The Advantages of Late Exit Bilingual Education

Imagine being brought up in a family speaking only one language for your entire life and then you had to move to a foreign land where the language is different. If you had a choice of progressively learning this new language over the course of six to nine years or being put into a classroom and have to virtually teach yourself the language by listening to others around you which would you choose? Late exit bilingual education is a more effective form of bilingual education compared to the English immersion form of bilingual education in the fact that there are more benefits and less adverse effects. There are many reasons why late exit bilingual education should be the choice of public schools everywhere with high minority populations. One of the effects of late exit bilingual education is that the students would be able to maintain their cultural background instead of having to give up one or the other. Language is a big part of a person†s culture. Late exit bilingual education gives the non-English speaking students more time to master the English language which is not an easy language to learn in three years as the English immersion strategy teaches. The findings of the Ramirez team in 1991 evaluating the effectiveness of English immersion, early exit bilingual education, and late exit bilingual education further prove why late exit bilingual education is the one that needs to be used. To look at why keeping one†s culture is important one just needs to look at how and why this country was founded. The first Americans from England came here so they wouldn†t have to conform to everything the rulers of England wanted. Immigrants founded this country. One of the greatest things about the United States is that there are so many different types of cultures everywhere you look. It is true that one needs to learn the English language to be successful, but forcing one to give up his or her cultural background is going against everything this country stands for. English immersion does just that by forcing the student to give up his or her cultural background and language (Faltis 191). Late exit bilingual education allows the child to progress effectively through the educational system with the instruction given in English to the extent to make this possible (Schneider, 1976, p. 128. ). To throw a student into a classroom that speaks a language that is not familiar to them and forcing them to adjust in three years like English immersion does is not fair to the student. A sink or swim technique is not very beneficial and can cause more harms than good. The English language takes longer than that to gain mastery in even for people who have a firm English base to start from. The expected time to master the English language is anywhere from four to nine years for the average person (Collier, 1992). Students who don†t have time to develop their L1 or English will not succeed in all-English classrooms (Cummins, 1981). Time is needed for development, which is just not offered with English immersion. I was in a class with three Hispanic immigrants while I was in high school. They knew no English and were forced to adapt to the all-English environment through English immersion. The classes were difficult for English speaking students let alone students who didn†t understand what was going on around them. As expected by the observers of these students, the immigrant students passed the class with D- ‘s only because the teacher felt it was the best thing for them. We need to realize that these non-English speaking students and other like them who go through the English immersion program will graduate from high school by the mercy of teachers and will not be prepared to be successful in the so-called ‘real world†. This leads me to statistics that further the notion that late exit bilingual education is more effective than English immersion. These results were published in the Ramirez report. The Ramirez report contains some very important evidence that suggests late exit bilingual education is the more beneficial program to use. By looking at the report it is clear that even teachers of the English immersion strategy believe that many of the students in their classes would be better off if they remained in the program for more than the three years that it takes now. The report has evidence that suggests the students should be provided with instruction in their primary language until they are able to profit from the English only instruction. Another important detail that came out of the Ramirez study was that the home language of the student should be used for instruction and as a way for parents to assist their children in their learning. Parental involvement appears to be the greatest in the late exit program. The study suggests that schools should explore how they might use the students† home language to get the parents involved in the schooling of their children. Whether it†s from the Ramirez report, my personal experiences, or the fact that it takes more than three years to even get close to mastering the English language it is clear to see that the English immersion program is not the way to go, but rather late exit bilingual education. If public schools want to prepare the minority student for the world after high school they need to use late exit bilingual education and give them the best chance to succeed while at the same time allowing them to keep there cultural and native language. It is clear that there are more benefits to late exit bilingual education compared to English immersion.

Marketing to Baby Boomers

The Baby Boomers generation is generally classified by the children born after World War II; specifically anyone born between 1946 and 1964. The veterans, as we know them today came back from war, settled down, got married and had children. This was a great time in America as their economy was improving vastly as opposed to other nations of the world. It was a time of affluence, particularly in the Western side of the world. The â€Å"boom† describes the greatly increasing birth rate at these times. As seen in the following diagram, birth rates were higher than ever during 1946 and 1964, with a very close second in the late 1980’s and very early 1990’s. Currently, there are 78 million baby boomers in America, accounting for 40% of the adult population. This gives motivation to marketers to want to sell to this age segment. Persons 45 and older are responsible for 55% of the total consumer spending in the U. S. Marketers are striving to segment the market in such a way, that they will be able to target this age group and market directly to them. There is a vast difference in the ages of Baby Boomers. 1946 to 1964 accounts for a maximum age difference of 18 years. It is important to notice that those who are the older boomers, also called the ‘Golden Boomers’ would have different needs to be satisfied that those that are younger. This age segment can then be further segmented into the golden boomers who, today would be between the ages of 65 and 56, and the younger baby boomers being 55 and 47. Sub-Segmented Baby Boomers The maturing market segment as classified by Moschis, Lee, Mathur, & Strautman, in their book â€Å"The Maturing Marketplace; Buying Habits of Baby Boomers and Their Parents†, can be broken down into four main categories. Firstly, there are the Healthy Indulgers (18%) who are the more affluent and focus more on enjoying life than their careers. They tend to engage in purchasing activities that revolve around their own independence. Secondly are the Healthy Hermits (36%) who have experienced some attitude-changing occurrence in life such as the death of a spouse, and are in turn socially withdrawn. Marketing strategies that focus on conformity work well amongst this segment as they try not to stand out. The following two categories are less affluent than the previously mentioned segments. They are also the segments that look forward to their own house or appartment, as opposed to the previous that intend to move into a retirement home or a nursing home. The third group are the Ailing outgoers. These represent 29 % of the baby boomers. These are people who have accepted their â€Å"old age† but are still willing to get the most out of life and tend to be influenced by money-saying incentives. Lastly are Frail Recluses (17%) who are very similar to the ailing outgoers, however they have accepted spirituality into their lives and keep high spirits through their strengthened faiths. Information that is very interesting to the marketer is that not all individuals stay in one group in their life time. A healthy hermit might be influenced to join a church and increase their knwoledge of faith, thus leading to a switch to be more likfe frail recluses. Also, these segments don’t have set boundaries, and persons are more likely to be classifed by one of those four sub-sections by leading, defining characteristics, rather than completely defined through all the expected qualities. The experiences that each person goes through is what really puts them in any particular group. The Baby- Boomer Misconception A problem that many companies face is their set perception of older generations. There is a stigma that they don’t really have an opinion on what they buy and they will buy the products anyway. This is a sure way to failure when having goods produced for this age segment. Another mistake commonly made by firms is the misconception that â€Å"Baby Boomers have never grown up. † They believe that when targeting to younger generations, the marketing will reach the baby boomers as well. Though baby boomers have been recently showing tendencies of younger generations that do not fit the general description of their age group, such as openness to new experiences, and engaging in activities that are health and fitness revolved, this is not a reason to assume they will be influenced by the same marketing schemes targeted at younger generations. What Nyren suggests from his text is that infomercials is the upcoming media for marketing toward baby boomers. This age segment has a longer attention span, and they want to know more information on the products they buy. More times than not, the television ads that last 30 seconds are perceptively dismissed, and would not have had any impact on them. Perhaps then, the companies that market to this segment, should redirect their marketing efforts toward 30 minute commercials. There is a stigma attached to infomercials that they are long air-time wasting nonsense that no one watches, and for the most part, it’s true; these are not the infomercials that would grab the attention of the baby boomer. They want to gain more knowledge. They want to be informed before making purchasing decision, and infomercials tend to give the time needed for explanations. The trick is indeed to find a way to captivate the target market’s attention. According to the authors of â€Å"The Maturing Marketplace†, the baby boomers are heavily influenced by price specials and reductions. These are likely to be in the their top considerations when making several types of purchases such as hotels, airlines or cruises. On the topic of travel, they majority notion is that they enjoy travelling, but do not have the funds for it. Also, they are concerned that if they do have the funds for it now, after the recession, and they spend it on this leisurely experience, that they may not have funds for future necessities like their own health care, and funds to take of their families. In theory, an infomercial about a cruise that is targeted toward this age segment, that focuses on getting value for your money and having readily available medical attention is likely to be very effective. Purchasing Behaviour of Baby Boomers Marketers have to accept that marketing to any group with all the greatest efforts will still not always be as effective as one would like it to be. This is again because of one’s predisposition toward a product or message because of one’s experiences. A person who might have had a bad experience with a Russian individual may be inclined to stay away from products manufactured in Russia. However, marketers must still try to market these groups directly by attempting to find out their values and market their product in a way that would appeal to these values. Through much research, several values have been found that relate to baby boomers more than any other age segment. The first of many values is independence. This generation throughout time has redefined that age group at that time; they never stuck to their elder’s traditional values and beliefs. Whereas older generations tended to be more party-loyal with regards to politics, the baby boomer generation always had to know more about the parties, and the issues that affected them and that the parties stood for. Their independence also stemmed from the availability of options given to them that were not offered to their elders. They grew up in a time of affluence, and this ability for choice stuck with them throughout the years. This is an interesting value to be known by marketers as they would want to appeal to this. Positioning products in the minds of these consumers as giving them their independence, especially as they are now getting to a stage in their lives where they may require help, would be quite effective. A value that is held so dearly to the baby boomer is individualism. Again, stemming from their years being brought up, they were able to create their own paths, and basically be whoever they so chose. This is why life- insurance companies that offer customized plans do quite well. The individual wants to feel that their status is being considered, and that that they have choices with regards to costs and other aspects of a life- insurance plan. Another value is humanity. This is reflected in their desire for better customer service. A company with friendly, helpful staff is definitely much more appreciated than those without. Though this group highly upholds independence, they also want to know that when they go to purchase an item at a store, that they will be given the appropriate attention, and that the sales person would be competence in their field. The invention of the automated answering machine that are so popularly used by companies today are abhorred by this generation. They want to talk to a real person, who would assist them as necessary. These companies have implemented these answering machines to save on salaries. However, they are losing out on a lot more than that amount because people are straying away from that. They are taking their business elsewhere. Comfort is a value that is upheld by the baby boomers. They want products that will fit well into their lives. They want commodities that will be compatible with their routines. The marketer of a product such a diabetes testing machine, a product that would be necessary in their lives once diagnosed with diabetes, should position the product as easy to use, and quick. This is extended to other related values such as easily read literature on drugs. A marketer of a pharmacy should market his pharmacy as convenient for all their pharmaceutical needs. This then leads to the next value. Convenience is very important those in this age segment. Most of these values go hand in hand, though many marketers, as mentioned before, have the belief that this age segment is going to buy their products anyway. Baby boomers want the added convenience that they can be offered. When choosing a housing arrangement, they would to know that if needed, medical attention would be readily available and easy to attain. As mentioned previously, baby boomers take a lot of time when considering prices. Special deals and price reductions appeal to them a lot; money- saving incentives such as coupons, rebates and acceptance of various discount cards are considered by the baby boomers when deciding on what product to purchase. Youthfulness seems to be quite important today to the baby boomers. This however is sometimes misunderstood. The Baby boomers want to be healthy, and fit at their age. They are comfortable with the age that they are at, however, they want to be able to enjoy their lives to the fullest. This is why many belong to health and fitness clubs. The misconceptions lies in the thought that they want to dress like younger generations, and involve themselves in activities typical of generation xers and younger; this is certainly not true. They don’t want to engage in the activities, but they want the feeling of being younger. They want that their age not be a limitation to the sense of thrill and excitement that they would have felt when they were younger. The baby boomers want to feel secure. Security is a great need of baby boomers. However, they require different types of security; financial security, home security, security of mind with regards to their health. Financial services marketed to the baby boomers have to take into consideration the various segments of baby boomers. For example, brokerage firms specifically target healthy hermits. The home security marketers would target the more affluent of the baby boomers because they would have their homes and their valuable items to secure. Again, health security is one that is gained through comfort of mind. Firms targeting baby boomer health would be successful with tactics employing round- the- clock ambulance services. Life Alert is a company that does quite well because of its attention to the security that that age segment requires. Though older generations than baby boomers would be more appealed to such an item, the older baby boomers are retiring and want that peace of mind that comes that is satisfied by Life Alert. A value that is well- known through the Maslow’s hierarchy of needs if self-actualization. Baby boomers tend to be intrinsically motivated; they are interested in engaging in activities that will give them insight to themselves. They are still searching for what makes them them and they are impacted by advertising focused on this need. Future Expectations of The Baby Boomer Segment By 2029, the last of the baby boomers would turn 65 and are likely to represent 16% of the population. Currently, the oldest baby boomers are entering retirement, and as they represent 25% of the population, 18 years of pension payments are to be paid. The concern of many is that the payment of these pensions would be a burden on younger generations. Marketing toward their independence would bring great returns as they would feel like burdens to society. Health- insurance companies and financial service companies should target this segment now, in a way that would appeal to their secure futures. Beachbody and Baby Boomers The image above is one of the many that are found in the testimonials for Beach Body’s well-known fitness program, P90X. The woman seen above is Mary Crawford, who was a 61 year old out of shape, complacent woman. She used the beachbody products over the course of two years, starting with the Power 90 series, then on to the Power 90 Master series, and then started the P90X program. The infomercial for this program can be seen on a variety of cable stations that describe how high- impact it really is. Typically, one would not assume that a woman of 60+ would want to engage in such an activity. However, that is the view that is making marketers failures. Those were the opinions of baby boomer’s elders. Today’s 47- 65 year old cohorts are willing to do what it takes to be fit and healthy. Team Beach Body is appeals to the baby boomers in several ways. Firstly, it appeals to their desire for the feeling of youth. Being healthy and fit is a major need for these people and they are able to attain this through beachbody’s programs. Secondly, it appeals to their value of comfort. Beachbody offers an array of products for different levels of fitness. Like Ms. Crawford, someone would be able to go from very low fitness to an able- bodied, fit person. The infomercials are highly effective among this group because of its expansion on the product. It gives detailed descriptions of how the program works and how it is different from other programs. Also, Tony Horton, the creator of P90X has a sense of care to him. He seems to truly care about the people he is helping with his product, and this is important to the baby boomers. He too, being born in 1958 is a baby boomer as such is an inspiration to other baby boomers. He is a sought after trainer to many. His infomercial is one that was able to catch the attention of many because unlike other infomercial that promise quick results with little effort, Tony Horton explains how the P90X program is a high intensity one that requires time and effort. At first, to a marketer, this seems almost blasphemous. However, it has proven to be effective. The baby boomers, being information seekers, want to gain information on products before purchasing. Tony Horton was able to present his program with extensive information and be honest, and that is what caught the attention of many. References https://www.beachbody.com/text/success/2008/gamewinners/ss_maryc.html http://www.bloomberg.com/news/2010-11-18/beachbody-thinking-beyond-the-infomercial.html

Immigration to Canada

Immigration is when one leaves their country of origin and move to another. The topic if immigration has always been a very delicate subject. This is due to the many problems immigrants have had to face in their new country. Today issues dealing with immigration are not as bad as they were many years ago. Immigration in Canada was not as popular then as it is now. During the 1900s-1918 not all migrants were treated with the same respect and acceptance as others. Immigrant and potential immigrants had to face many hardships. Firstly, during the 1900’s-1918 the population in Canada was low; and the government started campaigning for people to come to Canada however there was much â€Å"red tape† as to who could and couldn’t come. Secondly, those who immigrated to Canada were unsuccessful as there was a big regional difference. Lastly, the Aboriginals also known as first nation’s people were not treated well. The Aboriginals rights were not kept, and they where thought of as bad people who did not matter. In the nineteen hundreds immigration to Canada was problematic. People migrate to a country because of its many pull factors. However a country like Canada in the 1900’s had as many push factors as it does pull factor. In the 1900’s Canada was not very populated, it was so under populated the Prime Minister Laurier was scared that the Americans would come and overtake their land. Charles Sifton was hired to ensure that the Americans did not become a problem. Sifton started a campaign known as â€Å"The Last Best West. † It is known to have caused one of the biggest migrations of our times. However as previously mentioned there was a lot of â€Å"red tape. † Sifton carefully chose applicants and many potential immigrants faced discrimination. Sifton wanted English people and since there was so much British people others were classifies as â€Å"too different. † These were the Asians, Japanese, Indian and Chinese. These people were discouraged from coming however, those who did come faced major racial discrimination. Unfortunately, when times got hard the English started returning home and many were discouraged from coming. Once again immigration problems got worst and the population really became a big issue. When people move to a different country they have to adapt to a new way of life. Immigrants to Canada, in the 1900 have found it very hard to adapt. This was due to Canada’s physical diversity. A major problem for immigrants was climate. Many people were not able to manage the brutal Canadian winters, and unlike know only clothing and fire would have been available to keep people warm. Another difference was the terrain, soil and natural resources. The English farmers were not used to farming in the extreme conditions many failed, also many could not grow their crops the same way as the soil and terrain was a different. Many people died, became sick or fled back to England. This caused problems for all who lived in Canada, as all the positives about the country were becoming deficient. One’s home is where the heart is and no one likes their home been invaded by strangers. As humans, when unfamiliar things enter our lives we tend to fight them. This is what happened with the aboriginal people in Canada in the 1900’s. The aboriginals land were been taken over, and they did not like it. At first the aboriginals helped the English and saw them as a great source of income. However, the government started taking their rights and they started to rebel against the immigrants. These cause the immigrants to flee and return home and certainly not with good things to say about Canada. In the nineteen hundreds immigration to Canada was problematic and unpopular. The country was under populated yet had strict rules about who could and couldn’t reside in the country. Immigration to Canada in the nineteen hundreds caused much racial discrimination, many deaths and left immigrants with many negative things to voice about Canada. However, not withstanding it still is for one to realize that even though Canada has had and still does have a very huge issue with immigration it still helped define Canada today.

Should the Arctic National Wildlife Refuge be open to oil drilling Research Paper

Should the Arctic National Wildlife Refuge be open to oil drilling - Research Paper Example Environmentalists and other interest groups however argue that allowing oil drilling in the region would endanger the wildlife in the region, disrupting their reproductive cycles, their communication, and their endangering their lives. Advocates for oil exploration in the region however insist that the impact of oil drilling in the region on the wildlife would be minimal at best. Opponents to the drilling are not convinced of such contention. Hence, much controversy in this issue is apparent. This paper shall explore this issue and establish a clear and comprehensive discussion on the topic. It shall draw its discussion based on information gathered from scholarly materials and compare it with newspaper and materials from the print media. The discussions in both types of sources shall be analyzed and assessed based on reliability and their applicability to this subject matter. These sources shall serve as both informal and formal scholarly sources for this issue, establishing clear s upport for the topic based on clearly defined and clearly identified arguments from well-supported write-ups. Side A: Oil drilling should not be allowed in the ANWR Scholarly articles are also polarized on the issue with studies discussing the environmental and others the economic aspect of the issue. In a study by Brown (2005), the author discussed the value of the wilderness which is protected by the ANWR. The author further argued the importance of maintaining the area as a wilderness – an area which must be unexplored and untrammeled by humans (Brown, 2005). These environmentalists are firm in expressing that allowing oil exploration in the ANWR would ruin its pristine condition because human activities would blemish the landscape. The US Congress has even acknowledged the fact that â€Å"beauty is in part the glory of seeing moose, caribou, and wolves living in natural habitat, untouched by civilization† (as cited by Brown, 2005). Various studies on environmental positions on the issue set forth that preservation is a priority over any other considerations, and that lands which have been set apart from human exploration must be preserved as such. Most Americans seem to agree with this stance because surveys throughout the years indicate that majority of them do not support drilling in the ANWR. A paper by Kaye (2005) also sets forth similar positions by environmentalists on the issue. This paper also discussed the importance of preserving the ANWR as a wildlife refuge. This study points out that the ANWR provides sanctuaries and benefits which cannot be seen in any other region in the world. They describe it as a place to exercise restraint. It therefore implies that human activities must be fiercely restrained and restricted in this area because it represents the power which people seem to have over the area – a power which must be held back and controlled to a certain extent (Kaye, 2005). In effect, these studies point out the impor tance of controlling human activities, allowing it to be carried out elsewhere, but to be avoided in this region which has for millions of years been allowed to flourish and to exist as an area untouched by human hands. Other scholarly articles discuss how government officials are clearly recognizing the need for the US to explore its domestic sources of oil, and therefore the need for the

Human Geography Thinking Geographically About Global Processes RED Essay

Human Geography Thinking Geographically About Global Processes RED WINE - Essay Example There are different varieties of red wine based on the place of origin and the pattern of consumption of it in different places requires the understanding of the influence by the geographical aspects. The question that needs to be answered with regard to red wine is "What is the significance of the consumption pattern of different varieties red wine all over the world " The different geographical concepts like scale, globalization, landscape, etc can be applied on this topic to get a clear picture of the consumption pattern. Red Wine is said to symbolize class, culture, maturity and refinement. It has a special significance that the different varieties of red wine are related to the place of origin although they don't exactly have the name of the city or town. It is a fact that there is no uniformity in the consumption of red wine. Researching the above question helps to find out the extent of globalization of a given variety of red wine. It also shows the trade relations between countries and how information flows between people during transport of these products. Cultural influences by countries also occur during communication and commuting. The importance with red wine lies in today's world the fact that the consumption level is growing worldwide due to its health benefits and this earns high revenues for the Government through trade (Euro Monitor, 2007). The red wine production and sale in different countries creates interaction in spatial context among people. Production of wine starts from the plantation of vine yards containing grapes. The grapes are cultivated with the variety required being selected and then grown in the particular season. The grapes hence produced are moved to the place where they are fermented for a period of time. From here, the wine is moved for further processing to lessen the acidity content and increase the taste. Finally the bottling and packaging of red wine in different forms is done and is ready for sale. The product is transported to different places by people of different places and culture thereby promoting a flow of information between them Scale of activity: The consumption of red wine is not dependent locally and is based on the availability of farm products, the presence of good season, availability of labor required in fermenting, packaging and transport of products. Space, place and landscape: The more the revenue earned through production and sales of red wine, the more will be the change in demography and landscape of the place of production. Increase in housing and more vine yards will be formed as a result. Terroir refers to the combination of natural factors associated with any particular vineyard. These factors include such things as soil, underlying rock, altitude, slope of hill or terrain, orientation toward the sun, and microclimate (typical rain, winds, humidity, temperature variations, etc.). Also, no two vineyards have the exact same terroir. Vineyards are often on hillsides and on soil of marginal value to other plants. A common saying is that "the worse the soil, the better the wine." Planting on hillsides, especially those facing south, is most often in an attempt to maximize the amount of

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Notice of cafeteria construction - Case Study Example After the renovation, the changes will be made as follows: Meanwhile, you will have to eat lunch outside our building for the three days. Our company has made contracts with three restaurants on Lifelong Building, whose location is next to our building. You will not have to use money to get services from the restaurants for the three days shutdown period. The restaurant will allow every individual to have meals that do not exceed twenty dollars per day upon retrieval of their Employees ID as you would do at our cafeteria. To make it clear, you may spend twenty dollars including taxes in each restaurant (up to 60 dollars in total) in three days. The available restaurants include: If you have any queries regarding the closure of the cafeteria, you can get most of answers from our constructors’ website www.restaurantrenovators.ca. The Human Resource Team are also ready to answer any queries regarding the closure of our cafeteria. Sorry, for any inconvenience

Women rights in Saudi Arabia Research Paper Example | Topics and Well Written Essays - 1000 words

Women rights in Saudi Arabia - Research Paper Example In this case it spells out that countries which have ratified the international conventions should take special measures and ensure that their governments take strict measures on the main actors who interfere with the rights of the women. Women bring a lot of contributions in the economy of the country in this case their participation in the development arena will only be enhanced if their rights are protected. Saudi Arabia is one country on focus when it comes to women rights. As an Arab country, women have been subjected to inhuman treatment. The government strictly abides by the strict Islamic laws which have continued to suppress women and placed them in subordinate positions. Despite the country ratification of the convention against torture, their still continues to be high cases of torture experienced by the minorities of which women fall under this category. In Saudi Arabia, women have been subjected to inhuman treatment in several ways. Women in Saudi Arabia are not given th e same preferential treatment as that of men. For instance, women in Saudi Arabia are not allowed to drive freely as men do. ... King Abdullah once quoted that by the year 2015 women would be allowed to participate in the elections process which is yet to be realized. With these attempts women in Saudi have continued to form organizations so as to address the issue of voting. In 2005 at a municipal elections women attempted to vote but it was established that majority of these women did not have identity cards. In this case the process of involving women to take part in elections has a long way to go for it to be realized (Macfarquhar, 2011). Submission is one important aspect of a Saudi woman, women seen as minors who are supposed to submit themselves to their husbands. According to their custom, a male figure has more authority as compared to the females. In this case the females tend to seek for permission from their husbands before engaging in any activity. In the field of education they have to seek permission first before making a decision to attend schooling. Women in Arabia are also not allowed to trav el outside the country without the consent of their husbands. Currently the country introduced a cellphone monitoring system to monitor the movements of women this was put in an attempt to alert men in case their wives attempt to leave the country without their permission. Justice that is administered to children and women in South Arabia is very severe, women and children are normally subjected to detention without trial and they are not informed of the crimes that they have committed. In detention, the women are tortured and majority of them have been killed as a consequence. The penal codes for criminal activities do not consider the biological make up of an individual before administering the punishment. Physical and sexual harassment has raised alerts among the South Arabia women

Sustainability in Armenia as an Ethnographic Problem Case Study

Sustainability in Armenia as an Ethnographic Problem - Case Study Example Cultures and the lifestyles that people in a location practice leads to sustainability issues. For instance, a normal environmentally conscious citizen of the United Kingdom leaves a carbon foot print of over 6 tons of CO2 and an ecological footprint of 3.4 global hectares. This is the case with most of the western countries. The US for instance has a higher footprint on an average. This indicates the usage of more fossil and non-renewable energy sources causing more of environmental problems (WWF 2004). Sustainability is not only scientific or engineering related; it is also related to the cultural and ethical values of the community. Any community that does not have a tendency to protect its own environment and is interested more in commercialization of its own resources would end up denuding the environment faster; reducing sustainability. Sustainability reflects in many of the performance indexes of the country. While the gross domestic product (GDP) of a country could indicate the amount of money the country has spend or has earned over the period in consideration, other indexes take into consideration various parameters including the overall development of the country. Demographic and ethnographic factors hurt the performance of the country as a voter for sustained development. In the case of Armenia, it is ranked at 83rd position in 2005 with a Human Development Index of 0.775. This has increased from 0.701 in 1995, according to UNDP (UNDP 2008). At the same time, the percentage of people living below the national poverty line is well over 50%. This indicates that the wealth is not distributed uniformly across the population resulting in increased poverty at one end and extremely rich people at the other. This is one of the factors that will affect sustainable development in the Armenian Society. The Happy Planet Index is a measure of the long and happy lives people lead in that country or place. In the case of Armenia, it was found to be 36.1 out of 100 and the country was ranked at 130 out of 178 countries. This is a measure of the long lives people live and indicates how happy people are (nef 2006). As Aristotle says, the purpose of social living is to be happy. The same is supported by the US constitution when it says that every individual has the right to pursue his own happiness. This indicates that Armenia has a long way to go before it can turn into a happier place to lead human life. The Environmental Sustainability Index is produced out of 25 different factors in six policy categories. Multiple happenings in a country, including large corporate and social projects, affect the performance of a country when this index is measured. The index is a measure of the environmental health, air and water pollution levels, Productive natural resources, Biodiversity and habitat and finally, climate change contribution by the country. Environmental sustainability is an important criterion while looking for sustainable development. In case of Armenia, the ESI released in 2005 ranked it at 44 (CIESIN 2005). With the changes made in the factors estimated, the Environmental Performance Index was produced in 2008 where Armenia was ranked at 62 a substantial loss of position. There had been a number of factors that affect the

Scholary discussion Essay Example | Topics and Well Written Essays - 250 words

Scholary discussion - Essay Example Thus, quality assurance is ensured through peer reviewing of the information, which is published in the online environment. The environment also ensures that there is fair use of the published information for the purposes of research and education. Hence, preservation of the scholarly information so that it becomes available after a long-time occurs. Social networks and online environments are different. For social networks, scholar focus more on sharing ideals and issues, which are directed on their social life while in the online environments the focus is on contribution towards scholarly field. Scholarly discussions in online environment have rules and regulations, but in social networks there are no rules and regulations (Morgenthaler 335). Further, social networks lack the principles of guiding how the discussions have to occur. As such, there are no structures on how social network discussions occur. This makes social networks not to be effective means of conducting scholarly discussions on different

The Rise of Islamism in the 20th Century Essay Example for Free

The Rise of Islamism in the 20th Century Essay Islamism is by now a powerful force. It runs governments in Iran, Sudan, and Afghanistan. It is an important force of opposition in Algeria, Egypt, Turkey, Lebanon, and the Palestinian authority. The paper at hand is going to analyze what conditions and events allowed for the rise of Islamism as an ideology in the later 20th century? The first part is going to introduce the concept of eurocentrism. Following this, Kemalism and its effect on Islamism is going to be discussed. In the last part of the paper post-modernism and Khomeini and their role in the rise of Islamism are highlighted. EUROCENTRISM Eurocentrism can be described as a phenomenon establishing the West as the center of the world by equating it with modernity and as a result make it the destiny of the world to become westernized, since this is equal with being modern. This development is based on the idea that the West knows best (Sayyid, 127). This concept has its historical roots in European colonialism and imperialism. The discourse of eurocentrism is one of the major strands with which the network of western global power is held together (p. 129), since it provides them with a sense of nity and power, which serves as legitimacy for claiming to be the center of the world. Opposition that wants to resist this hegemonic order, can do so only in the terms of that hegemony. This leads to another assumption of eurocentrism: there is nothing outside the Western project. (p. 135) KEMALISM After the post-colonial order and the decline of the Ottoman Empire, the Muslim world was dominated by Kemalist discours es. Influenced by eurocentrism, Kemals vision was to mimic the European way of building and reigning a nation to become like the West and as a result become modern and reach political efficacy (Sayyid 155). This aim to become like the West resulted in major changes in Turkey and other countries being influenced by the Kemalist discourse. Before being abolished by the Kemalist regime, the caliphate constituted the nodal point, around which the Muslim unity and identity was built. At the same time it was the centre of the Muslim political structure, attaching Islam as a master signifier to the state. (p. 57) Abolishing the caliphate separated the link between state and Islam. The goal of Kemalism was to disconnect Islam from the state to be able to establish a hegemonic discourse without having to integrate Islam. Being aware of the fact that the Kemalist government could not neglect Islam altogether, since the possibility of using it to mobilize support still existed, Kemal tried to tie it in into his discourse. Acts like the abolishment of the caliphate and putting all educational institutions under direct state control to avoid Islamic concepts being taught, sought to distance and even exclude Islam from the Kemalist Turkey. (pp. 63-64) The effect of Kemalism on the role of Islam was different than expected. Instead of depoliticize Islam the policies of the Kemalist reactivated it. By removing it from the centre of their construction of political order, they politicized it. Unsettling it and disseminating it into the general culture made it available for reinscription. The rise of Islamism was enabled through the possibility to articulate it into a counter-hegemonic discourse. (pp. 72-73) Additionally, the social crisis, in which the discourse of Kemalism was in, was severe enough to make Kemalism appear unstable and Islamism, because at this time seeming to be the only discourse that was structured in an otherwise unstable environment, could emerge as opposition to Kemalism. It provided Muslim societies with social order and stability. Nevertheless, the existence of Islam alone cannot account for Islamism, since it is not a reflection of the religion, but it becomes a political discourse that makes use of Islam to undermine the Kemalist regime. Islamism makes use of the availability of Islam and increases its availability at the same time. Through this relationship a two-way process evolves in which Islam and Islamism are organized around each other. (p. 2) The most important task for Islamism was to establish Islamism as a counter-hegemonic discourse through the construction of order to be able to rule in opposition to Kemalism. Hence, overall the emergence of Islamism was equally dependent on the availability of Islamism and the erosion of Kemalism. (p. 77) The new hegemony of Islamism was only able to emerge because the old one began to unravel. Reasons for the failure were among others that the project of Kemalism failed to constitute all social rela tions and was not able to make all subjects within the Kemalist regimes fully internalize this discourse. It was not evenly represented in all Muslim societies and was therefore not able to impose it totally. (p. 85) This incompleteness of the discourse resulted in the politicization of Islam, which at the same time was also based on the inability of the Kemalists to make their picture of Islam as the backward, superstitious and traditional discourse seem natural. (p. 86). On top the Kemalist regime had difficulties to suppress existence of an Islamist opposition. All together these factors weakened the Kemalists hold as a hegemonic discourse. The only emergent counter hegemonic discourse readily available to substitute the crumbling anciens regime appeared to be Islamism, despite its uneven presence. (p. 86) POST-MODERNISM Around the 1970s, after the decline of Kemalism, the situation began to change. It became possible to articulate political demands using a vocabulary centered on Islam, without any attempt to associate Islam with the West (Sayyid 155). This period, called post-modernism, constitutes a critique of modernity, which tries to abolish the view of the West and modernity being synonyms. It aimed at breaking the substitutability of the West and modern. Decentring the West meant the weakening of this constructed western identity. If the West ceased to exist as an unified entity, it could not provide the unity to constitute modernity. (p. 110) Post-modernism did not see the West as continuing to be the nodal point of the discourse of modernity and decentred the West. (p. 110) This post-modern mind-set further spurred the emergence of Islamism, since it was only able to exist in a world in which there was suspicion of a western meta-discourse (p. 18). This possibility of rejection of westernization depended on the recognition that there was no historical necessity of the western hegemony; and after two world wars, decolonization and the decline of Kemalism there was enough support for this assumption. Only in a context in which it was possible to disarticulate and re-articulate the relationship between the West and universalism in a way that it was no longer seen as the center and equal to modernity, could Islamism emerge. (p. 128)

Royal Dutch Shell Plc Financial Analysis

Royal Dutch Shell Plc Financial Analysis I. INTRODUCTION a. Topic Chosen and its context In this Research and Analysis project Report, I will be analyzing the financial performance of Royal Dutch Shell Plc. I will be identifying and analyzing the factors effecting the financial position of Royal Dutch Shell plc. The role of non-financial performance indicators which effects the financial position of the company will also be kept in mind. I will analyze the financial position of the company compared to its performance with previous years, with the industry and with its rival (BP). The word Shell will be used in place of Royal Dutch Shell as it is convenient. I will base my comparison on figures of audited annual accounts for the last 3 years. Financial analysis is an effective way of analyzing companys performance. Ratio Analysis is the technique, which will mainly be used for financial analysis. My analysis will also be based upon the comparison of key ratios with main rival of Shell, which will indicate some of the core strategies in seeking a competitive position to achieve its purposes. I will use Life Cycle model to analyze my findings on those markets, which materially contribute towards the companys financial results. Then I will use PEST analysis to analyze different stages identified and nature of Life Cycle. My conclusions will be based on current situation of the company as compared to past years and future expectations using the techniques mentioned above. b. Reasons for selection Reasons for selection of the topic and organization are as follows:  § Wide Information base: Shell, being a public limited company and one of the largest oil and gas concern in the finance sector the availability of timely, relevant, reliable information was an added advantage.  § Relation to my studies: While studying my ACCA, one of the important skills which I have learned is the ability to analyze the financial statements, and such a comprehensive research and analysis project will definitely help in developing the same  § The company: Other reason is the investment prospective and size of the company. The company unveiled the largest expenditure program in its history, spend $36bn in 2008 compared to $25bn last year, as it seeks new sources of oil and gas to boost reserves and production and to better exploit its existing resources. (Ft.com, July2008) Standard Poors, the credit ratings agency, downgraded its long-term rating for BP, the Oil and Gas Company, and upgraded Royal Dutch Shell, BPs closest rival, illustrating the widening perception of the two companys circumstances. SP noted Shells reserves replacement success and said current major projects should sustain its production plateau in the next decade. (Ft.com, September 2008) c. Aims and Objectives The aims and objectives contains the comparison of the financial performance of the petroleum sector to assess the worth of the company in its operational industry .To get an idea about the attitude of the management towards the operations of the company by assessing the companys cash flow position compared to its profits. Also to analyze the risks faces by the company I will take in to account Solvency, Liquidity and Capital structures. d. Research Approach ACCA provides a complete guide about different sections of the report, and also this provides the opportunity to plan and think to allocate my time carefully. This planning will help me to concentrate on each section of the report so that I can focus on core and important areas of the report. This also enables me not to overspend my time in explaining any section of the report. Information mainly collected from annual reports of the company and also different sort of other sources like ACCA text books, internet, newspaper, library etc. Traditional ratio analysis has been used to measure and compare the financial performance of the company over last 3 years with its rivals. Ratio analysis will focus on the following key ratios:  § Profitability Ratios This ratio is the reflection of how well the business is performing in term of profits in order to pay the shareholders. Key ratios are: a. Gross Profit Margin b. Operating Profit Margin c. Return on Average Capital Employed  § Liquidity Ratios Liquidity ratio refers to the state of an assets nearness to cash to meet business short term obligations as they fell due. Key ratios a. Current Ratio b. Quick ratio (Acid Test Ratio)  § Efficiency Ratios These ratios show how efficiently the business is employing those resources invested in fixed assets and working capital. Ratios are: a. Debtor Days b. Creditor Days  § Risk Ratios These ratios are used to assess how healthy and sound the business is in term of capital or finances. Ratios are a. Gearing Ratio b. Interest Cover  § Investors Ratios Both present and prospective shareholders look at these ratios to measure their return and to make economic decisions. Key ratios are a. Earnings per Share b. Diluted Earnings per Share II. INFORMATION GATHERING a. Sources of Information Used The information has been collected from different secondary sources for the preparation of this project. Main secondary sources which are use to gather information is as follows:  § Annual Accounts: The annual audited accounts of Shell are the main secondary source of information to use in this project. These annual audited accounts were available from stock exchange. As it supposed to be accurate and reliable thus provides me with an ideal source of annual accounts of the company. I have used only the audited annual accounts for the last three years of the company though unaudited quarterly review until July was available, to make certain that only reliable and accurate source of information is used in my research and analysis project. These audited annual accounts provides me all the information for the last three years which is essential in computing key financial ratios and also to make a comparison with rivals and industry averages of the company. Annual accounts of the rivals for the last three years are also used to make comparison with the Shell.  § Financial Analysts Report: They are professional people and their views are independent and their analysis helped the shareholders making economic decisions, which in turns affects the very existence of the company.  § Kaplans Tutorial Text: Kaplans tutorial text for Bsc (Hons) in Applied Accounting also helped me a lot for gathering information and also about the different requirements of the reports. It also helped in focusing a particular section of the report and also helped in overall design of the project so that nothing is missing in the project.  § News Papers: Getting in touch with the business section of leading newspapers like The Times, The Independent, Daily Express and The Telegraph was very useful as it provided me guidance on the economy overall and as well the movement in the share prices of different companies. b. Methods Used To Collect Information To collect information various methods are used like,  § Internet: Internet offers a speedy and impersonal way of getting to know the basics of the services that a company provides. (BPP 2005 Paper 3.4) I visited www.shell.com to access the financial reports of the company and press releases. I also visited www.bp.com to get information about the rival company of Shell for the purpose of comparison. Also I visited www.ft.com which really helped me a lot for the up to date information about the Shell and BP. I have also visited www.wikipedia.org to get information which helped me a lot to understand the oil and gas industry. In addition I visited the www.bbc.co.uk to get the latest news and important interviews.  § Use of the E-mail: For communication with Shell people I use to e-mail them during my research whenever I want to get some important information. They responded quickly to answer my query.  § Library Research: Libraries proved quite helpful so some libraries in London, Kaplan Financial College library and City Business Library in Moorgate London for general reading of the newspapers, journals, different books, magazines to get important information about Shell and BP. I spend most of my time in city business library, where I was able to get specific information through different CD ROMS which included different databases search designed specifically for getting information about different companies. Some of the CD ROMs are:  § Financial Analysis Made Easy: This database provided the detailed key financial data in the form of profit and loss accounts and the balance sheet. Also it helped me to get important ratios of the Shell and BP and their comparison with the preceding years in the form of graphs.  § Marketing and Business Information Centre (Data Monitor): This database provided vital information regarding the company, industry and market news for the research and analysis. This database contains records of hundreds of companies in UK and worldwide. When I looked at the Shell data, it really helped me by providing the overview and the detailed information. Then same thing was true for its rival BP. c. Limitations in the Information Gathering A number of difficulties I have faced sometime in getting the required information. For instance, I was expecting to get more information from the newspaper, but actually it was not. The newspaper only provides information about a particular date and some events but in depth information cannot be obtained and also articles are found in different newspaper i.e. nothing is new than others. Similarly when I went to City library, I was not aware of using FAME database, so when I tried to get information from database it took me too long. Moreover it only provides me the financial data in the form of graphs. Another problem which I have faced is the information overload on the internet. Whenever I tried to search something on the net it gives me too many results which some time confused me which information I should use and which is not. d. Accounting Technique Used and Limitations In this report to analyze the financial performance of Shell comparing to BP ratio analysis has been used. Ratios are important tool in analyzing the financial performance of the company. Ratios are used because shareholders and potential investors are primarily concerned with receiving an adequate return on their investment. An earnings per share is a key ratio that is to be used to determine the returns on shareholders fund. Suppliers and lenders are concerned with the security of their debt or loan. So they are mainly focused on the gearing level the company is having and also the interest cover. More over management is concerned with the trend and level of profits, so ratios are the main measure of the success. Furthermore, managements bonuses are linked to the profits of the company. I have calculated the key ratios in an appendix from 2006-2008 for Shell and BP and they did analyze the results. Ratios were used as a tool to assist analysis and to focus attention systematically on important areas. Ratios summarize information in an understandable form and also helped me to identify trends and relationships. There are also limitations of financial statements and ratio analysis as they are based on the past and ratios are not predictive if they are based on historical information. Ratios ignores any future action which is or to be taken by management. Another limitation faced by ratio analysis is the fact that the ratios results may be distorted if there are differences in the accounting policies. (Kaplan Financial Study Text Paper F7) In all, Ratios have limitations but are still regarded as the best tool for analyzing the financial performance of the business and so I also used it. III. ANALYSIS In this section of the report I will explain and analyze the financial performance of Shell and will compare its results with BP.I will also explain Shells financial position in the current year. a. Company History: The Royal Dutch Shell Group was created in February 1907 when the Royal Dutch Petroleum Company and the Shell Transport and Trading Company Ltd of theUnited Kingdommerged their operations. This move was largely driven by the need to compete globally with the predominant American oil company (www.wikipedia.org) b. Financial Analysis: Here is the analysis of the financial data of Shell (Revenue, GP and NP) over the last three years.  § The revenues in 2008 were ($458.4 billion) 28.8% higher than in 2007, when they were ($355.8 billion) 11.6% higher than in 2006. (Appendix)  § The oil and gas prices was One of the main reasons of increase in revenues in 2008  § Brent crude oil prices average $97.14 per barrel in 2008 compared with $72.45 in 2007, while West Texas Intermediate average $99.72 per barrel compared with $72.16 a year earlier. Oil prices saw great fluctuation in 2008. (Annual Report Shell 2008)  § A 6% increase in Gross Profit of Shell in year 2008 and 2007 as compared to gross profit in year. (Appendix)  § Its shows an increase in production costs in line with increase in revenues on high margin products.  § Earnings ($26.5 billion) were lower by 17% in 2008 compared to 2007, when they were ($31.9 billion) 21% higher than in 2006 ($26.3 billion). (Appendix) The decrease in 2008, compared with 2007, reflected the effect of declining oil prices on inventory in the second half of the year, lower production volumes, lower realised refining margins and higher operating costs. These more than offset the positive impact on earnings from higher realised oil and gas prices as well as higher LNG and GTL product prices. (Annual Report Shell 2008) Second quarter 2009 reported earnings were $3,822 million compared to earnings of $11,556 million in the same quarter a year ago. (2nd quarter results 2009, www.shell.com )  § Earnings By Business Segments : All figures in this table are in $million The table shows that earnings in 2008 were higher by 47% in Exploration Production, Gas Power and Oil Sands segments as compare to 2007. On other hand earnings were lower by 100% in 2008 as compare to 2007 in Oil Products, Chemicals and Corporate segments. This 100% reduction in last three segments causes overall reduction of earning in 2008. In the Second quarter Exploration Production segment earnings were $1,334 million compared to $5,881 million a year ago. Earnings compared to the second quarter 2008 reflected the impact of significantly lower oil and gas prices on revenues, lower oil and gas production volumes, higher exploration expenses and non-cash pension charges, which were partly offset by lower royalty and tax expenses. (2nd quarter results 2009, www.shell.com ) Comparison of Shell with BP  § Revenue Growth: Shell and BP revenue over the last three years is shown in the graph: Growth in Revenue in $ Million Shell and BP revenue showed a consistent growth over a period of 3 years. In 2008 Shell revenue 26.9% higher than BP. Which shows that Shell growing consistently as Shell revenue were higher 25.2% 19.9% from BP in 2007 2006 respectively. (Appendix) a. Profitability Ratios The profitability of a company is important and a key measure of its success. The figures shown in the profit and loss account mean very little themselves. However, by expressing them as a percentage of sales they become much more useful. The figures can then be compared with previous years or with other similar companies. (Student Accountant ACCA Magazine, Christopher, 1999.) Gross Profit Margin: Gross profit margin shows earning on sales of a company. In the 2nd quarter of 2009 the gross profit margin has fallen 62% compared to last years 2nd quarter results. An indication of high profit margin is that the company earned well on sales by keeping overhead cost in control. Gross profit margin of 2008 is lower than previous years. Net Profit: Shell net profit margin dropped by 3.2% to 5.8% in 2008 from 9% in 2007. And margin in 2006 was 8.3%.BP net profit margin dropped by 1.5% to 5.9% in 2008 from 7.4% in 2007. The 2006 margin was 8.4%. (Appendix) Growth in Net Profit Shell and BP (%) The profit margin is mainly used as an internal comparison tool. As there are different levels of expenditure involved it is therefore sometimes difficult to accurately compare the net profit ratio for different entities. As compared to BP Shells net profit margin dropped by a higher percentage in 2008.On the other hand if we see the year 2007 the Shell profits are higher than the BP. Return on Average Capital Employed: ROACE reflects the ability of the company to utilize the resources i.e. capital in generating revenue. Capital employed consists of total equity, currant debt and non-current debts. The published segment level contains the computation and calculation of the tax rate and the minority interest components. The strong income generation is the only reason for change in ROACE from18% to 24% between 2006 and 2008. There is a significant decrease in the capital employed from 24% to 18% in 2008 as compare to 2007. A significant decrease in income attributable to shareholders is partly offset by an increase in capital employed, resulted in a decrease in ROACE of 6.0% in 2008(18%) compared to 2007 (24%). The 2006 figure was 23%. (Appendix and Annual Report Shell 2008) ROACE is defined as the sum of the current and previous three quarters income adjusted for interest expense, after tax, divided by the average capital employed for the period. In the 2nd quarter or 2009 the ROAC stands at 8.3% way below the 25.8% in the 2nd quarter of 2008. (2nd quarter results 2009, www.shell.com ) On the other hand BP utilization of its capital resources was showing a sorry picture. BP ROCE has moved in a range of 16% to 19% between 2006 and 2008. BPs ROCE was 19% in 2006, and then reduced to 16% in 2007, followed by an increase of 1% to stand at 17%. This was due to lower income attributable to shareholders in 3 years time. This increase in 2008 was due to some increase in income attributable to shareholders. (Appendix) ROCE Shell and BP (%) The drop in oil price in the second half of 2008 had a significant impact on earnings. The strengthening of the dollar against other main currencies reduced the impact of Shells investment plans on capital employed. b. Efficiency Ratios Debtor Days Shells receivable days has fallen from 76 days in 2007 to 65 days in 2008. The figure for 2006 was 68 days. This was due to the effective and better controlled credit policy. (Appendix) BP on the other hand, showed increase in its collection to 30 days in 2008 from 49 days in 2007. The 2006 figure stands at 53 days. All this reflected an aggressive and comprehensive credit control policy and ability to collect from customers. (Appendix) Creditors Days The payment to creditors from Shell showed improvement in payment to creditors in 2008 if we compare the figures to last three years. As creditors days reduced to 78 days in 2008 from 93 days in 2007, while the figure in 2006 was 87. This improvement shows that company has liquidity to pay off its debts and also helped in making stronger relationship with creditors, which could be Suppliers, lenders. (Appendix) BPs creditors days showed reduction over a period of 3 years i.e. from 82 days in 2006 to 78 days in 2007 and more improved to 46 days in 2008 which showed a good sign for the company. (Appendix) c. Liquidity Ratios Current Ratio As short-term creditors prefer a high current ratio since it reduces their risk. The current ratio measures the adequacy of current assets to meet the companys short-term liabilities as they fall due. Traditionally, a current ratio of 2:1 or higher was regarded as appropriate for most businesses to maintain creditworthiness. However, more recently a figure of 1.5:1 is regarded as a norm. (Kaplan Financial, Paper F7 Study Text) Current ratio for Shell in 2008 was 1.1 and remained Constant between 2006 and 2007 to stand at 1.2. This shows better position for Shell and its ability to pay short term liabilities as they fall due. (Appendix) BP current ratio was also healthy between 2006 and 2007, but in 2008 the ratio was below 1 which may be not a good sign for short term creditors. But it was ok as for as it remains near to 1. (Appendix) One drawback of the current ratio is that inventory may include many items that are difficult to liquidate quickly and that have uncertain liquidation value. SO the quick ratio is an alternative measure of liquidity that does not include inventory in the current assets. (Paper3.6, BPP Professional Education, June 2007) Quick Ratio The quick ratio also known as the acid test ratio eliminates inventory from the currant assets. It provides the acid test of whether the company has sufficient liquid resources (receivables and cash) to settle its short term liabilities. Normal level for quick ratio ranges from 1:1 to 0.7:1. (Kaplan Financial, Paper F7 Study Text) For Shell, liquidity ratio remained unchanged within the industry standards between 2006 and 2008 to stand at 0.9. This shows the companys ability to pay short liabilities from most liquid resources i.e. receivables and cash not inventory. (Appendix) BPs quick ratio showed a sorry picture and remains unchanged on 0.7 between 2006 and 2008, as it was standing at the danger level of 0.7 meaning that BP is not having enough liquid resources to pay off the liabilities due. (Appendix) d. Risk Ratios Gearing: Gearing is the relationship between the companys fixed return capital and its equity capital. Gearing ratio indicates the degree of risk attached to the company and the sensitivity of earnings and dividends to change in profitability and activity level. High geared businesses uses large proportion of fixed return capital, so there are greater chances of insolvency and ultimately return to shareholders grow proportionately more if profits are growing. While low geared businesses provide scope to increase borrowings when potential profitable projects are available and can usually grow more easily. (Kaplan Financial, Paper F7 Study Text) Gearing levels in (%) (2006-2008) Shell maintained smooth profits and more suitable assets for security in order to make use of gearing successfully. Shells gearing level increased in 2008 due to more debts taken as compared to 2006 and 2007. Gearing was 23% in 2008 compared to 17% in 2007. The gearing ratio was 15% in 2006. The increase was due to rise in the total debt. On the other hand, BP gearing level was also high standing between 36% to 28% with 36% in 2008 compare to 28% in 2006, while 2007 figure was 33%, which is higher than Shell. High level of gearing means high risk to business, but this is compensated by a significant increase in profits and the returns to the shareholders. So Shell can borrow more easily in future. Interest Cover Companys interest cover indicates the ability to pay interest out of profits generated. Low interest cover indicates to the shareholders that their dividends are at risk (because most profits are use to pay interest payments) and the company may have difficulty financing its debts if its profits fall. (Kaplan Financial, Paper F7 Study text) Shells interest cover has decreased to 42 times in 2008 compared to 45 times in 2007. The interest covers for 2006 was 38 times. This shows Shells ability to finance its debts and the ability to pay interest out of the profits for sure. As investors are interested in the risk level the company is in, it is a healthy sign. Interest Cover in Times (2006-2008) For BP, there is an increase of interest cover to 30 times as compare to 29 times in 2007 but in 2007 there is a huge reduction in interest cover to 29 times from 49 times in 2006 which clearly indicates the inability of BP to finance its debt and to pay interest out of profits generated. That makes BP riskier than Shell for investment purposes. e. Investors Ratios Earnings per Share (EPS): Earnings per Share for Shell decreased in 2008 from $5 in 2007 to $4.27 in 2008. This was due to decline in profits followed by the repurchase of the shares, which causes a net decrease of 105 million in the number of ordinary shares outstanding as a result of share buybacks. As widespread the use of the EPS as a yardstick for investment decisions. Share price of company might fall if it looks as if EPS is going to be low. EPS increased to $5 in 2007 compared to $3.97 in 2006, this was due to decrease in the number of ordinary shares in 2007 as company repurchased its 112 million shares of common stock for cancellation at a gross cost of $4.4billion.this purchase reduced the number of shares outstanding to 1.7% in 2007 and by 7.3% in total since the commencement of share repurchases following the unification into Royal Dutch Shell and successful completion of Royal Dutch Minority tender (August 2005). (Annual Report Shell 2008) In the first six months of 2009 the EPS for Shell is $1.19 compared to the six month figure of $3.34 of the same period of 2009 (2nd quarter results 2009, www.shell.com ) Earnings Per Share in $ (2006-2008) BPs Basic Earnings per Share increased in 2008 to $1.13 from $1.09 in 2007. This was due to the appreciation in the profits followed by the repurchase of shares, which causes a net decrease of 373 million in the number o shares. Basic EPS decline by 0.01 to stands at $1.09 in 2007 compared to $1.10 in 2006. This was due to the declining of profits of BP. (BP Annual Report 2008) Diluted Earnings per Share(DEPS) : Diluted Earnings Per Share attempts to alert the shareholders to the potential impact on the Earnings per Share due to change in equity share capital in future owing to circumstances which exist now-known as dilution. The most common type of dilution is an option or warrant which gives the holder right to buy shares at time in future at predetermined price. (Kaplan Financial, Paper F7 Study Text) Diluted Earnings Per Share in $ (2006-2008) Shells DEPS reduced due to the reduction in the profits and number of shares to $4.26 in 2008 compared to $4.99 in 2007, while it was $3.95 in 2006. BPs DEPS increased to $1.12 in 2008 from $1.08 in 2007. The figure was $1.09 in 2006. The main reason for this was increase in profits despite shares in numbers was reduced. (Appendix) f. Cash Flow Statement: Shells cash flow from operating activities has increased by 27% reaching a record level of $43.9 billion in 2008 compared with $34.5 billion in 2007 and $31.7 billion in 2006. This improvement in cash flow from operations was a result of reduces working capital in 2008 compared to 2007. The increase in the operating activity in 2007 mainly because of increase in income as well as a reduction in taxation paid in 2007 compared to 2006. In 2009, Shells cash flow from operating activities reduced in the first two quarters to stands at $8478 million compared to $21,030 million in the same period of 2008. (2nd quarter results 2009, www.shell.com ) BPs cash flow from operation declined to $24.7 billion in 2007 compared to $28.2 billion in 2006, but the cash from operating activity increased in 2008. This is menially because of increase in income. (BP Annual Report 2008) Higher capital expenditure in 2008 compared to 2007 made Shell to use its Cash flow in investing activities i.e. $28.9 billion in 2008 compare to $14.6 Billion in 2007. In 2009, Shell continued to invest more with cash flow from investing activities stands at $(13,829) million in six months from $(12,275) million in 2007. (2nd quarter results, www.shell.com) But there was less cash paid out in investing activity in 2007(-14.6 billion) as compare to 2006(-20.9 billion) and the main reason was that the proceeds from sale of asset was higher and les capital expenditure in 2007 as compare to 2006. (Shell Annual Report 2008) BP was also having strong investment with $(22.8) billion in 2008 from $(14.8) billion in 2007. The figure for 2006 was $(9.5) billion. (BP Annual Report 2008) In 2008, as Shell took more debts which results in Shells cash flow from/used in financing activities reduced to $(9.4) billion in 2008 from $(19.4) billion in 2007.As Shell acquired Canada minority interest in 2007 resulting Cash flow from financing activity increased in 2007 from (13.7) billion in 2006. There was a small increase of BPs Net cash flow from/ used in financing activities from (9.0) billion in 2007 to (10.5) billion in 2008 menially because of more dividends paid and less repurchase of shares in 2008. Net cash from financing activities was reduced to $(9.0) billion in 2007 from $(19.0) billion in 2006. (BP Annual Report 2008) Cash and Cash Equivalent of Shell and BP in Billions Cash and Cash equivalent of Shell reached 15.2 billion at the end of 2008, up by 57% as compare to 2007 figure of 9.6 billion. Which is good sign for Shell as there cash and cash equivalent was higher as well in 2007 as compare to 2006 figure of 9.0 billion. BPs cash and cash equivalent also increased to $8.2 billion in 2008 from $3.5 billion in 2007 and also up from 2006 level of $2.5 billion. (Shell and BP Annual Report 2008) This shows that Shell has a sound position and has no problem what so ever in cash flow compared to its rivals. c. Non-Financial Analysis In this section of the report I will be analyzing the corporate social responsibility and the SWOT analysis. Corporate Social Responsibility (CSR) We recognise that our continuing business success depends on helping to meet the worlds growing energy needs in environmentally and socially responsible ways. To manage todays business risks and deliver our strategy, it is critical that we maintain the trust of a wide range of stakeholders. (Shell Annual Report 2008) Environmental Social performance Greenhouse Gas Emissions In 2008 despite growing business, Shell operated facilities emitted 75 million tons of GHGs, (measured on a CO2 equivalent basis), about 7 million lower than the previous year, and nearly 30% below 1990 levels. (Shell Annual Report 2008) Flaring Since 2001, Exploration Production has reduced its natural gas flaring by more than 70%. In 2008, total flaring in Exploration Production dropped again mostly due to reduces flaring in Malaysia and Gabon, as investment and operational improvement programs showed result. In 2008 flaring levels in Nigeria were same as in 2007. Spills Shell has reduced the amount of oil and oil products spilled from operations for reasons, Shell can control, like corrosion or operational failures. Spills from sabotage or extreme weather, like hurricanes, which are harder to prevent, have fluctuated with events. In 2008 the number and amount spilled for operational reasons dropped Royal Dutch Shell Plc Financial Analysis Royal Dutch Shell Plc Financial Analysis I. INTRODUCTION a. Topic Chosen and its context In this Research and Analysis project Report, I will be analyzing the financial performance of Royal Dutch Shell Plc. I will be identifying and analyzing the factors effecting the financial position of Royal Dutch Shell plc. The role of non-financial performance indicators which effects the financial position of the company will also be kept in mind. I will analyze the financial position of the company compared to its performance with previous years, with the industry and with its rival (BP). The word Shell will be used in place of Royal Dutch Shell as it is convenient. I will base my comparison on figures of audited annual accounts for the last 3 years. Financial analysis is an effective way of analyzing companys performance. Ratio Analysis is the technique, which will mainly be used for financial analysis. My analysis will also be based upon the comparison of key ratios with main rival of Shell, which will indicate some of the core strategies in seeking a competitive position to achieve its purposes. I will use Life Cycle model to analyze my findings on those markets, which materially contribute towards the companys financial results. Then I will use PEST analysis to analyze different stages identified and nature of Life Cycle. My conclusions will be based on current situation of the company as compared to past years and future expectations using the techniques mentioned above. b. Reasons for selection Reasons for selection of the topic and organization are as follows:  § Wide Information base: Shell, being a public limited company and one of the largest oil and gas concern in the finance sector the availability of timely, relevant, reliable information was an added advantage.  § Relation to my studies: While studying my ACCA, one of the important skills which I have learned is the ability to analyze the financial statements, and such a comprehensive research and analysis project will definitely help in developing the same  § The company: Other reason is the investment prospective and size of the company. The company unveiled the largest expenditure program in its history, spend $36bn in 2008 compared to $25bn last year, as it seeks new sources of oil and gas to boost reserves and production and to better exploit its existing resources. (Ft.com, July2008) Standard Poors, the credit ratings agency, downgraded its long-term rating for BP, the Oil and Gas Company, and upgraded Royal Dutch Shell, BPs closest rival, illustrating the widening perception of the two companys circumstances. SP noted Shells reserves replacement success and said current major projects should sustain its production plateau in the next decade. (Ft.com, September 2008) c. Aims and Objectives The aims and objectives contains the comparison of the financial performance of the petroleum sector to assess the worth of the company in its operational industry .To get an idea about the attitude of the management towards the operations of the company by assessing the companys cash flow position compared to its profits. Also to analyze the risks faces by the company I will take in to account Solvency, Liquidity and Capital structures. d. Research Approach ACCA provides a complete guide about different sections of the report, and also this provides the opportunity to plan and think to allocate my time carefully. This planning will help me to concentrate on each section of the report so that I can focus on core and important areas of the report. This also enables me not to overspend my time in explaining any section of the report. Information mainly collected from annual reports of the company and also different sort of other sources like ACCA text books, internet, newspaper, library etc. Traditional ratio analysis has been used to measure and compare the financial performance of the company over last 3 years with its rivals. Ratio analysis will focus on the following key ratios:  § Profitability Ratios This ratio is the reflection of how well the business is performing in term of profits in order to pay the shareholders. Key ratios are: a. Gross Profit Margin b. Operating Profit Margin c. Return on Average Capital Employed  § Liquidity Ratios Liquidity ratio refers to the state of an assets nearness to cash to meet business short term obligations as they fell due. Key ratios a. Current Ratio b. Quick ratio (Acid Test Ratio)  § Efficiency Ratios These ratios show how efficiently the business is employing those resources invested in fixed assets and working capital. Ratios are: a. Debtor Days b. Creditor Days  § Risk Ratios These ratios are used to assess how healthy and sound the business is in term of capital or finances. Ratios are a. Gearing Ratio b. Interest Cover  § Investors Ratios Both present and prospective shareholders look at these ratios to measure their return and to make economic decisions. Key ratios are a. Earnings per Share b. Diluted Earnings per Share II. INFORMATION GATHERING a. Sources of Information Used The information has been collected from different secondary sources for the preparation of this project. Main secondary sources which are use to gather information is as follows:  § Annual Accounts: The annual audited accounts of Shell are the main secondary source of information to use in this project. These annual audited accounts were available from stock exchange. As it supposed to be accurate and reliable thus provides me with an ideal source of annual accounts of the company. I have used only the audited annual accounts for the last three years of the company though unaudited quarterly review until July was available, to make certain that only reliable and accurate source of information is used in my research and analysis project. These audited annual accounts provides me all the information for the last three years which is essential in computing key financial ratios and also to make a comparison with rivals and industry averages of the company. Annual accounts of the rivals for the last three years are also used to make comparison with the Shell.  § Financial Analysts Report: They are professional people and their views are independent and their analysis helped the shareholders making economic decisions, which in turns affects the very existence of the company.  § Kaplans Tutorial Text: Kaplans tutorial text for Bsc (Hons) in Applied Accounting also helped me a lot for gathering information and also about the different requirements of the reports. It also helped in focusing a particular section of the report and also helped in overall design of the project so that nothing is missing in the project.  § News Papers: Getting in touch with the business section of leading newspapers like The Times, The Independent, Daily Express and The Telegraph was very useful as it provided me guidance on the economy overall and as well the movement in the share prices of different companies. b. Methods Used To Collect Information To collect information various methods are used like,  § Internet: Internet offers a speedy and impersonal way of getting to know the basics of the services that a company provides. (BPP 2005 Paper 3.4) I visited www.shell.com to access the financial reports of the company and press releases. I also visited www.bp.com to get information about the rival company of Shell for the purpose of comparison. Also I visited www.ft.com which really helped me a lot for the up to date information about the Shell and BP. I have also visited www.wikipedia.org to get information which helped me a lot to understand the oil and gas industry. In addition I visited the www.bbc.co.uk to get the latest news and important interviews.  § Use of the E-mail: For communication with Shell people I use to e-mail them during my research whenever I want to get some important information. They responded quickly to answer my query.  § Library Research: Libraries proved quite helpful so some libraries in London, Kaplan Financial College library and City Business Library in Moorgate London for general reading of the newspapers, journals, different books, magazines to get important information about Shell and BP. I spend most of my time in city business library, where I was able to get specific information through different CD ROMS which included different databases search designed specifically for getting information about different companies. Some of the CD ROMs are:  § Financial Analysis Made Easy: This database provided the detailed key financial data in the form of profit and loss accounts and the balance sheet. Also it helped me to get important ratios of the Shell and BP and their comparison with the preceding years in the form of graphs.  § Marketing and Business Information Centre (Data Monitor): This database provided vital information regarding the company, industry and market news for the research and analysis. This database contains records of hundreds of companies in UK and worldwide. When I looked at the Shell data, it really helped me by providing the overview and the detailed information. Then same thing was true for its rival BP. c. Limitations in the Information Gathering A number of difficulties I have faced sometime in getting the required information. For instance, I was expecting to get more information from the newspaper, but actually it was not. The newspaper only provides information about a particular date and some events but in depth information cannot be obtained and also articles are found in different newspaper i.e. nothing is new than others. Similarly when I went to City library, I was not aware of using FAME database, so when I tried to get information from database it took me too long. Moreover it only provides me the financial data in the form of graphs. Another problem which I have faced is the information overload on the internet. Whenever I tried to search something on the net it gives me too many results which some time confused me which information I should use and which is not. d. Accounting Technique Used and Limitations In this report to analyze the financial performance of Shell comparing to BP ratio analysis has been used. Ratios are important tool in analyzing the financial performance of the company. Ratios are used because shareholders and potential investors are primarily concerned with receiving an adequate return on their investment. An earnings per share is a key ratio that is to be used to determine the returns on shareholders fund. Suppliers and lenders are concerned with the security of their debt or loan. So they are mainly focused on the gearing level the company is having and also the interest cover. More over management is concerned with the trend and level of profits, so ratios are the main measure of the success. Furthermore, managements bonuses are linked to the profits of the company. I have calculated the key ratios in an appendix from 2006-2008 for Shell and BP and they did analyze the results. Ratios were used as a tool to assist analysis and to focus attention systematically on important areas. Ratios summarize information in an understandable form and also helped me to identify trends and relationships. There are also limitations of financial statements and ratio analysis as they are based on the past and ratios are not predictive if they are based on historical information. Ratios ignores any future action which is or to be taken by management. Another limitation faced by ratio analysis is the fact that the ratios results may be distorted if there are differences in the accounting policies. (Kaplan Financial Study Text Paper F7) In all, Ratios have limitations but are still regarded as the best tool for analyzing the financial performance of the business and so I also used it. III. ANALYSIS In this section of the report I will explain and analyze the financial performance of Shell and will compare its results with BP.I will also explain Shells financial position in the current year. a. Company History: The Royal Dutch Shell Group was created in February 1907 when the Royal Dutch Petroleum Company and the Shell Transport and Trading Company Ltd of theUnited Kingdommerged their operations. This move was largely driven by the need to compete globally with the predominant American oil company (www.wikipedia.org) b. Financial Analysis: Here is the analysis of the financial data of Shell (Revenue, GP and NP) over the last three years.  § The revenues in 2008 were ($458.4 billion) 28.8% higher than in 2007, when they were ($355.8 billion) 11.6% higher than in 2006. (Appendix)  § The oil and gas prices was One of the main reasons of increase in revenues in 2008  § Brent crude oil prices average $97.14 per barrel in 2008 compared with $72.45 in 2007, while West Texas Intermediate average $99.72 per barrel compared with $72.16 a year earlier. Oil prices saw great fluctuation in 2008. (Annual Report Shell 2008)  § A 6% increase in Gross Profit of Shell in year 2008 and 2007 as compared to gross profit in year. (Appendix)  § Its shows an increase in production costs in line with increase in revenues on high margin products.  § Earnings ($26.5 billion) were lower by 17% in 2008 compared to 2007, when they were ($31.9 billion) 21% higher than in 2006 ($26.3 billion). (Appendix) The decrease in 2008, compared with 2007, reflected the effect of declining oil prices on inventory in the second half of the year, lower production volumes, lower realised refining margins and higher operating costs. These more than offset the positive impact on earnings from higher realised oil and gas prices as well as higher LNG and GTL product prices. (Annual Report Shell 2008) Second quarter 2009 reported earnings were $3,822 million compared to earnings of $11,556 million in the same quarter a year ago. (2nd quarter results 2009, www.shell.com )  § Earnings By Business Segments : All figures in this table are in $million The table shows that earnings in 2008 were higher by 47% in Exploration Production, Gas Power and Oil Sands segments as compare to 2007. On other hand earnings were lower by 100% in 2008 as compare to 2007 in Oil Products, Chemicals and Corporate segments. This 100% reduction in last three segments causes overall reduction of earning in 2008. In the Second quarter Exploration Production segment earnings were $1,334 million compared to $5,881 million a year ago. Earnings compared to the second quarter 2008 reflected the impact of significantly lower oil and gas prices on revenues, lower oil and gas production volumes, higher exploration expenses and non-cash pension charges, which were partly offset by lower royalty and tax expenses. (2nd quarter results 2009, www.shell.com ) Comparison of Shell with BP  § Revenue Growth: Shell and BP revenue over the last three years is shown in the graph: Growth in Revenue in $ Million Shell and BP revenue showed a consistent growth over a period of 3 years. In 2008 Shell revenue 26.9% higher than BP. Which shows that Shell growing consistently as Shell revenue were higher 25.2% 19.9% from BP in 2007 2006 respectively. (Appendix) a. Profitability Ratios The profitability of a company is important and a key measure of its success. The figures shown in the profit and loss account mean very little themselves. However, by expressing them as a percentage of sales they become much more useful. The figures can then be compared with previous years or with other similar companies. (Student Accountant ACCA Magazine, Christopher, 1999.) Gross Profit Margin: Gross profit margin shows earning on sales of a company. In the 2nd quarter of 2009 the gross profit margin has fallen 62% compared to last years 2nd quarter results. An indication of high profit margin is that the company earned well on sales by keeping overhead cost in control. Gross profit margin of 2008 is lower than previous years. Net Profit: Shell net profit margin dropped by 3.2% to 5.8% in 2008 from 9% in 2007. And margin in 2006 was 8.3%.BP net profit margin dropped by 1.5% to 5.9% in 2008 from 7.4% in 2007. The 2006 margin was 8.4%. (Appendix) Growth in Net Profit Shell and BP (%) The profit margin is mainly used as an internal comparison tool. As there are different levels of expenditure involved it is therefore sometimes difficult to accurately compare the net profit ratio for different entities. As compared to BP Shells net profit margin dropped by a higher percentage in 2008.On the other hand if we see the year 2007 the Shell profits are higher than the BP. Return on Average Capital Employed: ROACE reflects the ability of the company to utilize the resources i.e. capital in generating revenue. Capital employed consists of total equity, currant debt and non-current debts. The published segment level contains the computation and calculation of the tax rate and the minority interest components. The strong income generation is the only reason for change in ROACE from18% to 24% between 2006 and 2008. There is a significant decrease in the capital employed from 24% to 18% in 2008 as compare to 2007. A significant decrease in income attributable to shareholders is partly offset by an increase in capital employed, resulted in a decrease in ROACE of 6.0% in 2008(18%) compared to 2007 (24%). The 2006 figure was 23%. (Appendix and Annual Report Shell 2008) ROACE is defined as the sum of the current and previous three quarters income adjusted for interest expense, after tax, divided by the average capital employed for the period. In the 2nd quarter or 2009 the ROAC stands at 8.3% way below the 25.8% in the 2nd quarter of 2008. (2nd quarter results 2009, www.shell.com ) On the other hand BP utilization of its capital resources was showing a sorry picture. BP ROCE has moved in a range of 16% to 19% between 2006 and 2008. BPs ROCE was 19% in 2006, and then reduced to 16% in 2007, followed by an increase of 1% to stand at 17%. This was due to lower income attributable to shareholders in 3 years time. This increase in 2008 was due to some increase in income attributable to shareholders. (Appendix) ROCE Shell and BP (%) The drop in oil price in the second half of 2008 had a significant impact on earnings. The strengthening of the dollar against other main currencies reduced the impact of Shells investment plans on capital employed. b. Efficiency Ratios Debtor Days Shells receivable days has fallen from 76 days in 2007 to 65 days in 2008. The figure for 2006 was 68 days. This was due to the effective and better controlled credit policy. (Appendix) BP on the other hand, showed increase in its collection to 30 days in 2008 from 49 days in 2007. The 2006 figure stands at 53 days. All this reflected an aggressive and comprehensive credit control policy and ability to collect from customers. (Appendix) Creditors Days The payment to creditors from Shell showed improvement in payment to creditors in 2008 if we compare the figures to last three years. As creditors days reduced to 78 days in 2008 from 93 days in 2007, while the figure in 2006 was 87. This improvement shows that company has liquidity to pay off its debts and also helped in making stronger relationship with creditors, which could be Suppliers, lenders. (Appendix) BPs creditors days showed reduction over a period of 3 years i.e. from 82 days in 2006 to 78 days in 2007 and more improved to 46 days in 2008 which showed a good sign for the company. (Appendix) c. Liquidity Ratios Current Ratio As short-term creditors prefer a high current ratio since it reduces their risk. The current ratio measures the adequacy of current assets to meet the companys short-term liabilities as they fall due. Traditionally, a current ratio of 2:1 or higher was regarded as appropriate for most businesses to maintain creditworthiness. However, more recently a figure of 1.5:1 is regarded as a norm. (Kaplan Financial, Paper F7 Study Text) Current ratio for Shell in 2008 was 1.1 and remained Constant between 2006 and 2007 to stand at 1.2. This shows better position for Shell and its ability to pay short term liabilities as they fall due. (Appendix) BP current ratio was also healthy between 2006 and 2007, but in 2008 the ratio was below 1 which may be not a good sign for short term creditors. But it was ok as for as it remains near to 1. (Appendix) One drawback of the current ratio is that inventory may include many items that are difficult to liquidate quickly and that have uncertain liquidation value. SO the quick ratio is an alternative measure of liquidity that does not include inventory in the current assets. (Paper3.6, BPP Professional Education, June 2007) Quick Ratio The quick ratio also known as the acid test ratio eliminates inventory from the currant assets. It provides the acid test of whether the company has sufficient liquid resources (receivables and cash) to settle its short term liabilities. Normal level for quick ratio ranges from 1:1 to 0.7:1. (Kaplan Financial, Paper F7 Study Text) For Shell, liquidity ratio remained unchanged within the industry standards between 2006 and 2008 to stand at 0.9. This shows the companys ability to pay short liabilities from most liquid resources i.e. receivables and cash not inventory. (Appendix) BPs quick ratio showed a sorry picture and remains unchanged on 0.7 between 2006 and 2008, as it was standing at the danger level of 0.7 meaning that BP is not having enough liquid resources to pay off the liabilities due. (Appendix) d. Risk Ratios Gearing: Gearing is the relationship between the companys fixed return capital and its equity capital. Gearing ratio indicates the degree of risk attached to the company and the sensitivity of earnings and dividends to change in profitability and activity level. High geared businesses uses large proportion of fixed return capital, so there are greater chances of insolvency and ultimately return to shareholders grow proportionately more if profits are growing. While low geared businesses provide scope to increase borrowings when potential profitable projects are available and can usually grow more easily. (Kaplan Financial, Paper F7 Study Text) Gearing levels in (%) (2006-2008) Shell maintained smooth profits and more suitable assets for security in order to make use of gearing successfully. Shells gearing level increased in 2008 due to more debts taken as compared to 2006 and 2007. Gearing was 23% in 2008 compared to 17% in 2007. The gearing ratio was 15% in 2006. The increase was due to rise in the total debt. On the other hand, BP gearing level was also high standing between 36% to 28% with 36% in 2008 compare to 28% in 2006, while 2007 figure was 33%, which is higher than Shell. High level of gearing means high risk to business, but this is compensated by a significant increase in profits and the returns to the shareholders. So Shell can borrow more easily in future. Interest Cover Companys interest cover indicates the ability to pay interest out of profits generated. Low interest cover indicates to the shareholders that their dividends are at risk (because most profits are use to pay interest payments) and the company may have difficulty financing its debts if its profits fall. (Kaplan Financial, Paper F7 Study text) Shells interest cover has decreased to 42 times in 2008 compared to 45 times in 2007. The interest covers for 2006 was 38 times. This shows Shells ability to finance its debts and the ability to pay interest out of the profits for sure. As investors are interested in the risk level the company is in, it is a healthy sign. Interest Cover in Times (2006-2008) For BP, there is an increase of interest cover to 30 times as compare to 29 times in 2007 but in 2007 there is a huge reduction in interest cover to 29 times from 49 times in 2006 which clearly indicates the inability of BP to finance its debt and to pay interest out of profits generated. That makes BP riskier than Shell for investment purposes. e. Investors Ratios Earnings per Share (EPS): Earnings per Share for Shell decreased in 2008 from $5 in 2007 to $4.27 in 2008. This was due to decline in profits followed by the repurchase of the shares, which causes a net decrease of 105 million in the number of ordinary shares outstanding as a result of share buybacks. As widespread the use of the EPS as a yardstick for investment decisions. Share price of company might fall if it looks as if EPS is going to be low. EPS increased to $5 in 2007 compared to $3.97 in 2006, this was due to decrease in the number of ordinary shares in 2007 as company repurchased its 112 million shares of common stock for cancellation at a gross cost of $4.4billion.this purchase reduced the number of shares outstanding to 1.7% in 2007 and by 7.3% in total since the commencement of share repurchases following the unification into Royal Dutch Shell and successful completion of Royal Dutch Minority tender (August 2005). (Annual Report Shell 2008) In the first six months of 2009 the EPS for Shell is $1.19 compared to the six month figure of $3.34 of the same period of 2009 (2nd quarter results 2009, www.shell.com ) Earnings Per Share in $ (2006-2008) BPs Basic Earnings per Share increased in 2008 to $1.13 from $1.09 in 2007. This was due to the appreciation in the profits followed by the repurchase of shares, which causes a net decrease of 373 million in the number o shares. Basic EPS decline by 0.01 to stands at $1.09 in 2007 compared to $1.10 in 2006. This was due to the declining of profits of BP. (BP Annual Report 2008) Diluted Earnings per Share(DEPS) : Diluted Earnings Per Share attempts to alert the shareholders to the potential impact on the Earnings per Share due to change in equity share capital in future owing to circumstances which exist now-known as dilution. The most common type of dilution is an option or warrant which gives the holder right to buy shares at time in future at predetermined price. (Kaplan Financial, Paper F7 Study Text) Diluted Earnings Per Share in $ (2006-2008) Shells DEPS reduced due to the reduction in the profits and number of shares to $4.26 in 2008 compared to $4.99 in 2007, while it was $3.95 in 2006. BPs DEPS increased to $1.12 in 2008 from $1.08 in 2007. The figure was $1.09 in 2006. The main reason for this was increase in profits despite shares in numbers was reduced. (Appendix) f. Cash Flow Statement: Shells cash flow from operating activities has increased by 27% reaching a record level of $43.9 billion in 2008 compared with $34.5 billion in 2007 and $31.7 billion in 2006. This improvement in cash flow from operations was a result of reduces working capital in 2008 compared to 2007. The increase in the operating activity in 2007 mainly because of increase in income as well as a reduction in taxation paid in 2007 compared to 2006. In 2009, Shells cash flow from operating activities reduced in the first two quarters to stands at $8478 million compared to $21,030 million in the same period of 2008. (2nd quarter results 2009, www.shell.com ) BPs cash flow from operation declined to $24.7 billion in 2007 compared to $28.2 billion in 2006, but the cash from operating activity increased in 2008. This is menially because of increase in income. (BP Annual Report 2008) Higher capital expenditure in 2008 compared to 2007 made Shell to use its Cash flow in investing activities i.e. $28.9 billion in 2008 compare to $14.6 Billion in 2007. In 2009, Shell continued to invest more with cash flow from investing activities stands at $(13,829) million in six months from $(12,275) million in 2007. (2nd quarter results, www.shell.com) But there was less cash paid out in investing activity in 2007(-14.6 billion) as compare to 2006(-20.9 billion) and the main reason was that the proceeds from sale of asset was higher and les capital expenditure in 2007 as compare to 2006. (Shell Annual Report 2008) BP was also having strong investment with $(22.8) billion in 2008 from $(14.8) billion in 2007. The figure for 2006 was $(9.5) billion. (BP Annual Report 2008) In 2008, as Shell took more debts which results in Shells cash flow from/used in financing activities reduced to $(9.4) billion in 2008 from $(19.4) billion in 2007.As Shell acquired Canada minority interest in 2007 resulting Cash flow from financing activity increased in 2007 from (13.7) billion in 2006. There was a small increase of BPs Net cash flow from/ used in financing activities from (9.0) billion in 2007 to (10.5) billion in 2008 menially because of more dividends paid and less repurchase of shares in 2008. Net cash from financing activities was reduced to $(9.0) billion in 2007 from $(19.0) billion in 2006. (BP Annual Report 2008) Cash and Cash Equivalent of Shell and BP in Billions Cash and Cash equivalent of Shell reached 15.2 billion at the end of 2008, up by 57% as compare to 2007 figure of 9.6 billion. Which is good sign for Shell as there cash and cash equivalent was higher as well in 2007 as compare to 2006 figure of 9.0 billion. BPs cash and cash equivalent also increased to $8.2 billion in 2008 from $3.5 billion in 2007 and also up from 2006 level of $2.5 billion. (Shell and BP Annual Report 2008) This shows that Shell has a sound position and has no problem what so ever in cash flow compared to its rivals. c. Non-Financial Analysis In this section of the report I will be analyzing the corporate social responsibility and the SWOT analysis. Corporate Social Responsibility (CSR) We recognise that our continuing business success depends on helping to meet the worlds growing energy needs in environmentally and socially responsible ways. To manage todays business risks and deliver our strategy, it is critical that we maintain the trust of a wide range of stakeholders. (Shell Annual Report 2008) Environmental Social performance Greenhouse Gas Emissions In 2008 despite growing business, Shell operated facilities emitted 75 million tons of GHGs, (measured on a CO2 equivalent basis), about 7 million lower than the previous year, and nearly 30% below 1990 levels. (Shell Annual Report 2008) Flaring Since 2001, Exploration Production has reduced its natural gas flaring by more than 70%. In 2008, total flaring in Exploration Production dropped again mostly due to reduces flaring in Malaysia and Gabon, as investment and operational improvement programs showed result. In 2008 flaring levels in Nigeria were same as in 2007. Spills Shell has reduced the amount of oil and oil products spilled from operations for reasons, Shell can control, like corrosion or operational failures. Spills from sabotage or extreme weather, like hurricanes, which are harder to prevent, have fluctuated with events. In 2008 the number and amount spilled for operational reasons dropped