Circular Flow of Income

Q1. The circular flow of income is to show flows of goods and services and factors of production between firms and households. It used to measure the level of income and output in the economy . Households provide resources which aid the production process of business firms. Resources such as labour, land and capital are used by the business firms in return for payment this generates a flow of income to the households in the form of wages, rent, interest and profit . Firms in return make using the factors of productions goods and services which are sold to the households.Households give back payment for the goods and services these are expenditures. Expenditure of households becomes income for firms. The firms then spend this income on factors of production such as labour, capital and raw materials, â€Å"transferring† their income to the production factor owners. The production factor owners then spend this income on goods and services provided by the business firms which lead s to a circular flow of income. Q2. The income and spending of the circular flow of income are not equal this is because of injections and withdraws from the economy.Injections provide finance into the economy whilst withdrawals is money taken out of the economy. If withdrawals are bigger than injections the country would be facing a deficit and negative economic growth. If withdrawals are less than injections then a country would be facing a budget surplus and economic growth. Injections *Investment (I) *Government spending (G) *Foreign money /Exports (X) Investment (I) is defined as spending that results in an increase the economy's capital stock .Successful investments result in a increase in the economy's capacity to produce goods and services increasing profit. Examples include spending on construction and property the values of which appreciate over time due to inflation. The average, household spends less each year than they receive in income. The portion of household income that is not used to buy goods and services or to pay taxes is Savings (S). The most familiar form of saving is the use of part of a households income to make deposits in bank accounts or to buy shares or bonds, rather than to buy goods and services.The government withdrawals money, collecting revenue through taxes (T) which is provided by households and firms to the government. Taxes such as income tax that is tax on wages or corporation tax that is the tax on business profits are withdrawn out of the current income reducing the expenditure on current goods and services. Taxes are then injected back in as government spending (G) they are used to provide services such education, NHS and to provide welfare payments to the community such as jobseekers allowance, housing benefit and disability living allowance.International trade plays an increasingly important role in shaping the performance of the British economy, the UK is seen as one of the world leaders in terms of the volume of im ports/ exports of commodities and services. The value of exports (X) sold overseas will be injected into the circular flow, one of the UK’s largest exports is pharmaceuticals. Spending by UK consumers and businesses on imported (I) products represent a leakage from the flow, over 60% of imports into Britain are finished manufactured goods, while just under 3% are basic materials such as tobacco for cigarettes.

Mba Finance Assignment

The group operates in a highly competitive market. New entrants join the market on regular basis and current competitors continue to improve their standards. The outdoor market had become more attractive to the large retailers that challenges the Group in pricing. Although the Group generated a revenue of ? 267,7 million during the year it has an operating loss of (? 2 million) and loss before tax of (? 14,4 million). Chief Executive Neil Gillis, says the primary objective of the Group is to reduce costs and debt. Over the year by managing supply chain more effectively, the Group reduced debt facility from ? 40 million to ? 35 million. David Bernstein, Chairman, admits that the Group experienced a difficult financial year. On the other hand an improvement in working capital through a ? 5. 9m reduction in the level of inventory was achieved and new processes have been put in place to meet and improve on the level of availability from this lower level of inventory.Cash management had a high level of focus through the year with improvements being made to supplier terms and a greater focus on collecting debts. Outdoor division maintain a sound performance in a tough retail market, reporting a small reduction in operating profit compared to the previous year. Accordingly, the Group strategy is to focus on this strength and to manage a structured exit from the Boardwear business. A great deal of change has occurred over the last year and this will continue with a program of upgrading stores and converting stores from Boardwear to Outdoor.Ratio Interpretations ROTA(Return on total assets): The ROTA ratio measures how effectively the company is utilizing its assets to generate profit before paying its interest and tax obligations. From the ROTA calculation it is observed that the company has made 6. 62% loss for each ? of assets on its financial statements in 2008. In 2009 the company performed even worse in terms of ROTA with – 12. 21% of loss for each ? pound of assets on its books. When we take a deeper look into the calculation we see that the denominator has decreased by 14% which has a positive impact on the ratio.However the numerator therefore the loss of the company has increased by 62% which impacted the ratio negatively. Considering the ROTA ratio and comparing the two years results It can be said that the company is facing problems with utilizing its assets and generating revenues. Profit Margin: Profit margin ratio measures how much profit the company generates before paying interest and tax. The company made a loss of 2. 52% for each ? of sales it made in 2008 and 4. 50 %for each pound of sales made in 2009.Looking at the financials of the company we see that the cost of sales and distribution costs has decreased in 2009 compared to 2008 which positively impact the profitability. However the revenues of the company have decreased in 2009 and this decrease was larger than the total decrease in cost of sales and distribution co sts. Consequently the company made a larger loss for each ? of sales made in 2009. Return on capital employed (ROCE): Return on capital employed measures the efficiency and profitability of a company's capital investments. for each pound invested the company made -7,27 pence's for 2008 and 13,93 pence's for 2009.The decrease in ROCE is majorly due to the decrease in profit before tax. There is only a slight decrease in assets and liabilities from 2008 to 2009 which can off-set each other. Current ratio: Current ratio is a measure of liquidity and is believed to be a good indicator of a company's ability to repay its outstanding loans. The company has ? 1,49 of current assets for each ? 1 of current liabilities in 2008 and ? 1,33 of current assets for each ? 1 of current liabilities in 2009. There is only a slight change between the two years but looking at the books we can say 2008 was more liquid for the company rather 2009. Quick ratio:Quick ratio measures a company's ability to m eet its short-term obligations with its most liquid assets. The quick ratio is more conservative than the current ratio because it excludes inventory from current assets. Inventory is  excluded  because  some companies have  difficulty turning their  inventory into cash. As we look at our company we see that the company was successful in 2009 in turning inventory in cash but since the assets also decreased from 2008 to 2009 it was better in 2008 than 2009. Stock turnover: Stock turnover ratio indicates the number of times a company's average inventory is sold during an accounting period.It can be said that the company turned its inventory over 2,43 and 2,44 times in 2008 and 2009 respectively. It means the company sells out its inventory in approximately 150 days, which is not very effective. This shows that the company ties money in stocks for a long time therefore it is not available to be used elsewhere. Fixed asset turnover ratio: Fixed asset turnover ratio measures a company's ability to generate net sales from fixed asset investments. A higher one shows the company has been more effective in using the investment in fixed assets to generate revenues.Changes in the ratio over time reflect whether or not the firm is becoming more efficient in the use of its fixed assets.. Even though 2009 ratio is slightly higher than 2008 it does not mean that the company become more efficient because looking at the financials we see that both revenues and fixed assets decreased from 2008 to 2009. Furthermore when we look at the details of fixed assets we saw the decrease is due to the accumulated depreciation. In other words there is not an actual decrease in fixed assets but in revenue there is. Debtors turnover ratio:Debtors turnover ratio measures the days receivables are outstanding from the debtors. Looking at our company we see that the debtors turnover ratio decrease in 2009 compared to 2008. Therefore we can say that the company is collecting its receiva bles in shorter time intervals in 2009. In the ideal case the shorter collection periods indicates the effectiveness of the company. However in our case the company is already making loss and the shorter collection period might be due to the liquidity problems of the company. The company might be applying shorter terms to collect its receivables and pay its debts Debt to equity ratio:Debt to equity ratio is used for researching the capital structure of a company. It indicates what proportion of equity and debt the company is using to finance its assets. In other words it shows the proportion of the company financed by creditors in comparison to that financed by stockholders. From our computations we can conclude that 80% of the company was financed by investors in 2008 when 20% is financed by creditors. In 2009 only 6% of the company is financed by creditors when 94% is financed by investors. We can say that the firm is willing to fund its operations with its own equity rather than debt.Income gearing: Income gear ratio measures how much of its profits a company is spending on the payment of interest expense. Since the company in our case can’t make any profit it is not meaningful to analyse this ratio. However it can be said that the company can’t pay its with its earnings but with the assets it has in hands. Profit per employee: Profit per employee indicates the average profit generated per person employed. We can see that the company dismissed about four hundred employers during the year 2009 but this did not prevent profit per employee ratio to decline even more.In 2009 the company generated a loss of ? 5 million more than 2008 which could not be covered by the decrease in employees. Sales per employee: Sales per employee ratio compares the pound volume of sales against the total full time employee equivalent of people working in the business. It provides a broad indication of how expensive a company is to run. The sales per employee ratio is rather high for the company. Which means the company operates on lower overhead costs which translates into healthy profits. On the other hand looking at two years we can say that the company was more effective in 2008 than 2009.Even the company employed more people in 2008 than 2009 the revenues were also higher. Dividend per share (DPS): Dividend per share is the amount of the dividend that the shareholders will receive for each share they own. Dividends are a form of profit distribution to shareholder thus looking at the financials it can be said that it can be optimistic to expect a growth since the dividend per share is in a declining trend from 2008 to 2009. Earnings per share (EPS): Earnings per share mean the portion of profit allocated to each outstanding share of common stock. It serves as an indicator of profitability as well.In our case the EPS is in a negative trend. We see a large decrease from 2008 to 2009 about 20 pence's. This shows the company is not making money. In our case this is a going concern. The company should find ways to make money because money losing business will eventually go bankrupt. Dividend cover: Dividend cover measures the ability of a company to maintain the level of dividend paid out. Since the dividend cover is -3,6 and -34,8 for 2008 and 2009 respectively it means the company's loss attributable to shareholders is 3,6 times the amount of dividend paid out for 2008 and 34,8 times the amount of dividend paid out for 2009.The reason the dividend cover declining that much from 2008 to 2009 is due to the decrease in both dividends and earnings per share. Dividends have decreased 75% (from 4 to 1) while the earnings have decreased by more than 100% (from 14,4 to 34,8). Price Earnings ratio: Price earnings ratio shows how much investors in market is willing to pay for company's earnings. We can see that there is an increase in P/E ratio from -12,3 to-1,2 in 2009. Even though the earnings per share decreased so did the marke t price of the stocks. I believe we would not be wrong saying investors are more optimistic about the future of the stock in 2009 than 2008.Dividend yield: Dividend yield is the ratio that measures how much a company pays out in dividends relative to the market price of the share of the company. This ratio is important for the investors considering investing in the shares of the company. Observing the shares of the two companies with equal share price, an investor will invest in the company with the higher dividend yield. In our case dividend yield for Blacks Leisure Group increased in from 2. 22 % to 2. 38 % in 2009 which will have a positive impact on the investment considerations of investors.However the company has made losses in the last two financial years the increase is mainly due the decrease in market price of the shares of the company. This situation will possibly negatively affect the perceptions of the investors about the company. ROE: Return on equity measures the prof itability by revealing how much profit a company generates with the money shareholders have invested. The company earned -7,2 pence's for each pound invested by the stockholders in 2008 and -21 pence's for each pound invested in 2009. Both the decrease in net income and equity resulted in a %14 decrease in return on equity.Conclusion As we look at our calculations, the company's financials and the auditor's report we can see that the Group ability to continue is a going concern. The Group and Lloyds Banking Group are engaged in discussions regarding provision of a financial structure which will enable the Group to accelerate both the exit of the loss-making Boardwear business and the development of the Outdoor store portfolio. However the Directors are well aware that the loan facility will not be extended beyond August 2009 and that there is a risk that the going concern may not be resolved satisfactorily.

The Social and Legal Aspects of Homosexuality in Hong Kong

The social and legal aspects of homosexuality in Hong Kong In 1988, there was an intense argument on whether to legalize homosexuality. Different groups expressed their views on public discussion hold in Victoria Park. A group of homosexual men declared that they have the same contribution to the society as others. The existed law infringes on their human right. On the other hand, Dr. Philemon Choi who opposed decriminalization was afraid of the impacts of decriminalization such as the increase of male prostitution although he agreed to lower the penalties.Besides, the Law Reform Commission had also discussed on this topic for 8 years but the progress was very slow. The main consideration was that homosexuality was not about legal issues but morality; therefore, the commission suggested loosening the law. However, it did not mean the Acceptance of homosexuality. Many people still thought some criminal offences were related to homosexuality and it was against the morality. Moreover, D espite the relation between Hong Kong and Britain, the liberation movement of homosexual laws was restricted because of the International Covenant.One of the options from consultation paper from LRC was maintaining the existed law. It argued that it was a waste for the police to put so much focus on homosexuality instead of other more serious cases. What I think is totally different from the essay since there is about 20 years culture gap. People now are open-minded and more willing to accept others. The discrimination is less common in the modern society, and I hope all the people will accept homosexuality. REF: Louis Lee. â€Å"The social and legal aspects of homosexuality in Hong Kong† The HKU scholar Hub, (1988) 117-122,web. 9 Apr 2013

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Analysing advertisement form a sociological and marketing perspective Essay

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