President Obamas National Export Initiative

Copernicus and His Gifts to Science essays

Copernicus and His Gifts to Science essays On February 19, 1473 Nicolaus Copernicus was born, destined to be one of the most influential men in scientific history. Throughout his years, Copernicus has contributed many thoughts to science. The Autograph De Revolutionibus, preserved in the Jagiellonian Library, is a result of work of the great scholar. In May 1514 Copernicus had written and tastefully distributed in text his Commentariolus, the first outline of those wiles eventually substantiated in De Revolutionibus Orbium Coelestium (On the Revolutions of the Heavenly Spheres, 1543). This piece confronted the geocentric cosmology that had been uncompromisingly accepted since of Aristotle. Copernicus proposed that the Earth along with other planets revolved around a central Sun could account in a simpler way for the same observed phenomena of the daily rotation of the heavens, the annual movement of the Sun through the ecliptic, and the sporadic motions of the planets. The new theory that Copernicus advocated in De Revolutionibus exhibits an irregular fusion of both drastic and traditional basics. But, Copernicus still held to the ancient Aristotelian principles of solid celestial spheres and perfect circular motion of heavenly bodies, and the entire Aristotelian physics of motion. He clung to the Ptolemaic version of planetary motion by means of complex mixtures of circles called epicycles. These aspects of the Copernican expositions do not alleviate the innovation or the impact of the final theory, or the author's unyielding certainty that his system was an accurate depiction of physical reality. The articulation of the heliocentric theory by Copernicus launched the foundation of the scientific revolution. The publication of De Revolutionibus Orbium Coelestium was a break through contribution in history. By referring to the Earth, a daily motion around its own axis and a yearly motion around the stationary Sun, Copernicus developed a thought that had vast insinuation...

Writting Essay Example | Topics and Well Written Essays - 250 words

Writting - Essay Example Every intercultural conflict should be resolved accordingly in order to avoid bad consequences. Here the differences in beliefs should be taken into account and each belief should be respected. In some cases if the person came to another country and his/her beliefs contradict the beliefs of the citizens of this country, the conflict can occur. A person also may appear in the group of people with the religious beliefs different from his own. In these cases the majority is usually recognized as right if conflict occurs. However, the cases can be different and every case should be considered separately. In the situation under consideration, a teacher wants to make his student kill frogs saying that it is necessary to pass the course. First, no course may have a task to kill animals and frogs are animals. There are people who are responsible for these and the teacher can’t and should not make his students kill animals to pass the course, especially if the person has religious beliefs that do not allow him to kill animals. In this case it is necessary the student should apply to college administration with the complaint and the request to resolve the

Compare and contrast the UK education system to the education system Coursework

Compare and contrast the UK education system to the education system in a country of your choice - Coursework Example The educational structure of UK can be considered as the most respected and recognized structure across the globe. It can be stated that each of phase of their educational system is so well planned that it cannot be easily duplicated. On the other hand, the educational structure of India is all well known as it gives an opportunity to students to explore various dimensions. The main area of similarity in the educational structure is in context primary and secondary education. In India as well as in UK, students join school at the age of five years and at the age of 11 years they are prepared to join secondary education which is often called as high school in India. The basic educational structure in both the countries is quite similar as children are first introduced to pre-school education. The teaching and learning system can be regarded as the most critical component when it comes to educational system in a specific country. In India the main focus is on developing a strong theoretical base so that students are able to handle practical assignments in later time period. A similar fashion of teaching and learning is observed in UK’s educational system where in the initial stage of education teachers are more inclined towards developing required skills within children. These skills are usually developed through making students aware about different theoretical frameworks (Machin & Vignoles, 2005). It can be stated that in both the countries the focus is on giving more assignments to children so that they are able to develop a large base of knowledge. The teachers as per both the educational systems adopt best practices so that students possess required knowledge related to any real time scenario. The educational system of UK and India faces a similar kind of challenge which is growing global competition. In these two countries educational system is inclined towards incorporating basic education amongst students but they

An explanation of the strain and cultural criminology theories and the criminal elements Essay Example for Free

An explanation of the strain and cultural criminology theories and the criminal elements Essay The fast-changing society is demanding improvement of the existing legal frameworks each and every day. Indisputably, this is considerably challenging the decisions made by policymakers and more especially the judiciary sector. The challenge is more intensified by the way we define the defendant, victim, and penalty imposed for any crime committed. The underlying problem is that there exist various cultural norms and natural law; which significantly differ with constitutional requirements. In other words, legal procedures are not sufficient in providing criminal facts that can help us clearly understand the criminal elements mentioned above. Nevertheless, many scholars in the field of criminology such as Robert K. Merton and Keith Hayward now believes we can rely upon the strain and cultural criminology theories. Inarguably, the relationship existing between the two theories goes beyond our expectation, more especially when analyzing any criminology case. In fact, many people have been convinced it would be appropriate if policymakers integrate some of the facts unrevealed by these theories when making or amending the criminal laws. The paper offers a detailed explanation of the two methods and more importantly, how they can be applied in the criminal case study of Mr. Heffernan convicted of the crime of cultivating cannabis plant which is an illegal plant and supply of the same plant products as drugs to the community. The case took place in the district court, New South Wales and has since sounded the trumpet over how the proceedings were unraveling the case that Mr. Heffernan was convicted with. This will be discusse d along with the criminal elements and criminal facts which were evident in the case. Strain theory argues that when an individual is pressurized by the community or by the factors in his environment, the pressure overwhelms him which forces him to satisfy his cultural inequalities and material requirements by engaging in crime as stated by (Agnew, 2001, p319) The crime, in this case, is a subject to the strain that oversees a high level of pressure that the victim cannot bear the burden of. There are numerous forms of stress best explained by GST. The diverse forms of strain do not exclude financial requirements. The fear may force one into committing a crime that he never intended. Merton in his strain theory argues that it is only a small margin of the people who face stress end up committing crimes. The group that is involved in offenses that emanate from the strain from external forces is seen as deviant since they view the world as if there exists no other solution for their problems. Morten argues that the group is then forced into crime despite the fact that it is against their will. Cultural criminology theory, however, presents a different view of such an instance. It argues that the individual rather enjoys the self-fulfilling feeling that comes about with being involved in criminal activity. The theory explains that when the personal gains the social requirements that he or she could have otherwise not achieved legally, they are left with a sense of insecurity while others feel self-fulfilled and okay when they have their requirements fulfilled. According to Presdee, (2003) Cultural criminology is distinctively conjectural, procedural and domineering slant that places criminals, cases and the control mechanism in the context of culture Linking the theory to the case of Heffernan to both methods, strain theory argues that the convicted was involved in the crime due to the strain that he was facing.   It is evident that he as the criminal was suffering from an extraordinarily high degree of anxiety that he could have otherwise avoided if he had a well-paying job if the parents were not sick if his wife had no medical complications and if he was not unwell. On the other hand, cultural criminology argues that the occurrence of the crime was purely projected from the nature of the community the offender comes from as stated by (Ferrell et al., 2004). This, therefore, makes the community to be viewed as the actual cause of the crime due because the factors that led to the offense against which Mr. Heffernan is convicted are subject to the same community. The offender presents various evidence to the jury that when analyzed helped, in coming up with a valid judgment. The case presented states that the offender is a vict im of the drugs misuse and trafficking laws which inhibit one from growing plants that are otherwise termed as illegal. It also prohibits the supply of the same to the community. Mr. Heffernan was caught with 32kgs of cannabis leaves that are more than the monetary amount which is said to be 25 kilograms as stated by (Cerdà ¡ et al., 2012, p22). He had surpassed a commercial margin which otherwise inevitably presents the idea of the sale of the same to the community. He was rather much more cooperative by taking the police to the ranch where he grew the plant. The evidence was based on the idea that the man was found in the hold of a few bags of the leaves, showed where he grew the leaves and accepted to be the only person involved with the same. Evidence presented before the jury was photographs of these bags of leaves and the plant as well as the $1400 that was in his custody. The offender argues that he has been working on a farm for over 33 years and in his work life, he has been a victim of many injuries which have presented themselves as a limiting factor to the type and the amount of work that he can be engaged in evidenced by the numerous medical rec ords submitted to the coat regarding the same. His wife’s letter also backs up the issue since its content explains how those injuries have impacted negatively on their lives and the lives of their kids. This is seen as one of the strains that the convicted is battling with that could have otherwise presented to be the cause of the crime as stated by (Agnew, 2007, p319). The offender also claims that his family has been haunted by a trail of illnesses beginning with his mother who is suffering from breast cancer and osteoarthritis. His father is also suffering from a heart disease and osteoarthritis. He has diabetes and has been needing insulin to survive bearing in mind that his wife also has health conditions that make Mr. Heffernan the only breadwinner. This trail of illnesses presents themselves as another form of strain that led to the unusual character of the victim. An aggregate of such issues may result in so much pressure that needs a person with an unyielding personality to handle. While this is seen as strain, the cultural criminology finds it as social factors which when linked caused the occurrence of the crime. This presents the social and the crime as distinctively of a parallel nature. He is also faced with some more pressure of taking care of their 14 years high school kid and the younger one in primary education. The family had just married a year ago which rather increases the commitments of the breadwinner. The offender’s family has been selling their property which was around $80000 and has now depreciated to around $60000. His house is also being mortgaged at $70000, and this would render the family homeless. He argues that it is due to this pressure that he decided to engage in this criminal act. The jury well understands the pressure that the offender is facing pointing out that an offender is a man of substance whose life has not been presented as a threat to any criminal record. The only criminal record that exists seems baseless to make an overall conclusion that the man is a criminal. Evidence presented by  Ã‚   Mr. P. Harper, the offender’s defendant. The evidence is full of commendations for the man. This evidence is based on the peopl e who know Mr. Heffernan stating that the individual’s behaviors have been outstanding, something that even the judge recognizes by saying that Mr. Heffernan is a man of excellent character in the argument number 11 0f the case. The case presents itself from a criminal act that has been catalyzed by the excessive pressure faced by the convicted by strain theory which recognizes the existence of such anomalies in individual’s life when faced with extreme pressure. The issue that revolves around the life of the convicted is a monetary issue. Money, in this case, could have been the solution to all his problems since if he had enough of it, he could have saved his parent’s property from being sold. He could also have been able to take care of his sick relatives, his sick wife and cater for the life of the kids who are still in school. He could also have not gone to the extent of growing and distributing cannabis which is the states laws and the drugs misuse and trafficking act of 1985. The judge recognizes all the burdens that the convicted has to bear in his life considering that he is 51 and has to take care of all this pressure. About GST and the reasons that the convicted gives regarding the c ase he has been charged with, there were a few goals that the convicted was unable to meet. His desire to cater to his family and his parents and the desires to have a well-paying job dragged him to committing this crime. The unfolding circumstances are in line with the arguments of strain theory. Cultural criminology which seeks to understand crime in the context of culture is inevitably applicable in the case. The crime was subject to subcultures which revolve around what the community around the offender does and the rules that exist governing this particular crime. The rules governing drug and substance abuse have given guidelines on the judgment against the convicted depending on the nature and the extent of the committed crime. In a nutshell, it is the society that leads to the development of the rules that exist against the offenses revolving around drug and substance abuse. The occupation of the offender and the circumstances revolving around his life which led him to commit the crime are part and puzzle of the culture and community. As strain theory argues that the crime that was committed was subjected to the pressure of the life of the convicted, cultural criminology sees it as just another culture of various subcultures that may have led to the crime. Growing of Cannabis and distributing it to the public is considered to be a crime since there are rules against it as stated by (Reuter, 2010). If the drug had to be distributed to the community, the general impact on the youths would have been dire since this is the most likely group to the issue. As such, the convicted is seen to have been an agent of community destruction since he was a man of age and a parent. He is seen to have not minded about the lives of the other kids in the community and committed the crime for monetary gain. The strain theory comes about to argue that withstanding the pressure of the life the convicted was facing needed him to have looked for an alternative way of getting money. The convicted argues that he had complications regarding his health and that he was nearing his retirement age. He was forced to grow cannabis after ordering seeds from the United Kingdom which he later planted. It is the same marijuana that was harvested and packed before it was confiscated by the police. The theory gives out a clear argument that the man had small means of supporting his family using whatever he was gaining. This case is brought out clearly by the fact that the convicted had no previous criminal records and that his life was clean therefore it is due to what seemed to be a sort of excessive pressure that led him to commit the crime. On the other hand, cultural criminology makes the mere mention of cannabis a criminal activity where any activity that is associated with the drug has been criminalized. With the building of a belief that this activity is already a crime, the theory argues that rules that forbid it are developed ensuring that those who are associated wi th cannabis are taken into justice without considering any argument or reasons behind the act. With all the associated facts and evidence having been presented, Mr. Harper claims that the case on which the offender has been convicted with is not a drug trafficking case since it was planned as a one-time business. The pressure under which the convicted was suffering from forcing him to establish a cannabis plantation which he prepared to sell only once and increase the value of the ranch. This was one of the strain factors that made him respond to the pressure by involving himself in the crime. The judge, however, argues that it is irresponsible for a man with a family to release cannabis of a monetary amount to the society which would impact negatively on the lives of the youths as stated by (Lowinson, 2005). The judgment against both crimes was supposed to be ten years for the crime of growing cannabis and 15 years for trafficking.   The judge at the end of it all understands the pressure that the convicted was facing and gives him a sentence of two and a half years. The strain theory gives out a sense of reasoning and weighing of matters such that the degree of pressure was duly recognized by the jury. The cultural criminology theory, on the other hand, views the crime generally as breaking the law that originated from the same issue. It argues that the moral standards of the community which harbors the roots of the law have declined. The argument here is that the community from which the convicted comes from and the crime that was committed is viewed as one and the same thing. With the weak empirical evidence in support of the strain theory, the presented arguments were not sufficient to ensure that the convicted was set free. Rather it just explains the problems that the law class individuals are facing without taking into consideration of the larger picture of the community and the white collar crimes as stated by (Aseltine et al., 2000, p256). Crimes in such levels are the ones that decapitate the community. The theory deals with individuals rather than the community on which the crime and the criminals thrive. These issues are well explained by the cultural criminology theory which does not only just present its arguments from a particular line or level of crimes. It digs into every crime be it white collar or any other sort of the offense. Conclusion The case presented above shows how strain can cause various crimes. The arguments put forward to show that some forms of tension can be so haunting such that the victim ends up being involved illegal activities that end up bringing peace to the life of the victim. The judge, however, takes into consideration the strain that the convicted is facing, and from this, a valid judgment is given. As the strain theory views this crime as a result of pressure, the cultural criminology sees it as the larger picture of the nature of the community from which the convicted comes from. However, the theories try to explain the kind of judgment that is passed as not usual from the rest since consideration depending on the prevailing circumstance is taken note of. Reference Agnew, R., 2001. Building on the foundation of general strain theory: Specifying the types of strain most likely to lead to crime and delinquency. Journal of research in crime and delinquency, 38(4), pp.319-361. Agnew, R., 2007. Pressured into crime: An overview of general strain theory. Aseltine Jr, R.H., Gore, S. and Gordon, J., 2000. Life stress, anger and anxiety, and delinquency: An empirical test of general strain theory. Journal of Health and Social Behavior, pp.256-275. Cerdà ¡, M., Wall, M., Keyes, K.M., Galea, S. and Hasin, D., 2012. Medical marijuana laws in 50 state: investigating the relationship between state legalization of medical marijuana and marijuana use, abuse, and dependence. Drug and alcohol dependence, 120(1), pp.22-27. Chan, J.B., 1997. Changing police culture: Policing in a Multicultural Society. Cambridge University Press. Ferrell, J., Hayward, K., Morrison, W., and Presdee, M. eds., 2004. Cultural criminology unleashed. Routledge. Lowinson, J.H. ed., 2005. Substance abuse: A comprehensive textbook. Lippincott Williams Wilkins. Mazerolle, P., Piquero, A.R. and Capowich, G.E., 2003. Examining the links between strain, situational and dispositional anger, and crime further specifying and testing general strain theory. Youth Society, 35(2), pp.131-157. Presdee, M., 2003. Cultural criminology and the carnival of crime. Routledge. Reuter, P., 2010. Marijuana legalization: what can be learned from other countries. Baltimore, MD: RAND Drug Policy Research Center, University of Maryland.

The Satire of Animal Farm :: Animal Farm

The Satire of Animal Farm Orwell's book, "Animal Farm", is full of satire. This satire is Orwell's way of communicating problems and resolutions. The main message in Animal Farm is that power cannot be divided equally. There will never be equality for all. Once power is obtained it is always abused, and power causes all to think as the leader does. Equality does not exist, for it is impossible for everyone to be equal. There will always be a leader and there will always be followers, and they will never be equal. A society in which all are equal will never exist because people will have different opinions on the way that the society should be run. "This arrangement would have worked well enough if it had not been for the disputes between Snowball and Napoleon. These two disagreed at every point where disagreement was possible." Snowball and Napoleon are battling for control of the farm, they both want to be the leader because they know that the leader has the most privileges. The animals that are in charge, the pigs, do less work than the other animals. "All that year the animals worked like slaves." The title of leader is highly sought after, because the leader tells everyone what to do without actually having to work. The pigs not only do less work but they receive more food. "Once again all the rations were reduced, except those of the pigs and the dogs." The fact that the pigs receive more food than the other harder working animals, shows that the farm is full of inequality. This type of governing is wrong, and Orwell wants it to stop. Less power should be given to the leader, so that the leader and his followers can be more equal. Once a group or an individual obtains power, it is impossible to manage it correctly. The leader will always take advantage of his power. Power causes the leader to make decisions, that will only better himself. "... Boxer was being sent to the knacker's." The pigs killed an animal just so that they could make some money. The power led them to this decision, they could kill Boxer, make some money, and no one would ever find out. Everyone has heard about the golden rule: "whoever has the gold makes the rules." This applies to "

Financial Analysis of I.T Ltd.

Company background I. T Limited (0999. HK) is an investment holding company based in Hong Kong. It was listed on the main board of The Hong Kong Stock Exchange on 4-March-2005. The company offers a wide range of apparel products. It sells its products as well as offers a variety of national and international brands through its network of retail stores. As of February 28, 2011, it operated 392 stores in Hong Kong and Mainland China. Objective To undertake a comprehensive analysis on the financial performance of I. T. Limited. Detailed financial ratio analysis will be performed.An estimation of the firm’s cost of equity capital and weighted average cost of capital will also be provided. Horizon of analysis We will focus on its performance in the latest 5 fiscal years. A) Detail financial analysis The financial analysis will be conducted in two ways. First, the major accounts on financial statements will be inspected in order to derive a general picture on the healthiness of the business. Second, PERL (Performance, Efficiency, Risk, Liquidity) framework will be used to further analyze the financial performance of the company. I.Going through the financial statements We can get a glimpse of the healthiness of the business by looking into the trend of accounting items in income statement, balance sheet and cash flow statement respectively. Consolidated income statement (Referring to appendix A – table 1 and 2) 2008/09 was a special year, financial tsunami happened. Therefore there was a huge profitability impact in that year, resulting in a large decrease in operating profit. And since the market recovered in 2009/2010, the profitability suddenly increased a lot in that fiscal year. Other than these wo special years, the overall growth trend in sales turnover, costs, and profit is healthy. (Referring to appendix A – table 3) Standardizing the income statement can extract extra information. All the accounts are expressed as a percentage of turnov er. The company has done a good job in cost controlling, since the cost of sales as a percentage of turnover is in a decreasing trend, hence the gross profit margin is in an increasing trend. On the other hand operating expenses fluctuates at about 50-51% of turnover, but since cost of sales has a greater decrease, the net effect is operating profit is in an increasing trend.Consolidated balance sheet (Referring to appendix A – table 4) In general, total assets experience an increasing trend. This is reasonable since the business is at a growing stage. One notable point is the growth of non-current assets look greater than current assets, especially property, furniture and equipment has a very significant increase in 2010/11, this is probably due to the rapid expansion of retails stores in Hong Kong and China. And as a result, there is a significant increase in inventories in 2010/11 too. (Referring to appendix A – table 5)Similar conclusions can be drawn by viewing th e same accounts in a standardized balance sheet (all items are standardized by total asset value in the fiscal year). Property, furniture and equipment, and inventories make up most of the total assets. (Referring to appendix A – table 6) Liabilities also grow a lot with total assets as the business expands. Notably there is a significant increase in both short-term and long term bank borrowings. In addition the payable accounts also increased more than 100%, meaning that the company bought stocks or services from suppliers on credit more than before.This growth of liabilities is fine as long as the company can generate consistent operating cash flows, as we will see in the next section. (Referring to appendix A – table 7) Similar conclusions can be drawn at standardized balance sheet, bank borrowings and payables increased significantly, especially for longer term bank borrowings. (Referring to appendix A – table 8) The growth of the business was mainly funded by growing liabilities, as we can see that the growth of equity is not so significant, the company has not issued new shares to get funding. The company has simply retained some of the profit in each year into reserves.Consolidated cash flow statement (Referring to appendix A – table 9) The company has improved its cash flow generation as its business grew. The profitability of the company increased, and so as the cash generated from operation. And since the company has increased in size, it has increased its ability to finance from banks, therefore it also increased its cash generated from financing activities. Although the company has increased investment in fixed assets and hence the cash outflow from investment, this is offset by the increase in cash flow from operation and financing.II. PERL (Performance, Efficiency, Risk, Liquidity) analysis (Referring to appendix B and C) 1) Performance Profit margins (Gross, operating, net) Gross profit margin keeps increasing. The la test figure is 63. 35%, which is a very high margin. This is probably due to the increased brand image of the company, hence the company can increase the selling price of the products. Also, the company shifted the focus on selling products of its own brands more than imported brands, this also increased the gross profit margin.Both operating and net profit margin are also in an increasing trend (despite year 2008/09, a special year which financial crisis happened). But it is worth noting that the current margins are 12. 08% and 10. 12% respectively, which show a great difference from gross profit margin. This indicate the operating expenses are very high, eating up more than 50% of profit margin. The company should think ways to further reduce operating costs. Return on Equity (ROE) The company has increased its ROE along the years despite the special year 2008/09. The latest ROE is actually a high return, 21. 6%. So what are the main drivers of such high return? By utilizing DuPon t analysis, the reason for return growth can be found: ROE = Net Profit Margin x Asset Turnover x Financial Leverage The net profit margin is increasing throughout the years. At the same time, since the financing ability of the company has increased, the financial leverage also increased. These two factors drove the ROE up, offsetting the diminishing effect on ROE by asset turnover. The asset turnover actually decreased in last two fiscal years, indicating the efficiency of turning asset to revenue decreased.It is a bit worry to see the ratio decreased from 1. 6 to 1. 17 in these 2 years. It may indicate that the asset size of the firm is too large, further expansion may not bring further increase in revenue. This may be an indicator of the firm has passed its optimum point and management must take extra care in evaluating whether the company should invest in expanding more retail stores or not. Extended DuPont analysis breaks down net profit margin into tax burden, interest burden, and EBIT margin. Tax burden of the company is actually increasing, i. e. it has to pay more effective tax hence impacting the net profit margin.But it’s still fine as the effective tax rate is still at about 20%, which should be quite low when compared to effective tax rate outside Hong Kong and China. Interest burden also experiences an increasing trend. This is reasonable since the company has increased financing ability and financed through more bank loans. EBIT margin is increasing, offsetting the negative effect of tax burden and interest burden. 2) Efficiency Fixed asset Fixed asset turnover is in a decreasing trend (from 16. 08 to 7. 98 in last five years). This indicates the efficiency of generating sales revenue from fixed assets investment is lowering.This confirms with the decreasing asset turnover ratio mentioned above. However the ratio is still at a high level, the management should still invest in fixed asset and expand the business, but extra care should be t aken to determine the amount and scale to be invested. Inventory Inventory turnover is decreasing (from 3. 72 to 2. 48 in last five years). This indicates that in general, the speed of stocks selling has slowed down as the business expands. When this ratio is converted to days of inventory on hand, the meaning can even be clearer. The days increased from about 98 days to 147 days in these 5 years.Overstocking, importing or producing products which are not popular, or insufficient marketing efforts are all possible reasons to this decreasing efficiency. Receivables Receivables turnover is decreasing. To get a clearer meaning, the ratio is converted to days of sales outstanding, and this ratio is increasing (from 1. 97 to 11. 49). This ratio means on average how many days the company’s customers who buy on credit will pay their bills. This increasing ratio means that it takes more time to collect the bill from customers, meaning that capital has to be tied up for longer period. However the number actually is not large, it’s about 12 days and therefore an acceptable value. Payables Payables turnover decreased from 11. 14 to 5. 51. The ratio can be converted to number of days of payable. This ratio increased from 32. 76 to 66. 23. This ratio is the average amount of time it takes to pay its bills. The time has increased significantly. It showed the advantage of the growth of the company, i. e. when the company went listed and expanded, the ability to pay on credit increased. This increased time to pay bills increases the flexibility to manage working capital and hence benefits the operation of the company.Working capital The effectiveness of the company in using working capital has increased since the working capital turnover increased from 2. 72 to 4. 46 in last five years. This means that more sales revenue is generated for each dollar of working capital which funded the sales. This is probably due to increased size of the company, so that the compa ny can get more funding by short-term bank loans, and increase its payables to different creditors. These increased funding are used to purchase inventories to generate sales revenue. 3) Risk Gearing All debt-to-equity, debt-to-asset and financial leverage ratios are in an increasing trend.As the company grows, more funding is needed. Financing by debt issuance is better than equity issuance since the required return by debt is lower, and there is possible tax advantage on debt payment. These three ratios are still in a healthy range and further increase in the ratio is still possible. Debt-to-common equity ratio is 0. 32 and debt-to-asset ratio is 0. 18, these two numbers are fairly low. This indicates that the company has a considerable capacity in debt financing if needed. Coverage Interest coverage ratio maintains at a high level (159. at 2010/11), although the company has increased financing by bank loans. That means the operating profit is more than enough to cover the interes t expense and indicate that the business is healthy. Cash flow coverage ratio is also at adequate level despite it has fallen a bit (50. 54 at 2010/11). This is also a healthy signal because net cash flow is positive and adequate. 4) Liquidity Cash conversion cycle Cash conversion cycle is the days the company takes to convert its investment in inventories back into cash. The company has an increased cash conversion cycle, due to the increase in days on inventory on hand.This is still an acceptable length (92. 15 days), but the company should try to lower the days in inventory on hand as mentioned above. Current and acid test ratio Both current and acid test ratio are decreasing, but they are still at a healthy level. Current ratio is at 1. 85, meaning the current assets are 1. 85 times of current liabilities, which is sufficient for its short-term obligations. Acid test ratio is 1. 12, meaning the cash-like current assets are 1. 12 times of current liabilities, indicating that it i s sufficient to cover its short-term liabilities by short-term cash.Operating cash flow to maturing obligations This is also a measure of the company’s ability to meet short term liabilities from cash flow. Although the overall cash flow has improved, the current liabilities has also increased considerably, therefore this ratio is not at a high level (0. 44). The major cash outflow is from purchasing fixed assets and repayment of bank loans. Management should control the cash outflow in these two areas in order to improve the overall liquidity. III. Summary The company has a healthy business. It has an increasing net profit and positive cash flow.The ROE and profit margin are at good levels. It utilized bank loans to further expand its business, while the leverage ratios are still in a healthy range. There is no liquidity problem associated with the company as seen in liquidity ratios. However the management should focus on improving the efficiency of the company while expand ing the business. The major concern here is reducing days of inventory on hand, in order to reduce the length of cash conversion cycle. To sum up, this is a company with good financial performance, and therefore it is worth to invest in this company.B) Cost of equity capital Capital Asset Pricing Model (CAPM) is used to determine the cost of equity capital. There are three major inputs in CAPM equation: risk-free rate, beta of the company stock to a benchmark market, and equity risk premium of the benchmark market. Since I. T. Limited is a Hong Kong based company, therefore the input parameters mentioned above should come from Hong Kong. Risk-free rate Hong Kong government do not issue bill or bond (despite the newly launched ibond, but that is a floating rate bond which its purpose is for general public to protect inflation).Therefore risk-free rate should be the yield on Exchange Fund Bills issued by Hong Kong Monetary Authority. Risk-free rate should be the yield on short-term bi ll, therefore the yield on one-month bill is selected, which is 0. 05%. Stock beta Hang Seng Index (HSI) is the benchmark index in Hong Kong. 5 years of monthly return stock of I. T. Limited and HSI were obtained. Stock Beta of I. T. to HSI can be calculated by using Slope function of Excel, or regressing both return series. The estimated beta is 1. 399, meaning that the stock of I. T.Limited is more volatile than the index. R2 coefficient is 0. 2261, meaning that about 22. 61% of the variability of the stock returns can be explained by variability in the index. Equity risk premium According to Zhu & Zhu (2010), the equity risk premium of Hong Kong is 8. 19%. Applying CAPM: Cost of equity capital = (0. 05 + 1. 399*8. 19)% = 11. 51%. C) Weighted average cost of capital (WACC) The company has not issued any debt. The â€Å"debt† of the company is in the form of bank borrowings, so the effective interest rate of borrowing will be treated as cost of debt.In the latest annual repo rt, the effective interest rate is 1. 4% (from notes 23 of annual report). Total bank borrowings is HKD594. 145M, total equity is HKD1846. 961M, therefore: WACC = 594. 145 / (594. 145 + 1846. 961)*1. 4% + 1846. 961 / (594. 145 + 1846. 961)*11. 51% = 9. 049% References: Hong Kong Monetary Authority, Exchange Fund Bills and Notes fixing (http://www. info. gov. hk/hkma/eng/press/index_efbn. htm) Zhu & Zhu (2010) – Estimating the Equity Risk Premium: the Case of Greater China, Jie Zhu, Xiaoneng Zhu (http://citeseerx. ist. psu. edu/viewdoc/download? doi=10. . 1. 175. 7333&rep=rep1&type=pdf) Appendix A – Selected figures from financial statements Table 1 – Excerpt from summarized consolidated income statement 201120102009200820072006 HK$'000HK$'000HK$'000HK$'000HK$'000HK$'000 Turnover3,834,422 2,995,952 2,733,256 2,021,283 1,530,763 1,314,443 Cost of sales(1,405,482)(1,176,707)(1,121,570)(819,423)(640,442)(540,243) Gross profit2,428,940 1,819,245 1,611,686 1,201,860 8 90,321 774,200 Other income – incentive income0 13,200 0 0 Other (loss)/gain(7,544)3,791 (11,123)1,900 (4,395)(273) Impariment of goodwill0 (4,217)(59,569)0Operating expenses(1,958,255)(1,524,760)(1,468,877)(1,002,046)(749,898)(642,553) Operating profit463,141 307,259 72,117 201,714 136,028 131,374 Table 2 – Growth trend of turnover, costs and profit, calculated based on consolidated income statement 20112010200920082007 Increase/Decrease (%) Turnover27. 99%9. 61%35. 22%32. 04%16. 46% Cost of sales19. 44%4. 92%36. 87%27. 95%18. 55% Gross profit33. 51%12. 88%34. 10%34. 99%15. 00% Operating expenses28. 43%3. 80%46. 59%33. 62%16. 71% Operating profit50. 73%326. 06%-64. 25%48. 29%3. 54% Table 3 – Excerpt from summarized and standardized consolidated income statement 01120102009200820072006 Turnover100. 00%100. 00%100. 00%100. 00%100. 00%100. 00% Cost of sales-36. 65%-39. 28%-41. 03%-40. 54%-41. 84%-41. 10% Gross profit63. 35%60. 72%58. 97%59. 46%58. 16%58. 90% Other income – incentive income0. 00%0. 44%0. 00%0. 00%0. 00%0. 00% Other (loss)/gain-0. 20%0. 13%-0. 41%0. 09%-0. 29%-0. 02% Impairment of goodwill0. 00%-0. 14%-2. 18%0. 00%0. 00%0. 00% Operating expenses-51. 07%-50. 89%-53. 74%-49. 57%-48. 99%-48. 88% Operating profit12. 08%10. 26%2. 64%9. 98%8. 89%9. 99% Table 4 – Excerpt from summarized consolidated balance sheet 20112010200920082007HK$'000HK$'000HK$'000HK$'000HK$'000 ASSETS Non-current assets Property, furniture and equipment727,022 233,395 229,124 179,850 93,191 Current assets Inventories736,717 394,520 411,145 323,724 196,299 Table 5 – Excerpt from summarized and standardized consolidated balance sheet 20112010200920082007 ASSETS Non-current assets Property, furniture and equipment22. 13%11. 83%13. 44%11. 59%9. 38% Current assets Inventories22. 42%20. 00%24. 12%20. 85%19. 77% Table 6 – Excerpt from summarized consolidated balance sheet 20112010200920082007 LIABILITIES Current liabilities Bank borrowings (214,911)(47,400)(47,400)(10,000)0Trade and bill payables(360,545)(149,488)(155,993)(121,840)(66,805) Accruals and other payables(349,524)(178,245)(135,677)(140,200)(71,648) Non-current liabilities Bank borrowings(379,234)(35,200)(82,600)0 0 Table 7 – Excerpt from summarized and standardized consolidated balance sheet 20112010200920082007 LIABILITIES Current liabilities Bank borrowings-6. 54%-2. 40%-2. 78%-0. 64%0. 00% Trade and bill payables-10. 97%-7. 58%-9. 15%-7. 85%-6. 73% Accruals and other payables-10. 64%-9. 04%-7. 96%-9. 03%-7. 21% Non-current liabilities Bank borrowings-11. 54%-1. 78%-4. 85%0. 00%0. 00%Table 8 – Excerpt from summarized consolidated balance sheet 20112010200920082007 EQUITY Capital and reserves Share capital119,725 115,504 115,504 115,468 103,950 Reserves1,727,236 1,362,219 1,096,205 1,105,369 722,803 Non-controlling interests(3,749)0 0 0 0 Total equity1,843,212 1,477,723 1,211,709 1,220,837 826,753 Table 9 – Excerpt from summarized con solidated cash flow statements 20112010200920082007 HK$'000HK$'000HK$'000HK$'000HK$'000 Net cash generated from operating activities450,446 366,025 135,589 243,939 91,589 Net cash used in investing activities(508,347)(137,011)(156,242)(110,300)(101,843) Net cash generated from/ used in) financing activities204,453 (47,400)22,668 (76,497)(49,807) Net increase in cash and cash equivalents146,552 181,614 2,015 57,142 (60,061) Appendix B – Ratio formula Performance Profit margins Gross profit margin = Gross Profit / Turnover Operating profit margin = Operating Profit / Turnover Net profit margin = Net Profit for the year / turnover Return ratio Return of equity (ROE) = Net Profit for the year / Averageyear, year-1 (Share capital + Reserves) Decomposition of ROE ROA = Net Profit for the year / Averageyear, year-1 (Total Assets) ROE = ROA x Financial Leverage DuPont Decomposition of ROEAsset turnover = Turnover / Averageyear, year-1 (Total Assets) Financial leverage = Averageyear, year-1 (Total Assets) / Averageyear, year-1 (Share capital + Reserves) ROE = Net profit margin x Asset turnover x Financial leverage Extended DuPont Decomposition of ROE Tax burden = Net profit for the year / Profit before income tax Interest burden = Profit before income tax / (Operating Profit + Share of profit of jointly controlled entities) EBIT margin = (Operating Profit + Share of profit of jointly controlled entities) / Turnover ROE = Tax burden x Interest burden x EBIT margin x Asset turnover x Financial leverageEfficiency Fixed asset turnover = Turnover / Averageyear, year-1 (Property, furniture and equipment) Inventory turnover = Turnover / Averageyear, year-1 (Inventories) Days of inventory on hand = 365 / Inventory turnover Receivables turnover = Turnover / Averageyear, year-1 (Trade and other receivables) Days of sales outstanding = 365 / Receivables turnover Payables turnover = Cost of sales / Averageyear, year-1 (Trade and bill payables) Number of days of payable = 36 5 / Payables turnoverWorking capital turnover = Turnover / Averageyear, year-1 (Net current assets) Risk Debt-to-common equity ratio = (Short term + Long term bank borrowings) / (Share capital + Reserves) Debt-to-asset ratio = (Short term + Long term bank borrowings) / Total assets Financial leverage = Averageyear, year-1 (Total Assets) / Averageyear, year-1 (Share capital + Reserves) Interest coverage ratio = Operating profit / Interest expense Cash flow coverage ratio = Net increase in cash / Interest expense LiquidityCash conversion cycle = Days of sales outstanding + Days of inventory on hand – Number of days of payable Current ratio = Current assets / Current liabilities Acid test ratio = (Current assets – Inventories) / Current liabilities Operating cash flow to maturing obligations = Operating cash flow / Current liabilities Appendix C – Calculated ratios 20112010200920082007 Performance Profit margins Gross profit margin63. 35%60. 72%58. 97%59. 46%58. 16 % Operating profit margin12. 08%10. 26%2. 64%9. 98%8. 89% Net profit margin10. 12%8. 77%1. 56%8. 46%8. 0% Return ratios ROE23. 35%19. 53%3. 50%16. 70%15. 55% Decompsition of ROE ROA14. 76%14. 29%2. 61%13. 43%13. 05% ROA*Financial Leverage = ROE23. 35%19. 53%3. 50%16. 70%15. 55% DuPont decompistion of ROE Asset turnover1. 46 1. 63 1. 68 1. 59 1. 63 Financial Leverage1. 58 1. 37 1. 34 1. 24 1. 19 Net profit margin*Asset turnover*Financial Leverage = ROE23. 35%19. 53%3. 50%16. 70%15. 55% Extended DuPont decomposition of ROE Tax burden80. 65%83. 29%53. 97%81. 23%82. 63% Interest burden100. 46%100. 86%103. 66%106. 90%112. 12% EBIT Margin12. 49%10. 44%2. 8%9. 74%8. 63% Tax burden*Interest burden*EBIT Margin*Asset turnover*Financial Leverage = ROE23. 35%19. 53%3. 50%16. 70%15. 55% Efficiency Fixed asset turnover7. 98 12. 95 13. 37 14. 81 16. 08 Inventory turnover2. 48 2. 92 3. 05 3. 15 3. 72 Days of inventory on hand146. 89 124. 95 119. 58 115. 82 98. 19 Receivables turnover31. 76 31. 98 5 1. 12 81. 59 185. 10 Days of sales outstanding11. 49 11. 41 7. 14 4. 47 1. 97 Payables turnover5. 51 7. 70 8. 07 8. 69 11. 14 Number of days of payable66. 23 47. 38 45. 21 42. 01 32. 76 Working capital turnover4. 6 3. 91 4. 24 3. 39 2. 72 Risk Debt-to-common equity ratio0. 32 0. 06 0. 11 0. 01 0. 00 Debt-to-asset ratio0. 18 0. 04 0. 08 0. 01 0. 00 Financial Leverage1. 58 1. 37 1. 34 1. 24 1. 19 Interest coverage ratio159. 70 119. 70 29. 64 646. 52 45342. 67 Cash flow coverage ratio50. 54 70. 75 0. 83 183. 15 (20020. 33) Liquidity Cash conversion cycle92. 15 88. 99 81. 51 78. 28 67. 40 Current ratio1. 85 3. 00 2. 80 2. 93 4. 66 Acid test ratio1. 12 2. 08 1. 70 1. 91 3. 42 Operating cash flow to maturing obligations0. 44 0. 85 0. 36 0. 77 0. 58