#dividend reinvestment plans explained

[phoenixyfriend]

Ko-Fi prompt from @kayasurin:

Just rant about the stock market, whatever you want to say about it!

'just rant' is such a prompt for uhhhh my distaste.

LEGALLY NECESSARY DISCLAIMER: I am not a licensed financial advisor, and it is illegal for me to advise anyone on investment in securities like stocks. My commentary here is merely opinion, not financial advice, and I urge you to not make any decisions with regards to securities investments based on my opinions, or without consulting a licensed advisor.

So here are a few things:

1. Stocks are unreliable.

For the layperson, there is nothing that can be done about the direction a stock takes. Unless you are a majority shareholder, or one of several who can work in concert, you cannot affect the direction a company takes, which means you cannot affect the decisions that might cause a stock to increase or decrease in value. This is a rich man's game. The average investor is just along for the ride, god help them.

Between Random Walk Theory, the dart-throwing monkeys study, and the fact that mutual funds do not beat the market, there is just... it's a crapshoot. Anyone who tells you to invest to make a lot of money is drinking the Kool-Aid. You can invest to make a small return, to keep your money in a lot of places in case your bank gets digitally robbed or whatever your worries might be, diversification is good for safety nets, but for pity's sake, don't expect to become a millionaire, and be aware you can lose a lot, even listening to experts.

2. Stocks can be manipulated, and it's ridiculous and stupid and fucks over perfectly normal companies

Do you remember the GameStop reddit thing? I do. If you don't, please take a quick look at this record of the GameStop stock price.

See that spike in 2021? That was Reddit.

This post did a great job explaining it, but you told me to rant, and so I shall.

A large investment company had decided to make a lot of money for their clients by destroying GameStop. They did this by selling more shares than they actually owned (more than actually existed), force the market to absolutely tank the price, with plans to "buy back" the stock once it was dirt cheap, thereby making a profit for their company. This is a common form of stock manipulation called shortstelling, and investors had been doing it to GameStop for years, without the general public noticing.

Except Reddit did notice. And they decided to Fuck It Up, buying up stock at higher and higher prices, forcing the stock price to skyrocket, and the mutual/hedge funds still had to buy them back, but now it was at a massive loss, and it made headlines across the country because of how incredibly ridiculous it was.

The things to note here is that the market can be manipulated without any regard to the actual profits or health of the company, and that attempts to do so can backfire spectacularly.

3. Returns are minimal

There are two ways to earn money on stocks. The first is returns on capital investment; you buy the share at $10, sell it for $20, and you've thus received $10 profit. This is part of the incredibly unreliable bit I mentioned, because you cannot control the direction the stock takes, and generally can't predict it.

The other way is dividends, which like... profits made over the previous quarter (after paying employees, bank loans, rents, etc.) can be either reinvested to grow the company, or paid out to shareholders. But if you invest $150 in a single share of Walmart stock, your quarterly dividend is $2.25, which is $11/yr.

So unless you're investing hundreds of thousands of dollars, or get really lucky with what you choose to invest in, dividends aren't going to get you much of anything.

And when your stocks do give you healthy dividends, it's because there's money left for shareholders! Which, if you remember a few lines back, is left over after paying employees.

If an investor wants a return on their investment, and they can vote to change policy, and policy that pays employees dictates that they get a smaller dividend, do you think that the investors are going to vote to pay their employees fairly?

Yeah, didn't think so.

4. Rapid, Consumptive Growth

There was a really good post recently that described how and why the Chicago School of Economics, colloquially Reaganomics, has completely fucked over the entire US economy by encouraging the absolute worst state for the market to be in, which is seeking eternal parasitic growth. I urge you to read that one if you can, because the bloggers did a good job. Basically, screw Reagan and screw the Chicago school. The economy still would have been a capitalist hellscape without them, but they sure did hasten it!

(Prompt me on ko-fi!)

[beardedmrbean]

The recent amendments to the rules for obtaining a driver's license in Bulgaria have sparked mixed reactions among the public. According to new regulations published on September 10 in the State Gazette, which will take effect on December 10, 2024, prospective drivers will be allowed a maximum of four attempts at both the theoretical and practical tests.

Seven organizations involved in driver training have expressed strong opposition to the proposed changes, particularly concerning the introduction of electronic driving hour cards and limits on practical test attempts. Trendafil Marinov, the chairman of the Bulgarian Driving Instructor Union, confirmed plans for a protest scheduled for tomorrow, September 25.

Marinov voiced concerns during an interview with BNR, arguing that the new regulations do not align with existing educational standards. He criticized the push towards digitalization, labeling it "complete ambiguity" and questioning how the proposed changes would improve road safety.

He highlighted the additional financial burdens the new requirements would impose on driving schools, noting that each training vehicle would need to be equipped with specific devices that maintain a permanent Internet connection, necessitating contracts with mobile service providers.

Currently, the Automotive Administration employs inspectors who can effectively verify the validity of paper driving cards on the road, according to Marinov. He pointed out that these cards include essential identification information and photographs.

Additionally, Marinov raised issues regarding the limited number of examiners available to provide practical driving tests, leading to potentially long waiting periods. He questioned the rationale behind limiting attempts to four and the six-month timeframe for testing, calling for a collaborative working group with industry representatives to address these concerns.

Concerns about potential corruption have also emerged, with Marinov asking why a single company should develop the required software instead of promoting competition through multiple software solutions.

The protest is set to take place in front of the presidency, with activities planned from 1:30 p.m. to 4:00 p.m.

Krasimir Georgiev, manager of the Association for the Qualification of Motorists in Bulgaria, offered a contrasting perspective during a discussion on the national radio. He argued that the new regulations will effectively eliminate corrupt practices, which he claims opponents are afraid of.

Georgiev emphasized that the exam should serve as a test to assess knowledge gained during training, rather than as part of the training itself. He suggested that driving schools fearing the new requirement of four exams within six months indicate they are not adequately preparing their students.

He noted that after years of stagnation, reform is finally underway. "If the existing requirements were followed, there wouldn’t be so many driving schools. Many only had a classroom to obtain permits, while their actual operation occurred in their cars, which often served as family vehicles."

He further explained the prevalent practice of maintaining two sets of training cards: one for the instructor and student, and another that reflects the full 30 hours of required instruction, often fabricated to satisfy inspections by the traffic police.

Georgiev dismissed concerns regarding the financial burdens that driving schools would face, arguing that they often do not invest or reinvest profits, and are unfamiliar with tax concepts such as "Profit" or "Dividends."

He also mentioned that some civil servants work as driving instructors, asserting that there are sufficient examiners available.

Georgiev announced plans for a procession to support the reforms, scheduled from 11 a.m. to 1 p.m. at Alexander Battenberg Square. He noted that over 12 NGOs focused on road safety are backing the rally, which will culminate in a declaration supporting the reforms to the Ministry of Transport leadership.

[ibmarketer]

Zylvie Review: Revolutionizing Digital Sales with Zero Commission and Lifetime Access

In the ever-evolving digital marketplace, creators and entrepreneurs are constantly seeking platforms that not only showcase their products but also maximize their earnings. Enter Zylvie, a game-changing solution that has set the stage for a new era in digital sales. This Zylvie review delves into a platform that promises zero commission, high-conversion funnels, and a suite of tools designed to empower small creators. With an Appsumo lifetime deal that's turning heads, Zylvie is not just another e-commerce tool—it's a potential cornerstone for sustainable online businesses. Let's explore how this visitor tracking review reveals Zylvie's capacity to transform the way digital products are sold, all while keeping profits where they belong: in the pockets of those who create.

The Dawn of Commission-Free Sales: Zylvie's Core Promise

Understanding the Zero-Commission Model

At the heart of Zylvie's appeal is its bold stance on commissions—or rather, the lack thereof. In an industry where platforms often take a significant cut of each sale, Zylvie's 0% commission policy is nothing short of revolutionary. This model is particularly crucial for small creators and startups, where every dollar counts towards growth and sustainability.

The Impact on Creator Earnings

Traditional e-commerce platforms and marketplaces can charge anywhere from 5% to 30% per transaction. For a digital product priced at $100, this could mean losing up to $30 on each sale. Zylvie eliminates this financial burden, allowing creators to price their products more competitively or pocket the difference as pure profit. Over time, this can translate into thousands of dollars saved—funds that can be reinvested into product development, marketing, or simply improving one's quality of life.

Lifetime Access: A One-Time Investment

Zylvie's lifetime access offer through Appsumo complements the zero-commission model. This isn't just about avoiding recurring monthly fees; it's about making a single investment that pays dividends for years to come. For creators who plan to be in the game for the long haul, this proposition is incredibly attractive. It provides peace of mind and predictability in expenses, which is invaluable when scaling a business.

High-Converting Sales Funnels: The Zylvie Edge

While keeping 100% of sales is a strong start, Zylvie understands that creators need more than just favourable terms—they need the tools to drive those sales in the first place.

WYSIWYG Editor: Crafting Persuasive Landing Pages

Zylvie's What-You-See-Is-What-You-Get (WYSIWYG) editor demystifies the process of building sales pages. Users can drag and drop elements, insert media, and even embed custom code without touching a line of HTML. This accessibility is a boon for creators who may not have web design skills but understand the importance of a compelling sales pitch.

Conversion-Boosting Elements

A high-converting funnel is more than just an attractive layout. Zylvie enables creators to integrate elements proven to drive conversions:

Video content that explains product benefits vividly

Testimonials that provide social proof and build trust

Product samples or sneak peeks that give customers a taste of what they're buying

Long-form sales letters that address pain points and showcase solutions in depth

Templates and Layouts: Starting with a Winning Formula

For those who prefer not to start from scratch, Zylvie offers pre-designed, high-converting layouts. These templates are based on proven sales page structures, taking the guesswork out of design and allowing creators to focus on their unique value proposition.

Scarcity and Urgency: Psychological Triggers for Sales

Zylvie harnesses powerful psychological principles to motivate purchases, all without resorting to manipulative tactics.

Flash Sales and Seasonal Promotions

The platform makes it easy to schedule limited-time offers that coincide with shopping peaks like Black Friday, Christmas, or industry-specific events. These flash sales create a sense of occasion and prompt customers to act quickly to avoid missing out.

Countdown Timers and Stock Indicators

Visual cues like countdown clocks and "only X left in stock" messages tap into the scarcity principle. When customers see that time or quantity is limited, the perceived value of the offer increases, often leading to faster decision-making and higher conversion rates.

Exclusive Deals for Brand Advocates

Loyalty should be rewarded, and Zylvie facilitates this through the ability to create special offers for existing customers. This not only encourages repeat business but also turns satisfied buyers into brand ambassadors.

Affiliate Marketing Made Simple

Expanding reach is critical for digital product sales, and Zylvie's built-in affiliate system provides a scalable solution.

Unlimited Affiliates with Custom Commissions

Unlike some platforms that cap the number of affiliates or offer one-size-fits-all commission structures, Zylvie allows for unlimited partners. More impressively, creators can set individual commission rates, providing the flexibility to incentivize top performers or accommodate different partnership arrangements.

Automated Tracking and Payouts

The administrative headache often associated with affiliate programs is alleviated by Zylvie's automatic referral tracking and on-platform payout handling. This reduces the risk of errors and frees up creators to focus on product development and relationship building.

Upsells and Cross-Sells: Maximizing Average Order Value

Acquiring a customer is often the hardest part; Zylvie ensures that once you have their attention, you can maximize the transaction value.

One-Click Upsells with Urgency

After the initial purchase, customers are presented with relevant additional offers they can add to their order with a single click. Zylvie enhances these upsells with time-sensitive discounts, adding a layer of urgency that can significantly boost take-up rates.

Strategic Upsell Placement

Creators can choose where upsells appear in the customer journey:

As a pop-up on the checkout page for last-minute additions

On a separate page before checkout, creating a multi-step funnel

Within a discreet on-page div that doesn't interrupt the flow

Each option has its merits, and Zylvie gives creators the power to test and optimize for their audience.

Subscription Models: Building Recurring Revenue

For sustainable growth, recurring revenue is king, and Zylvie caters to this with robust subscription functionality.

Flexible Billing Options

Whether it's a membership site, ongoing coaching program, or SaaS product, Zylvie supports various billing intervals. Creators can charge monthly, quarterly, annually, or at custom frequencies that suit their offering.

 Free Trials to Reduce Friction

To lower the barrier to entry and increase long-term subscriptions, Zylvie allows the inclusion of free trial periods. This try-before-you-buy approach can dramatically improve conversion rates for subscription products.

Advanced Analytics: Data-Driven Decision Making

In the digital products space, flying blind is not an option. Zylvie provides comprehensive analytics that go beyond basic sales figures.

 Funnel Visibility

Track visitors through each stage of your sales funnel to identify drop-off points and optimization opportunities. Understanding where potential customers hesitate or lose interest is the first step in refining your approach.

 Lead and Conversion Tracking

Zylvie doesn't just show you sales; it helps you understand the journey from visitor to lead to customer. This insight is invaluable for tweaking marketing messages, page designs, and product offerings.

 Real-Time Data

The platform offers up-to-the-minute information, allowing creators to react swiftly to trends, troubleshoot issues, or capitalize on unexpected traction.

Integrations and Customizations: A Flexible Ecosystem

No two businesses are identical, and Zylvie recognizes this with a range of integration options and customization capabilities.

 Email Service Provider (ESP) Connections

Building and nurturing an email list is critical for long-term success. Zylvie integrates seamlessly with popular ESPs like ConvertKit, Mailerlite, Sendfox, AWeber, and GetResponse, ensuring that customer data flows effortlessly into your chosen marketing tool.

 Personalized Branding

From the store layout to transactional emails, Zylvie allows creators to infuse their unique brand identity. This consistency builds trust and reinforces brand recall, both of which contribute to customer loyalty and word-of-mouth referrals.

 Webhooks and API Access

For the tech-savvy or those with specific workflow needs, Zylvie offers webhooks and API methods. This opens up possibilities for custom integrations, automated tasks, and connections with other business tools in a creator's stack.

Ease of Use Meets Sophistication

A platform is only as good as its usability, and Zylvie strikes a balance between powerful features and intuitive design.

 Quick Deployment

Time is money, especially for small creators. Zylvie's promise of "minutes to market" isn't just marketing speak—it's a commitment to removing technical barriers that often delay product launches.

 Logical Workflows

From setting up a new product to configuring an affiliate program, Zylvie guides users through processes with clear steps and helpful prompts. This reduces the learning curve and minimizes the chance of overlooking important settings.

Security and Compliance: Trust as a Feature

In an age of data breaches and privacy concerns, Zylvie takes security seriously—not just for creators, but for their customers too.

 GDPR Compliance

All stores on the Zylvie platform are built with GDPR compliance in mind. This isn't just about avoiding fines; it's about respecting customer data and building trust with a global audience.

 Secure Payments and Tax Handling

Zylvie automatically collects appropriate taxes based on customer location, simplifying one of the most complex aspects of international sales. Furthermore, the platform ensures that all transactions are processed securely, protecting sensitive financial information.

The Appsumo Lifetime Deal: An Unbeatable Offer

While Zylvie's features are impressive on their own, the Appsumo lifetime deal takes the platform from a smart choice to a no-brainer for many creators.

 One-Time Payment, Eternal Access

The concept is simple yet powerful: pay once, use forever. This model eliminates the anxiety of rising costs as a business scales and provides a clear, upfront understanding of expenses.

 ROI Potential

With no recurring platform fees to factor in, the return on investment for Zylvie through Appsumo can be remarkably swift. A handful of sales can recoup the initial outlay, after which every transaction contributes directly to profit.

 Future-Proofing Your Business

As Zylvie continues to evolve and add features, lifetime deal holders stand to benefit without additional cost. This forward-looking aspect of the deal adds significant value, essentially allowing users to lock in tomorrow's improvements at today's prices.

FAQ: Your Burning Questions Answered

Before we wrap up this Zylvie review, let's address some frequently asked questions to ensure you have all the information needed to make an informed decision.

H4: Is Zylvie suitable for physical product sales?

While Zylvie specializes in digital products and services, it's not designed for physical goods that require shipping and inventory management. Its strengths lie in instant delivery and scalable distribution of digital assets.

H4: Can I migrate my existing products and customers to Zylvie?

Zylvie does not currently offer an automated migration tool. However, recreating products on the platform is straightforward, and you can manually import customer data where necessary.

H4: What happens if Zylvie ceases operations in the future?

This is a valid concern with any lifetime deal. While Zylvie is positioning itself for long-term success, they recommend that users regularly back up critical data such as customer information and sales records as a best practice.

H4: Are there any transaction fees with Zylvie?

Zylvie itself does not charge transaction fees. However, payment processors like PayPal or Stripe will have their standard fees, which are separate from Zylvie's services.

H4: Can I use my own domain name with Zylvie?

Yes, Zylvie allows you to use a custom domain, which is crucial for brand consistency and SEO. This feature ensures that your Zylvie store appears as a seamless part of your existing web presence.

H4: What kind of customer support does Zylvie offer?

Zylvie provides email support to all users. Response times and access to additional support channels may vary based on the plan level or special promotions like the Appsumo deal.

H4: Is there a limit to how many products I can sell on Zylvie?

No, there are no arbitrary limits on the number of products you can list. Whether you have a single flagship course or a extensive library of ebooks, Zylvie can accommodate your catalog.

Conclusion: The Verdict on Zylvie

As we conclude this visitor tracking review, it's clear that Zylvie is more than just another e-commerce platform—it's a paradigm shift for digital creators. By eliminating commissions, providing high-converting tools, and offering lifetime access through Appsumo, Zylvie positions itself as a true partner in the success of its users.

The zero-commission model alone is a compelling reason to consider Zylvie, but it's the combination of this with advanced features like customizable funnels, affiliate management, and one-click upsells that makes the platform shine. For solopreneurs, coaches, course creators, and digital product vendors of all stripes, Zylvie removes many of the traditional barriers to profitability.

However, no platform is without its considerations. Zylvie's focus on digital goods means those in physical product spaces will need to look elsewhere. And while the lifetime deal offers incredible value, it's important for users to have a backup plan for their data, as with any online service.

That said, for its target market, Zylvie's pros far outweigh its cons. The platform's commitment to putting more money in creators' pockets while providing the tools to generate those funds is admirable. Its user-friendly interface doesn't sacrifice depth of functionality, and the potential for truly passive income through evergreen digital products and subscriptions is tantalizing.

In a world where platforms often seem to take more than they give, Zylvie is a refreshing counter-example. It embodies the idea that when creators thrive, so does the marketplace that supports them. For anyone looking to launch or scale a digital product business without the ongoing overhead of commissions and fees, Zylvie warrants serious consideration.

The Appsumo lifetime deal makes the proposition even sweeter, offering a low-risk entry point to a potentially game-changing tool. As the digital economy continues to grow, platforms like Zylvie that align their success with that of their users are likely to play an increasingly important role.

In summary, this Zylvie review finds the platform to be a robust, creator-friendly solution that lives up to its promises. It's not just about selling products; it's about building sustainable online businesses where hard work and creativity are rewarded fairly. For many, Zylvie may well be the missing piece in the puzzle of digital entrepreneurship—a place where great ideas can flourish, unencumbered by excessive fees or technical limitations.

To know more, Click 👉👉Access Here 

[louishawkins671]

From Cash Value to Coverage: Explaining Whole Life Insurance

Introduction

Whole life insurance is a versatile financial tool that offers both protection and investment benefits. Unlike term life insurance, which provides coverage for a specific period, whole life insurance offers lifetime coverage along with a cash value component that grows over time. Understanding the mechanics of whole life insurance can help individuals make informed decisions about their financial future.

The Basics of Whole Life Insurance

At its core, whole life insurance explained is a type of permanent life insurance that provides coverage for the insured's entire life, as long as premiums are paid. Premiums for whole life insurance policies are typically fixed and remain constant throughout the policy's duration, providing stability and predictability for policyholders.

One of the distinguishing features of whole life insurance is its cash value component. A portion of each premium payment is allocated towards building cash value, which accumulates over time on a tax-deferred basis. This cash value serves as a financial asset that policyholders can access through loans or withdrawals, providing liquidity and flexibility in times of need.

Building Cash Value: How It Works

The mechanism behind the cash value accumulation involves the insurer investing a portion of the premiums in various instruments such as bonds, stocks, or money market funds. The returns generated from these investments contribute to the growth of the cash value over time. Additionally, the cash value benefits from compounding, as earnings are reinvested to generate further returns.

It's important to note that the growth of cash value is subject to certain factors, including the performance of the underlying investments, policy expenses, and the insurer's dividend payments (for participating whole life policies). Policyholders should review their policy illustrations regularly to track the performance of their cash value and ensure it aligns with their long-term financial goals.

Coverage and Guarantees

Whole life insurance provides a death benefit that remains intact regardless of economic conditions, providing financial protection for beneficiaries. This death benefit ensures that loved ones are taken care of in the event of the insured's passing, serving as a legacy for future generations.

Moreover, whole life insurance guarantees the cash value growth, providing a level of stability and predictability in an uncertain financial landscape. Policyholders can take comfort in knowing that their cash value will continue to accumulate over time, offering a reliable source of funds for future needs.

Tax Advantages

Whole life insurance offers several tax advantages that enhance its efficiency as a financial planning tool. The cash value growth is tax-deferred, meaning policyholders are not required to pay taxes on the earnings until they make withdrawals or surrender the policy. Additionally, policy loans are generally not taxable as long as the policy remains in force. These tax advantages make whole life insurance an attractive option for individuals looking to minimize their tax burden while building long-term wealth.

Flexibility and Customization

Whole life insurance policies offer a level of flexibility and customization to meet individual needs and preferences. Policyholders can choose the death benefit amount, premium payment schedule, and riders to enhance coverage. Common riders include accelerated death benefit, which allows policyholders to access a portion of the death benefit in case of terminal illness, and waiver of premium, which waives premiums in the event of disability.

Furthermore, policyholders have the option to tailor their premium payment schedule according to their financial situation. While traditional whole life policies require premiums to be paid for life, limited payment and single premium options are available, allowing policyholders to fully pay premiums within a specified period.

Conclusion

In conclusion, whole life insurance offers a unique blend of protection and investment benefits that make it a valuable tool for long-term financial planning. With its guaranteed coverage, cash value accumulation, tax advantages, and flexibility, whole life insurance provides a solid foundation for individuals and families to secure their financial future.

[earaercircular]

Patagonia: circular fashion and commitment to the environment

The outdoor clothing brand founded by Yvon Chouinard in 1973 maintains a business scheme, where profits that are not reinvested are paid as dividends for actions and measures in favour of the planet.[1]

The fast fashion phenomenon has experienced an unprecedented boom in recent decades, transforming the fashion industry in Chile and around the world. Although this trend has revolutionised the way we consume fashion, it has also brought with it a series of consequences for the environment. However, brands like Patagonia are changing the way we make fashion and care for the environment.

In Chile and the world, the industrialisation of clothing has left its mark. Access to affordable, on-trend clothing has increased, allowing a broader audience to purchase the latest collections. However, this “democratisation” of fashion has also led to a culture of unbridled consumption, where clothing is considered disposable and quickly discarded.

Globally, fast fashion has contributed significantly to the environmental and social crisis. The mass production of clothing generates a huge amount of textile waste and an unsustainable demand for natural resources, such as water and energy. Additionally, the rapid turnover of collections encourages trend sell-out and overproduction, exacerbating the problem. All of the above, hand in hand with a business model that promotes overproduction and overconsumption.

“The most documented consequences are the intensive use of water and its contamination in the dyeing and finishing process; the large emission of greenhouse gases as a result of the type of energy used in the production process and also the raw materials; soil degradation due to the use of pesticides and chemicals; and from the social sphere, we must also add precarious and even slave work in supply chains,” says the journalist and author of the book El Nuevo Vestir, Sofía Calvo[2].

As Calvo mentions, in terms of labour rights, this industry often operates in developing countries with lax labour regulations. Workers are subjected to precarious conditions and low salaries. This labour exploitation has led to calls for action from human rights advocates.

“The ‘elephant in the room’ in this discussion is the decrease in production, because the last thing needed in the world is clothing. According to data from McKinsey and the Ellen MacArthur Foundation, 150 billion items of clothing are manufactured each year. That is, 62 million tons of clothing and app accessories. Considering that there are 8 billion inhabitants in the world, we could say that each person on this planet could have a closet of almost 19 items of clothing just with what is produced in one year (what already exists is not considered), and I dare say that this figure is conservative,” explains the journalist.

To lower the carbon footprint, according to Calvo, we must start by changing the way in which clothing is being produced and stop doing so under the principles of planned and perceived obsolescence (programming the end of the useful life of a product), which is the key to the fast fashion business. “Change the energy matrix of production and introduce the principles of the circular and regenerative economy to the system. To this end, citizen awareness must be generated to stop overconsumption, which represents a cultural change that makes many people uncomfortable, because they believe that their 'freedom of choice' is being violated. The key is to refuse and reduce,” says the expert.

On the other hand, zero-waste designers believe that product design should be inspired by nature, where materials are recycled in a circular flow. But so much is made today that it is fabricated to be used and then discarded.

A life cycle for the world

In an increasingly environmentally conscious world, fashion brands are taking an active role in reducing the negative impact of fast fashion and promoting more sustainable practices in the industry. Openly and detailed transparency about where and how its products are manufactured, the use of sustainable materials, durable and timeless design, recycling and reuse initiatives, reducing carbon emissions and promoting the circular economy are some of the changes that some clothing brands are making.

A good example today is the Patagonia brand, which through its Worn Wear program[3] took the initiative to take charge of a used clothing sales program. “With all the responsibility that comes with the order, cleanliness and quality of the clothing, which logically highlights the outdoor brand. Democratising access to the same quality, at a lower price, is the main objective of being able to reach different audiences,” says Pascale Potin, digital marketing director of Patagonia Chile.

To take care of this serious problem, Patagonia also enabled its Program in Chile: “Instead of accumulating, Exchange.”[4] What does it consist of? Anyone who has a brand garment that they no longer use for various reasons, but that is in good condition, can take it to any Patagonia store or send it by parcel, even exchange it without the need to buy another product.

“It seems to me that it is an excellent way to 'change the verb' and create a new relationship with clothing from the culture of what is already worn. Furthermore, this is directly in line with what was pointed out in the latest study by Trove and Worldly[5], which says that: 'resale is an important decarbonization strategy: particularly for premium clothing and outdoor brands, resale can result in a 15-16% reduction in annual carbon emissions in 2040. These brands can achieve annual revenue growth and simultaneously reduce the need for new production by 23-35% annually,” shares Sofía Calvo .

“This Chilean cyber day[6] is a frenzy of deep discounts, limited-time offers and last-minute sales that pressure you to buy. We are not going to do that. That's why we're committed to repairing what we already have, making it easy to buy used to keep gear out of landfills, or—when you really need something new—buying clothing and gear designed to last for years to come,” concludes Pascale Potin.

Source

Redacción, Patagonia: moda circular y compromiso con el medioambiente, in: El País, 4-10-2023, -

[1] Patagonia is a designer of outdoor clothing and gear for the silent sports: climbing, surfing, skiing and snowboarding, fly fishing, and trail running. They are known for their sustainable practices and commitment to environmental activism. https://eu.patagonia.com/be/en/home/?msclkid=7bf3fe8557e013ebe52b9b9bb5050a14&utm_source=bing&utm_medium=cpc&utm_campaign=BE%20%7C%20NL%20%7C%20Brand%20%7C%20Category-G808855632&utm_term=patagonia%20clothing&utm_content=BE%20%7C%20Brand%20%7C%20Clothing%20%7C%20EX%2FMB&msclkid=7bf3fe8557e013ebe52b9b9bb5050a14&utm_source=bing&utm_medium=cpc&utm_campaign=BE%20%7C%20NL%20%7C%20Brand%20%7C%20Category-G808855632&utm_term=patagonia%20clothing&utm_content=BE%20%7C%20Brand%20%7C%20Clothing%20%7C%20EX%2FMB&gclid=CODv_NGo34EDFTJeHQkdowYDkA&gclsrc=ds

[2] Sofía Calvo Foxley is a Chilean designer and writer. She is the author of several books, including “Relatos de Moda” (2013), “El Nuevo Vestir” (2016), “La Revolución de los Cuerpos” (2019) y “Cambiar el Verbo” (2022). “El Nuevo Vestir” is a book that reflects on fashion and consumption in the 21st century, and how these affect society and the environment. It is also the name of a web series and a podcast created by Sofía Calvo, where topics are discussed. related to fashion and sustainability

[3] Worn Wear allows you to trade in and buy used Patagonia® gear. 85% of clothing ends up in landfills or gets incinerated.* One of the best things we can do for the planet is keep stuff in use longer and reduce our overall consumption. That means buying less, repairing more and trading in gear when you no longer need it. https://wornwear.patagonia.com/

[4] En vez de acumular, intercambia. Instead of accumulating, exchange. Trade in your Patagonia products when you no longer need them and get credit for something you need. https://cl.patagonia.com/pages/intercambia

[5] In a groundbreaking study released today, Trove, the leader in branded resale, and Worldly, the most comprehensive impact intelligence platform for the apparel industry, reveal where and how circular models play an important role for brands working to reduce their emissions when combined with upstream supply chain interventions. This comprehensive study, titled "Where Are Circular Models Effective Sustainability Strategies for Fashion Brands?", models the impact of resale in addition to supply chain interventions. By understanding the carbon implications of circular models across different types of products, brands can focus their efforts on generating the best possible outcomes. https://finance.yahoo.com/news/study-trove-worldly-circular-strategies-143500083.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmJlLw&guce_referrer_sig=AQAAAKaOu0VRlGOiLdvdJDHvDcQNhwNu6jP9na6P_2xILsaUiimt1mpFcyzGdXJTnpYwXDbevJcjinZCT0Vl26_hxNLyh6vpPuoXqpNF3DyVb0UftOYJVW1_EqSAg4T6t384PYJ_1tk-FveXi9sGaDwLxxOJTayg_NtMvMyK5F0k-AaD

[6] https://cyber.cl/

[techsuccesss]

The Advantages of Cryptocurrency Over Traditional Investments

There are many advantages to investing in cryptocurrencies over traditional investments. These include increased transparency and efficiency, a greater degree of trust and safety, as well as lower costs, among others.

Cryptocurrencies are a form of digital currency that are underpinned by encryption systems, or "cryptos." These currencies allow users to make secure transactions without the need for third-party intermediaries such as banks and payment processors. This is a significant advantage over traditional methods of money transfer, which can be expensive and involve lengthy paperwork.

The use of cryptocurrencies has grown significantly over the past five years. They are now widely recognized as an attractive investment asset class and have begun to garner media attention, as well as interest from the public.

One of the most obvious benefits of cryptocurrencies is their ability to offer a higher yield than traditional savings accounts and high-yield corporate bonds, which can often earn a paltry 3% APY. This is because cryptocurrencies have unique mechanisms for compounding gains, which can result in very large returns over time.

These mechanisms include yield farming, which allows you to earn additional rewards for lending your cryptocurrency to other people. This is similar to a How is Bitcoin and Tokenomics interlinked? dividend reinvestment program and can generate returns far in excess of the 3% APY of conventional savings accounts.

Another benefit of cryptocurrencies is that they are decentralized, which means that there's no single point of failure. This prevents the kind of system collapse that led to the 2008 financial crisis.

Privacy is also an important benefit of cryptocurrencies. This is because transactions are encrypted and stored on a distributed ledger called a "blockchain." A blockchain is a public record of transactions that doesn't show your name or identifying details.

However, there are a few downsides to cryptocurrencies. They are very volatile and can have a dramatic impact on the price of your assets, particularly if you are a short-term investor. This can make it difficult to decide whether or not it makes sense to invest in them.

If you are interested in acquiring crypto, it's crucial to understand the risks involved before you make any decisions about investing. This is especially true if you plan to trade your cryptocurrency at any point in the future.

Volatility is a big drawback to crypto, but it can be minimized by following a few simple rules. First, keep your portfolio well diversified with a wide range of asset classes and weight your crypto investments according to their risk technology manifesto level and time horizon.

Moreover, make sure to avoid speculating on the direction of the market. This can lead to losses in the short term, and is a poor strategy for investors who are concerned about market volatility.

If you are interested in investing in cryptocurrencies, it's best to consult an expert before making any decisions. These experts will be able to provide you with the information you need and explain the potential risks associated with investing in cryptocurrencies. They will also be able to help you determine whether or not it is a suitable addition to your overall portfolio.

[one7startups-blog]

8 Business Lessons From Game of Thrones

Pay your debts quickly.

One of the phrases that pops up in the series is "a Lannister always pays his debts"--which refers to the richest kingdom's credo. In business, debt reduction is not just a part of your financial statement, says Heather Taylor, the Social Media Manager at MyCorporation.com. She says dry spells will come, and debt destroys any flexibility.

Let your competitors destroy themselves

Plenty of start-ups enter a market that's already inhabited by others. That can be a good thing, says Chris Healey, the Web director of marketing at Inspyder Software . As the dwarf-prince Tyrion Lannister says, your enemies hate each other as much as they hate you. Letting your "combatants" fight each other through feature wars and marketing campaigns gives you a chance to build up your own storehouses--and attract more customers.

Freedom begets loyalty

In Game of Thrones, allegiance is nothing short of sacred. But it's also portrayed as a privilege and, well, a little less than optional. Maree Jones, an account coordinator at KC Projects, says the best management style is one that gives employees options--treat them as allies, not slaves. "In a recent episode, the Khaleesi have purchased a number of slave warriors called the Unsullied. They are trained to do as they are told no matter what it is. She purchases these troops, and gives them a new sense of freedom and self worth," she says. "In turn, they seem to be even more loyal to her--by choice--rather than by force."

Be kind

Sure, there are scenes in the HBO series that are graphic and violent--not too much to learn there. In between, there are also moments of kindness and sacrifice. Ivan Weinreb, a business consultant, says it might seem unnecessary to show kindness to a customer or business partner, but it will pay long-term dividends. As a queen tells her son in the series, "The occasional kindness will spare you all sorts of trouble down the road."

Cultivate your influence over time

A spymaster-to-the-king named Varys once explained how he was a beggar but, through cunning and manipulation, rose to prominence. (Sounds a bit likemy own Twitter feed\Andrew Aversa, the co-founder and lead developer atImpact Soundworks, says that's precisely how social networking works: You build an audience one person at a time. "Each connection you make, each new client, each review, interview, or press release, contributes to your business' profile and your own personal influence and network," he says.

Unity builds power

Robert Baratheon, also known as the King of the Seven Kingdoms, once explained how the power of an army can work. He held up five fingers, and then held up one finger. Then, he asked the queen which number is greater. She guessed wrong: Power comes in one unified approach. As Nick Dujnic, the multimedia marketing manager at display ad company LiveIntent explained, a united team is more powerful than a group of zealous individuals working independently. "Choose people that are passionate and focused on a singular goal--your goal," he says. "The worst thing you can do is to surround yourself with a team that, no matter how smart or talented, does not believe in your product. A united force, one that truly believes in what you are doing and wants to see it through to the end, will do what is necessary to find success."

Plan your strategy... or else

House Stark, who rule in the northern lands of the Seven Kingdoms, has a lesson that's easy to forget for any start-up: Winter is coming. This theme is a major plot-point in the series, and the opening of the latest season shows the remnants of a wintery battleground. "Strategic planning for the long term and being ready for any disasters which may come in the future are important traits for successful small business leaders," says Daniel Saynt, the chief creative director and founder of blogging network Socialyte Collective. "While entrepreneurs may feel reinvesting back into the company is the best use of profits, those who save a reserve as a rainy day fund find that their companies navigate bad times better."

Know who to trust

Knowing who to trust is critical, especially when a company first launches. Elizabeth Zelman, a marketing associate at bid management company Privia, says a common theme on the show is knowing the difference between friends and enemies. "Eddard Stark chooses to trust Littlefinger and gets his head chopped off for his efforts," she says. "If he had trusted Renly instead, things would have turned out differently." Sound a little dramatic? Sure--but a good lesson for anyone trying to build a company.

[davidrivkin]

Can Congress Tax Wealth by 'Deeming' It Income?

By David B. Rivkin Jr. and Andrew M. Grossman

September 2, 2021, in the Wall Street Journal

Charles and Kathleen Moore have done well, but they certainly aren’t billionaires. Yet the couple’s constitutional challenge stands to slam shut the door on a federal wealth tax like the one Sen. Elizabeth Warren wants to enact.

The story is complicated, though less so than the tax code. In the 1990s Mr. Moore, a software engineer, worked at Microsoft on its Office applications and grew close to a fellow programmer, Ravi Agrawal. Mr. Agrawal dreamed of returning to his native India to do something for the small-scale farmers he knew growing up in the state of Chhattisgarh.

On a series of trips to India in the early 2000s, he saw an opportunity. Unlike the massive agricultural operations that feed the U.S., capital-poor farmers working a few acres each serve much of India. What struck Mr. Agrawal is that their tools were plainly inadequate, far less reliable and effective than what any American could buy for a few dollars at Home Depot. His idea was to close the gap by providing India’s poorest farmers with tools that would improve their livelihoods and lives, even in the face of the labor shortages in many rural areas as workers migrated to the cities.

Mr. Agrawal needed capital to get the business off the ground. He approached friends to invest in his new company, KisanKraft, and the Moores put up $40,000. It was a lot of money for them, but they believed in Mr. Agrawal and the mission. They knew they were unlikely to earn much of a financial return on their investment, because the plan was to reinvest any profits in the business and serve more of India’s rural poor.

That was the real return, and it proved massive. Mr. Agrawal had put his finger on an unmet need, and by 2017 KisanKraft had expanded to reach the entire country, with hundreds of employees, thousands of dealers and millions of customers. The Moores have never received a dime from their investment, yet it paid off beyond their greatest hope.

Then the tax bill came. As part of the Tax Cuts and Jobs Act of 2017, Congress reworked the way multinational corporations are taxed, limiting the amount that they had to pay on foreign income. Offsetting part of the cost was a new, one-time tax on earnings that certain foreign corporations had accumulated over the preceding 30 years but not distributed to their shareholders through dividends. The law deemed those earnings as 2017 income to the shareholders and taxed them on it. The Moores’ bill amounted to $15,000. They paid and are now suing for a refund, on grounds that the new tax is unconstitutional.

The Constitution grants Congress the “power to lay and collect taxes,” but with limits. Article I requires that any “direct tax”—one that falls directly on the payer rather than being passed on to someone else, such as the consumer—“be apportioned among the several states” according to population. The idea was that taxation, like representation, should be fairly apportioned so that no state or region could be singled out for disadvantage. Alexander Hamilton explained in Federalist No. 36 that tax apportionment was a key component of federalism, given that direct taxes could disrupt local economies in ways federal lawmakers couldn’t even imagine. By contrast, men of commerce would understand the effects of indirect taxes like tariffs or sales taxes, which the Constitution therefore didn’t subject to apportionment, only uniformity.

The Supreme Court held the first income tax unconstitutional as an unapportioned direct tax in 1895, and Congress eventually responded by proposing the 16th Amendment, ratified in 1913. It authorizes Congress to tax “incomes, from whatever source derived, without apportionment.”

So far as tax law goes, the Moores’ argument is straightforward. The new tax is a direct tax, and it isn’t on income—after all, they haven’t received any from KisanKraft. Instead, they’re being taxed on their property, the KisanKraft shares. The tax is therefore constitutionally invalid because it isn’t apportioned.

The government insists that the Moores are being taxed on income, because KisanKraft could theoretically distribute its accumulated earnings in the future. The courts, however, have consistently defined “income” to require, as the Supreme Court put it in Commissioner v. Glenshaw Glass (1955), “undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion.” As the Moores observe, they haven’t realized a dime in income. The government argues that the courts should abandon the realization requirement, giving the federal government carte blanche to tax “deemed” income without apportionment.

The stakes of the Moores’ case go well beyond their own tax liability. If they prevail, that would confirm that the Supreme Court’s precedents generally requiring apportionment and limiting the exception for taxes on “income” to its common understanding remain good law, clearly barring any kind of federal property tax, including a wealth tax—unless Congress apportions it, which there is no obvious way to do.

What makes the case an especially attractive vehicle to resolve this issue is the simplicity of their situation, a rarity in tax cases. There’s also the timing: If the courts confirm the 16th Amendment’s limited reach now, that would relieve them from having to do so in a politically explosive case directly challenging a wealth tax. The courts would do well to remind Congress at this opportune time that its taxing power is not without limits.

Mr. Rivkin served at the Justice Department and the White House Counsel’s Office in the Reagan and George H.W. Bush administrations. Mr. Grossman is an adjunct scholar at the Cato Institute. Both practice appellate and constitutional law in Washington. They represent the Moores in their refund action.

Source: https://www.wsj.com/articles/congress-tax-wealth-courts-constitution-moore-agrawal-kisankraft-elizabeth-warren-11630529642

[sambilling]

Understanding How to Markets API Alleviates the Investor from Bank Accounts

Understanding How to Markets API Alleviates the Investor from Bank Accounts

In today's highly dynamic financial markets, SG Markets provides you full suite of Products, Services, Investing, Markets, Personalized to suit your unique requirements. Our advanced market research platform provides the tools to analyze, interpret and plan accordingly for your own trading requirements. With the assistance of market intelligence software, you can get information about the current trends of the markets and about the companies in the market. This helps in identifying the companies that provide the best trading opportunities in the market. The market intelligence software can also help you in identifying the companies with the potential to expand their business scope in the future. This way, you can take informed decisions and make better investment choices in your portfolio.

The sg markets have launched the 'open banking' platform, which is expected to revolutionize the way people trade. According to 'open banking', investors who have been in business for a certain number of years are allowed to open an online account. This would mean that they are not limited to having a bank account or being a regular customer at a particular bank. Investors can now invest without leaving their homes. This means that in markets has extended its arms to other financial institutions such as pension funds and insurance companies.

Investing in the stock market can be difficult at times; especially when you don't have the right information on the company in question. Now, you can easily access important data on specific needs like the company's shares price history, profit and loss statements and more through sg markets API. If you're looking to trade in stocks, it is advisable to opt for a market's API. There is no need to visit the company personally. You can now get all the information in front of your screen.

Investing in the stock market can be a challenge sometimes, especially for the novices. That's why you should know about sg markets API. You can find details of various companies from their official website. If you want to get in touch with them, all you have to do is fill out an online form asking pertinent questions regarding their open banking platform.

The sg markets provide fast-paced financial markets with complete digital solutions which provide instant access to information you require for making informed financing decisions. Through sg API, investors can access information relating to the company's shares price history, profit and loss statement and more. However, there is a limitation to using this API; you can't buy or sell shares at the moment.

Investing in the stock market is a daunting task to most investors who don't have requisite experience. In such cases, sg markets provide fast-paced financial markets with complete digital solutions which provide instant access to information you require for making informed financing decisions. Through sg markets, investors can easily obtain information on the company's shares price history, profit and loss statement and more. However, there is a limitation to using this API; you can't buy or sell shares at the moment. For such scenarios, you should use Professional Stockbroker API.

Investing in the stock market can be a daunting task to novice investors who have limited knowledge of the trade. To overcome this issue sg markets provide complete digital solutions to their clients by allowing them to access information they need instantly through sg API. This sg markets Professional Stockbroker API is specifically meant for investors who are new to the trade, as it provides them with an easy way to understand the basics of buying and selling stocks. However, this sg markets API does not allow buying and selling stocks at the moment, instead it gives an option to do so in the future, by logging onto sg market's website.

The sg market's website provides a comprehensive range of stock services like Dividend Reinvestment Schemes, Penny Stock Research, Market Volatility and Market Determinance, among others. All these API's are provided by professional private banks which are members of The Association of Private Banks. However, to invest in stocks, investors need to have appropriate brokerage accounts with members of this association. For further information on sg markets Private Banking API, you can log on to their official website at or markets private banks API.

The research team projects that the Nuclear Steam Generator Tubing market size will grow from XXX in 2020 to XXX by 2027, at an estimated CAGR of XX. The base year considered for the study is 2020, and the market size is projected from 2020 to 2027.

The prime objective of this report is to help the user understand the market in terms of its definition, segmentation, market potential, influential trends, and the challenges that the market is facing with 10 major regions and 50 major countries. Deep researches and analysis were done during the preparation of the report. The readers will find this report very helpful in understanding the market in depth. The data and the information regarding the market are taken from reliable sources such as websites, annual reports of the companies, journals, and others and were checked and validated by the industry experts. The facts and data are represented in the report using diagrams, graphs, pie charts, and other pictorial representations. This enhances the visual representation and also helps in understanding the facts much better.

By Market Players: Sandvik (Kanthal) BWX Technologies Vallourec Nippon Steel & Sumitomo Metal Centravis

By Type Alloy 690 Alloy 800

By Application Industrial Use Military Use

By Regions/Countries: North America United States Canada Mexico

East Asia China Japan South Korea

Europe Germany United Kingdom France Italy Russia Spain Netherlands Switzerland Poland

South Asia India Pakistan Bangladesh

Southeast Asia Indonesia Thailand Singapore Malaysia Philippines Vietnam Myanmar

Middle East Turkey Saudi Arabia Iran United Arab Emirates Israel Iraq Qatar Kuwait Oman

Africa Nigeria South Africa Egypt Algeria Morocoo

Oceania Australia New Zealand

South America Brazil Argentina Colombia Chile Venezuela Peru Puerto Rico Ecuador

Rest of the World Kazakhstan

Points Covered in The Report The points that are discussed within the report are the major market players that are involved in the market such as market players, raw material suppliers, equipment suppliers, end users, traders, distributors and etc. The complete profile of the companies is mentioned. And the capacity, production, price, revenue, cost, gross, gross margin, sales volume, sales revenue, consumption, growth rate, import, export, supply, future strategies, and the technological developments that they are making are also included within the report. This report analyzed 12 years data history and forecast. The growth factors of the market is discussed in detail wherein the different end users of the market are explained in detail. Data and information by market player, by region, by type, by application and etc, and custom research can be added according to specific requirements. The report contains the SWOT analysis of the market. Finally, the report contains the conclusion part where the opinions of the industrial experts are included.

Key Reasons to Purchase To gain insightful analyses of the market and have comprehensive understanding of the global market and its commercial landscape. Assess the production processes, major issues, and solutions to mitigate the development risk. To understand the most affecting driving and restraining forces in the market and its impact in the global market. Learn about the market strategies that are being adopted by leading respective organizations. To understand the future outlook and prospects for the market. Besides the standard structure reports, we also provide custom research according to specific requirements.

The report focuses on Global, Top 10 Regions and Top 50 Countries Market Size of Nuclear Steam Generator Tubing 2016-2021, and development forecast 2022-2027 including industries, major players/suppliers worldwide and market share by regions, with company and product introduction, position in the market including their market status and development trend by types and applications which will provide its price and profit status, and marketing status & market growth drivers and challenges, with base year as 2020.

Key Indicators Analysed Market Players & Competitor Analysis: The report covers the key players of the industry including Company Profile, Product Specifications, Production Capacity/Sales, Revenue, Price and Gross Margin 2016-2021 & Sales by Product Types. Global and Regional Market Analysis: The report includes Global & Regional market status and outlook 2022-2027. Further the report provides break down details about each region & countries covered in the report. Identifying its production, consumption, import & export, sales volume & revenue forecast. Market Analysis by Product Type: The report covers majority Product Types in the Nuclear Steam Generator Tubing Industry, including its product specifcations by each key player, volume, sales by Volume and Value (M USD). Markat Analysis by Application Type: Based on the Nuclear Steam Generator Tubing Industry and its applications, the market is further sub-segmented into several major Application of its industry. It provides you with the market size, CAGR & forecast by each industry applications. Market Trends: Market key trends which include Increased Competition and Continuous Innovations. Opportunities and Drivers: Identifying the Growing Demands and New Technology Porters Five Force Analysis: The report will provide with the state of competition in industry depending on five basic forces: threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitute products or services, and existing industry rivalry.

COVID-19 Impact Report covers Impact of Coronavirus COVID-19: Since the COVID-19 virus outbreak in December 2019, the disease has spread to almost every country around the globe with the World Health Organization declaring it a public health emergency. The global impacts of the coronavirus disease 2019 (COVID-19) are already starting to be felt, and will significantly affect the Nuclear Steam Generator Tubing market in 2021. The outbreak of COVID-19 has brought effects on many aspects, like flight cancellations; travel bans and quarantines; restaurants closed; all indoor/outdoor events restricted; over forty countries state of emergency declared; massive slowing of the supply chain; stock market volatility; falling business confidence, growing panic among the population, and uncertainty about future.

For more details contact as https://www.reportmines.com

[cryptoppro]

Explaining Investing to Kids - Stocks, Proxy Statements

Explaining Investing to Kids – Stocks, Proxy Statements

For my nephew’s 13th birthday, I transferred some shares of stock into a UTMA account for him under a dividend reinvestment plan (DRIP), and I’ve been using the investment as a teaching opportunity. Every time I get a statement or other correspondence about the investment, I forward it to him with a brief note explaining what it is and what it means to him and his investment. As I was crafting my…

[leenikgeelofromthemynock]

Ask anyone who’s studied urban planning to explain the field’s history and one of the first names you’ll hear will is Ebenezer Howard.

Howard was an English shorthand typist in the late 19thand early 20thcenturies. While working in Chicago, he saw the troubles of modern cities, such as rampant growth and housing shortages. He witnessed the struggle to resolve these issues in England after returning to London as a parliamentary reporter.

In his 1898 book, To-morrow: A Peaceful Path to Real Reform (reprinted in 1902 as Garden Cities of To-morrow), Howard laid out his solution: the garden city. Just five years after the book’s release, the first of these communities was founded: Letchworth Garden City, in Hertfordshire County, north of London.

The principles of garden cities, as laid out in To-morrow, are detailed and thorough. Broadly speaking, the goal is to combine the appeals of town and country without the drawbacks of either.

Howard defined three “magnet” locations: Town, Country, and Town-Country–AKA the garden city. Source:Garden Cities of To-Morrow, Ebenezer Howard

A few key components make this possible. The city is surrounded by an inviolate greenbelt and large areas of land reserved for agriculture, preventing expansion of the urban area. The city is composed of rings centered on a park and “Crystal Palace,” home to a farmers’ market and winter garden. Working outward, six wedge-shaped wards hold residential and commercial properties, as well as the “Grand Avenue” filled with parks, schools, and churches. Factories at the outer edge send products off on a looped railroad. Railways could tie the town to other garden cities, each surrounded by a greenbelt and reserved agriculture space.

  A single ward of the Garden City, showing the series of avenues and gardens that make up the rings of the city. Source: Garden Cities of To-Morrow, Ebenezer Howard

The overview of Howard’s protoypical Garden City, showing the entire city as well as the surrounding agricultural belt. Source: Garden Cities of To-Morrow, Ebenezer Howard

A view of Ebenezer Howard’s ultimate goal, a “social city” made up of interconnected garden cities. Source: Garden Cities of To-Morrow, Ebenezer Howard

After the physical design, Howard explains how such a city could be run. A single organization holds all the land­­–a proposed 6,000 acres–in trust for the mortgage holders and residents. All rent and profits from city-run businesses are reinvested for the public good. The land value, supported by people coming to the town, is thus returned to the residents through infrastructure improvements and other public works. These values are maintained through a clear statement of intent in advance and a well-defined management structure, answerable to the people. This unique system of community ownership, self-sufficiency, and voluntary cooperation reflected anarchist and utopian thought of the time.

Letchworth Garden City was founded under the watchful eyes of Ebenezer Howard and his Garden City Association (GCA). The city faced certain limitations as it moved from ideal to practice. First, and perhaps most significant, the GCA leaders elected to found the city as a limited-dividend company rather than attempt to finance it through loans and granting the city title to a democratic council. This company promised five percent returns to shareholders, which meant it needed to ensure a consistent profit. Thus was First Garden City Ltd. (FGC) founded.

However, the company failed to raise full start-up funds, drawing only £40,000, half the desired amount. The city was unable to build houses and other facilities for more than 10 years, and the only middle-class families with the capital to build their own homes moved in. Without blue-collar workers or farmers, industry and agriculture struggled, as did FGC Ltd.’s profits, preventing the development of some of the democratic structures Howard envisioned.

Letchworth Garden City’s original plan, by Barry Parker and Robert Unwin. Source: English Garden Cities: An Introduction, Mervyn Miller

Arts and Crafts architects Barry Parker and Raymond Unwin designed the city’s master plan–heavily modified from Howard’s outline to better fit the area. Compromises also had to be made for the sake of cost and comfort. Howard’s planning can, however, be seen in such beautiful areas as the central park and well-landscaped Broadway, as well as other preserved natural areas such as Norton Common. In fact, only one tree came down as the town was laid out.

The Spirella “factory of beauty” in Letchworth. Built with the employees in mind, it included everything from showers to a library.

Eventually, Letchworth developed a skilled manufacturing economy, featuring the Spirella Corset Company’s “factory of beauty,” a forward-thinking facility that focused on employees’ comfort. Growth in the agricultural sector was slow, but domestic gardens exploded: in 1953 there were an estimated 6,000 gardens in the city, each producing an average of 75 pounds of food. In 1946, Sir Frederic Osborn–who worked with Howard to promote later garden cities and headed the GCA after his retirement–described Letchworth as “a faithful fulfillment of Howard’s essential ideas,” noting the local employment, profit-sharing with the community, the demonstration of organic town planning, and the fusion of a single-owner leasehold with democratic ideals. Clearly, at this point, Letchworth was a success.

The community has had a massive impact, inspiring numerous follow-ups and imitators, including Welwyn Garden City–the only other built under Ebenezer Howard’s direct guidance–and Hampstead Garden Suburb. In fact, the International Garden Cities Institute–headquartered in Letchworth–lists garden cities on every continent except Antarctica. More broadly, the garden city movement influenced English New Towns (post-war government-planned communities), and is considered a cornerstone of modern urban (and suburban) planning. Ebenezer Howard also influenced Walt Disney’s EPCOT, and Letchworth has been linked to modern smart cities such as Masdar. The Garden City Association has evolved into the Town and Country Planning Association, which continues to work for healthy, affordable, and rational urban planning.

Letchworth Garden City itself is ultimately a compromise between ideals and reality. Today the Letchworth Heritage Foundation (First Garden City Ltd. was dissolved by statute after it was purchased and nearly destroyed in the early 1960s) operates the estate, still following Howard’s ideals of reinvestment and community health. In 1983, architect Mervyn Miller wondered if Letchworth’s limits on growth would cause it to stagnate and become “merely a landmark in the museum of planning.” Since then, however, it has only improved, drawing upon its history to become a leader in the ongoing development of garden cities. Now home to the International Garden Cities Exhibition and Institute, it stands at the center of efforts to bring Ebenezer Howard’s ideas into the modern era.

Further Reading

Garden Cities of To-morrow, Ebenezer Howard

English Garden Cities: An Introduction, Mervyn Miller

The Art of Building a Garden City, Kate Henderson

Miller, M. (1983). Letchworth Garden City Eighty Garden Years on. Built Environment (1978), 9(3/4), 167–184.

O’Sullivan, K. (2016). Letchworth: The first Garden City’s economic function transcribed from theory to Practice. Berkeley Planning Journal, 28(1), 164–175. https://doi.org/10.1111/ina.12046

Ebenezer Howard and Letchworth: The First Garden City Ask anyone who’s studied urban planning to explain the field’s history and one of the first names you’ll hear will is Ebenezer Howard.

[theculturedmarxist]

Stock buybacks are eating the world. The once illegal practice of companies purchasing their own shares is pulling money away from employee compensation, research and development, and other corporate priorities—with potentially sweeping effects on business dynamism, income and wealth inequality, working-class economic stagnation, and the country’s growth rate. Evidence for that conclusion comes from a new report by Irene Tung of the National Employment Law Project (NELP) and Katy Milani of the Roosevelt Institute, who looked at share buybacks in the restaurant, retail, and food industries from 2015 to 2017.

Their new paper contributes to a growing body of research that might help explain why economic growth is so sluggish, productivity so low, and increases in worker compensation so piddling, even as the stock market is surging and corporate profits are at historical highs. Companies are working overtime to make their owners richer in the short term, more so than to improve their longer-term competitiveness or to invest in their workers.

Buybacks occur when a company takes profits, cash reserves, or borrowed money to purchase its own shares on the public markets, a practice barred until the Ronald Reagan administration. (The regulatory argument against allowing the practice is that it is a way for companies to manipulate the markets; the regulatory argument for it is that companies should be able to spend money how they see fit.) In recent years, with corporate profits high, American firms have bought their own stocks with extraordinary zeal. Federal Reserve data show that buybacks are now equivalent to 4 percent of annual economic output, up from zero percent in the 1990s. Companies spent roughly $7 trillion on their own shares from 2004 to 2014, and have spent hundreds of billions of dollars on buybacks in the past six months alone.

The new Roosevelt Institute and NELP research examines public firms in three major but notoriously low-wage industries— food production, retail, and restaurants—weighing buybacks against worker compensation. Unsurprisingly, Tung and Milani found that companies were aggressive in purchasing their own shares. The restaurant industry spent 140 percent of its profits on buybacks from 2015 to 2017, meaning that it borrowed or dipped into its cash allowances to purchase the shares. The retail industry spent nearly 80 percent of its profits on buybacks, and food-manufacturing firms nearly 60 percent. All in all, public companies across the American economy spent roughly three-fifths of their profits on buybacks in the years studied. “The amount corporations are spending on buybacks is staggering,” Milani said. “Then, to look a little deeper and see how this could impact workers in terms of compensation, was staggering.”

How much might workers have benefited if companies had devoted their financial resources to them rather than to shareholders? Lowe’s, CVS, and Home Depot could have provided each of their workers a raise of $18,000 a year, the report found. Starbucks could have given each of its employees $7,000 a year, and McDonald’s could have given $4,000 to each of its nearly 2 million employees.

“Workers around the country have been pushing for higher wages, but the answer is always, ‘We can’t afford it. We’d have to do layoffs or raise prices,’” Tung said. “That is just not true. The money is there. It’s just getting siphoned out of the company instead of reinvested into it.”

The report examines the period just before President Donald Trump’s $1.5 trillion tax cut came into effect, leading to an even greater surge of buybacks and thus an even greater surge of new wealth for the owners of capital, as wages have continued to stagnate. The tax legislation cut both the top marginal corporate tax rate from 35 to 21 percent—dropping the estimated effective tax rate on profitable businesses to just 9 percent, well below the effective tax rate for households—and encouraged firms to bring money back from overseas.

What did publicly traded corporations do with that money? Buy back shares and issue dividends, mostly. There was strong anecdotal evidence that that would be true even before the law passed. At a Wall Street Journal CEO confab held last fall, the former Trump economic adviser Gary Cohn asked a room of executives, “If the tax-reform bill goes through, do you plan to increase your company’s capital investment? Show of hands.” Most participants sat still, prompting Cohn to ask, “Why aren’t the other hands up?” Surveys showed that corporations were planning to shunt money to shareholders, rather than putting it into research, mergers and acquisitions, equipment upgrades, training programs, or workers’ salaries.

Since then, analyses from investment banks and researchers have estimated that 40 to 60 percent of the savings from the tax cut are being plowed into buybacks. One analysis of companies on the Russell 1000 Index—which consists of big firms, much like the Standard & Poor’s 500 does—found that companies directed 10 times as much money to buybacks as to workers. As such, Milani and Tung said they expect the math on corporate spending on shareholders versus workers to become even more exaggerated in the coming years.

Not all economic and financial analysts see buybacks as problematic. “Far from being starved of resources, S&P 500 companies are at near-peak levels of investment and have huge stockpiles of cash available for even more,” argue Jesse M. Fried and Charles C. Y. Wang in the Harvard Business Review. “The proportion of income available for investment that went to shareholders of the 500 over the past 10 years was a modest 41.5 percent—less than half the amount claimed by critics.” Plus, if buybacks merely transferred money from businesses to investors who then reallocated that money to other, more dynamic businesses, the overall effect on the economy might be muted.

But more and more analysts disagree. Larry Fink, who runs BlackRock, a huge money-management firm, has argued that buybacks are bad for companies and even bad for democracy. “Society is demanding that companies, both public and private, serve a social purpose,” he wrote in an open letter. “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.”

Analysts argue that buybacks hurt corporate America, American workers, and American growth in a few ways. For one, buybacks are a sign of short-termism among executives, the argument goes, boosting shareholder value without boosting the underlying value, profitability, or ingenuity of a given firm. Companies do not get better because of buybacks; it is just that shareholders get richer. In an exhaustive financial analysis of buybacks, the consultancy McKinsey found that companies would generally be better off issuing dividends or increasing investment instead. Buybacks also might distort earnings-per-share calculations and other measures of profitability and value.

A related issue is that buybacks draw money away from investment; a dollar spent repurchasing a share is a dollar that cannot be spent on new machinery, an acquisition, entry into a new market, or anything else. Researchers at Deloitte point out that buybacks and dividends have soared as a share of GDP, whereas investment in equipment and infrastructure has remained unchanged. And new research by Germán Gutiérrez and Thomas Philippon of New York University suggests growing business concentration, a lack of competition, and short-term thinking on the part of investors have all contributed to firms “spend[ing] a disproportionate amount of free cash flows buying back their shares,” fostering an environment of “investment-less growth.”

Then there is the effect on workers. Chief executive officers are the workers who benefit the most from buybacks, Milani and Tung argue, given that they are often primarily compensated with stock. On the other hand, salaried, hourly wage, and contract employees generally get nothing when companies buy their own shares. With the purchasing power of the minimum wage low, unions all but defunct in the private sector, and less and less competition among employers, workers have no recourse to demand more money, even if there is plenty to be distributed to them. Buybacks have perhaps thus helped stoke the extraordinary levels of income and wealth inequality the country has seen in the past 30 years, and particularly since the Great Recession. (Milani and Tung are careful not to draw a causal relationship between stagnant worker pay and rising buybacks, but other analysts have.)  

Both by increasing inequality and reducing corporate investment, and thus productivity gains, buybacks might be bad for the overall economy, too. A high-inequality economy is one with less consumer spending and demand across the board, thus one with a lower GDP. A low-investment economy is a more sclerotic and less innovative one, and thus one with a lower GDP.

The growth of buybacks and growing research on the perils they pose has increased interest in regulatory or legal action to bar or limit them. Tung and Milani argue that companies should be required, as they were before the 1982 rule change, to provide dividends rather than purchase shares with their cash. “Issuing cash dividends (regular or special) has a less predictable and manipulative impact on a company’s stock price—and thus is less prone to gaming by executives or activist investors for their own gain,” they write. “Dividends also do not have the same potential as buybacks to mask the market and balance sheet impacts of increasing executives’ stock-based compensation.”

Democratic Senators Elizabeth Warren of Massachusetts, Tammy Baldwin of Wisconsin, Cory Booker of New Jersey, and Chris Van Hollen of Maryland, among other legislators, have also put forward legislation targeting the practice, raising the prospect that the rules could change if and when Democrats take back power. “The surge in corporate buybacks is driving wealth inequality and wage stagnation in our country by hurting long-term economic growth and shared prosperity for workers,” Baldwin said in a release. “We need to rewrite the rules of our economy so it works better for workers and not just those at the top.”

In the meantime, corporate boards are poised to spend hundreds of billions more on their own shares, benefiting executives along with the mostly wealthy Americans who own stock. Just this week, Caterpillar, for instance, said it plans to spend $1 billion buying back shares in the latter half of this year, before kicking off a new $10 billion round on buybacks starting in January. It is also in the midst of laying off hundreds of workers.

[sliverdemon]

Suze Orman http://ift.tt/2jXnQ0j

It is so so sad to watch from afar that it is a distinct possibility that this tax bill may pass. Are you kidding. Don’t be fooled. For the majority of you in the long run you will be paying more. Next don’t be surprise that they will get rid of Medicare and convince you it’s good for you. For many of you living in States like California and New York etc - you are going to be screwed with not being able to take state taxes off you federal taxes With only being able to write off $750,000 In mortgage interest. Good luck being able to afford to buy homes in states where real estate is through the roof. Most people need that tax write off. And don’t think that people buying million dollar homes are buying mansions - for cities like San Francisco etc good luck finding a home for just a million dollars. For those of you who invest in the market outside of a retirement account you all will be screwed. Why? Because they are going to change the accounting of when you sell an investment from you choosing what shares you want to invest to the FIFO method. If you don’t know what I’m talking which I know you probably don’t -you need too - My friends at The Motley Fools did an incredible job explaining it. You should read this and act on it. The list goes on - but bottom line this tax bill is an insult to the millions and millions of hard working people who deserve to pay less and earn more. But that is not what this tax bill is doing. Do not let this bill pass. Now read this excerpt from The Motley Fools What you need to know Both the Senate and the House have passed their own versions of the biggest tax changes of the last 30 years, and lawmakers are making progress on a joint bill through their committee work (reports from yesterday indicate they have a tentative deal). There is one particular part of the Senate bill that could disadvantage you as an individual investor if it makes it through to a vote — the mandatory FIFO proposal. Here is a brief primer on what this means and why it's important. FIFO stands for "First-In-First-Out." It is a method for identifying specific tax lots when you have made your total investment over time — using common strategies like dollar-cost averaging, dividend reinvestment plans, buying in thirds, or simply making annual lump sum contributions. (By the way, senators, many of your constituents invest this way.) The Senate's version proposes that all dispositions — including sales, donations, and gifts of investments — be on a first-in-first-out basis (FIFO). This means, if you want to sell, you must sell the oldest lot, which in all likelihood (especially after a very healthy 9-year bull market) has the lowest cost basis and the highest embedded capital gains. The proposal eliminates investor choice. What does no choice look like? Here's an example that might be common to Motley Fool investors. Say you own 200 shares of Amazon that you purchased twice during the last five years: 100 shares at $300 per share in 2013 and another 100 shares at $700 per share in 2016. Let's say you want to sell 100 of your shares at $1,100 per share. Under the Senate proposal, you would have to sell your older position and pay capital gains taxes on $800 per share instead of on $400 per share. Simply, you wouldn't have the option to choose, for yourself and your family, which of your own stock to sell! Under current tax rules, individual investors have the choice of which tax lots to dispose of. This allows for such tax-planning strategies as tax-loss harvesting and donating appreciated stock to charities. It also provides individual investors the flexibility to create sensible financial plans that correspond to their circumstances by having the flexibility to take on a higher tax burden when the situation affords it and being more tax-sensitive when times are tougher. These tax-management strategies would be severely limited in the new tax world, and that could leave you and charities worse off. Who could this hurt? In a word: you. More specifically, anyone owning stocks in a taxable account will be affected. Retirees will be especially hard hit, since many will have to sell investments to pay for medical expenses. Retirees typically have very long holding periods, with the oldest investments generally having the most gains built up over decades of buy-and-hold investing. Forcing retirees to recognize unusually high capital gains could increase the taxability of their Social Security benefits and lead to higher income-based Medicare premiums. Investors that sell stock for a large purchase such as a home or a car are going to be especially hard hit, and the negative tax consequences could have a meaningful effect on consumption habits that would otherwise grow the economy (ahem, again, senators??). Investors engaging in normal asset class rebalancing activities may place outsized weight on tax implications, resulting in poor investment decisions and an inefficient allocation of capital in our market system. That's the proverbial "tail wagging the dog" that we try to stay away from. Investors may be tempted to get out ahead of changing tax rules and sell some later-dated tax lots while they still can. On the flip side, the looming tax bill on old tax lots may dissuade selling a holding when it may be the sensible thing to do. So what can you do about it? It's easy and very quick. Contact your congressional representatives Let your representatives know how the mandatory FIFO provision in the tax plan will affect your family. Click here for an easy lookup of your representatives, along with their contact information. It will take only a few brief minutes to voice your opinion. Not sure what to say? Here is the message that Megan Brinsfield, the Director of Foolish Financial Planning for Motley Fool Wealth Management, LLC, left for her senators, Mark Warner and Tim Kaine: Hello, my name is Megan Brinsfield and I am a constituent located at [address]. I am calling to convey my concern over the mandatory FIFO provision in the tax plan. This provision will increase my tax bill by thousands of dollars every year by eliminating my freedom of choice around investment management. Additionally, my time spent in recordkeeping will increase since my brokerage only has information on stocks acquired since 2011. I implore you to strike this provision from the tax plan on behalf of me and my fellow investing taxpayers. For more than 20 years, The Motley Fool and our affiliates have stood up for the individual investor, helping millions around the globe make better financial and investment decisions. The proposed Senate FIFO provision handcuffs everyday investors from making the best individual decision for their own, unique circumstance. We ask that you join us in carrying our message to the halls of Congress by contacting your senator's office to express your concern with the FIFO provision. That's a great way to help the world invest, better. Thank you for joining us in supporting individual investors! Fool on, Megan Brinsfield, CPA, CFP, Director of Foolish Financial Planning, Motley Fool Wealth Management, LLC Bryan Hinmon, CFA, CIO Motley Fool Asset Management, LLC Andy Cross, CIO The Motley Fool, LLC.

SocioTech Tumblr @SliverDemon

[echrealestatetx]

The Intelligent Investor, a publication by Benjamin Graham, is broadly regarded as the very best book on value investing ever written

The Intelligent Investor, a publication by Benjamin Graham, is broadly regarded as the very best book on value investing ever written. The book (and it's writer ) had a deep influence on how people consider investing. Graham was extremely influential to many titans in the realm of investing. . .chief among them Warren Buffett. Buffet said after that the publication is

If I hadn't read this book in 1949, I'd have had a different future. In the time of it's publishing, the book was revolutionary in how it brought a frequent sense approach to investing by highlighting that when a person buys a stock, they are essentially purchasing a bit of the underlying company and consequently the cost they pay for their piece of the underlying business must reflect their view of the value of said item. To many of us today, this is common sense but in the time such investing practices were not on the radar of your average citizen. He also brought a principled approach to investing; one that has been focused around blending awareness of business fundamentals with emotional behaviour.

I decided to write this post after realizing that Graham's work has had a profound impact on my life as well. . .not only in investing but company as a whole. Above all in my function as farm business owner.

Here are some lessons from The Intelligent Investor that have crossed over to how I think about farming.

Mr Market is just one of two owners of a business who comes into work daily with wild mood swings. On a specific day, he may either wildly overestimate or underestimate the worth of their business but no matter, he's willing to sell out for his spouse daily. The partner is obviously free to decline the offer, since he understands another day Mr Market will return to him with an entirely different offer.

Graham is known for saying that in the short term markets are similar to voting machines, tallying the emotional thoughts of the market participants but in the long run they act like weighing machines, reflecting the accumulated value of the underlying company. Mr Market demonstrates psychological behaviour but the informed investor may know the inherent value of the business get the most out of purchasing or selling opportunities when the time is right for him. In agriculture, we're selling products rather than buying bits of a company but the idea stays the same. We will need to remember that emotion can fuel short term movements in the markets but that it's up to us to make the call on when we wish to market. And the only way to know whether a cost makes sense for you to market at is to be aware of the worth of everything you've created, aka your cost of manufacturing. Your number will be different than your neighbor's. Know this amount. It's possibly the most important calculation you'll do annually around the farm and unfortunately not enough individuals really spend the opportunity to do it. Actually, one of my regional Farm Credit executives estimates that less than 5% of his customers understand this amount for their operation. Finally, Graham said,"Market quotes are for your convenience, possibly to be taken advantage of or discounted." He predicted this gap the Margin of Security also it can be thought of as how safe (and potentially rewarding ) an investment can be. This line of thinking applies across all boundaries of assets from bonds and stocks to real estate to even commodities as a seller. If you would like to think concerning Margin of Safety when creating farm investment decisions, then one of the key elements you want to be aware of is the inherent value of your advantage. How can you determine that value? Could it be centered on marketable asset value? The very best way of valuation will be dependent on what you're trying to appreciate and how long you plan on holding it. By way of example, a 100 acre field which you intend on farming for the next 50 years should be valued differently than you plan on selling to some neighbor in 5. Equipment decisions may also be assessed by comparing intrinsic value vs market value. Equipment's intrinsic value is essentially it has utility value. Unless the piece of equipment is very old (essentially a collectible) we all know it is going to depreciate in value each year. Thus, to justify ownership of that equipment it's utility value better transcend the market value. Once equipment has zero usefulness values, it's time to move on from it and don't wait. How many of you have discovered old equipment nestled in the bloodline of a farm which you work which isn't even worth salvaging for scrap iron? At one stage, the utility value of the equipment fell to zero while still having some marketable value but yet the owner still couldn't part with this. This is called the"Sunk cost fallacy" and has affected farmers using old gear because the first plow was hitched to a mule. A higher Margin of Safety provides protection in case some of your intervention methods prove inaccurate. Just take the case of 3 farmers: Farmer A bought land in 2012 and guessed a 5% margin of security (using $7 corn to project income for the foreseeable future), Farmer B also purchased property but negotiated with the sellers before he had a 20% Margin of Safety. And Farmer C, couldn't find any attractive options with higher than 20%, so that he sat on the sidelines. I'd assume that Farmer A's purchase has caused him a substantial setback in his small business. I would presume that Farmer B is faring better than Farmer A but he is also probably a little light on working capital and is having to pass attractive opportunities. This is really where Farmer C gets redemption. At first he was somewhat mad to see his neighbors so busy purchasing land but now he's got more chances than previously and at more attractive valuations than 5 decades back. Margin of Safety can also apply to sellers. When the market value of this asset you own approaches or surpasses your inherent worth, it is time to consider selling. Now many farmers won't sell farmland and I'm right there with you. But we can and do sell products all year long. So when the market worth, aka future costs, exceed your inherent worth, aka your cost of production, it is time to consider selling. Again, the market is your servant and not your master in the event that you clearly know what your aim is and possess the discipline to follow your plan. To complete, as Graham wrote,"The use of the Margin of Safety is, in nature, that of rendering unnecessary an accurate quote of their future." Having a long-term outlook :Graham believed that among the best pieces of mental armor an investor might have was having a long-term perspective. By thinking in terms of decades instead of months or a year or two, the intelligent investor could more readily have the discipline to pass up cool or mediocre investments in the short term to be able to take advantage of fantastic investment opportunities in the long run. Among the most interesting paradoxes of business is that the best chances typically present themselves in poor times, but in bad times there are fewer people who will actually take advantage of those opportunities. Instead (and perhaps a future blog post), most of the major titans of company that you know of from Buffett to Rockefeller to Carnegie to Walton (and many more) made their most impactful business investments of their careers when times were tough. Easy to say, hard to do. Easier to do with a long-term perspective of the usage of Margin of Safety when assessing business investments. Keep this is mind when you think about the current state of ag. The long-term mindset also allows the smart farmer to make the most of the magic of compounding. Years before, in the Millionaire Next Door, the writers raised some eyebrows when they generated statistics stating that your average farmer was wealthier than your normal physician or attorney despite most farmers earning much less than those more affluent professions. That is possible because farmers often save more of their earnings to be reinvested into their business or investments. Over time, this may have a dramatic impact on the bottom line of one's private wealth. Buffett has explained compounding with a vibrant image of rolling a wet snowball down a really long snowy hill. It will grow exponentially. He's living evidence of the intense power of the long term consequences of compounding. Actually 99% of his wealth was got after his 50th birthday. Understanding the difference between linear and logarithmic profits is something every farmer needs to have a grasp of. Every tiny incremental change you make on your operation to lower costs or raise yields or increase your market cost combines in a multiplicative capacity. Small changes can have a tremendous effect over the long term. Long-term thinking also comes into play when thinking about infrastructure investments and soil health. Are you improving your infrastructure for this particular year in mind or the next ten? Have you ever designed your new store in order that a potentially bigger combine will fit into it in ten decades? It can have a loooong time for soil health to improve via cover crops and increased biological activity. Can you have the mindset and patience to reap the benefits of cropping system enhancements which may cost a little more on the front but pay massive dividends over the long term? The second best time is now." Lastly, purchasing land is the ultimate long-term investment if you're a farmer and plan never to sell it. This may mean a great deal of things like being individual on property purchase decisions, but it can also mean not structuring a property purchase loan so sharply that you become money poor and battle when other opportunities present themselves. There are all types of platitudes out there in regards to purchasing land but likely the best advice I've heard is to consider it as long term capital allocation. Bearing that in mind, constantly ask yourself A) Could I purchase at a cost that provides a Margin of Safety, B) Does my surgery produce enough revenue to make the obligations (again Margin of Safety) and C) is this the best location to allocate my capital as it now stands. Be skeptical of"specialists" and"forecasting": Graham was a skeptic of anybody who tried to forecast market prices in the future and you should be too. It's far easier to create valuations in the current than later on. Any idea of projecting future conditions should be baselined since most likely reverting to the mean. To put it differently, great times or bad times will last forever. Think about it. . .if specialists were so much brighter than us they'd be able to crush the markets regularly and, let us be fair, they wouldn't be crowing about their latest insights to you but rather earning millions while sipping Mai Tai's on a Carribean beach somewhere. Actually, experts are woefully inaccurate in regards to outperforming markets. Would you feel that in the last 15 years, just 35 percent of mutual funds have outperformed the S and P 500 index? In our current culture, it is unfortunate that too frequently the loudest voice is confused with being authoritative. Bear in mind that you can not predict the long run you can just manage your current circumstances. My own business has largely been predicated on the principle that if you're able to make your outcome independent of any views as to the long run you're that much better off." You should also be impartial when it comes to making decisions on entered choices with your crop. If you are actively engaged in farming, then you probably do not have the luxury of being a passive investor in your own operation. Consequently, you understand what Graham might predict an"enterprising" investor. In these tough times, you need to be searching for that additional edge. This may indicate negotiating input prices or paying down your working loan the moment you see a deposit has cleared. Little things accumulate in a huge way when compounding is involved. And farming is the greatest business case study .

I find people such as Ben Graham and his acquaintances such as Warren Buffett, fascinating case studies for farmers since so much of what they have learned and educated over the course of their lifetimes in company can be directly related to how we think about farming as a business enterprise. What valuable business lessons have you heard from those which aren't directly engaged in farming but nevertheless crossover that will help you on your day to day farming operation?

Thinking of Buying a farm or ranch at Texas contact Preferred Properties of Texas in www.preferredpropertiestx.com or even 254.965.7775

[margdarsanme]

NCERT Class 12 Entrepreneurship Chapter 5 Business Arithmetic

NCERT Class 12 Entrepreneurship Solutions

Chapter-5 Business Arithmetic

TEXTBOOK QUESTIONS SOLVED A. VERY SHORT ANSWER TYPE QUESTIONS 

Question 1. Explain the following terms with proper example: SKU Cash flow Cash inflow Cash outflow Re-order point Cash flow projection Cash conversion cycle Answer. SKU: Stock Keeping Unit (SKU) code (a) All items in the inventory is to be identified with a unique code which signifies certain aspects of the item. (b) It can be colour, size, weight or any other characteristics that is of importance in its use. (c) The SKU code can be a combination of alpha and numeric. (d) SKU is the very basic unit for data collection and further manipulation for deriving meaningful statistics and decision making. (e) Bar Codes and RFID (Radio Frequency Identification tags are used in tracking etc. using SKU. Cash flow: Cash flow refers to the movement of money in and out of a business during a specific period of time.

Example: Loan Received, Sales Receipts, Sale of Assets.

Cash inflow: All receipts of money in the business is known as cash inflow like rent received and loan received.

Cash outflow: It is defined as the movement of money out of a business.

Example: Furniture and Fixtures, Interior Decoration, Tools, Computers, Raw Material.

(a) Re-order point: It is a level at which a new order must be placed so that the inventory is renewed before the stock reaches zero level.

It is estimated by using the formula Reorder Point = Usage Rate x Lead Time.

Cash flow projection: Cash flow projection shows how cash is expected to flow in and out of your business.

Cash conversion cycle: (CCC or Operating Cycle) is the length of time between a firm’s purchase of inventory and the receipt of cash from accounts receivable. It is the time required for a business to turn purchases into cash receipts from customers.

CCC represents the number of days a firm’s cash remains tied up within the operations of the business. Question 2. Pareto’s Law formed the basis for a technique. Name it.

Answer. The principle is named for Vilfredo Pareto, an Italian economist who studied land ownership in Italy in the early 1900’s and found that roughly 20 per cent of the population held title to about 80 per cent of the land. Pareto’s law has applications throughout science as well as business, including inventory control, where it forms the basis for a technique called ABC analysis. B. SHORT ANSWER TYPE QUESTIONS-I

Question 1. What is ABC analysis?

Answer.ABC analysis is an inventory categorization method which consists in dividing items into three categories (A, B, C): A being the most valuable items. B-items are the inter class items, with a medium consumption value. C being the least valuable ones. This method aims to draw managers’ attention on the critical few (A-items) not on the trivial many (C-items). Question 2. What is Pareto’s Principle?

Answer. In 1906, Italian economist Vilfredo Pareto noted that 80% of Italy’s land was owned by 20% of the people. Pareto principle is a prediction that 80% of effects come from 20% of causes. The 80:20 ratio of cause-to-effect became known as the Pareto Principle. He became somewhat obsessed with this ratio, seeing it in everything. For example, he observed that 80% of the peas in his garden came from 20% of his pea plants. Question 3. Differentiate between cash flow projection and cash flow statement.

Answer.

Question 4. What is financial management? What is the main objective of financial management?

Answer. Financial management means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. It is an activity which is concerned with acquisition and conservation of capital funds in meeting financial need an overall objectives of business organisation. It means applying general management principles to financial resources of the enterprise. The main objectives of financial management is wealth maximization of shareholder’s wealth. To ensure regular and adequate supply of funds to the concern. To ensure adequate returns to the shareholders. To ensure optimum funds utilization. Once the funds are procured, they should be utilized in maximum possible way at least cost. C. SHORT ANSWER TYPE QUESTIONS-II

Question 1. There are three key elements in the process of financial management. Explain them.

Answer. Financial planning: Management need to ensure that enough funding is available at the right time to meet the needs of the business.

(а) The short term funding may be needed to invest in equipment and stocks, pay employees and fund sales made on credit.

(b) The medium and long term funding may be required for significant additions to the productive capacity of the business or to make acquisitions.

Financial control: It ensures that the business is meeting its goals and objectives. Financial control addresses questions such as: (a) Are assets being used efficiently? (b) Are the business assets secure? (c) Does management act in the best interest of shareholders and in accordance with business rules?

Financial decision-making: The key aspects of financial decision-making relate to investment, financing and dividends. For example, it is possible to raise finance from selling new shares, borrowing from banks or taking credit from suppliers.

(a) A key financing decision is whether profits earned by the business should be retained or distributed to share¬holders through dividends.

(b) If dividends are too high, the business may be starved of funding to reinvest in growing revenues and profits further. Question 2. What are the key aspects of financial decision-making?

Answer. The key aspects of financial decision-making relate to investment, financing and dividends. Investments must be financed in some way however there are always financing alternatives that can be considered. For example, it is possible to raise finance from selling new shares, borrowing from banks or taking credit from suppliers: A key financing decision is whether profits earned by the business should be retained rather than distributed to shareholders via dividends. If dividends are too high, the business may be starved of funding to reinvest in growing revenues and profits further. Question 3. What is a budget? What are the essentials of a budget?

Answer. For any business, a budget is a quantitative expression of a plan for a defined period of time. It may include planned sales volumes and revenues, resource quantities, costs and expenses, etc. 

Essentials of budget include: To control resources To communicate plans to various responsibility center managers. To motivate managers to strive to achieve budget goals. To evaluate the performance of managers. For accountability. Question 4. Explain Inventory Control and state its objectives.

Answer. Inventory Control is a systematic and detail record of purchase of materials, their storage capacity, quantity in order to supply quantity order for large discounts, handling delivery of materials etc. It is a process which facilitates an entrepreneur in smooth production operation and to take important decisions in a production line.

The objectives of inventory management are: To ensure that the supply of raw materials and finished goods will remain continuous so that production process is not halted and demands of customers are duly met. To minimise carrying cost of inventory. To keep investment in inventory at optimum level. To reduce the losses of theft, obsolescence and wastage, etc. (a) To make arrangement for sale of slow moving items. To minimise inventory ordering costs. D. LONG ANSWER TYPE QUESTIONS 

Question 1. What is a budgeting process?

Answer. Budgeting is a collective process in which operating units prepare their plans in conformity with corporate goals published by top management.

Each unit plan is intended to contribute to the achievement of the corporate goals.

Unit managers prepare projections of sales, operating costs, overhead costs, and capital requirements. They calculate operating profits and returns on the investment they intend to use.

The budget itself is the projection of these values for the next calendar or fiscal year.

In this process, each unit presents its plans and budget to a reviewing upper management panel and may, thereafter, make whatever changes result from instructions or negotiations with the higher level.

Texts presenting, documenting, and defending the rationales underlying the numbers are usually part of the planning document.

Approved budgets then become the road¬map for operations in the coming year. Ideally monthly or quarterly budget reviews track performance against the budget.

As part of such reviews, changes to the budget may be approved. At the end of year managers are judged by their performance against the budget. Question 2. There is a Budget to suit every business and its need. Elucidate.

Answer.

Sales Budget: (a) This budget shows what finished products can be sold in what quantities and at what prices.(an estimate of future sales)

(b) It may be prepared product wise, region wise, customer wise and period wise.

(c) It is often broken down into both units and currency.

Production Budget: It is always based on sales budget. It is generally prepared into two parts:

(a) It shows the estimates in volume or quantities. It estimates the number of units that must be manufactured to meet the sales goals.

(b) It shows production cost. The production budget also estimates the various costs involved with manufacturing those units, including labour and material,

Capital Budget: (a) It is generally prepared to estimate the total capital required for acquiring the fixed assets for fulfilling the production demand of an organisation.

(b) Long term investments such as new machinery, replacement machinery, new plants, new products, and research development projects are worth pursuing. Capital required for developing research and development should be totally different from the work of manufacturing unit.

(c) The capital budget helps you figure out how much money you need to put in place of new equipment or procedures to launch new products or increase production or services.

(d) This budget estimates the value of capital purchases you need for your business to grow and increase revenues.

Cash Flow/Cash Budget/Financial Budget: (a) It is one of the important budgets because success of any business totally depends upon the cash flow management and liquidity.

(b) It gives a prediction of future cash receipts and expenditures for a particular time period. A cash flow budget details the amount of cash you collect and pay out.

(c) It usually covers a period in the short term future.

(d) It helps the business determine when income will be sufficient to cover expenses and when the company will need to seek outside financing.

(e) It makes a provision for minimum cash balance which will be available at all times.

(f) The minimum cash balance should be equal to one month’s operating expenses including contingencies.

(g) A positive cash flow is essential to grow your business.

Marketing Budget: It is an estimate of the funds needed for promotion, advertising, and public relations in order to market the product or service.

Project Budget: (а) It estimates of the costs associated with a particular company project. These costs include labour, materials, and other related expenses.

(b) The project budget is often broken down into specific tasks, with task budgets assigned to each. A cost estimate is used to establish a project budget.

Operational Budget: (a) An operational budget is the most common type of budget used.

(b) It forecasts and tries to closely predict yearly revenue and expenses for a business.

(c) It is a short term budget.

(d) This budget can be updated with actual figures on a monthly basis and then you can revise your figures for the year, if needed. Question 3. Explain the two dominant forms of budgeting process.

Ans. The two dominant forms of budgeting processes are traditional and zero- based. Business planning is usually a combination of the two.

Traditional budgeting: It is based on a review of historical performance and then the projection of such findings to the future with modifications.

If inflation is high, for instance, cost trends of the last several years are projected forward but with adjustments both for inflation and for projected growth or decline in business activity.

Historical sales patterns, using established trends in sales growth, are projected; new sales from planned new product introductions are then added. Zero-based budgeting: It is the creation of a completely new budget from the ground up—as if no history existed. When using this method, the operation must justify and document every item of expenditure and income anew. Question 4. What is working capital? What is the need for a working capital?

Answer. Money needed to fund the normal, day- to-day operations of a business is known as the working capital.

Adequate working capital is required for the smooth running of any business. It is required by a business for meeting day to day business expenses to complete a business cycle or the operating cycle. The working capital of a business keeps on circulating or changing since the money circulates in various forms of assets in a continued manner. The above diagram explains that: In a business concern operating cycle begins with outflow of cash towards the purchase of raw materials, payment of labour, power, fuel and other expenses converting the raw materials into work in progress and converting them into finished goods. Sale of finished good for cash or credit.

If on credit then conversion of account receivables into cash.

This operating cycle indicates that funds once tied up in the form of raw materials are later converted into the form of finished goods.

In a manufacturing concern there is a time gap between the first step of purchasing of raw-materials to last step of selling of goods and realizing cash. This time duration is called operating cycle. It is also called the “changing” or circulating capital because money circulates in various forms of assets in a continued manner. E. HIGHER ORDER THINKING SKILLS (HOTS)

Question 1. Calculate working capital of Raja & Co. has the following items in its Balance sheet: Stock — 50,000; Trade creditors – 32,000; Debtors – 75000; Cash -1,00000; Dividend payable – 50,000; Tax – 44,000; Short term loan – 61,000; Short term investments – 76,000. Calculate gross and net working capital.

Answer. Total Current Assets = Debtors + Stock + Cash + Short term investment Total Current Assets = (Rs 75000 + Rs 50,000 + Rs 1,00000 + Rs 76,000) Total Current Assets = Rs 3,01,000 Total Current Liabilities = Sundry Creditors + Dividend Payable + Tax + Short Term loan) Total Current Liabilities = (Rs 32,000 + Rs 50,000 + Rs 44,000 + Rs 61,000) = Rs 1,87,000 Gross Working Capital = Total Current Assets Gross Working Capital = Total Current Assets = Rs 3,01,000 Net Working Capital = Total Current Assets – Total Current Liabilities Net Working Assets = Rs 3,01,000 – Rs 1,87,000 = Rs 1,14,000 (a) Gross Working Capital = Rs 3,01,000 (b) Net Working Assets = Rs 1,14,000 Question 2. Ramu is buying and selling ice-cream.Explain his working capital requirement.

Answer. Ramu is a trading entrepreneur. Trading entrepreneur is one who undertake trading activities, whether domestic or overseas. They deal in buying and selling of manufactured goods. Before launching the business they identify the potential market for his product in order to stimulate the demand. They believe in creating a demand in the market to market survey and push many ideas ahead of others in the form of demonstration to promote Operating cycle or cash conversion cycle for trading business:

Money needed to fund the normal, day to day operations of a business is known as the Working Capital. For trading, where there is no manufacturing (or conversion), the operating cycle will be shorter. Ramu needs less amount of working capital as ice-cream is a perishable goods and can’t keep for a long time period.

Therefore, Ramu has to purchase and sale of goods through cash only.

I. VERY SHORT ANSWER TYPE QUESTIONS

Question 1. What do you mean by Unit of Sales?

Answer. Unit of sales can be defined as the measure of what products are sold. Question 2. What do you mean by Gross Profit?

Answer.Excess of Unit Price over Unit Cost is known as the Unit Gross Profit or Unit Gross Margin. This represents the business’s profit from selling a product or providing service before deducting fixed expenses such as salaries, rent, and other expenses. Gross Profit = Unit Price — Unit Cost Question 3. What do you mean by Cash Inflow and Cash Outflow?

Answer. All receipts of money is known as cash in flow 5 like rent received and loan received, and payments made in money is known as cash outflow. Ex: Insurance premium and Transprtation charges. Question 4. Give one difference between Income Statement and Cash Flow Statement.

Answer. Question 5. What do you understand by Unit Cost/ Variable Cost/Cost of Goods sold?

Answer. Cost of unit can be defined as the cost incurred by a company to produce, store and sell one unit of sale of a particular product or service. Question 6. Give some examples of Variable Cost/ Unit Cost.

Answer. The Unit Cost refers to the variable cost like raw-materials, packing material, sales commission, freight, etc. Question 7. How do we calculate the unit cost in the case of multi product or service situations? Explain with the help of an example.

Answer. Grocery store is a trading business. One buys and sells. So, the cost at which the items are purchased is known as Unit Cost (just as its MRP at which you are selling). Therefore, at the end of the day, it is possible to know the purchase price of all the items and quantities that were sold. Let us suppose that it works out to Rs 1,70,000. There are 100 units of Sale. So the unit cost is Rs 1,700. Question 8. What is MRP?

Answer. MRP is a short form of Maximum Retail Price. It is a price at which shopkeeper sells the goods to customers. Question 9. What are “Carrying Costs”?

Answer. It is defined as the cost of holding and handling materials inside or outside the stores. It is important to examine the inventory level and to maintain optimum balance of inventory. Question 10. What do you mean by Order lead time?

Answer. It is an average time that elapses between placing an order and receiving the goods. Question 11. What do you understand by Usage Rate?

Answer. It is an average rate at which the inventory is drawn down over a period. Question 12. How Cash Flow Projection will be considered as a better idea for your business plan?

Answer. As part of a business plan, Cash Flow Projection will always give an entrepreneur a much better idea, of how much capital investment a business idea needs to start and to run the business. Question 13. Give four examples of inflow of cash in the business.

Answer. Question 14. Define Budget.

Answer. ICMA London defines a budget as “financial and quantitative statement, prepared and approved prior to a defined period of time, of the policy to be persued during that period for the purpose of attaining a given objective.” It may include income, expenditure and capital. Question 15. Give a few examples of Outflow of cash in the business.

Answer. Question 16.What are the key aspects of financial decision-making?

Answer. The key aspects of financial decision-making relate to investment, financing and dividends. Question 17. Give some examples of current assets.

Answer. Cash and bank balances Account receivables: (a) Bills receivable, and (b) Debtors Short term investments/Temporary investment Prepayment: (a) Prepaid rent, (b) Unexpired insurance, etc. Accrued Income Question 18. Give some examples of Current Liabilities.

Answer. Bank overdrafts Accounts Payable: (a) Creditors (b) Bills payable Outstanding Expenses: wages, rent, commission, etc. Income received in advance Dividend Payable Provision for doubtful debt. Question 19. What is the desirable behaviour of any inventory item? Answer. Desirable behaviour of any inventory item is “Availability”. It means that there should never be any stock out.

In other words, moment the need (demand) arises we should be able to supply the item- without losing any time. Question 20. Name the French word for the origin of the word ‘Budget’. Or Write the etymology of the word “Budget”.

Answer.The French word bougette, meaning purse (referring to money), is the origin of the word budget. Question 21. What do you understand by Budget Period?

Answer. It refers to the period for which a budget is prepared and implemented. Question 22. If Bhavin spends Rs 2,00,000 to open a grocery shop and earns a net profit of Rs 40,000 in one year. Calculate the annual return on investment.

Answer. Question 23. What does the acronym EBITDA stand for?

Answer. Earnings Before Interest, Tax, Depreciation and Amortization. Question 24. What does ROE Indicate?

Answer. ROE (Return On Equity) is a good indicator to know a true measure of how own money is being used. Question 25. What does ROI Indicate?

Answer. ROI (Return On Investment) is a good indicator to know a true measure of how total money is being used. ROI, on the other hand, gives an indication of how the total money is being used. Question 26. Give one example each of bulky items with low value and high value items with low volume.

Answer. Bulky items with low value – straw for use in paper mill. High value items with low volume — Diamond. Question 27. Give four examples of items which are hazardous in nature and special precautions have to be taken in their storage.

Answer. Gasoline, other combustible items, some hazardous chemicals, etc. Question 28. Give four examples of items are hazardous in nature and special precautions have to be taken in their manufacturing.

Answer. In a factory manufacturing safety matches, phosphorous and potassium chlorate are not stored in the same or even adjoining areas, for fear of accidental mix up. Question 29. What do you mean by shelf-life? Give two examples.

Answer. The length of time a product may be stored without becoming unsuitable for use or consumption. Items like vegetables, fruits, flowers and fish are perishable in nature. This calls for special storage conditions and equipments – cold storage, freezers, etc. These have financial implications. Similarly some of the manufactured food or medicinal products have expiry dates – beyond which they are not fit for consumption. This imposes certain constraints on inventory management. Question 30. Give one difference between amortisation and depreciation.

Answer. Depreciation is applicable for tangible assets (Building, Machinery) and amortisation is available for intangible assets (Goodwill, Patent, Trademark). Depreciation may write off slow but amortisation may write off fast. Question 31. What is meant by ‘financial management’? [CBSE Sample Paper 2016]

Answer. The financial management is the process of procurement, allocation and control of financial resources of a concern. II. SHORT ANSWER TYPE QUESTIONS

Question 1. Why is working capital called as circulating capital?

Answer. Working capital is called the changing or “circulating capital”, since the money circulates in various forms of current assets in a continued manner. For example: Funds once tied up in the form of raw materials are later converted into the form of finished goods which are not ultimately sold. Question 2. Write down the formula for calculating the weighted-average contribution margin per unit for the sales mix.

Answer. Suppose a manufacturing unit produces three products A, B, and C. Then the following formula is used: Product A CM (contribution mix) per unit x Product a sales mix percentage + Product B CM per unit x Product B sales mix percentage + Product C CM per unit x Product C sales mix percentage = Weighted average unit contribution margin Question 3. Give some examples of Carrying Cost.

Answer. Examples of Carrying Cost are: Money tied up in inventory Storage on inventories Taxes on inventories Obsolescence cost (a) Handling and transfer Deterioration of quality Cost of maintaining inventory records. Question 4. What is an Inventory?

Answer. Inventory means detailed list of items used in the business. It refers to stock of goods in the form of raw materials, work in progress and finished goods, a firm can make up the product and kept for sale in ordinary course of business. Thus, inventories make a linkage between production and sale of goods. Question 5. When an entrepreneur’s business is expanding, his business outflows can be more than his business inflows. Do you agree. How?

Answer. Yes, when an entrepreneur’s business is expanding, his business outflows can be more than his business inflows. It is so because there is always a lag between your spending (on raw materials, labour, etc.) and receiving the sales revenue. Receipt of sales revenue may be delayed because he might have given credit or you have produced ahead of the sales (to cater to the high demand during festive season) and are temporarily holding finished goods stock. Question 6. Write Unit of Sale in each case.

Answer. Question 7. What do you mean by Reorder Point? How it is calculated?

Answer. It is a level at which a new order must be placed so that the inventory is renewed before the stock reaches zero level. It is estimated by using the formula: Reorder Point = Usage Rate x Lead Time Example: Suppose a company uses 15 units of an item per day (usage rate, and the order lead time is 10 days, a new order must be placed when the inventory level reaches 150 units (Reorder Point 150 = Usage Rate 15 x Lead Time 10) so that inventory is replenished before a stock out occurs. Question 8. Why financial control is considered as an important activity?

Answer. Financial control is a critically important activity to help the business ensure that the business is meeting its objectives. It also addresses following points like: Efficient usage of all business assets Security of all business assets. Taking interest of all shareholders of the company and going in accordance with business rules. Question 9. What are Order Processing Costs?

Answer. The cost is associated with the placement of an order for the acquisition of inventories. It is determined on the basis of expenses incurred in the purchase department. Some of the components of cost are: Finding the sources of supply Obtaining quotations Transportation cost Expenses and follow up of an order (stationery, stamp) Forgone discounts Loss of sales and customer goodwill. Question 10. What do you mean by financial management?

Answer. Financial management is the part of management which deals with planning, organizing and controlling financial activities of an entrepreneur or the activity undertaken by the entrepreneur, For acquiring and maintaining fund. For fulfilling the financial requirements of the objectives of the enterprise. And for attaining the goals and objectives of the enterprise. Question 11. “The Budget period for all the business are same”. Do you agree? Comment. 

Answer. No, I don’t agree with the statement. The budget period will depend upon the type and size of business enterprise and control aspect. For seasonal enterprise (food and clothing) short period generally should cover one season. For heavy industries with heavy capital expenditure (heavy engineering works/automobile industries) the budget period is generally long. Question 12. What are the assumptions to be made for sales mix, for the calculation of break even point?

Answer. Following assumptions are made: The proportion of sales mix must be predetermined. The sales mix must not change within the relevant time period. All cost can be categorized as variable or fixed. Sales price per unit, variable cost per unit and total fixed cost are constant. All units produced are sold. Question 13.Why is Return on Investment deemed as a yardstick for the performance of an enterprise?

Answer. Return on Investment is a relationship between profit before interest and tax and capital employed. It is deemed as a yardstick for the performance of an enterprise because it measures the overall profitability and efficiency of the enterprise in relationship to investment made by an entrepreneur in business. Higher the ratio, higher the overall profitability of the business. The ratio is compared with earlier years ratio and important conclusions are drawn from such comparison. As a yardstick it also shows how efficiently the resources are used in the business. Question 14. What is B.E.P? Why an entrepreneur should know about it?

Answer. The business to break even when its value is equal to its total cost. The Break Even Point (B.E.P) is the sales volume at which there is neither profit nor loss, cost being equal to revenue. Break Even Point is a neutral point. Sales below this point show loss and sales excess of this point show profit. It is the relationship amongst cost of production, volume of production, profit and the sales value. The entrepreneur should know B.E.P as: He can forecast about profit accurately. He can ascertain costs, sales and profits at different levels of activity. For taking decision regarding price policy. Question 15. Explain the various categories of inventory.

Answer. In a manufacturing firm inventories work as a link between production and sale. The three categories of inventories are as follows:

Raw materials: Those materials which have purchased and stored in a godown at a particular time for future production.

Work in progress: These are the goods in the course of manufacture. It means goods which are likely to be in various stages but not reached to the final stage. It consist of material, labour and factory expenses applied to the unit up to the last stage. In these the goods are in semi-finished stage. Finished goods: These are the goods reached at the final stage of production process. These goods are ready for sale. The size of three types of inventories depends upon varying nature of their business. Question 16. Why is inventory control essential for an enterprise?

Answer. The process of inventory control gives direction to the entrepreneur to take important decision about the various activities like production line and use of material in the business. It is very essential for the enterprise: To ensure efficient, effective and optimum use of raw materials. To know the availability of resources for production. To ensure and make efforts to purchase raw materials in bulk to get quantity discounts. To ensure that delivery of finished materials to customers are prompt and not being delayed. To stabilize the fluctuation of demands. Thus we can say that it is an important tool in the hand of enterprise. Question 17. What factors should be kept in mind for ordering an inventory?

Answer. Inventory means list of materials used in a business. An entrepreneur must be very careful and wise while deciding about the level of inventory. An entrepreneur must avoid overstocking and under-stocking of each item of the inventory.

The factors that influence the decision on such orders are: Order lead time Usage rate or rate of consumption Reorder-point or minimum quantity of the item to be kept. An entrepreneur must maintain the supply line in a proper manner so that at any time he may have adequate flexibility to change the process of production according to customer’s requirement. Question 18. Differentiate between Unit Cost and Unit Price.

Ans. The following are the differences between Unit Cost and Unit Price.

Question 19. What is the need of financial management?

Answer. Financial management is needed for: Ensuring availability of funds in the right amount at the right time. Ensuring the safety of funds. Ensuring efficient utilization of the available fund. Ensuring the desired level of income and profit. Question 20. Explain trading on equity with the help of a suitable example.

Answer. Trading on equity relates to a situation when the debt component is likely to provide higher rate of return on share capital. Debt and equity are the two sources of finances. Both have their own merits and demerits.But when a mix of both is used wisely, the rate of return equity can increase. This is because the interest paid on the loan is deductible from earning before tax payment. The payment of dividend is only made after realizing the interest. Question 21. Distinguish between Fixed Capital and Working Capital.

Answer. The following are the differences between fixed capital and working capital. Question 22. Distinguish between Budget and Budgeting.

Answer. Question 23. Name and explain the chief cost of budget process.

Answer. The chief cost of the budget process is time. In some corporations the process takes on a life of its own and becomes a convoluted exercise of excessive complexity which, moreover, prevents unit managers from doing any thinking: their time is consumed in efforts to comply with a vast array of requirements dictated from above.

Much of the negative attitude that has developed concerning this activity has its roots in unnecessary bureaucratic impositions on the one hand and unreliability because of the rapid change, a few months out. Question 24. What do you understand by sales mix? State the assumptions made for the calculation of break even point for sales mix.

Answer. Sales mix is the proportion in which two or more products are sold. For the calculation of break even point for sales mix, following assumptions are made: The proportion of sales mix must be predetermined. The sales mix must not change within the relevant time period. All cost can be categorized as variable or fixed. Sales price per unit, variable cost per unit and total fixed cost are constant. All units produced are sold. Question 25. Explain the concept of ROI (Return on Investment).

Answer. 

Meaning: It is the ratio of net profit before interest and tax and total investment. Significance: The significance of computing this ratio is to find out how efficiently the long term funds supplied by the outsiders or creditors and owners are being used. It gives an indication of how the total money is being used.

Example: If an entrepreneur spends X 100,000 to open a grocery shop and makes a net profit of? 20,000 in one year, your annual ROI equals (20,000/100,000) x 100 = 20 per cent. When calculating ROI, the investment will include not only what the investor spent out of his/her pocket, but also all borrowed funds. Question 26. Explain the concept of ROE (Return on Equity).

Answer. Meaning: It is the ratio of net profit after interest and tax and owner’s investment. Significance: The significance of computing this ratio is to find out how efficiently the owners funds supplied by the shareholders/owners are being used. Example, if Sushmita the owner of a grocery shop has an equity stake of Rs 70,000 in the business, she has borrowed Rs 30,000 (rate of interest is 10%). This will attract an interest of 3,000 @ 10% per annum. If the Net Profit is Rs 14,000 then: ROE=Rs 14,000/Rs 70,000 x 100 =20% Question 27. Is ‘Break-even Analysis’ useful to achieve the target level of profit?

Answer. Yes, organisation’s identify those products, which yield the highest contribution. ‘Break even Analysis’ helps the firm in selecting and ranking those products, based on contribution, to achieve the targeted level of profit. Question 28. Make a SKU form for “Shirts” for the given number, classify them in Style, colour, date, month, year, size: 01234- 021-R- Ma 31-10-40 M.

Answer. Style: 01234-021, Colour: R-Red, Month: Ma-May, Date: 31st, Year: 2010, Size: 40 Medium. Question 29. Name the commonly used tags for tracking while using SKU.

Answer. Bar Codes and RFID (Radio Frequency Identification) tags are used in tracking containing electronically stored information. Question 30. Name few different system of inventory control.

Answer. ABC Analysis Economic Order Quantity Just-in- time (JIT), Perpetual inventory, etc. Question 31. What is RFID?

Answer. Radio-Frequency Identification (RFID) is the wireless use of electromagnetic fields to transfer data, for the purposes of automatically identifying and tracking tags attached to objects. The tags contain electronically stored information. III. LONG ANSWER TYPE QUESTIONS

Question 1. What is the procedure to prepare a cash flow projection? Or How to develop a cash flow projection? Or What steps are to be taken to develop a cash flow projection?

Answer. 

Step 1: Every enterprise has different guidelines and rules and regulations. It is based on the business charateristics, decides on the frequency and period (day, week or month) as well as horizon (month, 13 weeks or 6 months).

Step 2: Develop the format, with items appropriate for your business, which will be used for developing the projection. You may take help from the formats attached here as sample.

Step 3: A projected cash flow begins with the existing cash balance for the business. It then lists the sources of inflow and the anticipated payment dates.

Step 4: For example, if you supply goods on credit, you will know at the start of February that you will receive a certain amount during the month covering sales from January – based on credit terms. You may have other inflows interest on your deposits, sale of scrap, rent from space sub-let etc. In this manner, you add up all your inflows.

Step 5: The statement then looks at forthcoming expenditure. Some of this will be a fixed, regular sum such as staff costs. Other expenses will be known but only payable at certain times, such as taxes. There will also be variable costs such as buying stock or materials.

Step 6: Where payment dates are variable, it is usually safest to work on the basis that you will pay suppliers as soon as possible but not receive payment from customers until the last possible date. Step 7: In short, be conservative in assumptions.

Adding all outflows enables you arrive at the surplus or deficit for the period. Combined with the opening balance, leads to deriving the closing balance. It becomes opening balance for the next period. Question 2. What is EOQ? How it is calculated?

Answer. Economic Order Quantity (EOQ) is an important tool in the purchase of raw materials and storage of finished goods. Generally to determine the optimal order of quantity of a particular item of inventory to be purchased at a particular time, which gives maximum economy to an entrepreneur, is called “EOQ”.

It is calculated on the basis of the given formula: [latex]EOQ=\sqrt { 2DP/C } [/latex] Where D= the annual usage (or demand) of the item in units P = the cost of place on order C = inventory carrying cost per unit (This may be derived by multiplying the unit price of the item by carrying cost expressed as % of the unit price.)

The above formula minimizes the total cost of managing inventory consisting of ordering cost and carrying cost of inventory. The two costs are inversely related, when the one increases the : other decreases with the change in the purchase quantity of inventory. It is a balance between the two opposing cost-carrying cost and order processing cost, can be achieved by computing the economic order quantity. Question 3. Give the formula of EOQ and write down its assumptions.

Answer. [latex]EOQ=\sqrt { 2DP/C } [/latex] where D = the annual usage (or demand) of the item in units P = the cost of place on order C = annual carrying cost per unit The above formula is based on following assumptions: Ordering cost is constant i.e. it is independent of size of the order. The cost of carrying the additional inventory is constant. There are no quantity and discounts available. The consumption is in a steady rate. Question 4. Why is inventory control essential for an enterprise?

Answer. Inventory control is essential for an enterprise because: It ensures the availability of materials in the production process whenever it is needed. To ensure efficient and effective utilization of raw materials. It helps in removing all bottlenecks. To ensures prompt and regular delivery of materials to consumers. To examine quantity discount for large and lump sum order to stabilize the fluctuation of demand side. Question 5. Explain ABC Analysis of Inventory Control. Or Which items of inventory claim bulk of the values?

Answer. A firm maintains several types of inventories. To control them properly the firm adopts a selective approach which is called ABC Analysis. In this the firm classifies all items according to values so that the most valuable items may be paid highly, more attention is given regarding their safety and care as compared to other items. It has been observed that out of a long list of inventory, A category list are small in number say 5-10 per cent of the total value but they are quite valuable of total value. The value being 70-75 per cent of the total value of stocks.

B category is in between A and C categories having 15 to 20 per cent of the number of items and 15 to 20% of the total value.

C category items are 70-75% in numbers but carrying little value ranging from 5-10%.

We can see following categorization:

The above three categories vary from product to product and organization to organization. Great care and control is to be exercised on items of “A” list, as any loss or breakage or wastage of any item of this list may prove to be very costly, proper care is to be taken on “B” list items and comparative list control is needed for “C” list items. Question 6. What do you mean by Break Even Point? Explain its importance.

Answer. Break even point is a neutral point at which the company neither makes a profit nor suffers a loss. Calculating the break¬even point is a powerful quantitative tool for managers.

In its simplest form, break even analysis provides insight into whether or not revenue from a product or service has the ability to cover the relevant costs of production of that product or service. Entrepreneurs can use this information in making a wide range of business decisions, including setting prices, preparing competitive bids, and applying for loans. It also helps in profit planning and goal setting.

At the break even level, Total Revenue = Total Expenses The formula for calculating break even level is: Break Even Volume=Fixed cost/Gross margin Gross Margin Per Unit = Unit Price (Selling price) – Marginal Cost (Variable cost) Contribution per unit = Selling price per unit – Variable cost per unit Or Contribution Ratio = Selling price – Marginal cost Marginal Cost = Total variable cost Or = Total cost — Fixed cost Or = Direct material+Direct labour + Direct expenses + Variable overhead The ‘Break-even Point’ is that volume of sales at which total revenue is equal to total costs, with zero profit. ‘Break-even point’ is a situation where the firm is neither in profit nor loss. In other words, this is a ‘no-profit, no-loss situation’. When the organisation is not able to earn profits, the best alternative for the firm is, at least, not to incur loss. So, organisation would like to know at what level of production and sales, the organisation would be able to achieve no-loss, no-profit situation. This is the greatest contribution of ‘Break-even Point’. Question 7. State the advantages of‘cost plus’ method of pricing. [All India 2015]

Answer. Advantages of Cost Plus method of pricing:

Easy: This method of pricing is very simple method. It can easily be used for determining the price.

Flexible: Any changes in the cost of production or the margin of profit change the price in the same direction. It automatically gets adjusted to the change.

Visible profit margin: Profit margin is not to be calculated. It is already fixed. Thus by multiplying the profit per unit with the volume of the product, the total profit can be determined.

Increases efficiency: Any upward rise in cost is easily visible. This provides an idea to the entrepreneur to adjust his production for keeping the cost as low as possible.

Less calculation: Comparatively less calculations are involved. Which makes the implementation of this method simple.

Easy implementation: This method can easily be implemented because of its simplicity to understand and easy calculations. Question 8. Explain the following features of a cooperative society:[CBSE Sample Paper 2016] Democratic management Capital and return thereon Distribution of surplus Answer. Features of Co-operative societies:

Democratic management: The management of a co-operative organisation is vested in the hands of the managing committee elected by the members on the basis of ’one member-one vote’. Democracy is, thus, the keynote of the management of a co-operative society.

Capital and return thereon: The capital is procured from its members in the form of share capital. A member can subscribe subject to a maximum of 10% of the total share capital or Rs 1,000 whichever is higher. Shares cannot be transferred but surrendered to the organisation. The rate of dividends paid to the members/ shareholders is restricted to 9% as per the Co-operative Societies Act, 1912.

Distribution of surplus: After giving dividends to the members, the surplus of profits, if any, is distributed among the members on the basis of goods purchased by each member from the society. IV. VERY LONG ANSWER TYPE QUESTIONS 

Question 1. Differentiate between cash flow projection and cash flow statement.

Answer. Question 2. Identify the following items as inflow/outflow. Also give reasons for your choice. (i) Raw material, (ii) Depreciation, (iii) Machinery purchased, (iv) Loan from bank, (v) Equity shares issued (vi) Excise duty paid, (vii) Profit on sale of asset, (viii) Interest received on investments

Answer. Question 3. Why there is a need for cash flow projection?

Answer. The following are the need of cash flow projection: Every business must want to manage its affairs in a very efficient manner. It means it must pay its suppliers as per agreed terms, pay the employees their wages on stipulated dates, pay government levies, etc. as per rules, procure services and pay for the same, pay utility bills and rent etc., on time.

It must collect what is due to it also in a timely manner and should strive to sell more so it can collect more.

Very often, when business is expanding, your outflows can be more than in your inflows. This is so because there is always a lag between your spending (on raw materials, labour, etc.) and your receiving the sales revenue.

Receipt of sales revenue may be delayed because you might have given credit or you have produced ahead of the sales (to cater to the high demand during festive season) and are temporarily holding finished goods stock.

In such situations, you should be equipped with sufficient information to be able to arrange for needed funds.

The nature of any business is uncertainty. You base your calculations on certain (hopefully realistic) assumptions.

It plans the funds required using these assumptions. ‘

However, your actual performance, say of sales, could be higher or lower than your plan. It will rarely be exactly per plan.

Or your collection from credit customers has lagged and you are running short of funds. There could be many other reasons as to why your well laid out funding plan has gone for a loss, To avoid such situations and be on top of things, reviewing your projections periodically and recasting the future based on the current status (and not assumptions of the past) and what is likely to happen in the near future is very crucial.

Cash flow projections is not a static document. It must be used as a dynamic tool. V. HIGHER ORDER THINKING SKILLS

Question 1. Explain why break-even analysis is of reduced value to a multi-product firm? Analyse the factors that any business should take into consideration before using break-even analysis as a basis for decision making.

Answer. Break -even analysis is a technique widely used in the manufacturing unit by the production manager It is based on categorising production costs between two types of cost: Fixed cost Variable cost From the above two examples we can understand that unit price of single product is comparatively higher than the unit price of a multiple product.

Businesses dealing with multiple products must reduce all the selling prices down to one selling price and bring down to one variable cost. This is accomplished by calculating a weighted average selling price and a weighted average product cost (variable cost). Further, when the weighted average selling price and weighted average variable cost are calculated, only then can a business, selling multiple products, determine their break-even point. Moreover, businesses selling multiple products will determine their break-even point using the following Break Even formula:

Break-even point =Fixed Costs/Weighted Average Selling Price – Weighted Average Variable Costs As you can see, the break-even point formula for businesses selling multiple products is similar to the formula used by businesses selling a single product. The only difference is the term “weighted average” placed in front of the selling price and variable cost. It is important to understand the concept of weighted averages.

Calculating the break-even point (through break-even analysis) can provide a simple, yet powerful quantitative tool for managers.

The analysis provides insight into whether or not revenue from a product or service has the ability to cover the relevant costs of production of that product or service.

Entrepreneurs can use this information in making a wide range of business decisions, including setting prices, preparing competitive bids, and applying for loans. It also helps in profit planning and goal setting. Question 2. Explain the factors determining the working capital requirements.

Answer. Following factors determine the working capital requirements:

Turn over: Higher is the sales turn over, lower is the requirement of working capital. The revenue is obtained from the current assets. On the other hand, lower is the sales turn over; higher is the requirement of working capital.

Tax liability: Increase in the tax liability increases the requirement of working capital and decrease in the tax liability of the enterprise decreases the need of working capital.

Size of enterprise: Larger is the size of enterprise; larger is the requirement of working capital. On the contrary, smaller is the size of enterprise; smaller is the requirement of working capital.

Nature of the enterprise: Requirement of working capital is different type of enterprises. Restaurants, hotels, etc. have less working capital requirements due to cash sales. Enterprise producing heavy machines needs more working capital, as their operating cycle is longer.

(a) Operating cycle: Longer is the length of operating cycle larger is the requirement of working capital. This is due to the fact that more money is needed for making stocks, purchasing raw materials, etc.

Stock of inventory: If the enterprise prefers to make a larger stock of finished, semi-finished goods and raw materials, the requirement of working capital also matters. On the other hand, lesser is the stock of such materials, lesser is the requirement of working capital. Question 3. Classify the following into fixed cost and variable cost:

(i) Rent of a Godown (ii) Minimum telephone bill (iii) Interest on capital invested by an entrepreneur (iv) Salary to permanent staff (v) Cost of raw-material, payment of transportation of goods. (vi) Daily wages of sweepers (vii) Telephone charges beyond the minimum.

Answer. Do yourself  Question 4. State whether the following require small or large working capital. Answer should be supported by a valid reason:

(i) Selling ice-creams (ii) Following a liberal credit policy (iii) Dealing in stainless steel wares (iv) Using capital intensive technology

Answer. Do yourself  Question 5. On the basis of duration, classify the sources of finance.

Answer. Sources of finances can be classified on the basis of duration. VI. VALUE BASED QUESTIONS 

Question 1. How does pilferage of material affect the enterprise and entrepreneur?

Answer. Pilferage of material means – theft. In any enterprises or a business theft raises your costs, lowers your profits, makes you less competitive and affects morale. Question 2. How can an entrepreneur or an enterprise can take preventive measures to reduce pilferage in an enterprise? What values can lead to a successful implementation of these measures?

Answer. In many enterprises/organisations generally most of employees are honest and disapprove of theft, pilferage of materials and resources in many organisations. But every enterprise must keep some strategies for prevention of pilferage within your company could include:

Install adequate inventory and control measures to account for all material, supplies and equipment. One control method is the requirement, register and signing for all tools and equipment to be issued by individuals.

Identify all tools and equipment by some mark or code.

Conduct a meeting in the form of workshop to convince and educate the employees that they have much more to lose than gain by stealing.

Make them understand and realize all employees that pilferage is morally wrong no matter how insignificant the value of the item taken.

Demand that supervisory personnel set a proper example and maintain a desirable moral climate for all employees.

In extreme situations, propose spot searches of employees and vehicles leaving the installation at unannounced times and places. Publicize widely.

Impress upon all employees that they have a responsibility to report any loss to proper authorities. Value Points: (a)Spirit of enquiry (b) Discipline (c) Sincerity (d) Unwillingness to hurt by employer (e) Duty and loyalty to duty. Question 3. How cash flow projections will be helpful for an entrepreneur? What values can lead to a successful implementation of these programmes? (Value Points)

Answer. For an entrepreneur it is an important tool for cash management.

He will be able to verify when his outlays/outflows are too high or when you might want to arrange short term investments to deal with a cash surplus.

A cash flow projection will give a much better idea of how much capital investment a business idea needs.

Measurement is essential to analyse performance of any business. Given below are some businesses and items being sold/serviced by them.

Value Points: (a) Self- control (b) Duty and loyalty to duty (c) Discipline id) Self-support (e) To protect national property (f) Concentration. Question 4. Explain the main objectives of financial management which is helpful to the enterprise? (Give four value points)

Answer. Financial management is needed because of the following:

To protect against unforeseen circumstances: Entrepreneur minimizes the risks by making a estimate of risks. For this purpose, he prefers to manage his money (finance) by keeping in mind its requirement in the future.

To maximise profit: By managing the finance effectively, the entrepreneur tries to maximize his profit. Finance like other resources is available in limited quantity. Efficient utilization of finance is the only way for profit maximization.

To acquire assets: Any type of asset whether tangible or intangible, need finance for acquiring them. As the enterprise grows, develops or diversifies, the requirement of finance also increases. Thus more is the finance available, more are the chances of acquiring new assets. Moreover from the present income the provision is to make for meeting future obligations. This needs proper management of finance.

To maximise wealth: As the profit increases the wealth of the entrepreneur and the enterprise both are maximized. Goal of wealth maximization is realized by entrepreneur by making optimum utilization of resources, by maintaining the faith of the shares, by properly utilizing the undistributed profit etc.

To ensure ready availability of funds: The flow of funds must take place as and when needed. At any point of time the shortage of funds is undesirable for the growth of enterprise.

Value points: (a) Proper utilization of time (b) Universal (c) Awareness of responsibility of others and employees (d) Sincerity (e) Team work and team spirit. Question 5. Explain the benefits of budgeting. Give some value points.

Answer. For start up entrepreneurs, a budget is like a road map that can help them set goals and assess the validity of their business concept.

For established small businesses, a budget can be used to take the pulse of the business, determining how the business is performing through the years, and helping identify possible future investments. By regularly consulting a budget, business leaders can compare actual figures and catch potential business shortfalls or other problems early. Budgets can also be instrumental in winning over investors, convincing banks your business is a good loan risk, or bringing on new partners or customers.

The single-most potential benefit of formal budgeting lies in ensuring that responsible managers take time each year (and then at fixed intervals throughout the year) in thinking about their operation by looking at all of its aspects. Budgeting creates a comprehensive picture of the future and makes both opportunities and barriers conscious. This foreknowledge then helps guide day-to-day activities.

(a) Value Points: (a) Regularity (b) Positive performance (c) Responsibility of managers and others (d) Feasibility (e) Deal with other problems and find solutions to it. Question 6. Draw a diagram of an operating cycle or cash conversion cycle for large scale manufacturing business (in Detail). And explain how it is important for business (positive and adverse effects).

Answer. Positive Effects: Working capital is a life-blood of manufacturing unit. Its working capital financing can eliminate. Any gap between cash flowing into operations and cash flowing out.

An adequate supply of raw material for smooth functioning of the process. Cash to meet the wage bill. Ability to grant credit facility to customer. Adverse Effects: Due to inadequate funds. Growth of a firm may stop and it will become difficult for the firm to undertake important projects.

Attractive credit opportunity may have to be lost due to paucity of working capital.

It will be very difficult for meeting day-to-day expenses.

Sometimes even fixed assets may not be efficiently utilized, it may affect low rate of return on investment in the working process.

Firm may loose its reputation when sometimes not able to meet short term obligations. Effects of Excess Working Capital: It may result in unnecessary accumulation of stock of raw materials and finished goods, leads to mishandling, waste, theft, value may depreciate.

It shows managerial inefficiency.

It may lead for making speculative profits.

Undue incentive to adopt liberal credit policy. Value Points: Regularity Positive performance Responsibility of managers and others Feasibility Social awareness Proper and maximum utilization of resources National awareness Self-discipline Concentration and social justice. Question 7. In the following cases (statements) identify the type of budgets related to it: It always estimates of future sales, often broken down into both units and currency. It estimates the various costs involved with manufacturing those units, including labour and material. It is used to determine an organization’s long term investments. It also estimates the investment for research and development. It estimates the funds for promotion and advertising. It shows a cost estimated/associated and is used to establish a particular company project. An estimate of the number of units that must be manufactured to meet the sales goals. A budget which details the amount of cash you collect and pay out. This is generally tallied on a monthly basis, but some businesses tabulate this weekly. It helps you figure out how much money you need to put in place new equipment or procedures to launch new products or increase production or services. It estimates the value of capital purchases you need for your business to grow and increase revenues. Answer. Sales budget Production budget Capital budget Capital budget Marketing budget Project budget Production budget Cash flow budget Cash flow budget Capital budget Capital budget Question 8. Explain the concept of ABC Analysis.

Answer. The ABC approach states that a company should rate items from A to C, basing its ratings on the following rules:

A-items are goods which annual consumption value is the highest; the top 70-80% of the annual consumption value of the company typically accounts for only 10-20% of total inventory items.

B-items are the inter class items, with a medium consumption value; those 15-25% of annual consumption value typically accounts for 30% of total inventory items.

C-items are, on the contrary, items with the lowest consumption value; the lower 5% of the annual consumption value typically accounts for 50% of total inventory items. Through this categorization, the supply manager can identify inventory which is more important and more profitable, and separate them from the rest of the items, especially those that are numerous but not that profitable. Steps involved in ABC Analysis: Find out the unit cost and the usage of each material over a given period. For each item calculate the total cost = Annual demand x Item cost per unit Arrange all items in a progressively decreasing order of the cost (descending value). Calculate and tabulate the cumulative total cost. Calculate percentage on total inventory in value and in number. Compute the individual items as a percentage of the total number of items Tabulate. Question 9. Explain the concepts of working capital with the help of an example. 

Answer. 

Concept of Working Capital: Generally, there are two concepts of working capital i.e. gross concept and net concept.

Gross Concept of Working Capital: According to gross concept, working capital refers to all the current assets and represents the amount of funds invested in current assets.

(a) Thus, gross working capital is the capital invested in current assets. Current assets are those assets which can be converted into cash within the short-time period, (say for 12 months )

(b) Gross working capital = Total current assets

Gross working capital refers to the firm’s investment in current assets. Gross working capital represents total of current assets which includes cash in hand, cash at bank, inventory, prepaid expenses, bills receivable, etc.

Net Concept of Working Capital: According to the net concept, working capital is the excess of current assets over current liabilities. In other words, the difference between current assets and current liabilities is called net working capital.

Net Working Capital = Current Assets – Current liabilities Net working capital is the difference of current assets and current liabilities.

(a) Gross Working Capital = Total Current Assets (b) Net Working Capital/Funds/Net Current Assets = Current Assets — Current Liabilities

Example: Working capital of Raja and Co. has the following items in its Balance Sheet: Stock – 50,000: Trade creditors — 32,000; Debtors – 75000; Cash – 1,00000 Dividend payable – 50,000; Tax – 44,000; Short term loan — 61,000; Short term investments – 76,000. Calculate gross and net working capital.

Total Current Assets = Debtors + Stock + Cash + Short term investment = (Rs75000 + Rs 50,000 + Rs 1,00000 + Rs 76,000) = Rs 3,01,000.

Total Current Liabilities =Sundry Creditors + Dividend Payable + Tax + Short Term loan = Rs 32,000 + Rs 50,000 + Rs 44,000 + Rs 61,000 = Rs 1,87,000.

Gross Working Capital = Total Current Assets = Rs 3,01,000 Net Working Capital = Total Current Assets – Total Current Liabilities = Rs 3,01,000 – Rs 1,87,000 = Rs 1,14,000 Gross Working Capital = Rs3,01,000 Net Working Assets = Rs 1,14,000. Question 10. Enumerate the suggested policy guidelines for A, B and C classes of items.

Answer. The table given below explains the policy guidelines for A, B and C classes of items:

ABC (Always Better Control) analysis can help you control your inventory better. Question 11. “For a good inventory control system, we need to take care of both physical and fiscal aspects.” Explain the nature of items that make up the inventory.

Answer. For a good inventory control system, we need to take care of both physical and fiscal aspects. But before we deal with those two, let us understand the nature of items that make up the inventory. Stock Keeping Unit (SKU) Code: Each and every item in the inventory is to be identified with a unique code which signifies certain aspects of the item.

It can be colour, size, weight or any other characteristic that is of importance in its use. The SKU code can be a combination of alpha and numeric.

SKU is the very basic unit for data collection and further manipulation for deriving meaningful statistics and decision-making. Bar Codes and RFID (Radio Frequency Identification) tags ‘ are used in tracking etc. using SKU.

Motley crowd: (a) We always refer to inventory in one monetary value in the accounting statement, behind it are myriad numbers of SKUs – that can be classified as Raw Materials, Packing Materials, Spare Parts, Semi Finished Goods (or WIP – Work In Progress), Finished Goods, Consumables, etc.

(b) The SKU code should definitely help us identify which class the item belongs but not much else. The treatment for each class will have to be different, keeping in mind some of the factors identified here.

Space: Space requirement for all items will not be identical; neither will it have proportionate relationship with the cost of the item. There can be many bulky items with low value (For example, straw for use in paper mill) as well as high value items with low volume (For example, Diamonds). Value: Not all SKUs have same value.

Lead time: (a) Lead time to manufacture or procure an item depends on many factors. Combined effect of these factors — like standard or special raw material, processing time, scheduling of machines, distance between source and user point etc. – makes up the lead time for an item.

(b) It is not always the same for a given item; variability in different factors contributing to the total lead time can make the lead time vary.

Standard Made to order: Some of the items in the inventory could be commodity items – no significant differentiation and hence easy to substitute, or many suppliers produce to same specifications and hence easy to choose from.

(a) Others may be specifically made to order and hence possibly limited sources to order from. Seasonality of supply: If the item is an agricultural product (grains, vegetables, fruits, etc.), the supply would be seasonal. This can play a role in designing the inventory control system.

Demand neither uniform nor predictable:

(a) Demand for an item could be seasonal — weather, festival seasons, events, school opening, etc. can play a significant part in this.

(b) In some cases it is easy to forecast-raw material for items produced to order; but in others not so easy – requirement of a spare part.

Shelf life: (a) Items like vegetables, fruits, flowers and fish are perishable in nature. This calls for special storage conditions and equipments – cold storage, freezers, etc. These, have financial implications.

(b) Some of the manufactured food or medicinal products have expiry dates— beyond which they are not fit for consumption. This imposes certain constraints on inventory management.

Safety aspects: (a) Some of the items are hazardous in nature and special precautions have to be taken in their storage. Examples are — gasoline, other combustible items, some hazardous chemicals, etc.

(b) In a factory manufacturing safety matches, phosphorous and potassium chlorate are not stored in the same or even adjoining areas, for fear of accidental mix up. In fact, even their path of delivery to the respective end use points do not cross.

Obsolescence: (a) Due to advancement in technology, certain items may not be used and their demand drops off. These are the various characteristics of SKUs that have to be kept in mind while designing inventory control systems – one size will not fit all.

(b) Different (rules and guidelines) will have to be different for raw materials, consumables, spare parts, packing materials, etc. Question 12. Define budgetary control. State how “budgetary control” helps an entrepreneur ?

Answer. Budgetary control is a technique of managerial control in which all operations are planned in advance. In the form of budget actual performance is compared with standard performance. It also helps to achieve the organizational objective of an enterprises. Provides a source of motivation to employees and employers. It helps in optimum utilization of resources. It also helps to maintain the coordination among all the departments.

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