British Airways Case Study - 1363 Words

Introduction In this individual assignment, reading material including the different ways companies innovate, re-energize a mature organization, and change corporate culture provide the basis for analyzing British Airways’ (BA) transformation and the difficulties encountered in making an organizational change. Identification of critical factors leading to British Airways successful transformation as well as steps, sequence, and risks taken to transform the organization and personal assessment is provided for this case study. Connection of British Airways case to re-energizing the mature organization How was the accompanying reading, â€Å"Re-Energizing the Mature Organization,† germane to the case on British Airways? The re-energizing the†¦show more content†¦Through bureaucracy bashing, the company focused on removing work that added little value to customer satisfaction. This was accomplished through establishment of the Putting People First (PPF) program that also resulted in employee empowerment as the program was aimed to benefit employees as individuals first leading to a feeling of respect and belief they were part of the change moving forward. The focus on continuous improvement included creative financing, marketing, and a movement towards privatization and globalization. Lastly, addressing organizational cultural was one of BA’s biggest challenges in re-energizing through change. British Airways challenges to making change What was life like at the â€Å"old† British airways? What was difficult about making change? Prior to the marketing campaign touting BA as â€Å"The World’s Favorite Airline,† BA was often referred to as â€Å"bloody awful.† The company suffered from poor performance, inefficiencies, an older fleet, and substantial financial losses. Following passage of the Civil Aviation Act in 1971, BA assumed control of two state-run airlines, British European Airlines (BEA) and British Overseas Airways Corporation (BOAC), under the name British Airways. However, BEA and BOAC operated autonomously with separate boards, chairman, and chief executive officer that provided a challenge in making change. The level ofShow MoreRelatedBritish Airways Case Study1409 Words   |  6 Pageschange corporate culture, provide the basis for analyzing British Airways’ (BA) transformation and the challenges encountered in making an organizational change. Identification of critical factors leading to their successful transformation as well as the steps, sequence, and risks taken to transform the organization and personal assessment of what could have been done differently is provided in this case study. Connection of British Airways case to re-energizing the mature organization The re-energizingRead MoreBritish Airways Case Study3091 Words   |  13 PagesIntroduction British Airways is the one of the largest airline companies, and the passengers carry overall in the fifth largest in the world. Most of plans are stay in Heathrow Airport which is the highest of main international airport. The British Airways has a long history and airlines cover 133 countries; include 373 airplanes. The BA Company includes 50,086 workers to be in the service, which is one of the largest employers and employees in the United Kingdom. British Airways (BA) is basedRead MoreBritish Airways Case Study2190 Words   |  9 PagesOrganizational Behavior Final Case Analysis: Done By:       Table of Contents: 1.Introduction†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦3 What the company does?.....................................................................................................3 How it was developed historically?......................................................................................3 SWOT analysis†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦4 Strengths†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Read Morebaggage blunders (british airways) CASE STUDY Essay2145 Words   |  9 Pagesï » ¿BAGGAGE BLUNDERS A Case Study Presented to the Faculty of the Department of Business and Management College of Management and Economics of the Visayas State University ______________________________________________________ In Partial Fulfillment of the Requirements in MGMT 101: Concepts and Dynamics of Management ______________________________________________________ Submitted by: GROUP III Acabado, Rona Jane E. Alpar, Florie Mae A. BiscoRead MoreCase Study British Airways Swipe Card Debacle Essay1585 Words   |  7 PagesAbstract In the case study, The British Airways Swipe Card Debacle, British Airways (BA) introduced ‘a system for electronic clocking in that would record when they [employees] started and finished work for the day†¦ which was a unilateral decision by BA to introduce the swipe card, and a lack of adequate consultation with affected staff† (Palmer, Dunford, Akin, 2009, pp. 239 amp; 240). As a result, the BA staff held a twenty-four hour wildcat strike which caused BA to cancel its services, leavingRead MoreA Comparative Study of Mergers and Acquisitions Within the Eu Aviation Sector: a Case Study of British Airways and Iberia.1575 Words   |  7 PagesA Comparative Study of Mergers and Acquisitions within the EU Aviation Sector: A Case study of British Airways and Iberia. Key words: Mergers and Acquisitions, Aviation Sector, EU, Network Carriers, Strategies. Aims of Research: The Aim of this research is to address the following issues: 1) What are the main motives for engaging in Merger and Acquisition activity for Aviation Market? Did they reach their goals? 2) What are the consequences of Airlines Company’s merger and acquisitionRead MoreEssay about Changing the Culture at British Airways1074 Words   |  5 PagesChanging the Culture at British Airways Changing the Culture at British Airways The British Airways case study was a very interesting case to read. It proves that not all people can be leaders, especially the chairman, board and chief executives of British European Airways (BEA) and British Overseas Airways Corporation (BOAC.) According to the case study of British Airways, the life at the â€Å"old† British Airways was â€Å"bloody awful† (Changing the Culture of British Airways, 1990, p. 1). ThereRead MoreThe Organizational Change And Development Of A Travel And Tourism Organization933 Words   |  4 PagesDEVELOPMENT OF A TRAVEL AND TOURISM ORGANIZATION: CASE STUDY OF BRITISH AIRWAYS It is essential that an organization undergoes growth and development, Organizational change and innovation. Many investigators have formulated theories related to change management once they begin to understand the importance of organizational change and innovation. This theories have critically been analyzed with an example of several cases studies e.g. British Airways. Another analysis carried out is the comparisonRead MoreRyanair As A Low Cost Airline1238 Words   |  5 Pagescost airline, which delivered services equivalent to that of British Airways and Aer Lingus. In terms of service quality, they positioned themselves in the same category as the aforementioned airlines, but at the same time, charging a relatively low price when compared to British Airways and Aer Lingus. Their strategy was to deliver first rate/ good quality customer services and offer meals and amenities comparable to that of British Airways and Aer Lingus. The second strategy was to charge a singleRead Mo reUsair - British Airways Alliance1312 Words   |  6 Pagesthe case study: â€Å"British Airways – USAir: Structuring a Global Strategic Alliance†. The project fulfills partial requirements of the Strategic Management course of Harvard Summer School and has been completed by a team of two students. The case is about alliance of two airline companies, namely British Airways and USAir. In this case, we are focused on investigating the alliance process in detail by using strategic management tools and techniques. All relevant data to carry out the case study

Power of Cash Flows Free Essays

string(93) " local Nevada market to four properties in three states—Nevada, Louisiana and Mississippi\." The Power of Cash Flow Ratios EXECUTIVE SUMMARY CASH FLOW RATIOS ARE MORE RELIABLE indicators of liquidity than balance sheet or income statement ratios such as the quick ratio or the current ratio. LENDERS, RATING AGENCIES AND WALL STREET analysts have long used cash flow ratios to evaluate risk, but auditors have been slow to use them. SOME CASH FLOW RATIOS COMPARE THE RESOURCES A company can muster with its short-term commitments. We will write a custom essay sample on Power of Cash Flows or any similar topic only for you Order Now OTHER CASH FLOW RATIOS MEASURE A COMPANYS ability to meet ongoing financial and operational commitments. THERE IS NO CONSENSUS ON THE DEFINITION OF NET free cash flow, although the authors suggest taking off-balance-sheet financing into account. AUDITORS CAN USE THE INSIGHTS uncovered by cash flow ratios to spotlight potential problem areas, thus helping them plan their audits more effectively. JOHN R. MILLS, CPA, PhD, is a professor in the Department of Accounting and CIS at the University of Nevada, Reno. His e-mail address is www. mills@scs. unr. edu1. Mills experience includes auditing and consulting in the gaming industry. JEANNE H. YAMAMURA, CPA, PhD, is an assistant professor in the accounting and CIS department at the university’s Reno campus. Her e-mail address is www. yamamura@unr. edu2. Yamamura worked as an auditor overseas, including a stint in Papua, New Guinea. To fully understand a company’s viability as an ongoing concern, an auditor would do well to calculate a few simple ratios from data on the clients cash flow statement (the statement of sources and uses of cash). Without that data, he or she could end up in the worst possible position for an auditor—having given a clean opinion on a client’s financials just before it goes belly up. When it comes to liquidity analysis, cash flow information is more reliable than balance sheet or income statement information. Balance sheet data are static—measuring a single point in time—while the income statement contains many arbitrary noncash allocations—for example, pension contributions and depreciation and amortization. In contrast, the cash flow statement records the changes in the other statements and nets out the bookkeeping artifice, focusing on what shareholders really care about: cash available for operations and investments. For years, credit analysts and Wall Street barracudas have been using ratios to mine cash flow statements for practical revelations. The major credit-rating agencies use cash flow ratios prominently in their rating decisions. Bondholders—especially junk bond investors—and leveraged buyout specialists use free cash flow ratios to clarify the risk associated with their investments. That’s because, over time, free cash flow ratios help people gauge a company’s ability to withstand cyclical downturns or price wars. Is a major capital expenditure feasible in a tough year? If the last time total cash got a hair below where it is now the company’s capital structure had to be revamped, the auditor should treat the deficient value like a loud buzzer. Many auditors and, to a lesser extent, corporate financial managers have been slow to learn how to use cash flow ratios. In our experience, auditors traditionally use either a balance sheet or a transaction cycles approach. Neither approach emphasizes cash or the statement of cash flows. While auditors do use the cash flow statement to verify balance sheet and income statement accounts and to trace common items to the cash flow statement, their use of ratios for cash-related analysis has been limited to the current ratio (current assets/current liabilities) or the quick ratio (current assets less inventory/current liabilities). According to an informal survey of Big 5 and other national accounting firms, even now their audit procedures have not changed in ways that take advantage of the information presented in the cash flow statement, even though that statement has been required for over a decade. The value of cash flow ratios was evident in the collapse of W. T. Grant. Traditional ratio analysis performed during the annual audit did not reveal the severe liquidity problems that resulted in a bankruptcy filing shortly thereafter. While W. T. Grant showed positive current ratios as well as positive earnings, in fact it had severely negative cash flows that rendered it unable to meet current debt and other commitments to creditors. Educators have not been emphasizing the cash flow statement either. Auditing textbooks commonly include only ratios based on the balance sheet and income statement with little or no discussion of cash ratios. The next generation of auditors needs to learn how to use cash flow ratios in audits because such measures are becoming increasingly important to the marketplace. Investors and others are relying on them. The cash flow ratios we find most useful fall into two general categories: ratios to test for solvency and liquidity and those that indicate the viability of a company as a going concern. In the first, liquidity indicators, the most useful ratios are operating cash flow (OCF), funds flow coverage (FFC), cash interest coverage (CIC) and cash debt coverage (CDC). In the second category, ratios used to assess a company’s strength on an ongoing basis, we like total free cash (TFC), cash flow adequacy (CFA), cash to capital expenditures and cash to total debt. Lenders, rating agencies and analysts use all of these. Auditors should know when and how to use them, too. The gaming industry expanded to 12 states from 2 between 1989 and 1995. During that time, many of the traditional casino corporations managed asset growth rates of 200% and more. Rapid expansion led to major problems, including bankruptcy, when revenues did not meet projections. As this examination of two gaming companies shows, cash flow analysis can help avoid business meltdowns, providing auditors and clients with an additional level of comfort in both planning the audit and evaluating the strength of the going concern. Boomtown was a relatively young but successful Nevada company that went public in October 1992, with assets of $56 million. By 1995, its assets were up to $239 million, dropping to $206 million in 1996. Company operations grew from one casino in the local Nevada market to four properties in three states—Nevada, Louisiana and Mississippi. You read "Power of Cash Flows" in category "Papers" In the same period, Circus Circus was one of the largest and most profitable gaming corporations in the industry. Its properties, also all in Nevada at that time, included the Excalibur and the original Circus Circus in Las Vegas, the Colorado Bell and Edgewater in Laughlin and the Circus Circus in Reno. The company grew from total assets of $783 million in 1992 to over $2. 2 billion by 1996, including acquisitions. By the end of 1996, it had operations in three states—Nevada, Louisiana and Mississippi. Liquidity Assessment Exhibit 13, shows a variety of ratios calculated from the financial statements of Boomtown and Circus Circus. The figures cover the period from 1992 to 1996, although Circus Circus was on a January 31 fiscal year while Boomtown used a fiscal year ending September 30. Look at the lines for the current ratio (current assets/ current liabilities) and the quick ratio (current assets less inventories/current liabilities) for each. Viewed through the lens of these traditional balance-sheet-based ratios, Boomtown appears to be stronger financially than Circus Circus. But this was not the case. Boomtown’s current ratio was frequently well over 1. 00, even soaring to 4. 4 in 1993, while Circus Circus current ratio never strayed over 1. 32. Boomtown was able to maintain a higher quick ratio as well. Over the five years in question, Boomtown’s current ratio showed fairly consistent improvement, a trend that would be reassuring to most auditors. Although the balance sheet ratios for both companies are fairly low, that is normal for the gaming industry. Casinos just don’t carry much inventory—mostly perishable foods and the like. And gaming companies carry practically no receivables because gaming generally is a cash business. The traditional measures don’t address operating cash flows or cash interest coverage directly, but auditors can use cash flow ratios to answer questions about their clients liquidity—Are these companies generating enough cash to cover their current liabilities? How many times does cash flow from operations cover interest expense? Running a Casino†¦ Image Boomtown’s cash interest coverage was considerably weaker than that of Circus Circus, except in 1993, when Boomtown had no long-term debt. Circus Circus consistently maintained cash in excess of 5 times debt. Now look at the line for OCF. Over the interval shown, the Circus Circus OCF ratio slipped under 2. 00 only once, meaning that it generated enough cash to cover its current liabilities twice over—and even improved on that despite a rapid growth rate. The company’s cash interest coverage ratio also was consistently high. Boomtown’s cash flow ratios, however, might surprise an auditor relying solely on balance sheet ratios. Its OCF was consistently weaker than that of Circus Circus, even slipping into a negative position in 1994. Once Boomtown’s OCF slipped below 1. 00, it was not generating enough cash to meet its current commitments. Accordingly, it had to find other sources for financing normal operations. An auditor relying solely on the quick and current ratios in this instance would have missed that important point. An auditor who bothered to calculate two other cash flow ratios—FFC and cash/current debt—would have gotten even more remarkable results. Because Circus Circus carried very little current debt, its cash covered current debt well over 175 times in every year, while Boomtown’s cash didn’t even cover current debt in 1994, and its cash/current debt coverage was in the single digits for three of the other four years. More remarkably, Boomtown’s FFC went negative in 1994 and again in 1996 and was consistently weaker than that of Circus Circus in every year. Accordingly, the conclusions an auditor might draw after looking at the cash flow ratios might differ sharply from his or her opinion based solely on balance sheet ratios. Going-Concern Analysis Traditionally, auditors have used the balance-sheet-based debt-to-equity ratio (total debt/total equity) and the times-interest-earned (EBIT/annual interest payments) ratio to examine a company’s longer-term financial health (see exhibit 24). These measures do provide one perspective on the company’s ability to carry its long-term debt obligations and its solvency. The traditional solvency ratios reveal big differences between Circus Circus and Boomtown. Although both companies expanded considerably in 1993 and 1994, the effects on each corporation’s financial position were drastically different. Circus Circus showed a downward trend in its traditional debt-to-equity ratio, an indicator of an increasingly strong balance sheet, while maintaining a fairly stable times-interest-earned ratio. After 1992, Boomtown’s debt-to-equity ratio rose steadily, showing increasing reliance on outside borrowing. Its times-interest-earned ratio also weakened, even going negative twice. Cash flow ratios, however, provide an even clearer picture of each company’s financial solvency. Consider the lines for TFC, two for each company—one based on actual capital expenditures and the other on estimated maintenance spending. Negative figures in 1993 reveal that Circus Circus needed to go outside to raise cash for capital expenditures in both 1993 and 1994. However, using a capital maintenance approach, figures consistently greater than 1. 0 show the company was clearly generating enough cash flow from operations to maintain its normal operations and to provide at least some funds for additional growth. But 1993 and 1994 were years when total assets grew at 21% and 37%. Few companies could expand at this rate solely with internally generated funds from operations. Analysis of Boomtown’s cash flow ratios unveils a very different kind of growth. Its TFC (maintenance) ratio slipped below 1. 0 for three years in a row. An auditor who notices that Boomtown wasn’t able to fund normal operations from internal sources for three consecutive years has heard an alarm; however, the noise from the TFC (actual) ratio is even louder. Boomtown did not manage any of its growth from internally generated cash—it’s TFC (actual) ratio never got above 1. 00! That can’t go on forever. Now look at the total debt ratio line and the two cash flow adequacy (CFA) ratio lines for each company. The total debt ratio, to which credit-rating agencies and loan officers pay close attention, was quite stable for Circus Circus throughout. Boomtown’s, which started out weaker, took one wild fluctuation way up and then collapsed. Looking at the CFA ratios, once again Circus Circus exhibits more than adequate funds for maintenance and sufficient internally generated cash for new capital investments in all but one year. The one exception was attributable to rapid growth. Boomtown’s spectacularly negative ratios shout the company’s need for substantial outside funding. Turning to the capital expenditures ratio lines, Boomtown was unable to generate enough cash internally to even maintain plant and equipment in 1994, despite more than doubling its total assets. Circus Circus, on the other hand, had plenty of cash for maintenance throughout and needed outside cash to fund growth only for a two-year interval. In fact, Boomtown’s cash ratios do indeed reveal that drastic changes would have been needed for this company to survive on its own. It didn’t. Boomtown was acquired by Hollywood Park, Inc. , on June 30, 1997. Boomtown also disposed of its Las Vegas property, which had generated continuing operating losses. Despite its earlier promise, Boomtown ran out of cash. Traditional ratios would not have provided sufficient warning, but cash flow ratios would have. Auditors who employ cash flow ratios to assess corporate liquidity and viability can help their clients spot trouble in time to take corrective action. HOW TO TEST SOLVENCY WITH CASH FLOW RATIOS Creditors and lenders began using cash flow ratios because those ratios give more information about a company’s ability to meet its payment commitments than do traditional balance sheet working capital ratios such as the current ratio or the quick ratio. When a loan officer evaluates the risk she is taking by lending to a particular company, her greatest concern is whether the company can pay the loan back, with interest, on time. Traditional working capital ratios indicate how much cash the company had available on a single date in the past. Cash flow ratios, on the other hand, test how much cash was generated over a period of time and compare that to near-term obligations, giving a dynamic picture of what resources the company can muster to meet its commitments. Operating cash flow (OCF) Cash flow from operations Current liabilities Company’s ability to generate resources to meet current liabilities Operating cash flow (OCF) ratio. The numerator of the OCF ratio consists of net cash provided by operating activities. This is the net figure provided by the cash flow statement after taking into consideration adjustments for noncash items and changes in working capital. The denominator is all current liabilities, taken from the balance sheet. Operating cash flow ratios vary radically, depending on the industry. For example, the gaming industry generates substantial operating cash flows due to the nature of its operations, while more capital-intensive industries, such as communications, generate substantially less. The gaming giant, Circus Circus, exhibited an OCF of 1. 37 for fiscal year l997 while the media king, Gannett, produced an OCF of 1. 148 for a similar period. In order to judge whether a company’s OCF is out of line, an auditor should look at comparable ratios for the company’s industry peers. (For further details, see the case study5. ) Funds flow coverage (FFC) EBITDA (Interest + Tax-adjusted* debt repayment + Tax-adjusted* preferred-dividends) Coverage of unavoidable expen ditures *To adjust for taxes, divide by the complement of the tax rate. Funds flow coverage (FFC) ratio. The numerator of the FFC ratio consists of earnings before interest and taxes plus depreciation and amortization (EBITDA), which differs from operating cash flow. Operating cash flow includes cash paid out for interest and taxes, which EBITDA does not. The FFC ratio highlights whether the company can generate enough cash to meet these commitments (interest and taxes). Accordingly, interest and taxes are excluded from the numerator. The denominator consists of interest plus tax-adjusted debt repayment plus tax-adjusted preferred dividends. To adjust for taxes, divide by the complement of the tax rate. All of the figures in the denominator are unavoidable commitments. An auditor can use the FFC ratio as a tool to evaluate the risk that a company will default on its most immediate financial commitments: interest payments, short-term debt and preferred dividends (if any). If the FFC ratio is at least 1. 0, the company can meet its commitments—but just barely. To survive in the long run, any company must have enough cash flow to maintain plant and equipment. To be really healthy, it should be able to reinvest cash for growth. Accordingly, if a company’s FFC is less than 1. , the company must raise additional funds to meet current operating commitments. To avoid bankruptcy, it must keep raising fresh capital. Cash interest coverage Cash flow from operations + Interest paid + Taxes paid Interest paid Company’s ability to meet interest payments Cash interest coverage ratio. The numerator of cash interest coverage consists of cash flow from operations, plus interest p aid plus taxes paid. The denominator includes all interest paid—short term and long term. The resultant multiple indicates the company’s ability to make the interest payments on its entire debt load. A highly leveraged company will have a low multiple, and a company with a strong balance sheet will have a high multiple. Any company with a cash interest multiple less than 1. 0 runs an immediate risk of potential default. The company must raise cash externally to make its current interest payments. The cash interest coverage ratio is analogous to the old-fashioned coverage ratio (also known as the interest coverage ratio). However, where the numerator of the coverage ratio begins with earnings from the income statement, the numerator of the cash interest coverage ratio begins with cash from the cash flow statement. Cash interest coverage gives a more realistic indication of the company’s ability to make the required interest payments. Earnings figures include all manner of noncash charges—depreciation, pension contributions, some taxes and stock options. A company with a low income-based coverage ratio may actually be able to meet its payment obligations, but the mask of noncash charges makes it difficult to see that. A cash-based coverage ratio gives a direct look at the cash available to pay interest. Cash current debt coverage Operating cash flow—cash dividends Current debt Companys ability to repay its current debt Cash current debt coverage ratio. The numerator consists of retained operating cash flow—operating cash flow less cash dividends. The denominator is current debt—that is, debt maturing within one year. This is, again, a direct correlate of an earnings current debt coverage ratio, but more revealing because it addresses managements dividend distribution policy and its subsequent effect on cash available to meet current debt commitments. As with the cash interest coverage ratio, the current debt ratio indicates the company’s ability to carry debt comfortably. The higher the multiple, the higher the comfort level. But like most other ratios, as long as the company is not insolvent, the appropriate level varies by industry characteristics. HOW TO USE CASH RATIOS AS A MEASURE OF FINANCIAL HEALTH Beyond questions of immediate corporate solvency, auditors need to measure a client’s ability to meet ongoing financial and operational commitments and its ability to finance growth. How readily can the company repay or refinance its long-term debt? Will it be able to maintain or increase its current dividend to stockholders? How readily will it be able to raise new capital? Banks, credit-rating agencies and investment analysts understandably are very concerned with these questions. Accordingly, they have developed several ratios to provide answers to them. Auditors, who are more concerned about full disclosure, can use these same ratios to pinpoint areas for closer scrutiny when planning an audit. Capital expenditure Cash flow from operations Capital expenditures Company’s ability to cover debt after maintenance or investment on plant and equipment Capital expenditure ratio. The numerator is cash flow from operations. The denominator is capital expenditures. A financially strong company should be able to finance growth. This ratio measures the capital available for internal reinvestment and for payments on existing debt. When the capital expenditure ratio exceeds 1. 0, the company has enough funds available to meet its capital investment, with some to spare to meet debt requirements. The higher the value, the more spare cash the company has to service and repay debt. As with all ratios, appropriate values vary by industry. Cyclical industries, such as housing and autos, may show more variation in this figure than noncyclical industries, such as pharmaceuticals and beverages. Also, a low figure is more understandable in a growth industry, such as technology, than in a mature industry, such as textiles. Total debt Cash flow from operations Total debt Company’s ability to cover future debt obligations Total debt (cash flow to total debt) ratio. The numerator is cash flow from operations. The denominator is total debt—both long term and short term. Total cash flow to debt is of direct concern to credit-rating agencies and loan decision officers. This ratio indicates the length of time it will take to repay the debt, assuming all cash flow from operations is devoted to debt repayment. The lower the ratio, the less financial flexibility the company has and the more likely that problems can arise in the future. Auditors should take diminished financial flexibility into account when identifying high-risk audit areas during planning. NET FREE CASH FLOW RATIOS Other ratios that spotlight a company’s viability as a going concern rely on a computation of net free cash flow. Net free cash flow (NFCF) is not yet well defined, although bankers are working to standardize these computations in a way that would facilitate comparisons across companies and across industries. However, at present, there are still many variations of net free cash flow. We propose a total free cash (TFC) ratio developed by First Interstate Bank of Nevada, which uses it to make loan decisions and loan covenant agreements. This TFC computation offers the advantage of incorporating the effects of off-balance-sheet financing—by taking into account operating lease and rental payments. Total free cash (TFC)†  (Net income + Accrued and capitalized interest expense + Depreciation and amortization + Operating lease and rental expense – Declared dividends – Capital expenditures) (Accrued and capitalized interest expense Operating lease and rental expense + Current portion of long-term debt + Current portion of capitalized lease obligations) Company’s ability to meet future cash commitments †  These ratios require computation of the company’s net free cash flows. As net free cash flow can vary by company as well as by industry, the formulas should be considered as recommended rather than absolute. TFC ratio . The numerator of this ratio is the sum of net income, accrued and capitalized interest expense, depreciation and amortization and operating lease and rental expense less declared dividends and capital expenditures. The denominator is the sum of accrued and capitalized interest expense, operating lease and rental expense, the current portion of long-term debt and the current portion of long-term lease obligations. Varying definitions of capital expenditures can confuse the issue. Since different definitions change the value of free cash flow ratios, it is best to be clear about which definition the auditor is using and why it makes sense for a particular purpose. For example, if the auditor is trying to determine whether the company can maintain its present level of operations, the capital spending figure used hould exclude new investments and be limited to the amount of spending required to maintain operating assets. Sometimes maintenance spending is estimated at 2% of total assets, or up to 5% of property, plant and equipment. Industries with very long-lived capital assets may use smaller percentages to estimate maintenance spending. However, if the auditor is more interested in long-term grow th potential, then actual capital expenditures from the cash flow statement should be used. Cash flow adequacy (CFA)†  (EBITDA – taxes paid – interest paid – capital expenditures) (Average annual debt maturities scheduled ver next 5 years) Company’s credit quality †  These ratios require computation of the company’s net free cash flows. As net free cash flow can vary by company as well as by industry, the formulas should be considered as recommended rather than absolute. Cash flow adequacy (CFA) ratio. The numerator is earnings before interest, taxes, depreciation and amortization (EBITDA) less taxes paid (cash taxes) less interest paid (cash interest) less capital expenditures (as qualified above). The denominator is the average of the annual debt maturities scheduled over the next five years. Cash flow adequacy helps smooth out some of the cyclical factors that pose problems with the capital expenditure ratio. It also makes allowances for the effects of a balloon payment. Companies with strong NFCF compared with upcoming debt obligations are better credit risks than companies that must use outside capital sources. Thus, a high CFA means high credit quality. KNOW YOUR CLIENT In order to fully understand where to set the levels at which the cash flow ratios discussed here should trigger deeper investigation, auditors need to understand their clients businesses and the industries in which they operate. As with any other ratio, an auditor should listen to the client’s explanation of any unfavorable changes in cash ratios before becoming too alarmed. An auditor should know what cash concerns are critical to a company’s business. We wouldn’t suggest that a successful audit is just a matter of picking the right equations and plugging in the numbers. There are no absolutes. But properly applied, cash flow ratios can be revealing to auditors during the audit planning stages and can give the auditor a more accurate picture of the company. Auditors must ascertain whether the financial statements are fairly presented in accordance with GAAP. They must be satisfied with the accuracy of the transactions and balances summarized in the four financial statements and the related disclosures. Effective auditors can use cash flow ratios to improve their understanding of the cash concerns critical to the particular company and to plan the audit more effectively. References ^www. mills@scs. unr. edu (www. readability. com) ^www. yamamura@unr. edu (www. readability. com) ^Exhibit 1 (www. journalofaccountancy. com) ^exhibit 2 (www. journalofaccountancy. com) ^case study (www. journalofaccountancy. com) How to cite Power of Cash Flows, Papers

Motivation Essays (1341 words) - Climate Change,

Motivation The need for action is pressing in order to feed the expanding human population, expected to increase by almost one billion people per decade for the next three decades at least. Much of this increase will occur in developing countries in the low-latitude regions of the world. To meet the associated food demand, crop yields will need to increase, consistently, by over 2% every year through this period. Most research on agriculture and climate change has focused on potential impacts on regional and global food production, yet few studies have considered how global warming may affect food security. Food security has been defined as access by all people at all times to enough food for an active, healthy life. (World Bank, 1986). The World Food Summit, convened in 1996 by the Food and Agriculture Organization of the United Nations in Rome, highlighted the basic right of all people to an adequate diet and the need for concerted action among all countries to achieve this goal in a sustainable manner (FAO, 1996). The overall world production changes mask a disparity in response to climate change between developed and developing countries. The largest negative changes are predicted to take place in developing regions, although the extent of decreased production varies greatly from country to country, depending on the specific nature and degree of the local change in climate. The welfare effects of climate change on individual countries will not only depend upon changes in domestic yields, but also on changes in world prices, and the country's relative strength as an exporter and importer. Cereal-price increases resulting from climate-induced reductions in yield are estimated to range between 24 and 145%. The combination of production declines in developing countries and increases in prices due to climate change would increase the number of people at risk of hunger. Furthermore, the results show that adaptation strategies do little to reduce these disparate effects. This is due to the fact that developed countries have many more resources to utilize in adaptation strategies than do developing countries. Globally, both minor and major levels of adaptation can help restore world production levels (especially when CO2 physiological effects are included), compared to climate change scenarios with no adaptation. Low level adaptation largely offsets the negative climate change effects on yields in developed countries, thus improving their comparative advantage in world markets. However, developing countries are predicted to benefit little from this level of adaptation, and may experience a negative change of -9% to -12% in cereal production. More intensive adaptation may effectively eliminate the overall global reduction of cereal yields. Whereas under low adaptation cereal price increases range from 10 to almost 100%, under more intensive adaptation the compounding price responses range from a decline of 5% to an increase of 35%. Not only do preliminary analyses of direct effects of global warming indicate greater adverse effects in poor countries, but these same countries are less able to achieve the changes required for adapting. Less developed countries also tend to have less developed capital markets, with access for farmers being a pervasive and chronic problem for many. High interest rates are common even where loans for the agricultural sector can be obtained. If the needed adjustments require investment, these factors will slow or eliminate farmers' ability to adapt. Alternative assumption -lowering of trade barriers, low economic growth, and low population growth- were tested both in the absence and in the presence of climate change. Without climate change, the combination of full trade liberalization and low population growth would have beneficial effects on the world food system, whereas the effects of low economic growth would be detrimental. With climate change, the beneficial effects of full trade liberalization and low population growth would be equal to or even exceed the otherwise adverse effects of climate change. Therefore, there may be much to be gained from altering the conditions of trade and development as a strategy for helping to mitigate potentially negative climate change impacts. In the absence of such measures, cereal production would tend to diminish, particularly in the developing world, while prices and population at risk of hunger would increase due to climate change. The unequal distributional aspects of climate change are

A summary of Othello by William Shakespeare.

A summary of Othello by William Shakespeare. Act1The setting of this play takes place in Venice. In beginning of the play Iago, a soldier under Othello's command, is arguing with Roderigo, a wealthy Venetian. Roderigo paid Iago a large sum of money to spy on Othello for him. Roderigo wants to take Othello's girlfriend/wife, Desdemona, as his own. Roderigo thinks that Iago has not been telling him enough about Desdemona and that Iago's loyalty is to Othello not him. Iago explains to Roderigo that he hates Othello because Othello promoted Cassio as his officer or lieutenant and not himself as he had expected. Iago and Roderigo decide to cause problems for Othello by informing Brabantio, Desdemona's father, about her relationship with Othello, who is a Moor (an African). This enrages Brabantio, and he sends parties out that night to apprehend Othello. He believes that Othello must have used magic or tricked his daughter into marriage because she would not have gone on her own free will.Othello and Desdemona in Venice, 1850, oil on wood...When Brabantio and his men find Othello, Othello has been summoned by the Duke of Venice to discuss the problems with Cyprus. Brabantio wants justice for what he believes Othello has done to his innocent daughter and agrees to bring this matter in front of the Duke. The Duke is meeting with several senators discussing the problem with their enemy, the Turks. Brabantio complains to the Duke that Othello has bewitched his daughter and has had intimate relations with her. The Duke allows Othello time to explain his relationship with Desdemona. Othello tells everyone how he wooed Desdemona with his stories of his life. Brabantio does not believe the story, so the Duke sends for Desdemona to tell everything. She confirms everything that Othello had said. The Duke advises Brabantio to accept the marriage and then...

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E.B. White's Prophetic 1948 Essay That Anticipated 9/11 In the first paragraph, drawn from the opening of Here Is New York, E.B. White approaches the city through a simple pattern of classification. In the next two paragraphs, taken from the end of the essay, White hauntingly anticipates the terror that would visit the city more than 50 years later. Notice Whites habit of putting keywords in the most emphatic spot in a sentence: the very end. This is an excerpt from Whites piece on New York first published in 1948.  Here Is New York also appears in Essays of E.B. White (1977). Here Is New York There are roughly three New Yorks. There is, first, the New York of the man or woman who was born there, who takes the city for granted and accepts its size, its turbulence as natural and inevitable. Second, there is the New York of the commuter - the city that is devoured by locusts each day and spat out each night. Third, there is New York of the person who was born somewhere else and came to New York in quest of something. Of these trembling cities, the greatest is the last - the city of final destination, the city that is a goal. It is this third city that accounts for New York’s high strung disposition, its poetical deportment, its dedication to the arts, and its incomparable achievements. Commuters give the city its tidal restlessness, natives give it solidity and continuity, but the settlers give it passion. Whether it is a farmer arriving from a small town in Mississippi to escape the indignity of being observed by her neighbors, or a boy arriving from the Corn Belt with a manuscript in his suitcase and a pain in his heart, it makes no difference. Each embraces New York with the intense excitement of first love, and each absorbs New York with the fresh eyes of an adventurer, each generates heat and light to dwarf the Consolidated Edison Company. The city, for the first time in its long history, is destructible. A single flight of planes no bigger than a wedge of geese can quickly end this island fantasy, burn the towers, crumble the bridges, turn the underground passages into lethal chambers, cremate the millions. The intimation of mortality is part of New York now; in the sounds of jets overhead, in the black headlines of the latest editions. All dwellers in cities must live with the stubborn fact of annihilation; in New York, the fact is somewhat more concentrated because of the concentration of the city itself, and because, of all targets, New York has a certain clear priority. In the mind of whatever perverted dreamer might loose the lightning, New York must hold a steady, irresistible charm. Selected Works by E.B. White Every Day Is Saturday, essays (1934)Quu Vadimus? or, The Case for the Bicycle,   essays and stories (1939)One Mans Meat, essays (1944)Stuart Little, childrens fiction (1945)Charlottes Web, childrens fiction (1952)The Second Tree From the Corner,   essays and stories (1954)The Elements of Style,   by William Strunk (1959)Essays of E.B. White (1977)Writings From The New Yorker, essays (1990)

Nurse as Educator Essay Example | Topics and Well Written Essays - 2250 words

Nurse as Educator - Essay Example In today's healthcare arena, the unique holistic perspective of nursing practice mandates that nurses possess the knowledge and skills necessary to educate various audiences in a variety of settings with efficiency and effectiveness. The fundamental ideas related to person as caring and nursing as a discipline and profession that serves as the perspective grounding for the theory Nursing as Caring. A new generic understanding of caring or of discipline and profession, but to communicate some of the ideas basic to Nursing as Caring. Caring is an essential feature and expression of being human. The belief that all persons, by virtue of their humanness, are caring establishes the ontological and ethical ground on which this theory is built. Persons as caring are a value which underlies each of the major concepts of Nursing as Caring and is an essential idea for understanding this theory and its complications. Being a person means living caring, and it is through caring that out being and all possibilities are known to the fullest. The concept of nursing situation is central to every aspect of the theory of Nursing as Caring. ... Being a person means living caring, and it is through caring that out being and all possibilities are known to the fullest. NURSING SITUATION AS THE LOCUS OF NURSING The concept of nursing situation is central to every aspect of the theory of Nursing as Caring. The nursing situation is both repository of nursing knowledge, the context for knowing nursing, shared lived experience in which the caring between the nurse and the one nursed enhances personhood. It is to the nursing situation that the nurse brings self as caring person, expressing unique ways of living, attends to calls for caring, creating caring responses that nurture personhood, in the fullness of aesthetic knowing. The nursing situation comes into being when the nurse actualizes a personal and professional commitment to the belief that all persons are caring. It should be recognized that a nurse can engage in many activities in an occupational role that are not necessarily expressions of nursing. When a nurse practices nursing thoughtfully, that nurse if guided by his or her conception of nursing. The concept of nursing formalized in the Nursing as Caring theory is at the very heart of nursing, extending back into the unrecorded beginnings of nursing and forward into the future. Remember that the nursing situation is a construct held by the nurse, any interpersonal experience contains the potential to become a nursing situation. In the formal sense of professional nursing, the nursing situation develops when one person presents self in the role of offering the professional service of nursing and the other presents self in the role of seeking, wanting or accepting

Consider how the problems of cognitive bias might have influenced this Assignment

Consider how the problems of cognitive bias might have influenced this observation - Assignment Example Blue cars are not the only fats cars in Britain but boy racers have continuously selected them. This phenomenon can be associated with cognitive bias. People around us such as politicians, friends, politicians, expert and salesmen among others tend to influence our decision making by providing information that leads to their expectations (Stanovich & West 2000). This leads us to various forms of bias such as Confirmation, in-group, Gamblers fallacy, observational selection, post-purchase rationalization, and bandwagon effect biases among others other (Campbell 2010). One, two or more cognitive biases could have led boy racers in Britain to choose blue cars. Confirmation bias makes people agree with others who have similar opinion (Campbell 2010). Many people feel better while in the group of others who share same ideas and are insecure while in group of people sharing different ideas. A boy racer feels better while with other racers owning blue race cars. Blue cars may not be the fastest but no one among the racers is able to believe that there are faster cars bearing other color. As long as they keep that opinion that blue cars a re very fast, they will remain to use them. Racers may have also developed in-group bias. This is the bias associated by people who stay close together or those who have similarities in beliefs or origin (Finucane et al 2000). The fact that the boy racers are tied together by their age bracket and their fast driving habits, they have developed a close bond among them which makes them make similar choices as far as cars are concerned. This bias has led to their overestimation of blue cars’ ability to move faster than any other car. Gambler’s fallacy bias may have also influence their choice of blue car (Sides et al 2002). This is a type of bias that leads people to believe that past events influences future outcomes. If in the fast several blue cars won