Financial pros and cons Essay Example | Topics and Well Written Essays - 1000 words - 1

Financial pros and cons - Essay Example Operating margin: The Company has a better operating margin in 2003 of 19.60% over the previous years. This indicates the company is very efficient in managing its operating expenses to generate revenue. Return on Capital Employed: The Company have earned handsomely for its investors as return so far on its capital employed stands at approximately 25% which is far more than the cost of capital, assuming it to be at 10%. Debt Equity ratio: This ratio identifies the solvency of the firm by measuring the leverage position of a company. Higher the ratio the more leverage a company is and vice versa and hence higher financial risk. Superior Living Inc. has a very low debt equity ratio i.e. 0.025 for 2003, which indicates the company has a very low financial risk as a result it will be very easy for the company to raise debt in the market and banks would be willing to provide loans to the company without much hassle. Raising money by going public indicates accepting money from investors in exchange of ownership and control of the company without the obligation of paying back the money. The company as per its convenience benefits the investors by paying dividend from time to time. This sounds like easy money for the company but the flip side is that the ownership and control over the company would be foregone for the amount invested via equity financing. In the case of Superior Inc. the company is comfortably placed in terms of book debts. The debt equity ratio very low which means the company has not used debt to the extent it should have used. Generally the ideal debt equity ratio should be 1:2 but for Superior it’s around 1:40. Therefore, the prudent course of action for Superior Inc. is too raise capital by debt financing route which also brings in tax advantage as interest paid on debts is deductible from profits and dividend paid on equity cannot be deducted from profits. Debt

Letter and Memo paper Assignment Example | Topics and Well Written Essays - 1000 words

Letter and Memo paper - Assignment Example I, as well as I am sure many other readers like me, would agree with the fact that the socio – economic spectrum has been blown out of proportion just because of the steep competition to help get into one of the top educational institutions. It is rather shocking to find that the affluent are still faced with a persistent and pervasive anxiety, while the middle – class are underrepresented and the poor have absolutely no access to the best educational opportunities. According to me, the most interesting part of the article was about the â€Å"amicus briefs submitted to the Supreme Court in the landmark affirmative case concerning the University of Michigan — to give an edge in admissions to disadvantaged students, regardless of race.† But equally interesting and I must say rather shocking was to read the article further and find that former president of Princeton, William Bowen and his associates found through studies carried out in 19 different colleges, that this was totally untrue because applicants from different disadvantaged backgrounds got â€Å"essentially no break in the admissions process.† On behalf of all the other readers of the New York Times, I take this as an opportunity to express my views about this social scar on society and offer a few useful suggestions. Though I do like the idea of a lottery system when names of those who have achieved a high standard on the academic front are randomly selected for admission, yet I feel that an entrance exam where all are treated equally based solely on merit would be a good idea. Those who do their best must be given a seat irrespective of the background or status they belong to. Another suggestion I like to make in this regard is that it would be good if the top colleges set aside at least 5% of their seats and grant admission to students who specifically come from not very affluent backgrounds but who are really deserving. Once again, on