American Home Products Essay Example

American Home Products Essay Example American Home Products Paper American Home Products Paper American Home Products (AHP) is a capital structure case. For the purpose of this analysis it is assumed that AHP currently has no debt. In other words it is an unlevered company. The focus of this case is that with the retirement of AHPs CEO there is an opportunity to change the capital structure of the firm by adding some debt. The issue is should debt be added and, if so, how much debt should be added. Four options will be analyzed: 0%, 30%, 50%, and 70%. Currently, due to the lack of debt, this firm only faces operating risk as opposed to financial risk. AHP has a solid five year compound annual growth rate in both earnings and dividends per share of 12.4% and 13.6% respectively. This compares favorably to a proxy company, Warner-Lambert, where the five year compound annual growth rate in both earnings and dividends per share was 3.0% and 8.0% respectively. Overall, the unlevered AHP has a history of solid returns, good growth and in general low business risk. Since we are dealing with accounting numbers in this case, certain assumptions were made for this analysis. First, since AHP has high quality earnings it is assumed that the cash and accounting numbers will be close over the long term. Second, the level of debt taken on in these scenarios is going to go into perpetuity, getting replaced as it matures. Also the risk level of future tax shields is the same as the risk level of the debt of the firm. Finally it is assumed that the firm can borrow in all three scenarios at 14%. The analysis compares AHP issuing debt and retiring equity in three scenarios: 30%, 50%, and 70%. As depicted in Figure 1, Appendix A, the unlevered value of the firm (VU) is $4665.0 million. The required return, ru, was calculated using the constant dividend growth model where the dividends/share of $1.90 divided by a current stock price of $30/share plus an average dividend increase since 1973 of 12.12% per year yielding an ru = 18.45%. When debt occurs in each scenario the market price of the firm also changes. Figure 1 in Appendix A depicts the new stock price/share for each proposed level of debt. The current price of $30/share would increase to $31.58/share for 30%, $32.21 for 50%, and $33.16/share for 50%. These new values were calculated using the current dividend ratio (unlevered stock price/share divided by the current dividend) of $30/$1.90 = 15.79. This ratio was then multiplied by the dividends per share for each of the scenarios resulting in the above stock prices. To calculate the weighted average cost of capital (WACC) for each of the debt scenario we need to know the cost of debt and the cost of equity. The before-tax cost of debt is given in the case as 14%. To calculate the cost of equity, we can again turn to the constant growth model where r = (D1/P0 + g) = $2.13/$30 + 12.12% = 19.22% for the unlevered firm where D1 is the expected dividend in 1982, P0 is the current stock price, and 12.12% is the average % increase in dividends year-over-year. The results for the cost of equity at each debt level are listed in Appendix A, figure 1: 18.86%, 18.73%, and 18.54% for the 30%, 50%, and 70% scenarios respectively. Using the above values for cost of equity and debt, along with debt and equity values given in this case the WACC can now be calculated resulting in 19.22%, 17.40%, 16.36%, and 15.36% for the 0%, 30%, 50%, and 70% scenarios respectively. If the firm is able to earn simply its WACC (NPV = 0), the value of the firm is going to increase by the investment amount. If the firm earns more than its WACC, then the value of the firm should increase by the investment amount plus the amount captured by the shareholders in the positive NPV resulting in a higher market price. Of course, if the NPV is negative the value of the firm goes up less than the value of the investment. The interest expenses given in this case are a return on the debt. As discussed in class, when calculating return on assets (ROA) we can not simply divide net income by assets if a firm is using debt financing because there is a downward bias due to the interest expense. ROA determines profitability of the assets. We need to add the interest expense times (1-tax rate) to the net income before dividing by assets resulting in an ROA of 18.81% for the unlevered scenario and 20.21% for each of our debt scenarios. Comparing firm ROA against WACC for each debt scenario shows we are earning more than WACC in each case, which is good. We are not destroying shareholder value in any of these cases. ROA is the same across the scenarios since the operating risk and performance are all the same. However, ROE is not the same. The levered firm is able to earn favorable financial leverage (a.k.a. trading on the equity). ROE is listed in Figure 1 and in the case of the levered firm ROE ROA because the firm is able to earn more of those funds than the after-tax cost of debt. There is favorable financial leverage in all proposed scenarios. To determine where there is favorable versus unfavorable leverage we can perform an earnings before interest and taxes (EBIT) profitability analysis. Figure 2 in Appendix B lists the calculated EBIT indifference levels with each scenario compared against one another and Figure 3 plots the unlevered firm against each proposed debt case. For expected EBIT $130.4 million we have unfavorable leverage for all debt scenarios. Whereas for any value of EBIT ~$175 million we have favorable financial leverage with the 70% scenario. The optimal capital structure is the point where the value of the firm is maximized and WACC is minimized. Adding too much debt will decrease the value of the firm due to agency and expense costs. Finally, we can compare the proposed capital structures by calculating ROA and ROE for the EBIT indifference levels. The table in Appendix C, Figure 4 lists the previously calculated indifference levels along with the new calculations for ROA and ROE at these levels. Since this comparison is limited to comparing a capital structure with debt versus an all-equity structure, ROA=ROE=after-tax cost of debt at the EBIT indifference levels. Figure 5 shows that for EBIT levels ~$130 million, the best choice is 0% debt. For EBIT levels between ~$130 and ~$152 million, the best choice is 30% debt. Between ~$152 and ~$165 million, the best option is 50% debt. And for EBIT above $165 million, the best choice is 70% debt. In summary, AHP should implement a more aggressive capital structure by leveraging the company to 70% debt since EBIT will be substantially above $165 million. I believe the capital markets would favor AHP adopting my proposed capital structure since the resulting ROE increases would show more profitability and the stock price would increase. There would be a higher degree of operating risk but given the firms outstanding past performance, solid growth, and expected future earnings this should not pose a problem.

What to Say When a Job Interviewer Asks You Who Are You Voting For

What to Say When a Job Interviewer Asks You Who Are You Voting For As we near Election Day, in what many people believe is one of the most controversial elections in recent memory, political discussion  is undoubtedly going to make it’s way into your workplace- causing some very heated political debates. But what do you do when it  enters your job interview? It’s common knowledge that you should probably not talk  to new acquaintances about politics, religion, or sex. These topics, especially politics, can be very flammable. But what if a hiring manager begins to discuss their favorite candidate and asks you who you’re voting for?In this scenario, it’s best to be prepared. Here are three routes you can take to keep yourself out of hot water.Offer a Noncommittal ResponseMaybe  tell the interviewer that the entire discussion has so much controversy, you’ve chosen to stand on the sidelines and not get involved. This signals to the interviewer that you do not feel comfortable answering his/her question, and the conversation will most likely end it there. If not, you may want to consider a different employer.Keep it LightheartedYou can also take the route of humor and diplomacy. Some options include:â€Å"I plead the fifth.†Ã¢â‚¬Å"I’d back anyone in favor of world peace, but that’s probably not happening for a while.†Ã¢â‚¬  I think if the candidates stop attacking each other, we’d all have a better understanding of their policies. Until then, I’m not entirely sure.†Change the ConversationSometimes the best way to respond is to simply transition away from the topic. The less talk about politics, the better. You can even use it as an opportunity to showcase who you look up to.â€Å"This election has been a challenging one for so many reasons. But one issue that has stood out is the issue of leadership. Professionally, I’m always looking for leaders who do X and Y.†Ã¢â‚¬Å"This election is filled with so much polarity, which is the opposite of what I love about so many companies that emphasize team building and working together. How much does your company emphasize this?†Try a Neutral ResponseIf your interviewer goes on about how much they like a certain candidate, you can give them neutral acknowledgement. This will steer the conversation back on track, and you’ll be able to discover more about the company’s management and leadership. Simple body language, like a couple of nods, would suffice. Alternatively, you can try some of these options:â€Å"I can see what you mean†¦Ã¢â‚¬ Ã¢â‚¬Å"I hadn’t pictured it that way†¦Ã¢â‚¬ Ã¢â‚¬Å"Hmm.. interesting†¦Ã¢â‚¬ Your ideal strategy is to steer the conversation to business and the job interview at hand. If the interviewer seems determined to continue the political conversation, take this as an opportunity to evaluate their emotional intelligence. Are they ranting? Angry? Do they challenge you unnecessarily? All of these fact ors may give you an idea as to your compatibility with that workplace.Your best approach is to remain professional, calm, and diplomatic. Pay attention to the reaction you get as you try to shift gears. This will tell you everything you need to know about whether the company is right for you.Source: [Business Insider]Image Source: [CBS News]

Reporting Essay Example | Topics and Well Written Essays - 1500 words

Reporting - Essay Example k Theory (ANT) purification process with its findings based on themes such as, human and non-human actors, events and technological and regulatory initiatives (Law 1-21). The main agenda of implementing this process is to understand mobilization activities, chain of relations, conflicts and resistance, which determined integrating reporting journey of Australia. The research was undertaken with the objective to determine impact of events and manifestations on sustainability reporting and emergence of integrated reporting. The author has collected necessary data through documentation review, semi-structured reflective interviews and participant observation method (Patricia). Another qualitative approach has been included by the author that is the netnographical approach. In this research, qualitative data analysis was undertaken using Nvivo 9 research software by uploading all interview transcription in the software. The report findings present four key factors that influenced evolution of integrated reporting, namely, critical events, actors, technologies and regulatory initiatives (Richards 16). The introductory section briefly discusses factors that influenced emergence of integrated reporting in Australia. It discusses advances in reporting field because of purification processes, before introduction of International Integrated Reporting Committee (IIRC). The factor that motivated the author to commit to this research was to understand the shift from sustainability reporting to integrated reporting. The author demonstrated that sustainability reporting method has been in practice for quite some time and an important fact about it is that is a catalyst of Actor Network theory that has influenced evolution of integrated reporting. The social environment accounting study by Mathews (1997), along with contribution of other sustainability researchers such as, Buhr (2007), Gray (2001) and Milne and Gray (2007), show developments made in sustainability accounting

Research proposal Example | Topics and Well Written Essays - 2000 words - 3

Research Proposal Example In this research I will be using Alveson’s situational approach theory as it will enable me get an in-depth view and perception on meaning of leadership sharing (Alvesson, 1997). My proposal topic is ‘situational analysis of shared leadership in a self managing team’. This topic means that some people have no leaders at their workplace thus share leadership roles among themselves especially in self managing teams (Hicks & Bone, 1990). The aim of this proposal is to identify how self managing teams define leadership in their work meetings and work plans. In addition, this proposal aims to show how self managing teams determine the direction of the whole team towards their project and also the self managing team’s relationships, team identity and individual’s team member’s identities. Furthermore, the proposal aims at identifying the constraints faced by self managing teams by different factors like social factors, gender, cultural backgrounds and ethnicity. Leadership is a very tricky affair especially for self managing teams as they are bound to be conflicts. However, according to Alvesson (1996), situational approach gives leadership the team accomplishment which does not follow the norm of doing what the leader proposes (Alvesson, 1996). What makes this proposal interesting is the idea that leaders have always had a problem with leadership. There have been cases of suicides, failed projects, lost money and dysfunctional cases in many organizations. This negative situation befalls these companies because of their leaders and their leadership skills. In this proposal I will be doing a literature review, I will formulate some research questions, discussing methods used, and a conclusive conclusion. The proposal research will take up to two months of research and two hours per day for the two months. I have narrowed my research to a particular team of family run food joint. This

Comparing Washington Irvings Rip Van Winkle and Americas War of Indep

Parallels in Washington Irving's Rip Van Winkle and America's War of Independence The story of Rip Van Winkle is well known throughout American culture. As one of America's most popular short stories, few school children have not heard of Rip Van Winkle's twenty-year slumber or imagined his long, gray beard. In the telling and re-telling of this mysterious tale, the original context of the story itself has, for the most part, been forgotten. Few Americans are aware of how the story originated, and in what context it was first presented to the public. "Rip Van Winkle" first appeared as a part of Washington Irving's The Sketch Book. This was a collection of various short works, ideas, thoughts, and pictures. "Rip van Winkle" was only a part of this collection, but eventually gained a great deal of popularity in its own right. When considering this story, it is important to keep in mind the original context and its relation to other works within The Sketch Book. However, as "Rip Van Winkle" has stood on its own in American culture, there is also a place for examining the story apart from The Sketch Book. When doing this, certain symbolism becomes apparent. Washington Irving uses symbolism in "Rip Van Winkle" to relate Rip's life and experiences to the situation of the American colonies in relation to Great Britain and the War of Independence. In this interpretation of the symbolism in "Rip Van Winkle", the marriage between Rip Van Winkle and Dame Van Winkle represents the union between the American colonies and Great Britain. The characters themselves possess certain attributes which symbolize the perceived characteristics of the two entities. Dame Van Winkle is usually unhappy with Rip. She has cer... ...respectively. Rip's experience in the Kaatskill Mountains ultimately sheds light on the changes of the American public, and Washington Irving accomplishes his purpose of establishing a tradition for the American short story. Works Cited Barbarese, JT. "Landscapes of the American Psyche." Sewanee Review. 100 (1992): 599-603. Dawsone, Hugh J. "Recovering 'Rip Van Winkle': A Corrective Reading." Lauter, Paul, ed. The Heath Anthology of American Literature. Boston: Houghton Mifflin, 1988. Rubin-Dorsky, Jeffrey. "The Value of Storytelling: 'Rip Van Winkle' and 'The Legend of Sleepy Hollow' in the Context of The Sketch Book". Modern Philology. 82:4 (1985): 393-406. Shear, Walter. "Cultural Fate and Social Freedom in Three American Short Stories." Studies in Short Fiction. 25:3 (1988): 249-259.

Fighting Racism in Africa

In September 1984, the segregated townships of the blacks in South Africa’s Vaal Triangle, around twenty five miles away from Johannesburg, were suddenly lit up – burned by the fury of resistance. It seemed as though the helplessness felt by the blacks for two years during which their rebellion had been controlled had suddenly turned into extreme anger. In any case, it became apparent at the time that the region was ungovernable by all means. Moreover, it appeared as though the Soweto revolt of 1976 was being repeated in the history of South Africa (Davis). After all, the blacks had not been able to secure their rights in their own countries during that time. It is ironic that the blacks have had to fight racism in their own countries for a very long time. The African National Congress was established to struggle for their rights. On its website, the African National Congress describes itself thus: The ANC is a national liberation movement. It was formed in 1912 to unite the African people and spearhead the struggle for fundamental political, social and economic change. For nine decades the ANC has led the struggle against racism and oppression, organizing mass resistance, mobilizing the international community and taking up the armed struggle against apartheid. The ANC achieved a decisive democratic breakthrough in the 1994 elections, where it was given a firm mandate to negotiate a new democratic Constitution for South Africa. The new Constitution was adopted in 1996. The ANC was re-elected in 1999 to national and provincial government with an increased andate. The policies of the ANC are determined by its membership and its leadership is accountable to the membership. Membership of the ANC is open to all South Africans above the age of 18 years, irrespective of race, color and creed, who accept its principles, policies and programs (â€Å"What is the African National Congress†). Stephen Davis, in his book, Apartheid's Rebels: Inside South Africa's Hidden War, describes the African National Congress in greater detail. According to the author, this movement has acted as the chief mobilizing agency of black resistance in South Africa. Furthermore, the unrest experienced by South Africa during the mid-1980’s was staged by the African National Congress through a tremendous transformation of the blacks. The unrest was neither unplanned; nor was it short-lived. Rather, the main adversary of Pretoria – the African National Congress – had developed it through an ever-widening network of secret cells where blacks were politicized as well as schooled in all manners of confrontation (Davis). Although the African National Congress has played a part in the governance of South Africa, Davis claims that the movement is rather unruly in the sense that it employed clandestine couriers that slipped across international borders, in addition to insurgents that primed themselves for attacks, including sabotage, against their enemies who were understood to be superior in both numbers as well as weaponry. The author also details the relationship between the African National Congress and the South African Communist Party – an ally. The propaganda of Pretoria had exploited this connection, while the legislators of the United States had been troubled by the effect that sanctions would have had on this friendship. According to Davis, the South African Communist Party was influential enough in the policymaking process of the African National Congress to be a cause of worry. The surge of new recruits that had been trained in violent rebellion had also given rise to apprehension within the African National Congress. Oliver Tambo, an exiled leader of the African National Congress, had taken a rather radical position because of this friendship. Nevertheless, Tambo argued that the majority of the blacks would simply balk at the endorsement of Marxist rule if free elections were to take place in South Africa. Hence, Davis believes that the relationship between the South African Communist Party and the African National Congress was merely one of convenience for the latter. The African National Congress enjoyed the assistance of the South African Communist Party in its underground operations. Moreover, the South African Communist Party was known to supply weapons as well as intelligence information from its Russian sponsors to the African National Congress. At the same time, the South African Communist Party acknowledged the importance of the struggle against apartheid that the African National Congress was engaged in. What is more, the South African Communist Party hoped to establish a Marxist society once the African National Congress had won its struggle (Davis). Thus, Davis’ study describes the struggles, divisions, and weaknesses of the African National Congress, while also dwelling on the successes of the movement. As an example, the African National Congress was able to transform itself at a time when it was almost forgotten. The movement was able to spread its roots far and wide by nurturing alliances with the United Democratic Front, a movement of mass protest, in addition to the Congress of South African Trade Unions (Davis). Undoubtedly, the African National Congress has come a long way. At the same time, however, its history leaves a number of questions unanswered for the reader. The main question seems to be the following: In a world applauding the power of information and knowledge – must we continue to fight against discrimination? Sadly, the answer is, ‘Yes, our world is not civilized enough at this point. ’

Fake Blood With Knife Chemistry Trick

Heres a cool chemistry trick, perfect for Halloween! Trace a knife over your skin and leave a message that appears to be written in blood. The project works equally well with a spoon  but somehow loses impact. Try it... Bleeding Knife Materials You only need a few materials for this project, however, youll either need access to a lab for the chemicals or else you can order them online. Dull knife (we dont need real blood here)5 grams ferric chloride5 grams potassium thiocyanateWater Prepare the Magic Solutions Prepare saturated solutions. Youll know the solutions are saturated if no additional solid will dissolve in the liquid. Mix a few milliliters of water with the ferric chloride to dissolve it.Separately, mix a few milliliters of water with the potassium thiocyanate to dissolve it. Perform the Trick Coat the area of skin to be bloodied or written on with the potassium thiocyanate solution. Youll get the best effect (dripping blood) if the skin remains damp, but the color appears just fine even if you let the area dry.Dip the knife blade in the ferric chloride solution.Draw on your skin with the dampened knife blade. A deep red liquid resembling blood will appear where the two solutions mix. How It Works This chemistry trick is one form of a sensitive test for the ferric ion. A red color is produced by the reaction between the ferric ion and the thiocyanate ion. Bleeding Knife Clean-Up and Safety When youre done, rinse the blade and your skin under running water to remove the chemicals. The demonstration is safe to perform, but restrict the project to your arm or hand and avoid eyes, nose or mouth to avoid ingestion of the chemicals or irritation of mucous membranes. More Halloween Chemistry Apply chemistry for more Halloween fun. You can make a glow-in-the-dark jack-o-lantern, slime that looks like ghostly ectoplasm, or a mad scientist Halloween costume.