of assessing the financial position of a firm. The use of ration is useful in comparing the financial position of different companies and also to the industry average. Ratio is grouped into different types, and each explains the financial performance of the company. 2.3 Profitability Ratio It measures the firms use of its assets and control of its expenses to generate an acceptable rate of return. They express profit made in relation to other key figures in the financial statement. Return on Capital Employed (ROCE): This is used as a measure of the returns that a company is realising from its capital employed. The company under review with its competitors have shown to have the ROCE above the industry average for the periods under consideration. For SCS Upholstery, there was a great decline in profit in 2007 and this had affected their returns by a total difference of 22.68%. This is due to the significant shortfall in sale being experienced in 2007. As sales reduce, and overall cost of sales increases, there will be a significant effect on the overall profit. The price at which the company is selling its product is not sufficiently covering its cost. Carpet right has had a stable ROCE for two year period (2006-2006), although there was a great decline of 27% in figure from 2005-2006. This is attributed to the decrease in the operating profit. Looking at King Fisher, the figures have not been stable over the periods especially during 2005 when there was 110% increase in the operating profit. Home Retail Group also experienced an upward trend. In comparing the ROCE figures with those of the peer companies, Carpet Right appears to main a stronger position, although all the companies including SCS Upholstery exceeded the industry average. Return on Equity: This ratio helps to match up the amount of profit available to the owner during the period under consideration. There has been decline in the ratio for all the companies in 2007. This is due to the fact that the companies have all issued more equity compared to the profit before tax they all made. ROE figures for the peer companies offer mixed results, which gives an industry average which is influenced by the good performance of Carpet Right. Both SCS Upholstery and Carpet Right have their figure for all the periods greater than the industry average except for the 2007 figure for SCS Upholstery that is below the industry average and this is as a result of the reduced profit caused by the capital expenditure incurred. Gross profit percentage: This measures the percentage of sales available to pay overhead expenses of the company. It is the amount of contribution to the business enterprise, after paying for direct-fixed and direct-variable unit cost, requires covering overheads and providing a buffer for unknown items. Observing the gross profit ratio, it is noted that Carpet Right like before outperforms the other companies including SCS Upholstery for all the periods. In 2007, the gross profit ratio of Carpet Right is 29% above that of SCS Upholstery. But SCS Upholstery seems in line with the industry average. Both King Fisher and Home Retail group have their ratios below the industry average. For SCS Upholstery, no substantial change in the ratio, but it can be seen that the gross profit was lower relative to sales revenue in 2007 than it had been in 2006. The reduction in gross margin reflected the impact of lower average order values. This is attributed to the logistic issue which resulted in a smooth delivery experience around March period. The cost of these actions and of the spare distribution capacity to protect against peak trading period is reflected in increase in distribution cost as a percentage of sales were. This strategy was rolled out across all warehouses over a period of time, to increase flexibility for delivery to customers and ensure success in realising economies of scale and increasing profitability. 2.4 Liquidity ratio This provides information about the firms ability to meet its short term financial obligations. They are of particular interest to those extending short-term credit to the firm. Current Ratio: This is one of the best known measures of financial strength. This is a financial ratio that measures whether or not a firm has enough resources to pay its debt over the period of time. This means that for every 1 the company owes, it has its equivalent current ratio in form of current assets. The summary of this is that for every 1 SCS Upholstery owe, it has 1.05 in 2007 (1.21 -2005; 1.01 2006) available in current assets. This indicates that the firm holds most of its assets in non current form. The makes most of its sales in cash, and generates a lot of cash sales revenue. Comparing this ratio to its pairs and the industry average, the company has to find a way of increasing its current assets in relation to the current liabilities because the industry average figures are higher. The current ratio of Carpet Right has shown a very strong trend compared to its pairs and the industry average. Also Home Retail has maintained a good current ratio despite the fact that the gross profit, returns on capital ratios have not been impressive. King fisher current ratio is also seen to be below the industry average suggesting that it has more current liabilities in relation to current assets. It is likely that king fisher is facing liquidity issues. Acidic test ratio: This measures the ability of a company to use its near cash to immediately extinguish or retire its current liabilities. The Acid Test or Quick Assets Ratio provides a more prudent measure of short-term liquidity. Carpet Right has the highest ratio and its the only one that has its ratio above the industry average suggesting it is able to meet its short term liquidity. It can be seen that the liquid current assets of SCS Upholstery do not quite cover the current liabilities. There is a subsequent need to reduce the purchase of noncurrent assets (property, plant and equipment) and intangible assets as seen on the balance sheet in 2007 to have taken a huge sum. The company need to keep some of its asset in liquid form to meet any unforeseen obligations that may arise. Home Retail is not doing well in this ratio, but King Fisher having relative low ratio might be faced with liquidity problem. 2.5 Efficiency ratio This examines the ways in which various resources of the business are managed. It is also related to the liquidity ratio and gives an insight to the effectiveness to the companys management of the components of working capital. Stock turnover: the stock turn often represent a significant investment for business. This ratio reveals how well inventory is being managed. It is important because the more times inventory can be turned in a given operating cycle, the greater the profit. The ratio analysis for the four companies shows that King Fisher has the highest number of stock turnover, followed by Home Retail. This explains why King Fisher has had very low profitability ratio compared to its pairs. Also Carpet Right has the lowest stock turnover suggesting that they sell their stocks sooner than the rest and this also reflects in their sales revenue. Looking back to the Acidic Ratio of SCS Upholstery, is can be finalised that problem might arise in future if this figure is not monitored. The firm is a retail market and order their products from their suppliers. They can afford not to invest so much in inventory (sofa) as this can be ordered from their suppliers. Debtors turnover: this indicates the percentage of the companys assets that are provided via debt. The ratio indicates how well accounts receivables are being managed. Analysis of the debtor turnover shows that both Carpet Right and King Fisher have been managing its credit control with their figures below SCS Upholstery and Home Retail, as well as the industry average. SCS Upholstery figures for 2004 and 2005 were not impressive given the industry average and the stock turnover, but there was a turnaround in 2006-2007. This is done by doing more of cash sales than credit sales. In fact, it started doing most of its business in cash sales and this holds true for most retail stores. Creditors turnover: measures how long on the average, the business takes to pay its creditors. It can be understood from the analysis that of the 2 years that there is no significant change. While the company does a lot of cash sales, it tries to delay making payment to its suppliers. The ratio for the period under study has been consistent with the industry average. This is equivalent to taking out a free interest loan to finance working capital. The success has been attributed to the developing and maintaining effective, long term working relationship with suppliers and was able to negotiate exclusively on all product lines. They are able to negotiate and affect a good repayment plan with suppliers. Carpet Right has produced a large Creditor Turnover Ratio in all the years round. The ratios for 2006-2007 are higher than the industry average. The implication of this is that the company may lose its credibility, and the suppliers may decide not to supply credit goods unless cash is paid. Home Retail have its ratios for the three years below the industry average, this means that most of the goods are bought with cash. This is not a good strategy for the company as it may enjoy an interest free loan, and the fund can be employed for other purposes. Working capital This gives an indication of the length of time cash spends tied up in current assets. As said earlier that the company can generate cash more quickly because they make a lot of cash sales, then a negative working capital signifies that is company is being efficiently managed. They order goods from their suppliers making a deal that they will sell them in 58 days (55 days in 2006) and sold to customers before then. Since they do not have to pay the money right away, they can invest the money further, and even earn some interest on it, until payment day arrives. Also, some customers pay upfront and so rapidly, the business has no problems raising cash. In this company, products are delivered and sold to the customer before the company ever pays for them. The high negative figures for 2004 and 2005 stem from the high trade payable days. The Working Capital Cycle figures for King Fisher and Home Retail are positive compared to SCS Upholstery and Carpet Right. This explains that those companies with negative working capital have better cash flow than later. Lower ratio is beneficial to the financial health of the company. 2.6 Financial gearing This occurs when a business is financed, at least in part, by borrowing, instead of by finance provided by the owners (shareholders). A business level of gearing is an important factor in assessing risk. Where a business borrows heavily, it takes up a commitment to pay interest charges and also make capital repayment. This analysis will only focus on gearing ratio and leaves out the interest cover ratio because there is no borrowing that yielded interest. Gearing Ratio: measures the contribution of long-term lenders to the long-term capital structure of a business. The idea is that this relationship ought to be in balance, with the shareholders funds being significantly larger than the long term liabilities. The gearing ratio of SCS Upholstery firm is the lowest compared to its pairs and the industry average. This indicate that there is less debt in relation to the equity issued by the company especially when compared with Home retail that has its gearing ratio even higher than the industry average. Although in 2006 the ratio is times three of 2005 and in 2007, it is almost times four. The reason for this in 2004 and 2005, the only form of liability used in the calculation is the amount due to creditor that is over a year compared to 2006 and 2007 that has more debt. The company only has 19.8% of shareholders funds in the business. In future, if the company is facing any liquidity problem, it can still raise more capital for the company. 2.7 Investment Ratio There are different types of ratios under the investment ratio, and they are analysed below. Dividend yield: this is a measure of the proportion of earning that is being paid out by a firm to its shareholders as dividend. The dividend yield for SCS Upholstery has increased by 79% from 2006 to 2007, and it is even higher than the industry average. It is generally believed that with high dividend yield, there is a danger of the future dividend not meeting the level paid in previous year and the dividend may outgrow the earnings. Carpet right ratio has been consistent over the years, and Home retail has the lowest compared to the to the industry average. Earnings per share This relates the generated earnings by a firm and the one paid to share holders to the number of share issue at a particular period in time. This is also used used to measure the performance of share. It is not really fundamental to comapre different companys earnings per share because different company employ different capital structure. The earnings per share of SCS Upholstery is relatively higher than the industry average. Price-earnings ratio This relates the earnings per share to the market value of the share. It indicates the market confidence of the future earning power of the firm. Also the accounting policies of different company have an impact on this ratio. It shows that the capital value of SCS Upholstery share is 14 times higher than the present level of earnings. The company has the highest price earnings ratio when compared with its pairs and the industry average for the period under study. This indicates that investors will be more confident in the future earning power of carpet right. Dividend payout ratio It measures the amount of earning being paid out by a firm to its shareholders as dividend. The analysis shows that in 2007, SCS Upholstery has the ratio greater than the industry average. This reason for this is that the dividend paid in 2007 is higher than the earnings and this is the reason the same amount of dividend paid in 2006 is paid in 2007. Also this can be explained in terms of the cut in profit as the company embarked on capital project in order to expand its capital base. King fisher had a very high ratio in 2006 when compared to the industry average. Carpet right has had stable ratio over the time period, and only the 2005 ratio is higher than the industry average. 2.8 The capital Structure of SCS Upholstery Form of financing The capital structure will explain the equity financing in the operation of the company. There are two mainly types of firms raising funds, which are; debt and equity financing. Using debt to raise fund lowers the cost of capital, has an impact on increasing shareholders rate of return and also increases the risk of returns. Also, the risk of bankruptcy (firms asset fall short of debt value) will be introduced when gearing is employed relative to equity in financing. When debt is employed in capital structure, it is seen as splitting into two the risks and the earnings generated where one goes to the equity shareholders, and the other to the debt holders. However, if a firm is financed by equity, the shareholders stand the risk of bearing the loss of the company, and can only claim the net cash flow. If this should happen, the market value of the firm will depend on the nature of the cash flows. Although SCS Upholstery has no form of borrowing on their balance sheet, there is however trade credit that has been due for over a year. In order for me to analyse the capital structure (as an investor), the trade payable and amount due to creditors over a period of one year will be regarded to a debt. Capital structure theory Although gearing promises a higher expected rate of return, but it exposes the shareholders to higher risk. It is vital to consider the trade-off between risk and return before concluding if the use of debt is better or not. For the debt holders to have a lower risk exposure, the equity holders have to absorb more risk. It is imperative to note that manipulating capital structure of a firm cannot in any way increase the value of the firm. Modigliani and Miller The theory of capital structure was first introduced by Modigliani and Miller (1958), and they proposed that firms value is dependent on the risk and the level of earnings. Modigliani and Miller analysis of capital structure is based on the assumptions that the capital markets are perfectly competitive. These assumptions are as follows: there are no taxes; information is available and its is costless; there are no transaction costs; interest rate available for both the investors and the firms is the same; Market participants are the price takers and posses no market power. Although in real life, the capital market is not competitive, but the formal model can be loosened up so that analysis can incorporate the real life situation. Therefore, employing gearing in the capital structure of a firm is cheaper the equity financing. Debt-equity ratio The use of debt equity ratio helps a firm to have an idea the amount of fund the company can borrow over a long period of time. This is done by looking the total debt which includes short and long term debt against the total equity of the firm. The table below shows the debt-equity ratio of SCS Upholstery and the other three firms and these are compared with the industry average to know how the debt-equity ratio has been over the years compared to the other firms and the industry average. Company Name 2007 2006 2005 SCS Upholstery 0.39 0.41 1.15 carpet right 0.34 0.59 1.00 king fisher 0.38 0.37 0.23 home retail group 0.07 0.43 0.55 industry average 0.30 0.45 0.73 The table shows that the debt-equity ratio of the firm has dropped dramatically over the years. This indicates that less debt has been incurred compared to equity from 2005-2007, and it is in line with the industry average. The reason for this change is for the fact that during 2006 and 2007, the company did not employ long term trade payable, unlike 2006. This indicates that the company is trying to have its debt equity ratio in line with other companies in the same industry as well as the industry average. 2.9 Capital structure and bankruptcy When a firm adopts more debt in relation to equity, threat of bankruptcy is likely to be faced by such firm especially when the firms assets fall short of the debt value. A firm faced with threat of bankruptcy will have its assets allocated to the creditors and its equity owners bearing the loss (interest of equity holders is eliminated). In assessing the balance sheet of SCS Upholstery to know if there is threat of bankruptcy faced by the firm, the total assets will be assessed against the equity capital and the total liabilities. Looking at the 2007 balance sheet of SCS Upholstery firm, it can be seen that the company is not faced with any threat of bankruptcy even though financial trading is proving difficult for the financial year. If a firm is faced with bankruptcy, the equity holders suffer the loss and therefore on the balance sheet, the equity capital becomes zero. For the periods under consideration for SCS Upholstery balance sheets, it can be seen that each value of the non current asset or the noncurrent asset is sufficient to cover for the loss of equity capital. It can therefore be concluded that the firm is not faced with threat of bankruptcy. It is important to know that the SCS Upholstery has no interest payable for the period under consideration and there has not been any form of long term loan incurred. As a result, the company is not faced with any threat of bankruptcy. Business risk Revenue was 183.8 million for the ten months ended 28 July 2007 (twelve months ended 30 September 2006: 195.8 million). This reflected the extremely tough trading conditions which prevailed during the financial year compared to 2004-6. The trading profit has dropped for about 58% from 2006 to 2007. The corrective action taken included; spare capacity in distribution. This has led increase in the distribution cost to be 5.6% of the 2007 revenue (2006: 4.7%). Also expansion (opening of new stores) and pre-opening and launch cost for the new stores, staff recruitment cost that been taking place has a negative impact on the companys revenue. 2.10 Dividend policy The Lintner 1956 dividend policy model The dividend model proposed by lintner in 1958 has helped to develop a better understanding of how the managers of a firm make their dividend decisions. Based on the interviews with some management of different firms suggested that the dividend to be paid in present year is compared in relation to the one paid in the previous year even if the earnings have fallen, and this dividend increases as earnings increase over time. Increase in dividend will be as a result of difference between the long run target and the dividend paid the last time. This suggests that even if the earnings reduce, the dividend paid may not necessarily reduce. The most important factors in the dividend change are the adjustment to the change in earnings and the payout ratio. Earnings per share/dividend 2007 2006 2005 2004 Earnings per share (pence) 13.68 35.12 38.15 29.76 Dividends per share (pence) 19.0 19 16.5 14 Dividend as a % of earnings (%) 138.89 54.10 43.25 47.00 After applying the lintner model to explain the dividend policy of SCS Upholstery for the period 2004-2005, the adjustment factor (s) is calculated to be a negative coefficient of (-0.055), and the long run target payout ratio (z) was is calculated to be a negative coefficient of (-0.81). This therefore means that the Lintner model will not be applicable to SCS Upholstery Plc. Looking at the trend of the earnings per share, dividend per share and the dividend as a percentage of earning, it can be inferred that dividend paid from 2004-2007 has been increasing although, the same for both 2006 and 2007. The earnings have not been stable over the years and this can be attributed to the logistic issues of capital expenditure that is carried out in 2006/2007. The company can be said to take into account the implication of reducing the dividend paid even with reduced earning, and in 2007 even though the earnings per share is significantly small compared to previous years, the company still maintained the same amount of dividend paid in the previous year, and this is paid from the retain earnings. Any reduction in dividend may suggest to the investors that the company is having some financial problems. Chapter 3 Valuation of the company 3.1 Dividend Valuation Model The dividend valuation model presumes the market of a companys share is calculated using the discounted value of the dividend per share that shareholders are expecting to get. The cash flow is made up of the expected dividend for the period and the proceeds expected from share sale at the end of that period to determine the present cash flows, the discount rate is used. Where: represent the market value of a share; dividend expected to be paid in period t; price of the share expected at the end of period N; ris the discount rate and r; and is the number of years planned for the period. The firm share price will be undervalued if the current share price is less than the estimated value of the share, and therefore investors will see good prospects of buying the companys share. As investors are seeking undervalued shares and will therefore take advantage of any market error that occur even if it is not for long. Applying the above first equation, it is necessary to find the anticipated share price at the end of the period N, the discount rate (r) and the growth rate (g). The first calculation is based on the growth rate which is expressed as; g = b * k Where b = retention ratio; and k = rate of return on equity (average for the four years) The retention ratio is calculated by subtracting the average payout ratio from one. The dividend per share for 2007 will not be employed in this analysis because the earnings per share for that period are higher. Therefore, the payout ratio will only be calculated for a three year period. The payout ratio which is calculated using the formula; Dividend for the periods Earnings per share The retention ratio is calculated as b = 1 payout ratio; In calculating the growth rate using the formula, b = 1 0.48 = 0.52 Therefore, the growth rate gives; g = 0.52 * 0.306 = 0.159 Looking at the dividend per share paid in relation to the earnings per share for the period under study, the earnings per share in 2007 is relatively lower than the dividend paid. It explains why the same dividend paid in 2006 is paid in 2007. This implies that is company is having issues (even though its still paying the same dividend) with its level of earnings. This is however a matter of concern as to the financial position of the company. Therefore, in calculating the expected dividend, instead of using the calculated growth model (0.159), the average percentage change in dividend for the period is used calculated as (0.11). Year 1 = D1 = Do (1 + g) = 19 (1 + 0.11) = 21.09 Year 2 = D2 = 21.09 (1 + 0.11) = 23.41 Year 3 = D3 = 23.41 (1 + 0.11) = 25.99 Year 4 =D4 = 25.99 (1 + 0.11) = 28.85 The dividend growth rate has increased by 11% from year one to year two, and from year three to year four, there is an increase of 11%. The growth rate has been consistent and this can be explained with the fact that there has been drop in the earnings of the company in 2007. The cornerstone of modern finance is the Capital Asset Pricing Model, CAPM. Investor who wants to invest in the market portfolio must be prepared to earn some level of risk. Because of the investors risk adverse nature the portfolio is chosen in the manner that the risk is minimised to its barest minimum and maximise the expected return. To calculate the discount rate (r), the Capital Asset Pricing Model is adopted and the expected rate of return is expressed as; r = Rf + [E(m) Rf] (1) Where; Rf = risk free rate of interest at a given period; E(m) = return of the market portfolio return expected in a given period; and = measurement of risk [E(m) Rf] = historical risk premium in UK (0.042) The risk free of interest rate is calculated by finding the annual average of the risk free FT All-share in UK for the period January 1990-december 2008 which gives 0.0624. The beta (3.66) that measure the risk is calculated by running a regression of the companys excess return against the excess market return. The companys excess return is calculated using the historical share prices for the period January 2003- June 2008. The UK FT All-share of the excess market return for the same period is used as the as the excess market return. Comparing the calculated beta to the one on yahoo finance which is 3.83 (with industry average of beta 0.63), then it is in line and I decided to use the beta that I regressed because of the time period considered for them market share price. 2007 2006 2005 2004 average payout ratio 0.54 0.43 0.47 0.48 return on equity 0.43 0.35 0.13 0.31 0.306 The discount rate of return r is calculated as follows: r = Rf + [E(m) Rf] = 0.0624 + (0.042) * 3.66 = 0.21612 This high figure of the discount rate of return is as a result of high beta risk of the company. PO = 21.09 + 23.41 + [ 25.99 * 1 ] (1+0.21612) (1+0.21612)2 (0.21612-0.159) (1+0.21612)3 It is important to note that the number of periods employed is three years are used in the valuation. This is because it is assumed that investors may not believe in the long term prospects of the company due to its latest low earnings. Constant rate growth model Estimating the dividend indefinitely is not viable, it is therefore necessary to establish a regular dividend model. This model is not necessarily have to follow one period to the other, but at least start at some point. For dividend to be constant for a period of time, the equation for the valuation will be taken in form of perpetuity. However, the retained earning of a companys is usually to finance some long term investment so far the dividends, assets, and earnings are expected to produce a constant growth rate referred to as (g). In the constant dividend growth model, the dividend paid in future is expressed in terms of the dividend that will be paid now, as well as the growth rate. In adopting the equation below, the discount rate must be greater than the growth rate of the company rg, otherwise the equation gives a share price that is infinite. The model implies that dividends can be paid out from generated earnings without having any impact on the future earnings generating capacity of the firms assets. It means that in calculating the earnings, the amount charged to depreciation will be equal to the reinvestment that is needed to maintain the asset base of the company. The constant rate of growth model is represented as follows: P1 = Do( 1 + g) r g PO = 19(1+ 0.11) (0.21612 0.159) PO = 385.52 P1 = Do r g = 19/ (0.21612 0.159) = 332.63 Also, explaining in terms of the growth rate (g), that is: g = b * k With the assumption that dividends are not growing it is also possible to assume that the company will not be able to grow. Earnings are no longer retained and therefore there will be little prospects for growth. Also, as growth rate is a factor of retention ratio which is now zero, then it is safe to assume that the growth rate for the firm is zero: P1 = Do r = 19/0.21612 = 87.9 3.2 Earnings Valuation Model The earnings valuation model is important because investors/shareholders have the right to the companys earning. This could either be in form of dividend or used in financing further investment. Since dividends are paid from earnings, the firms earning power determines the market value. In the share valuation of the company, the level of earnings and the investment play crucial role. The earnings model helps in differentiating between the contributions of firm future investment from its existing contribution of assets. The investment of the firm has to guarantee higher rate of return for the shareholders in order for the market value to go up. The net value of a companys investment after deducting the cost associated is given by the net present value. Since the basis of this analysis is on the future contributions of the investments to the present share value, it is imperative to discount the expected net present value back to present which gives the present value of growth opportunities (PVGO). Earnings model does not depend on the constraint on the type of investment that is being undertaken by the company. It is not necessary to state the investment lives, and the cash flows may either be irregular or constant. This is because of the assumption that investments are in perpetuity form in order for earnings model to be comparable to the dividend model. The Gordon Model assumptions are as follows: The investments of the company are financed from retention; Retained earnings are the same; The same amounts of dividends are paid out (1-b); The earnings produced from the assets are constant in perpetuity; Rate of return (k) is constant; and A constant cash flow is produced by all investments in perpetuity. The earnings model valuation can be written and calculated as: Vo = E1 + PVGO r where: PVGO = present value growth opportunity Vo = E1 + E1[b(k/r 1)] r r g E1 = EPS (1+g) = 13.68 (1 + 0.11 = 15.185 Therefore: Vo = 15.185 + 15.185[0.52(0.306/0.21612) 1)] 0.21612 (0.21612 0.159) = 127.75 The figure is low but it is understandable because of low 2007 earnings compared to the dividend paid. As noted earlier, the company does not really have any prospects for growth and hence it is also be assumed that the share value is a function of earnings and discount rate. Vo = E1 r = 15.185/0.21612 = 70.26 3.3 The valuation multiplier model The valuation multiplier is analysed in terms of the analysts appropriate price-earnings ratio for share. The valuation model is equivalent to the prevailing price-earnings ratio when the market is assumed to value share correctly. The valuation multiplier model is expressed as: = P/E * NET earnings Number of ordinary shares The price-earnings ratio used in this analysis is the 2007, and this is assuming that hence forth, there is no growth as the earnings in 2007 is lower than the dividend. Substituting into the equation, the value gives: = 14.26 * 4616 33753 = 1.95 If I also assume that there is growth rate in 2007 and after this period, the rate becomes the same. This means that (1+g) will be added to the analysis. = P/E * NET earnings (1+g) Number of ordinary shares = 14.26 * 4616 (1+0.11) 33753 = 2.17 3.4 The free cash flow valuation Another method of the valuation model is the free cash flow valuation, and it is the cash flow that is accessible to the equity share holders and the firm net of capital expenditure. Any firm can use the free cash flow model because it gives a better picture of the value of the firm beyond the constant growth model. A way of doing this is by discounting the free cash flow for the firm at the weighted cost of capital in order to get the firms value, after which the then-existing debt value is subtracted to get the equity value. The free cash flow of a company (FCFF) is given as: In the case of SCS Upholstery, there is no interest payment because the company did not incur any debt, so as a result, the weighted average cost of capital (WACC) cannot be determined so the return on equity will be used as the WACC. The table below shows the figures for net earnings, depreciation charge, capital expenditure and total property, plant and equipment PPE. 2007 2006 2005 2004 net earnings 4616 11808 12651 9606 depreciation charge 4002 3358 2979 2979 capital expenditure 8826 14356 4369 4924 total PPE 40256 36113 25635 23432 The valuation of the cash flow involves calculating the net cash flow for the period under consideration. The net cash flow is summarized in the table below and the net cash flow is calculation using the formula: Net cash flow = net earnings + depreciation capital expenditure 2007 2006 2005 2004 net earnings 4616 11808 12651 9606 depreciation 4002 3358 2979 2979 capital expenditure 8826 14356 4369 4924 net cash flow -208 810 11261 7661 It is necessary to forecast the earnings, the capital expenditure and the depreciation charge into the future. For the purpose of this analysis, a 5-year forecast is analysed. In order to forecast the net earnings into the future, the net earnings growth using the net earnings is used and the average is calculated. The average will be use to project the future forecast. 2004-2005 30.73% 2005-2006 -6.66% 2006-2007 -60.91% average -12.28% For capital expenditure, it is necessary to relate the purchase of property plant and equipment for the year to the total property, plant and equipment (PPE) of the company. The analysis gives: 2007 21.92% 2006 39.75% 2005 23.78% 2004 21.01% average 26.62% Applying the same analysis to depreciation by relating the depreciation for the year to the total PPE, the percentage is used to forecast depreciation for the period of 5 years. 2007 9.94% 2006 9.30% 2005 11.62% 2004 12.71% average 10.89% It is also necessary to find average growth rate on property, plant and equipment PPE from 2004-2006. This average growth is used to forecast the capital expenditure and the depreciation for the next 5 years and it is analysed by relating the values of the total PPE from year to year. 2004-2005 9.40% 2006-2006 40.87% 2006-2007 11.47% average 20.58% The 5-year forecast The 5-year forecast will be for the net earnings, capital expenditure, and the depreciation charges. This will therefore be from 2008-2012. Earnings forecast Recall that there has been a negative growth in the net earnings and therefore, for the purpose of forecasting the earnings, an assumption is made that after 3-year forecast (2008-2010), the company will start regaining its financial position back to what it was, so the same rate at which the earning has dropped (-12%) will be assumed to be the same rate it will pick up for the next 2 years (12%). As a result, the forecast gives: 2008 = -12% * 4616 = 4062 2009 = -12% * 4062 = 3575 2010 = -12% * 3575 = 3146 2011 = 12% * 3146 = 3523 2012 = 12% * 3523 = 3946 year 2004 2005 2006 2007 2008 2009 2010 2011 2012 net earnings 9606 12651 11808 4616 4062 3575 3146 3523 3946 Looking at the previous earnings (2005-2006), there has been sustainable growth from 2004-2006, and a substantial decline in 2007. The graph below shows the rate of growth with the forecasted figures from 2008. It can be seen that the same rate at which the earnings decline from 2007 is the same rate at which it starts regaining its original position. PPE forecast In order to forecast the depreciation charge and capital expenditure, it is necessary to forecast what in the PPE will be in the next 5 year, and this is done using the average growth rate of PPE (20.6%) on the total PPE FOR 2007 (40,256). 2008 = 40256 (1+ 0.206) = 48549 2009 = 48549 (1 + 0.206) = 58550 2010 = 58550 (1 + 0.206) = 70611 2011 = 70611 (1 + 0.206) = 85157 2012 = 85157 (1 + 0.206) = 102700 Capital expenditure CAPX The forecast above can then be used to find the capital expenditure and the 2008 = 48549 * 0.266 = 12914 2009 = 58550 * 0.266 = 15574 2010 = 70611 * 0.266 = 18783 2011 = 85157 * 0.266 = 22652 2012 = 102700 * 0.266 = 27318 Depreciation To be able to forecast the depreciation rate into the future, the depreciation rate of 10.9% is multiplied with 2008 = 48549 * 0.109 = 5292 2009 = 58550 * 0.109 = 6382 2010 = 70611 * 0.109 = 7697 2011 = 85157 * 0.109 = 9282 2012 = 102700 * 0.109 = 11194 Net cash flow Net cash flow = net earnings + depreciation capital expenditure 2008 = 4062 + 5292 12914 = -3560 2009 = 3575 + 6382 15574 = -5617 2010 = 3146 + 7697 18783 = -7940 2011 = 3523 + 9282 22652 = -9847 2012 = 3946 + 11194 27318 = -12178 The forecasted net cash flow gives negative figures, and this is as a result of the rate the huge amount of capital expenditure incurred during the 2006-2007. This has resulted in the negative forecast. Applying the capital expenditure to forecast the cash flow pose a big problem. Therefore, the percentage growth in the capital expenditure (from the cash flow statement) for 2006-2007 is applied. = 14356 8826 14356 = 0.3852 Rate = 1 0.3852 = 0.6148 = 61.4 % This rate is then used to multiply the capital expenditure for 2007 in order to forecast for 2008. I am also assuming that the company will not want to spend much on the CAPX in future, so the same rate is applied throughout for the cash flow forecast. This will enable me to have forecasted positive cash flow analysed below: 2008 = 61.4% * 8826 = 5419 New cash flow forecast 2008 = 4062 + 5292 5419 = 3935 2009 = 3575 + 6382 5419 = 4538 2010 = 3146 + 7697 5419 = 5424 2011 = 3523 + 9282 5419 = 7386 2012 = 3946 + 11194 5419 = 9721 The cash flow forecasted is then discounted to find the value of the company. V0 = CF1 + CF 2 + CF3 + CFn + Vn (1+r) (1+r)2 (1+r)3 (1+r)n (1+r)n V0 = CF1 + CF 2 + CF3 + CF4 + CF4 * 1 (1+r) (1+r)2 (1+r)3 (1+r)4 (r-g) (1+r)5 The weighted average cost of capital (WAAC) because no interest charge on the financial statement. This is due to the fact that the company did not incur any borrowing. Therefore, the average return on equity is (k=r) is used as WAAC. The value of the company is computed using the formula above: V0 = 28.052.61 To get the share price per share, the value of the company is divided by the number of outstanding shares in 2007. Share price/share = V0/N0 Share price/share = 28,052.61 33,753 = 0.8311 = 83.11 pence

Example Answers to Tasks on Industry Experience - Free Essay Example

Sample details Pages: 7 Words: 2055 Downloads: 7 Date added: 2017/06/26 Category Management Essay Type Essay any type Did you like this example? Section 1: Use methods to arrange industry experience that will support the development of a management report in an appropriate service industry context There are a large number of placement host organizations in the market. For the right job, the most basic need is to select the right one of them. Therefore, while going on through the advertisements on web, newspapers, or other media; one should keep in mind to select the placement host organizations that suit best for the individual. Don’t waste time! Our writers will create an original "Example Answers to Tasks on Industry Experience" essay for you Create order The organization shall be good enough to provide a good job with proper reliability. For the report purpose, I had met with number of organizations to discuss for the job availability. I referred various news papers and online advertisements to know about the vacancy. I approached UK Jobs Network, Connection Employment Agency, and Actis Recruitment. All these organizations had their own policies for registration of aspirant. At Jobs Network, I had a discussion online with Mr. David. He was a good person to talk. He made me aware of the policies their organization follows. The person also seems to have strong relations in corporate to give one an opportunity for the job. During my discussion, he gave me various options to join. However, most of them were outside Manchester. Thus, the approach of the organization was noted to be mostly outside the city. Thereafter, I met Mr. James from Connection Employment Agency. There I came to know the rules and regulations that the industry basically follows. They give an opportunity to sit for interviews for a limited number of times, during these sessions, if candidate is not selected, he has to repay the sum (although at some discount) to extend the number of options for placement. Thereafter, I met Katie from Actis Recruitment. She was too energetic to work in the industry. Her act of communication deserves appreciation. Thus, she was amongst the energetic individuals I had met in the industry. She offered me a good number of job offers in Manchester. She also guided me for the approach to prepare for these interviews. She was noted to be helpful to an aspirant who looks for job. Therefore, her help can act as a catalyst to motivate an individual to perform even better. 1.2: Industrial experience is always helpful in the learning process for an individual (Darrah, 1996). Therefore, it becomes crucial to go through the practical experience for the job. My selection of an IT company as a sales executive was the choice. I expected to have a good offer from the company. My practical experience in working within an organization can help me know about the problems that are usually found in real life situation. Therefore, preparation of a management report can be easier if one is aware of the practical situation. One can better know about the exact HR policies, for an example, or knows about the operations task managed by an organization (Anderson et al., 2001; Drucker, 2007). One can also know whether there is an opportunity for growth in the particular segment or not. Based on this analysis, one can better make a decision for what all strategies are successful in an organization, and what shall be the approach. These all discussions can act as a strong back bone for the preparation of management report. Section 2: Prepare and agree aims, objectives and targets of the management report with the appropriate manager within the selected organisation (append a copy of your job description where possible) Answer 2.1: The below were the aims, objectives and targets for the management report:- Aims The aim of management report is to analyse the extent to which an individual working in the HR department can gain benefit from the process of personality Psychometric test. This would be of great help for the placement organization too for selection of right pool of candidates and guiding them to work in the right direction. Objectives In order to attain the aim of the study, following were the objectives designed: Understand how the personality and psychometric tests can help the management make clear conceptions with the recruitment and selection consultancy, and to send right pool of people for vacant position. Targets The targets for management reports are to have a clear understanding of how can these tests help the organization in carrying on their recruitment and selection process. Therefore, the following were the targets fixed for the management report: To differentiate the people based on their personality and psychometric skills, to increase the proportion of selectors in interviews, to know how beneficial can these tests be to pass a good pool of talent to the organizations. 2.2 The aims and objectives of the management report would help in attaining better outcomes. This report is expected to help me understand clearly about the concepts associated with personality and psychometric tests. This is of quite importance, because in case an individual is selected wrongly, the human resource department is liable for the same (Edenborough, 2007; Tomas and Furnham, 2005). Therefore, the responsibility of HR department increases for the right selection of an individual for the vacant position. This brings into consideration thorough evaluation of the aspirants. Therefore, the tests would also help Mr. Jamesà ¢ÃƒÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ÃƒÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¾Ãƒâ€šÃ‚ ¢ agency to select the right pool of people to send them in interview and selection process further in an organization (Fear Chiron, 2002). This way, the right candidate could be sent at the right place. The tests would help James to know about the skills that an individual has. Based on the ski ll set, and the demand of talent at different places, he can arrange interviews of candidates. Therefore, the results are attained at an optimal level. This would be of great help for James as the right candidates are only sent by him to apply for the vacant positions. This would increase the rate of conversion of application to conversion and joining of job. This even helps candidates like me to get into the right organization prior to joining it. I would be able to know about the skill set I have and choose the right place for me to work. The rate of employee turnover, which is the major problem in todayà ¢ÃƒÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ÃƒÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¾Ãƒâ€šÃ‚ ¢s scenario, would even be controlled through this approach. Therefore, it would result in favour of the placement agency, the candidates, as well as the organizations due to better match of skills and the demand, resulting in overall benefit for all the entities involved in the process. Section 3: Monitor and evaluate progress in achieving aims, objectives and targets, using relevant sources of information. Answer 3.1: The above sections discussed about the suggested approach. However, it is quite crucial to properly evaluate and monitor the efforts to ensure that the results are achieved (Sperandeo Brown, 1993; Fahad, 1993). For this, there should be some practice at place to check for the results that are achieved from the efforts put by the approach. For this purpose, the collection of information plays a crucial role. Therefore, efforts are made to ensure that a good bunch of information is collected about the organizations, their rate of turnover for employees, and the rate of conversion of application for job to selection. The rate of conversion of an employee from application to conversion was noted to be 7% in the organization. This was a good ratio. However, there are still the opportunities for improvement. Based on this, the efforts are made to select the potential candidates from the list of applicants. Therefore, the information will be elaborated further to help in proper evaluatio n of the outcomes. The use of this approach can result in attainment of better results. There would be proper control over the outcomes through this approach. Therefore, the right set of skills can result in benefits to the individuals involved. The information, which is of supreme role for the analysis and evaluation, shall therefore be collected thoroughly to attain outcomes. 3.2 For evaluation of the strategy, the use of various analytical techniques is available. Proper review about how the suggested strategy can be of help to the individuals, the agency along with me, made use of the statistics of candidates who had joined different organizations. For the organizational previous employees, who had been placed without the use of personality and psychometric tests, the records are noted. This record shows the duration for which an individual had worked for the organization. Therefore, this illustrates the number of months for which the candidate had served the organization. This shows about the employee turnover rate of the organization. This is then compared with the rate of employee turnover after the incorporation of personality and psychometric tests to select an individual. Therefore, the strategy is expected to be of great help in evaluation of the candidate (Edenborough, 2000). This helps in sending of right candidate to the right place. The rate of conversion of candidate from applying the job to being selected is also taken into consideration. This also helps in the same way to know about the associated benefits of the approach. This would also act as favourable approaches for the right evaluation of the strategy incorporated. Thus, the aims and objectives would be thoroughly accessed to know about the state at which the efforts results in outcomes. This would entail the success of efforts by the suggested strategy. The results would act favourably towards the growth and success of placement agency too. The brand building would be one of the characteristic for the organizations. Section 4: Write a management report which determines conclusions that are consistent with your aims, objectives and targets, identifying data and information to support the conclusions. Present the report in an appropriate format outlining the research undertaken and analyse the outcomes Answer The management report plays a crucial role in the cycle of management. At this instance, we had discussed about how the experience of meeting with three different organizations had helped me in understanding the concept of industry. My meeting with UK Jobs Network, Connection Employment Agency, and Actis Recruitment had helped me in understanding the concepts associated with organizations. The aim for the report was described as to understand the extent to which an individual working in the HR department can gain benefit from the process of personality Psychometric test. This approach was expected to be of great help for the placement organization for selection of right pool of candidates and guiding them to work in the right direction. Additionally, this would help in proper job selection by the candidate as well. Therefore, the concept has associated benefits. The strategy of proper evaluation would result in gains for the organization (Atlanta Magazine, 2007). So as to come up with the solution, some of the objectives were designed to ensure that the aims are achieved. These objectives include understanding how the personality and psychometric tests can help the management make clear conceptions with the recruitment and selection consultancy, and to send right pool of people for vacant position. Based on this, the proper personality and psychometric tests would be used by the consultancy agency. This would help in right selection of candidates for the job vacancies. The tests would help in knowing the skill set that an individual possess. Based on the skill set found in an individual, the opportunities would be provided for the candidates to face interviews. This would act in favour of the agency, because the rate of selection would be improved through this approach. Additionally, this would be of help for an individual to perform well in the interviews, because of the interest area of candidate (Brabender et al., 2004). Therefore, the agencyà ¢ÃƒÆ ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ÃƒÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¾Ãƒâ€šÃ‚ ¢s use of personality and psychometric tests would help in obtaining results. The approach would help organizational results as well. However, the main point is to analyze the responses of the tests in proper manner. This, if not undertaken in the right manner, can result in losses. Additionally, the costs involved with these tests would increase burden on the pockets of aspirants. These candidates need to invest more for the expenses of agency to come up with the solution. Thereafter, the agency should make use of experts to analyze the results in a proper manner. This way, the agency would be able to make better suggestions for individuals to join different organizations. There would be alignment of demand and supply, resulting in improved conversion of application for job to final selection.