Are U.S. CEOs overpaid Research Paper Example | Topics and Well Written Essays - 2000 words

Are U.S. CEOs overpaid - Research Paper Example Even if they did not occupy such positions, people with a firm educational background and effective leadership skills should be paid much more than the rest of the population. The public’s outcry is not entirely misguided; nonetheless, there are facts supporting the high earnings entitled to the CEOs and it remains unclear whether capping CEO salaries will contribute to business success. This paper explores whether US CEOs are overpaid. Statistics According to Kaplan, US CEOs are arguably overpaid (6). According to Walsh, some of the potential triggers of the ‘excessive’ salaries of CEOs include; too much influence, negligent boards of directors, weak compensation consultants, and formulation of salary scales through stock options among others (73). According to Kay and Van Putten, in 1970, the average Chief Executive Officer earned about $700,000 (189). The amount was 25 times the earning of an average production employee. Three decades later, CEO salaries had ri sen to almost $2.2 million, 90 times more than the salary of an average worker (Kay, and Van Putten, 190). Kaplan argues that with an increase in the value of stocks and other allowance, the average CEO currently earns between 250-500 times the average employee’s salaries (7). ... Any employee in the technology industry is aware this average salary would hardly hire a well-educated administrative staff in technology-intensive sectors in the United States. According to Thomas and Hill, current CEOs serve shorter terms compared to CEOs of the late twentieth century, hence the sharp rise in the earnings (19). The high rise in CEO salaries may be attributed to the fact that the officers are uncertain about what would happen next. Capitalism seems to have entered the corporate sector to the level that CEO may see it better to earn as much as they can when in such positions (Kay, and Van Putten 191). According to Walsh, today’s CEOs are virtually carrying out the same duties as their predecessors who earned a much less, but this is not the case with line workers (75). Whereas, the salary gap between a top executive and the average employee calls for a review of the rules to narrow it, Kaplan argues that rectifying the discrepancy may not be achieved (6). Owin g to the fact that CEO salaries top the list of salary scales in most organizations, theirs tend to be fodder to the media. Less widely covered is the substantial salary disparity between employees and junior executive remunerations. It differs by sector, but in most firms, the salary discrepancy becomes clear at the immediate CEO subordinates. At this point the analysts move into a lower pay level, but significant disparities in salary still subsist between a senior executive and a CEO (Kay, and Van Putten 122-127). Relating the average worker pay to CEOs For easier understanding of the salary scale of the average employee in the US, it would be appropriate to analyze all aspects of their salary; wage, shift gap,

The electrical resistance of rires Essay Example for Free

The electrical resistance of rires Essay In this investigation I will be looking at the resistance of wires to an electrical current and determining the factors that affect the resistance of a wire. There are five main factors that affect the resistance of a piece of wire. These are as follows: 1) The material that the wire is made of. 2) The length of the wire 3) The thickness (or diameter) of the wire. 4) The temperature of the wire. 5) Voltage of the circuit. However, in my investigation I will only be looking at two different factors that affect the resistance of the wire. These two factors are length of the wire and thickness of the wire. Apparatus For this investigation I will need several pieces of apparatus, these are as follows: 1) A ruler (to measure the length of the piece of wire that is being used). 2) Wires (to connect the circuit together) 3) A multimeter (to measure the resistance of the wire) 4) A role of Constantine wire. Method In this investigation I will do as follows: As I will be investigating one variable at a time, I will need to keep the other variables constant. When measuring the length I will always use the same material: Constantan wire. Also I will make sure that the wire does not get hot by not measuring any less than 10cm. Also, I will always use the same thickness wire, 32SWG (standard gauge). However, when I am looking at the factor of thickness I will make sure that the wire does not get hot, that the wire is Constantan wire and that the wire is always a set length, 50cm long. I need to keep the variables that I am not looking at or measuring the same at all times because of the fact that if I have two variables varying at the same time then I will not know which variable affected my results or how much it affected them. Because of this I will only be looking at one factor at a time to make sure that my results are as accurate and true as possible. In both factors I will always be using the same multimeter throughout. I will look at the factor of length first. In this I will keep the variables that I am not investigating the same so as to make it a fair test. Then, I will set up my circuit (See below this paragraph) Then, I will take readings of the resistance with the wire at a length of 10cm using the multimeter set at 200?. Multimeter Ruler Constantan wire I will then repeat the experiment with a 20cm piece of wire and measure the resistance of that. I will do this with pieces of wire 10cm, 20cm, 30cm, 40cm, 50cm, 60cm, 70cm, 80cm, 90cm and 100cm long to get a good range of readings and results. When I will measure the affect that thickness has on the resistance of a piece of wire I will do the experiment with 20, 24, 26, 28, 30, 32, 34 and 38SWG thickness of Constantan wire. I will also repeat each test for both variables 3 times and gat an average to make it a fair test. Predictions My hypothesis for the investigation concerning the length is this: As the wire gets longer, the resistance will increase. This will be in direct proportion and will produce a straight-line graph. I think that this will occur: As the electrons move through the wire, they collide into ions. This makes the resistor hotter and is what causes the resistance. The longer the piece of wire, the more ions for the electrons to collide into, therefore the resistance will increase. The graph that I will plot should be a straight-line graph; according to OHMS LAW. The graph should look like this: Ohms law states that for some conductors, the current flowing is proportional to the voltage, provided that the temperature does not change. For example, if you double your length of wire, then the resistance will also double. My prediction for the other factor that I am going to investigate, thickness, is this: As the thickness of the wire increases, the resistance will decrease. This is inverse proportion. I predict that this will also give a straight-line graph but going downwards instead of upwards. The graph should look like this: I think that this will happen because of the fact that the thicker the wire, the greater the number of electrons that will be able to travel through it at one time. Results Testing the thickness. Using a 50 cm long piece of Constantan wire: SWG Equivalent in mm 1st attempt 2nd attempt 3rd attempt AverageThe Graphs Testing the Thickness using 50cm Constantan wire Testing the Length using 32SWG Constantan Wire Analyzing the Data Length From my results and my graphs I can see that as the length of the wire increases, the resistance of the wire also increases. As my graphs gave a straight line at all times and points, I can say that the resistance is directly proportional to the length of the wire. Because the resistance is directly proportional to the length, I can say that if the length is 10cm and the resistance is 0. 5Ohms, when the length of the wire is 20cm, the resistance should be 1. 0Ohms. These results support my prediction. An odd occurrence is that the line does not pass through the origin (0,0). I believe this is because of slight errors in the readings whish make the line pass just above the origin. Thickness From my results, I can see that as the millimeters increase the resistance decreases. Therefore we can say that the thickness is inversely proportional to the resistance, as the thickness increases the resistance decreases. This was as I expected. However, in my prediction, I predicted that the graph would be a straight line and in my actual results my graph turned out to be a curve. Because of the fact that the graph is inverse proportion, I can say that if you double the SWG then you will half the resistance. My results support part of my prediction (that the resistance will be inversely proportional to the thickness) but not the part that states that the graph will be a straight-line graph. On this graph I used millimeters instead of SWG because it makes it easier to see the relationship between the resistance an the thickness of the wire. Evaluation In my investigation, I only investigated two of the different factors that affect the resistance of a wire. However, there are more than that, as I stated earlier on in my plan. There are also the factors of Material, Temperature and Voltage to be investigated. I could have extended my investigation further by also looking into and testing these other 3 factors. However, I only investigated 2 factors, the length and thickness. Length I think that overall, my results were fairly accurate but definitely could have been more accurate. For 32SWG, the results were a little inaccurate but nevertheless were accurate enough to produce a good directly proportional straight-line graph. I could have made more accurate results and a more varied set of results by doing the experiment at more than just 32SWG. This would have given more varied results at different thicknesses. I could have made my results more accurate by doing the experiment more than 3 times (perhaps 5 times) and taken the average of each set of results. This would have given me more accurate results. Inaccuracy in the results (like in the first attempt on length at 40cm) may have been due to the fact that the equipment used may not have been working properly or plain human fault. Also, when measuring the length of wire to be tested, it is possible that I may have slightly misread the length on the ruler by a couple of millimeters because of kinks and twists in the wire making it nearly impossible to get a perfectly straight piece of wire. This may have caused slightly inaccurate results. Thickness My results for testing the thickness were, on the whole, quite accurate with the exception of minor mistakes. This could have been due to an inaccurate length of wire, a temperature change or an inaccurate reading. However, the over all results produced a good smooth inversely proportional curve. If I were to conduct this experiment again I would have used more accurate equipment and tested more lengths at more SWGs than I did to give a more varied set of results. Show preview only The above preview is unformatted text This student written piece of work is one of many that can be found in our GCSE Electricity and Magnetism section.

Concept of the Ideal Family Within the Volksgemeinschaft :: German Family Masculinity History Nazi Essays

Concept of the Ideal Family Within the Volksgemeinschaft Adolf Hitler and the Nazis esteemed Aryan women as heroes in Nazi Germany because of their ability to procreate. Women had no place in such an industrial society so they were encouraged to focus on their role as a dutiful wife and mother. They contributed to the Volksgemeinschaft by constructing the future generation and making more of the Aryan race. Thus, since all women were valued as the creators of the nation’s most important product—pure Aryan people—there were no restrictions on their sexual orientation. Women were allowed to become homosexuals while men were prosecuted and imprisoned for partaking in any homosexual offences. The Nazis were fervent in preserving the concept of the ideal family within the Volksgemeinschaft, and thus they reinforced masculinity within men and instilled the significance of maternity within the women. The textbook that high school students are studying in the Santa Ana School District barely emphasizes the topic of gender in Nazi Germany. Unfortunately, these high school sophomores will not be able to understand the significance of gender nor will they be able to see Nazi Germany in a different light. The authors of the textbook, however, emphasize the maternity role of the women. The Nazis dismissed women from their upper-level occupations so they could pursue the maternal role. It was the responsibility of the women to increase the birthrate of pure-blooded Aryans. Women were even offered rewards for having more children. Although the text highlights the importance of women in their household roles, it does not offer a comparison between men and women. The Nazis stressed the importance of maintaining a utopian society within the Volksgemeinschaft. Hitler wanted to keep Germany as pure as possible—meaning no Jews, no homosexual males, nothing outside of the citizens of the Aryan race. Laws were established to preserve the Aryan purity of Nazi Germany. The Reich Penal Code of 1871 was revised in 1935 as Germany had changed under the stronghold of its new leader, Hitler. Section 175 under the revised code listed the penalties for a sex offence between males: â€Å"A male who commits a sex offence with another male or allows himself to be used by another male for a sex offence shall be punished with imprisonment.

A Case Study of Google Recruiting

A Case Study of Google Recruiting Google’s recruitment process is famously difficult, with candidates having to face multiple interviews (we've heard stories of ‘double figures') while those with sound work experience have been turned down due to having less than perfect college grades. As the company continues its rapid expansion, it has been forced to streamline this process, with Google co-founder Sergey Brin acknowledging last year that the company's high bar for hiring was holding back its expansion. Google has increased its workforce by an average of 16 people daily, from 1,628 at the end of 2003 to 3,021 in 2004 and 5,680 at the end of last year. Candidates have had to endure interviews with various different Google staff, as well as facing aptitude tests like this one. The average number of interviews for those offered a job at Google dropped from 6. 2 at the beginning of the year to 5. 1 in June. The company is said to be considering speeding up the process to prevent candidates accepting other jobs while waiting for a reply from Google. Candidates shouldn’t expect an easy ride though. According to the  Wall Street Journal, Google Chief Executive Eric Schmidt said in July that the company was â€Å"able to now in fact increase the standards by which we select and hire new people†. Google is said to place high importance on college grades, which can be frustrating for older candidates with a wealth of work experience

Revisiting Cost of Capital in Commercial Banks

CHAPTER 1: INTRODUCTION 2 Background Capital Structure decision remains one of the corporate strategies to corporate managers because it affects firm’s value. This research is conducted within the commercial banks. In many research journals and articles the cost of capital is the expected rate of return of capital in investor’s investment. Weighted average cost of capital is considered as required rate of return in the company. Component of cost of capital are; long-term debt, preferred stock, and common stock. Each must have minimum return.We analyze from previous research articles that the banks should not focus on historical cost but on new cost, because in order to invest and rise, new cost of capital is used to make decisions. Level of interest rates, tax rates are two of the factors that affects cost of capital in the commercial banks. Interest rates apply on debt and equity. It is the most important factor for investors. Cost of debt affects by the level of inter est rates and also the cost of equity. As described in many articles, if interest rates increases the cost of debt increases, which increases the cost of capital.So, the raising of capital delayed till interest rate become favorable. This shows how the interest rate can be a source effective measure of the cost of capital. Similarly, if the tax rates increases, the cost of debt decreases, which decrease the cost of capital as it affects the after tax cost. The cost of capital directly and totally linked with capital structure. Capital structure influence the value of the banks, firm, company potentially by reflects the financing strategy. And capital structure should consider tax strategies.We found from different articles that the most important capital structure decisions are when the expected tax rates goes higher. The basic function of capital structure is to minimize the cost of capital and risk. Interest is tax deductable. The deductibility of interest payments provides influe nce for value. Higher the tax rate, the greater impact of deductibility of interest potentially on the after-tax cost of debt. These are the proved facts that are evaluated in previous researches. According to this research we are trying to find what role these factors play in commercial bank’s capital structure.It is necessary for top management of any business institutions to ascertain the banks or firms relevant cost of capital. From the banks’ perspective, the cost of each source of capital reflects the level of return because it is affected by certain factors like tax rates, interest rates, dividends etc. as the time period changes, the level of return also changes. In its simplest form, the capital structure decision is the selection by firm management of debt-to-equity ratio for the firm. Cost of Capital is perhaps the most fundamental and widely used concepts in financial economies.Managers of banks or corporation and also regulators employ the weighted average cost of capital for investment decisions. The WACC and the tax rates are endogenous to the firm’s debt policy. The interest rates affect the cost of debt as increasing debt increasing interest payments. We also derive the sources of capital structure that which source is better for the commercial banks and how the interest rates, tax rates brings variation in the cost of debt and the dividends and growth rates affects the cost of equity that totally affect the weighted average cost of capital.Our methodology allows us to value the government tax rates and interest rates that affect cost of debt. We specify numerically the affects of the variations in the factor like interest rates, tax rates and dividends, thus providing useful conceptual framework for the tax and interest policy debates that influence cost of capital of debt and equity. Finally we come to analyze that cost of debt increase or decrease by variation in the interest rates and tax rates and that help in the est imation of WACC that show that whenever the WACC decreases, it results in an increase in the profit that is useful for any organization or commercial banks. . Problem statement (Revisiting the cost of capital in the commercial bank) The problem statement of this research proposal includes re-examine the cost of capital in commercial banking sector of Pakistan and also to evaluate the direct and indirect association of the factors that affects weighted average cost of capital and how this variation (increase or decrease) can affect the profit and also the capital structure -debt and equity- of the commercial banks. 2. Research objectives While doing research planning, we analyze that the cost of capital considers the factors affecting decision making.The following object of the research comes into play: ? We will find out the factors which creates the variation (increase or decrease) on cost of capital and their effect on the capital structure decision making. ? To analyze the after effects of these factors on capital structure. ? To examine up to how much extent they are controllable or not from bank’s perspective. 3. Significance The importance of this research paper is that, the relation between the different determinants of the costs of capital creates different impact on the different commercial banks by affecting capital structure of that commercial bank.We know that as the weighted average cost of capital decreases, it increases the profit n the Commercial Banks. Risk associated with cost of capital and capital structure taking needs to b looked at differently in the case of the commercial banking institutes. This research sheds new light on how the cost of capital computed in the case of commercial banks. Also the relationship between the cost of capital and capital structure is investigated. This research has another importance as banking system has a vital role to play in the economic development of a nation. A healthy economy requires a sound banking system.This research states that how banks applies different techniques that enhance their performance and also affect the decision making of the Mangers regarding their capital. In this research, the main finding of the paper suggests that the commercial bank should focus on reducing the cost of capital that maximizes the profit. According to our findings, it is concluded that each banks has its policies of financing. Each bank takes decision of selecting capital structure for minimizing their cost, risk factor differently that occupies good financial position in market.Factors that have impact on cost of capital as well as on capital structure are tax rates, interest rates, dividends payout, risk of default and other like market fluctuation, corporate governance. This research plays a vital role by showing the significant contribution of Commercial Banks while equating debt to equity ratio. It also shows the understanding of the performance of Banks by evaluating weighted average cost of capital. The main findings of the paper suggest that private commercial banks should focus on reducing the cost of capital which can magnify the returns to their stockholders.Finally this research paper would also help the students in academics in understanding the relation between the factors and the cost of capital and also their after affects that create impact on the weighted average cost of capital. 4. Limitation Time constraint of this semester is the issue for this study as we have limited time in this semester as compared to the actual time required for the research. By being in banks we will acquire interviews approximately 15 -30 minutes with questionnaire because of the time given by the Mangers of Finance Division.The information given by the managers is also limited because it difficult for them to provide all necessary information as they are bound by the policies of the commercial bank. 1. 6 Report Structure Chapter 1 represents the introduction of res earch topic its background, problem statement, objectives of research that set, significance of this research and limitations. This chapter gives brief information about the topic pervious information, the scope of research and its benefits, the target of the research. And also provides the basic information that already conducted by different authors researchers.Chapter 2 deals with the literature review and conceptual framework. In this portion you will find the different views of different researchers related to this research topic cost of capital in commercial banks including capital structure importance its link with cost of capital, and factors that affect cost of capital. This portion also gives the direction and relevant information which is very helpful in proceedings the research. Conceptual framework helps in determining the relationships of factors with WACC.Chapter 3 provides the detail of methodology that is adapted to proceedings the research. This portion gives expla nation of research type, method, sample size, instruments that is used in finding and collecting the data. Chapter 4 gives the analysis of data that is collected through the questionnaire, interviews and calculating the WACC of commercial banks that chosen with assumptions, and research findings that proves the hypotheses that is set. Chapter 5 includes the conclusion of research findings and literature review findings.Also gives the recommendations. Finally Appendix attach to our research that contain Questionnaire. CHAPTER 2: LITERATURE REVIEW AND CONCEPTUAL FRAMEWORK 1 Literature Review 2 Capital structure (Khadka 2005) has analyses in his research that the firms meet their operational needs by raising their funds and this can be done through the capital structure that involves the two major sources of debt and equity. There should be an appropriate balance between debt and equity as it has effects on the risk and return of the shareholders of the company.If there are reasonable proportions of debt and equity in the capital structure of the firm, it maximizes the shareholders wealth while minimizing the cost of capital and that could be considered as the optimal capital structure. (John J. Pringle, Jun. , 1974) Since banks are private economic units, it is reasonable to suppose that shareholder interests will influence, if not control, managerial decisions. Capital is an important managerial decision variable and that it plays an important role in the financial management of the individual bank. Groth 1997) said that the selection of capital structure affects the cost of capital. Carefully selection of capital structure is more important. Banks and companies consider more conservative capital structure with sensitivity to cyclical effects of economy. It involves in dividing not in sharing. If payments of dividend are not deductible and if interest is tax deductible on debt then capital structure is important. Barton and Gordon (1987) Financing and capital s tructure choices are among the several key decisions made by firm managers.Yet the study of these questions has been generally neglected by strategy researchers. Several scholars have noted that the issues involved are concerned with fundamental choices ‘which should support and be consistent with the long- term strategy of the firm. Balakrishnan and Fox (1993) said that by selecting suitable financing, a ‘firm's ability to manage its relationship with lenders thus becomes a key source of competitive advantage. Capital is a critical resource for all firms, the supply of which is uncertain. This uncertainty enables the suppliers of finance to exert ontrol over the firm. Stearns (1986) and Mizruchi (1993) estimate the cost of equity capital use a dividend discount model (DDM) methodology and earnings estimates. They find that the cost of equity capital for large U. S publicly traded companies ranged between 10% and 12% during 1979-1995, depending on the assumptions used wi th the DDM approach. Interestingly, Myers and Borucki (1994) obtain the same range of estimates for the cost of equity capital of a limited sample of U. S. utility companies using a DDM-type method.Bruner (1998) and Weaver(2001) surveying large corporation and confirm about WACC methodologies. Both authors find that there is a significant difference exists in estimating the equity capital component of the firm. Some uses CAPM while other uses different methods. 4 Cost of capital Cost of capital is the minimum required rate of return by investors in firm’s securities. It occupies an important role in the theory of financial management and in the investment decision making as it provides criteria for allocation of the capital that what a firm pays for its capital like debt, preferred stock and equity.Cost of Capital is related with the level of risk associate with existing and new assets and investments. (Khadka 2005) Modigliani and Miller (1958) proved that firms cost of capit al is independent of capital structure as it has no effect on the capital structure. The traditional belief of Modigliani and Miller (1963) is that the cost of capital can affect capital structure as in this belief they said that the personal taxes may include that brings variation in the cost of capital and hence affects the capital structure of the company. Khadka 2005) states that there is an empirical relationship between the cost of capital with capital structure, the size of the firm, growth of the firm, dividend payout ratio and liquidity of underdeveloped economy like Nepal but the major focus was the relationship of the leverage with the cost of capital where he conclude that negative beta shows that there is a negative relationship of cost of capital with the leverage as cost of capital decreases with the use of the leverage and this is done by the tax deductibility of the interest charges in the Nepalese firms.Cost of capital is the expected rate of return of capital in i nvestor’s investment. On debt, the amount of interest is paid is called cost of debt. Whereas cost of equity is equivalent to the risk free rate of interest plus risk premium for business risk. (Groth 1997). 5 Factors that affects cost of capital Groth (1997) further said that risk is one of the factors that affect the cost of capital which determines the expected risk of cash flow in the asset side of the bank. Business risk is that when bank and companies cash flow are not able to meet its operating expenses.Risk is linked to economic changes. And it would be at risk to business risk when change in economy occurs and when financing is done by totally with equity. Cost of equity influenced by business risk. Equity holder’s risk has not accepted by the creditors and preferred stock holder if present. If increase in business risk occurs then it decreases the financial risk and the optimal D/E ratio, and increases the cash flow uncertainty of asset side. Financial risk i s that when bank and companies cash flow are not able to meet its financial obligations. If firm finances through debt, then it has financial risk.Tax rates and interest rates are also factors. Interest payment expected deductibility give opportunity for value. If the tax deductibility is realized by the company then stockholders get the expected benefit of the tax deduction. Jorgenson and Landau (1993) or Bond and Devereux (2003) analyses that the government’s choice of the corporate tax rate is an important factor with respect to the investment decision made by shareholders and it is well known that the existence of corporate taxes distort this investment decision away from the social optimum . John J. Pringle, Jun. (1974) said that the traditional function of risk-bearing, capital is important in adjusting the maturity structure of liabilities. Risk is a function of uncertainty regarding future events, e. g. , earnings, losses on loans and securities, fluctuations in depos its, conditions in the financial markets, etc. Cost of equity increases if the financial risk become high. The cost of equity and debt increases with the increase in debt. The deduction of tax and its benefit is an expected benefit, to allow deduction of interest; the pre-tax EBIT income must be large.On after tax cost of debt, there is the greater the impact of interest deductibility, if the tax rate s higher. John R. Graham, (2003) analyze that the appropriate cost of capital in the presence of personal taxes does not depend directly on either the dividend payout rate or the tax on dividends. Equity shares have a market value lower than the difference between the reproduction cost of a firm's assets and the market value of its debt obligations. Because of this capitalization, it need not be true that an economy without risk or uncertainty would have no equity financing.Groth (1997) said that asymmetry of effects is that the expected return to stockholder will goes up, if in place of some equity; some debt is used. The good or bad leveraging effects are asymmetry if interest is tax deductable. The inability to realize the interest deduction result in an asymmetry effect on expected return to stockholder. Weighted average cost of capital become low with the cost of capital high, if the debt capital increase in proportion. Cost of equity increases with the cost of debt.If the cost of components high the weighted average cost of capital increases and reason is that shareholder prefer to use of debt when expected value of tax benefit is attractive as compared to the added financial risk associated with the debt. The Demanded rate of increase in cost of debt and equity, effects on value of the expected increase in tax benefit of using more debt. Interest rate affects the cost of debt. It involves the risk components that have the probability of default on the debt. Meziane (2006) in his article said that a company pays interest which is treated as an expense for t ax purpose and therefore it is tax deductable.Company will be bankrupt, if default on payment of interest to bank present by company. Equity financing cannot create a tax advantage because dividends are paid after interest and tax. Interest is paid on debt before tax deduction, whereas, dividend is paid after tax benefit. So, the cost of equity is high then cost of debt. Debt financing becomes attractive when tax is deductable from interest. Banks use cost of capital for decisions, a weighted average interest on debt. Bank should select D/E ratio for which the cost of capital fluctuate with the degree of debt finance is minimized.The D/E ratio is considered as one of the way of financing. (Alan J. Auerbach, aug. 1979). William F. Coffin and Sean Collin (2006) said that in the mid of 1990, a trend towards higher B/S debt in which low cost interest rate, lending level reduced by commercial banks and increase payback period for borrowers, a stable banking system. Cost of capital become low that could lower by the management in down market through viewing current corporate governance themes, taking action on giving management training with respect to capital market issues of today and advanced planning to identify the potential investors. Cost of capital and Corporate Governance Ramly and Rashid said corporate governance is also the factor that affects the cost of capital. CG directly affects the cost of equity, And indirectly with beta. This means poor performance of manager created through weak rights, thus increase cost of capital. Strong (weak) shareholders right associated with increase (decrease) cost of equity capital. CG generate liquidity problem in which investor high the sell price and decrease the buy price which can high the transaction cost and also affects the COEC.Thus, the CG creates strong mechanism on COEC and provides positive shareholder value for firm. It has also reducing effects on cost of capital. Banks and other financial institutes have negative influence on CG. Hennart, (1994) Both classes of suppliers (debt holders and equity holders) have governance abilities. The level of governance ability varies between the two and the optimal selection of the type of financing depends on the nature of resources of the firm. Seth, (1990) financing choices have the potential to affect performance by changing the level of governance costs. Importance and difficulties of WACC Denis Boudreaux (1995) in his article uses the buildup model for the cost of equity capital by estimating cost of equity capital for capital budgeting analyses. He said that whenever there is a need to determine the value of the firm, the cost of capital must be estimated. He said that the cost of debt of closely held firm is much higher that the publicly traded organization because of the loans or debt borrowed by the closely held firms including the commercial banks.He further said that the public traded firms have the low risk whereas a huge risk factor is involved in the closely held businesses. Experts have recognized that the exploitation of debt and equity can enhance the corporate value in 1940s. Later in the years, five concept developed on this area(1) early gearing leverage model; (2) the model of Modigliani and Miller (MM); (3) Capital Asset Pricing Model(CAPM); (4) Arbitrage Price Theory (APT); and (5) Gordon Model Shubbar and Alzafiri, (2008). Unless a firm can gain in excess of its cost of capital, it will not add value to its investor’s wealth.Company’s cost of capital is expressed by the weighted average of the cost of individual sources of capital employed. Bruner et. al. , (1998). For a firm using common stock (equity) and bond (debt) financing, with re and rd as the cost of equity capital and the cost of debt capital, the WACC is expressed the following equation: WACC = r = wd rd (1 ? t) + we re Where, wd (weight (proportion) of debt) = (value of debt/value of debt and value of equity), we (weight (pr oportion) of equity) = (value of equity/value of debt and value of equity), wd + we = 1, and t = tax rate on corporate income.The component costs, re and rd, as well as the weights are based on market values: re is frequently calculated as the risk free rate plus a risk premium, based on the capital asset pricing model, and rd reflects the market rates on the firm’s outstanding debt and on the rd of similar firms. The standard treatment includes (1? t) in the WACC calculation to reflect the deductibility of interest payments in the calculation of the corporate tax on the firm’s income statement: the interest cost of debt, by this procedure, is reduced.Also, to avoid double counting the tax â€Å"advantage† of debt, the interest payments are not calculated in the prospective cash flows. This is the textbook treatment in calculating a firm’s cost of capital. (Miller2006) Evaluating a firm’s weighted average cost of capital has its importance to the m anagers who estimate investments projects for capital budgeting purposes or to the investor whose desire is to assess the overall riskiness and expected return from a company’s activities for valuation purposes. (Miller 2006).Fama and French (1997, 1999) analyse that few difficulties arise because there is some uncertainty in evaluating a firm’s (or banks) cost of capital. This uncertainty is a sort of risk faced by the firm when projecting a project’s cash flow. Bruner, Eades, Harris, and Higgins, (1998) also analyze that there is wide variation in estimating WAAC by different methods. This is due to the manager’s differences in firms cost’s of equity capital that helps in investment decision making. 8 Conceptual Framework DV= DEPENDENT VARIABLE IV= INDEPENDENT VARIABLE MV=MODERATE VARIABLE 9 Conceptual HypothesisHo: WACC increases with increase in interest rates and decreases with decrease in interest rates. H1: WACC increases with decrease in ta x rates and decreases with increase in interest rates. H3: Cost of debt increases with increases in interest rate and decreases with decrease in interest rates. H4: Cost of debt increases with decrease in tax rates and decreases with increase in interest rates. CHAPTER 3: RESEARCH METHODOLOGY 10 Type of Research Research can be defined as the search for knowledge, or as any systematic investigation, with an open mind and facts, usually using a scientific method.Our research is empirical research, which tests the feasibility of a solution using empirical evidence. This research comprises of both the qualitative and quantitative research method for the data analysis. Firstly we search for the secondary data in order to know and understand the analysis of the previous researcher that how they work and create different perspective for the Weighted Average Cost of Capital than we include the researches of the previous researcher in the literature review of this research in order to creat e relation and direction between the previous researches with our research. 1 Sampling Technique Sampling Technique used in our research is Random Sampling in which we chosen from a population for investigation. In this method we chose from managers in the Commercial Banks and estimates obtained from the random sample in order to solve our queries related to WACC. 12 Sample Size The Sample Size is comprises of 5 Commercial Banks of Karachi. More than the given sample size is not possible because of the time of this semester and also the little difficulty in finding the appointments with the Mangers of Finance Departments. 3 Instruments Questionnaire includes 12 question given to the Managers of the Commercial Banks in order to analyses the perception of the manager that how each individual differs in their perception for the factors that affects the weighted average cost of capital. Most of them include five point likert scales. Other than questionnaire, the balance sheet of 2009 of each bank is used to estimate the WACC for the year and evaluate how the factors like tax rates, interest rates affect WACC. 14 Data CollectionThis research has been carried out to evaluate the correlation between the factors of cost of capital like tax rates, interest rates and the WACC that how these factors affect the WACC in the commercial banks. The selected five banks include: Allied Bank Limited (ABL), Habib Bank Limite(HBL), Muslim Commercial Bank(MCB), Alfalah Bank and Soneri Bank Limited. Descriptive Data Analysis is taken place in order to estimate WACC. This study employs after-tax cost of debt and equity in order to estimate WACC for selected banks. The procedure of calculating after-tax cost of debt and cost of equity has been stated here.The cost of debt measures the cost of borrowing funds of the firm. In calculating the after-tax cost of debt of each bank for the year 2009 by the following formula: After-tax cost of debt = pre-tax cost of debt (1 – tax rate) The cost of equity evaluated through the given formula: Cost of equity = Gordon growth model =(Do (1 + g))/ (market price per share)] + g) Finally the Weighted Average Cost of Capital calculated by WACC = (Weighted average cost of debt) + (weighted average cost of equity) CHAPTER 4: DATA ANALYSIS 15 QUESTIONNAIRE ANALYSIS Banks normally prefer financing through debt plus equity. 1% of the commercial banks use both (debt and equity) as their sources of finance while remaining 29% of the banks prefer debt for their investment. Only exploitation of equity is not preferred by any banks because through debt finances, the banks gain and improves profit. [pic] Equity sources liable bank to pay dividend, 71% of the banks says that the dividend payment increases the cost of capital while the other 14% said that it decrease the cost of capital and the remaining said that dividend payment has no such impact on the cost of capital. [pic] 5% of the commercial banks said that by using tax shield , cost of capital decreases as it decreases cost of debt and also impact interest rates. While 14% said that it has no such impact like some of Islamic bank like Meezan Bank. [pic] 71% of the sample size agreed that the Cost of capital has positive impact on the capital structure by using both sources of finance while 15% disagree and other 14% are highly disagree. That means most of the commercial banks are in the favor of Ho that the using both sources improves the profit of the commercial bank. [pic] 7% agrees and 28% strongly agrees that the risk factor of the default increases as there is an increases liabilities when bank finance through debt while only 10% of the sample size disagree to this fact but still they have profit by increasing their liabilities. [pic] Approximately 86% of the commercial banks agree from the fact that the fluctuation in the interest rate affects Cost of Capital and also the Capital Structure of their banks while other says that there is no as such im pact of the interest rates but from secondary data we analyze that interest rate is the factor that affects the cost of capital and the capital structure. pic] 71% of the managers agrees that as low dividend payout affects the reputation of their bank, similarly high dividend payout and dividend growth also affect the capital structure decision whereas 29% of the managers said that high dividend has no such impact on the cost of capital and on investment decision. [pic] 100% of the sample size agrees that cost of capital highly impact the investment decision in the commercial bank that also affects capital structure decision making and increases the profit if the weighted average cost of capital is low. [pic] 5% of the sample size agrees that the cost of capital has a huge impact on the level of risk because the maximization of the profit in the commercial bank is truly based on cost of capital and its other factors. [pic] 57% of the sample size agree that the taxes bring variation in the cost of capital in commercial bank while the other denied that taxes has no such affects on cost of capital but many researches has proved that taxes highly affects the cost of capital. [pic] 100% of the managers agree that weighted average cost of capital reduces as there is reduction in the net financial debt.It can be explained by the fact that if the cost of debt remains same but there is variation in the weightage of the debt. The lower weightage reduces the WACC of the commercial bank. [pic] While the method used for the cost of equity varies in different banks. 15% uses the CAPM, 42% uses the Gordon Growth Model whereas the remaining percentage uses both the CPM and Gordon Growth Model method when they finances through the equity. [pic] 16 DESCRIPTIVE ANALYSIS 17 Allied Bank Limited WACC = (Weighted average cost of dbt) + (weighted average cost of equity)WACC = (interest (1-tax)) + (Do (1 + g))/ (market price per share)] + g) COST OF EQUITY: |YEAR |2005 |2006 |2007 |20 08 |2009 | |DIVIDEND/SHARE |2. 5 |2. 5 |3 |3. 5 |4 | |GROWTH |0% |0% |20% |16. 66% |(14. 28%) | Average growth=4. 476% Cost of equity = Gordon growth model =(Do (1 + g))/ (market price per share)] + g) Cost of equity =4(1+0. 4476)/59. 11+0. 04476 = 11. 54% | |g |Growth Rate |4. 476% | | |Do |Last Dividend |4 | | |MP |Market Price |59. 11 | | | | | | COST OF DEBT: Interest Rate = 9. 619% Tax rate = 32. 4% Weighted average cost of debt after tax = 0. 09619(1-0. 324)Weighted average cost of debt after tax =6. 503 % WEIGHTED AVERAGE COST OF CAPITAL: | |AMOUNT |%AGE COMPONENT |COST |WACC | | |Thousand |(a) |(b) |(a*b) | | |(000) | | | | |DEBT |39,457,216 |0. 0055 |0. 650 |0. 00036 | |EQUITY |7,110,007,580 |0. 9945 |0. 1154 |0. 11476 | |TOTAL |7,149,464,796 | | |0. 11512 or 11. 51% | ANALYSIS In order to prove our research hypotheses, we find different relation between the interest rates, cost of debt and WACC; we assume different variation in the interest rates as it is the independent v ariable that affects the WACC hich is the dependent variable. In 2009, the interest rate of ABL was 9. 619%, we assume two different rates in which one is greater than 2009 rate i. e. 15% and other is less than 2009 interest rate i. e. 7. 00%. As the interest rates increases, it also increases the cost of debt that results in the increase in the weighted average cost of capital. Hence, hypotheses Ho and H3 of our research has proved by this analysis because as the interest rate decreases to 7. 00%, the cost of debt also declines which result in decreases in the WACC and vice versa. INTEREST |COD |WACC | |7. 00% |4. 73% |11. 50% | |9. 62% |6. 50% |11. 51% | |15. 00% |10. 14% |11. 52% | pic] For the relation between the taxes rates, cost of debt and WACC. We find different variations among them. Tax rates are the independent variable so they create different affects on WACC as it is dependent variable. In 2009, ABL has the tax rate of 32. 40%. Similarly we assume one tax rate greater than 32. 4% and another is less than 32. 4% in order to prove our hypothesis. From the following analysis, we come to know that as the tax rates increases, it decreases the cost of debt that results in the decrease in the weighted average cost of capital.Hence, hypotheses H1 and H4 of our research have proved by this analysis. |TAX RATES |COD |WACC | |30% |6. 73% |11. 84% | |32. 40% |6. 50% |11. 51% | |35% |6. 25% |11. 50% | [pic] 8 Habib Bank Limited (HBL) WACC = (Weighted average cost of debt) + (weighted average cost of equity) WACC = (interest (1-tax)) + (Do (1 + g))/ (market price per share)] + g) COST OF EQUITY: |YEAR |2005 |2006 |2007 |2008 |2009 | |DIVIDEND/SHARE |1. 5 |1. 48 |1. 48 |3. 01 |0. 30 | |GROWTH |0 |-1. 333% |0 |103. 378% |-90. 033% | Average growth=2. 4024%Cost of equity = Gordon growth model =(Do (1 + g))/ (market price per share)] + g) Cost of equity = 0. 03 (1+0. 024)/40. 9+0. 024 = 2. 475% | |g |Growth Rate |2. 4024% | | |Do |Last Dividend |0. 03 | | |MP |Ma rket Price |40. 90 | | | | | | COST OF DEBT: Interest Rate = (LIBOR+1. 75) = 18. 65% Tax rate = 37. 2% Cost of debt after tax = 18. 65 (1 – 0. 3732) Cost of debt after tax = 11. 69% WEIGHTED AVERAGE COST OF CAPITAL: | |AMOUNT |%AGE COMPONENT |COST |WACC | | |Thousand |(a) |(b) |(a*b) | | |(000) | | | | |DEBT |33,536,837 |0. 786 |0. 169 |0. 0912 | |EQUITY |9,108,000 |0. 214 |0. 0246 |0. 0053 | |TOTAL |42644837 | | |0. 0965 or 9. 65% | ANALYSIS We find different relation between the interest rates, cost of debt and WACC in order to prove our research hypothesis. We assume different variation in the interest rates as it is the independent variable that affects the WACC which is the dependent variable.In 2009, the interest rate of HBL was 18. 65%, we assume two different rates in which one is greater than 2009 rate i. e. 20% and other is less than 2009 interest rate i. e. 12. 00%. As the interest rates increases, it also increases the cost of debt that results in the increase in the weighted average cost of capital, this can easily proved by given table and you can also find this relation through the given graph. Hence, hypotheses Ho and H3 of our research has proved by this analysis because as the interest rate decreases to 12%, the cost of debt also declines to from 11. 69% to 7. 2% and which result in decreases in the WACC from 9. 65% to 6. 44% and vice versa. |INTEREST |COD |WACC | |12% |7. 52% |6. 44% | |18. 65% |11. 69% |9. 65% | |20% |12. 536% |10. 38% | pic] Tax rates are the independent variable so they create different affects on WACC as it is dependent variable. In 2009, HBL has the tax rate of 32. 40% that having COD 6. 503% and a WACC of 11. 51%. Similarly we assume one tax rate greater than 32. 4% and another is less than 32. 4% in order to prove our hypothesis. From the following analysis, we come to know that as the tax rates increases, it decreases the cost of debt that results in the decrease in the weighted average cost of capital. Henc e, hypotheses H1 and H4 of our research have proved by this analysis. Tax rates |COD |WACC | |30% |6. 73% |11. 84% | |32. 4% |6. 503% |11. 51% | |35% |6. 25% |11. 50% | [pic] 19 Muslim Commercial Bank (MCB)WACC = (Weighted average cost of debt) + (weighted average cost of equity) WACC = (interest (1-tax)) + (Do (1 + g))/ (market price per share)] + g) COST OF EQUITY: |YEAR |2005 |2006 |2007 |2008 |2009 | |DIVIDEND/SHARE |4. 5 |5. 1 |5. 6 |6 |6. 8 | |GROWTH |0 |13. 33% |9. 8% |7. 14% |13. 33% | Average growth=8. 72%Cost of equity = Gordon growth model = (Do (1 + g))/ (market price per share)] + g) Cost of equity=6. 8(1+0. 0872)/189. 79+0. 0872 =12. 62% | |g |Growth Rate |8. 72% | | |Do |Last Dividend |6. 8 | | |MP |Market Price |189. 79 | | | | | | COST OF DEBT: Interest Rate = 12. 75% Tax rate = 33. 07% Cost of debt after tax = 12. 275 (1 – 0. 3307) Cost of debt after tax = 8. 216% WEIGHTED AVERAGE COST OF CAPITAL: | |AMOUNT |%AGE COMPONENT |COST |WACC | | |Thousand (000) |(a ) |(b) |(a*b) | |DEBT |44,662,088 |0. 0221 |0. 0822 |0. 0018 | |EQUITY |1,972,537,950 |0. 778 |0. 1262 |0. 1234 | |TOTAL |2,017,200,038 | | |0. 1252 or 12. 52% | ANALYSIS From many different previous researches, we find different relation between the interest rates, cost of debt and WACC. We assume different variation in the interest rates as it is the independent variable that affects the WACC which is the dependent variable. In 2009, the interest rate of MCB was 12. 28%, we assume two different rates in which one is greater than 2009 rate i. . 11. 6% and other is less than 2009 interest rate i. e. 14. 90% in order to find the after affects of these changes. Remaining other things constant, as the interest rates increases, it also increases the cost of debt that results in the increase in the weighted average cost of capital, this can easily proved by given table and you can also find this relation through the given graph. Hence, hypotheses Ho and H3 of our research has proved by t his analysis because as the interest rate decreases to 11. 6%, the cost of debt also declines to from 8. 22% to 7. 6% and which result in decreases in the WACC from 12. 52% to 12. 51% and vice versa. |INTERSET RATES |COD |WACC | |11. 60% |7. 76% |12. 51% | |12. 28% |8. 22% |12. 52% | |14. 90% |9. 97% |12. 6% | [pic] For the relation between the tax rates, cost of debt and WACC. We find different variations among them. Tax rates are the independent variable so they create different affects on WACC as it is dependent variable. In 2009, MCB has the tax rate of 33. 07%. Similarly we assume one tax rate greater than 33. 07% and another is less than 33. 07% in order to prove our hypothesis. From the following analysis, we come to know that as the tax rates increases, it decreases the cost of debt that results in the decrease in the weighted average cost of capital.Hence, hypotheses H1 and H4 of our research have proved by this analysis. |TAX RATES |COD |WACC | |30% |8. 59% |12. 53% | |33. 07% |8. 22% |12. 52% | |40% |7. 36% |12. 50% | pic] 20 Al-falah Bank Limited WACC = (Weighted average cost of debt) + (weighted average cost of equity) WACC = (interest (1-tax)) + (Do (1 + g))/ (market price per share)] + g) COST OF EQUITY: |YEAR |2005 |2006 |2007 |2008 |2009 | |DIVIDEND/SHARE |0. 5 |1. 25 |1 |2. 25 |2. 25 | |GROWTH |0 |150% |-20% |125% |0 | Average growth=51%Cost of equity = Gordon growth model =(Do (1 + g))/ (market price per share)] + g) Cost of equity = 2. 25(1+0. 51)/26. 13+0. 51 = 64% | |g |Growth Rate |51% | | |Do |Last Dividend |2. 25 | | |MP |Market Price |26. 13 | | | | | | COST OF DEBT: Weighted average Interest Rate = 6. 406%.Tax rate = 34. 84% Cost of debt after tax = 0. 06406 (1 – 0. 3484) Cost of debt after tax = 4. 174% WEIGHTED AVERAGE COST OF CAPITAL: | |AMOUNT |%AGE COMPONENT |COST |WACC | | |Thousand (000) |(a) |(b) |(a*b) | |DEBT |18,687,600 |0. 00138 |0. 0417 |0. 000057 | |EQUITY |13,491,562,500 |0. 986 |0. 64 |0. 639104 | |TOTAL |13,5 10,250,100 | | |0. 639 or 63. 9% | ANALYSIS Many different researches have concluded that different variation in the interest rates as it is the independent variable that affects the WACC which is the dependent variable. In 2009, the interest rate of Alfalah Bank was 6. 404%, we assume two different rates in which one is greater than 2009 rate i. e. 8. 6% and other is less than 2009 interest rate i. . 4. 6% in order to find the after affects of these changes. Remaining other things constant, as the interest rates increases, it also increases the cost of debt that results in the increase in the weighted average cost of capital, this can easily proved by given table and you can also find this relation through the given graph. Hence, hypotheses Ho and H3 of our research has proved by this analysis because as the interest rate decreases to 4. 6%, the cost of debt also declines to from 4. 174% to 2. 997% and which result in decreases in the WACC from 63. 914% to 63. 0% and vice versa. |I NTEREST RATES |COD |WACC | |4. 6% |2. 997% |63. 90% | |6. 406%. |4. 174% |63. 914% | |8. 6% |5. 604% |63. 918% | [pic] For the relation between the taxes rates, cost of debt and WACC.We find different variations among them. Tax rates are the independent variable so they create different affects on WACC as it is dependent variable. In 2009, Alfalah has the tax rate of 34. 84%. Similarly we assume one tax rate greater than 34. 84% and another is less than 34. 84% in order to prove our hypothesis. From the following analysis, we come to know that as the tax rates increases, it decreases the cost of debt that results in the decrease in the weighted average cost of capital. Hence, hypotheses H1 and H4 of our research have proved by this analysis as they are negatively correlated. TAX RATES |COD |WACC | |25% |4. 805% |63. 917% | |34. 84%. |4. 174% |63. 9% | |40% |3. 844% |63. 915% | [pic] 21 Soneri Bank Limited ANALYSISSoneri Banks has following interest rates and tax rates, which affe ct WACC in the same manner as it affects other commercial Banks. In 2009, it has interest rate of 12. 63% that has the cost of debt 8. 54% and the WACC is of 0. 37%. Variation in the interest rates brings following changes and hence proves our research. |INTEREST RATES |COD |WACC | |11. 60% |7. 84% |0. 35% | |12. 3% |8. 54% |0. 37% | |14. 60% |9. 87% |0. 43% | [pic] Tax rates posses the same affect. As tax rates increases, it has negative relation with the COD and WACC that proves the hypothesis H1 and H4 of our research as in 2009, the tax rate was 32. 34%, when it decrease, the COD increases which also increases WACC and again inversely proportional when Tax rate increase. TAX RATES |COD |WACC | |25% |9. 47% |0. 41% | |32. 34% |8. 54% |0. 37% | |40% |7. 57% |0. 33% | [pic] CHAPTER 5: CONCLUSION AND RECOMMENDATION 1. ConclusionAccording to past related researches, there should be a suitable balance between debt and equity as it has effects on the risk and return of the sharehold ers of the bank. If there are reasonable proportions of debt and equity in the capital structure, it maximizes the shareholders wealth while minimizing the cost of capital and that could be considered as the optimal capital structure. Factors like Interest payment expected deductibility give prospect for value. If the tax deductibility is realized by the bank then stockholders get the expected benefit of the tax deduction.If firm finances through debt, then it has financial risk. And if through equity, then it has business risk. The cost of capital can affect capital structure that the taxes bring variation in the cost of capital and hence affect the capital structure of the banks. Cost of equity increases if the financial risk become high. The cost of equity and debt increases with the increase in debt. On after tax cost of debt, there is the greater the impact of interest deductibility, if the tax rate s higher. Weighted average cost of capital become low with the cost of capital high, if the debt capital increase in proportion.Cost of equity increases with the cost of debt. If the cost of components high the weighted average cost of capital increases and reason is that shareholder prefer to use of debt when expected value of tax benefit is attractive as compared to the added financial risk associated with the debt. The Demanded rate of increase in cost of debt and equity, effects on value of the expected increase in tax benefit of using more debt. Interest rate affects the cost of debt. It involves the risk components that have the probability of default on the debt.In this research, the main finding of the paper suggests that the commercial bank should focus on reducing the cost of capital that maximizes the profit. According to our findings, it is concluded that each banks has its policies of financing. Each bank takes decision of selecting capital structure for minimizing their cost, risk factor differently that occupies good financial position in market . Factors that have impact on cost of capital as well as on capital structure are tax rates, interest rates, dividends payout, risk of default and other like market fluctuation, corporate governance.These factors differently affect the cost of capital and capital structure of each commercial bank. Some banks agree that tax brings variation in the capital structure as the use of taxes decreases the cost of debt but some banks strongly disagree, like Islamic bank Meezan and Alfalah,. These Islamic banks have no such interest rate risk. Tax impacts on cost of capital increases cost of capital agrees by majority of commercial banks, and disagrees by some commercial banks. Dividend impacts on cost of capital increases cost of capital agrees by some banks, and disagrees by some banks.Interest rate brings effects on increase in cost of capital as the interest rate increases the cost of debt also increases but some banks strongly disagreed. Other factors like market fluctuation also influen ce interest rate to increase. And sometimes sudden increase in interest rates influence market. Due to this, all factors differently impact on cost of capital variation (increase and decrease) and capital structure decision making. We have estimated Weighted Average Cost of Capital (WACC) of commercial banks in order to find the effects of cost of capital and their factors on profit and capital structure decision making.We analyze from computing WACC with different assumptions that; †¢ The interest rates increases (decreases), it also increases (decreases) the cost of debt that results in the increase (decreases) in the weighted average cost of capital. Hence, hypotheses Ho and H3 is verify. †¢ The tax rates increases (decreases), it decreases (increases) the cost of debt that results in the decrease (increases) in the weighted average cost of capital. Hence, hypotheses H1 and H4 is verify. The cost of capital improves the profit and capital structure decision making in wh ich other factors also takes part to maximize the profit in the commercial banks. . Recommendations Cost of capital plays a central role in valuation, portfolio selection, and capital budgeting. Therefore, measuring and validating the cost of capital has been the subject of much research. †¢ For reducing cost of capital of bank, we recommend that proportion of debt plus equity financing is better although debt increases risk of default as most of the commercial banks prefer debt financing. Because, debt financing provides tax benefit under suitable market conditions and reduces WACC. †¢ Through equity financing banks give dividend which increases their reputation in market.In short, payment of dividend gives market position. And it is also important because in terms of financial ratios, equity financing shows bank more strong as compared to debt or liabilities. †¢ Adopt an optimal capital structure to improve shareholder value. Capital structure is part of a bank†™s package of financial policies, which include dividend policy and amount of debt and equity claims issued which improves share holder wealth and reduces WACC. Conventional thinking in the area of finance has also assumed that a certain amount of debt in the capital structure is a good thing. Interest rates are high in Pakistan.The following reforms looked-for from the Government of Pakistan (GOP): †¢ Allow and encourage consideration of financial institutions to reduce disintegration in the financial sector. †¢ Strengthen legal and judicial reform laws to allow financial institutions to foreclose on guarantee to reduce risk in the case of unpaid loans without going through lengthy court proceedings. CHAPTER 7: AREA OF FURTHER STUDIES After performing this research we have concluded that the researches on the Weighted Average Cost of Capital in Banks are less or there is no proper research that has taken place for the Commercial Banks.There should be more researches on the factor that are affecting WACC in the commercial banks as its proper estimation maximizes profit. It is found with the help of weightage there is a huge impact on the cost of capital that may be a source of further studies for the commercial bank because proper weightage of debt and equity can improves or enhances the profit of commercial banks. The WACC affects the profit or Capital Structure decision making that has direct affect on the reputation of the commercial banks. CHAPTER 8: REFERENCES †¢ Nadeem A.Sheikh and Zongjun Wang, June 2010, International Journal of Innovation, Management and Technology, Vol. 1, No. 2, Financing Behavior of Textile Firms in Pakistan, pg 130-135 †¢ Khadka, H Bahadur,2006. Leverage and the Cost of Capital. The Journal of Nepalese Business Studies,Vol. III, No1: 85-91 †¢ Modigliani, F. and Miller, M. H. 1963. Corporate Income Taxes and the Cost of Capital: A Correction. American Economic Review: 433-443. †¢ Shubber, K. and Alza firi, E. (2008). â€Å"Cost of capital of Islamic banking institutions: an empirical study of a special case†, International Journal of Islamic and Middle Eastern Finance and Management, Vol. No. 1, pp. 10-19 †¢ Bruner, R. F. , Eades, K. M. , Harris, R. S. , Higgins, R. C. (1998). â€Å"Best practices in estimating the cost of capital: survey and synthesis†, Financial Practice and Education, Spring/Summer, pp. 13-28. †¢ Miller, R. A. (2006). â€Å"The weighted average cost of capital is not quite right†, The Quarterly Review of Economics and Finance, 49 (2009) 128–138 †¢ Jorgenson, Dale W. and Ralph Landau (1993). Tax Reform and the Cost of Capital – An International Comparison. Washington, D. C. : Brookings Institution. †¢ Fama, E. F. , and K.French, 1997, Industry costs of equity, Journal of Financial Economics 43, 153-193. †¢ Fama, E. F. , and K. French, 1999, The corporate cost of capital and the return on corporate inv estment, Journal of Finance 54, 1939-1967. †¢ John J. Pringle, the Capital Decision in Commercial Banks, the Journal of Finance, Vol. 29, No. 3 (Jun. , 1974), pp. 779-795 †¢ Richard Lambert*, Christian Leuz, Robert E. Verrecchia â€Å"Accounting Information, Disclosure, and the Cost of Capital† September 2005, Revised, August 2006 †¢ Barton, S. L. and P. J. Gordon (1987). ‘Corporate strategy: Useful perspective for the study of capital structure? Academy of Management Review, 12, pp. 67-75 †¢ Balakrishnan, S. and I. Fox (1993). ‘Asset specificity, firm heterogeneity, and capital structure', Strategic Management Journal, 14(1), pp. 3-16. †¢ A. Seth (1990). ‘The impact of LBOs on strategic direction', California Management Review, 32(1), pp. 30-43. †¢ Groth John C. , â€Å"Capital structure: Perspectives. † Management Decision 35:7 (1997): 552–561. †¢ John C. Groth, Professor, Texas A University, USA â€Å"Capi tal Structure: Implications†, 1997. †¢ Ross, Stephen A. , Randolph W. Westerfield, and Jeffrey Jaffe. Corporate Finance. 9th ed.Boston, MA: McGraw-Hill, 2010. †¢ Alan J. Auerbach, Wealth Maximization and the Cost of Capital, the Quarterly Journal of Economics, Vol. 93, No. 3 (Aug. , 1979), pp. 433 †¢ John R. Graham, â€Å"Taxes and Corporate Finance: A Review†, the Review of Financial Studies, Vol. 16, No. 4 (Winter, 2003), pp. 1075-1129 †¢ Meziane Lasfer, Professor, Cass Business School, UK â€Å"Optimizing the Capital Structure: Finding the Right Balance between Debt and Equity†. †¢ William F. Coffin and Sean Collin, 2006, Techniques to lower the cost of capital in today’s volatile markets, CCG Investor Relations. Ali Murtaza, manager financial reporting and analysis, finance division, BANK ALFALAH LIMITED. †¢ Amir Ahmed, risk manager, Asst. vice president, Risk Management Unit, MEEZAN BANK. †¢ Aniel Victor, Asst. manag er, Riak management, UBL FUNDS MANAGERS. †¢ Syed Ali Shabar, Branch Manager, MCB BANK LIMITED. †¢ Raza Abbas, Asst. vice president, Portfolio Management, HABIB BANK LIMITED. †¢ Aamir Maysorewala, customer service manager, ALLIED BANK LIMITED. †¢ Riazullah Khan, Assistant Vice President & Manager, SONERI BANK. APPENDIX A Questionnaire NAME_________________________DESIGNATION_________________ BANK__________________________ BRANCH_______________________ 1. Debt and equity are the sources of finance, through which source your bank finances their investment? a) Debt b) Equity c) Both 2. What is the impact of dividend payment on cost of capital as using equity is source of finance that will liable bank to pay dividend? a) Increase cost of capital b) Decrease cost of capital c) No impact on cost of capital 3. Tax shield also has an important factor in cost of capital, how tax impact on cost of capital? a) Increase cost of capital b) Decrease cost of capital ) No impact on cost of capital 4. Cost of capital has positive impact by using both sources of finance. [pic] 5. When bank finance through debt, it increase liabilities that also increase the risk factor of default. [pic] 6. Fluctuation in the interest rate affects Cost of Capital and also the Capital Structure of your banks. [pic] 7. As low dividend payout will affect the reputation of your bank, is high dividend payout and dividend growth affect the capital structure decision? [pic] 8. Cost of capital occupies an important role in the financial management and in investment decision making in commercial banks. [pic] . Cost of capital affects the level of risk in commercial bank. [pic] 10. Taxes bring variation in the capital structure of commercial banks. [pic] 11. Reducti

Does Internet Good Outweigh the Bad †Argumentative Essay Brief Summary

Does Internet Good Outweigh the Bad – Argumentative Essay Brief Summary Free Online Research Papers Does Internet Good Outweigh the Bad Argumentative Essay Brief Summary Internet becomes more and more popular. Every child which is able to read use it and almost everyone has it at home. But is internet the blessing or the curse? Even if you do not have much time, having internet, you can contact with your friends very quickly. E-mails replace letters and instead tame taking meetings you can talk with people by messengers like gadu-gadu or skype. You can also meet some new friends or even the love of your life. It is really comfortable to use your account without going to a bank, standing in queues and all that stress. Internet is the best and the quickest way of acquiring information. What is more you can make there some shopping or have access to libraries or other sources. In the other hand some relationships made on-line can be dangerous, especially for children, who are naive. Internet is a very popular source of illegal mp3 and distributed without permission films. It is often that during searching some information you run into porno films or catch viruses. In addition not always you can get reliable information. Some of your data can be stolen and used by hackers. Whatever we say about it, internet is to popular to stop people using it. I think it is really good invention but as if with everything, human can use it in bad aims. Research Papers on Does Internet Good Outweigh the Bad - Argumentative Essay Brief SummaryAnalysis of Ebay Expanding into AsiaHarry Potter and the Deathly Hallows EssayThe Project Managment Office SystemOpen Architechture a white paperPETSTEL analysis of IndiaComparison: Letter from Birmingham and CritoWhere Wild and West MeetThe Effects of Illegal ImmigrationStandardized TestingNever Been Kicked Out of a Place This Nice

The Cult of Domesticity

The Cult of Domesticity In the middle of the 19th century, the movement known as the Cult of Domesticity, or True Womanhood, took hold in the United States and Britain. It was a philosophy in which womens value was based upon their ability to stay home and perform their duties as wives and mothers, and their willingness to abide by a series of very specific virtues. Did You Know? The cult of domesticity, or true womanhood, was an idealized set of societal standards that became popular with middle- and upper-class women in the late 19th century.Piety, purity, submissiveness, and domesticity were the mark of femininity during this period.The early cult of domesticity led to the development of the womens movement, in direct response to the standards set upon women by society. True Womanhood in the 19th Century Although there was not a formal movement that was actually entitled Cult of Domesticity, scholars have come to use this term to refer to the social environment in which many middle- and upper-class 19th century women lived. The term itself was coined in the 1960s by historian Barbara Welter, who also referred to it by its contemporary name, True Womanhood. Victorian family life revolved around domestic pursuits. ilbusca / Getty Images In this social system, gender ideologies of the time assigned women the role of the moral protector of home and family life; a womans value was intrinsically tied to her success in domestic pursuits such as keeping a clean house, raising pious children, and being submissive and obedient to her husband. The idea that this was part of womens natural place in the family dynamic was emphasized by womens magazines, religious literature, and gift books, all of which stressed that the way to true femininity was by adhering to a series of specific virtues as guidelines: piety, purity, submissiveness, and domesticity. The Virtues of Domestic Life Religion, or piety, was the foundation upon which a womans role in the cult of domesticity was built; women were seen as naturally more pious than men. It was believed that it was up to women to present the spiritual cornerstone of family life; she was to be strong in her faith, and raise her children with a strong Biblical education. She was to guide her husband and offspring in morality and virtue, and if they were to slip, the onus of responsibility fell to the wife or mother. More importantly, religion was a pursuit that could be followed from home, permitting women to stay out of the public sphere. Women were warned not to let intellectual pursuits, such as reading novels or newspapers, lead them astray from the word of God. Purity was a womans greatest virtue in the 19th century; the absence of it tarnished her as a fallen women, and marked her as unworthy of the comforts of good society. Virginity was to be protected at all costs, and death was considered preferable to the loss of virtue. The gift of a womans chastity to her husband was something to be treasured on their wedding night; sex was to be endured as part of the sacred bond of marriage. By contrast, if women were expected to be pure and modest, men were expected to try to challenge that virtue at every possible opportunity. It was up to women to keep amorous suitors at bay. A true woman was submissive to her husband, to whom she was completely dedicated. Because staying home with the family was an integral part of the cult of domesticity, women were wholly financially dependent upon their spouses. It was up to him to make the decisions for the entire household, while she remained passive and supportive. After all, God had made men superior, so it stood to reason that they were in charge. Young ladies were advised to respect their husbands wishes, even if they didnt agree with his opinions. Finally, domesticity was the end goal of the cult of true womanhood. A woman who considered working outside the home was seen as a unfeminine and unnatural. Ladylike activities such as needlework and cooking were acceptable forms of labor, as long as it was done in ones own home and not for employment. Reading was frowned upon, other than religious texts, because it distracted women from important things like caring for their children and spouse. They provided comfort and happiness, often at the expense of their own silent suffering, so that their menfolk would have a pleasant home to return to each day; if a man strayed and wanted to be elsewhere, it was the fault of his wife for not meeting his domestic needs. Although all women were expected to abide by the standards of true womanhood, in reality, it was predominantly white, Protestant, upper-class women who did so. Thanks to social prejudices of the period, women of color, working women, immigrants, and those who were lower on the socioeconomic ladder were excluded from the chance to ever be true paragons of domestic virtue. The Womens Movement in Response to Cult of Domesticity Victorian woman unpacking her basket in the kitchen.   Whitemay / DigitalVision Vectors / Getty Images Some historians have argued that working-class women who were employed as servants, thus taking them into the private, domestic sphere, did in fact contribute to the cult of domesticity, unlike their peers who worked in factories or other public places. Teresa Valdez says, [W]orking-class women were subsequently choosing to remain  in  the private realm. The same study shows that the majority of servants were young single women. This indicates that these women were preparing for their lives as wives and mothers by supporting their father’s household through work in a private home. Regardless, this social construct of true womanhood led directly to the development of feminism, as the womens movement formed in direct response to the strict standards set out by the cult of domesticity. White women who had to work found themselves excluded from the concept of true womanhood, and so consciously rejected its guidelines. Women of color, both enslaved and free, did not have the luxury of the protections afforded to true women, no matter how pious or pure they might have been. In 1848, the first womens movement convention was held in Seneca Falls, NY, and many women felt that it was time for them to begin fighting for equal rights. During the second half of the 19th century, when the right to vote was extended to all white men, women who advocated for suffrage were seen as unfeminine and unnatural. By the time the Progressive Era began, around 1890, women were vocally advocating for the right to pursue educational, professional, and intellectual pursuits of their own, outside of the sphere of home and family. This ideal that emerged of the New Woman was a direct contrast to the cult of domesticity, and women began taking on jobs in the public sector, smoking cigarettes, using birth control methods, and making their own financial decisions. In 1920, women finally gained the right to vote. In the years following World War II, there was a slight resurgence of the cult of domesticity, as Americans in particular sought a return to the idealized family life that theyd known before the war years. Popular films and television shows portrayed women as the foundation of the home, domestic life, and childrearing. However, because many women not only maintained their family life but also held down jobs, there was once again resistance. Soon, feminism reappeared, in what historians call the second wave, and women began fighting in earnest for equality once again, in direct response to the oppressive standards laid upon them by the cult of domesticity. Sources Lavender, Catherine. â€Å"Ê ºNotes on The Cult of Domesticity and True Womanhood.†Ã‚  The College of Staten Island/CUNY, 1998, csivc.csi.cuny.edu/history/files/lavender/386/truewoman.pdf. Prepared for Students in HST 386: Women in the City, Department of HistoryValdez, Teresa. â€Å"The British Working Class Participation In The Cult Of Domesticity.†Ã‚  StMU History Media - Featuring Historical Research, Writing, and Media at St. Marys University, 26 Mar. 2019, stmuhistorymedia.org/the-british-working-class-participation-in-the-cult-of-domesticity/.Welter, Barbara. â€Å"The Cult of True Womanhood: 1820-1860.†Ã‚  American Quarterly, The Johns Hopkins University Press, www.csun.edu/~sa54649/355/Womanhood.pdf. Vol. 18, No. 2, Part 1 (Summer, 1966), pp. 151-174

Definition and Examples of Exclamatory Sentences

Definition and Examples of Exclamatory Sentences In English grammar, an exclamatory sentence is a type of main clause  that expresses strong feelings by making an exclamation. Compare this with sentences that make a statement  (declarative sentences), express a command  (imperative sentences), or ask a question  (interrogatory sentences). An exclamatory sentence is also called an  exclamative or an exclamative clause. An exclamatory sentence usually ends with an exclamation point  (!). With the appropriate intonation, other sentence types- especially declarative sentences- can be used to form exclamatives.   Adjectives in  Exclamatory Phrases and Clauses Exclamatory phrases can stand on their own as sentences- such as if someone says No way! or uses interjections such as Brrr!- without even needing to have a subject and a verb in them, though to qualify as an exclamatory clause or sentence, a subject and verb need to be present. Author Randolph Quirk and his colleagues explain how adjectives play a part in creating exclamatory phrases and clauses: Adjectives (especially those that can be complement when the subject is eventive, eg: Thats excellent!) can be exclamations, with or without an initial wh-element...:​  Excellent! (How) wonderful!...Such adjective phrases need not be dependent on any previous linguistic context but may be a comment on some object or activity in the situational context. (​A Comprehensive Grammar of the English Language. Longman, 1985) Interrogative Clauses as Exclamations In addition to sentences that have the typical declarative  subject-verb  structure, there are exclamatory sentences that take a positive or negative interrogative structure. For example, examine the sentence structure here: Oh wow, was that a great concert! Note that the verb was comes before the subject concert. If youre having trouble parsing out subjects for these type of sentences, look first for the verb and then find the subject by deciding what belongs to the verb. Here, its concert, as you could put the sentence in a subject-verb order as Oh wow, that concert was great!   There are exclamatory questions, too, such as, Isnt this fun! or Well, what do you know! And there are rhetorical questions of surprise, such as What?! that end with both a question mark and an exclamation point.   Avoid Overuse in Your Writing Exclamative types of sentences rarely appear in  academic writing, except when theyre part of  quoted  material, which would likely be rare in that field. Please be aware that overuse of exclamations and exclamation points in  essays, nonfiction articles, or in fiction is a sign of amateurish writing. Use them only when absolutely necessary, such as  in direct  quotes and dialogue. Even then, revise out what you can in order to leave only the most necessary. Dont allow exclamation points (and exclamatory sentences) to become a crutch to carry the emotion of a scene. In fiction, the words the characters speak and the tension in the scene driven by the narration should be what expresses the emotion. The author voice  in an essay or nonfiction article should carry the message; exclamations should be restricted to direct quotes attributed to sources. A good rule of thumb to follow for any piece of writing is to allow only one exclamation point for every 2,000 words (or more, if possible). Revising them out of your drafts will make your overall piece stronger by the time its finalized.

Monetary Policy for Global Financial Crisis Assignment

Monetary Policy for Global Financial Crisis - Assignment Example The world’s drastic encounter with the Global Financial Crisis saw the demise of many financial institutions which later translated to the proclamation for steady measures to sustain many of the world’s economies. The disaster translated to a down turn in many stock markets, intrinsic topple of economies alongside a decline in all aspects of money dependent sectors of the world as a whole. The cause in the occurrence of the event was the decline in value in prime property and translating into monetary liquidity problems in the United States’ banking sector (Bordo & Michael, 2008, 17). A trace of the financial crisis takes us back to the end of 2007, when many of the securities held by banks in the United States devalued, perpetually leading to the same for the banking sectors all over the world. Background Information Characteristic of the crisis was the liquidity of banks in rendering services to their customers as their solvency had been vastly affected; leadin g to a very low capability to lend to customers and investors could therefore not be in a position to accomplish prospected development. The global financial crisis of 2008 was labeled the worst financial disaster since 1930’s Great Depression. It led to many adverse effects worldwide, even to the individuals who suffered mainly evictions from rental houses and evictions from mortgaged houses. Banks in the United States alone lost over a trillion dollars from dealing with toxic assets, many suffering closure and others having to lend from larger banks. The unexpected decline in the value of the world’s assets hit many banking institutions with a big bang, while many who had extended mortgages and other monetary loans could not sustain themselves with the low levels of liquidity which they encountered. The perpetual increase in the spread of the effects of the financial crisis saw other countries experiencing difficulties in sustaining their economies, much specifically those that committed much of their economy’s dominance in the western countries such as India and China. The drastic effects on the general macroeconomics of all the world’s effects of the global financial crisis obliged major monetary policy developments in economies, in an effort to protect their growth from dropping as well as the protect the individual from suffering the effects of the same. Governments had to strategize responses to protect themselves as well as device long term strategies to ensure the same does not happen to them (Gali, 2008, 165). Monetary Policies: Monetary Aggregate The purpose of the monetary aggregate policy is to increase the amount of physical money in circulation. It works towards increasing the amounts in the public so that enough of it is circulating. The effect of having a lot of circulating money is defined in many ways and it requires great scrutiny from economists. The quantity theory of money is a clear definition of the effects of applying the money aggregate monetary policy (Kenneth, R., 1985, 1175). In essence, fighting a financial crisis seeks to maximize the amount of money that is in circulation. According to the quantity theory

Principles of Information Security Essay Example | Topics and Well Written Essays - 2250 words

Principles of Information Security - Essay Example Health facilities strive to develop efficient and reliable information systems capable of providing real-time access to vital information that may always mean the death or life of a patient. The health facility provides an effective environment for assessing the importance of information systems thus formulating policies that would enhance service delivery in the facility. The members of the group carried out research on the health facility and interviewed some of its employees and managers who offered reliable information on the nature and importance of the information system. The research included studying and testing the various features of the facility’s information including the functionality of its website, its employees and managers . The report has various sections that provide in-depth analysis of the information system in the facility, the proposition of the policies and their anticipated effects. Overview of the company is a key section of the report that provides a dequate information about the existing information system of the hospital, its information needs and the need for functional information policies to guide the utilization of the system. Subsequent sections of the report address related topical issues including the existing information policy in the facility and the subsequent issue specific policies proposed after the study. Overview of the chosen company New York Presbyterian Hospital just as the name suggests is a health facility and a university hospital.

Art Education Essay Example | Topics and Well Written Essays - 750 words - 3

Art Education - Essay Example It is dated from 1964 and it is indicative of Johns’ shift away from maps to ‘grand’ works (paragraph 2). 6. Cotter suggests that paintings such as â€Å"Watchman† â€Å"invite lively interactions.† While on the other hand, â€Å"According to What† is considered standoffish. The painting seems to be a collection of elements which are not cohesive (paragraph 4). 10. Cotter questions whether Johns’ painting â€Å"According to What† is a great painting. He says that though the paintings greatness is questionable, it is important and interesting because it defines Johns’ career. It is interesting because Johns uses techniques which will later be copied by other artists (paragraph 7 & 8). 13. Cotter concludes by stating that â€Å"All the pieces of a complex and enticing puzzle are there.† Like other paintings the audience is left to themselves to figure it out for themselves (paragraph 8). 1. John Russell reviews Jasper Johns’ work by first discussing the painting â€Å"The Seasons†. He states that the painting is a â€Å"benchmark in the history† of America (1). The painting is displayed at the Leo Castelli Gallery in New York. 2. Russell describes â€Å"The Seasons† as an art with â€Å"deviation or concern†. The other paintings by Johns, including â€Å"Spring, Fall, Summer, and Winter† are described as â€Å"distinct from the invented† (3). Johns’ art style as â€Å"immutable, like the American flag† (3). 4. Russell analyzes the relationship between â€Å"The Seasons† and other works by stating that â€Å"The Seasons†¦is directly related to a painting by Picasso called â€Å"The Minotaur Moving His House† (5). 5. Russell discusses the similarities between Picasoo and Johns’ paintings. The similarieties include ropes and ladders. Russell notes that Johns has used this material before but he uses it in a whole new context (6). Russell notes

The Success and Challenges of Ryanairs Operations and Marketing Essay

The Success and Challenges of Ryanairs Operations and Marketing Strategies - Essay Example It is evidently clear from the discussion that the technology which is used by Ryan Air is one of the key factor successes because it saves check-in time and also helps to reduce check-in staff costs. Through this process, a company can maximize its profits. Effective resource planning and redesigning its operations are also the success factors. The company maintains low fare as it is generally operated short distance trips. This policy attracts fare-conscious customers who have to travel frequently. The demand is increasing and the travelers are motivated as they are getting the best value for money air services. The company carries out point to point operations on a regular basis which helps to eliminate the requirement of frills services. This point to point operation eliminates extra cost and travelers can get direct routes and non-stop services which cannot be provided by the long route airlines services. Units costs are also reduced as the aircraft are utilized more. As the rou tes are direct so it helps to reduce operating costs and further expenses. It targets to reduce aircraft equipment costs. They have generally used the single type of air crafts but later they upgraded it by using the new model of aircraft for stiff competition in the market and also for environmental rules and regulations. So this competitive mentality is another key factor of success as well as they are thinking about the society at large and agreed with corporate social responsibility. The company has the core competence which is nothing but a set of technology and skills. Through this core competence, the company enables to achieve a particular benefit which they also can provide to its customers.

Apple and samsung Essay Example | Topics and Well Written Essays - 1000 words

Apple and samsung - Essay Example Apple and Samsung companies are doing very well and they have several things in common. The objective of this writing is to compare and evaluate the two major competitor corporations, Apple and Samsung. According to Wagstaff & Kim (2012), it is undeniable that both companies are similar in terms of size though were founded in different periods. Steve Jobs and Steve Wozniak founded Apple in 1976 while Samsung was founded in 1938 by a Korean businessperson, Byung-Chull Lee. Even though Samsung started as a vegetable and fruit company, it later started back in 1969 as an electronic company. Apple’s personal computers were amongst the best but later experienced a decrease in sales after the high competition in electronics began. The company then started to produce new product iPod that largely enhanced her revenues. On the other hand, Samsung was developing slowly through introduction of various products in the market prompting it to change her mission statement to keep pace with its growing global operations, changes in the world economy as well as escalation from well-established companies. Moreover, Apple prides herself on innovation and is known for taking 8 years to develop a single product before releasing it to market. Worstall (2013) explains that Apple’s culture is to release products that are not perfect and once released, they make major updates hardly, confident that their original work is the best. This technique ensures a fascinated tech press and awed public, which compels a certain level of security as well as secrecy that segregates the company from attaining valuable market feedback prior to launch. This further raise the stakes of every product launch to the market changing and checking on any of their recent launches such as iPhone 5 and iOS7, it is nearly impossible for Apple live up to the demand for their products. Samsung however, releases a less than perfect product and iterate their way to success, which conforms, to their hi story of releasing new products that are far from perfect. The company does not make massive splash, instead the first generation product is meant to gauge interest and test capabilities since they are content to iterate their way to successful products. It is worth noting that Samsung uses less resources in product launch compared Apple although they are both at the top of the global smartphone market (Worstall, 2013). Although Samsung is a vast industrial conglomerate that manufacturers several things such as refrigerators and semiconductors, most people identifies it with smartphones, which is actually powering her growth. The company’s stunning fourth quarter results saw her profits rising to 87%. It is apparent that the phone division contributed to half of the profit and it does not break out smartphone revenues (Gupta, Kim and Levine, 2013). In 2011, Samsung sold almost 63.5 million in the quarter of which 40 million came from Samsung Galaxy S3 although the market seem to reach saturation in developed countries and the competition is high in developing countries. In the last quarter of 2011, Apple saw a remarkable profit of $13bn, which included 48 million of iPhones outpacing the Samsung Galaxy S3. Apple is even more dependent for profits for profits on smartphones compared to Samsung and Apple still takes a vast share of the mobile phone

The Success and Challenges of Ryanairs Operations and Marketing Essay

The Success and Challenges of Ryanairs Operations and Marketing Strategies - Essay Example It is evidently clear from the discussion that the technology which is used by Ryan Air is one of the key factor successes because it saves check-in time and also helps to reduce check-in staff costs. Through this process, a company can maximize its profits. Effective resource planning and redesigning its operations are also the success factors. The company maintains low fare as it is generally operated short distance trips. This policy attracts fare-conscious customers who have to travel frequently. The demand is increasing and the travelers are motivated as they are getting the best value for money air services. The company carries out point to point operations on a regular basis which helps to eliminate the requirement of frills services. This point to point operation eliminates extra cost and travelers can get direct routes and non-stop services which cannot be provided by the long route airlines services. Units costs are also reduced as the aircraft are utilized more. As the rou tes are direct so it helps to reduce operating costs and further expenses. It targets to reduce aircraft equipment costs. They have generally used the single type of air crafts but later they upgraded it by using the new model of aircraft for stiff competition in the market and also for environmental rules and regulations. So this competitive mentality is another key factor of success as well as they are thinking about the society at large and agreed with corporate social responsibility. The company has the core competence which is nothing but a set of technology and skills. Through this core competence, the company enables to achieve a particular benefit which they also can provide to its customers.

Legal & Regulatory Regulations Essay Example | Topics and Well Written Essays - 2000 words

Legal & Regulatory Regulations - Essay Example However, the same perceived advantages of a partnership, if enjoyed without caution, lead to a loss of credibility both in the eyes of prospective employees and prospective financers. There are myriad advantages and disadvantages to both the business forms seen from any angle that may have a bearing upon the choice of business structures. However, one thing is certain that it is next to impossible to run a company without qualified professional help,- and associated costs,- if benefits are to be obtained and penalties to be avoided. The principal advantages of a company are of course, the vaunted limited liability, greater flexibility in tax planning, a greater social perception of credibility, and an ability to raise funds formally through the sale of equity shares. Partnerships that maintain detailed auditing and have themselves audited by professionals are on the same footing as start-up limited companies with respect to an external loan, - for any financier, including a bank, would want personal guarantees from the directors of a new company in order to give a loan, just as they would demand collaterals from the partners of a partnership. Further, as research has shown, there is almost no discrimination shown by banks between male and female owned businesses when it comes to a loan (Carter & Shaw 2006). The principal difference in approach is that "While female applicants are required to demonstrate evidence that they understand the nature and implications of business ownership, male applicants are required to demonstrate trustworthiness through social stability, evidenced by marriage." (Carter & Shaw, 2006, pg 65). We know our subjects' mindset is entrepreneurial, that they have started with a small business, and have put it into running with economic viability. They have set short term (expansion of premises and staff) and long-term goals (countrywide expansion), and are working only with the product with which they have gained experience. Thus, they seem to understand the nature and implications of business ownership. That they are receiving conflicting opinions from "business associates" does not rule out the possibility of having accountants or lawyers as business associates. The abundance of contested litigation in the country is proof enough that professionals quite often, and with regularity, hold differing opinions upon the same issues. Thus, what remains is to assess the non-financial capital of Peggy and Nancy before choosing the business structure appropriate to their situation and for their needs. Their cast is of typical woman entrepreneurs (Carter & Shaw, 2006) as their choice bu siness of a fruit juice bar and choice of structure as a partnership shows a low level of overall capitalization at start-up. including low requirements for (a) start-up and ongoing funding (financial capital); (b) attributes and skills (human capital); (c) tangible assets including facilities and equipment (physical capital); (d) organizational relationships, structures, routines, culture and knowledge (organizational capital); (e) technological knowledge or process based skills and experience (technological capital); and (f) relationships and network, social, professional, political, etc. (social capital). Their business is dependent upon personal clients rather than corporate clients, and they have no previous