Monday, January 27, 2020

Fords Value Enhancement Plan Analysis

Fords Value Enhancement Plan Analysis Fords Value Enhancement Plan aims to align the interests of various shareholders by offering them different options the choice of $20 in cash, additional new common shares or a combination of cash and new share. Based on the following analysis, Ford should go ahead with Value Enhancement Plan. Characteristic of VEP The Value Enhancement Plan has the feature of stock split and share repurchase. Exchanging existing shares for new shares on a one-for-one basis, shareholders are also offered the option to reinvest $20 to receive additional new Ford common shares. In this sense, share price would decrease while the number of shares outstanding is going to increase. According to Fords announcement mentioned in the case, shareholders choosing the share option would receive 0.748 new Ford common shares in lieu of $20 cash. So, the effect is similar to 1.748 for 1 stock split. However, not all the shareholders prefer share option. For those who elect cash option, they would receive $20 as though they sell part of their shares, which reflects the feature of share repurchase. Advantages of VEP With the combined feature of stock split and share repurchase, VEP has its strength. In terms of cash option, since there is no good things to do with the massive cash reserve, returning the excessive cash allows shareholders to make profitable investment by themselves. Unlike cash dividend, returned cash is taxed as capital gains, so it generates tax efficiency for shareholders. In addition, though the price of new Ford shares would decrease, shareholders will not bear any loss, because the reduced price is offset by the cash they receive. But from the companys point of view, they can reduce dividend payment. Companies tend to keep dividend payout ratio constant, so dividend for each new Ford share will decrease because share price falls. For those who choose to receive $20 in cash, they keep the same amount of shares before VEP is introduced, therefore, the total dividend payment is going to reduce and to some extent, the pressure for increasing dividend level can be relieved a bit. Moreover, the effect of cash option is similar to that of share buyback, the number of new shares outstanding will reduce; thus, earnings per share will increase and it can increase the overall demand for Fords share, which will benefit share price in the long run. If shareholders elect stock option, they can increase voting power and exercise more control over the company. Also, as we discussed in the cash option, share price will increase, so, shareholders will benefit a lot from holding more new Ford shares. As for the combination of cash and new shares, shareholders can take part of their money out of the stock to make other profitable investment, and they can also maintain their interest in the company. On the one hand, they can enjoy tax efficiency by paying tax of capital gains for cash received, on the other hand, they can enjoy the profit when share price increases and they can have a say in the firm. VEP is better than cash dividend in terms of tax effect, and compared with share repurchase, it meets shareholders need to remain or increase control of the company. Therefore, based on the analysis, Ford should go ahead with VEP. Possible Choices of Different Shareholders Ford family member will choose stock option because they want to expand their control in the firm. By supporting VEP, their 40% voting power remains unchanged but their equity in the firm decreases from 5% to 3.6%. If they elect stock option, they hold more common shares, and their voting power is beyond 40%. Institutional investors, such as TIAA-Cref and the Calpers would choose combination of cash and shares. Its obvious that VEP favors Ford family members and dilutes institutional investors voting power, so its hard for them to compete with Ford family members in terms of control even if they reinvest all the $20 cash to buy new Common shares. In this sense, combination of cash and new share is a better choice for them. They can get part of their investment out of Ford stock for good opportunities somewhere else; meanwhile, they can remain interest in Ford. A regular outsider shareholder doesnt care about voting power. The purpose of their investment is profit. So, if I was one of them, I would go for cash option, because I would think Ford cant find profitable projects and there are few growth opportunities. By getting money back, I can make good use of it by myself.

Sunday, January 19, 2020

A Torrential Downpour in the South Essay -- Descriptive Essay, Descript

What causes fascination? Perhaps it is our inherent curiosity of the unknown. Why then, do we often marvel at the most mundane of phenomena? Wherein lies the secret to this sensation of phenomenal wonder - the ability to perceive the ordinary with a unique sensual acuity? I cannot claim to have this aforementioned acuity, but I have endeavored on many occasions to hunt for the intriguing in what is plain - to experience ‘phenomenal wonder’. There are experiences which do not require acuity to fascinate us - the mystical. I have encountered much that is mystical, but the torrential downpoor will forever amaze me. I pity those who have not bathed in the torrential downpoors of the southern states, for such a shower cannot be found in the most elaborate of spas. Many northern states are deprived of the torrential downpoor, and for me to explain its splendor, I must first describe the atmosphere prior to it. During the summer, the south is like a clay pot in an oven. The land is dry, hot, and dusty. The heat convinces you that the mouth of hell is opening, with flames licking your feat as you walk. Entire communities pray for a miracle hailstorm to extinguish this incredible heat. It is apparent that no amount of praying will result in a hailstorm in the middle of July; rain, on the other hand, is quite possible. Meteorologists argue it is the natural order of things; poets and romanticists claim it is the will of thirsty land that prompts the sudden showers of the downpoors. I am not concerned with the cause of this heavenly precipitation, only interested in its result. The first torrential downpoor is like tasting a sip of water after days in the desert. The mouth of hell is closed and the flames smothered. You can smell ... ... looked innocent and tranquil. As the ferocity of the downpour would end, we would begin to open the windows. Chilly breezes would sweep magnificently through our house, almost as if the wind had a mind of its own. I swear that I have, on more than one occasion, touched the wind. Physicists may label my claim as impossible; others envy me. The wind is a spirit; it is like a hand that strokes the earth to soothe it; and if you were to use an innate acuity (which we all possess) the spirit in the wind will surely touch you. For me, the torrential southern downpoors have never lasted long enough. The cold dry winter would always come too early, and the downpoors begin too late. Perhaps that is why I savor every rain drop. I have tried to search for such ‘phenomenal wonder’, but I have yet to succeed in finding an experience more astounding than that of rain.

Saturday, January 11, 2020

Social Benefits of Audit

Audit emerges because society needed. Auditing has been a regular feature of organized human activity from the earliest times. Indeed evidence suggests that formal audit procedures existed in the economic activities of the most of the early civilization. With the advancement of development, audit emerges as a separate discipline & contributes to the economic & social advancement. Audits serve a vital economic purpose and play an important role in serving the public interest to strengthen accountability and reinforce trust and confidence in financial reporting. As such, audits help enhance economic prosperity, expanding the variety, number and value of transactions that people are prepared to enter into. However, in recent years, and in the light of corporate scandals, we have witnessed ongoing global demands for improvements in audit quality. Changes have been taken place to promote greater transparency in the audit and accountability in auditors but there are continuing demands for further improvements to be made. Definition of audit: The availability and use of resources is strongly influenced by the type of economic policies that entities implement. Modern audit is concerned with citizen’s economic and social benefits. In the jargon of economics, government actions typically ‘distort’ the operation of economies, compared with the benchmark of a competitive market economy, and assumed to be able to operate without any government intervention. Such actions can only be justified by auditor if there are benefits stemming from the action that outweigh its costs. Here is an example of such logic applied to education: To finance better-quality schooling for those who have the least educated parents, and who attend the worse schools, it may be necessary to raise taxes on other people. The basic economic insight that such taxation distorts incentives remains valid. Such policies should be implemented only to the extent that the (present) value of the long-run benefits of greater equity exceed the efficiency costs of funding them. [World Bank, World Development Report 2006 (Washington DC: World Bank, 2006) at page 22. Benefits and costs are typically measured using a money-metric. Education is typically valued in terms of additions to a person’s expected future lifetime earnings, placing a low value on education of people whose expected future lifetime earnings are low, and no value on people for whom such earnings are zero. The same tension can be found if we look at the economy as a whole. Neoclassical economics judges the benefits of economic policies in terms of maximizing the output of goods and services, as measured by the level and rate of growth of the country’s Gross Domestic Product (GDP). It is assumed that rapid economic growth will lift people out of poverty, and that private ownership and market competition are likely to be the best mechanisms for maximizing economic growth. (This belief is what underpins the advocacy of privatization of public enterprises and services, and liberalization of markets). If some people are left behind, or indeed made worse-off, by policies aimed at maximizing national output, then it is assumed that ‘winners’ can compensate ‘losers’, for instance via taxation and public expenditure ( though these instruments must be used in a way that minimizes so-called ‘distortions’). This might be described as a strategy of ‘first maximize the size of the pie, then hope that it will be sliced up in such a way that nobody is made worse off’. Note that this approach is indifferent as to whether the losers are people who are already very rich, or very poor. Each is equally deserving of compensation. Nor does it pay much attention to the likelihood of compensation actually taking place. If the policy measures are expected to produce the maximum possible extra output, then auditor will express opinion that is enough for them to be judged ‘optimal’. States enjoy a margin of discretion in selecting the means to carry out their obligations. However, in discharging their obligations for the realization of economic and social rights, states must pay regard to the following key points: the requirement for progressive realization; the use of maximum available resources; the avoidance of retrogression; the satisfaction of minimum essential levels of economic and social rights; non-discrimination and equality; and participation, transparency and accountability. These principles can be used as a framework for auditing economic policy. Role of audit to the social perspective: Governments are facing an ever? growing demand to be more accountable and socially responsible and the people are becoming more assertive about their rights to be informed and to influence governments? decision? making processes. Faced with these demands, the executive and the legislature are looking for new ways to evaluate their performance. Civil society organizations are also undertaking ? Social Audits? to monitor and verify the social performance claims of the organizations and institutions. Social Audit is a tool with which government departments can plan, manage and measure non? financial activities and monitor both internal and external consequences of the department/organization’s social and commercial operations. It is an instrument of social accountability for an organisation. In other words, Social Audit may be defined as an in? depth scrutiny and analysis of the working of any public utility vis? a? vis its social relevance. Social Audit has significant role in social development. Purpose of the Social Audit The purpose of conducting Social Audit is not to find fault with the individual functionaries but to assess the performance in terms of social, environmental and community goals of the organisation. It is a way of measuring the extent to which an organisation lives up to the shared values and objectives it has committed itself to. It provides an assessment of the impact of organisations non-financial objectives through systematic and regular monitoring, based on the views of its stakeholders. Salient Features The foremost principle of Social Audit is to achieve continuously improved performances in relation to the chosen social objectives. Eight specific key principles have been identified from Social Auditing practices around the world. They are: 1. Multi? Perspective/Polyvocal. Aims to reflect the views (voices) of all those people (stakeholders) involved with or affected by the organisation/department/programme. 2. Comprehensive. Aims to (eventually) report on all aspects of the organisation? s work and performance. 3. Participatory. Encourages participation of stakeholders and sharing of their values. 4. Multidirectional. Stakeholders share and give feedback on multiple aspects. 5. Regular. Aims to produce social accounts on a regular basis so that the concept and the practice become embedded in the culture of the organisation covering all the activities. 6. Comparative. Provides a means, whereby, the organisation can compare its own performance each year and against appropriate external norms or benchmarks; and provide for comparisons with organisations doing similar work and reporting in similar fashion. 7. Verification. Ensures that the social accounts are audited by a suitably experienced person or agency with no vested interest in the organisation. . Disclosure. Ensures that the audited accounts are disclosed to stakeholders and the wider community in the interests of accountability and transparency. The following figure depicts the principles of Social Audit and universal values: These are the pillars of Social Audit, where socio? cultural, administrative, legal and democratic settings form the foundation to operational social Audit. The Social Audit process is intended as a means for social engagement, transparency and communication of information, leading to greater accountability of decision? akers, representatives, managers and officials. The underlying ideas are directly linked to concepts of democracy and participation. The application of Social Audit at the village level holds tremendous potential for contributing to good local governance and increased transparency and accountability of the local bodies. Applying the Tool The six steps of Social Auditing are: 1. Preparatory activities 2. Defining audit boundaries and identifying stakeholders 3. Social accounting and book? keeping 4. Preparing and using social accounts 5. Social audit and dissemination 6. Feedback and institutionalization of social audit Stakeholder consultation, involving department functionaries and civil society, would be the forum for sharing the Social Audit plan. This consultation would clarify the issues important for Social Auditing, role of stakeholders, as well as commitments from them. The outcome of the consultation would be fed into the process of detailing out: the indicators to be monitored; which existing records are to be used; and how additional information would be collected. The next key step is to fix responsibilities for various activities. The activities include preparing formats for social account? keeping, compilation of data and reporting the same on a monthly basis (internal use). Managers of the department/programmes can use this information for monitoring as well as providing feedback for improving performance and overcoming bottlenecks. Ideally, Social Audit should be conducted regularly, and the method should be developed through a participatory relationship between the auditor and the organisations/departments. The following figure depicts the detailed steps followed in the social audit cycle.

Friday, January 3, 2020

The Book Of Wild Swans Three Daughter Of China - 1234 Words

Quyen Nguyen IB World History 11th Grade In the book of Wild Swans: Three daughter of China by Jung Chang tells about the experiences of the life of Chang’s Mother, Grandmother, and Chang herself. The book starts off with Chang’s Grandmother Yu-fang. She was forced to be a concubine for a warlord general at a young age. She eventually escapes with her child after marrying a wealthy doctor, she continue to raise her child even rejected by her husband’s family. De-hong a happy girl who grew up normal until she start getting into politics. De- hong joined the Kuomintang party until the communist beat them. She then married Wang, an officer in the army, and they both began working for the Communist party where they are prosecuted for their affiliation and sent to detention camp. Chang is born in the middle of this political turmoil, she grew up through many of the hardship of China. The role of women and family in society was important and it changes throughout the story of each woman. The time of Chang s great-grandfather â€Å"following the custom, my great-grandfather was married young, at the fourteen, to a woman six years his senior. It was considered one of the duties of a wife to help bring up her husband.†(Chang, Jung. THREE-INCH GOLDEN LILIES In Wild Swans: Three Daughters of China, 2. New York: Simon Schuster, 1991.) Therefore in the lives of the three woman it will tell us about the role of women and family in the society . The beginning of theShow MoreRelatedAnalysis Of Ung Chang s Wild Swans1072 Words   |  5 Pagesung Chang’s Wild Swans: Three Daughters of China follows three generations of woman in China through live and political struggles. China’s transformation between 1910s and 1970s, was one of radical change and caused great suffering. The importance of Chang’s book is its in a women s point of view by showing the suffering and healing that occurred and to educate about the history of China through the Warlord, Japanese, and Mao rule. 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