The Predictions And Effects Of Financial Accounting

Introduction In the main analysis, this essay will describe the predictions and effects of financial accounting reports to discuss the statement based on the previous answer. In the conclusion, the essay will explain how the question helps to understand the importance of learning about accounting in its context. Main Analysis Predictions of Financial Reporting There are four preconditions of financial accounting reporting. Firstly, there are debates that upheld and against the regulation of financial accounting. The supporters of the ‘free-market’ technique dispute that there are proprietary economic incentives for organizations to report accounting information proactively, and forcing accounting regulation is costly inefficient (Deegan Unerman, 2011). By comparison, the supporters of the ‘pro-regulation’ viewpoint dispute that regulation is requisite as financial information is a ‘public good’, and users of accounting information are ‘free riders’, so organizations will report a lower quantity of information than socially optimal (Deegan Unerman, 2011). Secondly, various stakeholders have various viewpoints of the evolution of regulation. According to public interest theory, regulation is introduced to safeguard the community and regulators attempt to maximize public welfare (Deegan Unerman, 2011). According to capture theory, regulated organizations will obtain command of the regulating procedure (Deegan Unerman, 2011). According to private interest theory,Show MoreRelatedFinancial Accounting Theory the Reporting Environment1578 Words   |  7 PagesWeek 2: Topic 1: Financial Accounting Theory the Reporting Environment GHTHH Chapter 2 5. 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What Is Climate Change - 944 Words

2.1 What is Climate Change? Climate change is the subject of how weather patterns change over decades or longer. Climate change takes place due to natural and human influences. Since the Industrial Revolution (i.e., 1750), humans have contributed to climate change through the emissions of GHGs and aerosols, and through changes in land use, resulting in a rise in global temperatures.1 Increases in global temperatures may have different impacts, such as an increase in storms, floods, droughts, and sea levels, and the decline of ice sheets, sea ice, and glaciers. 2.2 Process of Global Warming The earth receives energy through radiation from the sun. GHGs play an important role of trapping heat, maintaining the earth’s temperature at a level that can sustain life. This phenomenon is called the greenhouse effect and is natural and necessary to support life on earth. Without the greenhouse effect, the earth would be approximately 33 °C cooler than it is today.2 In recent centuries, humans have contributed to an increase in atmospheric GHGs as a result of increased fossil fuel burning and deforestation. The rise in GHGs is the primary cause of global warming over the last century. There are three main datasets that are referenced to measure global surface temperatures since 1850.3 These datasets show warming of between +0.8 °C and +1.0 °C since 1900.4 Since 1950, land-only measurements indicate warming trends of between +1.1 °C and +1.3 °C, as land temperatures tend to respondShow MoreRelatedWhat Is Climate Change?1794 Words   |  8 PagesJean in a span of only six weeks ¹. At five years old, I had no concept that this was an unusually large number of hurricanes to be hitting central Florida, let alone the fact that the intensity and number of these storms was likely exacerbated by climate change. 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Financial Management Identification and Management

Question: Discuss the management of Equity and Debt as part of the long term funding requirements of companies. Answer: Introduction: The report is intended to conceptualize management of equity and debt. Debt equity ratio plays a crucial role in assessing the risk level of a particular company. The dependency of the ratio lies in the amount of both long term and short borrowings divided by the shareholders fund, popularly known as proprietary funds. Thus it is important to understand the various findings of the ratio and working of the same. From the perspective of the risk debt equity ratios lower than 0.4 or lower are considered as ideal for a particular company, the higher is the ratio it is more difficult for the company for borrowing of credit. Hence it is crucial for a company to maintain a low debt equity ratio for the purpose of the balancing the risk and take financial credit during emergencies or debt crisis. (De Franco et al. 2013). The study shows the comparison of the debt equity ratio on the basis of two non financial companies based on London Stock Exchange, namely Tesco PLC and Sainsburys. Both the selected companies are leading retail companies of UK. The calculation of the debt equity ratio of both the companys excludes the financial services of both the companies. For the purpose of the evaluation for the debt equity ratio the annual report for the last five years has been taken into consideration. The total amount of the debt and the equity has been represented in form of graphs and charts for a clear visual representation of the changes in the value of debt- equity for last five years. All the values of the shareholders find and long-term debt of the company has been studied from the annual reports of the selected organizations. (Tesco plc. 2016) Description of the management of the equity Equity is the difference of the presently available assets for the company and the liabilities currently incurred for a particular financial year. Equity can also be calculated based on the shareholders funds is divided by the total value of the assets. The equity shows the overall financial strength of a particular company and acts as the test for a sound capital structure for a particular company. The maintenance of higher amount of equity by a company ensures that the lower amount of interest is required on the available capital. On the other hand, a company with lower amount of equity is prone to losses (Bolton et al. 2015). In the main components of the equity comprises of the components such as Capital and reserves, called up share capital, share premium and reserve created for the purpose of profit and loss. The annual report of a company represents the retained earnings, which is essential for the purpose for calculation of the amount of the equity. (Schmitz 2015). In practical scenario, a company has to make amendment sand reveal the same related to the various types of the changes for equity by the revilements of the various types of particulars such as comprehensive income or losses, changes in the fair value of the finances available for the purpose of sale. The various type of the equity instrument used by a company is further recorded at the proceeds of the direct cost received. The equity components also take in to consideration the annual report also includes the perpetual capital securities and the perpetual convertible bonds (Green 2013). The main purpose for the management for the equity of the company is to keep the present members satisfied. If the amount of equity is managed effectively financing of the debt. A liability level affects liability to obtain credit and then various terms and conditions. The sufficient amount of the availability of the equity allows for additional financing of the debt at the time of emergency and various process related to the aversion of the risk (Finocchiaro and Mendicino 2013). Description of the management of the debt The debt ratio is firms total liabilities in terms of the percentage of the total assets. In other words the debt shows the number of assets, which a firm must sell off in order to pay off the liabilities. Then formula used to calculate the debt ratio is used as total liabilities over the total assets. The various type so of the debt management techniques is essential for a company to know about the various types of the payment which are held with the creditors and they need to be addressed at soon as possible in order to clearance of the same. The various types of the debt management techniques plays an essential role for the purpose of maintaining a feasible financial position of a company and improve the overall financial, situation through a reduced policy structure to keep the amount of then debt low. The debt has a direct impact on the debt equity ratio for the company and keeping then amount of debt low is essential to maintain a low amount of the overall debt equity ratio. Th e main purpose of the debt management team of the company is to formulate a plan for speaking to the unsecured creditors of the company. These creditors need to b e negotiated for the purpose of the payment and the final payment terms should be kept low as much as possible. The debt management technique is important to keep the repayment affordable at the end o the each moth and clearing of the various types of the creditors in order to keep the amount of the creditors lower. (Blessing 2012) An extensive analysis of the Annual report of a company includes the various types of the debts such as bank overdraft, borrowing (both long and short term), financial leases, then various type of the financial derivative. The purpose of the report is to include the calculation of the various types debt and the equity components of the nonfinancial firms the annual report clearly states that the debt evaluation excludes the value of the selected companys own net debt balances (Long and Phi Nga 2015). Some of the important components of the debt include components such as Inventories and trade and other receivables, deferred tax liability, Post-employment benefits, Liabilities of the disposal groups. The important aspect of debt management includes the forecasting of the debt from beforehand and keeping the reserves in case of a financial crisis. (Alves et al.2016). The importance of the debt management technique lies in the flexibility to make the payment related to the provisions made for the future investment, which are made by a company in general perspective. Evaluation and comparison of the equity and debt of Tesco and Sainsburys The evaluation of the debt equity ratio is based on the comparison of the Debt-equity is based on the calculation of five year basis. The debt equity calculation of Tesco PLC is shown below as follows: TESCO Particulars 2012 2013 2014 2015 2016 ( 000) ( 000) ( 000) ( 000) ( 000) Total Debt 6,838 6,597 6,597 8,481 6,085 Shareholder's Fund 17,801 10,464 9,399 12,450 12,682 Debt/Equity Ratio 0.384 0.630 0.702 0.681 0.480 (Sokolowska and Wisniewski 2015) Graphical representation of the debt/equity ratio The debt equity calculation of Sainsbury PLC is shown below as below: Sainsbury PLC 2012 2013 2014 2015 2016 ( 000) ( 000) ( 000) ( 000) ( 000) Total Debt 1,980 2,162 1,164 1,467 1,826 Shareholder's Fund 5,629 5,734 5,539 6,005 6,365 Shareholder's Fund 0.352 0.377 0.210 0.244 0.287 The graphical representation of Sainsbury PLC is shown below as follows: Comparison of the debt/ equity ratio of Tesco PLC The analysis of the debt equity shows that the company is able to keep the debt equity ratio sufficiently low to around 48%. The analysis of the financial data showed an increase in the debt amount in the year 2014 with a debt equity ratio of 0.702 and the company observed the lowest amount of debt equity ratio in the year 2012. In the present times, the debt equity ratio was observed to be 0.480. The graphical representation further shows the decreasing trend of the debt equity ratio of Tesco PLC. (Palley 2013). Comparison of the debt/ equity ratio of Sainsburys PLC The debt equity ratio analysis of Sainsburys PLC shows that the company had observed the best debt equity ratio in the year 2014 with a ratio of 0.210. The debt equity ratio of Sainsburys PLC further shows that the debt equity ratio at the initial level that is in the 2012 was 0.352 and it increased to 0.377 in the year 2013. This can be clearly seen with the graphical representation which shows that that initially the company has observed a high amount of debt in the year 2012, then it observed a decrease in the year 2014 and it was again able to manage its debt equity ratio to a standard position in the year 2016. (Said 2013). Comparison of debt equity of Tesco PLC with Sainsburys PLC The comparison of the financial position of both the company shows the financial position of Sainsburys PLC is in a better position than TESCO. As per the recent data of the annual report of Tesco the debt equity ratio of the company stands at 0.480 approximately whereas the debt equity ratio of Sainsburys PLC is observed to be 0.287. This measure of the financial performance by the company is found to be ideal to be maintained by the company as it will help the company to secure a better scope to obtain financial credit in the future. (Langenmayr et al. 2015). Conclusion and recommendation The first section of the report gives a general perspective of the management of the debt and equity by a company. The understanding of the various types of the concepts for the debt equity management is based on the present industry standards. After the comparison of the balance sheet of both the companies for the past five years it had been observed in Tesco needs to lower the debt amount considerably. It had been further observed that highest amount of the debt of the company was observed through bank and borrowing from the financial institutions. This trend was found to be similar for all the five years. The average borrowing was observed to be at 12000 million pounds for all the five years. This amount needs to be improved for the purpose of the improvement of the debt equity ratio. On the other hand the high amount of equity has been observed from the funds observed from share premium account and it should further work on improving it even further. The main source of the debt h as been observed from the borrowing of the company which is approximately observed as 2000 million for the past five years. This needs to be reduced by the company to reduce the debt equity ratio and improve the financial performance of the company. Hence it is important to consider all the aspects to improve the debt equity ratio (Levi and Segal 2015). Reference List Alves, N.S., Mendes, T.S., de Mendona, M.G., Spnola, R.O., Shull, F. and Seaman, C., 2016. Identification and management of technical debt: A systematic mapping study. Information and Software Technology, 70, pp.100-121. Blessing, P.H., 2012. The debt-equity conundruma prequel. Bullr Int Tax, pp.198-212. Bolton, R.N. and Tarasi, C.O., 2015. 14. Risk considerations in the management of customer equity. Handbook of Research on Customer Equity in Marketing, p.335. De Franco, G., Vasvari, F.P., Vyas, D. and Wittenberg-Moerman, R., 2013. Debt analysts' views of debt-equity conflicts of interest. The Accounting Review, 89(2), pp.571-604. Finocchiaro, D. and Mendicino, C., 2013. Debt, Equity and Monetary Policy. Green, S.F., 2013. Achievement and Private Equity in the UK. The Social Life of Achievement, 2, p.139. Langenmayr, D., Haufler, A. and Bauer, C.J., 2015. Should tax policy favor high-or low-productivity firms?. European Economic Review, 73, pp.18-34. Levi, S. and Segal, B., 2015. The Impact of Debt-Equity Reporting Classifications on the Firm's Decision to Issue Hybrid Securities. European Accounting Review, 24(4), pp.801-822. Long, P.Q. and Phi Nga, N.T., 2015. Debt risks and risk management of public debt: survey from theory to practice. Economic Studies, (8), pp.69-77. Palley, T.I., 2013. Financialization: what it is and why it matters. In Financialization (pp. 17-40). Palgrave Macmillan UK. Said, H.B., 2013. Impact of ownership structure on debt equity ratio: A static and a dynamic analytical framework. International Business Research, 6(6), p.162. Schmitz, C., 2015. Equity valuation of Tesco Plc (Doctoral dissertation). Sokolowska, E. and Wisniewski, J., 2015. Liquidity management by effective debt collection: a statistical analysis in a small industrial enterprise. Ekonomika, 94(1), p.143. Tesco plc. (2016). Tesco PLC. [online] Available at: https://www.tescoplc.com/ [Accessed 23 Jul. 2016].

Questions on Financial Management Essay Example

Questions on Financial Management Essay Sensitivity analysis provide information for decision makers to more informed about project sensitivities, to know the room they have for judgemental error and to decide whether they are prepared to accept the risks. During the implementation phase of the investment process the original sensitivity analysis can be used to highlight those factors which have the greatest impact on NPV. Decision makers can draw on key parameters differ significantly from the estimates. For example, this project is highly sensitive to the price of product. $50 of change can make a great impact on NPV. Managers after recognising this from the sensitivity analysis should make some plans to avoid big change of price. From sensitivity analysis of Pentre plc, we can see market size in year 2 to year 5 is more sensitive than market size in year 1. Thus the company should take more efforts to keep and extend its market share from second year. Sensitivity analysis also has many drawbacks. For example, the absence of any formal assignment of probabilities to the variations of the parameters is a potential limitation. Change of government policy, eventuality impact such as SARS. We will write a custom essay sample on Questions on Financial Management specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Questions on Financial Management specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Questions on Financial Management specifically for you FOR ONLY $16.38 $13.9/page Hire Writer Another criticism is that each variable is changed in isolation while all other factors remain constant. For example, if inflation is higher then both anticipated selling prices and input prices are likely to be raised. b) Merits and Drawbacks of the Use of Internal Rate of Return The Internal Rate of Return (IRR) is the discount rate at which the Net Present Value (NPV) of a project equals zero. The IRR decision rule specifies that all independent projects with an IRR greater than the cost of capital should be accepted. When choosing among mutually exclusive projects, the project with the highest IRR should be selected). IRR method has many advantages that make it one of the most widely used methods for evaluating capital investments. First, the IRR makes an appropriate adjustment for the time value of money. The value of a dollar received in the first year is greater than the value of a dollar received in the second year, and even cash flows that arrive several years in the future receive some weight in the analysis. Second, the hurdle rate itself can be base on market returns obtainable on similar investments. This takes away some of the subjectivity of other analytical methods that must be made when using payback or accounting rate of return, and it allows managers to make explicit, quantitative adjustments for differences in risk across projects. Third, because the answer that comes out of an IRR is a rate of return, it is easy for both financial and nonfinancial managers to grasp intuitively. Fourth, the IRR technique focuses on cash flow rather than on accounting measures of income. Though it represents a substantial improvement over payback or accounting return analysis, the IRR technique has its own set of problems that should analysis. One common problem is the difficulty associated with its calculation. In most circumstances the IRR of a project can only be found by trial-and-error. This is because the number of periods (or cash flows) involved in the project needs to be solved to calculate the IRR. IRR is the discount rate at which the NPV of a projects cash flows in equal to zero. Since zero is a number that lies between a positive number and a negative number, IRR must lie between two discount rates. So we need to guess a starting point to perform the interpolation. The second problem is that the nature of the rule must be modified depending on whether the project under evaluation is an investing project or a financing project (e.g. borrowing money from a bank). In the case of an investment, a corporation will accept a project with a high rate of return. With a financing project, the corporation is looking for the cheapest source of finance. Hence, the decision rule for a project must be modified to take into account whether it is an investment project or a financing project. Another problem with the IRR technique arises from the fact that a rate of return does not take into consideration the size of a project. This is sometimes referred to as the problem of scale. Incorrect investment decisions could be made when applying the IRR rule, because it ignores projects sizes. QUESTION 2: Valuing Shares Year 1 2 3 4 5 Retentions 180.00 148.80 124.99 111.97 116.17 Retention ratio 60% 40% 30% 25% 25% Incremental earnings 72 44.64 31.25 16.80 Incremental earnings ratio 40% 30% 25% 15% Profit 300.00 372.00 416.64 447.89 464.68 Dividend paid 120.00 223.20 291.65 335.92 348.51 g = retention rate * return on investment = 25% * 15% = 3.75% a) i. Dividend model V4 = D5 / (r g) = 348.51 / (15%-3.75%) = 3097.87 V0 = 120*0.8696+223.2*0.7561+291.65*0.6575+335.92*0.5718+3097.87 *0.5718 = 104.35+168.76+191.76+192.08+1771.36 = 2428.31 a) ii. Earnings based model E * 1/15% = 3001/15% = $2000 Vt = 180*0.8696 + 148.8*0.7561 + 124.99*0.6575 + 111.97*0.5718 = 156.53+112.51+82.18+64.03 =$415.25 R5 / (r g) * 0.5718 = 116.17 / (15%-3.75%) * 0.5718 = 590.45 V0 = 2000 + 415.25+ 590.45 = 3005.7 a) iii. Assumptions There are no taxes. The absence of corporate income taxes is assumed. There are no costs of financial distress. For example, there are no transactions costs, and all securities are infinitely divisible. There are no asymmetries of information. It implies that the expected values of the probability distributions of expected operating earnings for all future periods are the same as present operating earnings. The investment and operating policies of the firm are given and investors are assumed to be rational and to behave accordingly. b) Price earnings ratio A price-earning ratio is a commonly used way to simplistically value a company, determine what a companys stock should be worth. It is also known as P/E, is calculated by dividing the companys stock price by the companys earnings per share, or EPS. The P/E ratio gives an indication of how many times shareholders paying for a companys stock compares a companys earnings. P/E ratios can be used to compare against other companies, or against a companys own historical P/E ratio. Investors usually are willing to pay a higher P/E for companies they judge will be growing faster than the norm even though they do not pay those earnings out in dividends but retain them to fund future growth. If that growth is realized, the price of the companys stock usually grows faster than the overall stock price of the slower growth or higher dividend paying company. However, if estimated earnings are not realized or the stock market itself loses favor with the investor, such as higher interest rates attracting investment capital, the downside potential is greater as well. The risk is not just the ability of the company to create profits, but the investment risk in the higher price you paid relative to earnings. OSIM International LTD FY2003 Dec FY2002 Dec FY2001 Dec FY2000 Dec Adjusted EPS (Earnings/Current no. of Shares) $0.05387 $0.03836 $0.02997 $0.02113 P/E Ratio (Current price/Adjusted EPS) 18.93 26.59 34.03 48.27 http://www.listedcompany.com/ir/osim/web/stock.cgi OSIM is a global leader in healthy lifestyle products. It is the leading Asian brand for healthy lifestyle products. OSIMs P/E ratio decreased in the four years though the EPS increased rapidly. This means investors predict companys future isnt as good as former years. The price is going down, but the risk is lower than before. However, this is also a good growth stock for those who can buy and hold for further growth including bonus issues which the company had given every few years because healthy lifestyle products has a good outlook in the future. Brilliant Manufacturing Limited. FY2003 Sept FY2002 Sept FY2001 Sept FY2000 Sept Adjusted EPS (Earnings/Current no. of Shares) $0.04622 $0.01526 $0.00350 0.01327 P/E Ratio (Current price/Adjusted EPS) 12.98 39.32 171.43 45.21 http://www.listedcompany.com/ir/brilliant/web/stock.cgi? Brilliant Manufacturing produces precision machining of 5.25 floppy disk drive aluminium housing for Tandon in Singapore. After the acquisition of Tandon by Western Digital, The Company grew substantially from servicing Western Digital to other valued customers in the Hard Disk Drive (HDD) sector. P/E ratio decreased rapidly from 2002, this is because the boom of computer and internet industry in 2001. Stepped to 2003, due to the down results for the financial year, P/E ratio dropped quickly from 39 to 13 but the earnings also increased almost 4 times last year. That means the investment is worth and the company is still earning profits. Giant Wireless Technology FY2004 Mar FY2003 Mar FY2002 Mar FY2001 Mar Adjusted EPS (Earnings/Current no. of Shares) $0.02283 $0.02825 $0.02638 $0.02751 P/E Ratio (Current price/Adjusted EPS) 14.89 12.04 12.89 12.36 http://www.listedcompany.com/ir/giant/web/stock.cgi? Since commencing its operations in 1988, Giant Wireless Technology has grown to become a leading developer and manufacturer of wireless telecommunications solutions and electronics products for the U.S., Europe and China markets. Though the EPS decreased from FY2003 to FY2004, the P/E ratio increased 2 percent. This means investors give a high prediction to company. They willing to pay a higher P/E for company, judge company will be growing faster than the norm even though they do not pay those earnings out in dividends but retain them to fund future growth. If that growth is realized, the price of the companys stock usually grows faster than the overall stock price of the slower growth or higher dividend paying company. QUESTION 3: Financing Decisions a)i. earning per share Current Proposed Assets Debt (9%) Equity Market Value/Share Shares outstanding EBIT Interest Tax (30%) Return on equity(Earnings after Interest ;Tax) $1680m 0 $1680m $4 420m $300m 0 $90m $210m $1680m $600m $1080m $4 270m $300m $54m $73.8m $172.2m Earning per share(EPS) $0.5 $0.64 a)ii. Level of earning at which EPS will be same Current Proposed Assets Debt (9%) Equity Market Value/Share Shares outstanding EBIT Interest Tax (30%) Return on equity(Earnings after Interest ;Tax) $1680m 0 $1680m $4 420m 0 EBIT*30% ? $1680m $600m $1080m $4 270m $54m (EBIT-54)*30% ? Earning per share(EPS) $0.5 $0.5 EBIT 0 EBIT*30% = EBIT 54 (EBIT-54)*30% 420 270 EBIT = 151.2 b) Discuss some of the factors that are likely to limit the amount of debt that a company is likely to want to employ in its financing. Company is financed by ordinary shares (equity) or debt. Generally, debt has a cheaper direct cost than equity. There are two distinct reasons for this: ; Debt has low risk results in a low required return. Thus, company can reduce the cost of financing. ; Interest can be paid before taxation, whereas dividends are not. However, borrowing isnt perfect. To determining how much debt to use, corporate should first consider taxes. The government allow corporations to deduct interest payments from income before taxation, this essentially subsidizes dollar paid in interest. But any borrowing at all will cause the cost of equity capital to rise, offsetting the cheap direct cost of debt. Financial distress may also keep firms from loading up on debt. Explicit financial distress costs include the payments made to lawyers, accountants, and so on. they reduce the cash flows that will eventually be paid to the bondholders and stockholders. Clearly, investors would prefer that firms stay out of financial distress so that these losses are not incurred. Corporations must also consider the indirect costs of bankruptcy. As the firm takes on more and more debt, the probability of bankruptcy increases. This cause the firm will not be able to meet interest payments in any given year and will be forced into default goes up as the amount of debt and corresponding interest increases. It includes the costs of low inventories, higher costs of inputs from suppliers who fear the company might not pay its bills next month, and the loss of customers who desire a long-term relationship with the firm. These costs prevent firms from maintaining exceptionally high levels of debt. A fourth factor limiting the use of debt is desire for control by current shareholders. MM theory in a 1976 article, noted differences between the firm that is 100 percent manager owned and one where the equity is owned partially by managers and partially by outsiders. The managers should run the firm to maximize its value. But managers may not implement their decisions because of the control of shareholders. On the other hand, debtors cannot control the firms management that is advantaged. Availability of assets for pledge also limits the use of debt. In order to ensure its security of loan, bank always acquires pledges from the company and this kind of pledges should be easy to be realized. If the company lack of assets that can be used as pledges, it must be difficult to raise money as debt. When a company starts to borrow, the advantages always go with the disadvantages. In order to minimize the cost of capital and maximize the earning, company should consider above-mentioned factors carefully to gain benefits from financial leverage. c) Dividend Payment Policies 1. residual dividend pay dividend only if more earnings available than are needed to support optimal capital budget NTUC Income Shares 1999 ; 2000 6% each year 2001 5% 2002 3.5% 2003 5% Its dividend policy is to reward shareholders for investment earnings on their capital, which is used to back our business. Dividends are declared on all shares held during the financial year and are based on their business performance during the year. It is declared at the Annual General Meeting and is credited directly to your bank account. Dividend is payable in full on shares held for a duration of 12 calendar months during the financial year and on a pro-rated basis on shares held for less than 12 months. http://www.google.com.sg/search?q=cache:XweOBesthMcJ:incnet.income.com.sg/uishare/main.aspx+dividend+policy;hl=en 2. stable growth rate set target growth rate for dividend and strives to increase dividend by that amount every year ACOM CO., LTD. (Tokyo Stock Exchange) ACOMs dividend policy is to provide shareholders with stable dividend growth. Dividends for the fiscal year under review included an amount equivalent to the commemorative dividends paid last year in the interim and year-end dividends as well as a à ¯Ã‚ ¿Ã‚ ½5.00 per share increase in the term-end dividend, to à ¯Ã‚ ¿Ã‚ ½22.50. Consequently, the total year dividend for fiscal 1998 was à ¯Ã‚ ¿Ã‚ ½40.00 per share, a rise of à ¯Ã‚ ¿Ã‚ ½5.00 from the previous year. This represents a payout ratio of 13.3% and a 2.0% dividend on equity. www.c-direct.ne.jp/english/ divide/10108572/8572_98/8572e_02.pdf 3. Constant payout pay certain amount of earnings as dividends (or pay a constant $ amount each year). Neptune Orient Lines (NOL) NOL is a global transportation company, with core businesses involved in container transportation and supply chain management. NOL intends to maintain an annual dividend of 8 Singapore cents per share net, or a full year dividend payout of 20% of net profits, whichever is higher. In line with this policy, the Board of Directors has declared an interim dividend of 7 Singapore cents per share net (8.75 cents gross). This dividend is issued out of existing Section 44 tax credits and is payable on 30 August 2004. http://www.nol.com.sg/newsroom/04news/040727.html 4. low regular dividend plus extra pay a low regular dividend and an extra at the end of the year (depending on the earnings performance that year) SINGAPORE Exchange (SGX) July 30, 2004 SGX proposed a final dividend of 4.075 cents per share and a special dividend of 6.5 cents, bringing the total payout for FY04 to 13.5 cents per share. It paid 40.5 cents per share in dividends last year, including a special 34-cent dividend from the liquidation of assets. http://business-times.asia1.com/story/0,4567,124036,00.html

Frustrations With Japan essays

Frustrations With Japan essays December 8, 1941 was a solemn day. The day after Japan dropped the bomb on Pearl Harbor, the people of the United States mourned. If ever there was a time when Americans wanted to enter World War II, it was then. The United Sates had been deceived by the Empire of Japan, with whom they thought they were at peace. Franklin Roosevelts speech to Congress, asking for permission to declare war on Japan, shows the resentment and despair of the American After the bombing of Pearl Harbor, many Americans felt a lot of resentment against Japan, and the Japanese. Much of this resentment arose because Japan gave the United States a false hope of peace between the two countries. Also, from the evidence, it appeared that the attack was premeditated. Because of the distance between Japan and Hawaii, it was found that the attack had been planned days, possibly weeks beforehand (Roosevelt, 170). During the time before the attack, the Japanese had deceived the United States into believing they were at peace Because of the bombing by Japan, the American people were mourning the loss of their soldiers lives. They also were angry with the destruction of the naval and military forces, along with the attacks on Hong Kong, Guam, the Philippine Islands, Wake Island, and Midway Island all within hours of each other. The American people, along with the government, wanted nothing more than to destroy Japan, and win the war. In the Monica Sone document, I belief that the frustrations that the Americans were feeling are expressed in their entirety. The American people were so angry with the Japanese people, and so afraid that the Japanese would attack again, that the Americans basically rejected anyone that looked Japanese. To the Americans, regardless of whether you were native born, if you looked Japanese you were the enemy. The American government did not want to take ...

7 Must-Have Items for Your Author Media Kit

7 Must-Have Items for Your Author Media Kit Youre finally done with your book. But youre exhausted. And vulnerable to making mistakes. Before you plunge ahead with marketing, dont miss a critical tool whose absence could push your book into the remainder bin. You must create a complete, well-written author media kit. This package of marketing materials brands you and your print or digital book. If built correctly, the media kit includes items that will help journalists, bloggers, reviewers, retailers, individual buyers, event planners and others promote, sell and buzz about your book. Here are seven things indie authors shouldnt do without in an author media kit: 1. Cheat Sheet for Book Reviewers Three out of four authors who ask me to review their books fail to send the bare minimum a press release. If I dont find one, I put the book on my bookshelf. A year later, when Im de-junking, your book ends up in a cardboard box I donate to the church rummage sale. Tuck a short note in your book with a link that leads me to your digital media kit. Help me find your press release, great photos and a cheat sheet that tie into your title, and Im interested. 2. Sell Sheet for Retailers Bookstore buyers dont want the same information youd give to a reviewer. They want whats referred to as a sell sheet. A sell sheet includes a short summary of your book. Additional information about your marketing plan will help buyers compare your book to similar books on their shelves, and shows them how hard you work to help them sell your book. This should be full-color, and professionally designed, printed on 100 lb. Text-Gloss paper. 3. How to Order Form for Readers Youll need a marketing piece that explains about the book, and includes several killer endorsements and a How to Order form. The order form must address issues such as bulk orders, sales tax, C.O.D. payments, shipping and how to pay with a credit card. Its similar to the sell sheet for bookstores, but its for individual book buyers, not sellers. 4. Press Release with a High-Res Cover Image Consumer and industry magazines love featuring books. The New Product Section of these publications could be the perfect home for your book if you can provide a high-resolution photo of your book cover. Editors tell me they are practically begging for good-quality photos for these sections. 5. Interview Topics or Questions If you write and deliver a pitch that gets you booked on a talk show, dont show up at the station without a list of questions the interviewer can ask you. Most talk show hosts will not read your book. Broadcasters rely on these questions as a crutch. 6. Author

Image in Nursing Essay Example | Topics and Well Written Essays - 500 words

Image in Nursing - Essay Example It is apparent from the studies that if the registered nurses (RN), nursing hours and staffing increase, this would be a way of reducing the patients’ deaths and days of daycare every year. However, the staggering statistics are not reflected in the contemporary media. Instead, the most popular dramas in medical care have revolved around the physicians, with viewers being offered very limited truth, if any, about nursing profession. Greys Anatomy, ER, and House are medical shows that have received large reception and viewing from various audiences globally. However, these shows have not been able to portray a positive image of nurses, eventually undermining this profession in various ways. With this negative image, the impact has been an increase in nurses’ shortage. This condition has been witnessed in numerous hospitals thereby resulting in the profession misrepresentation, insulting and undermining. As Hassmiller and Cozine (2006) observe, nurses represent the largest healthcare group that provides direct care to patients in hospitals. The hospital care quality is highly connected to the nurses’ performance. In the medical drama House, an awful job is done by having any kind of nurses being represented. In shows such as House, the nurses barely constitute even the background noise. Sometimes, they are displayed walking on and off the screen holding clipboards and dressed in scrubs. In one image of these television series (depicted in the appendix page) a message is clearly displayed announcing that nursing profession has a few good nurses. Coupled with the above highlighted negative image, the public is left reflecting on the irrelevance of this practice which has been perceived to dominate the healthcare. Compared to Greys Anatomy, fewer nurse characters are displayed in House and ER with very few lines being reserved for the nurses. This, apparently, provides what woul d be perceived as damaging lie to many: that a

Dementia and Alzheimer's Disease Essay Example | Topics and Well Written Essays - 2250 words

Dementia and Alzheimer's Disease - Essay Example This brain and neuron disorder seriously affects a person's ability to carry out daily activities. This condition, called Dementia, which initially affects the parts of the brain that control thought, memory, and language, is taken to be a route map of the progression of Alzheimer's. From a medical perspective, the first signs of Alzheimer's disease are detectable from the lifestyle of affected individuals. However, the simplicity of these symptoms often result in them being ignored or dismissed as natural signs of old age. One of the earliest, yet most unnoticed symptoms of Alzheimer's disease is short-term memory loss. Very often, the patient appears to have skipped memories pertaining to a generation, or a similar time span, which essentially involves the present. Very recent incidents may be forgotten, while those which happened a relatively long time ago are vividly remembered, and oft quoted. Also, individuals and recent acquaintances may be completely forgotten, and may even be mistaken to be some individual the patient had acquaintance with, in the past. One hypothetical, yet practically very common, instance worth referring to is a case where a patient has no memory of his grandson's existence. On seeing the grandson, he may be mistaken to be the patient's son, and the patient may even make attempts to communicate with him in that context. Further symptoms may include problems with writing and speaking. The patient may forget simple words and make statements that don't make any sense. Familiar and routine tasks may prove difficult as time progresses. Common instruments used in daily life such as pens, towels, etc may appear meaningless to the patient. The patient may begin to dress inappropriately, completely forget to keep appointments and may even forget regularly used phone numbers. This is said to be a loss of the power of "Abstract Thinking" (Guide to Long Term Care.com). Also, repeated and unexplained mood swings and behavioural changes, quite contrary to the normal character are observed in such patients. As the disease progresses in the individual there may be a marked deterioration of control over his motor neurons, resulting in loss of mobility to considerable extents. The patient may be unable to feed himself, and incontinence may set in. 'Once identified, the average lifespan of patients living with Alzheimer's disease is approximately 7-10 years, although cases are known where reaching the final stage occurs within 4-5 years or at the other extreme they may survive up to 21 years'(Wikipedia, 2007a). Diagnosis and Clinical Perspectives Granted that the primary indications of a possibility of Alzheimer's disease in an individual are based on observations of the daily activities of the individual, the fact remains that it is primarily a clinical condition requiring diagnosis by qualified medical practitioners. Such a study shall be based on characteristic neuropsychological features and it must be ensured that no deferential diagnosis shall exist, considering the gravity of the possible result. Such a determination of the neurological feature shall consider the patient's medical history and clinical observation, while any neuropsychological evaluation will include testing and assessment of intellectual functioning over a series of weeks or

Social Sciences Essay Example for Free

Social Sciences Essay 1. Primary data are those which are collected afresh and for the first time, and thus happen to be original in character. They are gathered by the researcher for the specific purpose of addressing the research problem. Secondary data, on the other hand, are those which have already been collected by someone else and have been processed statistically. These are collected for some purpose other than the problem at hand (Polonsky Waller, 2005; Kothari, 2005). Some of the disadvantages of using a newspaper or magazine article as secondary source are doubts in the reliability, credibility and accuracy of data as sources may not be known, and the obsolescence of data as well (Summers Johnson-Morgan, 2005). Primary and secondary data alone are not sufficient. They should be both used in research because secondary data can be lacking something that only primary data can provide (Groucutt, Leadley, Forsyth, 2004). 2. Television broadcasts such as news are not totally valid as there is a tendency, especially in programs aimed at a wide public, to oversimplify data. News normally offers one set of secondary data. It would be a better practice to compare data from different sources (Walliman, 2006). The questionnaire, as a means for collecting primary data, should have minimal errors in its design in order to minimize bias in reporting and to maximize the likelihood of generating information that is reliable and valid (Amedeo, Golledge, Stimson, 2008). A systematic research design is aimed to ensure that appropriate issues are taken into account. It provides the mechanism by which research processes and practices can be assessed. The research design lays the foundation for a sound hypothesis describing the interrelationship of variables and providing the researcher with a baseline from which to work. A good research design eliminates ambiguity in concepts, thus ensuring construct validity. The actual design of the research process ensures that no other variables can affect the study, hence enhancing internal validity. The research design also provides control to unwanted variables that may arise in the conduct of the research in order to uphold its external validity. Statistical tests are used as instruments to verify the validity of the hypothesis. Hence, if statistical information is wrong, the hypothesis will be invalid (Black, 1999). References Amedeo, D. , Golledge, R. G. , Stimson, R. J. (2008). Person-Environment-Behavior Research: Investigating Activities and Experiences in Spaces and Environments. New York: Guilford Press. Black, T. R. (1999). Doing Quantitative Research in the Social Sciences: An Integrated Approach to Research Design, Measurement and Statistics. California: SAGE Publishing. Groucutt, J. , Leadley, P. , Forsyth, P. (2004). Marketing: Essential Principles, New Realities. London: Kogan Page Publishers. Kothari, C. R. (2005). Research Methodology: Methods Techniques. New Delhi: New Age Publishers. Polonsky, M. J. , Waller, D. S. (2005). Designing and Managing a Research Project: A Business Students Guide. California: SAGE Publishing. Summers, J. Johnson-Morgan, M. (2005). Sports Marketing. Ontario: Nelson Thomson Learning. Walliman, N. S. R. (2006). Social Research Methods. California: SAGE Publishing.

Life in the American Revolution :: Essays on American Revolution

On January 14, 1741, Benedict Arnold was born in Norwich, Connecticut. (B Arnold) Arnold’s father, also named Benedict, had a drinking problem and his mother Hannah often worried. (B Arnold) Arnold received his schooling at Canterbury. (B Arnold) While away at school, a few of Arnold’s siblings passed away from Yellow Fever. (B Arnold) Arnold was a troublesome kid that would try just about anything. (B Arnold) As a rebellious 14-year-old boy, he ran away from home to fight in the French and Indian War. (B Arnold) Later, Benedict Arnold deserted and returned home through the wilderness alone to work with his cousins. (B Arnold) The army had excused him without penalty because of his tender, young age. In 1762, when Benedict was just twenty-one years old, he went to New Haven, Connecticut where he managed a book and drug store and carried on trade with the West Indies. (B Arnold) In 1767, he married Margaret Mansfield, a daughter of a sheriff of New Haven County. (B Arnol d) They had three sons together. (B Arnold) When the Revolutionary War was just beginning to break out, Benedict Arnold became a prosperous ship owner, merchant, and trader. (Lake Champlain) Within days, Arnold became very interested in the war once again and joined the American Army. All of the battles Arnold commanded over showed immense courage and bravery, but he was soon known as America’s greatest traitor due to his betrayal of the American’s. As the Revolutionary War broke out, Benedict Arnold decided to volunteer to head over 1,000 men up to Maine. (Lake Champlain) He asked for additional men from his companies to join the army. Arnold then became a captain in the Connecticut Militia. General George Washington had his favorites, which Arnold was among the very few. (Macks 118) So, Benedict Arnold was sent on a infernal 500 mile march to Maine by Washington also known as "The Rock". (Macks 72, 118) There, he met up with General Richard Montgomery. (Mac ks 72) The relentless Benedict Arnold and only about fifty percent of his original soldiers made it to the St. Lawrence River where they met up with General Montgomery. (Macks 72) Their plan was to attack the British Army by surprise in Quebec City, Canada. (Lake Champlain and Macks 72) Both Montgomery and Arnold arranged to start on the lofty mountain sides of Quebec. (Macks 72) Arnold and his soldiers found themselves trapped by the British.

Deforestation: Effects and Consequences Essay

The main causes of deforestation are summarized below: (i) Population explosion (ii) Agriculture: shifting cultivation, overgrazing, cash crop economy etc. iii) Commercial logging: cutting trees for sale as timber or pulp (iv) Poverty (v) Mining (vi) Dams (vii) Infrastructure creation for logging (viii) Forest-fires (ix) Acid rain (x) Development projects and housing projects. Effects of Deforestation: The ill-effects of deforestation are summarized below: (i) Soil erosion: Soil is exposed to wind, sunlight, and evaporation due to deforestation. Soil fertility goes down due to soil erosion and rapid leaching of essential mineral nutrients. ii) Harm to fisheries: As the soil is eroded, it accelerates siltation in dams, rivers, and the coastal zone. The increased sedimentation harms downstream fisheries. (iii) More floods and droughts: Because of deforestation, there is no regulation of the flow into rivers. As result, floods and droughts alternate in the affected areas. (iv) Habitat loss of wildlife: Butterflies, migratory birds, wild animals suffer due to the loss of their habitat. (v) Extinction of some species: Many species are affected and some get extincted. (vi) Local and global climate changes: The rainfall pattern is affected as the forest is cut down. Local and global climate changes may result from deforestation. (vii) Global warming: If the trees are burned, the carbon is released immediately as carbon dioxide which leads to global warming. (viii) Danger for the survival of local communities: Communities lose their source of food, fuel, construction materials and areas for livestock grazing by deforestation.

Marvell vs Herrick

Youth comes around once in a lifetime and it’s not something you can save for later. â€Å"To His Coy Mistress† by Andrew Marvell and â€Å"To the Virgins, To Make Much of Time† by Robert Herrick portray the underlying theme of carpe diem or â€Å"seize the day,† enjoying life to the fullest. Both of these poems mainly try to pursue women who have grand beauty to realize the advantage of their good looks when young, before time takes a toll on their beauty.Both poets use their words to convince someone to act, in this case to savor youth, virginity and beauty; they are trying to convince young virgins to live life to the fullest potential. Marvell and Herrick poems share the same theme and central belief but have different audience and use different ways to express their ideas. Both poems use carpe diem as their major theme. Herrick's poem portrays carpe diem by citing the shortness of life and persuading young women to marry and enjoy life taking advantag e before death takes its turn.He says â€Å"gather ye rosebuds while ye may, old time is still a-flying†, which shows that the virgins in this case referred to as rosebuds are just beginning to live and don’t have any experience yet, but time flies and one ages fast by so it’s better to enjoy the good years while there is time (Herrick 1-2). Carpe diem is used from the beginning In Marvell’s poem, â€Å"Had we but world enough, and time this coyness, lady, were no crime† saying that even though he wants all the time in the world to spend with her, there isn't enough so she is committing a crime by making him wait for her virginity (Marvell 1-2).By stating to live life to its fullest potential he wants to persuade his mistress to a sexual relationship. â€Å"To The Virgins, to Make Much of Time† uses the meaning of carpe diem by encouraging young women to make use of their time by finding love while young and getting married before they get o ld and lose their beauty. Marvell and Herrick encourage young women to seize the day and don’t pass up chances since opportunities are hard to find. Marvell and Herrick’s poems share a central belief that young virgins should not wait to have sex because nobody knows what the future holds.Both poets want to idealize that tomorrow may never come, so it’s better to do it now and not wait because of coyness. They use death and getting old as the excuse to not lose time and make use of virginity when young. Marvell tries to lure a woman into sleeping with him by using time as a defense to experience pleasure now, he tells her that time is running out and â€Å"Now let us sports us while we may, and now, like amorous birds of prey† making use of their strength and youth to consummate their love (Marvell 37-38). He tries to convince the mistress that it is better to have sex now than to save her virginity for the future.Herrick recommends to all virgins to make use of the youth and to find love and enjoy life’s pleasures because old age is near. He emphasizes to not waste time as he feels women are their best at their prime, when they are young and untainted saying â€Å"then be no coy, but use your time, and, while ye may, go marry†(Herrick 13-14). The idea in both poems is to take advantage of being young and beautiful because times flies and people get old sooner than later. Marvell and Herrick dedicate the poems to a different audience. Marvell is writing specially to his mistress trying to woo her with promises of everlasting love.Herrick however, dedicates his poem to young virgins and wants to give them the idea of marriage while love and flesh is young to not have to suffer in the later years of life and not be lonely. In the beginning of To His Coy Mistress†, Marvell praises his woman writing how her modesty wouldn’t affect them if time was not an issue, but it is. He states she is a virgin because she is coy and later begins to diminish her ideals and beauty with aging and death saying â€Å"then worms shall try that long-preserved virginity, and your quaint honor turn to dust,† to state there is no reason for her to keep her virginity till the grave (Marvell 27-29) .Everything in Marvell’s poem is about his wishes to enjoy sexual pleasure with this woman and does everything in his power to scare her of dying without having sex first. Herrick’s poem is about the urgency and duty for the virgins to go forth and marry while young and beautiful before everything is loss with time and old age, warning them of the sufferings that come if they fail to listen to his advice. Marvell and Herrick use different ways to express their ideas on the poems.In â€Å"To the Virgins, To Make Much of Time,† Herrick uses a rather short poem to make his point short and simple versus the long and descriptive â€Å"To His Coy Mistress† by Marvell. Herrick focuses in an optimistic look to take advantage of youth and has basic and warmth imagery to state that beauty fades over the years and the effects of wasting time. On the other hand, Marvell’s poem is more detailed, beautiful and at the same time dark to suggest the mistress she shouldn't waste her youth and virginity while she is at the prime of her life.He uses ugly and realistic ideas to snap the mistress out the notion of eternal love to finally lure her to make love with him and make time the last thing on their minds. Marvell is more in-depth and emotional while Herrick is calm and regretful. Both poems compare to each other by using the underlying theme of carpe diem, making the most of each moment before old age and beauty disappears. Marvell is very emotional and persuasive while Herrick is less personal giving useful advice to young people. To His Coy Mistress† is an expression of Marvell ‘s most deeply rooted impulses, how he feels about the ideas the lady has abou t losing her virginity, and the fact he wants to spend time loving her and adoring her in bed. â€Å"To The Virgins, to Make Much of Time† is a poem about the wishes of Herrick for the youth to realize that now it’s their time and to not waste any amount because of coyness, addressing his thoughts to the young generation to have a fulfilled life, to not be shy of trying new things as those who are not afraid are the ones who will enjoy the most.Works Cited Marvell, Andrew. â€Å"To his coy mistress. † The Seagull Reader Poems. Ed. Joseph Kelley. W. W. Norton & Company, Inc. , 2008. 220-222. Print. Herrick, Robert. â€Å"To the Virgins, to Make Much of Time. † The Seagull Reader Poems. Ed. Joseph Kelley. W. W. Norton & Company, Inc. , 2008. 159-160. Print.

Anti-Markovnikov Addition Defintiion

Anti-Markovnikov Addition Defintiion Markovnikovs Rule describes the nature of alkene addition reactions in organic chemistry. Russian chemist Vladimir Markovnikov formulated the rule in 1865 after noting the halogen atom preferred the more substituted carbon in a hydrohalogenation reaction with an asymmetric alkene. If a reaction follows the Markovnikov Rule: The nucleophile adds to the more substituted pi-bound carbon.Hydrogen adds to the less substituted carbon. Another way to think of it is that the hydrogen rich get richer, meaning that out of two pi-bound carbon atoms, the one that has the most hydrogen atoms will get another hydrogen in the reaction. But, some reactions dont follow this rule... Anti-Markovnikov Addition Definition Anti-Markovnikov addition is an addition reaction between an electrophile compound HX and either an alkene or alkyne where the hydrogen atom of HX bonds to the carbon atom with the least number of hydrogen atoms in the initial alkene double bond  or alkyne triple bond  and the X bonds to the other carbon atom. The anti part of Anti-Markovnikov addition is that the reaction fails to follow Markovnikovs Rule. It does not refer to anti in terms of stereochemistry! The image shows the Anti-Markovnikov addition of HX to a propene alkene. The H bonds to the CH1 end and the X bonds to the CH2 end of the former double bond. References Hughes, Peter (2006). Was Markovnikovs Rule an Inspired Guess?.  Journal of Chemical Education.  83  (8): 1152.McMurry, John. Section 7.8: Orientation of Electrophilic Ractions: Markovnikovs Rule.  Organic Chemistry  (8th ed.).W. Markownikoff (1870). Ueber die Abhngigkeit der verschiedenen Vertretbarkeit des Radicalwasserstoffs in den isomeren Buttersuren.  Annalen der Pharmacie.  153  (1): 228–59.

Easy and Completely Edible Slime Recipe

Easy and Completely Edible Slime Recipe Most slime recipes are non-toxic, but there are only a few you can eat and none that taste as good as this one! Heres how to make edible slime. Edible Slime Ingredients 14 oz. can of  sweetened condensed milk1 tablespoon of cornstarchfood coloring (or you could add a little unsweetened powdered drink mix)couple of drops vanilla or other flavoring, if desired Make the Edible Slime In a saucepan over low heat, stir together the milk and cornstarch. Stir and heat until the mixture thickens. Remove from heat.Stir in the coloring and any flavorings. Allow the slime to cool.Enjoy! When you are finished playing with this slime, store it in a sealed plastic bag in the refrigerator. Refrigerated slime is good for a day or two. You can clean up the edible slime with warm soapy water. If you added food coloring or drink mix, keep the slime away from surfaces which could be colored, such as carpet or upholstery.

Corporate governance Coursework Example | Topics and Well Written Essays - 1000 words - 1

Corporate governance - Coursework Example Cadbury Report highlights the role of Chairman and Chief Executive Officer. The Chairman must not be allowed to become CEO and the same is applicable to the vice versa at the same. The Chairman is primarily responsible for the board’s working, and for its membership balance subject to board and approval of shareholders (ecgi, web). The Greenbury report focuses on the directors’ remuneration (icaew). The fundamental aim of this report is to identify good practice in identifying and determining directors’ remuneration; besides reporting a code of practice for UK PLCs. The Hampel report was designed to review the Cadbury report on corporate governance. Basically, this report enumerates all the elements discussed in the Cadbury report; this report talks about the role of directors and shareholders, directors’ remuneration, accountability and audit (ecgi, web). The Turnbull report talks about the internal controls. As the internal controls are the significant e lements of the corporate governance, the Turnbull report describes the significance and elements of a sound system of internal control (portal. survey, web). The Higgs Review puts light on the role of non-executive directors (national archieves, web). In this report, besides considerably stipulating the significance of the role of non-executive directors, the much emphasis is also placed on the effective role of non-executive directors. 2- Discuss the difference between the principles –based approach and the rules-based approach and highlight the advantages and disadvantages of each for the practice of corporate governance. Answer The principles-based approach is applied in UK; on the other hand, the rules-based approach is applied in United States of America. The principles-based approach is based on the concept of â€Å"comply or explain approach.† Under this approach, a company is either to comply with the requirements mentioned in the framework or to explain a deci sion of non-compliance. On the other hand, a US corporation cannot avail this option; it has to comply with the requirements of the framework issued by the Securities and Exchange Commission. The principles-based approach is mostly driven by the market forces. As a result, if a company wants to avoid complying with the corporate governance Codes, and additionally if the company has valid reason to do so, this can increase the chances for more investment, which will generate more employment opportunities. The disadvantage of this approach is that if the UK government or a regulatory authority wants to enforce certain corporate practices, it may not be easy for them to do so. The major of advantage of rules-based approach is that a company will find it difficult to circumvent the unpleasant rules. As a result, this approach considerably reduces the chances of mal-corporate practices. In addition, investors knowing corporate governance structure of a company; would not avoid investing further into the company as their confidence level has considerably improved after the implementation of the rules-based approach. However, some disadvantages cannot be avoided. The rules-based approach are mandatory to be followed, some companies may avoid investing in the United States of America as there are inflexible corporate rules. In addition, existing companies may disinvest due to the presence of such rigid rules. 3-What is board effectiveness? Discuss how this can be achieved for UK firms. Use

Using Collaboration Tools to Market Products PowerPoint Presentation

Using Collaboration Tools to Market Products - PowerPoint Presentation Example This is especially in the beauty industry where this study focuses to come up with an effective collaboration tool for a jewelry store. Collaboration tool product advocated in this presentation is â€Å"Yammer†, which will not only aid in serving clients as necessitated but also manage jewelry store’s human resource (Nash, 2011). There are numerous collaborations tools, which corporations can use and attain their respective goals. However, in ascertaining collaboration tool that will work appropriately for a given corporation it entails meticulous research coupled with considering its respective goals. This is because the need to have an effective collaboration tool is to aid a given Corporation to attain its targets with ease. Some of the probable web-based collaboration tools for a jewelry store include, Compared to other collaborative tools, Yammer emerges as the best option for jewelry store. This is because of its varied and essential features essential for reaching large pool of clients. It also enables effective management of human resource. Some of its essential functionalities include, Yammer 2.0 version will enable Jewelry Store Heads to have direct conversations with their clients as well as interacting with employees (Markowitz, 2011). Hence, make it easy for its respective departments handle clientele’s complaints and suggestions with immediate thus improve their services. Technical department will set Yammer 2.0 and other recently incorporated versions such that varied departmental sections are in constant contact with each other, hence share information internally (Nash, 2011). Internal interaction with the aid of Yammer aims at improving social networking such that there is no wastage of both resources and time, which employees use while holding meetings (Sumner, 2011). Therefore, Jewelry store will be posting internal and urgent information to its employees who in turn will try to give their sentiments

Physical capitals and financial capital Essay Example | Topics and Well Written Essays - 1750 words

Physical capitals and financial capital - Essay Example nited States Decrease Increase - Exchange rate changes Increase Increase Note: In the red above, an increase in wealth makes AD increase; a decrease in wealth makes AD decrease. This is how you should format each table. SECTION TWO a) Physical capital differs from financial capital in a number of ways. By definition, physical capital is an already-manufactured tangible asset that is used in production. On the other hand, financial capital refers to equity that is used by business owners to purchase resources that are required in producing goods and services. Different from financial capital, physical capital can be acquired by building it, purchasing it or renting it. Financial capital can be acquired through borrowing and selling of ownership stake within an organization. Examples of financial capital include bank loan and corporate bonds, while that of physical capital include motor vehicle and machinery. b) The distinction between gross investment and net investment is based on ca pital depreciation. Gross investment refers to total amount of investment that does not incorporate any depreciation while net investment refers to investment that incorporates depreciation. Therefore net investment can simply be defined as gross investment less capital depreciation. The difference between gross investment and capital investment can be illustrated mathematically as follows. Net Investment = Gross Investment – Depreciation Gross investment = Net investment + Depreciation c) The three main types of markets for financial capital include Loan markets Stock market Bond market d) The price of a financial asset and interest rate has an inverse relationship. The prices of financial asset do always increase with decrease in interest rate. This can be explained well by considering the relationship of a financial asset such as bond with its interest rate. For example, let’s assume company X issues a new bond that has a face value of $1000 with an interest rate of 7%. If in the same year the general interest rates increases to about 8%, buyers will not be willing to pay the $1000 face value with an interest rate of 7%. Therefore, in order to sell the bond, company X will have to issue its bond at a lower price, that is, at a discount that will enable the new bond holder to generate an 8% interest. In this scenario, the price of the bond will fall to approximately $ 875. Similarly, if the interest rate falls to 6%, the price of the bond will be much higher than $1000. The bond will be valued at $1166. This is illustrated in the diagram below. e) When firms are involving in decisions to make investment, they normally consider a number of

MTEF Reform in Bangladesh Analysis

MTEF Reform in Bangladesh Analysis Chapter 1: Introduction 1.1 Background This dissertation studies the MTEF (Medium Term Expenditure Framework) reform in Bangladesh. The MTEF was introduced in 4 ministries including Ministry of Education from 2005-06, named as MTBF (Medium Term Budgetary Framework). In the following year it included Ministry of Primary and Mass Education and Ministry of Health and Family Welfare. All other ministries will be brought under this framework in near future. The focus of this study is to explore the effect of introducing the MTEF in education and health budgets, explain the difference between the MTEF and traditional budgetary system in the formulation and execution of budget, analyze the effectiveness and efficiency of budgetary spending due to adopting the MTEF in the education and health sectors considering the three outcomes (maintaining fiscal discipline, promoting allocative Efficiency and enhancing operational efficiency) of public expenditure management (PEM) and finally to comment on whether improvements were achieved or not due to adopting the MTEF. This chapter outlines the relevancy of the study, the research questions to be answered in the subsequent chapters, methodology and analytical framework, limitations of the study and finally the presentation structure. 1.2 Rationale of the Study The main objective of formulating a budget under the MTEF is to link the budgetary allocations with governments policies, priorities. This is for ensuring efficient utilisation of limited public resources, which will enhance pro-poor growth and poverty reduction. One of the ‘policy priority triangles set out in countrys Poverty Reduction Strategy Paper (PRSP, 2005) is human development. So, Education and health sectors have been attached to top priority on investment by the Government. 1 According to MTBF (2005-06, p-01), ‘The Medium Term Budgetary Framework (MTBF) is a new budgeting approach generally known as the Medium Term Expenditure Framework (MTEF). Here, no basic difference between MTEF and MTBF has been stated. So, the term ‘MTEF will be used ubiquitously in this dissertation except quoting the references where relevant. These two sectors account for almost 20% of the total government expenditure each year in Bangladesh. The MTEF has been implemented in these two sectors since 2006 and many of the government policy objectives are linked with them. It is necessary to review the performance of the MTEF so that the output could be infused into ongoing works and corrective actions can be taken to planned activities accordingly. Thus, it seeks to investigate the impact of the MTEF on budgetary system of these two sectors. 1.3 Research Questions For this paper, the research questions are: 1. To what extent MTEF led to changesa in the formulation and execution of education and health budgets? 2. Has MTEF improved the effectivenessb and efficiencyc of budgetary expenditure on education and health? a. Mainly three types of changes- institutional, process (procedure) and technical (technological). b. Effectiveness is about how far does the activity (here MTEF) achieve its objective- and the objective itself is greater allocative efficiency. c. Efficiency here means at what cost was that result achieved, i.e. how many additional resources were used up in adopting MTEF (Here it means operational efficiency). 1.4 Broad Methodological Approach The analysis is purely desk- based. Secondary information sourced from review of literatures on the MTEF of different countries and other related articles of OECD, IMF, World Bank. UNICEF, PEFA, ADB, UNDP comprising as assessment and analysis of available documents on the MTEF and related processes. To answer the research questions data of national budget from 2001t o 2010, documents on the MTEF from 2006 to 2010, monthly fiscal report from 2004 to 2008- Finance Division, Ministry of Finance (MoF), Bangladesh Economic Review 2003-2008, IRBD by CPD (Centre for Policy Dialogue) from 2004- 2010, Public Expenditure Review on health- 2007, Bangladesh Bureau of Statistics, Sector wise budgets from Ministry of Education, Ministry of Primary and Mass Education, Ministry of Health and Family Welfare are used. Data from national budgets, BER, MTBF and PER played the key role to answer the research questions. Information was collected from interviewing few relevant staff of the MoF and consulti ng published documents and databases available in the Internet. The analysis is both qualitative and quantitative depending on the availability of the relevant data. 1.4.1 Analytical Framework 1) To answer the first question regarding changes due to adopting MTEF in Bangladesh, three elements will be analyzed institutional change, procedural change and technical change and this analysis will try to differentiate the qualitative changes took place due to adopting MTEF over the traditional budgeting system in relation to those three elements. 2) The MTEF budgets of education and health will be assessed taking into account the three basic elements of PEM (Public Expenditure Management) maintaining fiscal discipline, promoting allocative efficiency and enhancing operational efficiency (Schick, A, 1998) to get the answer of the second question concerning improvement in effectiveness and efficiency of budgetary spending after MTEF. Fiscal discipline, allocative efficiency and operational efficiency are interdependent (DFID, 2001). Allen Schick (1998, p. 2) argued that the lack of fiscal discipline leads to improper resource allocation and operates inefficiency. So, fiscal discipline promotes allocative and operational efficiency. MTEF sought to strengthen those three outcomes. Therefore, the effectiveness and efficiency of budgetary spending is improved when those three basic elements are achieved. The following criteria/ principles will be analysed to reveal the experiences of attaining those three basic elements Source: The above criteria in the table are generated on the basis of the literature of Schick, A (1998), World Bank (1998), DFID guidelines (2001) 1.4.1.1 Criteria setting The aim is to find out some criteria that influences the three objectives of PEM as well as matches with the ‘MTEF objectives of Bangladesh (discussed in chapter- 3..) so that the impact of the MTEF can be assessed. The analytical framework is adapted and it is mainly based on the literature of ‘Schick, A (1998), A Contemporary Approach to Public Expenditure Management, ‘World Bank (1998), Public Expenditure Management Handbook, DFID guidelines (2001) and some other empirical evidences (discussed in chapter- 2). Some other relevant criteria are not examined mainly due to data non- availability of appropriate data. For example, improvement in accountability and transparency relates to operational efficiency is not analysed due to data limitation and relevant information unavailability. A simple cross- section data is presented in tabular form where it is relevant in addressing the research questions. 1.6 Limitations The MTEF is now at its earlier stage in Bangladesh and no formal review or comprehensive assessment has been made on this new budgetary process. Sufficient information is not available and current and reliable data are also unobtainable. So, there is much reliance on government budgetary documents that cannot always be testified by evidences from other sources. 1.7 Presentation Structure Chapter 2 provides literature review on theoretical concept of MTEF, budgetary reforms followed both in developed and developing countries and assessments of the impact of the MTEF in those countries using the analytical framework specified for answering question two. Chapter 3 illustrates MTEF reform in Bangladesh and analysis of the traditional budgetary process and MTEF in view of the changes took place due to adopting MTEF to get the answer of question 1. Chapter 4 focuses on the assessment of impact of MTEF on education budget to get the answer to question-2 Chapter 5 focuses on the assessment of impact of MTEF on health budget to get the answer to question-2 Chapter 6 presents the conclusion where all the research questions are summarized. Chapter 2: Literature Review This chapter aims to explore various criteria/ principles that will be used to judge the performance of the MTEF in line with the three basic indicators of the public expenditure management (PEM). With this end in view, it provides literature review on theoretical concept of the MTEF, the theoretical explanation regarding the relationship between the MTEF and the public expenditure management (PEM). It also examines the empirical studies on the MTEF of different countries to reveal the different criteria/ conditions that were set to assess the role of the MTEF in promoting the efficiency and effectiveness of public expenditure. Finally it brings together some criteria that will be used to develop the analytical framework to assess the impact of the MTEF on education and health budget (the title of the dissertation) in Bangladesh. 2.1 The Theoretical Background 2.1.1 Concept of the MTEF The MTEF (Medium Term Expenditure Framework) is defined as an approach ‘designed specially to link planning, which has a medium term outlook, with the annual budget, and, as a consequence, to link budgetary expenditure more systematically with socially desired outcomes, (ADB, 2002, p-1). On the whole, MTEF integrated policy, planning and budgeting and allows expenditure to be ‘driven by policy priorities and disciplined by budget realities (World Bank, 1998). So, MTEF is a multiyear rolling expenditure under which a realistic projection of revenue receipts and expenditure is prepared over a three to five year period and spending priorities are set with reference to the Governments policy objectives and thus it provides a clear foundation for the annual budget. Under the MTEF, over a three year period, first year estimate is considered as budget, two outer years estimates as indicative figures. In the following year, the MTEF rolls forward and a new forward estimate for an other year is added. After necessary adjustment, the second year forward estimate is considered as budget as it becomes first year for the next MTEF. Figure 2.1: Rolling Principle of the MTEF (Source: ODI, 2002, p- 5) In many countries, the MTEF is implemented at two key levels, at the central government level which is referred to as the ‘top- down approach and at the spending agencies level, referred to as the ‘bottom- up approach (World Bank, 1998, p-40). In the ‘top- down approach, Ministry of Finance identified the ‘resource envelops (which is referred to as the indicative expenditure ceiling) and allocate those to the line ministries in view of their relative need. In the ‘bottom- up approach, line ministries or sectoral agencies formulates and estimates the actual and projected costs of the spending programmes within the spending limit for the medium term by examining the sectoral objectives and activities (Houerou and Taliercio, 2002, p-2). Table 2.1 Seven Stages of the MTEF Source: Adapted;[PEM Handbook (World Bank, 1998a: 47-51) cited in N.Oyugi. L, (2008, p-3, 4) and Houerou and Taliercio, (2002, p-3)] Annexure- 2 2.2 A General Overview of the Empirical Literature Many developed countries like UK, Australia, New Zealand, Austria, Sweden, Germany, USA are practising multi- year budgeting. The MTEF of UK maintains a firm consistency in controlling public expenditure having ‘focused on outcomes and efficient service delivery (HM Treasury, 2007). World Bank, DFID and other Aid agencies influenced many developing and transitional countries to initiate series of reforms (Wyane, 2005). The MTEF is introduced in more than 25 countries in Asia, Africa (e.g., Benin, Cameroon, Burkina Faso, Ghana, Malawi, Rwanda, South Africa, Tanzania, Uganda, Namibia, Kenya, Zambia) Latin America and Eastern Europe. In Asia, MTEF has already been introduced in Nepal, Pakistan and Bangladesh. Almost all the developing countries have 3 years MTEFs except Mozambique (6 years) and South Africa (4 years) (Houerou and Taliercio, 2002). Most of the countries integrated development and non- development expenditure in the MTEF except Guinea and Rwanda (only recurrent budget). In Kenya, Tanzania, South Africa, Uganda, civil society representatives participate in Sector Expenditure Frameworks (SEFs) preparing process (Houerou and Taliercio, 2002). Suriyaarachchi (2004) argued that Nepal has improved in development budget formulation and execution after intro ducing MTEF in Fiscal Year 2002-03. Assessments on the MTEF in many African countries are carried out considering the organizational change and procedural change rather than assessing the progress achieved through implementing the MTEF (Bird, A, 2003; Holmes and Evans, 2003; Jennes. G, 2003; Carlier. K, 2003; Short. J, 2003) 2.3 The MTEF and the public expenditure management (PEM) ADB (2001) suggested that ‘Public expenditure management (PEM) is the latest approach that emphasizes on achieving the desired policy outcomes through public sector budgeting. PEM considered expenditure as an instrument to produce optimal output whereas conventional budgetary process sets focus on spending as an input. PEM emphasizes on three main outcomes in budgetary system. The objectives of PEM are to maintain fiscal discipline, to promote allocative efficiency and to enhance operational efficiency (World Bank, 1998a cited in DFID, 2001, p-8). Allen Schick (1998, p-2) describes three basic elements of PEM as follows: 1. Aggregate fiscal discipline , which usually means that the public spending limit should not exceed the total revenue (spending in accordance with the affordability) and should be ‘sustainable over the medium-term and beyond (ibid, p-2). 2. Allocative efficiency , which refers to the condition that public spending, should be prudent. ‘Expenditure should be based on government priorities and it should be directed to the most beneficial programmes and activities that ultimately increase the effectiveness of the budgetary spending. It means that the allocation is better targeted shifting from ‘lesser to higher priorities and from less to more effective programs (ibid-2). 3. Operational efficiency means getting the best value of public money. Quality of the public services should be reasonable and it should be given at the lowest possible cost (ADB, 2001, p-1). According to Fjeldstad et al. (2004 p.2) cited in N.Oyugi. L, (2008, p- 2), The objectives of MTEF are : to maintain ‘aggregate fiscal discipline to promote ‘resource allocation to strategic priorities (allocative efficiency) to enhance ‘efficient and effective use of resources (operational efficiency) It suggests that there is a close connection between MTEF and PEM objectives. 2.3.1The MTEF and improvement in effectiveness and efficiency of budgetary expenditure ADB suggested that ‘the MTEF is one mechanism through which a PEM system can be operationalzed (2001- issue- 2, p-4). So, the improvement in effectiveness and efficiency of budgetary expenditure depends on to what extent the MTEF is sought to strengthen the PEM objectives. Fiscal discipline, allocative efficiency and operational efficiency are ‘interdependent (DFID, 2001). Allen Schick (1998, p. 2) argued that the lack of fiscal discipline leads to improper resource allocation and operational inefficiency. So, fiscal discipline can promote both allocative and operational efficiency. Fiscal discipline is maintained when implementation of budget ensures that actual expenditure does not exceed the spending limit and even when the increase in spending (% as a share of GDP) is consistent with the increase in revenue each year (Schick, A, 1998, p. 12, 67). So, two criteria- conformity with the spending limit and consistency in the trend of sectoral expenditure influence fiscal discipline. Allocative efficiency means the ability of the government to distribute resources considering the effectiveness of public programmes in accordance with its strategic objectives or policy planning. It is the capacity to reallocate resources from old to new priorities and from less to more effective programmes. Delegation of major allocative responsibility to sectoral ministries also promotes allocative efficiency (ibid, p. 17, 90). So, four criteria- change in sectoral allocation, strategic resource allocationlinked to policy planning, spending in priority areas/ programmes anddevolution of allocative responsibilities to line ministries influence allocative efficiency. MTEF offers greater predictability of fund since it establishes ‘baseline budgets for the upcoming years (while one year budget cannot) and thus improves operational efficiency (ADB, 2001- issue- 2, p-4). World Bank (1998) argues that predictability of funds (assurance to spending agencies as to when and where the resources will be available) is one of the major factors that influence operational efficiency (p- 28). Operational efficiency put emphasis on output and outcomes rather than input (Schick, A, 1998, p. 21). So, two criteria- greater predictability of public funds and progress in achieving output targets influence operational efficiency. 2.3.2 Evidence from Cross-country Studies This is to explore what criteria/ characteristics are set out by different countries to assess the impact of MTEF with respect to three levels of PEM outcomes. However, most of the studies are found to use one or more of the following criteria. Reducing fiscal deficit Since the adoption of the MTEF, Malawi reduced its fiscal deficit from 15% of GDP to 5% in the 1998/ 1999 budgetary- year and a further reduction to 4% in 1999/ 2000. So, it achieved some progress in reducing fiscal deficit (Anipe et al., 1999, p. 15). Adequate information availability In Cambodia, the MTEF was introduced in two ministries (education and health) and while preparing the sectoral expenditure for 2003-2005, health ministry had inadequate information regarding user fees and other payments, which in turn prevented from making a realistic estimation (Dom et al., 2003, p. 30). Above two criteria are concerned with aggregate fiscal discipline. Strategic resource allocation linked to policy, planning In case of Ghana, the MTEF was adopted in 1999; the resources were allocated in line with government development policy documents, e.g. ‘Ghana Vision 2020 (Anipa et al., 1999, p-21). The MTEF in Uganda achieved a considerable success in integrating the PEAP (‘Poverty Eradication Action Plan) within the Budgetary process and expenditure planning is carried out considering PEAP at the central and local government levels (Bird A, 2003). Change in sectoral allocation In Uganda, actual spending increased from 19.8% of total expenditure to 26.9% in 1998/99 (Bevan and Palomba, 2000, p. 18). In Benin, budgetary allocations had increased significantly to the ‘priority sector since 1998. Recurrent budget for education was 27.4% of the total expenditure in 1998 and it increased to 39.5% in 2001 and capital budget was 4.5% of the total expenditure in 1998 and that increased enormously to 40.7%. Allocations towards the health budget have increased from 1.4 percent of GDP in 1998 to 2.3 percent of GDP in 2001 (Carlier K, 2003, p. 23-24). Greater responsibility to line ministries The MTEF in Ghana promoted allocative efficiency as line ministries enjoying ‘greater responsibility for allocating resources to priority activities which ensures effective and efficient use of limited resources (Anipa et al., 1999, p- 7). Improvement in budgetary classification The MTEF in Malawi promotes allocative efficiency as it improved in budgetary classification by adopting activity- based budgeting that reviews the on- going programmes and creates sub- programmes to specify the activities (ibid, p. 12-25). From the above analysis it is evident that three criteria- strategic resource allocation linked to policy planning, change in sectoral allocation, improvement in budgetary classification are relevant to allocative efficiency and greater responsibility to line ministries is concerned with both allocative and operational efficiency (discussed in section 2.1.3). Fund predictability In Malawi, the allocation for health sector was 20.7% of the total development budget for the 1996/1997 fiscal year, but the actual release was only 3.6% of the development expenditure (Oxford Policy Management, 2000, p. 4). Reducing the deviation between budget and actual spending In case of Tanzania, from 1995 to 1998, the average BDI (Budget Deviation Index) was equal to 33% before introducing the MTEF and after the MTEF since 1999, it was reduced to 25% (Houerou and Taliercio, 2002, p. 21). Improvement in accountability and transparency In Namibia, MTEF has improved transparency as the framework explains inputs required for all programmes and expected outcomes. It also increased accountability because public has the access to the information regarding government priorities set in the medium term framework (N Oyugi L, 2008, p-12). The above two criteria are relevant to operational efficiency as discussed earlier. 2.4 Findings The country assessments of the MTEF indicate that all types of criteria/ conditions were not used by any single country to assess the impact of the MTEF. From the above analysis, the following key criteria/ principles can be brought together which appear to be important to examine the MTEF outcomes at three levels- fiscal discipline, allocative and operational efficiency. In the next chapter, the changes due to adopting the MTEF in the education and health budget will be examined. Asian development bank institute, 2005 http://www.adbi.org/files/2005.09.05.cpp.budget.classification.pdf Chapter 3: Changes due to the MTEF in Bangladesh This chapter addresses the first research question of Chapter- 1 which refers to the changes took place because of the MTEF introduced in the education and health budget. For this, it focuses on the budgetary reforms in Bangladesh. Experiences with the introduction of the MTEF are discussed and finally the changes due to adopting the MTEF (the traditional versus the MTEF) have been analysed. 3.1 Why the MTEF in Bangladesh Before the MTEF, budgets were prepared by making arbitrary incremental changes to the preceding years allocation. No strategic planning was present in budgetary process, non- development and development budgets were prepared separately and emphasis was laid on input rather than output (BCAS-2006/09, p. 53). Therefore, to enhance the credibility of the budget, to face the strategies set out in the PRSP with the macroeconomic framework and to ‘create a more disciplined, dynamic, efficient and modern public financial management system (MTBF-05/06, p. i), the MTEF was introduced. 3.2 Budgetary reforms and the MTEF in Bangladesh Bangladesh is a densely populated developing country which has a less public spending as a share of GDP (Socio- economic indicators are shown in Appendix- 1 ). For the effective and efficient use of scant resources, important reforms have been carried out in public financial management since 1990s. According to World Bank, ‘Bangladesh re-emerged as a democracy, successfully restarted reforms on critical fronts while ensuring sound macroeconomic and fiscal management (BCAS, 2006/09, p-9). A committee on Reforms in budgeting and Expenditure Control (CORBEC) was formed in March 1990 and this committee identified a number of problems including budgeting procedure, budget classification, budget presentation, separate non- development (recurrent) and development (investment) budgets preparation, emphasis laid on the inputs rather than outputs, etc. It was also difficult to identify the flow of funds as non- development and development budgets used separate classification systems and that was not computerized. To implement the recommendation of CORBEC, RIBEC (Reform in Budgeting and Expenditure Control) was formed with the financial suppo rt from the DFID (Department for International Development). A detailed operational unit wise and economic code wise classification chart was prepared and published, financial rules and reporting systems were upgraded and large number of Government officials were trained through the RIBEC from Ph MTEF Reform in Bangladesh Analysis MTEF Reform in Bangladesh Analysis Chapter 1: Introduction 1.1 Background This dissertation studies the MTEF (Medium Term Expenditure Framework) reform in Bangladesh. The MTEF was introduced in 4 ministries including Ministry of Education from 2005-06, named as MTBF (Medium Term Budgetary Framework). In the following year it included Ministry of Primary and Mass Education and Ministry of Health and Family Welfare. All other ministries will be brought under this framework in near future. The focus of this study is to explore the effect of introducing the MTEF in education and health budgets, explain the difference between the MTEF and traditional budgetary system in the formulation and execution of budget, analyze the effectiveness and efficiency of budgetary spending due to adopting the MTEF in the education and health sectors considering the three outcomes (maintaining fiscal discipline, promoting allocative Efficiency and enhancing operational efficiency) of public expenditure management (PEM) and finally to comment on whether improvements were achieved or not due to adopting the MTEF. This chapter outlines the relevancy of the study, the research questions to be answered in the subsequent chapters, methodology and analytical framework, limitations of the study and finally the presentation structure. 1.2 Rationale of the Study The main objective of formulating a budget under the MTEF is to link the budgetary allocations with governments policies, priorities. This is for ensuring efficient utilisation of limited public resources, which will enhance pro-poor growth and poverty reduction. One of the ‘policy priority triangles set out in countrys Poverty Reduction Strategy Paper (PRSP, 2005) is human development. So, Education and health sectors have been attached to top priority on investment by the Government. 1 According to MTBF (2005-06, p-01), ‘The Medium Term Budgetary Framework (MTBF) is a new budgeting approach generally known as the Medium Term Expenditure Framework (MTEF). Here, no basic difference between MTEF and MTBF has been stated. So, the term ‘MTEF will be used ubiquitously in this dissertation except quoting the references where relevant. These two sectors account for almost 20% of the total government expenditure each year in Bangladesh. The MTEF has been implemented in these two sectors since 2006 and many of the government policy objectives are linked with them. It is necessary to review the performance of the MTEF so that the output could be infused into ongoing works and corrective actions can be taken to planned activities accordingly. Thus, it seeks to investigate the impact of the MTEF on budgetary system of these two sectors. 1.3 Research Questions For this paper, the research questions are: 1. To what extent MTEF led to changesa in the formulation and execution of education and health budgets? 2. Has MTEF improved the effectivenessb and efficiencyc of budgetary expenditure on education and health? a. Mainly three types of changes- institutional, process (procedure) and technical (technological). b. Effectiveness is about how far does the activity (here MTEF) achieve its objective- and the objective itself is greater allocative efficiency. c. Efficiency here means at what cost was that result achieved, i.e. how many additional resources were used up in adopting MTEF (Here it means operational efficiency). 1.4 Broad Methodological Approach The analysis is purely desk- based. Secondary information sourced from review of literatures on the MTEF of different countries and other related articles of OECD, IMF, World Bank. UNICEF, PEFA, ADB, UNDP comprising as assessment and analysis of available documents on the MTEF and related processes. To answer the research questions data of national budget from 2001t o 2010, documents on the MTEF from 2006 to 2010, monthly fiscal report from 2004 to 2008- Finance Division, Ministry of Finance (MoF), Bangladesh Economic Review 2003-2008, IRBD by CPD (Centre for Policy Dialogue) from 2004- 2010, Public Expenditure Review on health- 2007, Bangladesh Bureau of Statistics, Sector wise budgets from Ministry of Education, Ministry of Primary and Mass Education, Ministry of Health and Family Welfare are used. Data from national budgets, BER, MTBF and PER played the key role to answer the research questions. Information was collected from interviewing few relevant staff of the MoF and consulti ng published documents and databases available in the Internet. The analysis is both qualitative and quantitative depending on the availability of the relevant data. 1.4.1 Analytical Framework 1) To answer the first question regarding changes due to adopting MTEF in Bangladesh, three elements will be analyzed institutional change, procedural change and technical change and this analysis will try to differentiate the qualitative changes took place due to adopting MTEF over the traditional budgeting system in relation to those three elements. 2) The MTEF budgets of education and health will be assessed taking into account the three basic elements of PEM (Public Expenditure Management) maintaining fiscal discipline, promoting allocative efficiency and enhancing operational efficiency (Schick, A, 1998) to get the answer of the second question concerning improvement in effectiveness and efficiency of budgetary spending after MTEF. Fiscal discipline, allocative efficiency and operational efficiency are interdependent (DFID, 2001). Allen Schick (1998, p. 2) argued that the lack of fiscal discipline leads to improper resource allocation and operates inefficiency. So, fiscal discipline promotes allocative and operational efficiency. MTEF sought to strengthen those three outcomes. Therefore, the effectiveness and efficiency of budgetary spending is improved when those three basic elements are achieved. The following criteria/ principles will be analysed to reveal the experiences of attaining those three basic elements Source: The above criteria in the table are generated on the basis of the literature of Schick, A (1998), World Bank (1998), DFID guidelines (2001) 1.4.1.1 Criteria setting The aim is to find out some criteria that influences the three objectives of PEM as well as matches with the ‘MTEF objectives of Bangladesh (discussed in chapter- 3..) so that the impact of the MTEF can be assessed. The analytical framework is adapted and it is mainly based on the literature of ‘Schick, A (1998), A Contemporary Approach to Public Expenditure Management, ‘World Bank (1998), Public Expenditure Management Handbook, DFID guidelines (2001) and some other empirical evidences (discussed in chapter- 2). Some other relevant criteria are not examined mainly due to data non- availability of appropriate data. For example, improvement in accountability and transparency relates to operational efficiency is not analysed due to data limitation and relevant information unavailability. A simple cross- section data is presented in tabular form where it is relevant in addressing the research questions. 1.6 Limitations The MTEF is now at its earlier stage in Bangladesh and no formal review or comprehensive assessment has been made on this new budgetary process. Sufficient information is not available and current and reliable data are also unobtainable. So, there is much reliance on government budgetary documents that cannot always be testified by evidences from other sources. 1.7 Presentation Structure Chapter 2 provides literature review on theoretical concept of MTEF, budgetary reforms followed both in developed and developing countries and assessments of the impact of the MTEF in those countries using the analytical framework specified for answering question two. Chapter 3 illustrates MTEF reform in Bangladesh and analysis of the traditional budgetary process and MTEF in view of the changes took place due to adopting MTEF to get the answer of question 1. Chapter 4 focuses on the assessment of impact of MTEF on education budget to get the answer to question-2 Chapter 5 focuses on the assessment of impact of MTEF on health budget to get the answer to question-2 Chapter 6 presents the conclusion where all the research questions are summarized. Chapter 2: Literature Review This chapter aims to explore various criteria/ principles that will be used to judge the performance of the MTEF in line with the three basic indicators of the public expenditure management (PEM). With this end in view, it provides literature review on theoretical concept of the MTEF, the theoretical explanation regarding the relationship between the MTEF and the public expenditure management (PEM). It also examines the empirical studies on the MTEF of different countries to reveal the different criteria/ conditions that were set to assess the role of the MTEF in promoting the efficiency and effectiveness of public expenditure. Finally it brings together some criteria that will be used to develop the analytical framework to assess the impact of the MTEF on education and health budget (the title of the dissertation) in Bangladesh. 2.1 The Theoretical Background 2.1.1 Concept of the MTEF The MTEF (Medium Term Expenditure Framework) is defined as an approach ‘designed specially to link planning, which has a medium term outlook, with the annual budget, and, as a consequence, to link budgetary expenditure more systematically with socially desired outcomes, (ADB, 2002, p-1). On the whole, MTEF integrated policy, planning and budgeting and allows expenditure to be ‘driven by policy priorities and disciplined by budget realities (World Bank, 1998). So, MTEF is a multiyear rolling expenditure under which a realistic projection of revenue receipts and expenditure is prepared over a three to five year period and spending priorities are set with reference to the Governments policy objectives and thus it provides a clear foundation for the annual budget. Under the MTEF, over a three year period, first year estimate is considered as budget, two outer years estimates as indicative figures. In the following year, the MTEF rolls forward and a new forward estimate for an other year is added. After necessary adjustment, the second year forward estimate is considered as budget as it becomes first year for the next MTEF. Figure 2.1: Rolling Principle of the MTEF (Source: ODI, 2002, p- 5) In many countries, the MTEF is implemented at two key levels, at the central government level which is referred to as the ‘top- down approach and at the spending agencies level, referred to as the ‘bottom- up approach (World Bank, 1998, p-40). In the ‘top- down approach, Ministry of Finance identified the ‘resource envelops (which is referred to as the indicative expenditure ceiling) and allocate those to the line ministries in view of their relative need. In the ‘bottom- up approach, line ministries or sectoral agencies formulates and estimates the actual and projected costs of the spending programmes within the spending limit for the medium term by examining the sectoral objectives and activities (Houerou and Taliercio, 2002, p-2). Table 2.1 Seven Stages of the MTEF Source: Adapted;[PEM Handbook (World Bank, 1998a: 47-51) cited in N.Oyugi. L, (2008, p-3, 4) and Houerou and Taliercio, (2002, p-3)] Annexure- 2 2.2 A General Overview of the Empirical Literature Many developed countries like UK, Australia, New Zealand, Austria, Sweden, Germany, USA are practising multi- year budgeting. The MTEF of UK maintains a firm consistency in controlling public expenditure having ‘focused on outcomes and efficient service delivery (HM Treasury, 2007). World Bank, DFID and other Aid agencies influenced many developing and transitional countries to initiate series of reforms (Wyane, 2005). The MTEF is introduced in more than 25 countries in Asia, Africa (e.g., Benin, Cameroon, Burkina Faso, Ghana, Malawi, Rwanda, South Africa, Tanzania, Uganda, Namibia, Kenya, Zambia) Latin America and Eastern Europe. In Asia, MTEF has already been introduced in Nepal, Pakistan and Bangladesh. Almost all the developing countries have 3 years MTEFs except Mozambique (6 years) and South Africa (4 years) (Houerou and Taliercio, 2002). Most of the countries integrated development and non- development expenditure in the MTEF except Guinea and Rwanda (only recurrent budget). In Kenya, Tanzania, South Africa, Uganda, civil society representatives participate in Sector Expenditure Frameworks (SEFs) preparing process (Houerou and Taliercio, 2002). Suriyaarachchi (2004) argued that Nepal has improved in development budget formulation and execution after intro ducing MTEF in Fiscal Year 2002-03. Assessments on the MTEF in many African countries are carried out considering the organizational change and procedural change rather than assessing the progress achieved through implementing the MTEF (Bird, A, 2003; Holmes and Evans, 2003; Jennes. G, 2003; Carlier. K, 2003; Short. J, 2003) 2.3 The MTEF and the public expenditure management (PEM) ADB (2001) suggested that ‘Public expenditure management (PEM) is the latest approach that emphasizes on achieving the desired policy outcomes through public sector budgeting. PEM considered expenditure as an instrument to produce optimal output whereas conventional budgetary process sets focus on spending as an input. PEM emphasizes on three main outcomes in budgetary system. The objectives of PEM are to maintain fiscal discipline, to promote allocative efficiency and to enhance operational efficiency (World Bank, 1998a cited in DFID, 2001, p-8). Allen Schick (1998, p-2) describes three basic elements of PEM as follows: 1. Aggregate fiscal discipline , which usually means that the public spending limit should not exceed the total revenue (spending in accordance with the affordability) and should be ‘sustainable over the medium-term and beyond (ibid, p-2). 2. Allocative efficiency , which refers to the condition that public spending, should be prudent. ‘Expenditure should be based on government priorities and it should be directed to the most beneficial programmes and activities that ultimately increase the effectiveness of the budgetary spending. It means that the allocation is better targeted shifting from ‘lesser to higher priorities and from less to more effective programs (ibid-2). 3. Operational efficiency means getting the best value of public money. Quality of the public services should be reasonable and it should be given at the lowest possible cost (ADB, 2001, p-1). According to Fjeldstad et al. (2004 p.2) cited in N.Oyugi. L, (2008, p- 2), The objectives of MTEF are : to maintain ‘aggregate fiscal discipline to promote ‘resource allocation to strategic priorities (allocative efficiency) to enhance ‘efficient and effective use of resources (operational efficiency) It suggests that there is a close connection between MTEF and PEM objectives. 2.3.1The MTEF and improvement in effectiveness and efficiency of budgetary expenditure ADB suggested that ‘the MTEF is one mechanism through which a PEM system can be operationalzed (2001- issue- 2, p-4). So, the improvement in effectiveness and efficiency of budgetary expenditure depends on to what extent the MTEF is sought to strengthen the PEM objectives. Fiscal discipline, allocative efficiency and operational efficiency are ‘interdependent (DFID, 2001). Allen Schick (1998, p. 2) argued that the lack of fiscal discipline leads to improper resource allocation and operational inefficiency. So, fiscal discipline can promote both allocative and operational efficiency. Fiscal discipline is maintained when implementation of budget ensures that actual expenditure does not exceed the spending limit and even when the increase in spending (% as a share of GDP) is consistent with the increase in revenue each year (Schick, A, 1998, p. 12, 67). So, two criteria- conformity with the spending limit and consistency in the trend of sectoral expenditure influence fiscal discipline. Allocative efficiency means the ability of the government to distribute resources considering the effectiveness of public programmes in accordance with its strategic objectives or policy planning. It is the capacity to reallocate resources from old to new priorities and from less to more effective programmes. Delegation of major allocative responsibility to sectoral ministries also promotes allocative efficiency (ibid, p. 17, 90). So, four criteria- change in sectoral allocation, strategic resource allocationlinked to policy planning, spending in priority areas/ programmes anddevolution of allocative responsibilities to line ministries influence allocative efficiency. MTEF offers greater predictability of fund since it establishes ‘baseline budgets for the upcoming years (while one year budget cannot) and thus improves operational efficiency (ADB, 2001- issue- 2, p-4). World Bank (1998) argues that predictability of funds (assurance to spending agencies as to when and where the resources will be available) is one of the major factors that influence operational efficiency (p- 28). Operational efficiency put emphasis on output and outcomes rather than input (Schick, A, 1998, p. 21). So, two criteria- greater predictability of public funds and progress in achieving output targets influence operational efficiency. 2.3.2 Evidence from Cross-country Studies This is to explore what criteria/ characteristics are set out by different countries to assess the impact of MTEF with respect to three levels of PEM outcomes. However, most of the studies are found to use one or more of the following criteria. Reducing fiscal deficit Since the adoption of the MTEF, Malawi reduced its fiscal deficit from 15% of GDP to 5% in the 1998/ 1999 budgetary- year and a further reduction to 4% in 1999/ 2000. So, it achieved some progress in reducing fiscal deficit (Anipe et al., 1999, p. 15). Adequate information availability In Cambodia, the MTEF was introduced in two ministries (education and health) and while preparing the sectoral expenditure for 2003-2005, health ministry had inadequate information regarding user fees and other payments, which in turn prevented from making a realistic estimation (Dom et al., 2003, p. 30). Above two criteria are concerned with aggregate fiscal discipline. Strategic resource allocation linked to policy, planning In case of Ghana, the MTEF was adopted in 1999; the resources were allocated in line with government development policy documents, e.g. ‘Ghana Vision 2020 (Anipa et al., 1999, p-21). The MTEF in Uganda achieved a considerable success in integrating the PEAP (‘Poverty Eradication Action Plan) within the Budgetary process and expenditure planning is carried out considering PEAP at the central and local government levels (Bird A, 2003). Change in sectoral allocation In Uganda, actual spending increased from 19.8% of total expenditure to 26.9% in 1998/99 (Bevan and Palomba, 2000, p. 18). In Benin, budgetary allocations had increased significantly to the ‘priority sector since 1998. Recurrent budget for education was 27.4% of the total expenditure in 1998 and it increased to 39.5% in 2001 and capital budget was 4.5% of the total expenditure in 1998 and that increased enormously to 40.7%. Allocations towards the health budget have increased from 1.4 percent of GDP in 1998 to 2.3 percent of GDP in 2001 (Carlier K, 2003, p. 23-24). Greater responsibility to line ministries The MTEF in Ghana promoted allocative efficiency as line ministries enjoying ‘greater responsibility for allocating resources to priority activities which ensures effective and efficient use of limited resources (Anipa et al., 1999, p- 7). Improvement in budgetary classification The MTEF in Malawi promotes allocative efficiency as it improved in budgetary classification by adopting activity- based budgeting that reviews the on- going programmes and creates sub- programmes to specify the activities (ibid, p. 12-25). From the above analysis it is evident that three criteria- strategic resource allocation linked to policy planning, change in sectoral allocation, improvement in budgetary classification are relevant to allocative efficiency and greater responsibility to line ministries is concerned with both allocative and operational efficiency (discussed in section 2.1.3). Fund predictability In Malawi, the allocation for health sector was 20.7% of the total development budget for the 1996/1997 fiscal year, but the actual release was only 3.6% of the development expenditure (Oxford Policy Management, 2000, p. 4). Reducing the deviation between budget and actual spending In case of Tanzania, from 1995 to 1998, the average BDI (Budget Deviation Index) was equal to 33% before introducing the MTEF and after the MTEF since 1999, it was reduced to 25% (Houerou and Taliercio, 2002, p. 21). Improvement in accountability and transparency In Namibia, MTEF has improved transparency as the framework explains inputs required for all programmes and expected outcomes. It also increased accountability because public has the access to the information regarding government priorities set in the medium term framework (N Oyugi L, 2008, p-12). The above two criteria are relevant to operational efficiency as discussed earlier. 2.4 Findings The country assessments of the MTEF indicate that all types of criteria/ conditions were not used by any single country to assess the impact of the MTEF. From the above analysis, the following key criteria/ principles can be brought together which appear to be important to examine the MTEF outcomes at three levels- fiscal discipline, allocative and operational efficiency. In the next chapter, the changes due to adopting the MTEF in the education and health budget will be examined. Asian development bank institute, 2005 http://www.adbi.org/files/2005.09.05.cpp.budget.classification.pdf Chapter 3: Changes due to the MTEF in Bangladesh This chapter addresses the first research question of Chapter- 1 which refers to the changes took place because of the MTEF introduced in the education and health budget. For this, it focuses on the budgetary reforms in Bangladesh. Experiences with the introduction of the MTEF are discussed and finally the changes due to adopting the MTEF (the traditional versus the MTEF) have been analysed. 3.1 Why the MTEF in Bangladesh Before the MTEF, budgets were prepared by making arbitrary incremental changes to the preceding years allocation. No strategic planning was present in budgetary process, non- development and development budgets were prepared separately and emphasis was laid on input rather than output (BCAS-2006/09, p. 53). Therefore, to enhance the credibility of the budget, to face the strategies set out in the PRSP with the macroeconomic framework and to ‘create a more disciplined, dynamic, efficient and modern public financial management system (MTBF-05/06, p. i), the MTEF was introduced. 3.2 Budgetary reforms and the MTEF in Bangladesh Bangladesh is a densely populated developing country which has a less public spending as a share of GDP (Socio- economic indicators are shown in Appendix- 1 ). For the effective and efficient use of scant resources, important reforms have been carried out in public financial management since 1990s. According to World Bank, ‘Bangladesh re-emerged as a democracy, successfully restarted reforms on critical fronts while ensuring sound macroeconomic and fiscal management (BCAS, 2006/09, p-9). A committee on Reforms in budgeting and Expenditure Control (CORBEC) was formed in March 1990 and this committee identified a number of problems including budgeting procedure, budget classification, budget presentation, separate non- development (recurrent) and development (investment) budgets preparation, emphasis laid on the inputs rather than outputs, etc. It was also difficult to identify the flow of funds as non- development and development budgets used separate classification systems and that was not computerized. To implement the recommendation of CORBEC, RIBEC (Reform in Budgeting and Expenditure Control) was formed with the financial suppo rt from the DFID (Department for International Development). A detailed operational unit wise and economic code wise classification chart was prepared and published, financial rules and reporting systems were upgraded and large number of Government officials were trained through the RIBEC from Ph