Economic Value Added And Shareholder Value Added Accounting Essay

Economic Value Added And Shareholder Value Added Accounting Essay Agrawal (2007) defines shareholder value added (SVA) as the term used for the difference between the wealth held by the shareholders at the end of a given year and the wealth they held the previous year. In other words, SVA is the estimated future cash flows that are discounted to present value to calculate the value of the firm continuously. Measuring the current performance is based on comparing these cash flow estimates and periods real cash flow (Rappaport, 1986). Therefore, SVA represents the economic profits generated by a business above the minimum return required by all providers of capital. Value term is added when the overall net economic cash flow of the business exceeds the economic cost of all the capital employed to produce the operating profit. Hence, SVA integrates financial statements of the business (profit and loss, balance sheet and cash flow) into one meaningful measure. Economic Value Added (EVA) is best explained by Drucker (1998) as, EVA is based upon something we have known for a long time: What we call profits, the money left to service equity, is usually not profit at all. Until a business returns a profit that is greater than its cost of capital, it operates at a loss. In other words, EVA is a measure that tells what has happened to the wealth of shareholders. Accordingly, earning a return greater than the cost of capital increases value of a company, and earning less destroys the value. EVA is calculated as the excess of net operating profit over the cost of capital including cost of equity. EVA is the mostly encountered index of measuring economic profit. It is an index of measuring internal and external performance of companies being introduced by Stern Steward American consulting firm. EVA index is relevant in quantifying the capacity of a company of creating value for capital suppliers; capital cost represents the index of the average efficiency expected by investors under similar risk circumstances. Return on Capital Employed There are many definitions for the return on capital employed (ROCE), but the widely-used definition, as evidenced by the fact that it is the standard measure produced by DATASTREAM and Standard Poors Compustat Service is ROCE equals to EBIT over capital employed. It is measured by comparing the profits made by the firm with the capital used in making the profit and set as a percentage or fraction. Hence, ROCE measures the efficiency of management in the application or use of the organizations funds or resources in a given financial period Value Based Management According to Coca-Colas A Guide to Implementing Value-Based Management, 1997, VBM is defined as a set of principles that allows us to manage value at all levels of our business. Value creation becomes not just our companys mission, it becomes the philosophy we work with daily. It becomes the framework for everything we do. VBM measures are generally based on comparison between (a) corporate market value corporate accounting book value and/or (b) on the residual income measure. VBM provides an integrated management strategy and financial control system designed to mitigate agency conflicts and increase shareholder value. VBM systems attempt to accomplish this goal by providing managers with a set of decision-making tools (metrics) that can identify which alternatives create or destroy value, and often by linking compensation and promotions to shareholder value. VBM provide a mechanism for linking managers decisions to firm performance outcomes that create shareholder value and provide a means to further align shareholder and managerial interests. Blue Ocean Strategy Blue ocean strategy (BOS) is a set of ideas encompassing tools and methodologies to help companies gain a competitive edge by creating uncontested market space or Blue Oceans. It is based on the view that market boundaries and industry structure are not given and can be reconstructed by the actions and beliefs of industry players. W. Chan Kim and Rene Mauborgne, called this as the reconstructionist view. Blue ocean strategies reconstruct market boundaries, thereby freeing companies from head-to-head competition and instead opening new market space to achieve a leap in value for both buyers and for themselves. Identifying a potentially successful strategic move does not require any special capacities, vision or foresight about the future. All new insights come through looking at familiar data from a new perspective. Blue ocean strategy integrates the range of a firms functional and operational activities. In this sense, blue ocean strategy is more than innovation. It is about strategy that embraces the entire system of a companys activities. METHODOLOGIES Shareholder Value Added The SVA methodology is an approach to assist management in the decision making process. Its applications include performance monitoring, capital budgeting, output pricing and market valuation of the entity. SVA = (Present value of cash flow from operations during the forecast period + residual value + marketable securities) Debt. The net of the present value of cash flow and the opportunity cost associated with the firms capital is a measure of the surplus or additional value provided to the shareholders as a result of the firms activities. This formula is expressed in dollar terms for a period Economic Value Added The EVA methodology can be applied to create wealth for the owners of businesses from all levels or size of the firms. It is a performance measurement which directly links strategy to value and is therefore the key to wealth creation. EVA = Net Operating Profit after Taxes (NOPAT) (Capital*WACC) NOPAT is an operating performance measure after taking account of taxation, but before any financing costs. Interest is totally excluded from NOPAT as it appears implicitly in the capital charge. Capital costs include both the cost of debt finance and the cost of equity finance. The cost of these sources of finance is reflected by the return required by the funds provider. This capital cost is referred to as the Weighted Average Cost of Capital Economic Value Added will increase if: New capital is invested and it earns more than the cost of capital. Capital is divested from the business if it does not cover the cost of capital. NOPAT increases without increasing the capital employed. Return on Capital Employed The ROCE methodology indicates how well the management has used the investment made by owners and creditors into the business. It is commonly used as a basis for various managerial decisions. ROCE = EBIT/ (Total Assets Current Liabilities) The ROCE ratio can be found for a number of years so as to find a trend as to whether the profitability of the company is improving or otherwise. Value Based Management VBM methodology provides an integrated framework for making strategic and operating decisions. By aligning internal business processes, strategies, and corporate governance and investor communications, VBM provide a common discipline, a consistent culture, and a singular focus on value for all business activities. There are many ways to measure and implement VBM in the business. Four approaches have been widely used in practice. One is fundamental value analysis (FVA). Two is returns to shareholder (RTS). Three is economic profit. Four is the relationship between the market value of the firms financial instruments and the book value of the firms operating assets (MVA, the q- ratio, and the market-to-book ratio). Planning and control analyses of the structure of income, costs, and investments are also employed in implementing the four approaches. In implementation, each approach to value based management (VBM) starts with strategic planning processes, ties performance to incentive compensation, requires top management involvement, as well as information and training programs for employees. The four approaches to VBM also take into account other stakeholders such as employees, consumers and community. VBM must also evaluate changing economic, cultural, and political environments. The strategic planning process analyzes long term trends, cyclical economic changes, competitive forces, and effective development of managerial capabilities and other resources. Blue Ocean Strategy To create a blue ocean market, there are several frameworks and tools to be applied in the business. First approach is the strategy canvas which is both a diagnostic and an action framework for building a compelling blue ocean strategy. It serves two purposes. First, it captures the current state of play in the known market space. This allows managers to understand where the competition is currently investing; the factors the industry currently competes on in products, service, and delivery; and what customers receive from the existing competitive offerings on the market. Second approach is the Four Actions Framework which is the value innovation analysis. This approach asks four key questions to challenge an industrys strategic logic and business model. The first question forces a company to consider eliminating factors that company in an industry have long competed on. The second question forces a company to determine whether products or services have been over-designed in the race to match and beat the competition. The third question pushes a company to uncover and eliminate the compromises an industry forces customer to make. The fourth question helps a company to discover entirely new sources of value for buyers and to create new demand and shift the strategic pricing of the industry. All the four questions allow a company to systematically explore how it can reconstruct buyer value elements across alternative industries to offer buyers an entirely new experience, while simultaneously keeping its cost structure low. Third approach is the Eliminate-Reduce-Raise-Create Grid. The grid pushes companies not only to ask all four questions in the four actions framework but also to act on all four to create a new value curve. By driving companies to fill in the grid with the actions of eliminating and reducing as well as raising and creating, the grid gives companies four immediate benefits; it pushes them to simultaneously pursue differentiation and low costs to break the value/cost trade-off, immediately flags companies that are focused only on raising and creating and thereby lifting their cost structure and often over-engineering products and service, is easily understood by managers at any level, creating a high level of engagement in its application and because completing the grid is a challenging task, it drives companies to robustly scrutinize every factor the industry competes on, making them discover the range of implicit assumptions they make unconsciously in competing. APPLICATIONS AND PRACTICES BY CORPORATE ENTITIES Shareholder Value Added The use of SVA gives an insight into the investment performance of the business by clearly identifying the opportunity cost of the investment, being the cost of capital, and comparing this to the return generated from the business. SVA can be applied to all the segments within a firm. Accordingly, it is primarily used by managers to evaluate the performance of divisions or branches. Practices AFS Consulting (2004) did a research on SVA performance with the Malaysian Banking Industry. The result shows that Maybank Berhad (MBB) and Hong Leong Bank Berhad (HLBB) emerge as banking institutions that create the best shareholder wealth or value among the local banks. While MBB and HLBB have enormous potential to be the leading domestic bank competing with foreign banks, both banks are still lagging behind in shareholder value creation compared to the incumbent foreign banks, which operate in a highly restrictive and controlled environment. Economic Value Added EVA can be used for the purposes like setting the organizational goals, performance measurement, determining bonuses, communication with shareholders and investors, motivation of managers, capital budgeting, corporate valuation and analyzing equity securities. Practices The study done by Issham Ismail on the performance of GLCs (Government-Linked Companies) and non-GLCs in Malaysia using EVA found that the outcomes of the study indicate a negative relationship between the size of the companies and the EVA values. The larger companies tend to have lower EVA values. In Malaysia, the GLCs are generally larger in size as compared to non-GLCS. Therefore, companies with government as their stakeholders tend to exhibit lower EVA scores than the companies without government stakeholders. It is believed that the Malaysian government prefers investing in public amenities companies to protect public interest, evidenced by their active role in Telekom, POS and TNB. These types of companies do not have higher value than their competitors, where the competitors are usually profit-oriented organization. This outcome further emphasizes that companies that have both the characteristics, large sized and government-linked, tend to have lower EVA values. It also leads to findings that an expansion of size government holding companies tends to increase the cost of capital in greater proportion to the any returns it generates. Return on Capital Employed ROCE is used to prove the value the business gains from its assets and liabilities, a business which owns lots of land but has little profit will have a smaller ROCE to a business which owns little land but makes the same profit. It basically can be used to show how much a business is gaining for its assets, or how much it is losing for its liabilities. Practices Norman Kahl and Jawad Shaikh (2003) analyzed ROCE trends over time for twelve major telecommunication service providers. The sample size represents nearly two-thirds of the US and nearly three-quarters of the Western European telecom services market. The result shows a significant regional difference exist, with ROCE at around 9% in the US and -8% in Europe. The negative European ROCE can only partially be explained by the enormous write-offs made in 2001 and 2002. Other finding is that past and present initiatives of the industry have mainly focused on revenue generation and operational efficiency; but less focus on asset utilization. This shows that by consistently leveraging all three drivers of ROCE (revenue generation, operational efficiency, and asset management), companies are able to get back on track and may even gain a sustainable leap versus their competitors. Value Based Management VBM emphasizes long-term cash flows analysis and risk analysis in all aspects of managerial decision making, such as evaluating individual projects and determining the economic value of the overall strategy of the business. The VBM approach is ultimately aimed at the goal of structuring and managing a company in a way that will create more value for its owners. Bromwich (1998) observes the need for measuring tools, applicable to different organizational levels, such as corporate and business unit level, while Ottoson and Weissenrieder (1996) emphasize the need for measurement systems that can be used for internal and external communication. Practices Harley E. Ryan, Jr. and Emery A. Trahan (2007) examine the performance of 84 firms that adopt value-based management (VBM) systems during the period 1984-1997. The result shows that the typical firm significantly improves residual income after adopting VBM. This improvement persists for the five post adoption years studied. They also found a negative relation between tying compensation to VBM and post-adoption performance. Furthermore, firms reduce capital expenditures following VBM adoption, but that the reductions in spending do not differ based on the firms growth opportunities. Overall, the evidence suggests that VBM improves economic performance and the efficient use of capital. Blue Ocean Strategy The frameworks and tools introduced by Kim and Renee (2006) are essential analytics that can be applied to allow companies to break from the competition and open up blue oceans of uncontested market space. Practices According to The Star Online dated July 16, 2007 titled Blue Ocean Strategy for Corporate Malaysia, Harvard Business School Professor D. Quinn Mills, states that there were many companies worldwide that are adopting BOS either knowingly or unknowingly. In addition, companies that know how to apply BOS to access a bigger market would reap significant benefits in terms of earnings. On questions regarding the Malaysian companies adopting BOS, he said: We believe the strategy is still fairly new to local companies. However, it is likely that many CEOs are aware of BOS but have yet to fully understand and apply the strategy to their companies. He also cited Air Asia as an example of a successful company that had identified a Blue Ocean and created a business model to capture and untapped and un-served market in the travel industry. Mills also said BOS was especially important for a country like Malaysia with a small population and market.

“More than our brother is our chastity”. How far do you find yourself able to condone Isabella’s point of view

John 15:13 says: â€Å"Greater love hath no man than this, that a man lay down his life for his friends†. In the traditional Christian Elizabethan society; this sentiment would have been revered; Shakespeare’s Puritanical and Catholic audiences would have loved the ideas of self-sacrifice and the immediate ascension into heaven. However, in Measure for Measure, Shakespeare manages to challenge this verse; he manipulates the situations and then causes the audience to digest the complexity of the verse, and causes the audience to question whether Isabella’s estimation that fornicating to save the life of another is not only morally wrong and a direct rebuttal of Jesus’ sentiment; but a damning sin. Isabella’s introduction into the play arouses intrigue in audiences and readers, as she is described as having a â€Å"speechless dialect/Such as move men†; so it is expected that audiences and readers would be waiting with bated breath fro Isabella to meet Angelo; and Shakespeare does not disappoint. The scene is written in blank verse, with unrhymed lines of iambic pentameter; Isabella first line is not quite metrically even; the word honour cannot be properly stressed, and that falter changes the rhythm of her speech. Her second speech leaves a gap in which Angelo inserts a terse question; almost as if the incomplete pentameter forces Angelo to reply. That first break in rhythm changes the dynamics of Isabelle’s interaction with Angelo. Shakespeare purposefully does this in order to use language and rhythm to convey the intensity of the relationship instantly forged between them; in particular the way the metre swaps between the two speakers. Later in the scene, the roles are reversed. On line 51, the position of the words in the pentameter undermines their stated meaning: while the words themselves speak of a certainty and finality, the rhythm is half-finished; in which Isabella can – metrically must- reopen the argument; although Angelo’s words say there is nor room for argument, he does not, at some level, want to dismiss the argument entirely; The language of the scene shows the extent to which they are aware of each other. So from the beginning of their interaction readers and audiences alike are left to question if this awareness is befitting of a novice nun. Conversely, Isabella may be seen as a model of some aspects of Christian virtue in ‘Measure for Measure', and her opposition to giving up her virginity an extension of her inherent virtue. For instance, in Act 2 Scene 2, Isabella's dialogue with Angelo expresses her quality of mercy, as although Claudio's sexual transgression is â€Å"a vice that I do most abhor†, Isabella argues that Angelo â€Å"might pardon him, / And neither heaven nor man grieve at the mercy. Furthermore she connects this value directly to God and her religion; â€Å"Why all the souls that were, were forfeit once/ And he that might the vantage best have took/ Found out the remedy. † This opposes Angelo's strict adherence to the secular laws of Vienna. His speeches in this scene make repeated references to his view of the law as immobile, such as â€Å"Your brother is a forfeit of the law/ And you but waste your words. He does not address the moral issues surrounding Claudio's crime, and the dry legal connotations of his language may seem to lack sympathy or mercy; this contrasts with Isabella's emotive language and religious allusions. This juxtaposition may have provided Shakespeare's original audiences with an interesting and current rhetorical debate, as the laws of the church and England's common laws were sometimes distinct and contradictory, causing moral and legal conflict. Moreover, the laws at the time were concerned with principles of justice, but did not often consider mercy, which was thought to be a religious virtue. Therefore, the characters of Isabella and Angelo may be intended to represent the two sides of this debate. Similarly, in John Webster’s ‘The Duchess of Malfi† The Duchess is portrayed as character who breaks the traditional Elizabethan revenge plot by to speak and act with the freedom of normal, albeit impulsive human beings. The Duchess is portrayed as sensual and aware of her sexuality, but is still able to become the embodiment of Christian virtue. In some ways Isabella and the Duchess are strikingly similar, but where The Duchess is overtly sexual, Isabella – like Angelo, has a moral compass that causes her to view situations as either Black or White, with no in-between {Insert quotation here} Isabella may therefore represent the difficulties of being a model of virtue, and of holding strict values of chastity and restraint whilst upholding sometimes contrasting principles of mercy and compassion. These themes would have been relevant in Jacobean society, as puritan values – which Isabella's devotion may represent – were becoming increasingly influential politically and socially, for instance the theatres of the suburbs were at times closed by puritan intervening. Furthermore, the play's genre of problem play allows for moral dilemmas to be raised and viewed from both sides. Therefore although seems to Isabella demonstrate a struggle to become ideally virtuous, it cannot be said definitively whether she succeeds as Angelo brings to light an equally challenging view â€Å"Is there no charity in sin? † However, it could be argued that modern values make it difficult for todays’ audience and readers to full grasp the gravity of Isabella’s situation. A similar story to ‘Measure for Measure’ is outlined in the Elizabethan novella â€Å"Eptia and Juriste† by Giraldi Cintho; in which Juriste is appointed governor of Innsbruck. He sentences a young man Vico to death; and like Angelo, Juriste propositions Epitia for sexual favours in exchange for her brother’s life, hinting that he might even marry her later. Epitia refuses indignantly â€Å"My brother’s life† she says with noble fierceness â€Å"is indeed very dear to me, but my honour is far dearer: my life I would willingly lose to save his, but I will not preserve him with my honour† so it could be argued that dilemma’s like this were popular and scintillating with Elizabethan audiences, as they understood the true depth of both women’s situations. Unfortunately, the representation of Isabella's religious devotion may appear – to some readers and audiences; humorous in its extremes, such as when in Act 1 Scene 4 she wishes for â€Å"a more strict restraint† even than â€Å"the votarists of St Claire†, a Catholic order that Shakespeare's audiences may have recognised as following rigorous rules of poverty. Furthermore, Isabella's devotion to chastity may place her on what seems like a moral highroad unachievable by most, and this may causes an audience to question or disapprove of her character. However, although Isabella's resilient chastity may have therefore seemed virtuous, her direct language: â€Å"Better it were a brother died at once† could seem unsympathetic and her use of the pronoun â€Å"our† in her proclamation â€Å"more than our brother is our chastity† could be seen as unemotional and an attempt to depersonalise he situation; making it harder for audiences and readers alike to empathise with her. Although, the argument of Isabella’s lack of sympathy for Claudio could be countered with her argument that Angelo should put himself in Claudio's place: â€Å"Go to your bosom, / Knock there, and ask your heart what it doth know/ That's like my brother's fault†. ; the emphasis on the shifting pronouns enacts the level of syntax, the act of identification she seeks to prompt. Also, it may be significant that Isabella sticks to her values of chastity even though it involves emotional upheaval, whereas Angelo, when he discovers he is not the legal and moral puritan he had previously thought himself to abandons his values completely and becomes a tyrant, exploiting both the law and the other characters for his own benefit, saying: â€Å"I have begun, /And now I give my sensual race the rein. † So, while Angelo is portrayed as occupying the same if not higher moral ground that Isabella, his fall from grace is well documented and juxtaposed against Isabella – who sometimes unethical but never immoral, it shows that Isabella’s strength lies I her unwavering moral compass, and easily giving over her virtue would be untrue of her character. This is portrays especially well in Act 2 Scene 4, where Angelo asks â€Å"who would believe thee Isabel? â€Å". Here Shakespeare's use of the rhetorical question emphasises Angelo's power over Isabella, in that he is relying on his â€Å"unsoiled name† to protect him from prosecution. The imagery of the â€Å"unsoiled† name implies that Angelo's power stems from his past reputation, in that no one would believe that he would be capable of succumbing to the same weaknesses as other's. This point is mirrored in the â€Å"Duchess of Malfi† in which the Cardinal places his power in his reputation as no one expects him to be a fornicator as his position supposedly attests to his morality. In conclusion, Isabella's conflict in the play has a deep moral centre. She wants to become a nun, but can only save her brother's life by surrendering her chastity to Angelo. When she says, â€Å"More than our brother is our chastity† I believe she is not being cruel or selfish, but trying very hard to adhere to an ingrained sense morality, and unlike many characters in the play, she sticks to her values and her faith; and this might seem foreign even to some Elizabethan audiences, as in some cases, representations of women of this time can be seen as being limited to idolised virgins, or sexual women who were often demonised as whores. So, because Isabella is not a perfect religious ideal, but as a woman with flaws who is placed in a difficult situation, and tries to achieve the best outcome; it is easy to respect her.

Effect of Collaborative Learning Styles on Student Achievement Essay

In terms of assessment and teaching strategies, collaborative learning styles can be considered as an indicator of the student’s prior knowledge about a certain topic or subject. Learning styles are functional especially within the classroom setup because it enables the teachers to determine the existing knowledge of students which they are able to acquire before-hand which in turn grant the teachers the capability to assess the degree or level of difficulty the lessons will be. While it enables teachers to plan ahead of time the scope and level of the lessons for the students, it also helps the students to refresh their knowledge and be fully aware of what they already know. The problem however in the context of today’s modernization is the ability of students to acquire such habit, which clearly, declines the quality of their academic gain. The rise of technological advancements and the internet diverted the attention of the students from reading books and journals towards updating their online profiles and music players. Given this, it would rather be best if the students work in groups since these individuals presumably have the same common ground when it comes to societal habits. In such case, the challenging tasks will benefit both the student and the teacher in terms of brainstorming strategies and it allows students to participate in a casual yet academic form just enough to prepare them for future public or corporate requisites. Conceivably, such is in a sense that traditional schooling is incapable of providing the authenticity learners require is often given voice in the literature of educational technology, and this field provides a good vantage point from which to study both constructivism and the concern for authenticity. In essence, there is a huge possibility that students will enhance their cultural knowledge, cognitive skills, personal skills, business knowledge, and management skills given the activities that involve collaborative learning. Quality of knowledge imparted to students should be innovative and fit for this era. Reference McKenna, B. J. , & McKenna, J. J. (2000). Selecting Topics for Research Writing Projects. The English Journal, 89(6), 53.

Child Abuse And Its Effects On Children - 1256 Words

Haley Smith English 2 10 November 2015 Child Abuse Hundreds of thousands of children in the United States are estimated to be victims of sexual, physical, or emotional abuse. Although society recognizes the harm caused by the abuse and neglect of children, many cases go unreported. Moreover, many of the reported cases result in little or no change in the child’s situation. Questions about what should be considered child abuse, when to report suspected abuse, and the proper steps to take to remedy child abuse are hard to answer and are hotly debated among parents, educators, law enforcement, lawmakers, and child advocates. Approximately 1 out of 5 children die every day from child abuse, most people think its child abuse when a parent†¦show more content†¦In some cases people will falsely accuse someone of sexual abuse or rape when it isn’t and an innocent person could go to prison over that lie and have it on their record forever. Having charges like that on your record can make it hard to find jobs which can m ajorly effect your life. The law will consider the victim incapacitated if they do not have the mental ability to understand the nature of the sexual acts, or if they are physically incapable of indicating their unwillingness to participate in the sexual conduct. However if you are charged with sexual abuse you can be charged with a felony and can get eighteen years to life in prison. Neglect is a passive form of abuse in which a perpetrator is responsible to provide care for a victim who is unable to care for himself or herself, but fails to provide adequate care. Neglecting a child causes mental harm to a child because they are not getting the attention that they need. An adult may not mean to neglect a child they may accidently do it by over working or focusing their attention on another child or adult. If you just completely abandon a child and stop caring for them you can be charged with a felony. Abandoning your child or not paying as much attention as needed to your child ca n cause low self-esteem, helplessness, and possibly depression. Emotional abuse refers to the psychological and social aspects of child abuse; it is the most common form of child