Starbucks Humana and Ethics Essay Example For Students

Starbucks Humana and Ethics Essay This paper analyzes the moral establishments of two organizations working in altogether different markets. Starbucks’ is a chain of cafés gaining practical experience in gourmet espresso lines. Starbucks depends on sound moral principals penetrated through the focal center of its business activities. The consequence of a few tests prompts an end that Starbucks works together in a gainful and ethically stable way. Humana Inc. is a huge Health Maintenance Organization (HMO) with activities that place it third among the top players in the field. As opposed to Starbucks’, research exhibits that Humana, and seemingly just for benefit HMO’s, does not have a sound moral establishment. The limits between creating a solid return and giving quality clinical consideration produce irreconcilable situations, which for all included lead to awful choices and good dilemas. The ends came to in this paper are the aftereffect of broad examination led through the Internet, individual meeting, writing audit, and legitimate discoveries. The accord drawn from this investigation is that Starbucks is a brilliant illustration of corporate social duty and Humana isn't. Starbucks is the United States number one strength espresso retailer and a nearness known the world over. It has more than 2,600 cafés from Asia, Canada, the United Kingdom and the United States. Starbucks sells espresso as well as: baked goods, food and beverages, cups, and espresso making frill. Starbucks offers their beans to eateries, aircrafts, inns, and via mail request. We will compose a custom paper on Starbucks Humana and Ethics explicitly for you for just $16.38 $13.9/page Request now Starbucks statement of purpose is †¦Ã¢â‚¬ to build up Starbucks as the chief purveyor of the best espresso on the planet while keeping up our firm standards as we develop. The accompanying six core values will assist us with estimating the propriety of our decisions:† ? Give an extraordinary workplace and approach each other with deference and nobility. ? Hold onto assorted variety as a fundamental segment in the manner we work together. ? Apply the best expectations of greatness to the buying, cooking, and new conveyance of our espresso. Grow energetically fulfilled clients constantly. ? Contribute emphatically to our networks and our condition. ? Perceive that gainfulness is fundamental to our future achievement. This gathering accepts that Starbucks is a moral and shows moral duty by the activities they participate in to help their central goal. Their numerous helpful endeavors are illustrated in this paper. Starbucks is dynamic in a few distinctive compassionate endeavors. While the helpful gifts of an association can't be demonstrated to make a moral organization, there has all the earmarks of being merit in these endeavors. Starbucks gives now is the right time, cash, and exertion to advance saving nature, education, human rights, and AIDS research. With this much helpful gifts, Starbucks gains the presence of a moral and good situation in its industry. Starbucks Environmental Mission gives a structure to dynamic at Starbucks. Starbucks Environmental Mission proclamation expresses that we will satisfy this crucial a guarantee to: (1) comprehension of ecological issues and imparting data to our accomplices, (2) creating inventive and adaptable answers for achieve change, (3) endeavoring to purchase, sell and utilize naturally well disposed items, (4) perceiving that financial duty is basic to our natural future, (5) ingraining ecological obligation as a corporate worth and (6) estimating and observing our advancement for each undertaking. Starbucks manures its espresso beans, reuses its burlap packs, and works with a counseling firm to investigate new reusing plans for its stores. Starbucks activity to build up an ecologically benevolent cup has not been fruitful. After a two-advertise trial of the cup it has quit attempting to create such a cup. The aftereffects of the test have not been uncovered. Starbucks is dynamic in the undertaking of education. Advancing proficiency has been one of its fundamental goals. Starbucks has banded together with various famous people to advance proficiency. .u3ca583388f0a4ecea61224b77faffbaf , .u3ca583388f0a4ecea61224b77faffbaf .postImageUrl , .u3ca583388f0a4ecea61224b77faffbaf .focused content region { min-tallness: 80px; position: relative; } .u3ca583388f0a4ecea61224b77faffbaf , .u3ca583388f0a4ecea61224b77faffbaf:hover , .u3ca583388f0a4ecea61224b77faffbaf:visited , .u3ca583388f0a4ecea61224b77faffbaf:active { border:0!important; } .u3ca583388f0a4ecea61224b77faffbaf .clearfix:after { content: ; show: table; clear: both; } .u3ca583388f0a4ecea61224b77faffbaf { show: square; change: foundation shading 250ms; webkit-progress: foundation shading 250ms; width: 100%; mistiness: 1; change: murkiness 250ms; webkit-change: haziness 250ms; foundation shading: #95A5A6; } .u3ca583388f0a4ecea61224b77faffbaf:active , .u3ca583388f0a4ecea61224b77faffbaf:hover { obscurity: 1; change: darkness 250ms; webkit-change: darkness 250ms; foundation shading: #2C3E50; } .u3ca583388f0a4ecea61224b77faffbaf .focused content territory { width: 100%; position: relative ; } .u3ca583388f0a4ecea61224b77faffbaf .ctaText { outskirt base: 0 strong #fff; shading: #2980B9; text dimension: 16px; textual style weight: intense; edge: 0; cushioning: 0; text-embellishment: underline; } .u3ca583388f0a4ecea61224b77faffbaf .postTitle { shading: #FFFFFF; text dimension: 16px; text style weight: 600; edge: 0; cushioning: 0; width: 100%; } .u3ca583388f0a4ecea61224b77faffbaf .ctaButton { foundation shading: #7F8C8D!important; shading: #2980B9; fringe: none; outskirt range: 3px; box-shadow: none; text dimension: 14px; textual style weight: striking; line-stature: 26px; moz-fringe span: 3px; text-adjust: focus; text-design: none; text-shadow: none; width: 80px; min-tallness: 80px; foundation: url(https://artscolumbia.org/wp-content/modules/intelly-related-posts/resources/pictures/basic arrow.png)no-rehash; position: supreme; right: 0; top: 0; } .u3ca583388f0a4ecea61224b77faffbaf:hover .ctaButton { foundation shading: #34495E!important; } .u3ca583388f0a4ecea61224b77faff baf .focused content { show: table; tallness: 80px; cushioning left: 18px; top: 0; } .u3ca583388f0a4ecea61224b77faffbaf-content { show: table-cell; edge: 0; cushioning: 0; cushioning right: 108px; position: relative; vertical-adjust: center; width: 100%; } .u3ca583388f0a4ecea61224b77faffbaf:after { content: ; show: square; clear: both; } READ: Who truly composed shakespeare's work EssayDuring the 1999 baseball season the â€Å"Read. Dream. Develop. Out of the Park †Into the Books† program joined forces Starbucks with Mark McGwire. For each grand slam that McGwire hit Starbucks gave $5000. 00 to help children’s noble cause in the network where the game was played. Starbucks ensured at least $250,000 for the season. Starbucks has likewise banded together with Doonsebury visual artist, Gary Trudeau by selling Doonesbury items at its bistros. All returns go to nearby proficiency programs. The principal year of this organization raised over $300,000. Notwithstanding these increasingly charming undertakings, Starbucks has likewise gathered books, gave by its clients, for the All Books for Children book drive. The books will be circulated to neighborhood association across America. Starbucks has joined forces with CARE, a universal help association, to advance human rights. Notwithstanding working coffeehouses around the globe Starbucks providers are situated in Latin America, Africa, and Southeast Asia. A few activities that it is associated with are training and proficiency programs, provincial network advancement and conservation of national parklands. Starbucks is the primary US agrarian item organization to embrace a corporate proclamation with respect to human rights. The announcement is called Starbucks Coffee Company’s Framework for a Code of Conduct. Starbucks was granted the National Leadership Award by AIDS Action. Helps Action is the national voice on AIDS, speaking to Americans influenced with HIV/AIDS and 2,400 network based associations that serve them. Starbucks got this honor for the endeavors of thousands of Starbucks representatives who have upheld AIDS causes by gathering pledges and volunteerism and for promoting the Red Ribbon Sampler, an item intended to fund-raise for AIDS specialist organizations. In 1997 three Starbucks workers were killed in a Washington D. C. store. Starbucks reacted by making the Starbucks Memorial Fund. All returns from that store are presently given to D. C. good cause that advance brutality counteraction and casualty help. In June of 1999 $75,000 was given to eight associations. Starbucks calls its workers accomplices. It offers investment opportunity programs. It urges its representatives to be effectively included it the network by giving budgetary help and item gifts to associations where its workers give their time. There have been a couple of unsatisfied clients with Starbucks, as is commonly the situation with any huge shopper centered organization. A couple of the displeased clients set up a site, www. starbucked. com, to permit different clients to vent their dissatisfactions. Humana is the third biggest oversaw medicinal services organization in the United States. The overall size of the association combined with characteristic irreconcilable situations has driven Humana, among different HMO’s, to get engaged with choices of sketchy moral substance. Humana upholds the vision, â€Å"To improve the soundness of our individuals, and offer some benefit to our clients, accomplices and investors. † A fundamental inquiry is how well would they say they are seeking after their vision? This gathering accepts that Humana is a case of an organization with moral uprightness issues. No conversation of one HMO might be finished without taking a gander at the business as a who

Cynognathus Facts and Figures

Cynognathus Facts and Figures Name: Cynognathus (Greek for hound jaw); articulated moan NOG-nah-in this manner Natural surroundings: Forests of South America, South Africa, and Antarctica Chronicled Period : Center Triassic (245-230 million years prior) Size and Weight: Around three feet in length and 10-15 pounds Diet: Meat Recognizing Characteristics: Pooch like appearance; conceivable hair and warm-blooded digestion About Cynognathus One of the most interesting of every ancient animal, Cynognathus may have been the most mammalian of all the alleged warm blooded creature like reptiles (in fact known as therapsids) of the middle Triassic time frame. In fact delegated a cynodont, or pooch toothed, therapsid, Cynognathus was a quick, savage predator, much like a littler, sleeker variant of a cutting edge wolf. Plainly it flourished in its developmental specialty, since its remaining parts have been found on no under three mainlands, Africa, South America and Antarctica (which were all piece of the goliath landmass Pangea during the early Mesozoic Era). Given its wide circulation, you might be astonished to discover that the class Cynognathus incorporates just a single legitimate animal types, C. crateronotus, named by the English scientist Harry Seeley in 1895. In any case, in the century since its disclosure, this therapsid has been known by no under eight unique variety names: other than Cynognathus, scientistss have additionally alluded to Cistecynodon, Cynidiognathus, Cynogomphius, Lycaenognathus, Lycochampsa, Nythosaurus and Karoomys! Further convoluting issues (or improving them, contingent upon your viewpoint), Cynognathus is the main recognized individual from its ordered family, the cynognathidae. The most intriguing thing about Cynognathus is that it had numerous highlights ordinarily connected with the main ancient warm blooded creatures (which developed from therapsids a huge number of years after the fact, during the late Triassic time frame). Scientistss trust Cynognathus brandished a thick layer of hair and may have brought forth live youthful (as opposed to laying eggs, as most reptiles); we know beyond all doubt that it had a very warm blooded animal like stomach, which empowered it to inhale all the more effectively. Most startlingly, proof focuses to Cynognathus having a warm-blooded, mammalian digestion, very dissimilar to a large portion of the relentless reptiles of its day.

Did the quadratic formula explode

Did the quadratic formula explode In one of the 28 (and counting!) responses to my last post, Kelly wrote, I just wish the bloggers themselves posted more. Well, there have been several things holding me back from that. The stacks and stacks of applications I still have to read. The other work (yes, other work) I have to do for the office. My silly notion that when I blog, it should be a momentous occasion, where I have something important to say (Im trying to get over this feeling). The feeling that I shouldnt blog until I have responded to all of your comments and emails (this time, Ive clearly ignored this one, sorry!). My desire to continue with my series of Not the same few colleges, which also consumes a reasonable amount of time writing/researching. So, from here on out, Ill try to post more frequently, with shorter posts. Also, I think I will hereby end my series of Not the same few colleges, but I hope my point is made. Yes, we do our best to get you psyched about MIT. But anxiety runs high, as youve demonstrated in the comments. And well defer 5 out of 6 of you, and sadly, we ultimately will not be able to admit everyone, or even most of you. But regardless of where you end up for school, youll be able to get a great education, even if its not one of these brand-name, looks-good-on-a-bumper-sticker colleges. More soon

Striving For Counseling Essay - 1646 Words

Striving for Accuracy and Persisting: The beginning of the semester my English teacher informed us that he will allow the class to revise papers if we do not like the grade we received on the first draft. Well, on a paper I thought I did excellent on came back with an eighty percent, I was a little disappointed. Of course, this is only the first paper so I’m getting used to how he grades papers and what he is looking for. It’ll be super helpful being able to revise the paper to improve my grade, taking his feedback to do better on the next draft and future papers in order to improve constantly. It’s been about three months since I was able to babysit one of my neighbor’s children. Their youngest, Timmy, was starting preschool this year†¦show more content†¦I had never had Dunkin Donuts before in my life because the closest one is about forty minutes away, so we decided to drive out there for the first time. It was something I wish I would be able to have more, it was so good, I got a frozen coffee with a flavor shot of vanilla and it tasted like ice cream, something else I love. As for now, since it’s too far away, caribou will have to suffice. During my visit today with McKenna, she was on the soft floor this time. In the beginning we were playing house in the kitchen, but soon moved over to the Lincoln Logs. She wanted to make a house for these little plastic pigs that were also at the station, so we started to build. As we got about half way high, we ran out of the longer logs and had to figure out a way to continue building to finish the house. I waited a while to see if she would figure something out, and she grabbed two of the smaller sized logs and put them on top of the longer ones, connecting them, allowing us to continue to build a higher house. The pigs were safe and sound. Applying Past Knowledge to New Situations and Remaining Open to Continuous Learning: My favorite thing to do once classes are finished with I am able to go rock climbing around six o’clock because it’s a way to relax from classes. There are a few routes I have been trying to get for the past few times I’ve gone, and I’ve almost been able to reach the top but miss it by a few rocks. Today was different, I was finally able toShow MoreRelatedSigmund Freud s Theory Of Psychology Essay967 Words   |  4 PagesIndividual. Three people that worked on these theories are Sigmund Freud, Carl Jung, and Alfred Adler. Each of these men approached psychoanalysis in both similar and individual ways, and have their own theories that will be further discusses within this essay. Sigmund Freud’s theory is said to have probed deeper into the human mind than the others that can before him. Part of his theory was about the mind. â€Å"On the surface is consciousness, which consists of those thoughts that are the focus of our attentionRead MoreThe Effect Of College Preparation On High School Students1353 Words   |  6 Pagescollege in this day and age is a whole new level of competition. High school students are now packing their lives full of activities and hours studying to look like the best candidate for their top choice schools. High school juniors are now not just striving to do well on standardized tests, but to get the perfect score, and anything less than a 4.0 GPA just won’t do. The little free time that these students have is filled with clubs, sports, volunteering, or even all three. Universities are becomingRead More Comparing Adlerian Therapy, Cognitive Behavioral Therapy, and Solution Focused Brief Therapy3619 Words   |  15 Pa gesAfter studying the different counseling theories, I have discovered that each theory is valid and there are ideas and techniques that I would use out of each of them. However, there are some theories more than others that I would use to guide me daily as a school counselor. Modern day counseling is equipped with a wide variety of therapies, techniques and approaches. The purpose of this essay is to compare and contrast three approaches of therapy. Also in this essay the views of the person and theRead MoreThe Social Issues of Homelessness Essay examples1432 Words   |  6 PagesSociology 2, Social Issues Problems Section 80528 November 24, 2008 The Social Issue of Homelessness Homelessness has always been a major social issue for cities across the nation but in recent years it is reached astonishing proportions. In this essay I will try to summarize ten recently published articles and each of the authors view of homelessness. First I will discuss some of their opinions of the causes of the recent increase of homelessness and who or what is to blame. Next we will look intoRead MoreThe Nursing Interventions Required for One Essay1900 Words   |  8 PagesIntroduction The aim of this essay is to explore evidence based nursing intervention in the care and management of chronic obstructive pulmonary disease (COPD) in an acutely ill patient. The acutely ill patient involved in this essay was admitted to hospital due to cerebrovascular accident and had a past medical history of myocardial Infarction, left Ventricular failure, peripheral vascular disease and duodenal ulcer as well as chronic obstructive pulmonary disease. This essay will provide a rationaleRead MoreStereotypes: Black Men are Prono to Violence1705 Words   |  7 Pages2004). Black peoples distrust of the â€Å"white society† that can also be seen in FMH settings stems from the level of racism experienced and contributes to what was formerly known as â€Å"healthy cultural paranoia† or â€Å"cultural mistrust† (Whaley, 2004). This essay aims to discuss theories such as cultural competency and institutional racism looking at how this impacts on how black people are treated in forensic metal health settings such as Broadmoor as well as general mental health settings. Focusing particularlyRead MoreEssay on Freuds Dream Analysis. a Case Study2163 Words   |  9 Pagespsychoanalytical therapy: a therapy aimed at increasing awareness, encouraging insight into the client’s behaviour, and understanding the significance of symbols (Corey, 2005). Using Freud’s psychoanalytic theory on dream analysis, this reflective essay endeavours to analyse a personal dream. The purpose of this analysis is to offer an interpretation in to any emotional issues that I may be currently experiencing. In order to do this, Freud’s techniques of dream analysis, free association and interpretationRead MoreOutline the Primary Skills Used in Counselling Relationships2629 Words   |  11 PagesOutline the primary skills used in counselling relationships This essay intends to introduce the reader to the most important skills involved within developing and maintaining a therapeutic relationship between a client and the therapist or counsellor. The onus will be on Humanistic counselling but many of these skills are central to all counselling types. Humanistic counselling is a process whereby the eventual goal is to facilitate the client in developing a personal understanding of self, andRead MoreAnorexia Nervosa and the Role of the Court3011 Words   |  13 Pagessister and best friend of someone who is deathly ill, I began to wonder what action might force Natasha to get some help. Currently no law can force a person with an eating disorder who is over eighteen years of age to get medical attention and counseling, yet, in spite of its drawbacks, such a law is needed to protect the lives of those who cannot presently help themselves.       Anorexia Nervosa is a psychiatric illness that is most often seen in teenage girls and young women. The pervasivenessRead MoreDescribe Some Aspects of Your Learning About Helping in a Counselling Way and What This Has Taught You About Yourself2438 Words   |  10 PagesBirbeck University: Introduction to Counselling Course Term 1, Coursework essay: 19th February 2013 (submission date) Author: Monica Malkani Describe some aspects of your learning about helping in a counselling way and what this has taught you about yourself This essay aims to address a number of aspects of counselling that I have found particularly interesting since starting the introductory course in Counselling in October 2012. This will include a brief history of counselling; what

Workplace Policy Review Workplace - 895 Words

Workplace Policy Review Workplace policies and procedures should be up-to-date and consistent, that may be a primary objective for several HR audits. Annual reviews of employee handbooks, customary in operation procedures and work postings guarantee employers’ rules are per labor and employment laws. This additionally provides employers a chance to see whether or not all workers are tuned in to policies that have an effect on the employment relationship. HR Processes Auditing human resources processes reveals whether or not an organization is working in as economical a way as attainable. Human resources employee’s qualifications and experience are usually a part of an audit to assess the strength and capabilities of the department. The†¦show more content†¦In the perspective of the IT Sector, the objectives would be – †¢ To identify the HR audit process in Indian IT sector †¢ To measure the need and importance of HR audit in Indian IT sector †¢ To analyze the effectiveness of HR audit process in Indian IT sector †¢ To recommend the ways to improve the HR audit process in Indian IT sector SCOPE The scope defines the breadth of the HR audit. This step determines the individual areas for review and provides a suggestion for the group or business conducting the audit. This might comprise requiring a review of HR compliance with federal and state laws, the human resource info systems, the department s service and management roles additionally as any strategic HR programs in place for company personnel. HR Audit answers the subsequent questions: ï  ¶ How effective is your organization at increasing the contribution of your human capital? ï  ¶ Why is one or more of your organization’s strategic initiatives languishing? ï  ¶ What steps are you able to take nowadays, using existing internal resources, to enhance your organizations performance and ROI? ï  ¶ Do you have a HR system that meets your company’s requirements, both currently and into the predictable future? ï  ¶ Are your employees satisfied with their compensation and benefits plan, training opportunities, and work environment? HR Audit entail 1) Legal compliance 2) Compensation/Salary Administration 3) Employment/Recruiting 4) OrientationShow MoreRelatedEssay on Health and Social Care960 Words   |  4 Pagesthis unit a learner will: To achieve each outcome a learner must demonstrate the ability to: LO1. Understand how health and safety legislation is implemented in the health and social care workplace 1.1 Review systems, policies and procedures for communicating information on health and social care workplace in accordance with legislative requirements. 1.2 Assess the responsibilities in a specific health and social care work place for the management of health and safety in relation to organizationalRead MoreUnderstand how health and safety legislation is implemented in the health and social care workplace1565 Words   |  7 Pagesthe Health and Social Care Workplace Assessor name: Christine Pratt Date of Issue Completion date 27/01/2014 18/04/2014 Student No. Submitted on Assignment title Learning Outcome Learning outcome Assessment criteria LO1 Understand 1.1 how health and safety legislation is implemented in the health and social care workplace 1.2 1.3 In this assessment you will Task have the opportunity to No. present evidence that shows you are able to review systems, policies and 1 procedures for communicatingRead Morehealth and safety in the health and social care workplace1112 Words   |  5 Pages 1. How Health and Safety legislation is implemented in the workplace ( Learning Outcome 1) 2. The ways in which health and safety requirements impact on customers and the work of practitioners, staff, visitors and clients in the health and social care workplace (Learning Outcome 2) 3. The monitoring and review of health and safety policies in the health and social care workplace (Learning Outcome 3) Read MoreWorkplace Bullying And Its Impact On The Nursing Profession1421 Words   |  6 PagesWorkplace bullying is a growing problem in the American workplace and the Nursing Profession no exception. Addressing workplace bullying and its impact on the nursing profession is paramount to upholding patient safety and decreasing nursing attrition rates. Defining the problem is the first step in addressing it. In the past, workplace bullying was referred to as â€Å"Nurses eating their young.† There are many names for the various levels of workplace bullying like horizontal and lateral violenceRead More Sexual Harassment and Workplace Violence Essay1416 Words   |  6 PagesHarassment has plagued the world for centuries. Why should the workplace be any different? Sexual harassment and workplace violence are not only of historical roots, but contemporary issues are still present in the workforce today. Managers are addressing and combating modern sexual harassment and workplace violence, however instances still occur (Robbins, Decenzo Coulter, 2011). â€Å"Sexual harassment is defined as any unwanted action or activity of a sexual nature that explicitly or implicitlyRead MoreLeadership : A Successful Network Of Collaboration, Together We Create Mutual, Continuing Value?956 Words   |  4 Pagesmaximize firm’s benefits in policy implementation. We will strive to be agile and responsive to the emerging needs of the company. 4. Organizational Capability: We will provide a challenging, dynamic and stimulating workplace that is well regarded. We will support career development and build the capability of our leaders. Requirements of the Team (Strategies for Action) †¢ Provide evidence based advice: Objective and timely advice to the subordinates. †¢ Manage public policy risks: Through early identificationRead MoreEmployment Relationship Within The Workplace1163 Words   |  5 Pagesemployment relationship, and the modification must be in writing. Workplace Commitments 2.1 Equal Opportunity Employment This Company is an equal opportunity employer and does not unlawfully discriminate against employees or applicants for employment on the basis of an individual’s race, color, religion, creed, sex, national origin, age, disability, marital status, veteran status or any other status protected by applicable law. This policy applies to all terms, conditions and privileges of employmentRead MoreThe Benefits And Challenges Of Diversity869 Words   |  4 PagesWriting Literature Reviews Research Plan Marcus Radford Brandman University OLCU 501: Organizational Research May 21, 2017 â€Æ' Research Plan This research plan includes (a) a statement of the research purpose for the literature review, (b) three specific research questions, (c) an outline that includes a statement of the need for the research and how the research questions will be answered, and (d) a preliminary list of references that will be used to write the literature review. Research Purpose Read MoreEnvironmental Health And Safety Management833 Words   |  4 Pagesenvironment because it protects human health and safety in the workplace. In regard to this, environmental health and safety regulations remain the hallmark that provides protection for American workers. Such regulation has helped maintain the wide-ranging safety standards as required by law. It has enabled companies in the United States to aggressively pursue accident prevention initiatives at all levels of their operation. The policy has empowered senior management to provide an alternative techniqueRead MoreEmployee Handbook Privacy Section1397 Words   |  6 Pagesfor employees to understand the company policy and procedures regarding privacy in the workplace. While this section cannot address every possible scenario that may occur, the general policy will serve as a basis of understanding the key workplace issues and employee privacy. This section addresses privacy issues related to personal background information, off-work activities, and the corporate policy on the use of electronic monitoring. These privacy policies are designed to both provide a clear guideline

SWOT Analysis and Porter’s 5 Forces analyses of John Lewis Partnership Free Essays

Abstract This paper looks at John Lewis, a top retailer in theUKand a very successful brand in the EU region as a whole. It scans the environment in which John Lewis operates while scrutinizing the attractiveness and competitiveness of the retailing industry in theUnited Kingdom(Porter’s Five Forces analysis). The SWOT analysis is done to bring in to light the retailer’s strengths and weaknesses and to expose any opportunities that it can capitalize on and the possible threats it may stumble upon in the process of further development. We will write a custom essay sample on SWOT Analysis and Porter’s 5 Forces analyses of John Lewis Partnership or any similar topic only for you Order Now Introduction Since its inception in 1864, the John Lewis brand has grown in to one of theUK’s leading departmental stores and enduring brands. John Lewis boasts the only remaining traditionally English brand with a focus on quality, value-for-money and practicality (John Lewis, 2008). John Lewis specializes in selling food and drinks, clothes and household goods. In addition, John Lewis has recently diversified into financial services such as insurance and credit cards. During the early 2000’s, the company experienced serious financial crunches due to tribulations with its supply chain and poor product offerings with the worst time being at the year ending March 31, 2001 when its profits were recorded to be as low as ?2.8m on revenue of more than ?8bn (John Lewis, 2008). However, the retailer managed to turn its fortunes in the preceding years following changes in the management and has since attained a remarkable growth in profits due to rigorous cost cutting, promotions, widespread store refurbishment and aggressive marketing (Economist, 2012). Thus, profit before tax (?997) and net profit (?860m) for the year ending March 31, 2011 were at their highest since 2001 (John Lewis, 2012). However, following the credit crisis in the US and the difficult trading environment in the UK over the 2010 Christmas period, the company’s sales growth saw a marked slow-down and its shares plummeted almost overnight (Economist, 2012). John Lewis has recently gained the title of â€Å"bell-weather† in theUKretailing industry, which means that if John Lewis is besieged, the whole sector is also struggling to stand on its feet. To this end, the SWOT analysis below looks at the environment in which John Lewis is operating, bringing in to light the companyà ¢â‚¬â„¢s strengths and weaknesses while exposing the opportunities that the institution can capitalize on and the possible threats it may lurch in to in the process of further growth. SWOT Analysis Strengths John Lewis enjoys a strong brand of embodying qualities, practicality and value-for-money promoting its customer loyalty (John Lewis, 2012). John Lewis profits have been growing steadily since 2001 and the cash position was very strong as at the year ended 31 March 2011 marking a decade of enormous economic growth (MS, 2011). The highly qualified management team has being greatly praised for having reversed John Lewis fortunes in the last decade. John Lewis aggressively markets itself and has recently used celebrities like as their brand ambassadors (John Lewis, 2012). Weaknesses John Lewis performance slipped over the 2010 Christmas period. While all retailers practically underperformed during this time, John Lewis was the most exposed. At the time of writing, the share price was 361p with the 52-week low of 367p and high of 759p, which means that John Lewis MS had lost more than 50% of its value during the year (Sunday Times, 2011). Similarly, the price/earnings ratio of 9.4 is very low as compared to that of its competitor’s i.e Mark and Spenser. The price/earnings ratio is the key indicator of investor assurance in a company (Arnold, 2002). John Lewis has recently started cutting prices to match up the ever increasing competition. This may devalue the brand (The Economist, 2012). The company has been recently criticized for fuelling accusations of poor managerial incompetence, corporate governance and lack of transparency infuriating many large investors (Nugent and Hawkes, 2012). Opportunities The idea of developing markets to Asiapresents large opportunities for John Lewis. Designing of trendier clothes would attract young and potential customers to its stores. Online sales provide a great opportunity since online margins are higher citing extensive growth from online companies like eBay (John Lewis, 2011). The adoption of healthy lifestyles by customers presents an opportunity to sell healthy foods and sports gear. Growing insurance and credit card industry. The industry has been on an upward trend over the past decade. Considering that John Lewis has a division that contributes over 23% of its total revenue dedicated to this segment, it is likely to reap significant benefits if this opportunity is fully utilized. Threats Currently, John Lewis target group are older customers usually over 45 years. This might pose as a risk in the future due to the fact that today’s 20-30 year olds will still stay trendy after 10-20 years and might be reluctant to shop in John Lewis, especially taking into consideration the desire for people to look younger nowadays (The Economist, 2012). Jeremy Paxman shaped a storm of negative publicity when he criticized John Lewis underwear due to lack of support (Nugent and Hawkes, 2012). Even though it is considered that every third woman and fifth man in the UKbuys John Lewis underwear, the publicity may have an adverse effect on sales (John Lewis, 2012). The stated poor corporate governance in the company might lead to a fall in the interest margins and reduced revenues accrued from the cash equity business. Such declines may lead to a situation whereby clients lose their confidence on the company’s ability to meet its financial obligations. In addition, a decline in returns indicates that the group lacks the ability to deploy its resources to profitable ventures. Porter’s Five Forces Level of competition Competition in the retail industry sector is extremely fierce. Predicament to this problem is exacerbated by the fact that institutions are diversifying into non-core turfs thus creating extra competition. John Lewis is particularly exposed to competition as it sells not only food and drinks but also apparel and household goods. This leaves it vulnerable to competition from giant supermarkets such as Tesco, Asda, Sainsbury’s and clothes retailers such as Next, Topshop, Marks Spencer and Zara. Porter (1985) wrote that â€Å"companies pursue one of three generic strategies: low cost, differentiation or hybrid†. In this regard, John Lewis has long tried to distinguish itself from competition by placing itself as a higher quality value-for-money brand. However, this has being greatly affected by the cuttings in apparel prices which poses a risk of de-valuing the brand in the market and losing the scope of specialization (Arnold, 2012). However not a key business for John Lewis, the John Lewis credit cards and insurance face a lot of competition from banks and building societies. Threat of Substitutes Apparently, there are no major substitutes to food and clothes. This makes the threat of substitutes relatively low. Notably, the key threat in substitutes in the food market is mainly Waitrose, while Peter Jones and Marks and Spencer offer high quality apparel. Asda and Tesco have also introduced less affordable alternatives and are even trading dinner jackets (Wilkes, 2012). In this regards, the threat of substitutes is relatively high. Threat of New Entrants The threat of new entrants is relatively low. This is due to the massive capital investments required in setting up a successful chain store. Also, the retail industry is mature and a new entrant in the market would consider offering something radically new, which is quite difficult to do in cloth retailing. All key retailers have strong reputable brand names therefore benefits from customer loyalty, which becomes increasingly important in homogenous markets (Doyle, 2002). The existing retailers are firmly clenching on to their market shares and would use all available methods to counter any new entrants i.e. litigation. Importantly, the lack of market knowledge – particularly for foreign investors-possess as a barrier to new entrants. Bargaining Power of Buyers Is relatively high. The buyer’s concentration is high giving them an advantage in dictating tastes and rules. The switching costs are low and there are plenty of alternatives. The UKeconomy is prospected to slow down by mid 2013 forcing retailers to cut down prices and focus more on customer needs (BBC, 2012). Bargaining Power of Suppliers Is rather low. John Lewis being a large company listed with a huge turnover, suppliers always want their products on the retailer’s shelves in order to reach a large customer base enjoyed by John Lewis (Daveyand Laurance, 2008). Unlike other stores, John Lewis is not overly dependent on suppliers as it mainly sells own branded products. This means that it largely buys raw materials and not finished goods, which is favourable for margins (John Lewis, 2012). Conclusion Although John Lewis managed to conquer its financial crisis in the early 2000’s, it now faces a slowdown in its profit gains. This has being partly contributed by the past economic crunch in theUnited Stateswhich spread to Europe and to theUKmainly (ABC News, 2008). As the spending power of consumers decreases, customers get more cautious and start to shop around more for cheaper products (John Lewis, 2012). Even though John Lewis has a lot of strength to help maintain its leading position in the UK retail market, it should also be on the verge of managing its weaknesses and be particularly cautious with regard to any form of bad publicity that may tarnish its name. John Lewis should consider all possible means of maintaining investor relations and consider reforming its executive management to improve its corporate image. Developing in to other markets and online sales present great opportunities and John Lewis should not vacillate in embracing them (BBC, 2012). References ABC News (2008). Buffet: US essentially in recession. 3 March 2008. www.acnews.go.com (Accessed 31/07/2012) Arnold, G. (2012). Corporate financial management. 3d. ed.Essex: Prentice Hall. BBC (2012). Darling signals economic slowdown. 8 March 2012. www.news.bbc.co.uk (Accessed 31/07/2012) Davey, J and Laurance, B (2008). John Lewis under fire: how the City turned against Rose. The Sunday Times. 16 March 2008, p.12-13 Dess, G.D., Lumpkin, G.T. andTaylor, M.L. (2004). Strategic Management: Creating Competitive Advantages. McGraw Hill Professional, p. 75 Doyle, P. (2012). Marketing Management and Strategy 3d ed., Pearson Education. Financial Times (2012). Market data. Information on oil prices. 24 March 2012. www.ft.com (Accessed 31/07/2012) LegalMedical (2008). Man loses MS grape case. 14 March 2008. www.legal-medical.co.uk (Accessed 31/07/2012) John Lewis (2012). John Lewis Annual report 2011. www.johnlewis.com (Accessed 31/07/2012) Nugent, H and Hawkes, S (2012). George follows Jeremy Paxman as John Lewis faces another brief challenge. 20 March 2012. www.timesonline.co.uk (Accessed 31/07/2012) Porter, M. (1985) Competitive advantage: creating and sustaining superior performance.New York: Free Press The Economist (2012). The world in figures: industries. The world in 2012. p124, 126 The Economist (2012). A Rose by any other name. A retailing star ticks off investors at an awkward time. 13 March 2012, p58-60 The Sunday Times (2012). Top 200 companies indices. 16 June 2012, p.19 Wilkes, D (2007). Asda launches ?35 tuxedo in attempt to sew-up formal attire market. The Daily Mail. 14 November 2007. www.dailymail.co.uk (Accessed 31/07/2012) How to cite SWOT Analysis and Porter’s 5 Forces analyses of John Lewis Partnership, Essay examples

Effects of Music on the Growth of Mung Beans free essay sample

This chapter presents the summary of finding the generalization of the conclusion and the recommendation for the further Improvement of the study. L. Summary of Findings 1 . Music affects the growth of Mug beans. As established In the experiment and based on the data gathered, music has a great effect on the growth of Mug beans. The varying degree of effect Is dependent on the type or tempo of music to be played. 2. In general, music helps in the growth of plants. It hastens the growth of plants. As we conducted and observed our experiment, we noticed that classical music helps the Mug beans growth. Plants exposed to rock music grew slower than those exposed to classical music; however, they grew faster than those exposed to no music. 3. The growth of the green variety of Mug beans is faster than those of the yellow variety in any of the environment they were subjected to. We will write a custom essay sample on Effects of Music on the Growth of Mung Beans or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page II. Conclusions 1 . Music affects the growth of Mug beans as we observed the set-ups.The efferent aspects that we have observed where music was involved were the plants height and the number of leaves produced. 2. Music helps the Mug beans growth and does not hinder their development. 3. Music, more specifically the classic music, has effects on the growth of Mug beans especially on the growth of the green variety. Ill. Recommendations 1. As we have proven through the data gathered that music hastens the growth of plants, we recommend promoting the use of music In planting and other agricultural actively.This can be done through discussions In the different for a to bring to the awareness of the authorities and the agricultural sector the benefits of music In planting. 2. We recommend that In the utilization of music for plant growing, you should use classical music In order for you to grow your plants faster. 3. We recommend that further study be conducted to validate the findings of this paper. Effects of Music on the Growth of Mug Beans By terror and the recommendation for the further improvement of the study. 1 . Music affects the growth of Mug beans.

Enterprise Resource Planning Integration Success

In modern age it is vital to be competitive in order to achieve successes. With this in mind, it is possible to say that any company or organization should watch carefully the development of digital technologies and be able to implement them in its work.Advertising We will write a custom report sample on Enterprise Resource Planning Integration Success specifically for you for only $16.05 $11/page Learn More Resting on these facts, it seems that the usage of the Enterprise Recourse Planning in the work of Brandon Group seems to be quite reasonable step which could lead to significant increase of the efficiency of the company. ERP is a special kind of software which can allow a company to manage its business with the help of modern technologies which include integrated applications (What is ERP – Enterprise Resource Planning? n.d.). With the help of this system more efficient functioning of services and human resources of the company could be achi eved. That is why, it is obvious that the work of the Brandon group should be organized taking into account different possibilities which this new tool suggests. There is the evidence that implementation of this system was connected with some difficulties because of the lack of data and some software basis, however, taking into account the nature of this very service and perspectives which it suggests, it is possible to say, that further attempts should be done in order to align its efficient functioning. Different ERP applications can be customized in order to fit the best special conditions of this very company. Moreover, ERP solutions can promote integration of all systems into one and appearance of some new mechanisms of functioning of the company. However, another important modern technology should not also be forgotten.Advertising Looking for report on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Customer relatio nship management (CRM) is a set of different applications and tools which are used to manage the data connected with the demands of customers, align their interaction and also improve employee, vendor and partner relationships (Beal n.d). Nowadays, systems of this sort are widely used by a great number of different companies and organizations. Moreover, CRM helps to make their work much more efficient (Rouse n.d). With this in mind, it is obvious. that the Brandon Group should be suggested to implement these elements into its functioning. One of the main difficulties connected with their implementation is connected with the process of transferring data from the OMD database to this one. Additionally, there are still difficulties connected with the absence of experience of its usage and, moreover, special kind of software which can promote efficient functioning of the whole company. Additionally, some CRM applications seemed too extensive and inefficient for the owners of the company fort them to use these very applications. With this in mind, it should be said, that CRM should be adapted to some certain conditions. First of all, special applications for this very company should be created. It is possible to do it with the help of different CRM software providers. Moreover, new lines of business, which appear in the course of further development of the company, should be supported by CRM applications for their more efficient functioning and, moreover, there will not be the necessity to transfer data from one database to another.Advertising We will write a custom report sample on Enterprise Resource Planning Integration Success specifically for you for only $16.05 $11/page Learn More As it becomes obvious from the description of these two different issues, both CRM and ERP are rather efficient and can improve the work of a company. That is why, under these conditions replacement of the old system, which was used by Brandon Group, w ith the new one, which combines elements of ERM and CRM, seems to be the ideal solution. First of all, it is possible to say, that applications of the CRM system will be able to align more efficient cooperation between different elements of the company (CRM and ERP Systems Integration Strengthens Businesses n.d). The database, which will be transferred to CRM, will allow to accept better decisions taking into account peculiarities of customers relations with the company and their preferences. At the same time, elements of the Enterprise Recourse panning system can allow to manage recourses available for the company better. With the help of these two issues, it is possible to organize efficient and understandable system of web-based ordering for customers to be able to use the services of the company without any complications or some other obstacles. However, to implement these systems into the work of the company some basis should be created (Four Keys to CRM and ERP Integration Suc cess n.d.). First of all, special software which can allow to do it should be used and understood. Moreover, the data should be prepared for its transfer from the OMD to CRM database which will help to increase the efficiency of its processing.Advertising Looking for report on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More With this in mind, having analyzed peculiarities of CRM and ERP services, it is possible to come to certain conclusion. It becomes obvious, that only combination of the main applications of these two systems can promote further successful development of the company and its prosperity. In spite of some difficulties connected with the implementations of these technologies, the results can be rather promising. Reference List Beal, V n.d., CRM software – customer relationship management software. Web. CRM and ERP Systems Integration Strengthens Businesses n.d. Web. Four Keys to CRM and ERP Integration Success n.d., Web. Rouse, M n.d., Customer relationship management (CRM). Web. What is ERP – Enterprise Resource Planning? n.d. Web. This report on Enterprise Resource Planning Integration Success was written and submitted by user Renata Bridges to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.

Wuthering Heights Essay Example

Wuthering Heights Essay Example Wuthering Heights Essay Wuthering Heights Essay Essay Topic: Wuthering Heights Heathcliff is not inherently evil, but rather he is a victim of the judgement and social prejudices of Victorian Society. Emily Brontes Wuthering Heights explores the deep romantic connection between Catherine Linton and the dark-skinned gypsy, Heathcliff and the effect their supernatural relationship has on their heirs. Initially, through Nellys interpretation, Heathcliff is seen as the villain of the novel unjustifiably upsetting the lives of the novels most innocent characters. However, on deeper analysis of Nellys unreliable story, it becomes evident that Heathcliffs satanic actions stem from his deprivation of love and sympathy. As well as societys assumption that he is merely more than an imp from Satan. Heathcliffs villainous actions stem from his lack of love and sympathy as a child. Found as good as dumb in the streets of Liverpool Heathcliff experiences neglect from an early age. Not even after being found by Mr Earnshaw who took to Heathcliff strangely petting him up far above Cathy does Heathcliff ever experience belonging. Through his childhood at Wuthering Heights Heathcliff has to stand Hindleys abuse and be forced to live like a servant after Mr Earnshaws death. This treatment he receives as a child reflects on the way he treats the other characters in the novel, in particular Hareton, who is Heathcliffs opportunity for revenge on Hindley. Hareton is treated by Heathcliff in much the same way as Heathcliff was treated by Hindley after Earnshaws death. Heathcliff reduces Hareton to a state of complete dependence on his fathers inveterate enemy; and lives in his own house as a servant. Though his treatment of Hareton is terrible, it is the only treatment Heathcliff knows. Unlike Hindley, Heathcliff is aware of his treatment, describing Hareton as the ghost of my immortal love; of my wild endeavours to hold my right; my degradation, my pride, my happiness and my anguish. Heathcliffs ability to recognise the similarities between him and Hareton shows his less satanic side and proves that he is not the creator of evil but rather the victim of it. Heathcliffs intense love for Catherine is behind most of his evil actions. Heathcliff falls passionately in love with Catherine and she, too, is passionately in love with Heathcliff claiming hes more myself than I am. Whatever our souls are made of, his and mine are the same. However Cathys want of social advancement separates her and Heathcliff as she believes it would degrade me to marry Heathcliff. It is ultimately Catherines connection with Edgar that divides the pair and induces Heathcliffs evil nature. Through Catherines marriage Heathcliff is denied the only love he has ever had which causes him to deny others of love. Catherines daughter, Cathy explains this when she states Mr Heathcliff, you have nobody to love you; and, however miserable you make us, we shall still have the revenge of thinking that your cruelty arises from your greater misery. Heathcliffs greatest misery is the death of Catherine, which intensifies his malicious treatment of Isabella and is the reason for the forced marriage of Linton and Cathy, as they can provide him with money. Without his love all Heathcliff has for fulfilment is money and power over the other characters, this is shown when he insists Cathy return to Wuthering Heights merely so he can have his children about me. However this does not make Heathcliff evil, his occasionally satanic actions are merely a cause of his separation from his only love. The fury of Heathcliffs revenge is the equal and opposite reaction to the intensity of is love, his ability to love proves that he is not an imp of Satan but lonely like the devil, and envious like him. Heathcliffs actions mirror the way the other characters in Wuthering Heights expect him to act. The Victorian Society from which Wuthering Heights is set is highly preoccupied with image and reputation obtained at birth. So therefore Heathcliff, an orphan with no last name, is seen to society as having no social class. From the moment Heathcliff enters the Earnshaw household he is stereotyped as a gypsy brat and a foulmouthed thief, facing torment and abuse from Hindley on a regular basis over his heritage. The other characters in the novel constantly expect him to be doing wrong, and once Catherine deserts him he gives in to their stereotyping. Heathcliff lives up to the expectation that he is a venomous serpent and a mad dog, and commits evil actions because no one expects any different from him. This is shown when Catherine is taken in by the Lintons and Mrs Linton refers to Heathcliff as a wicked boy Quite unfit for a decent house! Heathcliff responds to this comment by recommencing the cursing that caused him to be named a wicked boy and proving to Mrs Linton that he is as he is stereotyped, an urchin from Liverpool. Though Nelly tries to convince the reader otherwise, Heathcliff was not always as devilish as he would stand Hindleys blows without winking or shedding a tear. Heathcliff gives the reader no indication of wanting revenge or causing harm until years after his introduction to the Earnshaw family. This proves that Heathcliff does not enter Wuthering Heights with the intention of causing harm, but rather the constant stereotyping and the expectation that he is as an evil gypsy causes him to become a fierce, pitiless, wolfish man. Heathcliff is a victim of social prejudice rather than a fiend from hell. As Wuthering Heights progresses so too does our understanding of Heathcliff and the complexity of his nature. Though initially Nellys interpretation causes the reader to see Heathcliff as inherently evil, a deeper analysis of his character proves otherwise. Heathcliff is mistreated and denied love and sympathy from an early age which causes him to act in a satanic manner with no regard for the feeling of others. Heathcliffs nature is mainly influenced from his lack of love, his intense feelings for Catherine and societies expectations.

The Mentally Ill Essay Example | Topics and Well Written Essays - 1750 words

The Mentally Ill - Essay Example The Mentally Ill A. Journal Writings I am a psychiatric nurse from a local community hospital and was taking care of Patient X (not the real name to protect confidentiality of patient information). Patient X was diagnosed with schizophrenia and was treated with clozapine (Clozaril), an atypical psychotropic drug used to treat psychotic symptoms, hallucinations, and breaks with reality (NIMH, 2012, 6). For a period of four weeks, I usually give Patient X a 200 mg oral preparations of clozapine twice a day as ordered. After series of inpatient medication regimen, Patient X’s symptoms of schizophrenia decreased and the patient is now stabilized. With this, Patient X requested to be discharged and be treated through outpatient commitment. I told Patient X that I will relay his request to the health care team and will inform him of the decision made. Upon discussing it with the health care team, we were put in a dilemma whether to grant Patient X’s request to respect his aut onomy and independence or denied it to uphold the principle of nonmaleficence because the client might not take medications on time or not take medications at all and may result to an imminent threat or danger to self or to others due to relapse of schizophrenic symptoms. In addition, putting Patient X, who is receiving clozapine, on an outpatient commitment may present a serious harm as a WBC check every week or two is necessary to avoid occurrence of agranulocytosis or loss of the white blood cells that help a person fight infection. B. Ethical Dilemma In responding to a psychiatric patient’s request of discharge and treatment on an outpatient commitment, which ethical and legal principle should be considered – the legal right of a patient and the ethical principle of autonomy and independence or the professional responsibility of the nurse to do no harm and practice paternalism? C. Ethics Paper Summaries. Elbogen and Tomkins authored the article entitled â€Å"From the Psychiatric Hospital to the Community: Integrating Conditional Release and Contingency Management† in 2000. The article proposed involuntary outpatient commitment with therapeutic jurisdiction as one possible solution for psychiatric recidivism in the community. The article also emphasized that clinicians find it hard to discharge patients and are often put in a dilemma whether the discharge decision will benefit the patient or will end up in a relapse of chronic mental illness. In addition, discharge from the psychiatric hospitals also corresponds in legal status changes which might predispose the individual to heightened stress and independent living (Elbogen & Tomkins, 2000, 428). Thus, the article had raised a question whether outpatient commitment can provide continuity of care and reduce incidence of rehospitalization. Elbogen & Tomkins (2011) found therapeutic jurisprudence framework as the key to analyze legal and beneficial mental health interventions for the ind ividual, conflicting values, and generated or implemented laws, policies and practice (p. 429). In patients with chronic mental illness, therapeutic jurisprudence preferred a discharge plan that maximizes convergence between self-determination, individual well-being, and public safety through integration of risk assessment technology and effective rehabilitative treatment, particularly contingency management. Absolute discharge might be the best promoter of self-determination as there are no strings attached; however it predisposed the patient for rehospitalization unlike outpatient commitment that discharged patient with therapeutic jurisprudence and reduced incidence of reho

Discuss the difference between Aristotle and Kant Essay

Discuss the difference between Aristotle and Kant - Essay Example In philosophy classes, one is likely to learn about Aristotle’s system of propositional logic where the concepts of premises and conclusions are used as a structure of reasoning. Contrarily, Kant lived in the 18th Century in the years 1724 - 1804. Kant was a paradigmatic philosopher who played a central role in the structuring of modern philosophy. Unlike Aristotle who was active in medieval era, Kant emerged as a key figure in the European Enlightenment periods (Graham, 23). Conventionally, Kant is alleged to have laid the foundation of empiricism and eradicated any remaining traces of medieval reasoning in philosophy. Each of the two philosophers discussed comprehensively on the concepts of moral propriety, commonly referred to as ethics. Aristotle asserts that there is an extricable connection between psychological and physiological nature in human beings. The consciousness of sensation perceived by the body in the material world serves the purpose of clothing the senses of thought and reasoning. In this context, Aristotle claimed that material knowledge perceived by the body influences immaterial thoughts, thus developing a scale for comparison between distinct objects and thoughts (Sherman, 127). This interaction between psychology and physiology experienced by human beings gives rise to the opposing concepts of virtue and vice. In this case, practical experiences coupled with sensitive existence leads to distinct realization and subsequent differentiation of good from bad. Unlike animals, human beings are in an intrinsic pursuit of favorable experiences manifesting as universal happiness. Acc ording to Aristotle, actions and thoughts that lead to happiness are called virtues, while contrary actions and thoughts are vices. According to Aristotle, the opposing concepts of virtue and vice serve as a scale for measuring extremes. Excess vice lies on one end while deficient vice lies on another end. In this case, virtue is a mean or

Assessing And Solving Ethical Dilemmas Philosophy Essay

Assessing And Solving Ethical Dilemmas Philosophy Essay Honesty is the cornerstone of character. The honest man or woman seeks not merely to avoid criminal or illegal acts , but to be scrupulously fair, upright, fearless in both action and expression .Honesty pays dividends both in dollars and in peace of mind. B.C Forbes What are Ethical dilemmas Ethical dilemmas occur generally when a person is made to choose between two or more alternatives and all of them seem right from different perspectives. Such dilemmas have a very blurred line between right and wrong thus complicating the decision making process for a person. Sometimes its not even a question of right or wrong but which of the alternatives is more viable. Decision is further made difficult by the varying amount of impact of each decision on the profitability, share price, market share, competitiveness, relations and various other factors. For e.g. should wealthier person be forced to pay more taxes for poor people in the society. Why ethical dilemmas exist For any organization, its difficult to maintain harmony as opinions of individuals vary, stakes are high and emotions run strong. This may give rise to ethical issues which in turn can become ethical dilemmas, also known as ethical paradox. Let us first try to understand as to how ethics can be maintained in an organization as well as individual: Justice It talks about rights and laws, rules and regulations, fairness etc. The good thing about it is that it accentuates on equality and believes in providing justice to all irrespective of any cast, creed etc. This helps in establishing ethical standards and the enforcement may cause people or organization to abide by the law and remain ethical. Care Nothing can beat positive organizational climate and the value for each others feelings. Strong personal connections and trust over each other may make ethical decisions simpler by simplifying the lines between good and bad. Power Sometimes power and influence and the resultant fear to abide by the rules and regulations keep people on track. If the autocratic behavior of a leader denounces unethical steps then it makes his/her followers also to choose the correct path guided by him. Community These days we find the topic of Corporate Social Responsibility being taken up very seriously by the organizations. To keep themselves in the good books of community, the firms have started acting in the welfare of community which itself closes some unethical measures by company. Profession One cant deny clashes between personal and professional codes. Both the employee and employer should be careful in choosing each other else it will lead to lot of unrest and instability to both the parties. Differences and issues related to work work give rise to conflicts. The differences can come from various factors like working style, personal differences etc but if the difference is due to an ethical clash, then it can have serious repercussions. The following diagram shows us that an individual does have ethical issues with the organization on whole or with the team due to which he may not be able to deliver his 100% best in the work he undertakes. How to resolve ethical dilemmas As such there are no fixed rules to decide what is to be followed in case of ethical dilemmas. As stated earlier its not just about right or wrong decisions but taking a decision which one feels is more appropriate in a given context. However there are some methods suggested by various people in the field of business ethics for deciding which better decision to be chosen by an organization or individual under given circumstances. For e.g. Organizations and individuals can choose to follow many of the suggested ethical theories for moving ahead with their decisions. But the most useful and most effective method of choosing an ethical decision seems to be finding a similar example of ethical dilemma in past with any other individual or organization. Analyzing the actions, the reasons for actions the consequences of those actions which took in the past gives us a very good idea about the direction in which a person should proceed in case of ethical dilemmas. Therefore before deciding o n any plan of action a person must analyze all the possible consequences of the act and must check for how are the actions in line with the moral values and principles governing the organization or individual. Few of the right consequences by taking right decision can be: Substantially improve society. Help maintaining a moral course in turbulent times Cultivate strong teamwork and productivity Support employee growth and meaning An insurance policy they help ensure that policies are legal Promote a strong public image Ethical dilemmas from Hindu epics In this part of the project we would describe the various ethical dilemma situations from the Hindu epics of Mahabharata and Ramayana. The situations described are very much character centric and hence each situation would be described in context of the character. But these situations from these epics can very clearly be seen even in present conditions across the world at individual level, family level, organization level or country level. Following are the characters and their ethical dilemma situations from epics : Bhishma : Bhishma also known as Gangaputra, meaning the son of Ganges (the holy river). The context of ethical dilemma being mentioned here with Bhishma is about his fighting the war of Mahabharata from the side of Kauravas while he always wanted the victory of his opponents Pandavas. This ethical dilemma shows how even a very powerful and highly knowledgeable person like Bhishma do fall in the ethical dilemma trap and are not able to make out clearly that which of the decisions are better to go with. Lets analyze the ethical dilemma of Bhishma on following criteria. Why such a dilemma happened Bhishma was an obedient son. He during the reign of his father, Shantanu took a pledge that he will always abide by the orders of the king. He also pledged that he will never marry and wont ever become the king himself. So at the time of Mahabharata war he was in dilemma because he was binded by his pledge towards following the orders of king and hence to fight the war from the side of Kauravas but at the same time he knew very well that objective of Kauravas for the war was not good. He knew that Pandavas are the true people for owning the throne of Hastinapur. He was actually confused between whether it is right to break his earlier pledge of obedience for what he considered right or to blindly follow his pledge. This is a perfect example of a manager in present condition who is trapped in a quandary to follow or refuse the decision by top management if he finds them in conflict with his own ethics though following them might pave way for his lucrative career. Consequences of Decision As per his decision of fighting for Kauravas against Pandavas, finally Bhishma lost the fight with Arjuna and died after the war was over. During his last moments he mentioned that it was a mistake on his part to consider himself above the nation or taking the side of an army which was not fighting for good reason. Conclusion By analyzing the character of Bhishma , we can conclude that though his intentions for serving his king were good but he made a mistake by blindly following it without reflecting on his decisions from time to time. He should have realized that welfare of the kingdom is an insurmountable purpose in priority and his personal decisions shouldnt defeat it. This lesson can be implemented in present scenario when an individual feels obliged on joining an organization and stops thinking if the organization is leading in the right path. He has to rationally figure out if the managerial decisions: legitimizes managerial actions strengthens the coherence and balance of the organizations culture improves trust in relationships between individuals and groups Supports greater consistency in standards and qualities of products/services. Cultivates greater sensitivity to the impact of the enterprises values and messages. An analogy with Corporate real life case Hyundai Chairperson went to jail for embezzlement and breach of trust Problem: In late April 2006, Hyundai Motor Company chairman, Chung Mong-koo was arrested. This example would show us that the society interest prevails over individuals interest. Problem Details: The following month he was accused on charges of breach of trust, embezzling company funds, and causing damage to companies in the Hyundai group. Consequences: In April 2006, the directors of Hyundai apologized to the public and said the Chung family would donate assets worth Won 1 trillion to society. In June 2006, Chung appeared in court and admitted his guilt to a certain extent Karna : Eldest of the Pandava brothers, but not known to any of his brothers. Loyal friend of Duryodhana. Ethical dilemma of karna has been analyzed on following basis : Why such a dilemma happened Karna was son of Kunti (Mother of pandavas). He was born before kuntis marriage and hence because of fear of social repubation, kunti floated the child in the river. Karna was brought up by Adhirath, the chariot driver of king. Karna was supported by Duryodhan when he was not accepted by anyone else. Duryodhana made him king of Ängdesh. All these benefits by Duryodhan made karna indebted to him. For rest of his life karna promised to be loyal to Duryodhan in return of all these benefits. Here again we can see that an issue of loyalty against moral values of karna coming into play. This is because karna was always aware of what is morally right and what is morally incorrect but because of his loyalty to Duryodhana he decided to remain loyal in place of being morally correct in his own eyes. Consequences of Decision As a consequence of his decision to remain loyal to a person (Duryodhan) instead of being moral or doing what is in benefit of larger people, Karna fought in the Mahabharata war from side of Kauravas. He was finally killed by Arjuna. Conclusion Here also we see that karna was considering his loyalty towards a person (Duryodhana) to be more important than his moral values and doing the things for betterment of larger people. This analogy of karna can very well in this context be related to the way employees of Enron remained loyal to their top management by concealing the actual condition of the organization from the larger number of stakeholders. They did not go for morally correct decision of informing the condition of the degrading organization to the stakeholders. An analogy with Corporate real life case Dell Investors filed suit Over Accounting Practices Problem: A group of investors had filed a lawsuit in Feb, 2007 alleging that Dell had used illegal accounting methods to hide secret kickback payments paid by Intel .This case would show us that though being associated with the firm , the investors didnt get deter to complain against Dell. Problem Details: According to allegations, the payments from Intel were meant to ensure that Dell used only Intel Processors in its PCs according to suit. The investors claimed that Dells profits were inflated by hundreds of millions of dollars. Consequences: Regulators from the U.S. Securities and Exchange Commission (SEC) and the U.S. attorney for the Southern District of New York launched an investigation of Dells accounting practices due to which Dell had failed to file its quarterly earnings numbers for the periods ending Aug. 4, 2006 and Nov. 3, 2006, leading the Nasdaq stock exchange to take the decision of dropping Dell from its listing board for some period of time. Yudhisthira: Eldest son of Pandu, former king of Hastinapur. He is considered to be the best judge of right and wrong things. On the basis of his such a great knowledge he was awarded the title of dharmraj(King of right doings). But in Mahabharata we see even yudhishthira was caught in the web of ethical dilemma. Why such a dilemma happened This situation happened when Yudhishthira was invited by his younger brother Duryodhana for dhyut krida, a game of gambling. Those days the art of gambling used to make or break a kings reputation. Any person refusing to be a part of this game was considered either a coward or penniless. Yudhishthira as a king was well aware of the risk associated with the game yet he went beyond his limits by betting on his wife and ultimately losing to Duryodhan. Even though in the midst of the game, he had a clue of his losing out badly yet to prove he was strong enough to take the game further, he not only insulted his wife but tarred his own image. Consequences of Decision As a consequence of giving priority to his impression on society over what he believed to be morally and ethically correct, it led to the decline of the fame of Yudhishthira. He lost his fame and respect in the eyes of the people who considered him to be a real distinguisher of right and wrong. This game of gambling is a blemish on the character of Yudhishthira till date. Conclusion By analyzing the character of Yudhishthira, his act, reasons for act consequences of act we can conclude that decisions by people must be based on what is ethically correct rather than acting to inflate ones ego. An analogy with Corporate real life case Samsung paid $ 90 m in DRAM case Problem: Samsung paid $90m to bring to an end lawsuits brought against it by 41 US states as a result of its role in a worldwide DRAM price-fixing cartel. This would show us how in a bid to control the market (similar to Yudhishthiras claim to pride though he knew that he was committing mistake ), Samsung fell in the trap. Problem Details: Samsung, Elpida, Hynix and Infineon were all found guilty by the US Department of Justice of conspiring to set memory prices between July 1999 and June 2002 Consequences: In May 2006, Samsung, Hynix and Infineon agreed to pay $160m to settle a class-action brought against them by individuals who claimed they were financially harmed by the alleged conspiracy. Vibhishan : Vibhishan was the brother of Ravana. He was aware of the reality of Rama his real powers. For this reason he suggested Ravana to know the reality of Rama and move towards him making shri Rama his friend instead of making him his enemy. The dilemma faced by vibhishana is mentioned on following basis : Basis of existence of Dilemma : Vibhishan knew that Ramas power stood superior to that of his own brother (Ravana).He tried persuading Ravana to follow the path of goodness and extend a friendship relation to Rama. But when all his efforts went in vain, he was in a dilemma of whether to stay with his brother country at the time of war or should he stand in support of Rama, a person who he considered right. Hence here we see Vibhishana getting trapped between being a good obedient brother or being an enemy of his own brothers and country. Consequences of decision taken: He was insulted by his brother in front of society and ordered to leave his kingdom. This all happened after all the efforts taken by Vibhishana to pacify his brothers and Ramas relations. Later he decided to follow the path which he believed to be morally correct and a path towards achieving Moksha. He went to Rama and became his friend and a very important advisor against battle with Ravana. At the end after winning the battle Rama offers the kingdom of Ravana to Vibhishana as gift of his friendship and his gratitude towards his help and support in the war. Conclusion : Here again we see an ethical dilemma faced by a character between his loyalty towards personal relations and an ethical path. But here if we see in detail about the conditions, actions taken and consequences faced by the character, we can conclude that at the end Vibhishana took the right decision of joining with Rama. As we can see that by joining with Rama Vibhishana ensures that the effects of battle should be minimal on the citizens of his own country Lanka. With deeper thought we realize that his decision was out of his true love and respect for his country for he knew that by joining Rama, undesired damages of his kingdom can be avoided. Hence by observing this situation of Vibhishana we can also say that what actually looked to be a person who shifted to the enemy camp in the time of war and who was considered as a traitor by his own citizens was actually the real person concerned about the safety of his country. Here is a very good example by which we can explain that followi ng ethical decisions may seem to be against some of the known and dear ones in the short run but finally it is the ethically and morally correct decisions which are really good for the betterment of the organizations. This example of ethical decision resulting in loss for an organization in the short run but finally coming out as the most beneficial decisions ever taken in history for the organization in long term can be seen very well from the ethical decision taken by Johnson Johnson while calling back all its medicines which were considered fatal for the health of people consuming these medicines. As a result of this decision organization faced a huge short run financial loss even it looked that company may go for bankruptcy but now finally it is seen by everybody that Johnson Johnson is the top organization in its field and has a very good brand value and is perceived as one of the best ethically driven organizations. An analogy with Corporate real life case SEC fined TREND Micro CEO Problem: The allegation of suspicious trading of shares by Chen, chief executive and co founder of leading anti- virus firm Trend Micro on the major Chinese Internet Portal Sina.com. She was found to be in partner with the wrong dealings by his own husband too. This example would show us that one shouldnt keep silent over his/her close ones misdeeds. Problem Details: Apart from allegations of insider trading, there was also an inquiry into whether Ms Chen under reported her holdings in Trend Micro chares. Consequences: the CEO of Trend Micro was ordered to pay a fine by US Financial watchdogs. Also the US Securities and Exchange Commission did its investigations following the allegations. The company suffered huge losses due to it. Conclusion from the Project Most prominent ethical dilemma from Epics : By the study of various characters from Mahabharata we have seen that there is prominent type of ethical dilemma which exists across large number of characters. This prominent type of dilemma is the dilemma of loyalty versus moral values. Here by loyalty we mean that loyalty of a person can be towards anything. This loyalty in case of Bhishma was towards his own pledge of protecting his king. In case of Karna this loyalty is towards Duryodhana. Here the reason of loyalty is again different. While in case of Bhishma the reason of loyalty is his pledge in case of Karna reason of loyalty is his being indebted to Duryodhan because of the benefits given by Duryodhan to him. Similarly for Yudhishthira the inclination was towards popularly accepted beliefs rather than his own inner voice telling him not to go ahead with the game. In Ramayana, Vibhishan on the other hand was an example to show that ethically taken decisions stand much superior to ones worldly relations. Existence of similar dilemma in present scenario : The ethical dilemma faced by the large number of characters in Mahabharta can be seen in present scenario as well. This dilemma of loyalty versus personal moral values of an individual can also be seen in case of Enron failure. Here also as already explained above, employees found it their duty to remain loyal to the organization or top management by not concealing the degrading condition of organization to outside public. Conclusion : From all the above mentioned examples we can conclude that following ethically and morally correct decisions are the ones which an organization or an individual should always go with though they may be hard to follow. This is because these decisions may look difficult and harmful when viewed in short term perspectives but these are truly the decisions which are going to be beneficial in long run. All successful individuals and organizations are those which have a respected and trustworthy image in the minds of the public and stakeholders it has. This kind of image of individuals and organizations is never built in a day or so but is an effect of continuous dealings of ethical or moral values. According to Universalist theory of Business Ethics too, the interest of the larger mass prevails over individual interests It rightly says that the best moral choices are those that you want others to do , even when you cannot make yourself an exception , and ,that respect others as persons.

Managing Working Capital

MANAGING WORKING CAPITAL Cash Budgets and Current Assets Learning Objectives Upon reading this chapter, students should: †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Be able to compare and contrast working and fixed capital †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Understand the impact of the operating cycle on the size of investment in accounts receivable and inventories †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Know the differences between the three motives †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Be able to differentiate between float, collection float, and disbursement float †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Know how to appraise a firm’s credit worthiness †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Be able to appraise the effectiveness of a firm’s inventory management policiesChapter Summary A firm can invest in both working capital and fixed capital. Working capital is a firm’s current assets and includes cash, marketable securities, inventory, and accounts receivable. Fixed capital is a firm’s fixed assets and includes plant, equipment and property. Firms that cannot obtain short-term financing become candidates for bankruptcy. Management of working capital is particularly important to the entrepreneurial or venture firm because there is such a pull on resources.Two important concepts in managing working capital are the operating cycle and the cash conversion cycle: †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The operating cycle measures the time between receiving raw materials and collecting the cash from credit sales posted to accounts receivable †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The cash conversion cycle measures the time it takes to collect money from the company’s customers and use those funds to pay its suppliers Calculating three ratios will reveal the average length of these cycles: 1. Inventory days     Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   =   365 / (Cost of goods sold / Inventories) 2.Accounts receivable period (average collection period ) =   Accounts receivable / (Net sales / 365) 3. Average payment period   =   Accounts payable / (Cost of goods sold / 365) The operating cycle is the inventory conversion period plus the average collection period. The cash conversion cycle is the operating cycle minus the average payment period. In order to determine average investment in accounts receivable, multiply net sales per day by the average collection period. With this number, a manager can now estimate what the investment in accounts receivable will be fore ht following year given sales increases and average collection period.In order to determine investment required in inventories, multiply average cost of goods sold per day by inventory conversion period. The required amount of accounts payable can be found by multiplying the cost of goods sold per day by average payment period. Armed with these numbers, a manager can tweak the business practices and use these numbers as metrics for improvement. If savings can be wrung out of the operating cycle and conversion cycle, this means less money will have to be raised in financing. A cash budget details the cash inflows and outflows of a firm over a specific time frame.Small firms may prepare annual or monthly cash budgets while larger firms will forecast cash flows weekly or daily. Most firms have a minimum desired cash balance that depends on the firm’s ability to acquire financing on short notice, management preferences, and the predictability of cash inflows and outflows. Estimates of cash inflows are driven by two main factors: 1. Sales forecast (may exhibit seasonality) 2. Customer payment patterns Cash outflows will go to suppliers, payroll, taxes, operating expenses, and purchases of plant and equipment.In order to construct the cash budget, list all expected cash inflows and then all expected cash outflows for the particular period, generating a net cash flow amount. As a general rule of thumb, the average firm has 1/3 or more of i ts assets in the form of current assets (cash, accounts receivable and inventory). Seasonal production and forecasting can lead to idle plant capacity and laid-off workers during the off-season. Under a level production plan, the same amount of raw material is purchased and the same amount of finished product is manufactured every month.There are three types of motives for holding cash: 1. The transactions motives are demands for holding cash – cash is needed to conduct day-to-day operations 2. Precautionary motives are demands that may be caused by unpredictable events, such as delays in production or in the collection of receivables; marketable securities are held in such a contingency 3. Speculative motives are demands for funds to take advantage of unusual cash discounts for needed materials Cash and marketable securities include: †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Cash itself †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   U. S. Treasury bills   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Commercia l paper – short-term, unsecured notes of well-known business firms †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Negotiable certificates of deposit – a receipt issued by a bank in exchange for a deposit of funds †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Bankers’ acceptances – primarily used to finance exports and imports †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Eurodollars – deposits placed in foreign banks that remain denominated in U. S. dollars There are several reasons why U. S. banks have entered the Eurodollar market through overseas branches: 1. To finance business activity abroad 2. To switch Eurodollars into other currencies 3. To lend to other Eurodollar banksIn general, managers try to speed up cash collections while slowing down the payment process. The float is the time between sending out payments and having them actually be charged to the bank account. The collection float is the time between when a payer sends payment and funds are credited to the payee ’s bank account. The disbursement float is the time between when a payer sends payment and when the funds are deducted from the payer’s bank account. Float has three components: 1. Delivery or transmission float – the delay in transferring the means of payment from the payer (customer) to the payee (provider of goods/services) 2.Processing float – once payment reaches the destination, it needs to be entered and processed 3. Clearing float – delay in transferring funds because of the banking system itself In order to speed up the process: †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Preauthorized checks are regular (typically monthly) deductions by a vendor from a customer’s checking account. †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Under the Check 21 law, enacted in 2004, payee banks can present electronic or digital images of checks to payer banks rather than having to physically deliver the paper checks for payment.In order to facilitate sales, firms of ten offer the customers credit for purchases; this process calls in credit analysis. The five Cs of credit analysis are: 1. Character – ethical quality of the applicant and the history of paying bills on time (credit checks) 2. Capacity – the ability to pay bills (liquidity ratios) 3. Capital – adequacy of owners’ equity relative to existing liabilities 4. Collateral – whether assets are available to provide security 5. Conditions – current economic climate and state of the business cycleCredit bureaus obtain credit information about business firms and individuals; two such organizations are Experian and Equifax. Dun & Bradstreet reports contain information assembled through many channels and is one of the best sources of information on privately-held companies; reports are typically divided into five sections:   (1) rating and summary; (2) trade payments; (3) financial information; (4) operation and location; and (5) history. Trade credit is extended on purchases to a firm’s customers. Sometimes, customers are given a discount if they pay early.The financial manager must be careful not to impose onerous credit terms that will alienate customers and lower sales. With respect to global credit, the concern is forex. There are two ways to handle the issue: 1. Invoice customers in the firm’s home currency 2. Hedge the forex risk Inventory management: †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The just-in-time (JIT) inventory control system is a system where there are enough materials in inventory to cover needs for a short time, but not more inventory than is needed for short-term needs.Vendor and manufacturer work together to reduce lead time, setup time, and production time so that inventory shows up â€Å"just in time†Ã‚   †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   JIT II further integrates the activity of vendor and purchaser, wherein the position of buyer’s purchasers or materials planners is eliminate d and replaced by a representative of the supplier †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Tracking inventory also allows firms to reduce the inventory conversion period and the cash conversion cycle. RFID (radio frequency identification) tags send out a radio signal to electronic readers that allow companies to know the location of inventory at any timeInventory management can result in reduced cost of warehousing and handling inventory. Cost savings and smaller asset bases should lead to higher return on assets and increasing shareholder wealth. Technology is improving asset management by making information available with which managers make business decisions in a real-time setting. Technology may be the key to reducing procurement and supply chain costs. Portals are specialized and secure Web sites through which clients can access order and account information. Key TermsCapacity  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The ability to pay bills and often involves an examination of liquidity ratios. Capital  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The adequacy of owners’ equity relative to existing liabilities as the underlying support for creditworthiness. Cash budget  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The cash inflows and cash outflows of a firm over a specific time frame. Cash conversion cycle  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The time it takes to collect money from the company’s customers and use those funds to pay its suppliers.Character  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The ethical quality of the applicant and his/her willingness to pay bills on time and is best judged by reviewing the past credit hist ory for the company or person. Collateral  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Assets that secure credit. Collection float  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The time between when a payer sends payment and the   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   funds are credited to the payee’s bank account. Conditions  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The current economic climate and state of the business cycle.They are an important consideration in assessing whether the applicant can meet credit obligations. Credit bureaus  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Firms that obtain credit information about   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   business firms and individuals. Disbursement float  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The time between when a payer sends payment and when the funds are deducted from the payer’s bank account. Fixed capital  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   A firm’s fixed assets, which include plant, equipment, and property. Float  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The time between sending out payments and having them actually be charged to the bank account.Level production plan  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Schedule where the same amount of raw material is purchased and the same amount of finished product is manufactured every month. Operating cycle  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The time between receiving raw materials and collecting the cash from credit sales posted to accounts recei vables. Portals  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Specialized and secure web sites through which clients can access order and account information. Pre-authorized checks  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Regular (typically monthly) deductions by a vendor from a customer’s checking account.Precautionary motives  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Demands for funds that may be caused by   unpredictable events, such as delays in production   or in the collection of receivables. Speculative motives  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Demands for funds to take advantage of unusual cash discounts for needed materials. Trade credit  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Credit that is extended on purchases to a firm’s customers. Transactions motives  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Demands for holding cash is that cash is needed to conduct day-to-day operations.Working capital  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   A firm’s current assets as shown on the balance sheet and includes cash in the bank accounts, marketable securities, inventory, and accounts receivable. Suggestions for Additional Resources 1. http://en. wikipedia. org/wiki/Just_In_Time_%28business%29 2. http://www. lean. org/ 3. http://www. equifax. com/ 4. http://www. experian. com/ 5. http://www. investopedia. com/terms/c/creditbureau. asp 6. http://en. wikipedia. org/wiki/Credit_bureau 7. http://www. investopedia. com/terms/w/workingcapital. asp 8. http://en. wikipedia. org/wiki/Working_capitalAnswers to Summary Questions 2. Fixed capital would be defined as the firm’s fixed assets, which include plant, equipment and property. True or false? True. .   3. The operating cycle measures the time it takes between o rdering materials and collecting cash from receivables. True or false? True. .   4. If a firm has $50,000 in profit and pays out about one half to the owners of the company, the amount of profit retained in the firm would show up as: (a) an increase in owners’ equity (b) a decrease in owners’ equity (c) a decrease in retained earnings (d) a decrease in long-term debt .   5.The accounts payable period is the time between a firm’s paying its suppliers for inventory and collecting cash from inventories. True or false? False. .   6. Increases in the cash conversion cycle will lower the firm’s short-term financing needs. True or false? False. .   7. The inventory conversion period is calculated by inventory divided by costs of goods sold. True or false? False. .   8. Activities that decrease the cash conversion cycle will increase the firm’s need to obtain financing. True or false? False. .   9. More efficient management of working capital a ssets will lessen the firm’s needs for financing.True or false? True. . 10. A cash budget is a tool the treasurer uses to forecast future cash flows and estimate future short-term borrowing needs. True or false? True. . 11. To construct a cash budget, two sets of information are needed: estimated cash inflows and estimated cash outflows. True or false? True. . 12. The estimated cash inflows are affected by the sales forecast and customer payment patterns. True or false? True. . 13. Assume a firm’s production process requires an average of 80 days to go from raw materials to finished products and another 40 days before the finished goods are sold.If the accounts receivable cycle is 70 days and the accounts payable cycle is 80 days, what would the short-term operating cycle be? (a) 110 days (b) 130 days (c) 190 days (d) 270 days . 14. If a firm has net sales of $400,000, annual cost of goods sold of $315,000, an inventory turnover of 4. 5 times a year, and an accounts re ceivable turnover of five times a year, the combined investment in inventories and accounts receivable would be: (a) $64,500 (b) $92,000 (c) $122,500 (d) $150,000 . 15. Calculation of a firm’s average collection period is the same as calculating the: (a) accounts receivable cycle (b) inventory cycle c) accounts payable cycle (d) short-term operating cycle . 17. A level production plan has problems, such as idle plant and laid-off workers during slow sales months and production bottlenecks during busy times. True or false? False. . 18. The account receivable period may be calculated as accounts receivable divided by sales. True or false? False. . 19. The account receivable period may be calculated as accounts receivable divided by daily sales. True or false? True. . 20. The transactions motive is the demand for holding cash. True or false? True. . 22. The federal funds rate is normally several points lower than the Treasury Bill rate.True or false? False. . 23. The five C†™s of credit analysis is a popular concept used by inventory managers. True or false? False. . 24. A mercantile credit bureau serves primarily as a (n): (a) collection agency for delinquent accounts (b) common meeting place where credit managers may exchange information (c) organization through which accounts receivable may be sold to other businesses (d) central record-keeping organization for credit information on business firms . 25. The objective of just-in-time (JIT) inventory control is to carry a minimum level of inventories.True or false? True. . 26. The delivery or transmission float is the delay in transferring the means of payment from the payer (customer) to the payee (the provider of goods or services). True or false? True. . 27. The disbursement float is the delay in transferring the means of payment from the payer (customer) to the payee (the provider of goods or services). True or false? False. Answers to â€Å"Review Questions† .   1. What is meant by wor king capital? Net working capital is defined as current assets minus current liabilities. .   2. Briefly describe a manufacturing firm’s operating cycle.The operating cycle measures the time between receiving materials and collecting cash from receivables. Raw materials are purchased and products are manufactured from them to become finished goods. Effort then is made to sell the finished goods. If the goods are sold on credit, then the receivables must be collected. .   3. Explain how the cash conversion cycle differs from the operating cycle. The cash conversion cycle typically is shorter than the operating cycle. The cash conversion cycle measures the time between when a firm pays for its supplies or raw materials and when it collects cash from receivables.    4. Describe how the length of the cash conversion cycle is determined. It is equal to the operating cycle (inventory period minus the accounts receivable period) minus the payables period. .   5. Explain how the length of the operating cycle affects the amount of funds invested in accounts receivable and inventories. All else being equal, a longer (shorter) inventory period and receivables period will increase (decrease) the amount of inventory and accounts receivable carried by the firm. .   6. What affects the amount of financing provided by accounts payable as viewed in terms of the cash conversion cycle?The level of the firm’s cost of goods sold and the average payment period affect the amount of financing provided by accounts payable. .   7. What is a cash budget? How does the treasurer use forecasts of cash surpluses and cash deficits? A cash budget lists, period by period, expected cash inflows and outflows. The treasurer can plan ahead to find suitable marketable securities in which to invest excess cash. If cash deficits are forecast, the treasurer can arrange for short-term financing sources. .   8. Three sets of information are needed to construct a cash budget.E xplain what they are. The firm’s minimum desired cash balance, forecasted cash inflows, and forecasted cash outflows are needed to construct a cash budget. .   9. Why might firms want to maintain minimum desired cash balances? Firms want to maintain minimum desired cash balance to ensure they can pay bills on time (transactions motive) and to have a cushion, as forecasts of cash flows may differ from actual future cash flows. . 10. What are the sources of cash inflows to a firm over any time frame? The main sources of cash inflows are cash sales and customer payments on credit sales. . 11.What are the sources of cash outflows from a firm over any time frame? The main sources of cash outflows are payments for raw materials, labor and overhead expenses, rent/lease payments, plant and equipment purchases, interest and principal payments, dividend payments, and taxes. . 12. How does the choice of level or seasonal production affect a firm’s cash over the course of a year ? Under level production, inventory becomes large before the peak selling season; whatever cash the firm has will probably be borrowed funds as cash is used to pay workers and suppliers over the course of the year as inventories are building.Under seasonal production, there is still a build-up of inventories prior to the selling season but probably less than under level production, as inventory can be sold shortly after it is made. Cash is conserved for much of the year; materials and labor expenses are less during the off-peak times when production is low. . 13. Describe what happens to a firm’s current asset accounts if the firm has seasonal sales and they use (a) level production; (b) seasonal production. a. Under a level production plan, the same amount of raw materials are purchased and the same amount of finished product is manufactured every month.Inventory builds up in anticipation of higher seasonal sales while cash and accounts receivable are quite low. When the sel ling season begins, inventories fall and receivables rise. After a time, inventories are nearly exhausted, and the firm is collecting cash from its customers. The changing composition of current assets for a firm with a seasonal sales pattern is illustrated in Figure 15. 4. b. Under seasonal production, raw material purchases will rise or fall in anticipation of higher or lower sales.Such a strategy can help minimize the effect of seasonal sales on inventory; goods are manufactured shortly before sale. Receivables will rise during the peak selling season but will fall thereafter as cash is collected. . 14. Describe the three motives or reasons for holding cash. a. need for day-to-day bill-paying? Transactions motive: b. hold funds to meet unexpected needs—a safety level of? Precautionary motive: cash hold funds? c. Speculative motive: to take advantage of attractive input prices or discounts 15. What characteristics should an investment have to qualify as an acceptable market able security?Marketable securities must be highly liquid (easily converted into cash at a price close to fair market value) with little chance of price risk or default risk. . 16. Identify and briefly describe several financial instruments used as marketable securities. Marketable securities that can be used as a means to â€Å"park† the firm’s excess cash include a. short-term securities issued and backed by the U. S.? U. S. Treasury Bills: government b. a bank’s temporary excess reserves that are lent to other banks? Federal Funds: on a day-to-day basis c. short-term unsecured notes of large financially stable? Commercial Paper: firms . large dollar CDs ($100,000 or more) for? Negotiable Certificates of Deposit: which a secondary market has evolved e. business paper used to finance international trade, backed? Bankers’ Acceptances: (accepted) by a bank with a high quality rating f. deposits placed in foreign banks that remain denominated in U. S.? Euro dollars: dollars (so there is no currency risk) . 17. What is float? Why is it important to cash management? Float is the delay between when funds are sent by a payer to a payee. Collection float is the time between when a payer sends payment and the funds are credited to the payee’s bank account.Disbursement float is the time lag between when a payer sends payment and when the funds are deducted from the payer’s bank account. It is important to cash management as the firm will have larger cash balances to invest and to reduce its own financing needs, all else being equal, the shorter the collection float and the larger the disbursement float. . 18. What are the three components of float? Which are under the control of the firm seeking to reduce collection float? The three components of float are delivery (or transmission) float, processing float, and clearing float.Delivery float and processing float are most directly under the control of the firm. Clearing float is c ontrolled mainly by the banking system’s check-clearing process but the firm can try to reduce it (and delivery float) by using lockboxes that are geographically closer to customers then the firm’s main office. . 19. What are some strategies a firm can use to speed up its collections by reducing float? Using a lockbox, incoming receipts are placed in a Post Office box which can be emptied several times a day by bank personnel, who process the payments and deposit the incoming funds into the firm’s accounts.This reduces mail delivery delay and processing delay, as the bank processes the payments rather than the firm. A second popular method, best used for regular payments such as utility, cable bills, or insurance premiums, is the use of preauthorized checks that allow the firm to deduct funds from the payer’s bank account. . 20 How can processing float be reduced? Vendors reduce processing float by improving the process of receiving payments and depositin g them. Large incoming payments (say, over $1 million) are automatically flagged and deposited expeditiously.Electronic check images and electronic payments (rather than the use of paper checks) remove the human component and thus can reduce processing delays. Lockboxes and preauthorized checks reduce processing delays, as processing is handled by banks, speeding deposit of incoming receipts. .. 21. How can a firm use float to slow down its disbursements? A firm can increase mail float by mailing payments from out-of-the-way locations, but that may hurt its reputation with suppliers who can direct the firm to send payments to another, closer, lockbox location.Another means are to use disbursement banks that are located around the country to increase disbursement float via the check-clearing process. So excess (and noninterest bearing) funds are not kept in a disbursement account, a firm can arrange to use a zero balance account for its disbursements. A bank will transfer sufficient funds every day into the ZBA to cover the day’s presented checks; other funds can remain invested in marketable securities. . 22. Why can’t a firm that wants to increase disbursement float simply make payments after the stated due date?There is an ethical issue with paying invoices late. If a vendor has provided needed goods and services the customer should pay for them in a timely and appropriate manner. Paying late can lead to negative notations on credit reports. Credit availability to late payers can be discontinued if the vendor’s credit standards are tightened. . 23. What is credit analysis? Identify the five C’s of credit analysis. Credit analysis involves appraising the creditworthiness or quality of a potential credit customer. Credit analysis includes examining the 5 C’s of credit. a. illingness to repay debts? Character: b. ability to repay debts (liquidity)? Capacity: c. equity cushion? Capital: d. what assets can provide security for t he credit? Collateral: e. the state of the business cycle and its expected movement during the? Conditions: credit period . 24. Describe various credit-reporting agencies that provide information on business credit applicants. Credit bureaus provide firms with information about a firm’s financial condition and its record on paying its past debts. Local credit bureaus service community credit information needs.The National Credit Interchange System facilitates exchange of information between bureaus. The National Association of Credit Management established the Foreign Credit Interchange Bureau to service firms with overseas customers. Dun & Bradstreet is perhaps the best-known private firm supplying credit information. . 25. How can a firm control the risk of changing exchange rates when billing an overseas customer? First, a firm can invoice the overseas customer in the firm’s home currency; this transfers the risk of changing exchange rates to the customer.Second, if the customer may pay in their own currency, the supplier can use currency futures or options contracts to hedge or reduce the risk of changing exchange rates. . 26. What risks arise when a firm lowers its credit standards to try to increase sales volume? Marginal and poor-risk customers may purchase the firm’s goods/services on credit. If they are unable to make payment, the firm must revise its sales figures and faces the added expense of trying to recover the goods and whatever funds it can from the delinquent customer. . 27. How do credit terms and collection efforts affect the investment in accounts receivable?All else being equal, lax credit terms increase the investment in accounts receivable and increase the chance for larger bad debts. Stricter credit terms will likely reduce receivables balances, but at the cost of possibly losing sales to competitors with easier standards. Collection efforts are aimed at having customers with overdue accounts pay their bills. Thus, successful collection efforts can reduce receivable balances and bad debt expense. On the other hand, collection efforts that offend customers can lead to lost future business. 28. How is the financial manager involved in the management of inventories? Inventory management concerns the financial manager because inventory, like all other assets, must be financed. Overly large inventories use warehouse space and have larger financing costs and insurance costs. Smaller inventories run the risk of selling out and causing customer dissatisfaction. Answers to â€Å"Applying this Chapter† Questions 2. The Robinson Company has the following current assets and current liabilities for these two years: 2004   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   2005 Cash and marketable securities |$50,000 |$50,000 | |Accounts receivable |300,000 |350,000 | |Inventories |350,000 |500,000 | |Total current assets |$700,000 |$900,000 | |Accounts payable |$200,000 |$250,000 | |Bank loan |0 |150,000 | |Accruals |150,000 |200,000 | |Total current liabilities |$350,000 |$600,000 | |   |   |   | If sales in 2004 were $1. 2 million and sales in 2005 were $1. 3 million, and cost of goods sold was 70 percent of sales, how long were Robinson’s operating cycles and cash conversion cycles in each of these years? What caused them to change during this time?AR period = $350,000/($1,300,000/365) = 98. 27 days (2005)   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   = $300,000/($1,200,000/365) = 91. 25 days (2004) Inventory period  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   = $500,000/($910,000/365) = 200. 55 days (2005)   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   = $350,000/($840,000/365) = 152. 08 days (2004) AP period   = $250,000/($910,000/365 ) = 100. 27 days (2005)   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   = $200,000/($840,000/365) = 86. 90 days (2004) Operating cycle = AR period + Inventory period = 98. 27 + 200. 55 = 298. 82 days (2005)   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   = 91. 25 + 152. 08 = 243. 33 days (2004) Cash conversion cycle = Operating cycle – AP period = 298. 82 – 100. 27 = 198. 5 days (2005)   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   = 243. 33 –   86. 90 = 156. 43 days (2004) Both the OC and CCC rose in 2005, primarily because of a large rise (almost 48 days) in the inventory period. 5. The Robinson Company from Problem 2 had net sales of $1,200,000 in 2004 and $1,300,000 in 2005. (a)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Determine the receivables turnover in each year. AR turnover  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   = Sales/AR = $1,300,000/$350,000 = 3. 71 (2005)   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   = $1,200,000/$300,000 = 4. 00 (2004) (b)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Calculate the average collection period for each year. Average collection period  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   = AR/(Sales/365)   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   = $350,000/($1,300,000/365) = 98. 7 days (2005)   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   = $300,000/($1,200,000/365) = 91. 25 days (2004) (c)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Based on the receivables turnover for 2004, estimate the investment in receivables if net sales were $1,300,000 in 2005. How much of a change in the 2005 receivables occurred? Receivables investment  Ã‚  Ã‚  Ã‚  Ã‚   = Sales per day ? Average collection period   Ã‚  Ã ‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   = ($1,300,000/365) ? 91. 25 days = $325,000 6. Suppose the Robinson Company had a cost of goods sold of $1,000,000 in 2004 and $1,200,000 in 2005. (a)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Calculate the inventory turnover for each year. Comment on your findings.Inventory turnover  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   = COGS/Inventory = $1,200,000/$500,000 = 2. 40 (2005)   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   = $1,000,000/$350,000 = 2. 86 (2004) Inventory turnover fell in 2005; inventory rose more quickly than cost of goods sold. (b)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   What would have been the amount of inventories in 2005 if the 2004 turnover ratio had been maintained? Inventories investment  Ã‚  Ã‚  Ã‚  Ã‚   = COGS per day ? Inventory period   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   = $1,200,000/365 ? (365/2. 86) = $419,580. 42 7. Given Robinson’s 2004 and 2005 financial information presented in problems 2 and 4,   Ã‚  Ã‚  Ã‚   (a)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Compute its operating and cash conversion cycle in each year. Robinson Company |   |   |   |   | |   |2004 |   |2005 |   | |Sales |$1,200,000 |   |$1,300,000 |   | |Cost of Goods sold |$1,000,000 |   |$1,200,000 |   | |profit margin |5. 0% |   |5. 0% |   | |   |   |   |   |   | |Accounts Receivable |$300,000 |   |$350,000 |   | |Inventory |$350,000 | $500,000 |   | |Accounts Payable |$200,000 |   |$250,000 |   | |   |   |   |   |   | |Sales/ day = |$3,287. 67 |   |$3,561. 64 |= $1,300,000/365 | |COGS/day= |$2,739. 73 |   |$3,287. 67 |= $1,200,000/366 | |   |   |   |à ‚   |   | |Inventory conversion period = Inventory/COGS per day | |   |127. 75 |days |152. 8 |days | |   |   |   |   |   | |Average collection period = AR/sales per day |   | |   |91. 25 |days |98. 27 |days | |   |   |   |   |   | |Average payment period = AP/COGS per day |   | |   |73. 0 |days |76. 4 |days | |   |   |   |   |   | |Operating cycle = Inventory conversion + collection periods | |   |219. 00 |days |250. 35 |days | |   |   |   |   |   | |Cash cycle = Inventory conversion + collection period – payment period | |   |146. 00 |days |174. 31 |days | (b)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   What was Robinson’s net investment in working capital each year? |Net investment in working capital = AR + Inventory – AP (as used in his chapter) | |   |2004 |   |2005 |   | |   |=$300,000+$350,000-$200,000 |=$350,000+$500,000-$250,000 | |   |=$450,000 |   |=$600,000 |   | 8. Robinson expects its 2006 sales and cost of goods sold to grow by 5 percent over their 2005 levels. (a)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   What will be the affect on its levels of receivables, inventories, and payments if the components of its cash conversion cycle remain at their 2005 levels? What will be its net investment in working capital? If the ratios remain the same, a |   |   | |5 |percent increase in sales and COGS will increase AR, | |inventory, and AP proportionately in 2006 |   |   | |AR: $350,000 + 5%= |$367,500 |   |   | |Inv: $500,000 + 5%= |$525,000 |   |   | |AP: $250,000 + 5%= |$262,500 |   |   | |Net investment in working capital = AR + Inventory – AP |   | |=$367,500 + $525,000 – $262,500 = |$630,000 |   | |   |   |   |   | |The new sales will be |$1,300,000 + 5% = |$1,365,000 |   | |Sales/day = |   |$3,739. 3 |   | |The new COGS will be |$1,200,000 + 5% = |$1,260,000 |   | |COGS/day = |   |$3,452. 05 |   | (b)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   What will b e the impact on its net investment in working capital in 2006 if Robinson is able to reduce its collection period by five days, its inventory period by six days, and increase its payment period by two days? |The new sales will be |$1,300,000 + 5% = |$1,365,000 | |Sales/day = |   |$3,739. 3 | |The new COGS will be |$1,200,000 + 5% = |$1,260,000 | |COGS/day = |   |$3,452. 05 | |Estimated AR if collection period reduced by |5 |days: | |New AR = sales/day x collection period |   |   | |Sales/ day = |$3,739. 73 |   |   | |Old collection period |98. 27 |   |   | |New collection period |93. 27 |   |   | |New AR estimate= |$348,801. 7 |   |   | |   |   |   |   | |Estimated inventory if conversion period reduced by |6 |days: | |New Inv = COGS/day x conversion period |   |   | |COGS/day |$3,452. 05 |   |   | |Old conversion period |152. 08 |   |   | |New conversion period |146. 08 |   |   | |New Inv estimate= |$504,287. 7 |   |   | |   |   |   |   | |Estimated AP if payment period increased by |2 |days: | |New AP = sales/day x payment period |   |   | |COGS/day |$3,452. 05 |   |   | |Old payment period |76. 04 |   |   | |New payment period |78. 04 |   |   | |New AP estimate= |$269,404. 1 |   |   | |   |   |   |   | |2006 working capital = AR + Inventory – AP |   |   | |=$360,020. 55 + $514,643. 84 – $259,047. 95 |   |   | |=$583,684. 93 |   |   |   | |which is a reduction of |$46,315. 07 |from part a) | 9. Robinson expects its 2006 sales and cost of goods sold to grow by 20 percent over their 2005 levels. (a)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   What will be the affect on its levels of receivables, inventories, and payments if the components of its cash conversion cycle remain at their 2005 levels? What will be its net investment in working capital? If the ratios remain the same, a |   |   | |20 percent increase in sales and COGS will increase AR, | |inventory, and AP proportionately in 2006 |   |   | |AR: $350,000 + 5%= |$420,000 |   |   | |Inv: $500,000 + 5%= |$600,000 |   |   | |AP: $250,000 + 5%= |$300,000 |   |   | |Net investment in working capital = AR + Inventory – AP |   | |=$367,500 + $525,000 – $262,500 = |$720,000 |   | |   |   |   |   | |The new sales will be |$1,300,000 + 20% = |$1,560,000 |   | |Sales/day = |   |$4,273. 97 |   | |The new COGS will be |$1,200,000 + 20% = |$1,440,000 |   | |COGS/day = |   |$3,945. 21 |   | b)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   What will be the impact on its net investment in working capital in 2006 if Robinson is able to reduce its inventory period by ten days? |Estimated AR if collection period reduced by 0 days: | |New AR = sales/day x collection period |   |   | |Sales/ day = |$4,273. 97 |   |   | |Old collection period |98. 27 |   |   | |New collection period |98. 27 |   |   | |New AR estimate= |$420,000. 0 |   |   | |   |   |   |   | |Estimated inventory if conversion period reduced by 10 days: | |New Inv = COGS/day x conversion period |   |   | |COGS/day |$3,945. 21 |   |   | |Old conversion period |152. 08 |   |   | |New conversion period |142. 08 |   |   | |New Inv estimate= |$560,547. 5 |   |   | |   |   |   |   | |Estimated AP if payment period increased by 0 days: | |New AP = sales/day x payment period |   |   | |COGS/day |$3,945. 21 |   |   | |Old payment period |76. 04 |   |   | |New payment period |76. 04 |   |   | |New AP estimate= |$300,000. 0 |   |   | |   |   |   |   | |2006 working capital = AR + Inventory – AP |   |   | |=$360,020. 55 + $514,643. 84 – $259,047. 95 |   |   | |$680,547. 95 |   |   |   | |which is a reduction of |$39,452. 05 |from part a) |   | 10. Following are financial statements for the Genatron Manufacturing Corporation for the years 2004 and 2005: Selected Balance Sheet Information 2004   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   2005 Cash |  $ 50,000 |$ 40,000 | |Accounts receivable |200,000 |260,000 | |Inventory |450,000 |500,000 | |Total current assets |$700,000 |$800,000 | |Bank loan, 10% |$ 90,000 |$ 90,000 | |Accounts payable |130,000 |170,000 | |Accruals |50,000 |70,000 | |Total current liabilities |$270,000 |$330,000 | |Long-term debt, 12% |300,000 |400,000 | Selected Income Statement Information 2004   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   2005 |Net sales |$1,300,000 |$1,500,000 | |Cost of goods sold |780,000 |900,000 | |Gross profit |$ 520,000 |$ 600,000 | |Net income |$93,000 |$ 114,000 |Calculate Genatron’s operating cycle and cash conversion cycle for 2004 and 2005. Why did they change between these years? Inventory period  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   = Inventory/(COGS/365)   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   = $500,000/($900,000/ 365) = 202. 78 days (2005)   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   = $450,000/($780,000/365) = 210. 58 days (2004) AR period = AR/(Sales/365) = $260,000/($1,500,000/365) = 63. 27 days (2005)   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   = $200,000/($1,300,000/365) = 56. 15 days (2004) AP period   = AP/(COGS/365) = $170,000/($900,000/365) = 68. 94 days (2005)   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   = $130,000/($780,000/365) = 60. 83 days (2004) Operating cycle   = Inventory period + AR period 202. 78 days + 63. 27 days = 266. 05 days (2005)   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   = 210. 58 days + 56. 15 days = 266. 73 days (2004) Cash conversion cycle = Operating cycle – Average payment period   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   = 266. 05 days – 68. 94 days = 197. 11 days (2005)   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   = 266. 73 days – 60. 83 days = 205. 90 days (2004) The operating cycle remained constant in 2004 and 2005 as a reduction in the inventory period was balanced by an increase in the average collection period. The cash conversion cycle sell for 2005 was longer. Genatron took, on average, longer to pay its suppliers. 11.Genatron Manufacturing expects its sales to increase by 10 percent in 2006. Estimate the firm’s investment in accounts receivable, inventory, and accounts payable in 2006. If the inventory, collection, and payment periods remain constant, each account should rise by 10 percent. $260,000 (1. 10) =? Accounts receivable: $286,000 $500,000 (1. 10) = $550,000? Inventory: $170,000 (1. 10) = $187,000? Accou nts payable: 12   . With concerns of increased competition, Genatron is planning in case its 2006 sales fall by 5 percent from their 2005 levels. If cost of goods sold and the current asset and liability accounts decrease proportionately, (a) Calculate the 2006 cash conversion cycle.    |   |   |   |   |5% decline | |   |2004 |   |2005 |   |2006 | |Sales |$1,300,000 |   |$1,500,000 |   |$1,425,000 | |Cost of Goods sold |$780,000 |   |$900,000 |   |$855,000 | |profit margin |7. 2% |   |7. 6% |   |   | |Net income |$93,000 |   |$114,000 |   |   | |Accounts Receivable |$200,000 |   |$260,000 |   |$247,000 | Inventory |$450,000 |   |$500,000 |   |$475,000 | |Accounts Payable |$130,000 |   |$170,000 |   |$161,500 | |   |   |   |   |   |   | |Sales/ day = |$3,561. 64 |   |$4,109. 59 |= $1,500,000/365 |$3,904. 11 | |COGS/day= |$2,136. 99 |   |$2,465. 75 |= $900,000/366 |$2,342. 47 | |   |   |   |   |   |   | |Inv entory conversion period = Inventory/COGS per day |   | |   |210. 58 |days |202. 78 |   |202. 8 | |   |   |   |   |   |   | |Average collection period = AR/sales per day |   | |   |56. 15 |days |63. 27 |   |63. 27 | |   |   |   |   |   |   | |Average payment period = AP/COGS per day |   | |   |60. 8 |days |68. 94 |   |68. 4 | |   |   |   |   |   |   | |Operating cycle = Inventory conversion + collection periods |   | |   |266. 73 |days |266. 04 |   |266. 04 | |   |   |   |   |   |   | |Cash cycle = Inventory conversion + collection period – payment period |   | | |205. 90 |days |197. 10 |   |197. 10 | (b) Calculate the 2006 net investment in working capital. Net investment in working capital = AR + Inventory – AP (as used in this chapter) | |2004 |2005 |2006 |   |   | |   |   |=$247,000+$475,000-$161,500 | |$520,000 |$590,000 |=$560,500 |   |   | 13. .In problem 10 we assumed t he current asset and liability accounts decrease proportionately with Genatron’s sales. This is probably unrealistic following a decline in sales.What will be the impact on the working capital accounts if its collection period lengthens by five days, its inventory period lengthens by seven days, and its payment period lengthens by three days if Genatron’s sales and COGS fall 5 percent from their 2005 levels? |The new sales will be |$1,500,000 – 5% = |$1,425,000 |   | |   |Sales/day = |$3,904. 11 |   | |The new COGS will be |$900,000 – 5% = |$855,000 |   | |   |COGS/day = |$2,342. 7 |   | |   |   |   |   | |Estimated AR if collection period lengthens by |5 |days: | |New AR = sales/day x collection period |   |   | |Sales/ day = |$3,904. 11 |   |   | |Old collection period |63. 27 |(from problem 10) |   | |New collection period |68. 27 |   |   | |New AR estimate= |$266,520. 5 |   |   | |   |   |   |   | |Estim ated inventory if conversion period lengthens by |7 |days: | |New Inv = COGS/day x conversion period |   |   | |COGS/day |$2,342. 47 |   |   | |Old conversion period |202. 78 |   |   | |New conversion period |209. 8 |   |   | |New Inv estimate= |$491,397. 26 |   |   | |   |   |   |   | |Estimated AP if payment period increased by |3 |day: | |New AP = sales/day x payment period |   |   | |COGS/day |$2,342. 47 |   |   | |Old payment period |68. 4 |   |   | |New payment period |71. 94 |   |   | |New AP estimate= |$168,527. 40 |   |   | |   |   |   |   | |2006 working capital = AR + Inventory – AP |   |   | |=$266,520. 55 + $491,397. 26 – $168,527. 40 |   |   | |=$589,390. 1 |   |   |   | |which is an increase of |$28,890. 41 |from problem 10. |   | 14. .Suppose Global Manufacturing is planning to change its credit policies next year. It anticipates that 10 percent of each month’s sales wil l be for cash; two thirds of each month’s receivables will be collected in the following month, and one-third will be collected two months following their sale. Assuming the Global’s sales forecast in Table 10. 5 remains the same and the expected cash outflows in Table 10. 6 remain the same, determine Global’s revised cash budget. Nov. Dec. Jan. Feb. Mar. Apr.Sales  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   $80,000  Ã‚   $100,000  Ã‚  Ã‚  Ã‚   $ 30,000  Ã‚   $   40,000  Ã‚  Ã‚  Ã‚   $ 50,000  Ã‚  Ã‚  Ã‚   $ 60,000   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Cash (10%)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   3,000  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   4,000  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   5,000  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   6,000   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   1 Month Later (2/3)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   60,000  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   18,000  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   24,000  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   30,000 [pic][pic][pic][pic]  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   2 Months Later (1/3)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   24,000  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   30,000  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   9,000  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   12,000   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Total Cash Receipts  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   $ 87,000  Ã‚   $   52,000  Ã‚  Ã‚  Ã‚   $ 38,000  Ã‚  Ã‚  Ã‚   $ 48,000 [pic][pic][pic][pic]  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Less: Total Cash Payments  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   60,000  Ã‚  Ã‚  Ã‚   127,000  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   44,000  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   40,000   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Net Cash Flow  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   $ 27,000  Ã‚   $ –75,000  Ã‚  Ã‚  Ã‚   $ –6,000  Ã‚  Ã‚  Ã‚   $   8,000 [pic][pic][pic][pic]  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Beginning Cash Balance  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   25,000  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   52,000  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   25,000  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   25,000   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Cumulative Cash Balance  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã ‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   $ 52,000  Ã‚   $ –23,000  Ã‚  Ã‚  Ã‚   $ 19,000  Ã‚  Ã‚  Ã‚   $ 33,000Monthly Loan  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚     Ã‚  Ã‚  Ã‚  Ã‚  Ã‚      (or repayment) 0  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   48,000  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   6,000  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   –8,000   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Cumulative Loan Balance  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚     Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   0  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   48,000  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   54,000  Ã‚  Ã‚  Ã‚      46,000   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Ending Cash Balance  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚