Ambition Essay - 708 Words

Ambition is a strong desire to do or achieve something. Many people view ambition as a positive aspect, many do not. The great things that people have accomplished are driven by ambition. Yet, too much ambition can drive someone to have very destructive actions. Ambition is a negative trait based on the fact that it gives you a careless attitude and gets you wealthy but not exactly satisfied. Ambition can cause you to be self-absorbed and give you a careless attitude toward your family or the important aspects of life. â€Å"It means you care more about getting ahead rather than about your kids or your wife or your husband†(Gale). Ambition can cause you care more about â€Å"climbing the corporate ladder† or try to â€Å"win that next marathon† rather†¦show more content†¦Genuine happiness is not brought by wealth and power, it is brought by family or pets.â€Å"Some people think that ambitious people are selfish and are never satisfied because they always want more.† Despite the fact that ambitious people may have the best car, or the greatest house in the neighborhood, this does not guarantee true happiness in life. Materialistic items are only temporary, the happiness you get from a new Audi A3 Sedan is only for a brief time. The happiness you get from marrying the love of your life is until the end of time. Ambitious people are co ntinually working on the next goal or dream. This means they rarely have time for their kids or their wives or husbands. This may divide the family, lead to divorce, where the kids and adults endure suffering . â€Å"...but not enough to spend all your time working for your loved ones instead of spending time with them.† Your ambition may be driven by the need to provide for your family, or ensure that your family is financially stable. The time spent constantly searching for another way to get a check can cut into the time you can be spending with your family. Ambition is a negative trait because it gives you a careless attitude and gets you wealthy but not exactly happy. Those with ambition may have the best car or the best house yet may not be completely happy. Yes, ambition can be a extremely constructive part of ones life, but forShow MoreRelatedMy Ambition In Life Essay To Become A C1082 Words   |  5 PagesMy ambition in life essay to become a collector Free Essays on My Ambition In Life To Become A Collector for students. Use our papers to help you with yours. 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Summary Of D Evelopment Of Ho Opili - 1477 Words

D evelopment of Ho’opili When I drive by a new house being advertised for a sale or search for homes on Zillow, I can’t help but to wonder about the day I get to buy my own home. But, then I look at the price, and suddenly that dream just crash and burns. In Hawaii you have to make a fortune just to live comfortably here. With the high cost of living, it doesn’t make able to own a home easier. Many locals on the islands are looking else where to buy homes because it’s just that hard. But there could be a solution to that problem, simply to use our land to build more homes. Ho’opili a new city that will be built on farmlands on the Ewa plains will offer more reasonable prices for homes and more businesses. The development of Ho’opili will better the economy and provide affordable housing for Hawaii residents. Why is Ho’opili beneficial to our economy you might think? Ho’opili will be a new city that will consist of affordable housing to Hawaii’s residents. Here on the islands we are suffering from high cost of living and an even higher housing market. On USA Today’s Most Expensive states to live in, Hawaii ranks number one in the cost of living index and Housing index. To be able to live comfortably in Hawaii you would have to make about $122,000 a year. The average home value in Hawaii is around $520,000, and that’s about $420 per square foot. So you will have to pay a hefty price to even afford a home here in paradise. Here in Hawaii, a lot of people chose to rent

Sources of Capital Owner’s Equity Free Essays

Owner’s Equity as a Source of Capital Sources of capital come in two forms: debt and equity. Obtaining permanent capital through equity is the capital supplied by the entity’s owners. It is the owner’s share in the financing of all the assets. We will write a custom essay sample on Sources of Capital: Owner’s Equity or any similar topic only for you Order Now Richard Scott, United States accounting professor wrote, â€Å"one of the most deep-seated, and incontrovertible concepts embraced by accounting theory today is that of owner’s equity. † Through analysis of the case, we found this to be true. There are different financing costs both a company and its investors face when considering equity financing. It is strangely fascinating that often times, equity financing becomes more costly than debt financing. The analysis of opportunity for both sides of the transaction, financier and debtor, requires multiple formulas and calculations. Options for financing vary in pre-tax earnings and return on investment. For this reason, the options should be thoroughly analyzed to find the best yield for both parties, company and investor. Innovative Engineering Company was founded as a partnership, and within five years became a thriving business bringing with it both success and the need for new permanent capital. The two partners, Gale and Yeaton, estimated the capital need at $1. 2 million. Initially, the partners found interested investors, but none willing to risk their personal assets by participating in a partnership. Though incorporation is more costly and subject to numerous regulations, it provides limited liability to its investors and the ability to raise capital through bonds and stock. The partners planned to form a corporation to secure investors. Under incorporation, owner’s equity becomes stockholder’s equity. The two types of equity are purchased equity, consisting of preferred stock, common stock, and paid in capital, and that of earned equity, also referred to as retained earnings. The later represents profits earned by the company and retained in the business. Owner’s equity is shown on the balance sheet and within the statement of owner’s equity in a company’s financial statements, and is most commonly influenced by income and dividends. Four proposals were developed to attempt to meet the needs of investors in the Innovative Engineering case and the two original partners struggled to maintain ownership control. Proposal A includes a $1. million long-term loan, giving Arbor Capital Corporation 10% common stock. Proposal B includes $200,000 debt, $900,000 preferred stock, and $100,000 common stock. Proposal C includes $600,000 debt, $600,000 equity with 40% common stock. Proposal D includes $300,000 debt, $900,000 equity with 50% common stock. Calculating the impli cations of each proposal is necessary to seek further investors and find the best option for both sides of the transaction. Gale and Yeaton assumed an interest cost of debt at 8% and a dividend rate for preferred stock at 10%. They also assumed pessimistic, best guess, and optimistic variables. The applicable tax rate is 34%. The return on common shareholder’s equity earned under each of the three income assumptions is as follows: Proposal A: Debt = $1,100,000 Taxes= 34% Payment on Debt = $1,100,000(. 08) = $88,000 Common Stock = $1,000,000 Pessimistic NI – Interest Expense+ Tax Savings/Common Stock = $100,000 – 88,000+34,000 = 46,000/1,000,000 = 4. 6% Best Guess $300,000-88,000+102,000 = 314,000/1,000,000 = 31. 4% Optimistic $500,000 – 88,000+170,000 = 514,000/1,000,000 = 51. 4% Proposal B: Debt = $200,000 Payment on Debt = $200,000(. 08) = $16,000 Preferred Stock = $900,000 Dividend Payment for Preferred Stock = $900,000(. 0) = $90,000 Common Stock = $100,000 Common Shareholder’s equity = 1,000,000 Taxes = 34% Pessimistic NI-Interest Expense-Preferred Div+ Tax Savings/Common Stock $100,000-16,000-90,000+34000 = 28,000/1,000,000 = 2. 8% Best Guess $300,000-16,000-90,000+ 102,000= 296,000/1,000,000 = 29. 6% Optimistic $500,000-16,000-90,00 0+170,000 = 564,000/1,000,000 = 56. 4% Proposal C: Debt = $600,000 Payment on Debt = $48,000 Common Stock = $1,500,000 Taxes = 34% Pessimistic NI-Interest Expense+Tax Savings/Common Stock $100,000-48,000+34,000 = 86,000/1,500,000 = 5. 7% Best Guess $300,000-48,000+102,000 = 354,000/1,500,000 =23. 6% Optimistic 500,000-48,000+170,000 = 622,000/1,500,000 = 41. 47% Proposal D: Debt = $300,000 Common Stock = $1,800,000 Taxes = 34% Pessimistic NI-Debt+Tax Savings/Common Stock $100,000-24,000+34,000 = 110,000/1,800,000 = 6. 1% Best Guess $300,000-24,000+102,000 = 378000/1,800,000= 21% Optimistic $500,000-24,000+170,000 = 646,000/1,800,000 = 35. 89% From this, we see proposal D is the optimal investment strategy for Arbor Capital Corporation. The three income assumptions provide higher returns at a more constant rate than the other proposals. For Innovative Engineering Company, proposals A and B are more ideal for meeting their control needs. For a further analysis of earnings, the pre-tax earnings and return on investment are calculated as follows: Pre-Tax = 100,000 / (1-. 34) = 151,515. 15 Proposal A: Debt = $1,100,000 Common Stock = $100,000 Interest = $88,000 Dividend = $21,200 Pre-Tax Earnings = $109,200 (sum – common stock and debt) Return on Investment = 9% (pre-tax earnings / $1,200,000) Proposal B: Debt = $200,000 Preferred Stock = $900,000 Common Stock = $100,000 Interest = $16,000 Preferred Dividend =$90,000 Common Dividend =$10,000 Pre-Tax Earnings = -$64,000 Return on Investment = -5% Proposal C: Debt = $600,000 Common Stock = $600,000 Interest = $48,000 Common Dividend = $240,000 Pre-Tax Earnings = $288,000 Return on Investment = 24% Proposal D: Debt =$300,000 Common Stock = $900,000 Interest = $24,000 Common Dividend = $450,000 Pre-Tax Earnings = $474,000 Return on Investment = 40% Again, proposal D shows the most promise for Arbor Capital Corporation, with larger pre-tax earnings and a greater return on investment. Innovative Engineering Company is in a good position and has options. They should not consider proposal B. Proposal A will give them greater control over the company but comes with large debt financing and is risky. They should consider other investors and should look at options such as warrants. They should further research their options for a large loan. We have found debt financing can be cheaper than equity financing and should be considered. We are certain Innovative Engineering Company could find more attractive financing than proposal D. They should have more options, because their need is success driven versus a start-up company. From outside research we have found there is a natural definition of market efficiency relating capital stock and investment flow. Obviously, equity finance should not be used if it becomes more expensive than debt financing. The company can create value by managing these sources of capital, finding an optimal balance of both. Works Cited Anthony, R. N. , Hawkins, D. F. Merchant, K. A. (2007). Accounting Text Cases (12th ed. ). Boston: McGraw-Hill Irwin. Frieden, Roy (2010). â€Å"Asymmetric information and economics. † Physica A. Volume 389 Issue 2. Scott, Richard (1979). â€Å"Owner’s Equity, The Anachronistic Element. † The Accounting Review. Volume 4. How to cite Sources of Capital: Owner’s Equity, Essay examples

Financial Performance of Eagle Ltd

Question: Analyse the financial performance of Eagle Ltd? Answer: Introduction The main aim of the report is to analyse the financial performance of Eagle Ltd. in the year 2013. It is noted that there is vast different between the actual and budgeted figures due to which variance analysis and ratio anazlysis have been conducted. This huge variance can be attributed to the fact that the budget is only prepared by the company accountant in isolation and further not reviewed till the year end when the actual figures are available. Clearly this practice of budgeting may be defeating the innate purpose of budgeting and thus may need to be modified which would also be the focus of the current report. Description and Justification The various to be used in this analysis are briefly described below (Brealey, Myers Allen, 2008). Gross Profit Margin = Gross Profit/Sales This ratio is imperative in the given case so as to analyse the impact of variation of figures on the gross profitability. Operating profit Margin = Operating Profit/Sales This ratio is imperative in the given case so as to analyse the impact of variation of figures on the operating profitability. Return on Assets = Operating Income/Total assets This ratio would highlight the variation in the efficiency of the usage of the assets for generation of income. Current Ratio = Current Asset/Current Liabilities This ratio would highlight the variation in the short term liquidity of the company which would help in understanding whether the company would face any short term crisis. Ratio Calculation The calculation of the various relevant ratios based on the actual and budgeted figures for 2013 for Eagle Ltd. is shown below (Damodaran, 2008). Gross Profit Margin Actual = (12690/25000)*100 = 50.76% Budgeted = (16540/29670)*100 = 55.75% Operating Profit Margin Actual = (8650/25000)*100 = 34.6% Budgeted = (9970/29670)*100 = 33.6% Return on Assets (ROA) Total Assets (Actual) = 10800 + 4020 = 14,820 Total Assets (Budgeted) = 15950 + 2080 = 18030 Actual ROA = (8650/14820) * 100 = 58.37% Budgeted ROA = (9970/18030) * 100 = 55.3% Current Ratio Actual = 4020/1580 = 2.54 Budgeted = 5800/2080 = 2.79 Variance Calculation The variance calculation for the income statement is captured in the table shown below (Brealey, Myers Allen, 2008). Particulars Actual (000) Budgeted (000) Variance (000) % Variance Sales 25,000 29,670 -4,670 -15.74% Cost of Sales Opening Inventories 1,870 2,060 -190 -9.22% Purchases 12,500 13,960 -1,460 -10.46% (-)Closing Inventories 2,060 2,890 -830 -28.72% Total cost of sales 12,310 13,130 -820 -6.25% Gross Profit 12,690 16,540 -3,850 -23.28% (-) Expenses 4,040 6,570 -2,530 -38.51% Operating Profit 8,650 9,970 -1,320 -13.24% The variance calculation for the financial position statement is captured in the table shown below (Damodaran, 2008). Particulars Actual (000) Budgeted (000) Variance (000) % Variance Fixed Assets PPE 10800 15950 -5150 -32.29% Current Assets Inventories 2060 2890 -830 -28.72% Trade Receivables 1500 2870 -1370 -47.74% Bank 460 40 420 1050.00% Total current assets 4020 5800 -1780 -30.69% Current Liabilities 1580 2080 -500 -24.04% The variance calculation for the ratios calculated is captured in the table shown below. Ratio Actual Budgeted % Variance Gross Profit Margin (%) 50.76 55.75 -8.95% Operating Profit Margin (%) 34.6 33.6 2.98% Return on Assets (%) 58.37 55.3 5.55% Current Ratio 2.54 2.79 -8.96% Findings From the above ratio analysis and variance analysis it is apparent, that on a gross profitability level the actual performance of the company is inferior to the expected performance. This is primarily on account of lower actual sales by almost 16% than the budgeted sales. However the decline in the cost of sales could not decline by the same percentage, hence eroding the gross profit margin. The actual operating profit margin is better than the corresponding budgeted figure since the actual expenses are nearly 39% lower than the budgeted expenses. Further the actual return on assets is around 5.5% better than the budgeted return on asset primarily because the actual total assets are significantly lower than the budgeted total assets thus enhancing the actual ROA even though actual operating income is less than the budgeted operating income. Moreover the actual current ratio which is indicative of the short term liquidity is around 9% worse than the budgeted current ratio primarily on account of negative deviation to the tune of 31% in the current while which to some extent was balanced by the negative deviation to the tune of 24% in the current liabilities. Additionally it is apparent that there is significant variation in the actual and budgeted amounts for all the items in either the income statement or the financial position which is reflective of the fact that budget making process needs immediate revision so to as lower the variance and thus be able to present a better estimation of the companys financial performance. Limitations Although ratio analysis and variance analysis can help us analyse the positive and negative variances for the company in the year 2013 but they do not reflect on the underlying reasons for these variances which would present a complete picture and thus would be possible to present an in-depth analysis of the company performance and the implications of the variances and their underlying causes in the long term. It is quite possible that the ratio variances are wrongly interpreted. For instance even though the actual operating profit margin is 100 basis points better than the budgeted operating profit margin, the actual operating profit is lower than budgeted figure which the company needs to analyse besides the falling sales which is 16% lower than expected. Hence variance and ratio analysis must be deployed as complementary tool along with other detailed qualitative analysis focusing on underlying causes (Ross, Westerfield Jordan, 2013). Conclusion From the above discussion, it may be concluded that the current budgetary practice is not appropriate and hence it is imperative that the budget at the first place should be prepared by the management accountant along with the help of various departments heads so as to gain there inputs before making estimates thus lending them credibility. Further it is also needed that there should be an half yearly review of the budgetary estimates along with the actual number of the half year which could be used for making relevant changes in the budgetary estimates and thus the company can be better prepared for any contingency. With regards to performance, the reasons for the above deviations must be looked at closely along wth the given analysis so as to reach holistic conclusion in this regard. References Brealey, R, Myers, S Allen, F 2008, Principles of Corporate Finance, 9th edition, McGraw Hill Publications, New YorkDamodaran, A 2008, Corporate Finance, 3rd edition, Wiley Publications Pvt. Ltd, London Ross, S., Westerfield, R. Jordan, B. 2013. Essentials Corporate Finance, 8th edition, McGraw-Hill/Irwin Publications, New York