Bright Source: August 2008

Saturday, August 23, 2008

Business and Psychology

Business and Psychology
Modern psychology is divided into several sub disciplines, each based on differing models of behavior and mental processes. Psychologists work in a number of different settings, including universities and colleges, primary and secondary schools, government agencies, private industry, hospitals, clinics, and private practices. Recent years have seen a rise in the significance of applied psychology—as can be seen from the areas contemporary psychologists concern themselves with—with an attendant decline in the importance of psychology in academia. Businesses are increasingly recognizing the valuable contribution psychologists can make to their organizations. Psychologists primarily focus on helping businesses deal with people issues. They use particular tools and techniques to improve how businesses select their staff; design and shape the culture of their organizations; design jobs; help develop employee satisfaction and motivation; implement and evaluate leadership and training programs; provide career development
At present , psychology are directly impact on business and related issues . In every sector and sub-sector of business psychology played a vital role in overall aspect. There are some specialized sector of psychology, among them industrial psychology and social psychology are directly engaged and involved with business related activities. There are two equally important aspects of industrial psychology field . First it involves the study of human side of organization and second it includes application of the principles and findings of the related research works.
Industrial and organizational psychology (I/O) is among the newest fields in psychology. Industrial Psychology focuses on improving, evaluating, and predicting job performance while Organizational Psychology focuses on how organizations impact and interact with individuals. In 1910, through the works and experiments of Hugo Munsterberg and Walter Dill Scott, Industrial Psychology became recognized as a legitimate part of the social science.[21] Organizational Psychology was not officially added until the 1970s and since then, the field has flourished. The Society for Industrial Organizational Psychology has approximately 3400 professional members and 1900 student members. These two numbers combine to make up only about four percent of the members in the American Psychological Association but the number has been rising since 1939 when there were only one hundred professional I/O psychologists.[21]
I/O psychologists are employed by academic institutions, consulting firms, internal human resources in industries, and governmental institutions. Various universities across the United States are beginning to strengthen their I/O Psychology programs due to the increase of interest and job demand in the field.[21]
Industrial organizational psychologists look at questions regarding things such as who to hire, how to define and measure successful job performance, how to prepare people to be more successful in their jobs, how to create and change jobs so that they are safer and make people happier, and how to structure the organization to allow people to achieve their potential.
Some key issues related to Business and Psychology

Psychology for Business Success: examines key aspects of business activity and how business psychology can be applied to give a competitive advantage. There is also an element of Consumer Psychology included here. Consultants visiting from the Association of Business Psychologists give the majority of the lectures.
Organizational Learning, Innovation and Creativity: this module explores the concept of what is meant by learning at individual, group and organizational levels and how this relates to developing innovation. You also explore new approaches to product innovation.
Selection and Development for Business Success: analyses the elements that constitute a successful selection procedure. You also examine assessment and development programmes and how these can influence the performance of businesses.
Organizational Culture and Change: analyses organizations from an anthropological and psychoanalytical viewpoint. The metaphors of culture and Freudian theory will be used to examine how individuals experience groups and organizations.
Decision Making, Leadership and Motivation: looks at the elements of leadership and what differentiates it from management. Different leadership styles are examined and their relationship with commitment and motivation explored.
Research Methods and Consultancy Skills: you acquire skills in a variety of research methodologies and develop skills in data collection, analysis and interpretation. Mini-projects are undertaken in organizational settings in order to develop the negotiation and intervention skills essential for the consultant.
Overall I can stay on tune that Psychology has a bond relationship with business and has great impact on it’s affairs and related issues . If we can understand and apply the knowledge of psychology in business it will provide more fruitful output.

Friday, August 22, 2008

Barclays Premier League transfers

Barclays Premier League transfers
Keep up to date with all of the latest comings and goings in the Barclays Premier League.
Arsenal
IN: Aaron Ramsey (Cardiff City, £5million), Samir Nasri (Marseille, undisclosed)
OUT: Mathieu Flamini (AC Milan, free transfer), Jens Lehmann (VfB Stuttgart, free transfer), Alexander Hleb (Barcelona, £11.8million), Gilberto (Panathinaikos, undisclosed)
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Aston Villa
IN: Curtis Davies (West Bromwich Albion, undisclosed), Steve Sidwell (Chelsea, £5million)
OUT: Olof Mellberg (Juventus, free transfer), Patrick Berger (released), Luke Moore (West Bromwich Albion, £3million), Thomas Sorensen (released)
Blackburn rovers
OUT: Peter Enckleman (released), Stephane Henchoz (released), Bruno Berner (released)
Bolton Wanderers
IN: Johan Elmander (Toulouse, undisclosed), Fabrice Muamba (Birmingham City, £5million)
OUT: Stelios Giannakopolus (released), Ivan Campo (released), Andranik Teymourian (Fulham, free transfer), Daniel Braaten (Toulouse, exchange)
Chelsea
IN: Jose Bosingwa (FC Porto, £16million), Deco (Barcelona, £8million),
OUT: Ben Sahar (Portsmouth, loan), Hernan Crespo (released), Slobodan Rajkovic (FC Twente, loan), Steve Sidwell (Aston Villa, £5million), Claude Makelele (Paris St Germain, free transfer), Khalid Boulahrouz (VfB Stuttgart, undisclosed)
Everton
OUT: Lee Carsley (Birmingham City, free transfer), Stefan Wessels (released), Bjarni Vidarsson (released), Patrick Boyle (released)
Fulham
IN: Mark Schwarzer (Middlesbrough, free transfer), David Stockdale (Darlington, undisclosed), Zoltan Gera (West Bromwich Albion, free transfer), Andranik Teymourian (Bolton Wanderers, free transfer), Toni Kallio (BSC Young Boys, undisclosed), Bobby Zamora (West Ham United, undisclosed), John Pantsil (West Ham United, undisclosed)
OUT: Carlos Bocanegra (Rennes, free transfer), Jari Litmanen (released), Phillippe Christanval (released), Simon Elliott (released), Ian Pearce (released), Michael Timlin (released), Ismael Ehui (released). Bjorn Runstrom (released), Brian McBride (released), Dejan Stefanovic (Norwich City, undisclosed), Elliot Omozusi (Norwich City, loan), Tony Warner (Hull City, free transfer)
Hull City
IN: Craig Fagen (Derby County, £750,000), Geovanni (Manchester City, free transfer), Bernard Mendy (Paris St Germain, free transfer), Tony Warner (Fulham, free transfer), George Boateng (Middlesbrough, £1million), Peter Halmosi (Plymouth Argyle, undisclosed)
OUT: David Livermore (released), Jay-Jay Okocha (released), Stuart Elliott (Doncaster Rovers, undisclosed)
Liverpool
IN: Philipp Degen, (Borussia Dortmund, free transfer), Andrea Dossena (Udinese, undisclosed), Diego Cavaleri (Palmeiras, undisclosed), Emmanuel Mendy (Murcia Deportivo, undisclosed)
OUT: Harry Kewell (Galatasary, free transfer), John Arne Riise (AS Roma, £3.96million), Anthony Le Tallec (Le Mans, undisclosed) Peter Crouch (Portsmouth, £11million), Scott Carson (West Bromwich Albion, £3.25million), Danny Guthrie (Newcastle United, undisclosed)
Manchester City
IN: Jo (CSKA Moscow, undisclosed)
OUT: Jihai Sun (Sheffield United, free transfer), Paul Dickov (released), Emile Mpenza (released), Andreas Isaksson (PSV Eindhoven, undisclosed), Geovanni (Hull City, free transfer), Georgios Samaras (Celtic, undisclosed)
Manchester United
OUT: Gerard Pique (Barcelona, undisclosed), Kieran Lee (Oldham Athletic, free)
Middlesbrough
IN: Marvin Emnes (Sparta Rotterdam, £3.2million), Didier Digard (Paris Saint Germain, £4million)
OUT: Dong-Gook Lee (released), Fabio Rochemback (released), Gaizka Mendieta (released), Mark Schwarzer (Fulham, free transfer), George Boateng (Hull City, £1million)
Newcastle United
IN: Jonas Guiterrez (Real Mallorca, undisclosed), Danny Guthrie (Liverpool, undisclosed)
OUT: Stephen Carr (released), Peter Ramage (Queens Park Rangers, free transfer), James Troisi (released), David Rozehnal (Lazio, £2.9m)
Portsmouth
IN: Ben Sahar (Chelsea, loan), Glen Little (Reading, free), Peter Crouch (Liverpool, £11million)
Stoke City
IN: Dave Kitson (Reading, £5.5million)
OUT: Marlon Broomes (Blackpool, free transfer), Russell Hoult (released), Dominic Matteo (released)
Sunderland
OUT: Andy Cole (released), Ian Harte (released), Stephen Wright (released), Stanislav Varga (released), Greg Halford (Sheffield United, loan)
Tottenham Hotspur
IN: Luka Modric (Dinamo Zagreb, £16.6m), Giovani dos Santos (Barcelona, £4.7m), John Bostock (Crystal Palace, £700,000)
OUT: Simon Dawkins (Leyton Orient, loan)
West Bromwich Albion
IN: Roman Bednar (Heart of Midlothian, undisclosed), Michal Danek (Viktoria Plzen, loan), Kim Do-Heon (Seongnam Ilhwa Chunma, £550,000), Luke Moore (Aston Villa, £3million), Gianni Zuiverloon (Heerenveen, £3.2million), Graham Dorrans (Livingston, £100,000), Marek Cech (FC Porto, £1.4million), Scott Carson (Liverpool, £3.25million)
OUT: Luke Steele (Barnsley, free), Zoltan Gera (Fulham, free transfer), Martin Albrechtsen (Derby County, free transfer), Curtis Davies (Aston Villa, undisclosed), Kevin Phillips (Birmingham City, free)
West Ham United
IN: Holmar Orn Eyjolfsson (HK Kopavogur, undisclosed),
OUT: Nolberto Solano (released), Bobby Zamora (Fulham, undisclosed), John Pantsil (Fulham, undisclosed)
Wigan Athletic
IN: Daniel De Ridder (Birmingham City, free transfer), Olivier Kapo (Birmingham City, £3.5million), Amr Zaki (Zamalek, loan)
OUT: Solomon Olembe (released), Josip Skoko (released), Andrew Webster (Glasgow Rangers, undisclosed), Julius Agahowa (Kayserispor, undisclosed), Andreas Granqvist (FC Groningen, undisclosed)

The wealthy are not happy

Many people say that “most rich people are not happy” as what we always imagine. They might have a lot of money and they can own most of the things that they want. However, in fact they have lost something valuable that make them regret and unhappy. According to the expert, they will unhappy only if they have the lack of 5 categories of “needs”. The reasons for which the wealthy are not happy or the 5 “needs” are needs of relationship, needs of having good health, needs of emotional bonding, needs of independence and needs for mental satisfaction.
Besides money, they are also looking for love, cares and encouragements from their friends and families. While they are fighting for their goal to be wealthy, they need some supports or encouragements from people around them. After they succeed, they always look for someone to celebrate and share our success. This is our human nature of thinking. According to the expert, most people will ignore their relationship with others and hence break it. This is also the main reason why some wealthy people are not happy because they lose their loving one.
It is known to all that “health is our biggest wealth”. So in order to be happy, we must own 2 kinds of “wealth”. One is money and another is our health. Sometimes the wealthy people are getting too busy to their activities for what they can’t take proper care of their health and their body becomes weak and sick, they will not have the power and mood to spend their money to get something they like. Instead, they always spend their money on medical treatment. Finally, their life will be suffering and gloom and gradually they become unhappy.
We believe that our emotion is very important for us and it can affect anything in our life directly. Emotional control means controlling our emotion. We found that by controlling our emotion, we can actually handle other fields of our life too. Sometimes the wealthy people can’t control over their emotion and being angry in certain time, for this reason they actually involve in a lot of argument and conclude their relationship with people around them. If they can control their emotion and also others’ emotion, they can run their business very well and make lot of money. Or even for the most basic, they can control their emotion and be happy at anytime, anywhere that they want to. At this moment, they don’t really depend on money to be happy instead they can control their emotion and be happy.
We all love freedom; people have different definition on time freedom. In general, time freedom means that you can have more choice to do something you like instead of follow a fix schedule. Most of the wealthy people have busy and fix schedule the reason why they becomes unhappy with their job is because it controls their time. They just feel they are in lacking of choice and freedom on their time because they have to go to their office in certain time. Besides that it also disturbs their life too. So we want to say that if we own most of the money in the world but we don’t have time to do something that we enjoy and love then we might suffer from our life. Thus the wealthier become unhappy.
Wealthy people, by their nature/attitude, a way of life they chose for themselves, can never have enough of anything. Wanting is what drives them on. They will get dissatisfied with in every aspect that they achieved. It gives them stress and they become disappointed. Sometimes wealthy people convince themselves that wealth and happiness is the same thing. They aren't, but wealth is what they substitute for happiness. They have no idea what happiness is. But they are quite prepared to tell everyone else that wealth is happiness. They use those who believe them as their support system. On the other hand, it seems like some people are having this misconception that being wealthy will actually hold up your happiness. But, while I do agree that having money/ not having money will not make you happier as well. Hence, I would definitely rather to be unhappy with money than unhappy without it.
Happy conditions do not make you happy. It is being happy that causes happy conditions. We know that our heart knew the best for us. Sometime it is good for us to follow our personal perception. Our subconscious actually knew what is good and what is bad for us. So our personal perception can be a good signal from our subconscious mind. So follow it and we can live happily.

The problems we face while using Public transportation in Dhaka city

In ancient times, people often covered long distances on foot. For instance, even today it is not uncommon for people in rural areas to commute several kilometers every day. But now-a-days both rural areas and towns transportation plays a significance role for communication.
Transportation in developing countries is of great significance because of its contribution to national and regional economic, industrial, social, and cultural development. However, most developing countries are facing problems related to traffic and transportation. Inadequate transportation facilities slow down the process of socioeconomic development in a country. Especially in a heavily populated country such as Bangladesh, managing different aspects of transportation is a difficult task.

The most important problem concerning transportation professionals in Bangladesh is that of highway safety. Ministry of Transport figures show that approximately (5000-10,000) people died in road accidents in each year. The fatality rates are high in many cities in the subcontinent. Another important problem is personal security. By the time of transportation people should concern about it, because there is a chance of being injured or hijacked in any transport both at day & night. The growing trend toward private transportation increases congestion. The way to avoid congestion is to travel by mass transport or railways. Roads are getting jam-packed because more vehicles travel on them, sometimes the street beggars and hawkers are also reasonable for this traffic-jam and that is the biggest problem in transportation of Bangladesh. Most of the transport has limited space to carry passengers and loads, so there is a difficulty in carrying heavy loads. There is a limitation of good public transport in Bangladesh also alternatives to public transport aren’t available. That’s why to journey both in public and private transport should take a long wait. Sometimes there is a possibility of cancellations of any private transport without any declaration. Most of the time private transport isn’t running in 24 hours, so people can’t travel according to necessary. There is a limitation of stoppage/station also, so people can’t ride at the place they want, they should wait for the vehicle or go to the stoppage first. There are many vehicles which aren’t well-furnished, so the passengers suffered at the bad weathers. The vehicle owner never concern about being on time and the length of journey time compared with another schedule. Sometimes it is hard to get information about a journey. In many cases the behavior of ticket-collector/ conductor or passengers aren’t good. Both the public and private transportation systems having lack of cleanliness, discomfort of the ride, hassle of buying tickets, charging high cost and difficulties getting on and off.

Finally, we can say there is too difficulties in daily transportation of Bangladesh both the public and private sector. Although there is a large private-sector involvement in transportation, government plays a large regulatory and developmental role. We expect Bangladeshi government should pass legislation to control vehicles on roads and enforce tougher environmental regulations. With the majority of World Bank funds allocated toward transportation and highways, the government should adopt the latest technology and introduce mass rapid transit to reduce congestion and accidents on roads.

Online shop comparison

Online shop

Online shopping is the process consumers go through to purchase products or services over the Internet. An online shop, e-shop, e-store, Internet shop, web shop, online store, or virtual store evokes the physical analogy of buying products or services at a bricks-and-mortar retailer or in a shopping mall.

Consumers find a product of interest by visiting the website of the retailer directly, or do a search across many different vendors using a shopping search engine. Online shoppers commonly use their credit card for making payments, however some systems enable users to create accounts and pay by alternative. Once a payment has been accepted the goods or services can be delivered.

Amazon

Placing Your First Order
Placing an order with Amazon.com is easy. There's no need to create an account first. You automatically create an account when you place your first order online. (We cannot accept orders by phone, fax, or e-mail. All orders must be placed online.)
Here are the steps you need to follow to place an order. If you have any problems when following these steps, please read our Troubleshooting Tips.
Find the Items You Want
Add the Items to Your Shopping Cart
Proceed to Checkout
Sign In/Create a New Account
Enter a Shipping Address
Choose a Shipping Method
Provide Payment Information and a Password
Review and Submit Your Order
Check Your Order Status

Advantage of amazon
One advantage of shopping online is being able to quickly seek out deals for items or services with many different vendors (though some local search engines do exist to help consumers locate products for sale in nearby stores). Search engines and online price comparison services can be used to look up sellers of a particular product or service.Shoppers find a greater selection online in certain market segments (for example, computers and consumer electronics[18]) and in some cases lower prices. This is due to a relaxation of certain constraints, such as the size of a "brick-and-mortar" store, lower stocking costs (or none, if drop shipping is used), and lower staffing overhead.
Products

Books
Books
Kindle
Textbooks
Magazines & Newspapers
Movies, Music & Games
Movies & TV
Unbox Movie & TV Downloads
Music
MP3 Downloads
Musical Instruments
Video Games
Digital Downloads
Kindle
Unbox Movie & TV Downloads
MP3 Downloads
Amazon Shorts
Electronics & Computers
Audio, TV & Home Theater
Camera & Photo
Computers & PC Hardware
Software
MP3 & Media Players
Kindle
Cell Phones & Service
GPS
Office Products
Video Games
All Electronics
Home & Garden
Home Improvement
Bedding & Bath
Kitchen & Dining
Furniture & Décor
Patio, Lawn & Garden
Home Appliances
Vacuums & Storage
Sewing, Craft & Hobby
Grocery
Grocery
Natural & Organic
Gourmet Food
Health & Personal Care
Household Supplies
Pet Supplies
Fresh Flowers & Plants
Toys, Kids & Baby
Toys & Games
Baby
Apparel (Kids & Baby)
Books
Movies
Music
Video Games
Software
Apparel, Shoes & Jewelry
Apparel & Accessories
Shoes
Jewelry
Watches
Health & Beauty
Health & Personal Care
Exercise & Fitness
Beauty
Sports & Outdoors
Camping & Hiking
Cycling
Exercise & Fitness
Fan Gear
Golf
All Sports & Outdoors
Tools, Auto & Industrial
Power & Hand Tools
Outdoor Power Equipment
Home Improvement
Lighting & Electrical
Plumbing Fixtures
Automotive
Industrial & Scientific

Determination of prices :
Usually the prices of product provided by Amazon are determined by the authority and the amount is fixed. But the customers get/receive different types of rebates, discounts and many other promotional offers in case of buying products from the sites.

Payment Methods
Amazon.com accepts American Express, Diners Club, Discover, JCB, MasterCard, Eurocard, Visa, Visa Check Cards, payment from your bank account, Amazon.com gift cards, Amazon Store Card, Webcertificates, and checks, money orders, traveler's checks, or cashier's checks denominated in U.S. dollars and drawn on a U.S. bank. Additionally, we accept Borders Gift Cards and Waldenbooks Gift Cards as payment for qualifying orders.
Amazon.com does not currently accept international wire transfers, PayPal, or Smart Cards. For grocery purchases, we are unable to apply manufacturer's coupons, food stamps, or any other payment method not listed above.
Other noteworthy information:
Amazon.com Platinum Visa Card: for customers who want to earn points toward free rewards with every purchase
Amazon.com Corporate Account Credit Line: for businesses looking to pay online by purchase order
Amazon.com Payments: for Amazon Merchants and Marketplace purchases

Payment Declines
If customer receive a message that we were unable to authorize payment from your bank account, If customer receive a message that we were unable to authorize or charge your credit card, please check with the issuing bank for your card. Credit cards may be declined for a variety of reasons, such as a technical error during processing, and we do not have access to further information.
If customer placed your order with Amazon.com, we will try charging the same card again if you do not submit updated information. Typically, we attempt to charge a credit card daily for one week before canceling your order. If the customer was placed with an Amazon Merchant, the order has been canceled. You are welcome to place a new order using a different payment method.If the order was placed through Amazon Marketplace, you will have an opportunity to resubmit payment. If the second attempt to process the charge also fails, your order will be canceled

Delivery
Their estimated shipping dates are based on several factors, including your destination address, how quickly we can obtain and assemble items for shipment (the "usually ships within" time listed on a product's detail page), and whether you have requested that we minimize the number of shipments or ship items as they become available. The estimated shipping date is displayed on the order form, just before you place your order.They calculate delivery estimates by taking the estimated shipping date and adding the time it takes a package to travel from our facilities to your destination address, based on the shipping speed you've chosen. Orders for multiple items or multiple copies of a single item can take longer to assemble before we're able to ship them to you.Shipping costs (if applicable) reduce the price advantage of online merchandise, though depending on the jurisdiction, a lack of sales tax may compensate for this.Shipping a small number of items, especially from another country, is much more expensive than making the larger shipments bricks-and-mortar retailers order. Some retailers (especially those selling small, high-value items like electronics) offer free shipping on sufficiently large orders.

http://www.amazon.com/gp/homepage.html/002-5301213-1080810

e-bay

Products provided by ebay
Antiques Art Baby Books Business & Industrial Cameras & Photo Cars, Boats, Vehicles & Parts Cell Phones & PDAs Clothing, Shoes & Accessories Coins & Paper Money Collectibles Computers & Networking Consumer Electronics Crafts Dolls & Bears DVDs & Movies Entertainment Memorabilia Gift Certificates Health & Beauty Home & Garden Jewelry & Watches Music Musical Instruments Pottery & Glass Real Estate Specialty Services Sporting Goods Sports Mem, Cards & Fan Shop Stamps Tickets Toys & Hobbies Travel Video Games Everything Else Giving Works

Payment system of e-bay
There are a number of ways to pay on eBay. Most sellers offer more than one option. Some payment options offer more protection than others, so be sure to select a method of payment that makes customer feel comfortable. The methods of payment
· PayPal
· Credit card
· Personal checks, cashier's checks, or money orders

Delivery system of e-bay

Once a payment has been accepted the goods or services can be delivered in the following ways.
Download: This is the method often used for digital media products such as software, music, movies, or images.
Shipping: The product is shipped to the customer's address.
Drop shipping: The order is passed to the manufacturer or third-party distributor, who ships the item directly to the consumer, bypassing the retailer's physical location to save time, money, and space.
Determination of prices:

Usually the prices of product provided by ebay are determined by the authority and the amount is fixed. But the customers get/receive different types of rebates, discounts and many other promotional offers in case of buying products from the sites.

Gillette and the Men’s wet-Shaving Market

Summary of the case

The name Gillette is introduced by King C. Gillette of Boston who invented the safety razor in 1895. After a decade it has become an established company all over the world of shaving equipments.

The product perfection of eight years Gillette started its operation in the market. It introduced various market operations through achieving booming successes and implementing visionary idea with the Government during world war. Because company founder King Gillette invented the first safety razor, Gillette had always been an industry inventor. It expanded its industry through introducing Blue and Thin blade, silicone-coated blade and the super blue blade in different years compiling the success and the growth of the market as well. In 1948, Gillette began to diversity in to new Markets through acquisition. It acquired the Toni Company, Paper Mate and Sterilon Corporation. In 1988, the Gillette Company was a leading producer of men’s and women’s grooming aids. Gillette introduced a number of innovative shaving systems in the 1970s and 1980s as a part of its strategy to sustain growth. It claimed that Trac II, the first twin-blade shaver represented the most revolutionary shaving advance ever. Gillette also developed a clog-free, dual blade cartridge for the Trac II system. Late in 1976, Gillette, apparently in response to BIC’s pending entrance in to the U.S. market, launched the first disposal razor for men in the United States. Because of BIC’s market operation Gillette came forward with its new dimension of product variation. In 1977, Gillette introduced a new blades and razor system at the expense of Trac II. It launched Atra (Automatic Tracking Razor Action) with $ 7 million advertising campaign and over 50 million $ 2 rebate coupons. It quickly achieved 7% share of the blade and about one-third of the razor market. It also introduced in Europe. In early 1980s, Gillette introduced most new disposal razors and product enhancements which insisted the BIC to move from the U.S. market. Despite these product innovations and introductions of early 1980’s Gillette primarily focused its energies on the Global markets and strategies. By 1985, Gillette was marketed 800 products in more than 200 countries. The company felt a need at this time to coordinate its marketing efforts first regionally and then globally.

Unfortunately for Gillette’s management team, others noticed its strong international capabilities. Ronald Perelman, Chairman of the Revlon Group attempted an unfriendly takeover in November, 1986. At the end Gillette and Perelman signed an agreement preventing Perelman from attempting another takeover until 1996. In 1988, just as Gillette returned its attention to new product development and global marketing, Coniston partners, after obtaining 6 percent of Gillette stock, engaged the company in a proxy battle for 4 seats on its 12 person board. In this regard the second takeover attempt forced Gillette to increase its debt load to $ 2 billion and pushed its total equity negative to $ 84,600.000. Moreover both takeover battles forced Gillette to “wake up”. Gillette closed or sold its Jafra Cosmetics Operations in 11 countries and Jettisoned weak operations. The company also thinned its workforce in many divisions. Despite Gillette’s concentration on fending off takeover attempts, it continued to enhance its razor and blade products. In 1986 it introduced the Contour Plus and in 1988, the company introduced Trac II Plus, Pivot Plus and the Daisy Plus. The warfare launched after capturing 16.2 percent U.S. market share by Schick. Though after few years it was broken down and in 1988 it introduced “guerrilla warfare”. Schick generated approximately 67 percent of its revenues overseas. By the 1988, Schick generated roughly 40 percent of its sales and 35 percent of its profits in Japan. Moreover BIC as like as Gillette frequently introduced new razor products and product enhancements. It also tried its commodity strategy on sail boards, car-top carries and perfume. BIC had exerted quite an influence since its razors first entered the U.S. market in 1976 and in 1988 BIC’s razors generated $52 million in sales with a net income of $ 9.4 million. The BIC’s market operation effected to lowering the Gillette’s profit margin. On the contrary Wilkinson Sword was introduced with its new strategy through customizing razors and other shaving equipments. It developed new dimension of blades and razors and launched R & D as a weapon to capture the market.

In 1988 Paul (Marketing Director of Gillette in Europe) identified that the market share of Gillette has fallen because of increasing competition in the market. Moreover there were nothing special about Gillette’s packaging and display. There were always been on male focused in which there were more women wet shavers rather than men in the U.S. market.

According to the problem Paul become concerned to develop their new strategies.

Internal & External analysis (SWOT)

Strength:

Ø Gillette is the market leader in the field of razor, blade and other shaving equipments.

Ø It has strong management team compiling visionary ideas and strategies.

Ø Gillette is able to capture major portion of the market share through customizing and launching product variations.

Ø It expanded its industry through introducing Blue and Thin blade, silicone-coated blade and the super blue blade, Trac II etc. in different years compiling the success and the growth of the market as well.

Ø It acquired the Toni Company, Paper Mate and Sterilon Corporation.

Ø Gillette Company is a leading producer of men’s and women’s grooming aids.

Ø It launched Atra (Automatic Tracking Razor Action) with $ 7 million advertising campaign and over 50 million $ 2 rebate coupons which quickly achieved 7% share of the blade and about one-third of the razor market.

Ø In early 1980s, Gillette introduced most new disposal razors and product enhancements which insisted the BIC to move from the U.S. market.

Ø By 1985, Gillette marketed 800 products in more than 200 countries.

Ø Gillette is always concerned about their growth including customer satisfaction and R & D process.

Weakness:
Ø Gillette’s management team, others noticed its strong international capabilities.

Ø Ronald Perelman, Chairman of the Revlon Group attempted an unfriendly takeover in November, 1986.

Ø The second takeover attempt forced Gillette to increase its debt load to $ 2 billion and pushed its total equity negative to $ 84,600.000.

Ø Gillette closed or sold its Jafra Cosmetics Operations in 11 countries and Jettisoned weak operations. The company also thinned its workforce in many divisions.

Ø In 1988 Paul (Marketing Director of Gillette in Europe) identified that the market share of Gillette has fallen because of increasing competition in the market.

Ø There were nothing special about Gillette’s packaging and display.

Ø There were always been on male focused in which there were more women wet shavers rather than men in the U.S. market.

Opportunities:
Ø Paul Hankins came in to operation as a Marketing Director of Gillette in Europe with Jim Pear, Vice President to implement a pan-European strategy.

Ø Prior to 1983, Gillette had organized and managed Europe as a classic decentralized market.

Ø The company had treated each country as a separate market.

Ø Gillette had launched Contour Plus, the European version of Atra Plus, in 1985-86.

Ø Paul became to formulate new strategy for Gillette in North Atlantic for shaving products.

Ø According to researchers, men rate system shavers significantly better than disposal razors.

Ø There were more women wet shavers than men in the U.S. market.

Ø Disposable razors are the wave of the future.
Threats:
Ø Schick generated approximately 67 percent of its revenues overseas.

Ø By the 1988, Schick generated roughly 40 percent of its sales and 35 percent of its profits in Japan.

Ø Moreover BIC as like as Gillette frequently introduced new razor products and product enhancements.

Ø BIC had exerted quite an influence since its razors first entered the U.S. market in 1976 and in 1988 BIC’s razors generated $52 million in sales with a net income of $ 9.4 million.

Ø The BIC’s market operation effected to lowering the Gillette’s profit margin.

Ø Wilkinson Sword was introduced with its new strategy through customizing razors and other shaving equipments.

Ø It developed new dimension of blades and razors and launched R & D as a weapon to capture the market.

Ø Competition is increasing day by day.

Problem Identification

Þ Atra blades seem to have leveled off and Trace II blades are declining.

Þ The share of the disposable razor market has fallen.

Þ Every 1 percent switch from system razors to disposable razors represents a loss of $10 million on the bottom line.

Þ Spending on advertising has fallen from $61 million in 1975 to about $15 million in 1987.

Þ Brand name (Gillette) is done in thin block letters on the product which is not I impact.

Þ Loosing focus on the brand name.

Þ There is nothing special about retail packaging and display.

Þ Focusing on male and through separating female who are the larger portion of its market potentiality.

Action Taken by the Gillette:

v Lowering the price of disposable razors and to raise the price of system razors.

v Increase the spending on advertising.

v Sponsoring on athletic events and launching slogan to capture the men over 40.

v Focusing on logos and brand names.

v Focusing the market potentiality of women regarding wet shave.

v Continue the business as usual as a give-up strategy.

v Building up the product image.

v Trying to protect the category profitability by segmenting the market and offering the value to those segments willing to pay for it.

v Continue to invest on R & D.
Recommendation:
Gillette can add more value and image with its product.

It should come up with Brand strategy and focusing on customer satisfaction.

It should introduce attractive advertisement that will capture the consumer’s mind.

Lowering the price of both disposable and system razors.

Propose the brand name through following the different cultural aspects of different segments and sub-segments.

Launching product variation to attack the competitors.

Its market strategy will be between the middle of company growth and the customer satisfaction.

Conclusion:
According to the above recommendations Gillette may achieve its desired objectives and fruitful their demand to the market but its overall strategy should be focusing on its building brand name as well as adding value with the product with minimum price in order to reach its desired destination.

ACCOUNTING IN ACTION

Definition of Accounting:

“Accounting is a services activity. Its function is to provide quantitative information, primarily financial in nature, about economic entities that is to be useful in making economic decisions, in making reasoned choices among alternative courses of action.” ---- AICPA (1970).

Accounting is defined as “the process of identifying, measuring, and communicating economic information to permit informed judgments and decisions by users of the information.” --- AAA (1966).

Objectives of Accounting:

Making decisions concerning the use of limited resources, including the identification of crucial decision areas and determination of objectives and goals.
Effectively directing and controlling an organization’s human and material resources.
Maintaining and reporting on the custodianship of resources.
Facilitating social functions and controls (with respect to taxation, detection and protection of frauds, government control on public utility services, government incentives for encouraging trade and commerce, statistics on economic activities, et.).

Scope of Accounting:

Data Creation and Collection: Historic and Predictive
Data Recording using Accounting Methods (GAAP) and Data Processing (Manual, Mechanical and Electronic)
Data Evaluation that includes:
(a) Budgetary Control including Standard Costing and Variance Analysis
(b) Performance Analysis
(c) Cash Flow Analysis
(d) Analysis and Interpretation of Accounting Information (for external and internal decision makers)
(e) Auditing
Data Reporting to internal management (according to their demand) and external stakeholders (financial statements and notes accompanying those statements)
Accounting Theory in the heart of the above.

Information Needs of the Users of Financial Statements

According to paragraph 9 of the Framework for the Preparation and Presentation of Financial Statements of the IASB (International Accounting Standards Board), the users of financial statements include present and potential investors, employees, lenders, suppliers and other trade creditors, customers, governments and their agencies and the public. They use financial statements in order to satisfy some of their different needs of information. These needs include the following:
(a) Investors: The providers of risk capital and their advisers are concerned with the risk inherent in, and return provided by, their investments. They need information to help them determine whether they should buy, hold or sell. Shareholders are also interested in information which enables them to assess the ability of the enterprise to pay dividends.
(b) Employees: Employees and their representative groups are interested in information about the stability and profitability of their employers. They are also interested in information which enables them to assess the ability of the enterprise to provide remuneration, retirement benefits and employment opportunities.
(c) Lenders: Lenders are interested in information that enables them to determine whether their loans, and the interest attaching to them, will be paid when due.
(d) Suppliers and other trade creditors: Suppliers and other creditors are interested in information that enables them to determine whether amounts owing to them will be paid when due. Trade creditors are likely to be interested in an enterprise over a shorter period than lenders unless they are dependent upon the continuation of the enterprise as a major customer.
(e) Customers: Customers have an interest in information about the continuance of an enterprise, especially when they have a long-term involvement with, or are dependent on, the enterprise.
(f) Governments and their agencies: Governments and their agencies are interested in the allocation of resources and, therefore, the activities of enterprises. They also require information in order to regulate the activities of enterprises, determine taxation policies and as the basis for national income and similar statistics.
(g) Public: Enterprises affect members of the public in a variety of ways. For example, enterprises may make a substantial contribution to the local economy in many ways including the number of people they employ and their patronage of local suppliers. Financial statements may assist the public by providing information about the trends and recent developments in the prosperity of the enterprise and the range of its activities.
Role of Accounting:

Role as watchdogs – scorekeeping function (recording data for a later evaluation of performance)
Role as helpers – (1) attention directing function (reporting and interpretation of information for the purpose of focusing on inefficiencies of operation or opportunities for improvement); and (2) problem solving function (presenting a concise analysis of alternative courses of action)
Role as decision maker – regarding information decision for choosing needed information for action choice
Role as an associate with business world – maintaining records and documents of organizations, preparation and presentation of financial statements through which capital investments are invited, credit-worthiness is verified and basis for income tax determination is found
Role as a professional – doing auditing, tax consultancy, other professional services as a ‘person of trust’
Role as technicians – being skilled in business management techniques working as a part of management and as an external consultant on different issues such as accounting system design, short- and long-term planning, etc.

Functions of Accounting:

Types of Accountants
Areas of Accounting
Financial Accounting
Management Accounting
Tax Accounting
Private Accountants (accountants employed in private firms)
Preparation of financial statements
General accounting, Cost accounting, Preparation of budgets, Internal audit
Preparation of tax return, Tax planning
Public Accountants (independent professional accountants for public services)
Audit of financial statements
Advisory services to management
Preparation of tax return, Tax planning
Government Accountants (accountants employed in government units)
Preparation of financial statements, Review of financial statements, Writing regulation, Investigation of violation of laws
General accounting, Cost accounting, Preparation of budgets, Internal audit
Review of tax return, Help to taxpayers, Writing regulation, Investigation of violation of laws
Forensic Accountants (accountants hired by both private and government units)
1. Detection of:
· Preparators of theft and frauds in corporate entities;
· money-laundering;
· identity-theft;
· tax evasion;
· insurance frauds such as arson;
2. Identification of materials assets in divorces

Parties involved with Accounting and Users of Accounting Information:

Generally Accepted Accounting Principles (GAAP)
Accounting Standards-Setters

Auditors
Users of Accounting Information
Financial Statements
Audit Reports
Auditing Standards-Setters
Generally Accepted Auditing Standards (GAAS)
Preparers of Financial Statements
Internal Users:
Management
External Users:
- Investors (owners)
- Employees
- Lenders
- Suppliers and other trade creditors
- Customers
- Government and its representatives
- Public
- Regulatory agencies

Accounting as an Information System:

An accounting system consists of the personnel, procedures, devices, and records used by an organization (1) to develop accounting information and (2) to communicate this information to decision makers. The basic purpose of the accounting is to meet the organization’s needs for accounting information as efficiently as possible.

Many factors affect the structure of the accounting information system (AIS) within a particular organization. Among the most important are (1) the organization’s needs for accounting information and (2) the resources available for operation of the system.

Viewing accounting as an information system focuses attention on the information accounting provides, the users of the information, and the support for financial decisions that is provided by the information. These relationships are depicted below:

Decisions Supported:
- Performance evaluations
- Stock investments
- Tax strategies
- Labour relations
- Resource allocations
- Lending decisions
- Borrowing

Information Users:
- Managers
- Investors (owners)
- Employees
- Lenders
- Suppliers and other trade creditors
- Customers
- Government and its representatives
- Public
- Regulatory agencies

ACCOUNTING AS AN INFORMATION SYSTEM

Financial Information Provided:
- Profitability
- Financial Position
- Cash Flows

Output of Accounting – Financial Statements:

The output of accounting process is called ‘financial statements.’ In the general sense of the word, a statement is simply a declaration of something believed to be true. A financial statement is simply a monetary declaration of what is believed to be true about an enterprise. When accountants prepare financial statements, they are describing in financial terms certain attributes of the enterprise that they believe fairly represent its financial activities.

According to paragraph 7 of International Accounting Standard (IAS) 1, a complete set of financial statements includes: (a) balance sheet; (b) income statement; (c) statement of changes in equity; or statement of changes in retained earnings; (d) cash flow statement; and (e) accounting policies and explanatory notes.

Accounting Process/Cycle:

The sequence of accounting procedures used to record, classify and summarize accounting information is often termed as accounting cycle. In another way, the procedures established by every business unit to provide the data to be reported on the financial statements are collectively referred to as the accounting process or accounting cycle. The term ‘cycle’ indicates that these procedures must be repeated continuously to enable the business to prepare new up-to-date financial statements at reasonable intervals. In a broader coverage, the accounting cycle includes the following steps:

1. Identification of transactions: Occurrence of transactions explicitly (affecting the concerned business unit for an involvement with an external party) or implicitly (such as depreciation occurring as the result of ownership of a fixed asset, consumption of office supplies purchased earlier and recorded as asset), where the financial effect is measurable in definite monetary terms and then preparation or collection of source documents of those transactions to ensure their objectivity of occurrence.
2. Journalizing (Journalize or record transactions): Enter all transactions in the journal by analyzing them into debit(s) and credit(s) accounts, thus creating a chronological record of events.
3. Posting to the ledger (Posting to ledger accounts): Post debits and credits from the journal to the proper ledger accounts with a running balance, thus creating a record classified by accounts.
4. Preparation of a trial balance: Prove the equality of debits and credits in the ledger.
5. Adjusting entries (Make end-of-period adjustments): Make adjusting entries in the general journal and post to ledger accounts. The purpose is to assign to each accounting period appropriate amounts of revenue and expenses Adjusting entries are made to: (i) convert assets to expenses result from cash being paid prior to an expense being incurred, (ii) convert liabilities to revenues result from cash being received prior to revenue being earned, (iii) accrue unpaid expenses result from expenses being incurred before cash is paid, and (iv) accrue uncollected revenue result from revenue being earned before cash is received.
6. Preparation of an adjusted trial balance: Prove again the equality of debits and credits in the ledger. Note that the figures mentioned in the adjusted trial balance are the amounts used in the preparation of financial statements.
7. Preparation of financial statements and appropriate disclosures: Financial statements prepared include: income statement (showing the results of operations of the concerned enterprise for the period concerned), statement of changes in retained earnings (showing the changes in the retained earnings during the period), balance sheet (showing the financial position of the enterprise at the end of the period), and cash flow statement (showing the results of cash activities for the period). Financial statements should be accompanied by notes disclosing facts and accounting policies necessary for the proper interpretation of those statements.
8. Closing entries (Journalize and post the closing entries): The closing entries “zero” the revenue, expense, and dividends accounts, making them ready for recording the events of the next accounting period. These entries also bring the balance in th Retained Earnings account up-to-date.
9. Preparation of a post-closing trial balance: This step ensures that ledger remains in balance after posting of the closing entries.
10. Reversing entries: Reversing entries eliminate those accounts originated at the time of giving adjusting entries, which are not listed in the chart of accounts (the complete list of all ledger accounts). This step ensures that ledger remains with the accounts listed in the chart of accounts.

Financial Statements

According to paragraph 7 of IAS 1 (revised 1997), Presentation of Financial Statements, a complete set of financial statements includes the following components:
(a) balance sheet;
(b) income statement;
(c) a statement showing either:
(i) all changes in equity [i.e., statement of changes in equity]; or
(ii) changes in equity other than those arising from capital transactions with owners and distributions to owners [i.e., statement of changes in retained earnings];
(d) cash flow statement; and
(e) accounting policies and explanatory notes.

Balance Sheet:

It refers to the list of an entity’s (enterprise’s) assets, liabilities and owner’s equity as of a specific date. It is also called a statement of financial position. Asset means a resource controlled by the enterprise as a result of past events and from which future economic benefits are expected to flow to the enterprise. Liability means a present obligation of the enterprise arising from past events, the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits. Equity means the residual interest in the assets of an enterprise after deducting all its liabilities.

Income Statement:

It refers to the list of an entity’s (enterprise’s) revenues, expenses and net income or loss for a specific period. It is also called a operating statement or a statement of operation. Income is defined as the increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants. The term revenue means the gross inflow of economic benefits during the period arising in the course of the ordinary activities of an enterprise when those inflows result in increases in equity, other than increases relating to contributions from equity participants. Expenses means the decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrence of liabilities that result in decreases in equity, other than those relating to distributions to equity participants.

Statement Changes in Retained Earnings:

It refers to the financial statement showing summary of changes in the retained earnings during a specific period. Retained earnings is the portion of owners’ (shareholders’) equity created by earning net income and retaining the related resources in the business.

Statement Changes in Equity:

It refers to the financial statement showing summary of changes in owners’/shareholders’ equity (i.e., the capital and retained earnings) during a specific period.

Cash Flow Statement (CFS):

It is the financial statement that reports the impact of a firm’s operating, investing, and financing activities on cash flows during a specific period (between two balance sheet dates). Operating activities are the principal revenue-producing activities of the enterprise and other activities that are not investing or financing activities. Investing activities are the acquisition and disposal of long-term assets and other investments not included in cash equivalents. Financing activities are activities that result in changes in the size and composition of the equity capital and borrowings of the enterprise. The main purpose of a CFS is to provide information to decision makers about a company’s cash inflows and outflows during the period.

Accounting Policies and Explanatory Notes:

According to paragraph 21 of IAS 1, “Accounting policies are the specific principles, bases, conventions, rules and practices adopted by an enterprise in preparing and presenting financial statements.” Explanatory Notes are the important accompanying part of the basic financial statements. According to the principle of adequate disclosure (the most important accounting policy to the users of accounting information), the financial statements should be accompanied by any information necessary information for the statements to be interpreted properly. Since the basic components of the financial statements are always a summary presentation, most disclosures appear within the several pages of notes that accompany the financial statements. The explanatory notes to the financial statements of an enterprise should (i) present information about the basis of preparation of the financial statements and the specific accounting policies selected and applied for significant transactions and events; (ii) disclose the information required by regulatory provisions that is not presented elsewhere in the financial statements; and (iii) provide additional information which is not presented on the face of the financial statements but that is necessary for a fair presentation.

Relationships among Financial Statements:

All the financial statements are related to an accounting period, which is usually a year. At the beginning and ending points in time of that accounting period, an enterprise prepares the balance sheet that gives a static look in financial terms of where the enterprise stands. The other financial statements (income statement, statement of changes in equity/retained earnings, and cash flows statement) cover the intervening period of time between the two balance sheets and help explain important changes that occurred during the period.

From balance sheet, we understand where an enterprise stands financially at two points in time. From income statement, we understand the changes that occurred during the intervening period in terms of the enterprise’s profit-seeking activities. From statement of changes in retained earnings, we understand the changes that occurred during the intervening period in terms of the enterprise’s earnings and distribution/appropriation of those earnings. From statement of changes in equity, we understand the changes that occurred during the intervening period in terms of the enterprise’s earnings and distribution/appropriation of those earnings and in addition the changes in terms of capital transactions of the owners. From cash flows statement, we understand the changes that occurred during the intervening period in terms of the enterprise’s cash activities.

Specimen Financial Statements of BEXIMCO INFUSIONS LTD.:

Below is the presentation of two-year comparative financial statements of Beximco Infusions Ltd.
INCOME STATEMENT
For the Year Ended 31 December

STATEMENT OF CHANGES IN RETAINED EARNINGS
For the Year Ended 31 December

2002
2001

2002
2001

Taka
Taka

Taka
Taka
Revenue from Sales
328,288,005
314,977,227

Retained Earnings at

Cost of Goods Sold
(192,857,430)
(172,353,390)

beginning of the year
117,600,234
80,411,015
Gross Profit
135,430,575
142,623,837

Add: Net Profit after Tax
35,003,485
51,168,724
Operating Expenses
(76,119,117)
(66,464,723)

Less: Appropriation for

Profit from Operation
59,311,458
76,159,114

Tax-holiday Reserve
(12,180,260)
(13,979,505)
Finance Cost
(20,509,022)
(19,847,934)

Less: Appropriation for

Net Profit before

Dividend of Previous Year
(10,000,000)
-
Contribution to WPPF
38,802,436
56,311,180

Retained Earnings at

Contribution to WPPF
(1,847,735)
(2,681,485)

end of the year
130,423,459
117,600,234
Net Profit before Tax
36,954,701
53,629,695

Income Tax Expense
(1,951,216)
(2,460,971)

Net Profit after Tax
35,003,485
51,168,724

BALANCE SHEET
As on 31 December

CASH FLOWS STATEMENT
For the Year Ended 31 December

2002
2001

2002
2001
ASSETS:
Taka
Taka

Taka
Taka
Non-Current Assets
322,788,211
328,278,824

Cash Flows from

Property, Plant and

Operating Activities
24,878,144
50,141,380
Equipment - Carrying Value
322,189,061
327,679,674

Cash Flows from

Long-term Security Deposit
599,150
599,150

Investing Activities
(6,368,182)
(249,754)
Current Assets
232,219,916
189,808,694

Cash Flows from

Inventories
84,028,954
65,958,351

Financing Activities
(24,057,003)
(46,287,461)
Accounts Receivable
105,971,668
81,833,340

Net Increase/(Decrease)

Advances and Deposits
41,624,542
35,875,210

in Cash & Cash Equivalents
(5,547,041)
3,604,165
Cash and Cash Equivalent
594,752
6,141,793

Cash & Cash Equivalents

Total Assets
555,008,127
518,087,518

at beginning of the Year
6,141,793
2,537,628
EQUITY & LIABILITIES

Cash & Cash Equivalents

Shareholders' Equity
341,666,665
316,663,180

at end of the Year
594,752
6,141,793
Issued Share Capital
100,000,000
100,000,000

Tax-holiday Reserve
111,243,206
99,062,946

Retained Earnings
130,423,459
117,600,234

Non-Current Liabilities
16,342,110
34,629,164

Long-term Borrowing
12,790,437
31,561,454

Deferred Liability -

Provision for Gratuity
3,551,673
3,067,710

Current Liabilities
196,999,352
166,795,174

Short-term Borrowings
103,616,455
81,156,940

Long-term Borrowing -

Current Maturity
38,371,311
31,561,454

Loan from Associated

Undertaking
-
10,775,000

17% Debenture -

Current Maturity
1,363,964
3,222,673

Creditors and Other

Payables
35,472,186
22,428,730

Accrued Expenses
10,965,723
10,502,897

Dividend Payable
415,000
1,145,350

Provision for Income Tax
6,794,713
6,002,130

Total Liabilities
213,341,462
201,424,338

Total Liabilities and

Shareholders' Equity
555,008,127
518,087,518

Profit versus Cash Flow:

There is a misconception that a profitable enterprise has no liquidity (cash availability) problem. Under conventional accrual basis accounting, in measuring periodic profit, periodic revenue is offset by all the expenses incurred in producing that revenue. Revenue is the price of goods and services rendered during a given accounting period. Expenses are the costs of the goods and services used up in the process of earning revenue. Here the accounting principle followed is called the matching principle which ascertains the relationship between revenues and expenses. Here timing is an important factor in matching (offsetting) revenue with related expenses. In case of preparing annual income statement, one year’s expenses are offset against only that year’s revenues. Thus it is often required at year-end to provide adjusting entries to calculate the periodic revenues and expenses. Adjusting entries are made to: (i) convert assets to expenses result from cash being paid prior to an expense being incurred, (ii) convert liabilities to revenues result from cash being received prior to revenue being earned, (iii) accrue unpaid expenses result from expenses being incurred before cash is paid, and (iv) accrue uncollected revenue result from revenue being earned before cash is received. Due to this type of adjusting entries, profit and cash flows are not an alternative to other. In case of full cash transactions (that means, there is no credit transactions), profit will be fully realized in cash, but this is only cash inflow from operating activities (in case of loss, this will be an operating outflow of cash). Here, cash flow from operating activities can be shown as follows:

Cash flow from operating activities
=
Net Profit
–
Noncash Income
+
Noncash Expense
–
Non-operating
Income
+
Non-operating
Expense

Cash flows (inflow or outflow) may be generated by financing activities and also by investing activities. Thus, due to cash flows from other activities (financing or investing), an enterprise may have adequate liquidity but that does not mean that it is a profitable enterprise. It is noted here that the wealth of the owners of an enterprise (shareholders in case of corporate entities) is based upon the movement of cash and accounting policies and conventions should have no effect upon the value of the enterprise. This means that pure accounting or book entries (noncash items) should be excluded in case of financial management decisions.

Analysis of Financial Statements

Financial Statement Analysis

Financial statement analysis involves the application of analytical tools to financial statements and supplemental data included with the financial statements to enhance the ability of decision makers to make optimal decisions.

How can we determine:
The ability of an organization to pay loans?
Whether we are earning a fair return on our investment?
The adequacy of cash flow to pay operating expenses?
How to improve the overall performance of the company?
The best answer is: Financial Statement Analysis.

Limitations of Financial Statement Analysis

· When comparing companies and interpreting financial statement analysis, differences in accounting methods and cost flow assumptions need to be considered.
· Ratios of a company should be compared with industry standards.
· Rather than focus on a single ratio, decision makers need to evaluate a company by comparing ratios to those of previous years, budgeted amounts, and industry standards.
· Financial statements, and thus financial ratios, are prepared using historical costs and are not adjusted for the effects of increasing prices.

Horizontal analysis

Horizontal analysis is used to analyze changes in accounts occurring between years.
Example
BEXIMCO INFUSIONS LIMITED
INCOME STATEMENT for the Year Ended December 31, 2001 and 2002

2002
2001
Increase
Increase

(Decrease)
(Decrease)

Taka
Taka
Taka
%
Revenue from Sales

328,288,005
314,977,227
13,310,778
4.2
Cost of Goods Sold

(192,857,430)
(172,353,390)
(20,504,040)
11.9
Gross Profit

135,430,575
142,623,837
(7,193,262)
(5.0)
Operating Expenses

(76,119,117)
(66,464,723)
(9,654,394)
14.5
Administrative Expenses

(2,829,105)
(2,534,032)
(295,073)
11.6
Selling & Distribution Expenses

(73,290,012)
(63,930,691)
(9,359,321)
14.6
Profit from Operation

59,311,458
76,159,114
(16,847,656)
(22.1)
Finance Cost

(20,509,022)
(19,847,934)
(661,088)
3.3
Net Profit before Contribution to WPPF
38,802,436
56,311,180
(17,508,744)
(31.1)
Contribution to WPPF

(1,847,735)
(2,681,485)
833,750
(31.1)
Net Profit before Tax

36,954,701
53,629,695
(16,674,994)
(31.1)
Income Tax Expense

(1,951,216)
(2,460,971)
509,755
(20.7)
Net Profit after Tax

35,003,485
51,168,724
(16,165,239)
(31.6)

Changes in the Income Statement are analyzed above using the horizontal analysis.

A few results with respect to the income statement items of Beximco Infusions Ltd. have been given below to show the changes from 2001 to 2002:

Sales increased by 04.2%
Cost of goods sold increased by 11.9%
Total operating expenses increased by 14.5%
Operating income decreased by 22.1%
Net income decreased by 31.6%

Note that focusing on net income without looking at other changes in income statement items would definitely be a mistake in this case. From 2001 to 2002, although sales revenue has been increased by an small amount (4.2%), the gross profit has been decreased by higher figure (5.0%) and operating income decreased by over 22%. Net after-tax income has been decreased by a greater amount (31.6%).

Changes in the other financial statements are analyzed below using the horizontal analysis.

BEXIMCO INFUSIONS LIMITED
STATEMENT OF CHANGES IN RETAINED EARNINGS
For the Year Ended December 31, 2001 and 2002

2002
2001
Increase
Increase

(Decrease)
(Decrease)

Taka
Taka
Taka
%
Retained Earnings at beginning of the year
117,600,234
80,411,015
37,189,219
46.2
Add: Net Profit after Tax

35,003,485
51,168,724
(16,165,239)
(31.6)
Less: Appropriation for Tax-holiday Reserve
(12,180,260)
(13,979,505)
1,799,245
(12.9)
Less: Appropriation for Dividend of Previous Year
(10,000,000)
-
(10,000,000)
-
Retained Earnings at end of the year

130,423,459
117,600,234
12,823,225
10.9

BEXIMCO INFUSIONS LIMITED
BALANCE SHEET as on December 31, 2001 and 2002

2002
2001
Increase
Increase

(Decrease)
(Decrease)
ASSETS:

Taka
Taka
Taka
%
Non-Current Assets

322,788,211
328,278,824
(5,490,613)
(1.7)
Property, Plant and Equipment - Carrying Value
322,189,061
327,679,674
(5,490,613)
(1.7)
Long-term Security Deposit

599,150
599,150
0
0.0
Current Assets

232,219,916
189,808,694
42,411,222
22.3
Inventories

84,028,954
65,958,351
18,070,603
27.4
Accounts Receivable

105,971,668
81,833,340
24,138,328
29.5
Advances and Deposits

41,624,542
35,875,210
5,749,332
16.0
Cash and Cash Equivalent

594,752
6,141,793
(5,547,041)
(90.3)
Total Assets

555,008,127
518,087,518
36,920,609
7.1

EQUITY AND LIABILITIES
2002
2001
Increase
Increase

(Decrease)
(Decrease)

Taka
Taka
Taka
%
Shareholders' Equity

341,666,665
316,663,180
25,003,485
7.9
Issued Share Capital

100,000,000
100,000,000
0
0.0
Tax-holiday Reserve

111,243,206
99,062,946
12,180,260
12.3
Retained Earnings

130,423,459
117,600,234
12,823,225
10.9
Non-Current Liabilities

16,342,110
34,629,164
(18,287,054)
(52.8)
Long-term Borrowing - Net of Current Maturity (Secured)
12,790,437
31,561,454
(18,771,017)
(59.5)
Deferred Liability - Provision for Gratuity
3,551,673
3,067,710
483,963
15.8
Current Liabilities

196,999,352
166,795,174
30,204,178
18.1
Short-term Borrowings (Secured)

103,616,455
81,156,940
22,459,515
27.7
Long-term Borrowing - Current Maturity (Secured)
38,371,311
31,561,454
6,809,857
21.6
Loan from Associated Undertaking (Unsecured)
-
10,775,000
(10,775,000)
(100.0)
17% Debenture - Current Maturity (Secured)
1,363,964
3,222,673
(1,858,709)
(57.7)
Creditors and Other Payables

35,472,186
22,428,730
13,043,456
58.2
Accrued Expenses

10,965,723
10,502,897
462,826
4.4
Dividend Payable

415,000
1,145,350
(730,350)
(63.8)
Provision for Income Tax

6,794,713
6,002,130
792,583
13.2
Total Liabilities and Shareholders' Equity
555,008,127
518,087,518
36,920,609
7.1

Trend Analysis:

It is also a horizontal analysis of financial statements over several years.

It can be used to build prediction models to forecast financial performance in the future and to identify problem areas by looking for sudden or abnormal changes in accounts.

Vertical Analysis

Vertical analysis compares financial statements of different companies and financial statements of the same enterprise across time after controlling for differences in size. Common size financial statements are statements in which all items have been restated as a percentage of a selected item on the statement. Vertical analysis uses common size financial statements to remove size as a relevant variable in ratio analysis.

Comparative Balance Sheet

Individual asset accounts are stated as a percentage (%) of total assets.
Individual liability and stockholder’s equity are stated as a percentage (%) of total liabilities and shareholders’ equity (L & SE).

BEXIMCO INFUSIONS LIMITED
COMMON SIZE BALANCE SHEETS
As on December 31, 2001 and 2002

2002
2001
2002
2001

Common Size
Common Size
ASSETS:

Taka
Taka
%
%
Non-Current Assets

322,788,211
328,278,824
58.2
63.4
Property, Plant and Equipment - Carrying Value
322,189,061
327,679,674
58.1
63.2
Long-term Security Deposit

599,150
599,150
0.1
0.1
Current Assets

232,219,916
189,808,694
41.8
36.6
Inventories

84,028,954
65,958,351
15.1
12.7
Accounts Receivable

105,971,668
81,833,340
19.1
15.8
Advances and Deposits

41,624,542
35,875,210
7.5
6.9
Cash and Cash Equivalent

594,752
6,141,793
0.1
1.2
Total Assets

555,008,127
518,087,518
100.0
100.0
EQUITY AND LIABILITIES

Shareholders' Equity

341,666,665
316,663,180
61.6
61.1
Issued Share Capital

100,000,000
100,000,000
18.0
19.3
Tax-holiday Reserve

111,243,206
99,062,946
20.0
19.1
Retained Earnings

130,423,459
117,600,234
23.5
22.7
Non-Current Liabilities

16,342,110
34,629,164
2.9
6.7
Long-term Borrowing - Net of Current Maturity (Secured)
12,790,437
31,561,454
2.3
6.1
Deferred Liability - Provision for Gratuity
3,551,673
3,067,710
0.6
0.6
Current Liabilities

196,999,352
166,795,174
35.5
32.2
Short-term Borrowings (Secured)

103,616,455
81,156,940
18.7
15.7
Long-term Borrowing - Current Maturity (Secured)
38,371,311
31,561,454
6.9
6.1
Loan from Associated Undertaking (Unsecured)
-
10,775,000
-
2.1
17% Debenture - Current Maturity (Secured)
1,363,964
3,222,673
0.2
0.6
Creditors and Other Payables

35,472,186
22,428,730
6.4
4.3
Accrued Expenses

10,965,723
10,502,897
2.0
2.0
Dividend Payable

415,000
1,145,350
0.1
0.2
Provision for Income Tax

6,794,713
6,002,130
1.2
1.2
Total Liabilities and Shareholders' Equity
555,008,127
518,087,518
100.0
100.0

Common Size Comparative Income Statements

Percentages are based on net sales.
The gross profit percentage is usually closely watched.

BEXIMCO INFUSIONS LIMITED
COMMON SIZE INCOME STATEMENTS
For the Year Ended December 31, 2001 and 2002

2002
2001
2002
2001

Common Size
Common Size

Taka
Taka
%
%
Revenue from Sales

328,288,005
314,977,227
100.0
100.0
Cost of Goods Sold

(192,857,430)
(172,353,390)
(58.7)
(54.7)
Gross Profit

135,430,575
142,623,837
41.3
45.3
Operating Expenses

(76,119,117)
(66,464,723)
(23.2)
(21.1)
Administrative Expenses

(2,829,105)
(2,534,032)
(0.9)
(0.8)
Selling & Distribution Expenses

(73,290,012)
(63,930,691)
(22.3)
(20.3)
Profit from Operation

59,311,458
76,159,114
18.1
24.2
Finance Cost

(20,509,022)
(19,847,934)
(6.2)
(6.3)
Net Profit before Contribution to WPPF
38,802,436
56,311,180
11.8
17.9
Contribution to WPPF

(1,847,735)
(2,681,485)
(0.6)
(0.9)
Net Profit before Tax

36,954,701
53,629,695
11.3
17.0
Income Tax Expense

(1,951,216)
(2,460,971)
(0.6)
(0.8)
Net Profit after Tax

35,003,485
51,168,724
10.7
16.2

Beximco Pharmaceutical Ltd. (BPL) & Beximco Infusions Ltd. (BIL)
COMMON SIZE INCOME STATEMENTS
For the Year Ended December 31, 2002

BPL
BIL
BPL
BIL

Common Size
Common Size

Taka
Taka
%
%
Revenue from Sales

2,522,942,523
328,288,005
100.0
100.0
Cost of Goods Sold

(1,620,493,149)
(192,857,430)
(64.2)
(58.7)
Gross Profit

902,449,374
135,430,575
35.8
41.3
Operating Expenses

(357,339,989)
(76,119,117)
(14.2)
(23.2)
Administrative Expenses

(79,926,759)
(2,829,105)
(3.2)
(0.9)
Selling & Distribution Expenses

(277,413,230)
(73,290,012)
(11.0)
(22.3)
Profit from Operation

545,109,385
59,311,458
21.6
18.1
Other Income

7,266,435
0
0.3
0.0
Finance Cost

(170,994,495)
(20,509,022)
(6.8)
(6.2)
Net Profit before Contribution to WPPF
381,381,325
38,802,436
15.1
11.8
Contribution to WPPF

(19,148,862)
(1,847,735)
(0.8)
(0.6)
Net Profit before Tax

362,232,463
36,954,701
14.4
11.3
Income Tax Expense

(20,552,415)
(1,951,216)
(0.8)
(0.6)
Net Profit after Tax

341,680,048
35,003,485
13.5
10.7

Beximco Pharmaceutical Ltd. (BPL) & Beximco Infusions Ltd. (BIL)
COMMON SIZE BALANCE SHEETS
As on December 31, 2002

BPL
BIL
BPL
BIL

Common Size
Common Size
ASSETS:

Taka
Taka
%
%
Non-Current Assets

4,780,464,825
322,788,211
70.7
58.2
Current Assets

1,982,226,375
232,219,916
29.3
41.8
Total Assets

6,762,691,200
555,008,127
100.0
100.0
EQUITY AND LIABILITIES

Shareholders' Equity

4,441,096,192
341,666,665
65.7
61.6
Non-Current Liabilities

812,591,999
16,342,110
12.0
2.9
Current Liabilities

1,509,003,009
196,999,352
22.3
35.5
Total Liabilities and Shareholders' Equity
6,762,691,200
555,008,127
100.0
100.0

Ratio Analysis

Ratio analysis is useful in assessing the impact of transactions on ROI, residual income, EVA, and other key measures of performance.

Ratio analysis provides additional information necessary to enhance the decision-making ability of the users of the information.

Ratios
Formula
What the ratio measures
Liqu-idity Ratios
Current Ratio (CR)
Current Assets ÷ Current Liabilities
Measures the entity’s liquidity.
This ratio tells us the amount of current assets for every Taka of current liabilities.
2.0 is considered to be a good CR.
Quick Ratio
Quick Assets ÷ Current Liabilities
This ratio is a stricter test of a company’s ability to pay its current debts with highly liquid current assets.
This ratio removes inventories and prepaid assets from the CA amount used in the calculation.
A quick ratio of less than 1.0 should be of concern.
Cash Flow from Operations to Current Liabilities Ratio
Net Cash Provided by Operating Activities ÷ Average Current Liabilities
Cash flow from operations is sometimes used as the numerator because all debt is paid with cash.
The ratio is indication of whether enough cash is being generated from operations to pay current obligations.
Working Capital per Taka of Sales
(Working Capital – Cash) ÷ Sales
This gives an indication of the additional finance necessary upon an expansion of sales.

Ratios
Formula
What the ratio measures
Activity Ratios
Accounts Receivables Turnover
Net Credit Sales ÷ Average Accounts Receivable
This ratio tells that on average, how much was sold on account and subsequently collected accounts receivable.
Number of Days Sales Are in Receivables
Number of Days in the Period ÷ Accounts Receivable Turnover
This number is the average number of days to collect a credit sale.
This may vary according to the credit policy of the particular business and the industry standards.
This ratio has an impact on ROI as part of the turnover of assets.
Inventory Turnover Ratio
Cost of Goods Sold ÷ Average Inventory
Determines how many times during the time period that the value of the inventory was sold.
Determining what is good is dependent on the industry and company standards.
Grocery stores would have a much higher expected turnover than car dealerships.
Number of Days Inventory Is Held Before Sale
Number of Days in the Period ÷ Inventory Turnover
Another way to look at inventory turnover is to calculate the number of days inventory is held before it is sold.
This may vary according to the particular business and industry standards.
This ratio has an impact on ROI as part of the turnover of assets.
Cash-to-Cash Operating Cycle Ratio
Number of Days in Inventory + Number of Days in Receivables
Measures the length of time between the purchase of inventory and the collection of cash from sales.
Solve-ncy Ratios
Debt to Equity Ratio
Total Liabilities ÷ Total Stockholders’ Equity
A solvency ratio which measures the ability to stay financially healthy over the long-run.
Indicates the preference of debt or equity financing of the entity.
Times Interest Earned
(Net Income + Interest Expense + Income Tax) ÷ Interest Expense
Measures a company’s ability to meet current interest payments to creditors by specifically measuring its ability to meet current-year interest payments out of current-year earnings.
Especially important to bankers and other lenders.
Debt Service Coverage Ratio
Cash Flow from Operations Before Interest and Taxes ÷ Interest and Principle Payments
Measures the amount of cash generated from operating activities that is available to repay principal and interest in the upcoming year.
The ratio indicates the amount of cash generated for every Taka 1 interest and principal paid.
Cash Flow from Operations to Capital Expenditures Ratio
(Cash Flow from Operations – Total Dividends Paid) ÷ Cash Paid for Acquisitions
Measures a company’s ability to use cash flow from operations to finance its acquisitions of property, plant, and equipment.
The ability to use cash from operations diminishes the need to acquire outside financing such as debt.
Degree of Financial Leverage[1]
(Net Income + Interest Expense + Income Tax) ÷ (Net Income + Income Tax)
Measures the impact of a change in operating income on change in earning on equity capital.
Employed to plan the ratio between debt and equity so that earning per share (EPS) is improved.

Ratios
Formula
What the ratio measures
Profit-ability Ratios
Return on Assets
[Net Income + Interest Expense (net of tax)] ÷ Average Total Assets
Considers the return to investors on all assets invested in the company.
Interpretation is based on the company’s required return on assets, industry standards, and trends.
Return on Common Stockholders’ Equity
(Net Income – Preferred Dividends) ÷ Average Common Stockholders’ Equity
Measures the return to common stockholders as a percentage of stockholders’ equity.
Adequacy of return is dependent on a number of factors including the risk of the investment.
Earnings Per Share (EPS)
(Net Income – Preferred Dividends) ÷ Average Number of Common Shares Outstanding
Used to measure performance.
Used to compare the performance of companies across different industries.
Price Earnings Ratio
Current Market Price ÷ EPS
Important for investors as it is the relationship of earnings to dividends and the market price of a company’s stock.
P/E is very dependent on the industry.

Basic Data for Calculating Ratios

BEXIMCO INFUSIONS LIMITED
2002
2001
Symbol

Taka
Taka
A
Total Current Assets
232,219,916
189,808,694
B
Quick Assets
148,190,962
123,850,343
C
Total Current Liabilities
196,999,352
166,795,174
D
Net Cash Provided by Operating Activities
24,878,144
50,141,380
E
Average Current Liabilities
181,897,263
151,693,085
F
Cash
594,752
6,141,793
G
Working Capital
35,220,564
23,013,520
H
Sales
328,288,005
314,977,227
I
Working Capital – Cash
34,625,812
16,871,727
J
Net Credit Sales (80% of total sales)
262,630,404
251,981,782
K
Accounts Receivable
105,971,668
81,833,340
L
Average Accounts Receivable
93,902,504
40,916,670
M
Accounts Receivable Turnover (Times)
2.80
6.16

Taka
Taka
N
Cost of Goods Sold
192,857,430
172,353,390
O
Ending Inventory
84,028,954
65,958,351
P
Average Inventory
74,993,653
56,923,050
Q
Number of Days in the Period (Days)
365
365
R
Inventory Turnover (Times)
2.57
3.03
S
Number of Days in Inventory (Days)
142
121
T
Number of Days in Receivables (Days)
131
59

Taka
Taka
U
Total Liabilities
213,341,462
201,424,338
V
Total Stockholders’ Equity
341,666,665
316,663,180
W
Net Income before Interest & Tax
57,463,723
73,477,629
X
Interest Expense
20,509,022
19,847,934
Y
Cash Flow from Operations before Interest & Taxes
48,533,142
71,888,497
A1
Interest and Principle Payments
46,940,033
42,406,031
B1
Cash Flow from Operations – Total Dividends Paid
37,802,792
56,898,447
C1
Cash Paid for Acquisitions
6,368,182
249,754
D1
Net Income + Interest Expense (net of tax)
55,512,507
71,016,658
E1
Total Assets
555,008,127
518,087,518
F1
Average Total Assets
536,547,823
499,627,214
G1
Net Income – Preferred Dividends
35,003,485
51,168,724
H1
Average Common Stockholders’ Equity
329,164,923
304,161,438
I1
Average Number of Common Shares Outstanding (No.)
1,000,000
1,000,000

Taka
Taka
J1
Current Market Price
232
250
K1
EPS
35.00
51.17
L1
Net Income before Tax but after Interest
36,954,701
53,629,695

Ratios Calculated from the above Data
BEXIMCO INFUSIONS LIMITED
Ratios
Formula
Symbols
2002
2001
Current Ratio
Current Assets ÷ Current Liabilities
A÷C
1.18
1.14
Quick Ratio
Quick Assets ÷ Current Liabilities
B÷C
0.75
0.74
Cash Flow from Operations to Current Liabilities Ratio
Net Cash Provided by Operating Activities ÷ Average Current Liabilities
D÷E
0.14
0.33
Working Capital per Taka of Sales
(Working Capital – Cash) ÷ Sales
I÷H
0.11
0.05
Accounts Receivables Turnover
Net Credit Sales ÷ Average Accounts Receivable
J÷L
2.80
6.16
Number of Days Sales Are in Receivables
Number of Days in the Period ÷ Accounts Receivable Turnover
Q÷M
131
59
Inventory Turnover Ratio
Cost of Goods Sold ÷ Average Inventory
N÷P
2.57
3.03
Number of Days Inventory Is Held Before Sale
Number of Days in the Period ÷ Inventory Turnover
Q÷R
142
121
Cash-to-Cash Operating Cycle Ratio
Number of Days in Inventory + Number of Days in Receivables
S+T
272
180
Debt to Equity Ratio
Total Liabilities ÷ Total Stockholders’ Equity
U÷V
0.62
0.64
Times Interest Earned
(Net Income + Interest Expense + Income Tax) ÷ Interest Expense
W÷X
2.80
3.70
Debt Service Coverage Ratio
Cash Flow from Operations Before Interest and Taxes ÷ Interest and Principle Payments
Y÷A1
1.03
1.70
Cash Flow from Operations to Capital Expenditures Ratio
(Cash Flow from Operations – Total Dividends Paid) ÷ Cash Paid for Acquisitions
B1÷C1
5.94
227.82
Degree of Financial Leverage
(Net Income + Interest Expense + Income Tax) ÷ (Net Income + Income Tax)
Y÷L1
1.31
1.34
Return on Assets
[Net Income + Interest Expense (net of tax)] ÷ Average Total Assets
D1÷F1
0.10
0.14
Return on Common Stockholders’ Equity
(Net Income – Preferred Dividends) ÷ Average Common Stockholders’ Equity
G1÷H1
0.11
0.17
Earnings Per Share (EPS)
(Net Income – Preferred Dividends) ÷ Average Number of Common Shares Outstanding
G1÷I1
35.00
51.17
Price Earnings Ratio
Current Market Price ÷ EPS
J1÷K1
6.63
4.89

[1] The term leverage is used in financial management to describe an enterprise’s ability to use fixed cost assets or funds to increase the returns to its owners (equity shareholders in case of a company). The leverage associated with the employment of fixed cost assets is referred to as operating leverage, while the leverage resulting from the use of fixed cost sources of funds is known to as financial leverage. The degree of operating leverage is calculated by dividing contribution margin (i.e., sales revenue minus variable costs) with earning before interest and income tax.

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