How Does Montessori Compare With Waldorf Schools

Montessori and Waldorf schools are two popular kinds of schools for preschool and elementary school age children. But, many people arent sure what the differences are between the two schools. Read on to learn more and discover the differences.   Different Founders A Montessori school follows the teachings of Dr. Maria Montessori (1870-1952), a medical doctor and anthropologist. The first Casa dei Bambini, a house of children rather than a school, was opened in 1907 in Rome, Italy.  A Waldorf school follows the philosophy of Rudolf Steiner (1861-1925). The first Waldorf School was founded in Stuttgart in Germany in 1919. It was intended for the workers at the Waldorf Astoria Cigarette Company, after the companys director requested such.   Different Teaching Styles Montessori Schools believe in following the child. So the child chooses what he wants to learn and the teacher guides the learning. This approach is very hands-on  and student-directed.   Waldorf uses a teacher-directed approach in the classroom. Academic subjects are not introduced to children until an age that is typically later than that of students in Montessori Schools. Traditional academic subjects - math, reading and writing - are viewed as not the most enjoyable learning experiences for children  and are such put off until the age of seven or so. Instead, students are encouraged to fill their days with imaginative activities, such as playing make-believe, art and music. Spirituality Montessori has no set spirituality per se. It is very flexible and adaptable to individual needs and beliefs. Waldorf is rooted in anthroposophy. This philosophy believes that in order to understand the workings of the universe, people must first have an understanding of humanity. Learning Activities Montessori and Waldorf recognize and respect a childs need for rhythm and order in his daily routine. They choose to recognize that need in different ways. Take toys, for example. Madame Montessori felt that children shouldnt just play but should play with toys which will teach them concepts. Montessori schools use Montessori designed and approved toys. A Waldorf education encourages the child to create his own toys from materials which happen to be at hand. Using the imagination is the childs most important work posits the Steiner Method. Both Montessori and Waldorf use curricula which are developmentally appropriate. Both approaches believe in a hands on as well as an intellectual approach to learning. Both approaches also work in multi-year cycles when it comes to child development. Montessori uses six-year cycles. Waldorf works in seven-year cycles. Both Montessori and Waldorf have a strong sense of societal reform built into their teaching. They believe in developing the whole child, teaching it to think for itself and, above all, showing it how to avoid violence. These are beautiful ideals which will help build a better world for the future. Montessori and Waldorf use non-traditional methods of assessments. Testing and grading are not part of either methodology. Use of Computers and TV Montessori generally leaves the use of popular media to individual parents to decide. Ideally, the amount of TV a child watches will be limited. Ditto the use of cellphones and other devices. Waldorf is usually pretty rigid about not wanting young people exposed to popular media. Waldorf wants children to create their own worlds. You will not find computers in a Waldorf classroom except in upper school grades. The reason why TV and DVDs are not popular in Montessori and Waldorf circles is that both want children to develop their imaginations. Watching TV gives children something to copy, not to create. Waldorf tends to place a premium on fantasy or imagination in the early years even to the point where reading is delayed somewhat. Adherence to Methodology Maria Montessori never trademarked or patented her methods and philosophy. So you will find many flavors of Montessori. Some schools are very strict in their interpretation of Montessori precepts. Others are much more eclectic. Just because it says Montessori doesnt mean that it is the real thing. Waldorf schools, on the other hand, tend to stick pretty close to standards set out by the Waldorf Association. See for Yourself There are many other differences. Some of these are obvious; others are more subtle. What becomes obvious as you read about both educational methods is how gentle both approaches are. The only way you will know for sure which approach is best for you is to visit the schools and observe a class or two. Speak with the teachers and director. Ask questions about allowing your children to watch TV and when and how children learn to read. There will be some parts of each philosophy and approach with which you will probably disagree. Determine what the deal breakers are and choose your school accordingly. Put another way, the Montessori school which your niece attends in Portland wont be the same as the one you are looking at in Raleigh. They both will have Montessori in their name. Both might have Montessori trained and credentialed teachers. But, because they are not clones or a franchise operation, each school will be unique. You need to visit and make up your mind based on what you see and the answers you hear. The same advice applies with respect to Waldorf schools. Visit. Observe. Ask questions. Choose the school which is the best fit for you and your child. Conclusion The progressive approaches which Montessori and Waldorf offer young children have been tried and tested for almost 100 years. They have many points in common as well as several differences. Contrast and compare Montessori and Waldorf with traditional preschools and kindergarten and you will see even more differences. Resources A Montessori EducationA Waldorf EducationThree Approaches from Europe: Waldorf, Montessori, and Reggio Emilia    Article edited by Stacy Jagodowski.

Essay on A Research and Self-Reflection on Peanut Butter

Self-Reflection Summary The reason I chose this particular area of research is that peanut butter is an extremely popular food choice worldwide as it is affordable and nutritious; and I also love to eat it. However, the number of brands and the choices within the brand range make it complicated for the consumer and myself to choose the most nutritious option. Prior to this research I did not understand the nutritional content of the food I ate. On every food product there is a table of nutritional information that states the exact health contents of the food. There is also a list of ingredients that provides consumers with details regarding the food. In today’s times, consumers are flooded with choices of seemingly similar products. I†¦show more content†¦I am excited to further my studies in this methodology in my career. 6900kJ for a boy aged 7 and 6400kJ for a girl aged 7. This requirement will differ based on gender, amount of exercise done through out the day, height and weight. [30] [31] A single serving of crunchy peanut butter (1 tablespoon/15g) contains 401kJ. A single serving of smooth peanut butter contains 405kJ. A single serving of no added sugar or salt peanut butter contains 382kJ. Peanut butter would therefore be a healthy food choice for children’s breakfasts or school lunches, as it will provide them with the energy needed to concentrate at school and to use while playing sport. Adults also benefit from the high energy content of peanut butter, as they too require energy to complete a full day’s work. Graph 3 Yum Yum Smooth Peanut Butter contains 350mg of sodium per 100g; Yum Yum Crunchy Peanut Butter contains 414mg and Yum Yum Crunchy Peanut Butter with no added sugar and salt contains 8mg. Sodium is used by the body to control blood pressure and blood volume. However, excess sodium in the diet leads to high blood pressure, which may result in cardiovascular diseases and strokes. Table salt (sodium chloride) is the most common form of sodium. 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Assessment of Financial Health Free Essays

string(65) " to less creditworthy individuals or inattention to collections\." Reocities Home Neighborhoods Making Of Cases in Finance – Final Project Report Friendly Cards, Inc. (1988) Gary Cao Noah N Flom Robert Harris Srini Pidikiti May 1997 TABLE of CONTENTS 1 Assessment of Financial Health Pro Forma Financial Statements 1. 1 Review of History and Statement of Financial Health 1. We will write a custom essay sample on Assessment of Financial Health or any similar topic only for you Order Now 1. 1 Industry 1. 1. 2 Friendly Cards History 1. 1. 3 Friendly Financials 1. 2 Review and Evaluation of Pro Forma Statements 1. 3 Financial Policy / Covenants 2 Beaumont’s Decisions 2. 1 Envelope Machine Proposal 2. 1. 1 Evaluation 2. 1. 2 Financial Effect of Investment 2. 1. Recommendation 2. 2 Evaluation of West Coast (new equity offer) 2. 2. 1 Advantages 2. 2. 2 Disadvantages 2. 3 Valuation of Creative Designs, Inc. 2. 3. 1 Capital Structure Argument 2. 3. 2 Weighted Average Cost of Capital Assumptions (WACC) 2. 3. 3 Cash Flows, Terminal Value, Equity Value Valuations 2. 4 Pooling Implictions (Friendly + CD) 2. 5 Friendly Cards Stock Valuation 3 Overall Assessment 4 Goals for the Financial Structure of Friendly Cards, Inc. ——————————————————————————- PART 1. Assessment of Financial Health Pro F ormas 1. Review of History and Statement of Financial Health Wendy Beaumont, president of Friendly Cards, Inc. , has rapidly expanded her greeting card business through internal growth and acquisitions. Ms. Beaumont realizes that money is currently tight, however, she is adamant about future growth and has sought our opinion as to determine her best course of action. In presenting a decision we will first conduct an analysis of the industry, then give a short history of Friendly Cards, Inc. (Friendly), and then examine Friendly’s financial statements to determine the financial health of the company. Industry Information The greeting card industry is dominated by three large companies, (Hallmark, American Greetings, Gibson), which are referred to as ‘The Big Three’. ‘The Big Three’ dominate market share, and the remaining competitors are predominantly small private and family owned firms. The greeting card industry is characterized high fixed costs due to: large inventory costs, large investment costs in the establishment of efficient distribution lines, and the need for a highly diversified product lines. Market leaders enjoy great economies of scale which tends to hinder new ntrants into the market. As a result, the card industry is capital intensive and very competitive. The number of firms competing in the industry has decreased by an annualized rate of 15% over the last three decades. Exiting firms were typically smaller in size, the majority of which had less than 50 employees. Additionally, the competitive nature of the market results in a high d egree of price sensitivity which culminates in smaller margins on sales. Sales tend to be very seasonal in nature with peaks during major holidays. There is trending toward a larger variety of card offerings (increasing inventories), shorter carrying/selling periods, increased diversification of product lines, and an increase in sales of everyday cards as compared to holiday cards. Friendly Cards, Inc. Beaumont Greeting Card Co. was founded by Wendy Beaumont in 1978, in New York City. She later acquired Lithograph Publishing Co. and took these companies public a year later for $3 a share under the name Friendly Cards, Inc. Friendly has rapidly expanded by acquiring Glitter Greetings of Lansing, Michigan (for cash and equity), whose primary market was selling cards to supermarkets. Soon thereafter, it acquired Edwards Co. of Long Beach, New York (for cash), whose primary market was selling juvenile valentines through chain, drug, variety, and discount stores, as well as, to wholesalers and supermarkets. These acquisitions greatly enhanced Friendly’s distribution line expanding it to a regional power. Later Friendly acquired a California firm (Friendly Artists) which extended the distribution line to a national basis. Friendly Artists’ primary market was prepackaged cards direct to the warehouse. Twenty-five percent of Friendly’s sales are prepackaged boxes, which have a higher margin than regular cards due to lower return rates and lower handling costs. Currently, Friendly appears to be a niche player in the prepackaged box cards market and has avoided entry into the premium card market, thus, avoiding direct competition with the ‘Big Three. ‘ Friendly’s sales are more concentrated than the industry with the majority of sales occurring near Christmas at 30% (vs. Industry 32%), and Valentines Day at 25% (vs. Industry 7%). Thus, over 55% of sales occur within a 3 month period. Plants at Friendly are being used at capacity thus, growth would necessitate further additions or acquiring contract services. Friendly’s distribution line is effective for a smaller firm due to its structure. Of twenty salesmen, one-third work on commission thus lowering Friendly’s costs. However, one problem with using salesmen on commission and having such a small sales force is the tendency to sell to rack jobbers and wholesale distributors. This decreases the potential margin on cards by two-thirds. Friendly’s Financials Sales have increased by over 50% between 1985 to 1987. Cost of goods sold has decreased as a percentage of sales in each of those years thus, producing an increasing margin ( 29. 36% in 1985 to 35. 15% in 1987). The rapid growth by acquisition and the national distribution channels that were accomplished by it, have affected the number slightly. In 1986 selling and delivery expenses increased by 1. 45% and this leveled out in 1987. GA expenses also spiked in ’86, reflecting the recent purchase of another company, and then settled back in 1987. However, while sales may have grown rapidly they have not matched the increase in asset growth, which nearly doubled in 1986. Growth in this company is being funded by improving margins and by increasing leverage, as indicated by the Dupont Data. Although the acquisitions were acquired by both cash and equity, the majority were debt financed, which explains why the ROE figures have increased so dramatically (almost 16%) in the last three years. The activity ratios indicate that the receivable to payable were in arrears by 36 days in 1985 increasing to 52 days in 1987. This is probably a result of increased sales to less creditworthy individuals or inattention to collections. You read "Assessment of Financial Health" in category "Papers" Inventory turnover umbers are shrinking due to the continually larger inventories being carried. Net fixed asset turnover has decreased by 2. 3% between 1985 and 1987. This can be explained by higher growth in assets than in sales. The liquidity ratios indicate that the asset to liability ratio for this company is trending down. The current ratio indicates that the company i s becoming slightly more insolvent with a current ratio of 1. 18 during ’87. However, by looking at the Quick ratio and discounting for the affect of inventory in the asset number, the company is dramatically less liquid at 0. 67 in 1987. This indicates that the company is very highly leveraged and is using its large inventory levels in order to support its substantial borrowing needs. Friendly’s actual growth rate exceeded the sustainable growth rate in 1986 and was equivalent in 1987. This difference in 1986 produced a need for added debt to finance growth. However excess funds were not needed to fund additional growth in 1987 since the actual rate of growth did not exceed the sustainable rate of growth. This can also be seen in the total debt to equity ratio which increased from 3 in 1985 to 5. 21 in 1986 and reduced to 4. 1 in 1987. The leverage ratios indicate that the bank loans to debt are fairly well matched, with loans being less than receivables, however, increasing in percentage. Interest bearing debt jumped dramatically in 1986 as a result of debt funded acquisitions but continues to level off along with total debt to equity figures in 1987. Finally, debt to assets has increased dramatically in the last three years, increasing by 7. 5% to 82. 5% in 1987. Thus Friendly Cards seems to be very highly leveraged, even more so than other firms in the industry although the trend is to increase debt. This highly leveraged position coupled with the high fixed costs and low margins characteristic of the industry, exposes Friendly as extremely susceptible to fluctuations in the market. Therefore, further debt growth may not be advisable–especially since it is currently violating its existing debt covenants. However, Continued growth, however, is needed as to allow the company to further take advantage of its existing distribution lines and realize further economies of scale. 1. 2 Review and Evaluation of Pro Forma Statements The parameters that Ms. Beaumont has set for the pro formas seem reasonalbe for the most part. There are, however, some questionable numbers. For instance, all the forecasts are based on continued sales growth at 20% per year. When compared to astronomical growth rates of 58% in 1986 and 27% in 1987, these estimates appear almost conservative. The majority of the growth in the past, however, were associated with major acquisitions which served to inflate the sales numbers. The historical reluctance to use equity to grow would serve to limit growth if continued into the future. Furthermore, it may be difficult to continue to grow at such a high rates in an increasingly competitive market. Holding costs of goods runs at 65% of sales and may also present a problem depending on whether the company can continue to manage its costs as it continues to grow. It could be argued that the reason CGS has dropped recently is due to the acquisition of Friendly Artists and the increasing reliance on a sales mix made up of low cost prepackaged boxes of cards. A shift in the mix away from these items could increase costs. Also, further acquisitions will serve to push up delivery and selling costs. For our purposes, however, holding them flat seems reasonable. The tax rate seems low at 38% but, depending on the new volume of sales and the maximum tax rate for a corporation, this rate could be even higher. And while the rest of the numbers seem to follow their previous assumptions, the inventory turnover, debt to asset, and interest rate assumptions could be assumed differently. As a result of increased competition in the industry, increasing variations of cards as well as shorter holding duration, it is very unlikely that inventory turnover would improve to 1. 1, and it may very well drop well below this number, possibly to 1. 75. Since growth is likely to continue into the future, an increased amount of inventory will be needed for new market areas. Debt to assets needs to decrease, but this will be difficult to do without funding growth by equity rather than debt. The large sales growth assumptions are directly related to acquisitions, thus increasing assets. If this is done through equity, this number is very realistic. Finally, there may be a problem with the assumption that interest rates on LTD will be 11%. The Monetary Policy Report to Congress indicates that rates should tend to decrease in the future so this rate may be attainable even to such a highly leveraged firm as Friendly. Without more information this estimate seems fine. 1. 3 Financial Policy / Covenants Friendly’s apparent financial policy is rapid growth by debt. This debt-financed growth may be due to a ownership issues that could affects Ms. Beaumont’s control over her company. The financials indicate that growth is also taking place at the expense of margins, as indicated by the Dupont data. The company believes in the economies of scale of the industry and appears to be establishing a national distribution network. While costly in the short run, this strategy may enable a viable and profitable position in the industry. The elements of Friendly’s financial policy appear to be the following. Friendly’s capital structure mix is governed by a debt orientation. Its debt/assets ratio is currently at 82. 5% which places is significantly below the AAA rate. AAA bonds are listed at 9. 7% while Friendly can only borrow at 11. 5%. While equity has been used in recent acquisitions there is a strong preference by management to use debt funding. Without question, Friendly is at an integral juncture. Existing lines of credit are maxed out and the bank is imposing new covenants on future loans: bank loans ; 85% of AR and liabilities not to exceed three times the BV of the company. Friendly currently has a $6. 25 million line of credit. Under the current structure Friendly will be in violation in 1987 with bank loans at 87% of AR and debt to equity is at 3. 13 times. Significantly, bank and trade credit for Friendly is expected to reach over $9 million in Dec. ’87. Long term and short term debt are both fueling growth. The basis is assumed to be the prime rate (which is 8. 5%) plus 2. 5% points. This is assumed to be a fixed rate established at the time of borrowing. The company’s currency is the U. S. dollar and the company does not have any exotica policy to mention. Control of the company rests solely with Ms. Beaumont as she is both the president and the leading shareholder, possessing 55% of the stock. An additional 20% of the stock is owned by employees and officers of the company. Finally, earnings are retained for future growth and meeting current obligations. There are no dividend payments and the stock has depreciated in value from a high of $15 a share. PART 2. Decisions faced by Ms. Beaumont 2. 1 Envelope Machine Investment Evaluation of the Envelope Machine We do not agree that the investment in the envelope machine will result in a return of 31%. The reason for this is that the working capital needed to fund the machine would be funded by additional debt by the company. The interest on the debt needs to be considered before evaluating the total return on the investment. Under this scenario, and considering that Friendly Cards’ interest on debt is 11% the interest expense is $22,000 per year before taxes. Our Estimated Annual savings from Operation of Envelope Machine, Years 1 through 8 ( Dollar figures in thousands) is as follows: Savings: Outlays for envelopes purchased in 1987 $1,500 Incremental expenses from manufacturing envelopes: Materials$ 902 Warehouse 94 Labor 91 Depreciation 62 Total Expenses $1,149 Increase in Profit before Taxes (decrease in COGS) 351 Interest Expense on Working Capital 22 Actual Increase in Profit before Taxes 339 Increase in Income Taxes @. 38 125 Increase in profit after taxes $ 204 The projected Cash flows for the investment in the machine are: (attachments). Based upon the cash flows projected in the above Table the internal Rate of Return on the investment is 26%. Based upon Friendly Cards Cost of Equity which is 20% (Appendix WACC) buying the machine with all equity at 20% or debt at 11% is recommended Financial Effects of Investment The Financial effects of buying the envelope machine are can be examined in detail in Appendix Machine. The activity ratios for Friendly if the investment in the machine is made are: (attachments). The investment in the machine has the following effects: * Decreases Cost of Goods Sold by about 1. 5 % which in turn increases the Gross Margins * Decreases Inventory Turnover from 1. 91 to 1. 86 * Increases Funds needed in 1988 by $418,000, in 1989 by $323,000 and in 1990 by $112,000. * Earnings per share increase to $2. 89 in 1990 from $2. 53 in 1990 without investment * By making the investment in the machine Friendly would not be able to meet both of the covenants required by the bank The ratio of the bank loans to receivables exceeds . 85 in all three periods. * Ratio of Friendly’s total liabilities to the book value of the company’s net worth exceed 3 in 1988 and 1989 which do not meet the covenant but in 1990 the ratio drops down to 2. 94 where it meets the covenants. 2. 2 Evaluation of West Coast Offer (New Equity) We agree with Ms. McConville’s conclusion that Friendly should accept the offer from the West Coast Group at the terms stated if that was the only option available to Friendly Cards. The advantages of this proposal would be: Agency costs will be only 5% compared to the actual costs if an investment bank was used to sell securities of the company in a public offering. * The infusion of equity would enable Friendly to meet all the covenants required by the banks (Appendix WC) enabling Friendly to continue its rapid growth without any financial restrictions from the bank. * The equity infusion would enable Friendly to invest in the envelope making machine and reduce its cost structure and still meet all covenants required by the bank. * The uncertainty about how many securities will be sold if a public stock offering is held is eliminated. Continuing rapid growth would enable Friendly to retain most of the sales representatives who might shift to a competing firm if growth is slowed to enable Friendly to meet its financial covenant s * The price that Friendly is getting is more than reasonable based upon the present value of the discounted cash flows as shown in (Appendix Valuation) Disadvantages of accepting the proposal would be: * Loss of control. Ms. Beaumont’s who presently owns 55% of the outstanding shares would own 40. 37% of the company after the equity infusion. Even though along with the employees of the company she would own 60% of the company she would not be able to make unilateral decisions. * The West Coast Investors who would own 26% of the company would have a significant say in how the company should be run which may affect the current management structure and aversely effect their ability to mange the company as they wish. * Reduction of EPS. Earnings per share would be reduced to $2. 29 per share from the projected $2. 89 per share in 1990 with the purchase of the machine and without equity infusion due to the dilution effect of the new shares. This earnings dilution would probably result in a lower share price. (Approximately $18. 32 instead of $23. 12 considering a price multiple of 8). 2. 3. Valuation of Creative Designs, Inc. Capital Structure Argument Ms. Beaumont had been considering a possible acquisition of Creative Designs, Inc. (CD), a small mid-western manufacturer of studio cards. She had examined the details of CD’s operations for four months, and believed that under her management, CD could immediately reduce cost of goods sold by 5%, and reduce other expenses by 10%. If Friendly acquires CD in early 1988, assumptions are made that CD’s sales would stay flat during 1988 but would grow at 6% per year thereafter. Based on the following table from case facts, there is a wide range of Debt-to-Equity Ratios for the four companies within the same industry. American Greetings'(AG) D/E ratio increased from 0. 35 in 1985 to 0. 63 in 1987. The reason for this upward trend was that American Greetings had diversified its business segments; from solely relying on greeting card sales AG expanded into gift wrap and stationary goods, such as playing cards, gift-books, and college study guides. Such diversification efforts demanded higher debt levels. In addition, AG was a large company with annual sales of $1,174 million in 1987, up 16% from 1985. Gibson Greeting’s (GG)D/E ratio decreased from 0. 71 in 1985 to 0. 49 in 1987. The reason for this downward trend was that Gibson was a relatively small company, with annual sales of $359 million in 1987, an 8. 8% increase from 1985. GG’s growth rate was significantly lower than American Greetings. The total debt-to-equity ratio of Creative Designs would decrease over the next several years. Since CD’s sales in 1987 was $5 million, it was much smaller than the above two companies. Based on the pro forma financial statements for the period of 1988 to 1990, we see growing sales and EBIT. As a small-size manufacturer, the best capital structure would be: financing its operations mainly by internal growth and a significant reduction in the company’s debt levels. Ms. Beaumont wanted to acquire CD for the following reasons: * In the highly competitive market with high cost in distribution and low margin, Friendly had to grow in order to survive, and CD was a good target; Since CD’s shareholders agreed to the acquisition by stock-exchange, â€Å"pooling of interests† accounting method would be used, and the consolidated financial statements more attractive than without CD, and Friendly need not record goodwill (if any) and avoid amortization of goodwill; * Since CD had a relatively low debt level and a very low â€Å"bank loan to receivable ratioâ⠂¬ , while Friendly had difficulty meeting its bank borrowing restrictions, acquiring CD would make possible for Friendly to meet the covenants; Friendly can easily integrate CD to its high growth strategy, and expand Friendly’s market presence in the mid-western region. Weighted Average Cost of Capital Assumptions (WACC) Based on the case facts that the premium for equity risk was 6% on long-term governmental bond rate of 8. 37%, we may calculate the unleveraged beta for American Greetings and Gibson Greeting, and use a derived estimate as a proxy for CD’s unleveraged beta. 1987 Financial Data for Two Large Publicly Traded Companies To be conservative, we assume the unleveraged beta for CD is 0. 77. Since the cost of debt was 11% and the tax rate was 38%, we calculated CD’s cost of equity is 13. 97% in 1988, and the weighted average cost of capital (WACC) is 11. 07%. Over the next five years, CD’s WACC would increase to 11. 92% in 1992 due to the decreasing D/E ratio and therefore the tax shield effect. Cash Flows, Terminal Value, Equity Value Valuations In addition to the above information on WACC and sales growth rate, we have made the following assumptions: * Sales will stay flat in 1988, but will grow at 6% per year after 1989. * Cost of goods sold will stay at 55. 2% of sales level. * Depreciation, â€Å"Selling, delivery, and warehousing expenses†, and â€Å"general and administrative expenses† will grow proportionately to sales growth. * Increased Retained Earnings will be used to reduce long-term debt. * Prepaid expenses will increase by a small amount each year. * Interest expenses will decrease over the period since the debt level will decre ase. * No dividend will be paid after 1988. Based on the above assumptions, we found that the total present value for CD was $4. 349 million. Adjusting for the interest-bearing loans totaling $1. million, the net worth of CD would be $3. 049 million, $1. 168 million higher than the calculated value of the stock exchange ($1. 881 million). This indicates that acquiring CD is a good transaction for Friendly. 2. 4 Pooling Implications (Friendly + CD) By using the â€Å"pooling of interests† accounting method, we constructed the Friendly and CD consolidated financial statements. (see Appendix Valuation – Friendly + CD) The impact on 1988 pro forma financial statements is as follows: * New bank loans needed decreased from $1. 585 million to $1. 357 million; * EPS increased from $1. 7 to $1. 73; * Net profit margin increased from 4. 96% to 5. 49%; * Assets turnover increased from 1. 01 to 1. 03; * ROA increased from 5. 01% to 5. 49%; * ROE decreased from 25. 23% to 20. 5%; * Days in Receivable reduced from 157 to 149; * Bank loan to receivable ratio decreased from 0. 9 to 0. 74; * Interest bearing debt to equity ratio decreased from 2. 62 to 1. 92; * Total debt to equity ratio decreased from 4. 04 to 2. 62. The overall impact of acquiring CD to CF is positive. The result of pooling is in line with Friendly Cards’ financial strategy. In the long run, acquisition of CD would become an integral part of Friendly Cards’ strategic plan for the next few years to achieve a higher growth rate and increased market share. In the short run, acquisition of CD would meet Friendly Cards’ immediate financial needs enabling the company to meet the bank’s covenants, specifically, to reduce the â€Å"bank loan to receivable† ratio to an estimated 0. 9 in 1988 to 0. 85 or lower, and to decrease â€Å"total liabilities to equity ratio† from an estimate 4. 04 in 1988 to 3 or lower. The result of pooling shows that these two requirements are met. 2. 5 Friendly Cards Stock Valuation Assumptions: Capital structure Based upon the pro forma financial statements and the bank covenants’ requirements, we assume the capital structure to be 75% debt and 25% equity. Any other capital structures with the reduction of debt would make it more difficult to get additional capital through equity. We need the debt financing to be able to meet Ms. Beaumont’s growth requirment. Discount rates We assume the cost of debt to be 11%. This is based upon the following facts: In early 1988, interest rates were declining, the 10-year Treasury Notes rate declined from 9. 52% in October 1987 to 8. 9% in January 1988; even though the short-term Prime Rate increased to 9. 07% by October 1987, it had decreased to 8. 5% by January 1988; furthermore, the Federal Reserves Monetary Policy Report(Jan. 1988) stated that â€Å"high rates of capacity utilization and low unemployment suggest the needs in maintaining progress toward price stability†, indicating that interest rates would stabilize at the present level. Also the need to reduce the trade deficit, business and labor would continue to exercise restraint in price and wage behavior, indicating the Fed would hold interest rate at the present level, or even reduce them. We assume the interest rates would hold stable at the present level of 8. 5% and that the lending institution will continue its premium of 2. 5% over prime. We assume all the funding for the debt to be short term as most of the debt would be used to fund the current assets (receivable and inventories). This would be a proper matching of funds. Based on the valuation of Friendly Cards, we found that * FCFE Method (Free Cash Flows for Equity): the valuation was -$ . 95 per share ; * Free Cash Flow for Capital: the valuation was -$5. 5 per share ; * Book Value Method: using 11/2 times Book Value the valuation was $7. 40 ; * P/E ratio (multiple) method: using the industry average P/E ratio of 7, the valuation was $9. 50 per share. (Please refer to appendix Valuation – Friendly Cards, Inc. ) The only way the company’s stock price was worth $8 to $9. 50 per share was that West Coast Investors and Creative Designs valued the company using a Price to Earnings multiple method. * *Note** We attempted to back out a discounted cash flow model that would justify an $8 or $9. 50 share price. By altering certain assumptions, most specifically the sales growth rate we can achieve positive valuations of the stock price. Slower growth in sales PART 3 Overall Assessment Our recommendation to Ms. Beaumont is to (1) First, acquire CD with a stock exchange of 198,000 shares at $9. 5/share, (2) With the additional leverage obtained by the CD acquisition, purchase the envelope machine. As evidenced by the above matrix and graphs, even though Friendly Cards would achieve a higher EPS by not acquiring CD but buying the machine, it would not meet the bank covenants. Advantages of our recommendation: * Meet all of the bank’s covenants; * Meet Ms. Beaumont’s growth needs; * Meet Ms. Beaumont’s requirement on D/E ratio of 2 by 1990; * Maintain a relatively high level of control for Ms. Beaumont over the company; * Position the company for future growth by providing a more favorable D/E ratio. Disadvantages of our recommendation: * EPS dilution by acquiring CD from $4. 64 per share in 1992 as compared to $4. 15 with the CD acquisition; * Reduce Ms. Beaumont’s control from currently 55% to 41. 5% with CD acquisition. PART 4 Goals for the Financial Structure of Friendly Cards, Inc. 4. 1 Friendly Cards capital structure consideration Our recommendation is that Ms. Beaumont to move Friendly Cards’ capital structure closer to 60% debt and 40% equity (a D/E ratio of 1. 5). Our reasoning for such a recommendation is as follows: Flexibility: For future growth and possible acquisitions, Funds for acquiring more assets (another envelope machine! ) to reduce costs. Risk: Ability to deal with possible adversity into the future (i. e. , low sales) Lower risk level than current D/E ratio Income: Future growth in earnings due to ability to acquire market share through acquisitions. Further exploit the economies of scale to reduce CGS, Handling and Distribution Costs Control: Maintain controlling interests in the company Timing: Having a higher D/E Friendly can issue equity at more favorable terms at a later date when EPS is higher, the market environment is â€Å"friendlier†, and the company will be in a better financial position. Our recommended target capital structure for Friendly Cards, Inc. of 60/40 D/E is realistically attainable within 3-4 years (mid 1991). Friendly Cards Case Attachments How to cite Assessment of Financial Health, Papers

The Advantages Of Stupidity (931 words) Essay Example For Students

The Advantages Of Stupidity (931 words) Essay The Advantages of StupidityMost people say being stupid will lead no where. They claim that it is the worst possible condition in which to spend ones life, and if possible, it should be completely avoided. They would even suggest if the symptoms of stupidity are caught in the early stages, it could easily be treated by a surgeon. The most effective method used to do this is the chainsaw technique, later described in volume two. Yet, perhaps if people took a closer look at someof the advantages stupidity had to offer, they wouldnt have such a negative attitude toward it. After reading this paper, one will underezd the advantages of stupidity. Admittedly, stupidity has certain disadvantages. Life isnt a bowl of cherries. And being stupid doesnt make it any fruitier. Being stupid can annoy even the most sensitive people. If one acts stupid, and does it in the wrong crowd, like a group of adults, it will seem more immature than funny. If one is forced to act stupid while dealing with lower life forms, for example, high school teachers, one may encounter barriers such as cruelty and insensitivity, with the utterance of statements like, Think with your head straight! or, You have a brain, use it. Yet these areall true, there are still many advantages to stupidity.The first advantage is very easy to underezd. Stupid people are never asked to do a lot. Many have noticed that people tend to steer away from someone they feel may be stupid. This is for a very good reason. The stupidity which they posses makes a name for themselves, a name which can be very difficult to shake. Possibly, it is a word which describes the working habit s of the person, such as crappy. Yet, this creates a positive situation for thestupid person.They will have a lot of free time on their hands for more of lifes truly meaningful pleasures. Some of these activities are combing facial hair, and counting the pixels on a Sony TV. Now, there has been a rumour going around that suggests that stupid people have low expectations. This is true. They are so stupid that they dont realize great from O.K. They could have a Sanyocordless phone, but would probably choose instead a Pierre Cardin alarm clock telephone, because it comes free with their sensamatic folding bed. And someone with the advantage of stupidity might have a hard time doing certain tasks, or setting things up. Yet this isnt allbad. For example, if a stupid person leaves the chore, and comes back to it later, no one will be able to underezd it. Would they get fired from their job? No. For the very simple reason that no one would underezd their work except for them. The job would have to be given back to the stupid person, perhaps with a higher salary, or someone would do it for them, leaving them with even more free time! Free time is great for brainstorming (Admittedly this seems to be a bad choice of words!). Yet the ideas stupid people create tend to be original. For example, when was the last time someone stupid said something, and made one think about it? It seems that people are always talking about someone elses dumb idea. An example of such an idea would be, How many stories will that english teacher drop before having a stroke? This would suggest that stupid people may have the upper hand when it comes to thinking up original ideas. In fact, the next time someone wants an original idea for something, they should try talking to their local, community stupid person. The reason for this is that while a stupid person thinks with his head, he does not do so an organized manner. This is why they have so much creativity. By thinking in this fashion, thei r ideas have a natural tendency to flow more easily, without the interruptionswhich occur from the editing of thoughts that logical people would have normally. Thus if someone else should say to one, That was a stupid idea! one should merely look that person straight in the eye, and say, Thank-you! This also means that the claim, Stupid minds think alike. is not true. All stupid minds have different ideas, each idea being original. One of the final advantages of stupidity is that stupid people are always remembered, even after graduation day. It has been noticed how a quiet person is always hard to detect, and often remains anonymous. There is a very good reason for this. The mind has a hard time keeping quiet people in its memory track. But it is much easier and pleasing for the mind to remember someone really stupid. Anyways, when was the last time one laughed at an idiot in ones grade 12 class? When was the last time one laughed at the little kid at the back of the room? The evid ence here proves how stupid people last longer in someones thoughts. The largest advantage which arises from stupidity is that it takes up 2/3 of DNA storage space, which is excellent for keeping stupidity in the family.Thus, stupidity clearly has many advantages, as long as someone is smart enough to use them! It is important to underezd that stupid people are like all other humans physically. Yet, because of the difference between smart and stupid people, smart human beings should give them some breathing space. Teachers can learn that someone graced with stupidity, deserves more respect. After all, they are special. .ud60c5b70c83a1d3899106be3c84e7a1b , .ud60c5b70c83a1d3899106be3c84e7a1b .postImageUrl , .ud60c5b70c83a1d3899106be3c84e7a1b .centered-text-area { min-height: 80px; position: relative; } .ud60c5b70c83a1d3899106be3c84e7a1b , .ud60c5b70c83a1d3899106be3c84e7a1b:hover , .ud60c5b70c83a1d3899106be3c84e7a1b:visited , .ud60c5b70c83a1d3899106be3c84e7a1b:active { border:0!importa nt; } .ud60c5b70c83a1d3899106be3c84e7a1b .clearfix:after { content: ""; display: table; clear: both; } .ud60c5b70c83a1d3899106be3c84e7a1b { display: block; transition: background-color 250ms; webkit-transition: background-color 250ms; width: 100%; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #95A5A6; } .ud60c5b70c83a1d3899106be3c84e7a1b:active , .ud60c5b70c83a1d3899106be3c84e7a1b:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #2C3E50; } .ud60c5b70c83a1d3899106be3c84e7a1b .centered-text-area { width: 100%; position: relative; } .ud60c5b70c83a1d3899106be3c84e7a1b .ctaText { border-bottom: 0 solid #fff; color: #2980B9; font-size: 16px; font-weight: bold; margin: 0; padding: 0; text-decoration: underline; } .ud60c5b70c83a1d3899106be3c84e7a1b .postTitle { color: #FFFFFF; font-size: 16px; font-weight: 600; margin: 0; padding: 0; width: 100%; } .ud60c5b70c83a1d3899106be3c84e7a1b .ctaButton { b ackground-color: #7F8C8D!important; color: #2980B9; border: none; border-radius: 3px; box-shadow: none; font-size: 14px; font-weight: bold; line-height: 26px; moz-border-radius: 3px; text-align: center; text-decoration: none; text-shadow: none; width: 80px; min-height: 80px; background: url(https://artscolumbia.org/wp-content/plugins/intelly-related-posts/assets/images/simple-arrow.png)no-repeat; position: absolute; right: 0; top: 0; } .ud60c5b70c83a1d3899106be3c84e7a1b:hover .ctaButton { background-color: #34495E!important; } .ud60c5b70c83a1d3899106be3c84e7a1b .centered-text { display: table; height: 80px; padding-left: 18px; top: 0; } .ud60c5b70c83a1d3899106be3c84e7a1b .ud60c5b70c83a1d3899106be3c84e7a1b-content { display: table-cell; margin: 0; padding: 0; padding-right: 108px; position: relative; vertical-align: middle; width: 100%; } .ud60c5b70c83a1d3899106be3c84e7a1b:after { content: ""; display: block; clear: both; } READ: Walk Essay