Tradgedy In The Commons Essays - Environment, Soil Contamination

Tradgedy In The Commons There has been growing concern about the environment and what is safe and not safe. Several new programs aimed at protesting the environment and human health, have been initiated under the 1990 Amendments to the clean air act (Chicago). But what is it exactly that is really wrong with the environment.. Well, its the people who need to get around using things such as cars that give off pollutants into our atmosphere. The wants and needs of society grow mainly because of population expansion and a growing desire for a more comfortable life. But is the U.S. only dealing with this? Beijing has been proven to be the worlds smoggiest city. The air has diminished so severely that Premier Zhu Rongii and other top leaders have made major cleanup measures. Tiny little vans called an Miandi have been one of the major causes of poor air quality. Although they call for less then 2% of the more then 1.4 million vehicles, they are the sources of 8-10% of the pollution because of their auto gases. The other factors of pollution in Beijing are the restaurants and businesses that use coal to fuel their stoves (Beijing). However, the question is not what caused the pollution but how we will stop it. There are 2 good answers for Beijing. One is to convert the coal burning stoves into stoves that use cleaner fuels. The second is a company that is trying to crack down on pollution called Capital Steel. Capital Steel has been a long time target of environmentalists and by 2003 they plan to spend $100 million on pollution prevention (Beijing). On the other hand, in the US the Environmental Protection Agency has been enforcing air pollution standards on S.U.V.'s, pickups, and mini-vans. The effects of these standards are the rising costs of motor vehicles. The EPA had estimated that these standards will increase the cost of cars on average $100 and trucks about $200 (Trucks). There is a problem however, with creating cars that give off non pollutant materials. This gasoline additive, MTBE, has seeped through into near by wells and has forced and has forced them to close. The result of this is that millions of dollars have been spent in the clean up costs( Gasoline). In conclusion, I guess you could agree with me when I say the world we live in is far from perfect. Things will be proven to be harmful and there will be ways to save us at the mere cost of millions. The reason that air pollution is important is that it shows not only the U.S. is cracking down on pollution prevention but the rest of the world is too, not to mention the hundreds of millions of dollars that are being spent because of the tragedy of the commons. Bibliography Bibliography Hanson, Donald A., William A. Testa. Chicago Fed. Letter. Chicago: The Federal Reserve Bank of Chicago, 1992. This showed how market based approaches are set up so that goals can be achieved. Kurtenbaeh, Elaine. Beijing moves to clear up chocking smog. USA Today. 19 October 1999. This article talked about how mini vans were leading causes of the air pollution, and how the Capital Steel co. has spent $100 million on pollution prevention. O'Donnell, Jayne. Trucks will have to meet clean air rule. USA Today. 21 December 1999. This article talked about how the EPA standards are raising the prices of cars and trucks. Gasoline additive Cleans air, fouls water. USA Today. 21 January 2000\ This article talked about how this gasoline additive MTBE makes cars burn cleaner, but is also at the same time polluting the water. Economics Essays

How To Build An Irresistible Brand Via Social Media With Dave Kerpen

How To Build An Irresistible Brand Via Social Media With Dave Kerpen Do you know how to use social media to build an irresistible brand and delight customers? Want to be amazing on Facebook, Instagram, and all the other sites? Need some inspiration for your social media branding? Today, we’re talking to Dave Kerpen, chairman of Likeable Media and best-selling author of Likeable Social Media. He shares his advice on what has remained relevant in social media over the past few years and what will continue to help you be successful. Dave’s favorite ideas/concepts include using social media for listening and storytelling to put ideas into the world Brands that are good at storytelling are Redbox, Ahold, Century 21, and Work It Dave’s #1 social media goal for brands is to make money; have a specific monetary ROI in mind Move people down the sales funnel for awareness to purchase Social media savagery trend where brands troll the trolls; is it helpful or hurtful? Depends on your brand’s personality and audience Biggest mistakes marketers make include using social media to sell too quickly, not sell at all, and not use advertising to take advantage of paid opportunities Make sure you’re not selling too much and your content is something you would Like, share, or comment on For paid opportunities, focus first on investing dollars into ads on social media Future Social Media Trends: Musical.ly, videos, and messaging apps Stop investing time into a social channel when the reason you joined no longer applies Links: Dave Kerpen on Facebook Dave Kerpen on Twitter Dave Kerpen on Instagram Likeable Media Likeable Social Media The Art of People Redbox Ahold Supermarkets Century 21 Carrie Kerpen Work It book All the Social Ladies podcast Musical.ly Write and send a review to receive a care package If you liked today’s show, please subscribe on iTunes to The Actionable Marketing Podcast! The podcast is also available on SoundCloud, Stitcher, and Google Play. Quotes by Dave Kerpen: â€Å"There’s so many ways to tell stories now. Social media allows us to not only tell that story, but to distribute that story in a really powerful way.† â€Å"If you’re engaging in social media activities, you should have a specific monetary ROI in mind.† â€Å"Social media is a great way to build relationships and nurture people across that sales funnel, no matter what the product or service is.†

The usage of financial accounting information Essay

The usage of financial accounting information - Essay Example One of the uses of financial accounting information is for funding purpose.Capital from shareholders and loans and credit from creditors require reporting of financial accounting information to solicit funds.Since the shareholders provide the funds for the organization to run,they are interested in the returns earned on their investments. Financial ratios such as return on shareholders' funds can be calculated to assess the returns earned on their investments. They use information on past performance obtained from the financial statements comprising the profit and loss statement, balance sheet, and cash flow statement together with the present economic market conditions to predict the future returns. Also, since the shareholders elect the board of directors, they would want to regularly evaluate the management's performance. Profitability ratios, indications of earning capacity and ability to make profits, can be used by the shareholders to evaluate the management's performance. Loan creditors, such as bankers are interested in the financial stability and liquidity of the organization, as assessed by the liquidity ratios, solvency ratios, and capital structure ratios. Loan creditors would also like to know whether the organization is able to pay interest on time and to repay the principal of the loan. They can use financial ratios such as the coverage of fixed interest charges to assess the organization's ability in this regard. They are also interested in the amount of security existing for their debt, other liabilities the organization has and security offered for them. The balance sheet offers this information. Trade creditors let the organization obtain goods or services with postponed payment. They are interested in the ability of the organization to pay its debts as they fall due, as revealed by liquidity ratios. Both shareholders and creditors use financial accounting information to assess the timing and uncertainty of prospective cash receipts. The pros pects of cash receipts depend on the organization's ability to generate enough cash to meet its obligations when due and its other cash operating needs. The cash flow statement, when used in conjunction with the rest of the financial statements, provides information that enables users to evaluate the changes in net assets of an enterprise, its financial structure and its ability to affect the amounts and timing of cash flows in order to adapt to changing circumstances. Another use of financial accounting information is to solicit investments from potential investors. Potential investors require information on various matters, including solvency, financial strength, earning capability, and the ability of the management to decide whether or not to invest in the organization. The financial statements and the various financial ratios derived from the financial statements mentioned in the above paragraph can be used by potential investors to make this decision. Lastly, financial accounting information is used to facilitate wage and employment negotiations. Management accounting information is used for decision making such as to accept or reject special sales order, fix selling or tender price, add or delete a product line or department, maximize profits with a limited productive capacity or scarce resources, make or buy a component, or further process joint products. The management accounting information used in decision making is relevant costs such as differential and marginal costs. A special sales order, such as an order of a particularly large quantity such that certain costs can be reduced, can be accepted if it gives a positive contribution margin (sales minus marginal costs), provided the organization has idle capacity, fixed costs will not change, normal sales at regular prices will not be disrupted, and no other special order that is more profitable can be obtained. The selling or tender price is used to determine the target market of the organization's products. Some products may be sold in a luxury market where prices may b e higher

Marketing Strategy For Entering Chinese Market Essay

Marketing Strategy For Entering Chinese Market - Essay Example lower and middle classes as their target audience, the premium standard product would automatically appeal to the upper segment of the society to have such a fine product that can also make them feel different than the people using the Chinese products that are so common, cheap and also referring to the lower standard. China is entering almost in every market whether it is electricity goods or clothing, so the product that should be introduced must be very much competitive to the Chinese product so that the people who are not being served by the Chinese goods can be served on relatively higher prices but it would make them feel supreme, so the basic idea is to introduce something that is much similar to Chinese good but must be different on numerous basis, it would also disturb the Chinese market which seems to be relatively very stable right now. According to the normal observations the product that should be introduced is a VCD/DVD player, the basic reasons for introducing them is that people are already complaining about the big giants in the market and also the material made by China is just serving the core purpose that is a picture on Television, it does not include any tangible or augmented product in it, which means that there is absolutely no quality and guarantee for it. Target Groups As discussed earlier the target market should be people who are having relatively higher income than the most of the people in the society, this does not only include the people who are top class business executives but also people who are young, who are brand conscious and also who have the habit of having excellence in every part of life, this would be made quite visible to the people through our advertisement which would be clearly showing the excellence in the product. Promotional Mix The product as discussed earlier is catering the upper class of the society or people who are having desire to excel, so according to the plan we would have to go for advertising and sales promotion by eliminating personal selling and public relations from our promotional mix list, the idea of not using personal selling is that the product is very supreme and also the market is wide spread and the nature of product is however sensitive, so to keep the product in the higher position it would be unfair to use personal selling, while there is no need of public relations at this stage. The details of advertising and sales promotion are as follows. Advertising: The best thing in the advertising is to have an emotional appeal, perhaps by showing a superior quality picture and smooth sound effects than can make a person go into dreams, and also as the product is VCD/DVD player we would have to

Methodology And Performance Standards Essay Example | Topics and Well Written Essays - 500 words

Methodology And Performance Standards - Essay Example In this essay, Baldwin Hotel is assessed for service quality in the way and manner in which staff deal with guests by using two major performance standards namely resourcefulness and customer service. Resourcefulness is a quality of staff or workers that makes it possible for them to contribute to several aspects of decision making within their job even outside their official job specification. This means that for staff of Baldwin for example who are front desk attendants must be in a position to provide other services and resources to their superiors outside of their stated job specifications as front desk attendants. Generally resourcefulness improves service quality because it helps in eliminating gaps in tasks and services within the hotel. For example when one worker is absent, the presence of a resourceful employee would ensure that the vacancy is not felt and that it does not affect customer service because he will be there to take that task up. At the visit to the site, there were two major measurable and observable areas or components of resourcefulness that was seen. The first had to do with front desk attendants who were giving room services, and front desk attendants who were undertaking troubleshooting in inaccurate ledger postings and entries. The methodological tools that were devised to measure the resourcefulness of workers were observation and accuracy with ledger postings. This means that there was both a qualitative and quantitative methodology. Employees who were responsible for this performance standard were front desk attendants. Customer service is a performance standard that basically deals with the level of satisfaction that the services rendered to customers by staff is appreciated by customers (Covey, 2008). At the Baldwin Hotel, greater percentage of customers is guests to the hotel who come to book rooms to spend from one night to a whole vacation. Customer service rendered to

Gas Chromatography Mass Spectrometry Environmental Sciences Essay

Gas Chromatography Mass Spectrometry Environmental Sciences Essay Gas chromatography-mass spectrometry (GC-MS) is a method that combines the features of gas-liquid chromatography and mass spectrometry to identify different substances within a test sample. [6] Gas chromatography (GC) and mass spectrometry (MS) make an effective combination for chemical analysis. [5, 10] The use of a mass spectrometer as the detector in gas chromatography was developed during the 1950s by Roland Gohlke and Fred McLafferty. These sensitive devices were bulky, fragile, and originally limited to laboratory settings. The development of affordable and miniaturized computers has helped in the simplification of the use of this instrument, as well as allowed great improvements in the amount of time it takes to analyze a sample. In 1996 the top-of-the-line high-speed GC-MS units completed analysis of fire accelerants in less than 90 seconds, whereas first-generation GC/MS would have required at least 16 minutes. This has led to their widespread adoption in a number of fields. [6] GC-MS theory and principle The Gas Chromatography/Mass Spectrometry (GC/MS) instrument separates chemical mixtures (the GC component) and identifies the components at a molecular level (the MS component). It is one of the most accurate tools for analyzing environmental samples. The GC works on the principle that a mixture will separate into individual substances when heated. The heated gases are carried through a column with an inert gas (such as helium). As the separated substances emerge from the column opening, they flow into the MS. [3] The GC separates the constituents of a sample as previously described, but as the gaseous sample exits the column and enters the Mass Spectrometer, it is bombarded with electrons that cause the molecules to become unstable and break down into charged fragments. The positive ions are collected and separated on the basis of their mass / charge ratio.   Various analyser types are available depending on what is being studied.   We have both a quadrupole type MS and an ion trap type MS available. The resulting mass spectra permit the identification of the analytes.   A typical detection limit would be 10 picograms which make it much more sensitive than the flame ionising detector on a GC. [2] To effectively use GC/MS evidence one must understand the process.   First, the GC process will be considered, and then the MS instrument will be presented.  [5] Gas chromatography In general, chromatography is used to separate mixtures of chemicals into individual components. Once isolated, the components can be evaluated individually. In gas chromatography (GC), the mobile phase is an inert gas such as helium. The mobile phase carries the sample mixture through what is referred to as a stationary phase. The stationary phase is a usually chemical that can selectively attract components in a sample mixture. The stationary phase is usually contained in a tube of some sort. This tube is referred to as a column. Columns can be glass or stainless steel of various dimensions. The mixture of compounds in the mobile phase interacts with the stationary phase. Each compound in the mixture interacts at a different rate. Those that interact the fastest will exit (elute from) the column first. Those that interact slowest will exit the column last. By changing characteristics of the mobile phase and the stationary phase, different mixtures of chemicals can be separated. Further refinements to this separation process can be made by changing the temperature of the stationary phase or the pressure of the mobile phase. The capillary column is held in an oven that can be programmed to increase the temperature gradually (or in GC terms, ramped). This helps our separation. As the compounds are separated, they elute from the column and enter a detector. The detector is capable of creating an electronic signal whenever the presence of a compound is detected. The greater the concentration in the sample, the bigger the signal. The signal is then processed by a computer. The time from when the injection is made (time zero) to when elution occurs is referred to as the retention time (RT). While the instrument runs, the computer generates a graph from the signal. This graph is called a chromatogram. Each of the peaks in the chromatogram represents the signal created when a compound elutes from the GC column into the detector. The x-axis shows the RT, and the y-axis shows the intensity (abundance) of the signal. [1] Figure: schematic diagram of gas chromatography 3.1 Mass spectrometry Mass spectrometry (MS) is a technique used for characterizing molecules according to the manner in which they fragment when bombarded with high-energy electrons, and for elemental analysis at trace levels. Therefore, it is used as a means of structural identification and analysis. Its widest application by far, is for the structural elucidation of organic compound. MS involves the ionization (conversion of molecules into positively charged ions) and fragmentation of molecules. Various methods are available to effect such a process: e.g. (i) Electron impact ionization, by far the most common mode used, (ii) Chemical ionization, (iii) Field ionization or (iv) Fast atom bombardment. In the more commonly used electron impact (EI) mode, the sample molecules are bombarded in the vapour phase with a high-energy electron beam in the instrument known as a mass spectrometer. This process generates a series of positive ions having both mass and charge, which are subsequently separated by deflection in a variable magnetic field according to their mass to charge (m/z) ratio. This results in the generation of a current (ion current) at the detector in proportion to their relative abundance. The resulting mass spectrum is recorded as a series of lines or peaks of relative abundance (vertical peak intensity) versus m/z ratio. The sample is introduced into the inlet system, where it is heated and vaporized under vacuum, and then bled into the ionization chamber (ion source) through a small orifice. Sample sizes for liquids and solids range from milligrams to less than a nanogram, depending on the detection limits of the instrument. Once the gas stream from the inlet system en ters the ionization chamber, it is bombarded at right angles by an electron beam (70 eV) emitted from a hot filament. Only Ëœ20eV is needed to remove one electron from the molecule, to create M+, the remainder is used to fragment the molecular ion into a mixture of radical cations, cations and free radicals. The positively charged ion fragments are then forced through a series of negatively charged accelerating slits towards the mass analyser, where separation of these ion fragments takes place. This analyser tube is an evacuated curved metal tube through which the ion beam passes from the ion source to the ion collector. In early instruments, the fragment ions were deflected in a curved path by a magnetic field only. Mass separation depended on the magnetic field strength, the radius of curvature of the magnetic field and the magnitude of the acceleration voltage. The introduction of an electrostatic field after the magnetic field in later instruments permitted higher resolution so that the mass readings could be obtained to four decimal places. In present day instruments, this double focusing system has been further modified to optimize resolution and most instruments now use a quadrupole mass analyser to effect separation of the ion fragments. The ions are collected one set at a time, with the aid of collimating slits, in the ion collector, where they are also detected and amplified by an electron multiplier. Mass spectral data is recorded on computer. Most mass spectrometers are computer controlled nowadays, and scans from mass ranges 12 to > 700 amu, Can be performed in seconds. [4] Figure: schematic diagram of mass spectrometry 4. Instrumentation of GC-MS The insides of the GC-MS, with the column of the gas chromatograph in the oven on the right. The GC-MS is composed of two major building blocks: the gas chromatograph and the mass spectrometer. The gas chromatograph utilizes a capillary column which depends on the columns dimensions (length, diameter, film thickness) as well as the phase properties (e.g. 5% phenyl polysiloxane). The difference in the chemical properties between different molecules in a mixture will separate the molecules as the sample travels the length of the column. The molecules take different amounts of time (called the retention time) to come out of (elute from) the gas chromatograph, and this allows the mass spectrometer downstream to capture, ionize, accelerate, deflect, and detect the ionized molecules separately. The mass spectrometer does this by breaking each molecule into ionized fragments and detecting these fragments using their mass to charge ratio. Figure: GC-MS schematic These two components, used together, allow a much finer degree of substance identification than either unit used separately. It is not possible to make an accurate identification of a particular molecule by gas chromatography or mass spectrometry alone. The mass spectrometry process normally requires a very pure sample while gas chromatography using a traditional detector (e.g. Flame Ionization Detector) detects multiple molecules that happen to take the same amount of time to travel through the column (i.e. have the same retention time) which results in two or more molecules to co-elute. Sometimes two different molecules can also have a similar pattern of ionized fragments in a mass spectrometer (mass spectrum). Combining the two processes makes it extremely unlikely that two different molecules will behave in the same way in both a gas chromatograph and a mass spectrometer. Therefore when an identifying mass spectrum appears at a characteristic retention time in a GC-MS analysis, i t typically lends to increased certainty that the analyte of interest is in the sample. [6] Figure: schematic of GC/MS 4.1 Inlet system Samples are introduced to the column via an inlet. This inlet is typically injection through a septum. Once in the inlet, the heated chamber acts to volatilize the sample. [6] 4.1.1 GC-MS interface In this GC-MS system, the link between the two instruments is called an interface; it is like a jet separator, whose purpose is to (1) enrich the sample and (2) adjust the vacuum to the high vacuum conditions needed for MS analysis of the column eluent. [11, 9] After separation of our components by the GC, we need away to introduce this sample into MS- interface. An ideal interface should be Qualitatively transfer all analyte Reduce pressure flow/from chromatograph to level MS can handle Not cost an arm (or a leg) No interface meets all requirements The major goal of the interface is to remove all of the carrier gas from- the majority of the effluents. Interface should cover Molecular separator Permeation separator Open split Capillary direct [7] 4.1.2 Molecular separator It is the most popular approach when packed columns are used and based on the relative rate of diffusion. In this the smaller molecules will diffuse more rapidly and most will miss the MS entry jet. The larger molecules will diffuse more slowly will tend to lead the MS entry jet. [7, 11] Figure: molecular separator Advantages of molecular separator It is relatively simple and inexpensive approaches Disadvantages Rate of diffusion is molecular weight dependent If jet becomes partially plugged, you can end up with an excellent carrier gas detector [7] 4.1.3 Permeation interface A semi permeation membrane is placed between the GC effluents and the MS The major problem with this approach is Membrane selectively based on polarity and the molecular weight slow to respond. Only a small fraction analyte actually permeates through the membrane. [7] Figure: permeation membrane 4.1.4 Open or split interface In a split system, a constant flow of carrier gas moves through the inlet. A portion of the carrier gas flow acts to transport the sample into the column. [6] The chromatographic column leads to a T-shaped that contains a smaller diameter tube. A platinum or deactivated fused silica capillary also leads to this tube and goes into the mass spectrometer source. The capillary is kept into the vacuum sealed device and is heated to avoid condensation. The T-shaped tube is closed at both ends but is not sealed, so that pressure remained equal to the atmospheric pressure. A helium gas is continuously passed to avoid any reaction of the gas. [9] The MS pulls the analyte in about 1mL/min through a flow restrictor. If flow is above that the excess is vented. If it is below the He from the external source is pulled in. it is the best source for that have flows close to1mL/min like capillary columns.[7] Figure: open or split interface Advantages Any gas producing source will be used. Relatively low cost and easy to use. Disadvantages Sample leaves columns in split. Split changes as flow change. Split system is preferred when the detector is sensitive to trace amounts of analyte and there is concern about overloading the column [7] 4.1.5 Capillary direct interface This coupling consists of having the capillary column directly entering the spectrometer source by a set of vacuum- sealed joints. Here the pumping is not the problem because the capillary is very long. A length of at least 1.5m is necessary for the column with inside diameter of 0.25mm. [9] If we limit the GC to the capillary column only, the MS can actually use all column effluents. [7] The carrier gas flow gets directed to purge the inlet of any sample following injection (septum purge). Yet another portion of the flow is directed through the split vent in a set ratio known as the split ratio. [6] Figure: capillary direct interface Advantages Low cost simple device No dead volume No selectivity Disadvantages Limits flow range that column can be used Limits the column ID that can use Part of column lost which serve as a flow restrictor[7] 4.2. Vacuum system In order to the MS process to work, it must be conducted under vacuum condition. The major reason for this is to increase the mean free path. The average distance that ions or molecules will travel before colliding with another ion or molecule. A high mean free path is to ensure predictable and reproducible high sensitivity and reliable mass analysis. [7] Since a vacuum is required to work a detector; Detectors are design to use the vacuum as an insulator Large voltage are used in the MS Operation of the detector in the absence of the vacuum that can cause severe damage Most instrument prevent operation if the vacuum is not high enough A vacuum is produced by using a combination of the two pumps- two stage vacuum pumps. The rotary pumps produced vacuum 102-104torr. These are the turbomolecular or diffusion pumps work in the range of 105torr. These are actually like the compressor. 4.2.1 Turbomolecular pump It relies on the series of blades or the air foils that tend to deflect the gas. It able to produce the clean vacuum in few hours and reliable Disadvantage It is expensive, short life time, can become noisy Figure: turbomolecular pump 4.2.2 Oil diffusion pumps It is another important type of the pump that produce high vacuum. These are reliable, maintenance free and quite but take much time and due to poor design oil enters into the vacuum. [7] Figure: oil diffusion pumps 4.3. Ionization A number of ionization techniques available Figure: types of ionization 4.3.1 Types of ionization After the molecules travel the length of the column, pass through the transfer line and enter into the mass spectrometer they are ionized by various methods with typically only one method being used at any given time. Once the sample is fragmented it will then be detected, usually by an electron multiplier diode, which essentially turns the ionized mass fragment into an electrical signal that is then detected. The ionization technique chosen is independent of using Full Scan or SIM. [6] 4.3.1.1 Electron Ionization By far the most common and perhaps standard form of ionization is electron ionization (EI). The molecules enter into the MS (the source is a quadrupole or the ion trap itself in an ion trap MS) where they are bombarded with free electrons emitted from a filament, not much unlike the filament one would find in a standard light bulb. The electrons bombard the molecules, causing the molecule to fragment in a characteristic and reproducible way. This hard ionization technique results in the creation of more fragments of low mass to charge ratio (m/z) and few, if any, molecules approaching the molecular mass unit. Hard ionization is considered by mass spectroscopists as the employ of molecular electron bombardment, whereas soft ionization is charge by molecular collision with an introduced gas. The molecular fragmentation pattern is dependant upon the electron energy applied to the system, typically 70eV (electron Volts). The use of 70eV facilitates comparison of generated spectra with Na tional Institute of Standard (NIST-USA) library of spectra applying algorithmic matching programs and the use of methods of analysis written by much method standardization Chemical Ionization. [6, 10] Figure: EI graph Figure: EI source 4.3.1.2 Chemical Ionization In chemical ionization a reagent gas, typically methane or ammonia is introduced into the mass spectrometer. Depending on the technique (positive CI or negative CI) chosen, this reagent gas will interact with the electrons and analyte and cause a soft ionization of the molecule of interest. A softer ionization fragments the molecule to a lower degree than the hard ionization of EI. One of the main benefits of using chemical ionization is that a mass fragment closely corresponding to the molecular weight of the analyte of interest is produced. Figure: CI source Positive chemical Ionization In Positive Chemical Ionization (PCI) the reagent gas interacts with the target molecule, most often with a proton exchange. This produces the species in relatively high amounts. Negative Chemical Ionization In Negative Chemical Ionization (NCI) the reagent gas decreases the impact of the free electrons on the target analyte. This decreased energy typically leaves the fragment in great supply. [6, 7] Figure: comparison of graph obtain from EI and CI 4.4 Mass analyzer A mass analyzer or filter is the portion of the mass spectrometer that is responsible for resolving different mass fragments. Typically all ions will move with same kinetic energy (1/2mv2). Some aspects of these accelerated ions are exploited as the basis for resolving them. 4.4.1 Types of mass analyzers There are following types of mass analyzers Magnetic Electrostatic Time of flight Quadrupole mass filter Quadrupole ion storage(ion trap) The last two types are most commonly used in GC/MS systems although time of flight making a come back [7, 6, 10] 4.4.1.1 Quadrupole mass filter It consists of four rods. Figure: rods of quadrupole Rods operate in pairs (x or y) and each carries a voltage. Only ions of proper m/z value can successfully traverses the entire filter (z axis). The high pass rods filter out ions with too low of an m/z. the low pass filter outs the ions with too high of an m/z value. [7] Figure: schematic of quadrupole 4.5 Detector Ion detection Once the ions are separated, we need a way to convert them to a response that can be used. An electron multiplier is the most common type of detector used. It is a continuous dynode type of detector. The inner surface of the detector is electroemassive material. When struck by ion electrons are ejected. Due to increasing potential, the electrons are accelerated and when they strike another surface, even more electrons are ejected. This significantly amplifies our signals. [7] Figure: detector 4.6 Data system Data system is the heart of our GC/MS system. Without it we would have no way to deal with the vast amount of information that even a single GC/MS analysis produce. Inexpensive fast desktop are the single most important advance in GC/MS. [7] Figure: data system 4.7 Method of analysis The primary goal of instrument analysis is to quantify an amount of substance. This is done by comparing the relative concentrations among the atomic masses in the generated spectrum. Two kinds of analysis are possible, comparative and original. Comparative analysis essentially compares the given spectrum to a spectrum library to see if its characteristics are present for some sample in the library. This is best performed by a computer because there are a myriad of visual distortions that can take place due to variations in scale. Computers can also simultaneously correlate more data (such as the retention times identified by GC), to more accurately relate certain data. Another method of analysis measures the peaks in relation to one another. In this method, the tallest peak is assigned 100% of the value, and the other peaks being assigned proportionate values. All values above 3% are assigned. The total mass of the unknown compound is normally indicated by the parent peak. The value of this parent peak can be used to fit with a chemical formula containing the various elements which are believed to be in the compound. The isotope pattern in the spectrum, which is unique for elements that have many isotopes, can also be used to identify the various elements present. Once a chemical formula has been matched to the spectrum, the molecular structure and bonding can be identified, and must be consistent with the characteristics recorded by GC/MS. Typically, this identification done automatically by programs which come with the instrument, given a list of the elements which could be present in the sample. A full spectrum analysis considers all the peaks within a spectrum. Conversely, selective ion monitoring (SIM) only monitors selected peaks associated with a specific substance. This is done on the assumption that at a given retention time, a set of ions is characteristic of a certain compound. This is a fast and efficient analysis, especially if the analyst has previous information about a sample or is only looking for a few specific substances. When the amount of information collected about the ions in a given gas chromatographic peak decreases, the sensitivity of the analysis increases. So, SIM analysis allows for a smaller quantity of a compound to be detected and measured, but the degree of certainty about the identity of that compound is reduced. [6] 5. Applications 5.1. Environmental Monitoring and Cleanup GC-MS is becoming the tool of choice for tracking organic pollutants in the environment. The cost of GC-MS equipment has decreased significantly, and the reliability has increased at the same time, which has contributed to its increased adoption in environmental studies. There are some compounds for which GC-MS is not sufficiently sensitive, including certain pesticides and herbicides, but for most organic analysis of environmental samples, including many major classes of pesticides, it is very sensitive and effective. 5.2. Criminal Forensics GC-MS can analyze the particles from a human body in order to help link a criminal to a crime. The analysis of fire debris using GC-MS is well established, and there is even an established American Society for Testing Materials (ASTM) standard for fire debris analysis. GCMS/MS is especially useful here as samples often contain very complex matrices and results, used in court, need to be highly accurate. 5.3. Law Enforcement GC-MS is increasingly used for detection of illegal narcotics, and may eventually supplant drug-sniffing dogs. It is also commonly used in forensic toxicology to find drugs and/or poisons in biological specimens of suspects, victims, or the deceased. 5.4. Security A post-September 11 development, explosive detection systems have become a part of all US airports. These systems run on a host of technologies, many of them based on GC-MS. There are only three manufacturers certified by the FAA to provide these systems, one of which is Thermo Detection (formerly Thermedics), which produces the EGIS, a GC-MS-based line of explosives detectors. The other two manufacturers are Barringer Technologies, now owned by Smiths Detection Systems and Ion Track Instruments, part of General Electric Infrastructure Security Systems. 5.5. Food, Beverage and Perfume Analysis Foods and beverages contain numerous aromatic compounds, some naturally present in the raw materials and some forming during processing. GC-MS is extensively used for the analysis of these compounds which include esters, fatty acids, alcohols, aldehydes, terpenes etc. It is also used to detect and measure contaminant from spoilage or adulteration which may be harmful and which is often controlled by governmental agencies, for example pesticides. 5.6. Astrochemistry Several GC-MS have left earth. Two were brought to Mars by the Viking program. Venera 11 and 12 and Pioneer Venus analysed the atmosphere of Venus with GC-MS. The Huygens probe of the Cassini-Huygens mission landed one GC-MS on SaturnHYPERLINK http://en.wikipedia.org/wiki/SaturnsHYPERLINK http://en.wikipedia.org/wiki/Saturnss largest moon, Titan. The material in the comet 67P/Churyumov-Gerasimenko will be analysed by the Rosetta mission with a chiral GC-MS in 2014. 5.7. Medicine In combination with isotopic labeling of metabolic compounds, the GC-MS is used for determining metabolic activity. Most applications are based on the use of 13C as the labeling and the measurement of 13C/12C ratios with an isotope ratio mass spectrometer (IRMS); an MS with a detector designed to measure a few select ions and return values as ratios. [6]

Bioinformatics - Solving Biological Problems Using DNA and Amino Acid

Bioinformatics - Solving Biological Problems Using DNA and Amino Acid Sequences 1. Introduction In the wake of Genomic revolution, biology that used to be a lab-based science has transformed to embrace Information science. Human Genome Project is a 13-year project focusing on identifying approximately 30,000 genes in human DNA. The information found is stored in databases, analyzed and used for different purposes like simplifying diagnosis of disease, earlier detection of genetic predisposition to specific disease, custom drugs, gene therapy, gene replacement technologies [1]. Technological advancement has been one of the contributors for the early completion of this project. Computer technology has facilitated in managing and using the deluge of biological data, and various software tools are used to model biological structures in biotechnology. The simplest definition of the biotechnology industry is that it deals with the application of biological knowledge and techniques pertaining to molecular, cellular and genetic processes to develop products and services. The applications range from agriculture (genetically modified food, insect resistant fibre, food processing), industrial (biofuels, bioenzymes in pollution control) and medical biotechnology (diagnosing diseases, developing new drugs). The ethical issues of Bioinformatics data collection and use of human biological data is being analyzed in this paper. 2. What is Bioinformatics Fredj Tekaia at the Institut Pasteur offers this definition of bioinformatics: "The mathematical, statistical and computing methods that aim to solve biological problems using DNA and amino acid sequences and related ... ...e/umlnews/viewarticle.asp?articleid=16 8) Human Genome Project Information, Genetics and Patenting, http://www.ornl.gov/sci/techresources/Human_Genome/elsi/patents.shtml#4 9) The Golden Cusp by Samar Halarnkar and Venkatesha Babu , Business Today, http://www.renodis.com/media/businesstoday/bustoday_article.htm 10) Pankaj Sohaney, Asian Student Medical Journal, Recent Techniques in Biological Research: Bioinformatics http://www.asmj.netfirms.com/article3.html 11) Nature http://www.nature.com/genetics Bibliography 1) www.bioinformatics.org 2) Rob Blatchey, Ethical issues related to the Collection, Storage, and Use of Data Obtained through Bioinformatics. http://www.acsu.buffalo.edu/~rdb2/bioinformatics.htm 3) Human Genome Project Information: Ethical, Legal, and Social Issues. http://www.ornl.gov/sci/techresources/Human_Genome/elsi/elsi.shtml

Production and Operation Managemne, Case of Mcdonald

This paper aims at examining the use of teams in production and operations management. Boone and Kurtz (2011) reported that ’’the purpose of production and operations management is to oversee the application of people and machinery in converting materials into finished goods and services’’ (p. 356). Dr. Deming has developed fourteen principles for production and operations management, originally presented in Out of the Crisis, that serve as management guidelines. Organizations that follow that guideline should have more efficient workplace, higher profits, and increased productivity. According to Zupanc ( 2007) ,Dr. Deming’s principles are: Create constancy of purpose, Adopt the new philosophy, cease inspection and require evidence,End the practice of awarding business on the basis of price tag, Improve constantly and forever the system and of production and service , Institute training on the job , Institute leadership , Drive out fear , Break down barriers between departments , Eliminate slogans, exhortations, and targets for the work force , Eliminate work standards (quotas) on the factory floor , Remove barriers to pride of workmanship , Institute a vigorous program of education and self-improvement, Everyone must undergo transformation continuously and indefinitely. (Total Quality Management, para. 5). This paper will focus on Dr. Deming 9th principle. He has advised his client to:’’ break down barriers between departments and staff area’’. In other words, he is encouraging organizations to use team work in production and operations management. It is very important for a company to use team work. Most organizations divide themselves to several departments so that work would end faster upon splitting up and distributing to several departments. This takes the organization to better management in quality and also other profit with better planning. Thesis Statement: In discussing the use of team work in production and operation management, we shall start by describing a major global corporation ( McDonald) , next we shall describe its production or operations management, then we will describe and evaluate the company’s use of teams in production and operations management, and finally we will analyze and evaluate the company’s ability to adjust to a major economic, environmental, or natural crisis (such as the real estate crash, financial crisis, nuclear meltdown, hurricane, flood, oil spill, etc. and communicate effectively with their employees and customers about issues caused by the crisis 1. Describe a major global corporation: (1) a leading manufacturer or (2) a major retail or restaurant business. Describe the type of business, market share, financials, size, and global presence. McDonald's is the world's # 1 fast-food company by sales, with more than 32,500 restaurants serving burgers and fries in 117 countries. (McDonald Corporation , 2009). Svoboda (2007) argued that, in 1991, McDonald owned $13 billion of the $93 billion fast food industry. The popular chain is well-known for its Big Macs, Quarter Pounders, and Chicken McNuggets. Most of the outlets are free-standing units offering dine-in and drive-through service, but McDonald's also has many eateries located in airports, retail areas, and other high-traffic locations. About 80% of the restaurants are run by franchisees or affiliates (p. 1). The sales increased by 5% in 2010, Operating income grew by 9% and the company is continuing to gain market share around the world. In addition, McDonald has returned $5. 1 billion to shareholders through share repurchases and dividends paid, and has provided a 27% return to investors for the year, ranking it third among the companies comprising the Dow Jones Industrial Average (McDonald, 2011). 2. Describe the company’s production or operations management. Operations management can be defined as the planning, scheduling, and control of the activities that transform inputs into finished goods and services (Sloan School of management, 2009). Production and operation managers oversee the work of people and machinery to convert inputs into finished goods and services. Boone and Kurtz (2011) argued that operation managers execute four majors task, first they plan the overall production process, next they determine the best layout for the firm facilities, then they implement the production plan, and finally they control the manufacturing process to maintain the highest possible quality( p . 365). The following paragraphs will have a look at how McDonald executes those four major operation management tasks. PRODUCT PLANNING: Production planning begins by choosing what goods or services to offer to customers. The main operation In McDonald’s Restaurants is product planning. In order to meet the needs of the customers, that are constantly changing, McDonald has to keep on adding new products to its menu. For instance, the increasing preference of consumers towards healthy food made the restaurant add healthier food items to its menu. Similarly it has to add new products for different seasons, for examples hot coffee in winter and milkshakes in summer. LAYOUT DESIGN: Boone and Kurtz (2011) believed that an efficient facility layout can reduce material handling, decrease cost, and improve product flow through facility layout (p. 366). In McDonalds Restaurant layout designing is a very important operation. A proper layout of the equipment in the kitchen is very essential to ensure preparation of quality food in less time. It also designs its layout keeping in mind the health and safety issues. McDonald layoutis design in such a way that needs of supervision is minimised. McDonalds also sets its premises in proper manner to handle any number of customers easily. The building design is standard worldwide but it may be havesome difference in size or in exterior according to the location. It enables them tosave time, satisfy their customers, comfortable environment for both employees and customers. McDonalds uses the same interior pattern as it’s used internationally. Itmay vary according to the premises size (Gondal, 2008, p. 8). IMPLEMENTING THE PRODUCTION PLAN: After planning the production process and determining the best layout. Organization starts implementing the production plan. According to Boone and Kurtz (2011), this activity involves; selecting the best suppliers, and controlling inventor (p. 367). Selecting best suppliers: When an organization has decided what input to purchase, it must choose the best vendors for it needs. Their choice of a vendor will be based on the quality, the price, the delivery, and the services offered. The McDonald’s supply chain is a complex web of direct and indirect suppliers. It manages this complex system by working with direct suppliers who share their values and their vision for sustainable supply. McDonald holds them to clear standards for quality, safety, efficiency and sustainability (McDonald, 2010). It expects them to extend those requirements to their suppliers. McDonald also partner with them to identify, understand and address industry-wide sustainability challenges and achieve continuous improvement. Svoboda (2007) argued that, McDonald often holds seminars and conference for suppliers to discuss their need (p. 3). Overall, McDonald’s and its suppliers are collectively focused on three responsibility areas: ethical, environmental and economic. Controlling Inventory According to Boone and Kurtz (2011) , production and operations managers’ responsibility for inventory control require them to balance the need to keep stocks on hand to meet the demand against the costs of carrying inventory ( p . 369 ). At McDonalds the inventory is managed on the basis of First-In-First-Out basis. This is because most of the inventory consists of perishable items. Therefore delivery of inventory happens twice or more times a week depending on the business of the restaurant. Moreover inventory is stored in freezer with proper packaging so as to ensure freshness of the food items. All this activities comes under inventory management of the organisation. According to Kennon (2007), between 1999 and 2000, McDonald's had an inventory turn rate of 96. 1549, incredible for even a high-turn industry such as fast food. This means that every 3. 79 days, McDonald's goes through its entire inventory. By tying up as little capital as possible in inventory, McDonald's can use the cash on hand to open more stores, increase its advertising budget, or buy back shares. It eases the strain on cash flow considerably, allowing management much more flexibility in planning for the long term (McDonald vs. Wendy’s, para. ) Just in time system seek to eliminate anything that does not add value in operations activities by providing the right part at the right place at just the right time (Boone and Kurtz, 2011, p. 370). McDonald's is also uses JIT system in the sense that it doesn’t begin to cook its orders until a customer has placed a specific order. CONTROLLING THE PRODUCTION PROCESS: The final task of production and operation management is controlling the production process to maintain the highest possible quality. McDonalds put an emphasis on themaintenance of the product quality, the human resources used within the organization, its location and layout designs. They train their employees of all departments regarding their job, so they can handletheir customer and work as well which helps to maintain their status quotas (Gondal, 2008, p. 10). McDonalds is among the companies which are partially involved in the production of goods and services, so a proper maintenance system within the organization strengthens the goodwill and reputation. In McDonalds restaurant , the operations manager develop and establishes the process of cooking food items so that food is prepared using that method which helps them to maintain the speed and the quality of the food. Moreover it also designs processes so that the health, safety and hygiene issues are taken into consideration. Also the managers keep on introducing latest equipment’s with the advancement of technology so as to bring pace, perfection and quality in the product. Overall operations management is very important for any organisations; it contributes to the strategy and therefore helps the organisation to gain competitive advantage. 3. Describe and evaluate the company’s use of teams in production and operations management. A team is a group of people with complementary skills who are committed to a common purpose, approach, and set of performance goal (Boone and Kurtz, 2011, p. 329). A good team is said to be one where the whole of the team is greater than the sum of its parts; and this signifies that the team members are working in teamwork with each other. Many teams have worked together and the output has been lesser than teams made up of less intelligent minds. So while a team does move towards a common goal, how well it achieves this goal depends solely on how well the team members work in collaboration with each other. According to Goldman (2008), McDonald’s owes is success to its team functionality rather than the efforts of one individual. McDonald’s does not have very highly integrated teamwork, but they would be unable to deliver their products and service without sufficient team unity and cooperation (Observation of Leadership, para . 5). Team members have one area that they focus on during their shift. If they leave their post or are not productive, other line members will not be able to accomplish their jobs and the production line will suffer. For example, when a customer enters the restaurant places an order with the cashier, the later inputs the order into the computer and the information is displayed in the kitchen at the sandwich and grill stations. The grill worker prepares the meat and then places the burger on a bun. The sandwich maker then assembles the sandwich according to the type of sandwich and any additional requests the customer has. If the sandwich maker leaves his post, another worker has to cover for him or the entire product delivery process shuts down. Without everyone working together and having sufficient motivation to provide good and quick quality service, all members of the team fail. As a result of one person losing motivation or failing to adequately perform his duties, customers may complain and business can be lost. Even though most employees are trained to perform multiple tasks at various stations, they are not usually able to perform all of these tasks simultaneously. 4. Analyze and evaluate the company’s ability to adjust to a major economic, environmental, or natural crisis (such as the real estate crash, financial crisis, nuclear meltdown, hurricane, flood, oil spill, etc. ) and communicate effectively with their employees and customers about issues caused by the crisis. Every major corporation faces external and internal challenges. External challenges faced by organizations can be economic, environmental, or natural. We will take a look at the environmental challenges that McDonald has encountered and how it has been able to find solutions to those challenges. Svoboda (2007) argued that, in 1989 McDonald was facing environmental protests in the form of demonstrations, letters, and customers mailing their polystyrene clamshells back to the company. In order to take care of those protest McDonald stepped up its recycling effort by creating a joint task force with the Environmental Defense Fund (EDF) (p . 5 ). Developing a strong company-wide environmental policy, declaring that McDonald is committed to protecting the environment for future generation, was one of the first result of the task force. McDonald has also been active in educating its customers about the company’s environmental activities and positions. There are brochures available in restaurants informing customers about McDonald position on such as ozone depletion, the rain forest, and packaging. McDonald has realized that in order to achieve its waste reduction goals, it must collaborate with its suppliers. In order to promote collaboration McDonald has developed an annual environmental conference intended to train suppliers and has included environmental issues in its annual supplier reviews and evaluations. According to Svoboda the following initiatives were proposed by the task force and had since been followed by McDonald: Source Reduction, Reuse, Recycling, and composting. Section 40196 of the California Public Resources Code defines source reduction as any action which causes a net reduction in the generation of solid waste. â€Å"Source Reduction† includes, but is not limited to, reducing the use of non-recyclable materials, replacing disposable materials and products with reusable materials and products, reducing packaging, reducing the amount of yard wastes generated, establishing garbage rate structures with incentives to reduce the amount of wastes that generators produce, and increasing the efficiency of the use of paper, cardboard, glass, metal, plastic, and other materials (Department of Resources Recycling and Recovery, 2010 ) . Over the past twenty years , McDonald has made substantial progress in its source reduction efforts. Svoboda (2007) believed that, McDonald’s â€Å"average meal† in the 1970s — a Big Mac, fries and a shake — required 46 grams of packaging. Today, it requires 25 grams, a 46 percent reduction. McDonald’s has also reduced the weight of packaging in its sandwich wraps, hot cups, and napkins, removed corrugated dividers in some shipping cases, and switched to bulk containers wherever possible ( p . 4 ) . Re-use is using an object or material again, either for its original purpose or for a similar purpose, without significantly altering the physical form of the object or material (Department of Resources Recycling and Recovery, 2010). McDonald reuse options include the reuse of plastic (rather than cardboard) disposables, shipping trays for bakery items, and plastic shipping pallets that last at least three times longer than wooden pallets (Svoboda, 2007, p. 5). Recycling can be defined as using waste as material to manufacture a new product. Recycling involves altering the physical form of an object or material and making a new object from the altered material. McDonald’s tries to use recycled materials whenever possible . According to Svoboda (2007), in April 1990, McDonald’s announced the McRecycle Program, a commitment to spend $100 million annually on the use of recycled materials, especially in the building and renovation of its restaurants. In 1991, it surpassed its goal, purchasing more than $200 million of recycled materials (p. 6). McDonald’s continued to work with suppliers to develop packaging that was consistent with curbside recycling programs, to support the recycling of material that leaves the restaurant via takeout orders. Composting is the biological decomposition of organic materials such as leaves, grass clippings, brush, and food waste into a soil amendment. Almost 50 percent of McDonald’s waste stream consists of paper packaging and food organics that could be composted. McDonald’s is reviewing the compostability of its packaging and studying materials such as the coatings used on its paper-based packaging to determine if they impair compostability. Where possible, it will replace materials that are not compostable with materials designed for compostability. Conclusion This paper has discussed the use of team work in production and operation management, we started by describing a major global corporation ( McDonald) , next described Macdonald’s production or operations management, then described and evaluate the MacDonald’s use of teams in production and operations management, and finally we analyzed and evaluate the McDonald’s ability to adjust to a major economic, environmental, or natural crisis (such as the real estate crash, financial crisis, nuclear meltdown, hurricane, flood, oil spill, etc. ) and communicate effectively with their employees and customers about issues caused by the crisis. References Department of Resources, Recycling and Recovery. (2010). Waste Prevention Terms and Definitions. Retrieved from Department of Resources, Recycling and Recovery website: http://www. calrecycle. ca. gov/reducewaste/define. htm Goldman. E. (2008, November) . Observation of Leadership ; Organizational Behavior at McDonald’s. Retrieved from: http://www. ericgoldman. name/non-technical/28-leadership/34-observation-of-leadership-a-organizational-behavior-at-mcdonalds Gondal. N. (2008). Operation Management Strategies ; Total Quality Management Strategies . Retrieved from: http://www. scribd. com/doc/17407126/POM-REPORT-on-McDonalds McDonald Corporation. ( n. d. ) . McDonald’s 2010 annual report . Retrieved from http://www. aboutmcdonalds. com/etc/medialib/aboutMcDonalds/investor_relations3. Par. 56096. File. at/2010%20Annual%20Report%20(print). pdf Kennon . J. (2007). McDonald's vs. Wendy's – A Case Study in Inventory on the Balance Sheet . Retrieved from: http://beginnersinvest. about. com/od/analyzingabalancesheet/a/mcdonalds-vs-wendys. htm Zupanc . H . ( 2007 ) . Total quality management. Retrieved from: http://www. qualitysolutions. ca/tqm. htm Sloan school of Management. ( n . d . ) What is operation management? Retrieved from the Sloan school of management website :http://sloan. mit. edu/omg/om-definition. php Svoboda . S . ( 2007 ). McDonald’s environment strategy. Retrieved from: http://www. umich. edu/~nppcpub/resources/compendia/CORPpdfs/CORPcaseA. pdf

The maintenance of accurate records Essay Example

The maintenance of accurate records Essay Example The maintenance of accurate records Essay The maintenance of accurate records Essay unless there is a change in circumstances when a different approach might be warranted. In this situation full disclosure is made in the accounts. * Prudence concept: provision for doubtful debts and valuation of stock are examples of the prudence concept. The company requires to give a conservative profit figure when there is any doubt, this avoids an over optimistic appearance of the companys annual reports. * Going concern concept: this states that the organisation will continue operating in the foreseeable future. The annual reports are drawn up with no intention to decrease the size of the company; otherwise assets could have different values that will have a huge amplify on its balance sheet. Accounting policies: This policy emphasises on the method each business uses, to demonstrate the effect of transactions, assets and liabilities in its accounts. Referring back to the example in the consistency concept, a business needs to select one appropriate method to depreciate each class of fixed assets e.g. reducing balance method or straight line method. Accounting standard: Accounting standards are a set of rules to frame the accounting of a limited company, which fall under the International Financial Reporting Standards (IFRS) or UK Statements of Standard Accounting Practise (SSAP). The choice of standards will depend on the type of company. A publicly listed company is required by law to produce its financial statements using IFRS. FRS 18 Accounting policies: This policy is an extended version of the consistency concept; it states that a business needs to select the most relevant accounting policies to its business circumstance in order to give a true and fair view. The accounting policies need to be reviewed at regular intervals to make certain that they are still relevant to the business circumstances and are adjusted when required. Enough information is revealed in the financial statements to allow users to understand the accounting policies used and how they have been implemented. SSAP 5 Accounting for Value Added Tax (VAT): VAT is a form of tax that is charged on the supply of goods at a rate up to 17.5%, which is charged at each stage throughout the production and distribution channel. Businesses generating a certain amount of turnover must register for VAT, and generally each quarter makes VAT payments on the total of output tax collected on sales made subtracted the total of input tax collected on purchases to HMRC. If a circumstance where the amount of the input tax is larger than the output tax, the business has got the right to claim the difference of the VAT from HRMC. Besides personal taxation and VAT, the company is liable for corporation taxation as well. Russell Stokes needs to pay out a certain percentage of Corporation Tax calculated from its net profit; all companies in the UK are liable to this tax as stated under various Taxes Acts. Companies that generate taxable profits (being reported profits adjusted for certain items allowed by tax laws) up to à ¯Ã‚ ¿Ã‚ ½300 000 need to make a payment of 19%; companies generating taxable profits over à ¯Ã‚ ¿Ã‚ ½1.5 million are charged 30%. Companies generating taxable profits between à ¯Ã‚ ¿Ã‚ ½300 000 and à ¯Ã‚ ¿Ã‚ ½1.5m are charged Corporation tax on a marginal rate of 32.55 to claw back the benefit of the small companies rate by the time the upper profit limits is reached. The full rate of Corporation tax will decrease to 28% with effect from 1 April 2008. Any internal stakeholder at Kutz ltd, who is classified as an employee is eligible for National Insurance payments to cover state benefits (including medical through the NHS and pensions). Employees with earnings below à ¯Ã‚ ¿Ã‚ ½100 per week make no contribution. Between à ¯Ã‚ ¿Ã‚ ½100-670 per week employees pay 11% over the à ¯Ã‚ ¿Ã‚ ½100 and employers pay 12.8% over the à ¯Ã‚ ¿Ã‚ ½100 floor. An additional 1% is paid by employees and amounts exceeding à ¯Ã‚ ¿Ã‚ ½670 per week and employers pay an additional 12.8% on the wages exceeding à ¯Ã‚ ¿Ã‚ ½670 per week. A new company has specific rules which need to be obtained when deciding under what name the company can trade. The Business Names Act 1985, Company and Business Names Regulation 1981 states that a business cannot register and trade under the name of an existing company e.g. Marks ; Spencer, words such as Royal and Government are not permitted to use and names that origins discrimination or offence are not permitted to use as well. Limited companies have special formalities that must be followed: Public Limited Companies (plc) * The company is required to display on all its paperwork that it is a plc. * A starting up authorised share capital of à ¯Ã‚ ¿Ã‚ ½50 000 distributed to its share holders. * It must have a minimum of two directors and two members, and a secretary to be able to operate. Private Limited Companies (ltd) * The company is required to display on all its paperwork that it is an Ltd. * It must have a minimum of one director and a secretary to be able to operate. Companies trading as a Plc or Ltd must both complete the following forms which needs to be sent to Companies House * An Article of Association * a Memorandum of Association * Form 10 * Form 12 Article of Association: This document states the following: * The companys internal workings * The issue and transfer of shares * The meetings and voting of members Memorandum of Association: * The business objectives * The location of the companies registered office e.g. Wales, England or Scotland. * The companies name Form 10: This form must be completed be signed and completed by a new establishing companies, it states the following: * The details of the first director and secretary * The address of the registered office * Name and address of the company * Date of birth, occupation and details of the board of directors Form 12: This form needs to be signed by a professional legal person e.g. the companies solicitor or secretary, it is a statutory declaration that states that all legal requirements regarding to a limited company has been completed. The legal requirements of partnerships and sole traders are less onerous compared to a limited company. Sole trader and partnerships must also comply with the Business Names Act and Regulations as discussed earlier. Similar to a limited company, partnerships and sole traders are also liable for taxations. A sole trader needs to make a payment of up to 40% on its taxable profit for Corporation tax, whereas in a partnership the rate of tax that is due per partner depends on the ratio distribution of the profits each partner receives and the level of profit. . For example: partnership xyz has a taxable profit of à ¯Ã‚ ¿Ã‚ ½300 000, it will need to pay à ¯Ã‚ ¿Ã‚ ½120 000 tax allocated between the partners based on their share of interest in the partnership. The owners or partners (who are classified as self employed for tax purposes) need to make a contribution towards National Insurance which is a fixed amount of à ¯Ã‚ ¿Ã‚ ½2.20 per employee weekly. If annual generated profit is less than à ¯Ã‚ ¿Ã‚ ½4635, then the partner or sole trader is not charged for National Insurance. Even though a sole trader and a partnership have lots in common due to its similar structure of ownership, there are some differences as a partnership has a statutory framework to follow. The Partnership Act 1890 shows the details of the statutory framework, which include the following: * The partnership is shaped to make a profit and there must be a sharing distribution for the profits * The partners must have common actions, to enable them to have an equal say in the management * The partners must be carrying on a business, I.e. they must be operating a trade (for example, accountancy partnerships carry on the business of providing accounting, tax and audit services) Layout/Template As technology is advancing it enables businesses to use computerised accounting systems instead of manual book keeping, which helps in the production of accurate and efficient decision making. Small businesses such as a sole trader could use spread sheet for forecasting and financial modelling. The use of spreadsheet ensures the accounts are more accurate due to the automatic calculations and formulas. As everything is linked to each other due to the formula, when something is adjusted everything will be automatically updated. Computers set up properly tend to make fewer mistakes than humans! As Kutz ltd is a Limited company it can make use of accounting packages such as SAGE to record its book keeping and to produce annual statements. The key advantage of using accounting softwares is that it can produce automatic reports , which will helps with the control and monitor of the business as the reports can be used as statistics to analyse trends occurring, which will be an important factor to rely on when analysing ratios. Furthermore it decreases the chance of mistakes occurring as entry is made only once for each transaction. Nevertheless, the main drawbacks of a computerised system include capital cost of the installation, the cost of training employees to be familiar with the system, health problems occurring and the danger of system crashing. Even though the introduction of the computerised accounting system could cause short term difficulties it will have long-term benefits; it will have a clear view of its debtors, which will enable quicker debt collection that will increase the inflow of money. For this reason I think it is a very useful tool to use. It also tends to be more accurate, reliable, quicker and able to deal with large volumes. The key reasons to use templates or to follow a specific layout when preparing annual statements (e.g. trading, profit and loss statement (P/L) and balance sheet), it allows the business to make comparison between companies and firms operating in a similar industry worldwide. It is more accessible to external stakeholders such as shareholders, who are interested if investment is worthwhile. The layouts of the annual statements of a sole trader are slightly different compared to the annual accounts of a limited company because of the different industry the business is operating in. Referring to appendix 1A, the P/L template of a sole trader has a clearer structure as it is separated into three columns; it represents an understandable view of its income and expenses. While the P/L template of a limited company has got two columns, especially a public limited company because as they need to publish their accounts to the public they would want to represent the company positive as possible, (Referring to Appendix 1B). The trading account, which is the top section on the P/L of a sole trader and limited company are done in the same way; the way gross profit is calculated. The major difference is in the profit and loss account, the bottom section. In a sole trader P/L, after adding any income and deducting any expenses from the gross profit it will have a net profit figure. Wh ile the P/L of a limited company will have an appropriation section at the bottom, which will show the distribution of net profit. Corporation tax is deducted from profit before tax to give an after tax number. Tax is another expense of the business. The appropriation section is divided into the following sections: * Interim and final dividends * Retained profit Interim dividends paid This is dividends that are paid half way through the year to shareholders. They come in two forms depending upon the capital structure of the group, ordinary shares and preference shares: Preference shares: the shareholders that get paid off first e.g. employees Ordinary shares: the shareholders that get paid off after preference shares. Dividends proposed A share of the profits paid to share holders after dividends have been paid; this again comes in two forms preference shares and ordinary shares. Referring to appendix 2a/b, the balance sheet of a sole trader and limited company have similar headings; fixed assets, current assets, current liabilities and long term liabilities. However, the bottom section represents the equity in the business owned by the shareholders. The financed by section of a sole traders balance sheet will be funded with the owners equity; opening capital, net profit and drawings. While the financed by section of a limited company will be funded by; authorised share capital, issued share capital, capital reserves and revenue reserves. * Authorised share capital: is the value and number of the shares the company is permitted to issue. * Issued share capital: is the value and the number of shares the company has issued. * Capital reserves: represent other reserves generally established by law. This might include the share premium account representing the amount received upon the issue of shares in excess of the shares nominal value (if a company receives à ¯Ã‚ ¿Ã‚ ½10 per share for a share that has a nominal value of à ¯Ã‚ ¿Ã‚ ½1, a share is issued at a premium of à ¯Ã‚ ¿Ã‚ ½9 and this is taken to the share premium account that can be used only for certain purposes prescribed by law). * Revenue reserves: retained profit from the Profit and loss account Task F Ratio After drawing up final accounts, a business would want to assess the businesss strengths and weaknesses. This can be done through calculating ratios, which enables management to draw up conclusions on the profitability, solvency and performance of the business. The ratios enable Russell to analyse current years performance, identify trends occurring through comparing the ratio with previous years and to compare its result to a business operating in the similar industry as a bench mark. Unfortunately I could not have access to the annual accounts of a business operating in the similar industry as Kutz ltd as the information is kept confidential; therefore I was not able to measure Kutz ltd ratios to a bench mark The table below represents Kutz ltd ratio figure and its calculations are on the workings page see appendix. year 2006 year 2007 Profitability Ratios Profitability Ratios Gross margin 62.04% Gross margin 61.94% Net margin 0.74% Net margin 10.89% ROCE 2.22% ROCE 41.00% Liquidity ratio Liquidity ratio acid test ratio 10:1 acid test ratio 2.68:1 current ratio 22:1 current ratio 6.49:1 Performance ratio Performance ratio debtor collection period 34 days debtor collection period 73 days creditor collection period 15 days creditor collection period 55 days stock turnover 183 days stock turnover 242 days * Profitability ratios It shows the relationship between profit, sales turnover, assets and capital employed. Basically how much profit the business makes weighting it against its size. Gross profit margin This represent the gross profit figure, it shows the link between the revenue generated (sales) and cost of sales. It indicates how much profit the business has made on every à ¯Ã‚ ¿Ã‚ ½100 of sale before subtracting any expenses. The higher the gross profit margin is the better. A successful business needs to have a sufficient figure for gross profit margin to be able to cover its expenses and to maintain an up to standard return on capital. If there is a huge decrease in the gross profit margin compared to the previous years, the business should start making investigations into the selling price and purchasing. The table above demonstrates that for every à ¯Ã‚ ¿Ã‚ ½100 of sale, the gross profit earned was à ¯Ã‚ ¿Ã‚ ½62.04 in 2006. The following year it dropped to à ¯Ã‚ ¿Ã‚ ½ 61.94. There is a minor decrease of 0.1% in the gross profit margin that is not a big issue; this could have occurred due to the increase in the prices of raw materials while the same selling price is retained or a decrease in the volume of sales. To prevent the decrease over the long term to happen in the years following, Kutz ltd should take action to avoid bigger decreases through looking for suppliers with lower prices or to persuade the salons with offering discounts, to increase the volume of sales. Net profit margin This represents the net profit figure; it shows the link between the revenue generated and the total expenses of the business. It indicates how much profit the business has made on every à ¯Ã‚ ¿Ã‚ ½100 of sale after subtracting all expenses. The net profit margin figure should increase each year if possible, which shows that the business is keeping its expenditure under control. As with gross profit, net profit should be investigated when a huge decrease occurs. The table shows that in the year 2006 for every à ¯Ã‚ ¿Ã‚ ½100 of sales the business earned à ¯Ã‚ ¿Ã‚ ½0.74 after all operating costs and cost of sales had been covered. The following year it increased to à ¯Ã‚ ¿Ã‚ ½10.89, this is a positive aspect as Kutz ltd will receive a higher return on capital; huge increase in net profit. Bearing in mind that net profit and gross profit are strongly linked together, this is not always necessarily true as you can see Kutz ltd has increased it net profit by 10.15% whereas it has decreased its gross profit. It could have happened due to a huge decrease in expenditure. Kutz ltd should try to maintain the reduction of expenditure through building up good relationships with its creditors and try to negotiate lower prices or making use of economies of scale. ROCE Return on capital employed is the most significant ratio; it shows the link between the capital and net profit earned. The best way to measure the ROCE is to compare it to other investments, for example would I receive greater return on my capital if I put the capital in a savings account? The table shows that in the year 2006 for every à ¯Ã‚ ¿Ã‚ ½100 invested into the business, the profits were à ¯Ã‚ ¿Ã‚ ½ 2.22. The following year for every à ¯Ã‚ ¿Ã‚ ½100 invested into the business, the profits were à ¯Ã‚ ¿Ã‚ ½41.00; this shows an increase of 38.78% a better result. This has been occurred due to the huge increase in the net profit margin. The current interest rates are 5.5%, so if I was putting à ¯Ã‚ ¿Ã‚ ½100 into a savings account I would be receiving a return of à ¯Ã‚ ¿Ã‚ ½ 5.5 for every à ¯Ã‚ ¿Ã‚ ½100. However, as an investor I would be investing my money into Kutz ltd because I would be receiving a greater return on my capital with à ¯Ã‚ ¿Ã‚ ½41. In conclusion the overall profitability is positive, Russell should try to maintain on this level of performance if not try to increasing the profitability would be better * Solvency ratios: This shows the financial stability of the business, how quickly the business can cover its current liabilities with its current assets. (How quickly it can pay off its debts) Current ratio This shows the link between current assets and current liabilities. An ideal figure would be 2:1, which means the business will have assets worth à ¯Ã‚ ¿Ã‚ ½2 to cover every liability worth à ¯Ã‚ ¿Ã‚ ½1. You need to consider that this ideal figure is not applicable to a business operating in a retail industry because immediate payments are made for sales; this decreases the number of debtors. This will result in a lower current ratio figure e.g. 1.5:1 or even less. The table shows that in the year 2006 the current ratio was 22:1. In the year 2007 the current ratio was 6.49:1, it decreased nearly 3 times it has improved. Kutz ltd had tied up assets in unproductive resources in 2006, which was more under control in 2007. It is currently still a huge figure compared to the ideal figure, therefore the Kutz ltd isnt in its best state of liquidity it should have been. Furthermore Kutz ltd has got an enormous amount of cash tied up in working capital of stock of à ¯Ã‚ ¿Ã‚ ½150000 and debtors of à ¯Ã‚ ¿Ã‚ ½104000 outstanding. Acid test ratio This ratio works in the similar way to the current ratio; the only difference is that stock has been omitted. Stock has been omitted as it is the least liquid asset; it takes long to convert it into cash. The ideal figure is 1:1; the business will have for every à ¯Ã‚ ¿Ã‚ ½1 of liability à ¯Ã‚ ¿Ã‚ ½1 of assets to cover it. The table shows that in the year 2006 the acid test ratio was 10:1. In the year 2007 the acid test ratio was 2.68:1, a decrease of 7.32 a positive aspect. Even though the figure of the acid test ratio has decreased, it is quite high currently compared to the ideal figure. Comparing the current ratio to the acid test ratio, it decreased nearly 3 times. This shows that Kutz ltd relies mainly on its stock of à ¯Ã‚ ¿Ã‚ ½150000, which is why it has not got enough cash flowing in. Russell should use its assets more efficiently through selling off its stock using discounts and making use of just in time production in the future rather than having too much stock piled up, this will enable him to expand in the current product range as he suggested because then he will have enough fund that will support his suggestion. In conclusion, overall the solvency of Kutz is lacking and the suggested improvements should be made, which were discussed earlier on. Performance ratios This shows how effectively management controls the current aspects of the firm, whether assets and liabilities are being utilised properly. Creditor collection period This ratio shows on average, how long the business takes to pay its creditors. This figure should be higher than the debtor collection period; if its shorter the business might face cash flow problems. The table shows that in the year 2006, it took Kutz ltd15 days to pay its creditors. In the following year it took him 55 days, an increase of 40 days which is a good thing although too long, might impact relationships with suppliers. Russell could use this as a useful temporary source of finance; however payments over 60 days can cause problems. Russell should try to prevent an increase in the years following as this will establish poor relationships with its suppliers, which will have a negative impact on Kutz ltds reputations. Debtor collection period This ratio shows on average, how long it takes a business to collect it debts the ideal figure is 30 days. The quicker it can collect it debts the better. If the number of days is rising from year to year, the firm might be facing difficulties in collecting money it is owed to. The table shows that in the year 2006, it took Kutz ltd 34 days to collect it debts, which is an acceptable figure. However in the year 2007, it took him 73 days. This is nearly increased twice, which is a bad result. The huge increase could make Kutz ltd end up in cash flow problems as he does not have enough inflows to pay of his outflows e.g. creditors, instalments and interest of his loan. When comparing the debtor and creditor, the creditors are being paid much quicker than cash is being received from the debtors. The situation should be the other way around. Kutz ltd could prevent this through offering discounts for early payments or charge the creditors for late payments. I predict that if Russell doesnt take any action based on the debtors collection period, it should increase the provision for doubt full debts. Even though this will decrease gross profit but it will prevent him from overspending and getting trapped into current liabilities he cannot afford. Stock turnover: This ratio measures how many times a business turns its stock around in an accounting period. The table shows that in the year 2006, Kutz ltd turned its stock over every 183 days. In the year 2007, it took Kutz ltd 242 days to turn it stock over, it has increase by 59 days, this has worsened the situation. This shows that the stock has either increased or the trading has slowed down, increased investment in stock means that the stock is piled up in the warehouse. As part of my secondary research, we went to Price Waterhouse Coopers. I received feedback from my mentor on my work; he suggested to me that Russell should stop purchasing more stock and perhaps invest into a new product range that might result in a quicker stock turnover. In conclusion, overall the performance of this business is lacking as well, it should try to make improvements for the future. Limitation of ratios: Bearing in mind that ratio is a useful business tool to use to analyse; performance, solvency and the profitability of the business, however it has got its draw backs as well: * Different companies use different accounting policies, which makes comparison difficult. * It does not necessarily show future performance as the data is based on numbers only, it should bear in mind the external factors it could affect; economical influences. * It needs to be compared with the businesss past performance, in Kutz ltd case it only had one previous years to compare the data with, which didnt enable me to identify trends occurring as the data was very narrow. Task G Cost of the business having too much cash, including loss of interest and opportunity costs. It is a superior aspect to have a positive bank balance, because this prevents Russell to suffer from cash flow problems; a good state of liquidation. Nevertheless if Russells bank balance is too huge this might mean that he is using his cash ineffectively. Even though he will be earning interest on his cash at the bank account but as shown in the example of ROCE, it could be earning a greater return if he invested the money in other more profitable operating activities. He could also make use of the business tool; opportunity cost in this situation, as he can only spend his money once he would need to consider his most relevant option. For example, If Russell had a huge bank balance and he chooses to expand through investing in new machinery or diversification through buying new beauty products. The danger he would be facing is that if he suddenly needs his money to support the financial state of the business, he would need to sell the machine or his stock most likely at a lower pri ce, which will result in a loss. Costs of the business holding too little cash, such as inability to meet creditors demand and need to borrow at expensive rates It is a negative aspect to have too little cash, because this could make Kutz ltd suffer from cash flow problems as he would not have the funds to cover his current liabilities. If the business is facing problems to cover its current liabilities, during the short term Russell could obtain an external or internal source of finance. It could get an arranged bank overdraft, which is an effective way to cover the cash flow shortage. Nevertheless, overdrafts are very expensive due to the high interest rate charged. It could also try to pay off his creditors as late as possible to use the cash somewhere else for the time being, however late payments could cause problems with Kutz ltd creditor. Furthermore creditors could also charge interest on the debt as a penalty for late payments or they could start to lose confidence in Kutz and stop trading with them. In addition, this will have an effect on the profitability and solvency of the business. Russells current ratio suggests that he has excess cash stored in his business, which is not a good aspect as discussed earlier. Whereas when comparing the current ratio with the acid test ratio, a conclusion can be drawn up that he has not got excess liquid cash (once stock had been taking out). Based on the analysis of the ratios it shows that the business has a huge amount of stock piled up in its warehouse; 242 days. In addition the business has got too much assets, which is not being use effectively. Kutz ltd could be converting the huge amount of stock into liquid cash through selling off his stock in bulks and offering discounts to its customers, as a result this will improve the cash flow of the business He should also send out reminding letter to his debtors that are overdue as his debtor collection period has increased enormously compared to the previous year. As stated earlier, otherwise in view of his large amount of debtors, his provision for doubtful debts could increase in the future and he would not be able to meet his liabilities. To prevent the decrease in Kutz ltd cash flow in the future, it should try to decrease the number of stock purchased through applying the business term just-in-time to its stock as discussed earlier. Kutz ltd doesnt have a huge problem in its state of cash but he is using it ineffectively, which results in a poor cash flow management. The huge decrease in its stock turnover shows that Kutz is having lower volumes of sales; there is not enough demand compared to the supply he is offering, he could improve this through introducing a new product range related to hairdressing e.g. beauty products. My advice to Russell is to use the cash available for expansion through purchasing a new range of beauty products; using diversification as he mentioned as one of his aims. I suggest that he purchases a small amount of beauty products at the beginning and see how profitability, performance and solvent his new investment is, particularly if the stock turns over has increased. If it is very successful he should continue operating with the new product range, as he will be able to utilise his cash quicker because he will make higher profits than the current product range. However, if the product range is not successful it can try to invest in a new resource and it would not have a big impact upon the business as he has only invested in a small amount of beauty products. Methods of improving cash flow It is a significant factor to monitor the business cash flow as it enables Russell to have a better understanding regarding its income and expenses; if it is able to meet his current liabilities. The cash flow forecast will also help him to predict when an internal source of finance needs to be obtained. Furthermore this will help him to avoid problems rising, like overspending or being unable to get the external finance when needed. As discussed earlier it can send out warning letters to its debtors that will increase the inflow of the business, basically a method shortening the length of time taking to collect the debts. My advice to Russell is to take immediate action based on its debtors because if he remains paying off his creditors before he receives any debts that is owed to him, Kutz ltd will be financial unstable that obviously will have an enormous impact on the cash flow of the business. Bearing in mind that his loan repayment is due soon he needs to have sufficient cash flow in order to pay off the loan on time, without affecting the relationship it has with the bank currently. He therefore needs to increase his provision for doubtful debts, to get a picture of the financial stability of the business in the future and try to look for different alternatives for the problems he will be facing. A credit payment can be up to 60 days; Russell should try to negotiate his credit payment period from 55 days to an extended period of 60 days. He should be able to exceed the creditor payments as he is a medium to large size business, he will have some influence upon its suppliers as he most probably buys in bulk. Cash versus profit Profit does not necessarily mean the business has a got efficient cash flow. Profit is the money the business makes when all expenses have been subtracted from revenue, it takes into account the non monetary values such as depreciation and provision for doubtful debts. Cash is the money that enables a business to operate that doesnt take into account the monetary values, for example paying off his loan, dividends to its shareholders, water and gas bills. The non monetary values will have an effect on the profit of the business as they are deducted from the net profit the business generates, however this will not have an impact on the out flow of the business as it is not deducted on the cash flow. Another difference is that on the profit and loss statement outstanding payments to be received will still be included in the turnover when net profit is calculated, but as the business has not received the actual money it will not have an inflow on the cash flow statement. This has the sam e affect on purchases that are outstanding. The profit and loss statement will include the figure of purchases that are still outstanding; this will result in a lower gross profit. While it will not be included in the business outflow as it has not been paid off yet, therefore it will not have an effect on the cash flow of the business. As touched onto earlier, Kutz ltd is in its poor state of solvency. As profitability and solvency ratios are linked to each other, I suggest he should improve its net profit through introducing the new product range, which I assume will increase the volume of sales. To prevent a decrease in the gross profit due to the new expenses, it should try to switch to a cheaper supplier. As the volume of sales are increasing the rate of stock turnover will automatically increase; stock is sold quicker at the same time, which means more cash is available to the business. In conclusion this will solve both problems at the same time as Kutz ltd will have a better cash flow, which will not affect the profit of the business. The business changing its aim due to such things as expansion, diversification, downsizing, and its impact on financial planning. In my opinion Kutz ltd should develop and expand, as it is a limited company it should take the advantage of the limited liabilities it will have, it is easier for him to get access to external finance. The main reasons I think Kutz ltd should expand is to use make use of economies of scale, as the firm is growing it can produce at lower average costs compared to smaller businesses. For this reason they can give consumers lower selling prices which will help them increase their sales and profits. It should diversify its product range (beauty products) as it can sell into different markets, therefore it can reduce the risks that a decrease in sales of one product will have a negative impact on the business; there is less threat to their profit. In my opinion to solve the current cash flow problems Kutz ltd faces, he should also take on the request of the national hairdressing business as he is not using the first floor at the moment; the income he will be receiving from renting out the space could be used to fund the repayment of the loan. Kutz ltd should invest its capital in a delivery service to get ahead of competitors, as this will also help to increase the customer base and the volume of sales. Conclusion The most significant aspect to Kutz ltd at the moment is improving its state of liquidity; a suggestion to recover this problem is through cutting stock. I will be prioritising the significance of the steps Russell could take to become solvent. Reduce level of stock Russells first priority should be reducing the number of stock he purchases as I have discussed previously, he has got excess amount of stock piled up in Kutz ltd warehouse, which could be used to improve his state of liquidation. First of all, I have suggested that he has a 50% cut in his stock (therefore purchases will drop from 238384 to 117374.5) I assume this will deduct his revenue by 10% only (therefore sales will drop from 500000 to 450000) as he turns his stock over at an enormous slow rate. After he implements the changes, Kutz ltd will have a negative net profit (as demonstrated in appendix). From my secondary research at PWC, my mentor emphasised on the fact that cash is king and profit does not equal cash (source Partner at PWC; Simon Friend). Russell is legally insolvent as he has the sufficient assets that could be used to fund his financial obligations but converts them with insufficient time into cash. Furthermore he faces a cash flow shortage through using his assets ineffectively as I have explained earlier. Referring to the words of Simon Friend, lower profits do not indicate the business is not successful; the most important aspect is that the business is solvent. I advice Russell to implement the changes as this will improve the cash flow management of Kutz ltd and at the moment he needs a good cash flow to fund the repayment of his loan, otherwise he will be creating poor relationships with his external shareholders e.g. bank. year 2007 stock turnover: average stock=(100000+150000) = 125000 2 125000 à ¯Ã‚ ¿Ã‚ ½ 365 = 242 368468.5 After the reduction of stock stock turnover average stock=(100000+150000) = 125000 2 125000 à ¯Ã‚ ¿Ã‚ ½ 365 = 124 368468.5 Based on the analysis of the ROCE Ratio, the time taking to turn over stock has increased nearly twice from year 2006 to the year 2007. As demonstrated above after implementing the changes, the time taking to convert stock into cash has decreased nearly by 50%. This shows that even though Russell has got a negative net profit the overall performance of the business has increased by 50%, which is an excellent aspect. Collect debts quicker/ extend creditor payment periods Russells second priority should be taking action on the period of time he receives his debtor payments. I believe he should send out warning letters and stop offering credit payments to its debtors, he should insist on direct cash payments as 80% of his sales are on credit. Through this Russell will receive immediate cash from its sales and could decrease the amount of provision for doubtful debts. Furthermore if sales increase rapidly, I assume Kutz ltd would end up with a positive net profit while having a healthy cash flow. Russell should also try to negotiate a longer credit payment period. If he succeeds to collect his debts quicker and get longer credit payment period offer, he will have more liquid cash around that can be used to fund the repayment of the loan or to invest in the new product range. In conclusion, this will enable Russell to finance the business with its short term liabilities that will be beneficial to Kutz ltd as it does not increase the business cost with in terest payments if he had to take an external source of finance to fund the business. Take request Russells next best option would be renting out the first floor to the National Hairdressing business. The reason behind this is that this form of internal finance, besides being used for the repayment of the loan and investment of a new product range as discussed earlier. It could be used as reserves for the future, instead of risking making repayments including huge amounts of interest on bank loans for investment in other operating activities; it could use the reserves to fund the business objectives without the business facing financial difficulties. Diversify, expand and develop The internal sources of finance that has been collected from reducing the level of stock, taking on the request, collecting debts quicker and extending the creditor payment periods can now be invested into the purchase of a delivery van that will help to increase the customer base and increase volume of sales. It could also be used to diversify into beauty products, which will with anticipation to result in an increasing volume of sales. This means that Russell will still end up with a positive net profit figure and a healthy cash flow, even though I discussed earlier that profit is not important compared to cash but external stake holders might have a different view towards it. So to prevent the loose of stake holders and creating a bad public image, Russell should expand and diversify Kutz ltd. Appendix Trading, profit and loss account of Kutz Ltd for the year ended 31 may 2007 after the reduction of stock *Workings Sales 450000 less sales returns -1923 net sales 448077 opening stock 100000 purchases 121009.5 less purchase returns 3635 117374.5 carriage inwards 1094 less closing stock -150000 cost of sales 368468.5 Gross profit 79608.5 Add other income: bank interest received 42 discount received 14887 94537.5 less expenses rent and rates 2 66000 motor vehicle expenses 7720 advertising expenses 14500 sundry expenses 2 34977 light and heat 3 16460 wages 76251 discount allowed 11238 Depreciation 1 10050 doubtful debts 4 (5200+2080 7280 loan interest 3 22500 266976 operating profit -172439 less directors dividends 12000 retained profit -184439 add retained profit at the beginning of year 2000 balance of retained profit at the end of the year -182439 *The workings are found in appendix