Do Financial Management Decisions Influence Firm Value? Essay

Financial management decision-making consists of techniques, tools and procedures that a company or individual uses to gather ideas, evaluate options and select the best outcomes, depending on internal and external factors. A firm’s leadership may ask department heads, segment chiefs and accounting managers to provide input in financial decision-making processes. There are three main financial management decisions which are: * Capital budgeting Capital budgeting is a required managerial tool. According Brunel, R. (2009) one duty of a financial manager is to choose investments with satisfactory cash flows and rates of return. Therefore, a financial manager must be able to decide whether an investment is worth undertaking and be able to choose intelligently between two or more alternatives. To do this, a sound procedure to evaluate, compare, and select projects is needed. * Capital structure The Modigliani–Miller theorem states that, in the absence of taxes, bankruptcy costs, and asymmetric information, and in an efficient market, a company’s value is unaffected by how it is financed, regardless of whether  the company’s capital consists of equities or debt, or a combination of these, or what the dividend policy is. The theorem is also known as the capital structure principle. There are two main questions when looking at the capital structure – 1) How much money do we need to borrow to buy this long-term asset? 2) What are the least expensive sources of funds for the firm? * Working capital management The goal of working capital management is to ensure that a firm is able to continue its operations and that it has sufficient ability to satisfy both maturing short-term debt and upcoming operational expenses. Any decision undertaken by the firm in one area has its impact on other areas as well. For example acceptance of an investment proposal by a firm affects its capital structure and capital budgeting decision as well. So these decision are inter-related and should be taken jointly so that financial decision is optimal. All the financial decision have ultimately to achieve the firm’s goal of maximisation of shareholders wealth. Burberry, one of the famous designer brands in the world was started by a 21 year old draper’s apprentice, Thomas Burberry. This all started with small outfitter’s shop in Basingstoke, Hampshire, England (The Telegraph 2011). Burberry gained popularity during the First World Was when it won the contract to supply trench coats to the British army. Later on, Burberry was also won by Humphrey Bogart in Casablanca, Audrey Hepburn in Breakfast at Tiffany and Peter Sellers in the Pink Panther. Burberry’s main mission was to sell Britishness to the world (Friedman 2011). * 2008/2009/2010 Financial reports The Annual Report of Burberry for the year of 2008, states that revenue of of  £995m, up 18% on an underlying basis, 17 % reported. Exchange rates reduce revenue by  £12m. Final dividend of 8.65p per share giving 12.0p for the full year, as the payout ratio is moved progressively towards 40%. The following graph shows the Total Shareholder Return (‘TSR’) for Burberry Group plc compared to the companies in the FTSE 100 Index assuming Ј100 was invested on 31 March 2003. The FTSE 100 Index has been selected because Burberry’s market capitalisation is close to that of companies at the lower end of the FTSE 100 Index. For the year of 2009 Burberry had a 15 per cent rise in sales to  £380m. The company said retail sales were up 17 per cent with strong comparable store sales growth, greater full-price sell through of the winter collection as significantly lower inventory going into the last quarter. Burberry’s wholesale revenue was up 11per cent, driven by more frequent deliveries and full year dividend maintained at 12p per share. Angela Ahrendts, Chief Executive Officer, commented: â€Å"2008/09 was one of the most challenging years the luxury sector has ever faced, especially in the second half. Against this background, Burberry grew revenue to  £1.2bn.† The results for the 2010 are that the total revenue up 24% underlying (up 30% reported), Retail sales up 16% underlying (up 21% reported). Wholesale revenue up 46% underlying (up 51% reported) in smallest quarter. After reading and analyzing the financial reports for the past three years, we found three working capital oriented decision made: 1. Investments in market expansion in Middle East (UAE), China and Japan- The achievement of Burberry to enter the China market was the main highlight in the period of 2010/11. Japan offers challenging consumer environment not only to Burberry Group PLC but to many other companies decided to be successful in this market. With the opportunity to make improvements to its leading license agreement, Burberry developed its long-term tactical options in Japan. Through the effort executing the core approach Burberry have reached strong financial results. â€Å"Total revenue grew 7% to  £1.3 bn. Retail performed well, increasing revenue 19% on a 7% comparable store sales gain. Licensing increased 18% with a decline in Japan offset by growth in global product licenses and favorable exchange rate movements.†(2009/10) The achievement of Burberry to enter the China market was the main highlight in the period of 2010/11. Burberry have obtained 50 stores in 30 towns for about  £65 m. Sales in emerging markets were up 45per cent in the past six months .The entering on the China market brought to the company opportunity to develop in the fastest growing luxury market in the world. Since the acquisition ten new stores were opened. Retailing and inventory initiatives have effectively driven efficiency in open stores, with comparative store sales up about 30 % in the second half of the year. 2. Investments for improvement of the overall outlook of the company –  renovating the stores and employing online shopping system- Emphasize profitability over revenue growth. In 2009/10, the significantly slowed buyer environment pressured gross margin and expense structure with a leveraged unfavorable effect on income. To capitalize on gross margin, trade teams continued to reduce range sizes across category. This resulted in more focused assortments leading to enhanced sourcing efficiencies, more consistent in-store presentation and improved sell-through rates. The teams also revised mark-down policies to capitalize on the less seasonal elements of the collections. Retail/wholesale gross margin increased from 52.1% in 2008/09 to 59.7% in 2009/10. â€Å"Pre-tax profits were up by 50 per cent to  £118m and total revenues increased by 21pc, in the six months to the end of September.† This led to boost of Burberry’s dividend by 43pc to 5p. Angela Ahrendts have brought to the company ascend of share price more than 130p. Leveraging the instrument in systems and planning expertise, the Group enhanced inventory management in the year. Inventory levels were cut down 36% year over year. The status of the Burberry Group as a leader in the digital world was further improved with the autumn 2010 show, which in addition to live streaming over the internet, was screen in 3D in five cities all over the globe and let customers to acquire and look through runaway items straight for accelerated delivery- both firsts in the luxury segment. The rollout of the new Burberry.com web page launched in the fourth quarter of 2010/11. The web page was available live in six languages and transactional across 45 countries all over the world by the year end. And: 3. Strict employee payment schemes, bonuses for big sale quantities. Elements of remuneration In economics and finance decisions the principal-agent problem treats the difficulties that arise under conditions when an employee is hired, and there is a conflict of interest and moral hazard. One of the decisions that Burberry shareholders take to overall this problem is with bonus shames. Remuneration is planned such that for executive directors and other senior managers, performance-related elements represent the majority of total possible remuneration. The Group gears its remuneration policy with  providing of the following elements: Base salary The Group intentions to provide salaries which are competitive with those of comparable roles at global companies of a related size and global reach within the luxury goods sector. These companies are representative of Burberry’s participants for executive talent. When bearing in mind the salary, the Board considers not only competitive firms decision, but also what the contribution to the business is and the overall performance through the year. Annual bonus Each year the Board make bonus targeting by reference to internal and external expectations Bonuses are currently based on effectiveness and presentation against Group strategic and individual points of overall contribution to the business. The Committee have confidence in linking incentives to profitability helps to reinforce the Group’s strategy and long-term growth purposes. Targets are severely regulated by Kepler using benchmarks that contains broker earnings estimates for Burberry and its competitors, targets for productivity consistent with median/upper quartile shareholder returns, latest plans for the then current year, budget, strategic plan, long-term financial goals, etc. Actual bonus awards are subject to the discretion of the Board. Service agreements Angela Ahrendts relocated from the US to the UK and commenced her employment with Burberry as an executive director on 9 January 2006 Under a service contract dated 10 October 2005. She was appointed Chief Executive Officer on 1 July 2006. Now she is the chief executive of Burberry and she led the best performing company in the FTSE 100 index for year 2009.Burberry paid Ahrendts a total of  £3.2m, positioning her between the’’ upper middle’’ of the FTSE 100 index for total remuneration. Her pay packet contained a base salary of  £910,000 and a maximum cash bonus of 200 % of that salary, together with other ‘’allowances’’ Burberry made Angela Ahrendts a shareholder by motivating her to make an even better performance. One of the examples of her brilliant decisions was that Ahrendts quickly recognise that the franchise model would in the end disaster the company’s hopes of  restoring and maintaining its premium rating, and has spent much of her tenancy buying back the licenses, often taking a generous hit to the lowest line in the short term as a result. Bibliography 1. Burberry Annual Report 2007/2008 , [Online] from http://smartpdf.blacksunplc.com/burberry2007-08ara/Burberry_2007-08_AnnualReport.pdf [Accessed: 02 December 2011] 2. Burberry Annual Report 2009/2010, [Online] from http://smartpdf.blacksunplc.com/burberry2009-10ara/ [Accessed: 03 December 2011] 3. Burberry- Financial news 2008/2009, [Online] from http://www.burberryplc.com/bbry/newsrel/finnews/2009/2009-05-19/ [Accessed: 02 December 2011] 4. Burberry Annual Report 2010/2011, [Online] from http://201011.annualreport.burberry.com/ [Accessed: 03 December 2011] 5. Burberry Group PLC- Business profile, [Online] from http://markets.ft.com/research/Markets/Tearsheets/Business-profile?s=BRBY:LSE [Accessed: 01 December 2011] 6. Burberry- Financial news, FIRST QUARTER TRADING UPDATE AND INTERIM MANAGEMENT STATEMENT, [Online] from http://www.burberryplc.com/bbry/newsrel/finnews/2010/2010-07-13/ [Accessed: 02 December 2011] 7. Burberry’s sales rocket 15 percent, [Online] from http://www .fashionunited.co.uk/news/leads/burberrys-sales-rocket-15-per-cent-201001208062 [Accessed: 02 December 2011] 8. Burberry- Strategy and mission, [Online] from http://www.burberryplc.com/bbry/corporateprofile/strmis/ [Accessed: 03 December 2011] 9. Financial Management – Meaning, Objectives and Functions, [Online] from http://www.managementstudyguide.com/financial-management.htm [Accessed: 01 December 2011] 10. Luxury brands: should you buy the shares? [Online] from http://www.telegraph.co.uk/finance/personalfinance/investing/shares/8169322/Luxury-brands-should-you-buy-the-shares.html [Accessed: 09 December 2011] 11. The Financial Management Decision Process, [Online] from http://www.oppapers.com/essays/Financial-Management-Decision-Process/118408 [Accessed: 01 December 2011] 12. The Relationship Between Financial Decision Making & Risk & Return, [Online] from

Listening Is a Desirable Skill in Organizational Settings Essay

Listening is a desirable skill in an organizational settings; good listening can improve worker productivity and satisfaction. The challenge facing the workplace of today is how we will do business going forward. Far removed are the face to face staff meeting and on site work functions of the 70’s, 80’s, and early 90’s. In today’s workplace staff meetings are held virtually with offsite employees, conference calls, and video conferencing. Although much research in listening has taken place over the last few years, little of that research addresses workplace listening directly and much is based on false assumptions: that listening is a unitary concept. Listening is a cognitive function rather than a behavioral skill, and that listening is a linear act. In the past years many businesses /organizational have taken a closer look at listening and its competency that apply directly to the workplace. And have come up with a strong argument for listening to be the most important skill of effective communicators. This paper explains the process of listening, the significance of this form of communication, and it domination of effective workplace communication. Listening is one of the most important skills you can have. How well you listen has a major impact on your job effectiveness, and on the quality of your relationships with others. The purpose of communication is achieved only when the receiver receives the message sent by the sender fully and clearly. Developing good listening skills is a key step toward collaborating with colleagues. Good communication, therefore, calls for active listening skills. These skills will help you clarify and understand the messages that are being sent to you. To be a successful collaborating professional, you must understand the intent of those with whom you interact. It has been proved by many researchers that the success of a business essentially depends on the promotion of good listening skills at all the levels in the organization. {{3 Rane,D.B. 2011;}} The ability to understand and give response effectively to verbal communication is known as listening. The effectiveness in listening doesn’t necessarily depends on the interrelationships between the sender and the receiver of the message, but more is found to be a vital skill more particularly for the managers in business organizations while obtaining need-based information to perform their jobs successfully. The quality of relationships with others and job effectiveness largely depend on the listening ability of the individual concerned. Lack of listening ability at all the levels in any organizations lead to work-related problems. Thus listening, among others, is one of the most essential skills one should have. This reveals that improvement in workplace productivity is quite possibly developing active listening and better communication at all the levels. {{6 Johnson, Lawrence J. 2004; 3 Rane, D.B. 2011 ;}} Listening emphasizes two effective behaviors: accuracy, that is, confirming the message sent; and support, that is, affirming the relationship between the speaker and the listener: This model serves as an effective basis for improving workplace listening, both through formal training programs and through individual workers’ own efforts. References Abbasi, M. H., Siddiqi, A., & Azim, R. u. A. (2011). Role of effective communications for enhancing leadership and entrepreneurial skills in university students. International Journal of Business & Social Science, 2(10), 242-250. Retrieved from http://ezproxy.umuc.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=64758501&site=eds-live&scope=site Goby, V. P., & Lewis, J. H. (2000). The key role of listening in business: A study of the singapore insurance industry. Business Communication Quarterly, 63(2), 41-51. Retrieved from http://ezproxy.umuc.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=3184193&site=eds-live&scope=site Johnson, L. J., & Pugach, M. C. (2004). Listening skills to facilitate effective communication. Counseling & Human Development, 36(6), 1-8. Retrieved from http://ezproxy.umuc.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=ehh&AN=20481483&site=eds-live&scope=site Mercer County, C. C. (1992). The art of active listening http://ezproxy.umuc.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=eric&AN=ED351594&site=eds-live&scope=site Rane, D. B. (2011). Good listening skills make efficient business sense. IUP Journal of Soft Skills, , 43-51. Retrieved from http://ezproxy.umuc.edu/login?url=http://search.ebscohost.com/login.aspx?dire

Bleakness and Futility in Chapter 2 of The Great Gatsby

Consider the second chapter of Great Gates, pages 23-25; investigate Fitzgerald 's image, form, structure, and his comments on American society in the 1920' s. The swaying and bleaky images of the Valley of Ash juxtaposed with the end of the starlight in Chapter 1 show the devastation and useless of the society of the 1920s Jazz era. It embodies the spiritual hollow nature of society, eventually collapsing and falling into its fundamental entity-free nature. The connection of the hedonistic carnival in the opening chapter finds the division of the metaphor in the contradiction of Chapter 2; they collapse like the American dream structure. Gatsby is wonderful. When you pick up the book, the first thing you see is the title Great Gatsby so you expect Gatsby before opening the book. As we revealed in the first chapter that the narrator is the same as Gatsby's neighbor Nick Calloway, it tells us that he hates Gatsby, but at the end of the paragraph he marks the character of Gatsby gorgeo us . Scott Fitzgerald's great Gatsby was known as a roaring twenty in the American history in the 1920s. Scott Fitzgerald's novel The Great Gatsby reflects the life of the 1920s. In the roaring twenties, prospering parties, outstanding fresh fashion trends, and excessive alcohol are every aspect of life. The magnificent party of Scott Fitzgerald's Great Gatsby reflects the American life in the 1920s. Gatsby shows his excellent wealth by opening a spectacular party We must recognize that there are many similarities between Great Gatsby and its author F. Scott Fitzgerald. Most importantly, Great Gatsby was done in the 1920s, and Fitzgerald experienced this period. The 1920s was an important point in Fitzgerald 's life. It is just like the important link in this novel. But the period is not the only similarity between Fitzgerald and great Gatsby, but it is the one that can best form the story. Fitzgerald is one of the themes of Great Gatsby, focusing on important differences between th e pursuit of dreams and the realization of dreams. Fitzgerald does not directly address this idea, but it plays it through the actions of the character. For example, in Chapter 5, Gatsby showed Daisy and Nick all the wealth he accumulated to impress Daisy. The author's topic can be seen in the behavior of Gatsby.

The difference between informative and argumentative speech Assignment

The difference between informative and argumentative speech - Assignment Example Whether argumentative or informative, all speeches have a purpose. There should be a reason why the speech is necessary and a desired outcome from the speech. Informative speeches are generally given as a form of instruction with the desired outcome to be something such as to have a more informed audience or to introduce a new idea. The fundamental goal of the informative speech is to â€Å"provide interesting, useful and unique information to your audience† (Writing @ CSU, 2010). The audience is often called together with the expectation of hearing a speech and the atmosphere is almost always relatively calm. This is not necessarily true with occasions in which an argumentative speech is called for. These speeches are given with the intent to convince the audience of a specific point of view. This type of speech may be a planned speech, a sales pitch or even an impromptu delivery at a political meeting in which the audience may or may not be calm and receptive. The desired ou tcome is to maintain or acquire supporters. The topics most often addressed by these types of speeches are another area in which the concepts might overlap but the focus is skewed. Informative speeches, for example, can be given about objects, processes, events or concepts. All of these can be covered by an argumentative speech as well. The difference is that the informative speech focuses on factual information about these things, offering ideas and proof that can be generally accepted as fact or the correct answer. Argumentative speeches often address these topics in ways that the conclusions reached are debatable – there may be more than one right answer. An example of this difference is an informative speech that instructs the audience about the specific features available on a new hybrid car against an argumentative speech about that same car that focuses on why those features are better than similar features being offered by another

Business management Essay Example | Topics and Well Written Essays - 4250 words

Business management - Essay Example On the other hand behavioral theory argues out that any individual who can adopt a behavior that is appropriate can be considered to be a good leader. Behaviors could be learned in an easier manner than traits making the leaders to access all behaviors. As opposed to the trait theory that believes that all leaders may be born, behavioral theory argues out that leaders may not be born. The process of leadership can be learned thus not automatic. Different leaders are made through hard work and efforts. The behavioral theory argues out that managers’ potential of leadership can be could be trained to leadership that is effective thus leadership needs to be combined together with management so as to obtain significant outcome. In this regard, the theories of behavior are based on the idea that leaders are normally made instead being born. With this basis, the theory of behaviourism focus on the leaders actions instead of traits. Transformational leadership is a leadership style that facilitates morale, performance, and motivation of the followers by using various mechanisms. The first mechanism include having the follower’s identity and self sense connected towards the project and an organization’s identity. The second mechanism is challenging the followers for them to assume a great working ownership. The third mechanism involves serving as a role model of the followers hence inspiring them and boosting their interest. The last mechanism involves getting to know the weaknesses and the strengths of the followers for the leader to align the followers with tasks for enhancement of their performance. An organization that will call for transformational leadership is an organization whose workers need their needs to be addresses, for them to rise beyond self interest for the organizational sake. This is an organization whose workers have a consciousness level considered as below the optimal level o f the

Affordable care act Essay Example | Topics and Well Written Essays - 250 words

Affordable care act - Essay Example The Act paves the way for the construction more health centers and National Health Service Corps at a cost of $12.5 billion across the period 2011-2015. The measures in the Act reduce the cost of coverage for ordinary citizens. In fact, the Affordable Care Act is expected to reduce the number of citizens without insurance by 50% (Rosenbaum, 2011). The employers, pharmaceutical companies, and medical equipment manufacturers contribute a tax towards the general health of the public. Thus, the Act covers citizens regardless of age, gender, and race, thereby allowing for a healthy population. The affordable care act leaves a huge role for nurses. The Act provides for health promotion and insists on primary care. Such roles are dedicated to nurses. In the Act, nurses have a responsibility of ensuring that common health problems are contained at the source by communicating health information to the people and prevent vulnerabilities. By so doing, nurses reduce the pressure on healthcare system, thus reducing the cost of healthcare. The point implies that the role of nurses has widened due to the implementation of the Act. Department of Human and Social Services. (2013, September 11). Improving the Public’s Health through the Affordable Care. Retrieved from

Measures to reduce the energy consumption for the sewerage plants Essay

Measures to reduce the energy consumption for the sewerage plants - Essay Example This research will begin with the statement that sewage plants consume a lot of power although they also generate a lot of heat and power. They generate heat through biogas production, which is purified and used to power locomotive machines like gas motors. The process of biogas production requires power especially in the fermentation and decomposition process because of temperature regulation. This is to say that production of energy from sewerage plants includes both aspects of increasing energy efficiency and reducing energy consumption. Biogas is produced through a process of anaerobic digestion.   Biogas production is environmentally friendly. Biogas is a gas produced through the breakdown of organic matter in the absence of oxygen Sewage plants produce biogas, which is a good source of energy. During the sewage treatment process in the sewage plant, a lot of energy is consumed approximately 50 kWh per person. That means that a substantial amount of energy is required to treat sewage from the population. Research shows that sewage treatment is one of the sectors, which requires a lot of electricity. Biogas is a renewable source of wind and solar energy.   For the production of biogas to occur, the sewage undergoes a process known as anaerobic digestion.   In this process, anaerobic bacteria are used to break down the waste materials. The biogas produced is mainly carbon dioxide, methane, and small amounts hydrogen sulfide. Gases produced hydrogen; methane and carbon monoxide oxygen oxidize them to allow a release of biogas used as fuel.