The last lecture Essay Example | Topics and Well Written Essays - 500 words

The last lecture - Essay Example Randy Pausch was a professor of computer science at Carnegie Mellon University (CMU) in Pittsburgh, Pennsylvania. His speech that he made on September 18, 2007 ‘’ The Last Lecture’’ received worldwide fame and is till now inspiring people to achieve their childhood dreams, to manage their time well and much more. Pausch was diagnosed with cancer in August 2006, he was told that although he has the option of chemotherapy on regular basis but he still has only 3 – 6 months of good health. Pausch seems to be a very optimistic person. Instead of focusing on his terminal illness and getting depressed about it all the time, he decided to contribute back to his college in particular and the community in general. In his talk on Time Management, first he talked about clarifying the goals and objectives of our tasks , dealing with difficult projects that are more time consuming and ugly looking. Pausch talked about using technology in more efficient way so as to save our time, for example, in his talk he discussed about speaker phones that could be of great advantage if we use it for time saving purposes. Setting up proper plans and goals to achieve ones task can help in proper time management. As he says ‘’ failing to plan, is planning to fail’’. One way to do this is to make a to- do list, that will help in keeping a track on where you are and what you are going to do in next few days, months and years. Avoid procrastination; do not do things at the last minute.if u r youngest u will be pampared in first half of ur childhood and in second half u wil be scolded for being spoild child...in ur early teens u have to prove that u r respectful to ur siblings and their in-laws...and in ur adulthood u have to serve them and their kids.....in betwen all this ur designation is no more then a "Chottha" who works as waiter in a hotel or an

Effect of foreign direct investment in the banking sector on the Research Proposal

Effect of foreign direct investment in the banking sector on the Libyan banking industry - Research Proposal Example n investor can â€Å"alter the way of doing business† for the new company including change of name, nature of doing business or the products on offer (Froot26-27). According to Barclay, firms mostly multinationals engage in Foreign Direct Investment with the aim of â€Å"increasing profitability and also increasing its global presence† (101). It is also aimed at minimising risk that is inherent in international business operations. A firm that engages in FDI stands a better chance of surviving in turbulent economic times if it operates in more than one market. A firm may also engage in FDI to â€Å"check the expansion of a local competitor into a new market† (Barclay 77). The aim is to prevent the local competitor from gaining a foothold in a foreign market and then using its newly acquired status and resources to destabilize the local market. Martinez says that Libya is a country in the African continent with a â€Å"fairly complicated history† (81). It has evolved from decades of misrule, revolutions among other national evils. It has for a long time been accused of sponsoring terrorist activities, and was listed among the axis of evil by the American government. Libya was put under the microscope by the United Nations after it was accused of sheltering the suspects accused of the Lockerbie bombing. Consequently it was put under UN sanctions and this severely affected its economy. Today Libya is one of the â€Å"emerging economic giants in Africa courtesy of its abundant oil resources† (Ham 35). It has also normalised its relations with the west and the UN lifted its economic sanctions after the Arab state complied with the set demands. Libya has a population of around 6 million people and a GDP of $21 billion. It has carried out extensive private and public sector reforms to encourage foreign investors so as to spur the local economy. â€Å"The banking industry in Libya is fairly complicated† (Collard 71-72). Due to the embargo that was put by the UN and other

The Warehouse Receipts Law Essay Example for Free

The Warehouse Receipts Law Essay The rate of storage charges, (f) A description of the goods or of the packages containing them, (g) The signature of the warehouseman which may be made by his authorized agent, (h) If the receipt is issued for goods of which the warehouseman is owner, either solely or jointly or in common with others, the fact of such ownership, and (i) A statement of the amount of advances made and of liabilities incurred for which the warehouseman claims a lien. If the precise amount of such advances made or of such liabilities incurred is, at the time of the issue of, unknown to the warehouseman or to his agent who issues it, a statement  of the fact that advances have been made or liabilities incurred and the purpose thereof is sufficient. A warehouseman shall be liable to any person injured thereby for all damages caused by the omission from a negotiable receipt of any of the terms herein required. Sec. 3. Form of receipts. — What terms may be inserted. — A warehouseman may insert in a receipt issued by him any other terms and conditions provided that such terms and conditions shall not: (a) Be contrary to the provisions of this Act. In any wise impair his obligation to exercise that degree of care in the safe-keeping of the goods entrusted to him which is reasonably careful man would exercise in regard to similar goods of his own. Sec. 4. Definition of non-negotiable receipt. — A receipt in which it is stated that the goods received will be delivered to the depositor or to any other specified person, is a non-negotiable receipt. Sec. 5. Definition of negotiable receipt. — A receipt in which it is stated that the goods received will be delivered to the bearer or to the order of any person named in such receipt is a negotiable receipt. No provision shall be inserted in a negotiable receipt that it is non-negotiable. Such provision, if inserted shall be void. Sec. 6. Duplicate receipts must be so marked. — When more than one negotiable receipt is issued for the same goods, the word duplicate shall be plainly placed upon the face of every such receipt, except the first one issued. A warehouseman shall be liable for all damages caused by his failure so to do to any one who purchased the subsequent receipt for value supposing it to be an original, even though the purchase be after the delivery of the goods by the warehouseman to the holder of the original

Technology Available :: essays papers

Technology Available Given that the Fine Arts contain expression such as sculpting, painting, drawing, dance, theater, music, etc, there are countless opportunities for advancement within the curriculum. Having such a broad range of options enables different types of technological support to be introduced to both teachers and students. Theater students use technology constantly, whether it's accessing the computer catalog to find plays for study or on the Internet for reviews or to study about a particular playwright. Technology is a central part of technical theater as well. The lights used to illuminate the stage are computer driven and must be programmed correctly (Marshall, 1998). Visual arts students study laser discs, which are used in teaching and learning art history. They also use the CD-ROM drives in Macintosh-based computers to study color mixing, art forms, current trends in visual arts and art history (Marshall, 1998). There is a computer graphics lab at their disposal, which is used to teach animation and the creation of art. Images downloaded from the Internet are modified and adapted to create original works of art (Marshall, 1998). â€Å"The visual arts students are required to become handy with 35mm copy stand photography as they document everything they do for their portfolios. Working with computer animation and photography are important skills for visual artists in the field today† (Marshall, 1998). Music programs also include advancements, â€Å"for example†¦students learn about acoustics, lighting, seating arrangements, ergonomics, and personal programming in the context of how the built environment affects musical performance. The technology includes building models of spaces to incorporate specific acoustical properties and studying types and colors of lights† (Marshall, 1998). Those are just a few ways in which all Fine Arts categories use technology to improve their class content. The world will keep advancing; it’s up to the educators to take advantage of such learning enhancers. What Practices are Guiding Students in the Fine Arts Today Several educators express a need for a more vigorous and expanded arts curriculum. In schools today, the Fine Arts programs seem to be the underdogs of education. In fact, the arts are an incredibly important and integral part of a students learning and development.

Financial Analysis of Lockheed Martin

A Financial Analysis of Lockheed Martin Corporation Colby Scott LeTourneau University A Financial Analysis of Lockheed Martin corporation The world of finance in today’s market is one of numerous ups and downs. With the global economy in constant flux, it is more important than every for companies to examine their financial status and compare their position to that of the relative market as well as their fellow competitors.In order to better understand the ways in which today’s managers examine their position on the market and evaluate their current value as a company we will examine the financial data of Lockheed Martin Corporation and perform a detailed financial analysis on the company. In this analysis we will examine financial rations of Lockheed Martin and in turn compare these rations to that of fellow market competitors.Upon completion of our financial analysis we will be able to understand the financial position of Lockheed Martin as well as the position of Loc kheed Martin in their respective market, and in turn we will be able to fully comprehend the methods and data used by companies in order to evaluate their company. Before going into an in depth analysis of our company, let us first examine the history behind Lockheed Martin. The Lockheed Martin Corporation traces its roots all the way back to the earliest days of flight. In 1909 aviation pioneer Glenn L.Martin organized a company around a small airplane construction business and transformed it into a major airframe supplier to U. S. military and commercial customers. In 1961 the Glenn L. Martin Company became the Martin Marietta Company after the completion of a merger with American-Marietta Corp. , a leading supplier of building and road construction materials. In 1982, Martin Marietta was subject to a hostile takeover bid by the Bendix Corporation which bought the majority of Martin Marietta shares and in effect owned the company.However, Martin Marietta's management used the shor t time separating ownership and control to sell non-core businesses and launch its own hostile takeover of Bendix (known as the Pac-Man defense). The end of this extraordinarily bitter battle saw Martin Marietta survive and forced Bendix to be sold off. In 1913, Allan and Malcolm Loughead (name later changed to Lockheed) flew the first Lockheed plane over San Francisco Bay. The brothers later established their own corporation known as the Alco Hydro-Aeroplane Company which was later renamed the Loughead Aircraft Manufacturing Company.In 1926, following the failure of Loughead, Allan Loughead formed the Lockheed Aircraft Company in Hollywood, California. In 1929, Lockheed sold out to Detroit Aircraft Corporation. The Great Depression ruined the aircraft market, and Detroit Aircraft went bankrupt. A group of investors headed by brothers Robert and Courtland Gross, bought the company out of receivership in 1932. The syndicate bought the company for a mere $40,000. Ironically, Allan Lou ghead himself had planned to bid for his own company, but had only raised $50,000 which he felt was too small a sum for a serious bid.The first successful aircraft built in any number by the Lockheed Corporation was named the Vega and was best known for its use in several first- and record setting flights by, among others, Amelia Earhart, Wiley Post and George Hubert Wilkins. In the 1930s, Lockheed spent $139,400 to develop the Model 10 Electra, a small twin-engine transport which sold 40 units in the first year of production. Amelia Earhart and her navigator, Fred Noonan, flew this plane on their failed attempt to circumnavigate the world in 1937.The Lockheed Model 12 Electra Junior and the Lockheed Model 14 Super Electra expanded their market. The Model 14 also formed the basis for the Hudson bomber, which was supplied to both the British Royal Air Force and the United States military before and during World War II. In 1995 the these two companies, Lockheed and Martin Marietta, jo ined together in a merger which created the modern Lockheed Martin corporation, and further expanded with the acquisition of Loral, a defense electronics and systems integration business, in 1996.Today, the Lockheed Martin Corporation is headquartered in Bethesda, Maryland and employs 126,000 people worldwide. The company is principally engaged in the research, design, development, manufacture, integration, and sustainment of advanced technology systems. Lockheed also serves both domestic and international customers with products and services that have defense, civil, and commercial applications, with their principal customers being agencies of the U. S. Government. In 2011, 84% of their $45. billion in net sales were made to the U. S. Government, either as a prime contractor or as a subcontractor. Lockheed’s U. S. Government sales were made to both Department of Defense (DoD) and non-DoD agencies. Sales to foreign governments (including foreign military sales funded, in whol e or in part, by the U. S. Government) amounted to 15% of net sales in 2011. The remainder of net sales was attributable to commercial and other customers. In 2011, net sales at Aeronautics of $13. 2 billion represented 29% of their total net sales.Aeronautics has three principal lines of business and the percentage that each contributed to its 2011 net sales was 68 percent combat aircraft, 20 percent air mobility, and 12 percent in other aeronautics programs. At December 31, 2011, we operated in 545 locations (including offices, manufacturing plants, warehouses, service centers, laboratories, and other facilities) throughout the United States and internationally. Of these, we owned 43 locations aggregating approximately 30 million square feet, and leased space at 502 locations aggregating approximately 26 million square feet.We also manage or occupy various government-owned facilities under leases and various other arrangements. The U. S. Government also furnishes equipment that we use in some of our businesses. We operate in four principal business segments: Aeronautics, Electronic Systems, IS, and Space Systems. Lockheed organizes their business segments based on the nature of the products and services offered. The following table presents net sales and operating profit of their four business segments.Net sales exclude intersegment revenue, as these activities are eliminated in consolidation. Intercompany transactions are generally negotiated and accounted for under terms and conditions similar to other government and commercial contracts. Operating profit of the business segments includes the equity earnings or losses from investees in which certain of their business segments hold equity interests, because the activities of the investees are closely aligned with the operations of those segments. In Millions |2011 |2010 |2009 | |Net Sales | | | | |Aeronautics |13,235 |12,201 |11,473 | |Electronic Systems |14,363 |13,532 |12,803 | |Information systems & Gl obal Solutions |9,959 |9,608 |9,069 | |Space Systems |8,246 |8,654 |8,027 | |Total 45,803 |43,995 |41,372 | | | | | | |Operation Profit | | | | |Aeronautics |1,502 |1,577 |1,433 | |Electronic Systems |1,712 |1,660 |1,583 | |Information systems & Global Solutions |890 |895 |919 | |Space Systems |972 |972 |953 | |Total Business Segments |5,076 |5,104 |4,888 | |VESP and other charges |220 |- | | |Other unallocated Corporate income net |759 |689 |161 | |Total |4,097 |4,415 |5,049 |Now that we have established the background of the Lockheed Martin Corporation, let us now analyze the ratios which provide us insight into the financial status of the corporation. The first ratio which we will look at is the current ration of Lockheed Martin. Using the current ration, we will be able to determine if Lockheed will be able to satisfy the amount of current liabilities based upon their current assets. When looking at the Lockheed’s balance sheet for 2011, we see that they have 11. 157 mil lion dollars in current liabilities and 12. 851 million dollars in current liabilities. In order to compute the current ratio of Lockheed we then take the current assets of 12. 51 million and divide this number by the current liabilities of 11. 157 million thus giving Lockheed a current ratio of 1. 15% for 2011. When looking at this ratio over a period of 2 years we began to see that the ratio calculated for 2011 has decreased . 01 percent from 2010. In examining this ratio, we are able to conclude that Lockheed has a fairly constant liquidity rate which could tell us that the company is relatively stable at this point in time. The second ratio which will help us in evaluating the financial status of Lockheed Martin Corporation is the inventory turnover ratio. This ration will allow us to examine how efficiently Lockheed manages its assets and uses those assets to create income.In order to calculate this ratio we must find the companies net sales and divide this figure by the invent ories that the company has on hand. After examining Lockheed’s financial statements, we find that they reported 45. 803 million dollars in net sales and 2. 378 million dollars in inventories for 2011. After plugging these figures into our equation, we find that Lockheed had an inventory turnover ratio of 19. 26. This tells us roughly that Lockheed’s inventory is sold out and restocked roughly 19. 26 times per year. When examined over a two year period, we find that the ratio of sales to inventories when compared to the 20. 15 ratio calculated in 2010, had only fallen by . 89.When compared to the rival Boeing Company, we find that Lockheed’s inventory turnover ration is considerably higher than the 1. 386 that Boeing reported over the same period. This could lead to the conclusion that Lockheed Martin is in considerably better position than the majority of the other companies with in the same market. The next ratio that we will examine is referred to as the debt ration. This ratio allows us to examine the percentage of funds provided by current liabilities and long term debt. In order to calculate this ratio, we will need to take the total liabilities and divide this figure by the total assets. When examining the financial documents provided by Lockheed, we find that Lockheed reported a total liability of 31. 59 million and a total asset of 35. 067. As we plug this data into our equation we find that Lockheed Martin has a debt ratio of 89. 43 percent for 2011. When interpreting this outcome we must remember to examine the data from two separate perspectives. From the perspective of a creditor, a high debt ratio allows for less cushion against losses in the event that liquidating occurs. This could discourage creditors from lending to the company due to the fact that it poses a greater risk to the creditor. On the other hand, stockholders generally like to see a higher debt ration due to the fact that it magnifies the amount of return that t hey receive.Therefore, it would be wise for a company to maintain a debt ration which is fairly close to 50 percent due to the fact that it allows creditors to feel comfortable while satisfying the desires of the stockholders. Another ratio which provides valuable insight into a company’s financial status is the Gross Profit Margin. When calculating this ratio we must first find the amount of sales, then subtract this number by the cost of goods sold and divide this number by the amount of sales during that period. As we examine the financial data using our Gross Profit Margin formula, we find that Lockheed had a gross profit margin of 10. 2 percent. This number tells us that Lockheed had a gross profit of 10. 2 percent per dollar of sales before any other expenses are deducted.When compared to rival aeronautical company Boeing, we find that Boeing had a gross profit margin that was 11. 9 percent higher than Lockheed. This suggests that Boeing is turning a higher profit margi n than Lockheed and thus does not need to sell as much product in order to generate the same amount of income as Lockheed. By having a lower profit margin than their competitor, Lockheed must have a higher amount of sells in order to keep their place within the market. The final ratio which we will examine is the Price per Earnings ratio or the P/E Ratio. By looking at this ration we are able to identify how much investors are willing to pay per dollar of reported profit.Looking at Lockheed’s current price per share and earnings per share data we find that they are able to maintain a ratio of 28. 67. When viewing this data, we are able to conclude that Lockheed has a fairly strong growth prospect when other things are held constant. When we compare this number to the smaller rival Northrop Grumman and find that Lockheed has a P/E that is 19. 69 higher. When looking into the reasoning behind this difference, we can conclude that Northrop is regarded as being a much riskier com pany than Lockheed and thus could receive less support for creditors. This places Lockheed Martin at an advantageous position due to the fact that they are viewed as a more stable company.This allows them to control more of their respective market and in turn secures their market share for future years. Now that we have viewed the financial ratios of our company and have interpreted the data based upon Lockheed’s market and past financial data, let us now look at the Beta coefficient. When stockholders examine which companies they wish to invest in, they generally seek to invest in companies with the smallest amount of risk possible. In doing so, Stockholders greatly minimize the amount of risk that they themselves accrue and in turn provides confidence within the market. However, we must have a way in order to evaluate the relative risk of a particular companies stock and for that we use the Beta coefficient.In order to calculate the Beta coefficient we will need two sets of data, the closing price for the stock we are examining and the closing prices for the index we’re using. As we look at the Beta value of . 98 for Lockheed Martin and compare it industry rival Boeing’s 1. 31 and Northrop Grumman’s 1. 08 we find that Lockheed has a lower Beat value than both of its major competitors. This suggests that Lockheed is a less risky company to invest in and thus could create greater capitol available through the sale of stock for the company. In addition to drawing potential investors to the company, having a lower Beta value could cause creditors to be more willing to lend money to the company.This would allow a greater possibility for Lockheed’s future expansion in the industry and could serve to propel them to the top of the Aeronautic market. If this were to occur, I forecast that the dividend structure within the company would increase due to the increased amount of wealth that the company is generating yearly. By having mo re funds available for allocation to stockholders, the company would be more willing to pass this added revenue to the stockholders thus promoting more investors to purchase stock. Upon examining the numerous financial data available on Lockheed Martin we are able to determine that the financial status of the company is sound. Lockheed Martin maintains a current ratio of 1. 5 percent which tells us that the company is able to cover the cost of their current liabilities 1. 15 times using their current assets. This tells us that the company does not have any problematic debt at the current time and therefore generates a profit at the end of every operating period. The second indicator of Lockheed’s current and future success is their ability to turn over inventory. In our calculations we discovered that Lockheed had an inventory turn over ratio of 19. 26 percent which told us that they were able roughly able to sell all of their products and restock at least 19. 26 times per ye ar. When viewing this from a financial standpoint this figure is encouraging because it represents a steady profit within the company.The next ratio analysis performed, the debt ratio, informed us that the company had a debt ratio of 89. 43 percent. This high number could serve costly to the company if they ever need seek loans from creditors, but it does satisfy the shareholders by providing a higher amount of leverage. Another ratio that we analyzed for Lockheed Martin was the gross profit margin. After computing this ratio, we found that Lockheed had a gross profit margin of 10. 2 in 2011 which means than Lockheed earned retained 10. 2 percent of every dollar earned. The final ration analysis that we performed on Lockheed’s financial statements was a profit per earnings ratio.After performing this ratio, we found that Lockheed had a better profit per earnings than its rivals thus making it a more desirable company to invest in. This could attract future investors and in tu rn create more profit for the company. From this analysis, I have concluded that Lockheed Martin could not handle much more debt in the near future due to the fact that their debt ration is already considerably high. If the company were to take on much more debt, creditors would become unwilling to provide financial support for the company and the company could risk taking on more debt than their assets could cover. This would cause the overall value of the company to fall and cause the Beat coefficient to ri se to a much higher level.In order to further improve the company from the position that it is in, I believe that the company should take steps to lower the debt ratio. This would cause the creditors to be more willing to invest in the company as well as keep the stockholders satisfied with the amount of leverage the company has. Also, by lowering the debt ratio, the companies eat coefficient would fall even further making the desire to invest in the company even higher. If Loc kheed were to take this step, I believe that the companies stock would continue to rise and the company could in turn increase the amount of dividends that it provides. Bibliography 1. Free SEC Filings Email Alerts – SECFilings. com. (n. d. ). Free SEC Filings Email Alerts – SECFilings. com.Retrieved April 26, 2011, from http://secfilings. com/searchresultswide. aspx? TabIndex=2=7752072=convpdf=11373=%2fdefault. aspx%3fticker%3dLMT%26amp%3bformgroupid%3d1%26amp%3bauth%3d1 2. Free SEC Filings Email Alerts – SECFilings. com. (n. d. ). Free SEC Filings Email Alerts – SECFilings. com. Retrieved April 26, 2011, from http://secfilings. com/searchresultswide. aspx? TabIndex=2=7704986=convpdf=11757=%2fdefault. aspx%3fticker%3dBA%26amp%3bformgroupid%3d1%26amp%3bauth%3d1 3. Ehrhardt, M. C. , & Brigham, E. F. (2011). Corporate finance: a focus approach (4th ed. ). Mason, OH: South-Western Cengage Learning.

The Spanish Ballad, Or Romancero - 1346 Words

The spanish ballad, or romancero, is a form of poetry which, closely linked to the medieval epic, is passed down by word of mouth and open to interpretation by the performers and audience. The ballad â€Å"Romance de Moraima† (or yo me era mora Moraima) is a romancero fronterizo which is relatively brief, and follows the standard octosyllabic structure. The ballad contains the key feature of assonating units, yet does not strictly rhyme with one vowel, i.e. ‘a’ but varies between ‘a’, ‘o’, and a paragogic ‘e’. Moraima opens quite abruptly and dramatically, as is the fashion of the romancero. No time is spared in small details; instead the sensational tale begins immediately. Interestingly, the description is in the past- era- even though one would imagine that she is still the same person, which gives the impression that something drastic has changed. The first line lands with a punch. The bold statement of her name-  «yo me era mora Moraima « - identifies the protagonist and throws the listener in. The yo is emphatic, as is the last positioning of Moraima, and together they frame the line to deliver impact. There is strong alliteration and repetition of the ‘mo’ sound with Moraima, mora and morilla, all of which contribute to a compelling description, and draw attention to her islamic beliefs. The choice of the name Moraima, when juxtaposed with mora, emphasises her religious affiliation which would have been controversial at that time due to the Reconquista. This play o n

The components of Corporation Financing in the Economy - Free Essay Example

Sample details Pages: 9 Words: 2615 Downloads: 1 Date added: 2017/06/26 Category Business Essay Type Research paper Did you like this example? The major issue arising in the present times, for both management academics and practitioners, relates to the principles which determine corporate successes and failures that is why some organization prosper and grow while other collapse. The often unexpected collapse of large companies during the early 1990s and more recently in 2002 has lead analysts to look for ways of predicting company failure. Corporate failures are common in competitive business environment where market discipline ensures the survival of fittest. Don’t waste time! Our writers will create an original "The components of Corporation Financing in the Economy" essay for you Create order Moreover, mismanagement also leads to corporate failure. Predicting corporate failure is based on the premise that there are identifiable patterns or symptoms consistent for all failed firms. Definition According to Altman (1993), there is no unique definition of corporate failure. Corporate failure refers to companies ceasing operations following its inability to make profit or bring in enough revenue to cover its expenses. This can occur as a result of poor management skills, inability to compete or even insufficient marketing. COPORATE FAILURE The models to predict Corporate Failure: Several techniques have been developed to help predict why companies fail. However, these are not accurate and doo not guarantee that the prediction will turn out to be true. These models are The Z-Score, Argenti Model, and the VK model amongst others. Beaver was one of the first researchers to study the prediction of bankruptcy using financial statement data. The established practice for failure prediction is therefore a model based on financial ratio analysis. Published financial reports contain a great deal of information about the company performance and prospects. Therefore, ratio analysis is not preferred for financial accounts interpretation however; it has also played a central role in the development of bankruptcy prediction models. The Altman Model: Z-Score The Z-Score model is a quantitative model developed by Edward Altman, a financial economist and professor at the Leonard N.Stern School of business at New York University in 1968 to predict bankruptcy or fi nancial distress of a business. The Z-score is a multi variate formula that measures the financial health of a company and predicts the probability of bankruptcy within 2 years. This model involves the use of a specified set of financial ratios and a statistical method known as a Multiple Discriminant Analysis. (MDA). The real world application of the Altman score successfully predicted 72% of bankruptcies two years prior to their failure. The model of Altman is based on a linear analysis in which five measures are objectively weighted and summed to arrive at an overall score that then becomes the basis for classification of companies into one of the two a priori groupings that is bankrupt or non- bankrupt. These five indicators were then used to derive a Z-Score. These ratios can be obtained from corporations financial statements. COPORATE FAILURE The five Z-score constituent ratios are: 1. Working Capital/Total Assets (WC/TA):- a firm with negative working capital i s likely to experience problems meeting its short-term obligations. 2. Retained Earnings/Total Assets: Companies with this ratio high probably have a history of profitability and the ability to stand up to a bad year of losses. 3. Earnings Before Interest Tax/ Total Assets: An effective way of assessing a firms ability to profit from its assets before things like interest and tax are deducted. 4. Market Value of Equity/ Total Liabilities: A ratio that shows, if a firm were to become insolvent, how much the companys market value would decline before liabilities exceed assets. 5. Sales/Total Assets: A measure of how management handles competition and how efficiently the firm uses assets to generate sales. Based on the Multiple Discriminant Analysis, the general model can be described in the following form: Z=1.2WC/TA + 1.4 RE/TE + 33 EBIT/TA + 0.6 MVE/TL + 1.0 SL/TA Altman (1968) found that companies having a Z-Score greater than 2.99 clearly f ell into the non- bankrupt category, while companies having a Z-Score below 1.81 were all bankrupt. The area between 1.81 and 2.99 was defined as the zone of ignorance because of the susceptibility to inaccurate classification. Z-Score Probability of Failure Less than 1.8 very High Greater that 1.81 but less than 2.99 Not Sure Greater than 3.0 Unlikely Calculation of the Z-Score for a fictitious company where the different values are given to calculate the Z-Score. Sales 25,678 Total Assets 49,579 Total liabilities 5,044 Retained earnings 177 Working Capital -1,777 Earnings before interest and tax 2,605 Market value of Equity 10,098 Book value of Total Liabilities A Type 1 failure characterises the failure of newly formed and therefore mainly small companies. Whereas, Type 2 is characterised by the presence of a very ambitious, charismatic and active manager with an outstanding personality. Due to his over ambition the company is brought down. These failure types can occur to young organisations, but they usually survive longer than Type1 companies. Type 3 failures only occur to mature companies that have been operating successful over a fair number of years and that often are of a major social and economic importance to the community. The largest characteristic of Type 3 companies is its insensitivity towards changes in the environment, whereas the world around it is changing with its environment. Symptoms of corporate failure There are three classic symptoms of corporate failure. These are namely: 1. Low profitability 2. High gearing 3. Low liquidity Each of these three symptoms may be indicated by trends in the companys accounts. Symptoms are interrelated. The classic path to corporate failure starts with the company experiencing low profitability. This may be indicated by trends in the ratios for: ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Profit margin ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Return on Capital Expenditure ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Return on Net Assets A downward trend in profitability will raise the issue of whether and for how long the company can tolerate a return on capital that is below its cost of capital. If profitability problems become preoccupying, the failing of the company may seek additional funds and working capital by increasing its borrowings, whether in the form of short term or long-term debt. This increases the companys gearing, since the higher the proportion of borrowed funds, the higher the gearing within the capital structure. The increased debt burden may then aggravate the situation, particularly if the causes of the decreasing profitability have not been resolved. The worsening profit situation must be used to finance an increased burden of interest and capital repayments. In the case of a publicly quoted company, this means that fewer and fewer funds will be available to finance dividend payments. It may become impossible to obtain external credit or to raise further equity funds. Confidence in the company as an investment may wither away leaving the share price to collapse. If the company is sound, for instance, but ineptly managed, the best that can be hoped for is a takeover bid for what may be now a significantly undervalued investment. At this point, a company may not be really failing but unfortunately, more often rescue attempts are not mounted. This may be because the companys management does not recognize the seriousness of the situation, or is by now too heavily committed or too frightened to admit the truth to its stakeholders, when refinancing is attempted profits fail to cover payments leading to a cash flow crisis. CAUSES OF CORPORATE FAILURE AND THEIR EXAMPLES: Technological causes Traditional methods of doing work have been turned upside down by the development of new technology. If within an industry, there is failure to exploit information technology and new production technology, the firms can face serious problems and ultimately fail. By using new technology, cost of production can be reduced and if an organization continues to use the old technology and its competitors start using the new technology; this can be detrimental to that organization. Due to high cost of production, it will have to sell its products at higher prices than its competitors and this will consequently reduced its sales and the organization can serious problems This situation was seen in the case of Mittal Steel Company taking over Arcelor Steel Company. Arcelor Steel Company was using its old technology to make steel while Mittal Steel Company was using the new technology and as a result, Mittal Steel Company was able to sell steel at lower price than Arcelor Steel Company d ue to its low cost of production. Arcelor Steel Company was approaching corporate failure and luckily, Mittal Steel Company merged with Arcelor Steel Company and became ArcelorMittal Steel Company, thus preventing Arcelor from failure. Working capital problems Organizations also face liquidity problems when they are in financial distress. Poor liquidity becomes apparent through the changes in the working capital of the organization as they have insufficient funds to manage their daily expenses. Businesses, which rely only on one large customer or a few major customers, can face severe problems and this can be detrimental to the businesses. Losing such a customer can cause big problems and have negative impact on the cash flows of the businesses Economic distress 7 COPORATE FAILURE A turndown in an economy can lead to corporate failures across a number of businesses. The level of activity will be reduced, thus affecting negatively the performance of firms in several industries. This cannot be avoided by businesses. The recent economic crisis in the USA led to many cases of corporate failures. One of them is the insurance AIG insurance company. It is facing serious problems and it might close its door in the near future. COPORATE FAILURE MISMANAGEMENT Inadequate internal management control or lack of managerial skills and experience is the cause of the majority of company failures. Some managers may lack strategic capability i.e. to recognize strengths, weaknesses, opportunities and threats of a given business environment. These managers tend to take poor decisions, which may have bad consequences afterwards. Furthermore, managers of different department may not have the ability to work closely together. There are dispersed department objectives, each department will work for their own benefits not towards the goal of the company. This will bring failure in the company. One example can be WorldCom, where the finance and legal functions were scattered over several states and communication between these departments were poor. OVER-EXPANSION AND DIVERSIFICATION Research has shown that dominant CEO is driven by the ultimate need to succeed for their own personal benefits. They neglect the objective set for the company and work for their self- interest. They want to achieve rapid growth of the company to increase their status and pay level. They may do so by acquisition and expansion. The situation of over expansion may arise to the point that little focus is given to the core business and this can be harmful as the business may become fragment and unfocused. In addition, the companies may not understand the new business field. Enron and WorldCom can be an example for this situation where the managers did not understand how growing overcapacity would influence its investment and therefore did not comprehend the risks associated with it. FRAUD BY MANAGEMENT Management fraud is another factor responsible for corporate collapse. Ambitious managers may be influenced by personal greed. They manipulate financial statements and accounting reports. Managers are only interested in their pay checks and would make large increase in executive pay despite the fact that the company is facing poor financial situation. Dishonest managers will attempt to tamper and falsify business records in order to fool shareholders about the true financial situation of the company. These fraudulent acts or misconduct could indicate a serious lack of control. These frauds can lead to serious consequences: loss of revenue, damage to credibility of the company, increased in operating expenses and decrease in operational efficiency. POORLY STRUCTURED BOARD Board of Directors is handpicked by CEO to be docile and they are encouraged by executive pay and generous benefits. These directors often lack the necessary competence and may not control business matters properly. These directors are often intimated by dominant CEO and do not have any say in decision making. Example Enron and WorldCom where poorly structured board was a contributor towards their failure Financial distress Firms that become financially distressed are found to be under- performing relative to the other companies in their industry. Corporate failure is a process rooted in the management defects, resulting in poor decisions, leading to financial deterioration and finally corporate collapse. Financial distresses include the following reasons also low and declining profitability, investment Appraisal, Research and Development and technical insolvency amongst others. A firm may fail, as its returns are negative or low. A firm that consistently reports operating losses probably experiences a decline in market value. If the firm fails to earn a return greater than its cost of capital, it can be viewed as having failed. Falling profits have an obvious link with both financial and bankruptcy as the firm finds it is not generating enough money to meet its obligations as they fall due. Political and legal causes also can affect organisations. New legislation for example on product safety s tandards or pollution controls, can affect a companys main products. The imposition of a complete ban on an organisations product might be damaging and lead the firm to loses. The Tobacco industries are at present faced with the prospect of a ban on advertising for their product. Another cause that will lead the company to fail is the investment appraisal. Many organizations run into difficulties as they fail to appraise investment projects carefully. The long- term nature of many projects means that outcomes are difficult to forecast and probabilities are usually subjective. Big project gone wrong is a common cause of decline. For example the acquisition of a loser company. This has happen in the case for the failure of Parmalat Co Ltd of Italy, which made the acquisition of several losses making company. Inappropriate evaluation of the acquired company, its strengths and weaknesses. COPORATE FAILURE Preventing corporate failures It is a fact that some companies perform well and that some underperform and some fails. In many, if not most cases, these companies are led by executives that are quite experienced. Below are some recommendations that can help to reduce the risk of failures of organisations: Appointment of non-executive directors The non-executive directors will bring their special expertise and knowledge on strategies, innovative ideas and business planning of the organization. They will monitor the work of the executive management and will help to resolve situations where conflict of interest arises. Overall, the non-executive directors will act as a Cross Check. Audit committees Very often, there is occurrence of fraud in management and financial reporting. The presence of the audit committees will help to resolve this problem. Audit committees have the potential to reduce the occurrence of fraud by creating an environment where there is both discipline and control. Code of ethics Corporate governance is based on enterprise and integrity. Directors of companies need to do their jobs with good faith and in the interest of the company. There must be a relationship of honesty, openness and fairness between the stakeholders. Development of environment learning mechanism Some organizations fail because they lose touch with their environment. Therefore, to counter this problem, there is a need to develop the environmental learning mechanism. Through it, new information can be brought on continuous basis. This is mainly done by carrying customer- feedback surveys. In this way, the organisation can realign itself with the new needs and challenges. Focus on research and development Organizations can generate new knowledge by investing and focusing more on research and development. Thus, there will be more ideas how to make the products much better than that of their competitors. Conclusion It can be deducted that a director has a big responsibility that he has to assume The recommendations mentioned above can help directors to reduce corporate failure, provided that the directors abide. Proper planning also is critical to the success of a business.