Finance

Pavilion, regret, forgiveness, and living in the present were the main themes presented In this play, Everyone has regrets on what they should or should have done but can we really go back in time to change our decision, no. All we can really do is learn from our mistakes and try not to make the same mistakes again. Forgiving sometimes Is a hard thing for someone to do. But once you get to the point where you can forgive someone you can finally move on from the problem.

In this lay, I will demonstrate what Kari and Peter did to show forgiveness, regret, and also lastly living In the present. What I realized was, Peter one of the characters Is always dwelling on the past. He makes the audience realize that he has missed his opportunity, but if he were to be given a chance he would want to go back in time and change his choice of leaving Karl. In the play he kept asking for a second chance from Kari. He knows what he did in the past was wrong and he begged for the narrator to go back a million years so he can redo the decisions he made.

But the narrator made it clear that she couldn’t change time. Peter keeps thinking that If he could go back in time he could change everything and everything in the present would be different. But what he doesn’t know is that if you aren’t living in the present then everything that he thinks Is all Just an Illusion. All he could really do now Is live with the decisions he made, and live in the present. Living in the present is something I think everyone should do. No one should dwell on pass events and sections because there Is nothing we can do to change what has already happened.

All we can really do now is Just deal with what we have right now and make the most of it. Another thing Peter dwells on is regret. Throughout the play Peter keeps talking about how he regrets the decision that he made and he wish he could go back and change his decision for Kari. Although Kari tells him there is nothing she can do now because she is partially happily married to a professional golfer she can’t Just leave him to be with Peter. Even though Peter regrets the decisions that he made when he was young all he can do now is learn from his mistakes.

Many people regrets a lot of decisions that they make because sometimes they weren’t thinking or they Just didn’t care about what would happen, this Is what happened to Peter. But living life with regrets is not something anyone should do. They should take regret as a painful experience and move on with their life and maybe Just look back and tell themselves how much better they are now because of this experience. Look at regrets like a ump in the road and it’s an experience in life where you have to just overcome it.

Kari, on the other hand is the opposite of Peter. She knows that what Peter did was wrong back then for leaving her when she was pregnant. But she knows that there Is no way for them to go back in time and change what he did. All she could do now is live with his decisions they made. Although she is married now and not happy she knows there Is nothing to do now to change the past. What she did In the play was she decided to forgive Peter and Just move on. Forgiving someone can be really hard

Finance

Introduction In this report, I will analyze the financial performance of SD by comparing It with Its industry peers. Sad’s asset quality, earnings capability and capital adequacy are the three aspects I will pay attention to when evaluate its financial performance. Then I will discuss whether it is appropriate for Unabridged to pay 1. 6 times book value for 18% shares in SD. And what is appropriate range for the price Unabridged can offer. The objective of this report it to assist Unabridged to make right decisions on whether to Invest SD or not and If Invest what Is appropriate price to pay for each share.

Part 1 SD’ financial performance In order to analyze the financial performance of SD, there are three aspects we should consider. And they are asset quality, earnings capability and capital adequacy of SD. I will exam its asset quality first. Asset quality First of all, the asset quality of SD seems In a big problem. There are two Important asset quality measures that managers and analysts should pay attention to, they are NP ratio (Nonporous loan) and NP coverage ratio (LARD/NP). Here, NP means nonperforming loan, it is a sum of borrowed money upon which the debtor has not dad his or her scheduled payments for at least 90 days.

Based on the data from Exhibit 10 on, Guan, & Bat, 2009), NP ratio for SD IS 1. 6% 2002 and the average NP ratio Is 7. 3% for other Joint-stock banks In china. Higher NP ratio Indicates SD got a worse quality of the loan portfolio, which means the SD got more nonperforming loan compare to industry peers. Moreover, I think the NP number SD reported is likely to be too low. Because Unabridged conduct the due diligence and they think the actual NP is higher. In details, SD was a government-controlled bank. And as a result, SD has poor governance and risk management issues.

For example, same as other banks In china, officers may trend to lend loan to their favorite clients due to poor governance. Moreover, government may force bank to provide loan to under performing state owned company at a low Interest rate. Furthermore, the credit management is not transparency in China. These reasons will cause significant increase in NP without disclosure it precisely. Therefore, the Sad’s NP is more likely to be too low and asset quality is lower than benchmark. When examine Sad’s asset quality not only amount of NP will be considered but also e should consider LARD level of SOB.

So it more likely there will not be enough capital to cover the loan loss, as the LARD is low. And lower actual LARD levels will have implications on Sad’s capital adequacy in the future as well. Because it may cause capital shortage in the future when the reserve cannot cover the future loan loss and immediate capital injection will be required. Large amount of NP may also on the other hand provide higher interest revenue for SD on the high-risk loan they made, so to determine its financial performance we have to also consider its earnings capability.

Earnings capability The key earnings measurements of SD are ROAR (net income/average total assets) and ROAR (net income/average equity). ROAR is called return on average asset. It is an indicator shows how much bank earns as a percentage of total assets. ROAR is an indicator for return on equity. And From 2000 to 2002, the SD’ s ROAR and ROAR are decreasing over time. Based on Exhibit 10 Non, Guan, & ABA, 2009), the average ROAR for industry peers is 0. 6%, higher than SAD’S ROAR, which is 0. 3%. The average ROAR for industry peers is 26. 8%, which is much higher than 9. 1% for SD.

These data wows SD is not a profitable bank as the profitability of both banks total assets and average equity are lower than industry peers. Moreover, the overall financial performance of SD is worse compare with its industry peers. This is because not only the ROAR and ROAR are lower than other banks but also other measure of firm earning capability are performing poor than industry peers. For example, the Operating expense/Operating income ratio for average industry peers is 55. 3% and for SD is 58. 3% din, Guan, & ABA, 2009). Which means for every operating income SD generated, it has to spend more than others.

There are two factors that mainly drive Sad’s poor financial performance. First of all, poor credit risk management leads to SD make massive low quality loan that impacts on Sad’s profitability. In details, as lack of credit policy, authorization system, approval mechanism and poor design for credit functions, the credit monitor and control is inefficient for SD and also slow it’s the responsive for markets. This directly has bad influence on Sad’s business portfolio and it’s operating performance. Secondly, SD also has governance problems as a state-owned bank.

As a result, SD often has to lend money to municipal projects and these borrowers often also the shareholder of SD. Therefore it arises conflicts of interest issue, which affects both SD decision-making and asset quality as well. When SD cannot manage independent and make it’s own decisions. SD more likely to lend loan for less profitable projects or even SD may make loan that it knows borrowers are unlikely pay back. This causes both ROAR and government officers and the compensation for current managers are not associated with their performance.

There are no incentives for board members to discipline the current management team and perform fiduciary duty. Therefore the current management team will not be working efficiently and in the best interest of all stakeholders, which is increasing the value of SD. So the operating expense/ operating income is also high for SD. Furthermore, the government regulation also limits the discretion of SD management team to make some critical operation decisions. For examples, SD does not have flexibilities in setting the interests rate of their loans and deposits.

As a result, SD more likely to charge lower lending rates for high credit risk loans, especially when make loan to municipal projects. Then the risk-adjusted profit for SD is also low. Poor asset quality with earnings capability, SD more likely to has problem in capital adequacy as well. Capital adequacy Sad’s Total CAR ratio has decreased from 10. 6% to 9. 5% during 2001 to ninny, Guan, & ABA, 2009). The CAR ratio is capital adequacy ratio that used by bank to evaluate its capability to meet the timeline liability and risk loss. Total CAR ratio is the sum of Tier 1 capital and Tier 2 capital divided by risk weighted assets.

In details, the Tier 1 capital equals equity plus retained earnings and Tier 2 capital is sum of subordinated debt and reserves. And the risk-weighted assets indicate the total sets of bank net potential losses according to the credit risk of different assets. The decreasing of Sad’s capital ratio may cause by two reasons. Firstly, the poor credit management leads to increase in risk-weighted assets of SD. Because governance problems, mismanaged by government officers and poor credit management system, SD has substantial loan quality troubles. The risk-weighted assets of SD increased as SD hold massive low quality loans.

So more capital was required by SD to cover the credit risk loss. But the capital of SD was not increase then the CAR ratio is deceased in 2002. Secondly, SD didn’t generate sufficient retained earning because they provide high-risk loan with lower interest rate to borrowers. Because SD is government owned company, SD sometime has to provide low lending interest rate to high-risk government projects. Moreover, as the credit management system is poor, there are conflicts of interest issues which leads officers in SD often lend loan to their favor clients with low interest rates.

All of these situation will cause sharply decrease in retain earning of SD, and then causes decline in CAR ratio. Because the capital is inadequacy and the NP is large, SD is to well capitalized. Even though the total CAR ratio of SD is 9. 5%, which slightly higher than Chinese government regulatory floor of 8%, it still seems very dangerous for SD to keep liquidity. Because if the new guidelines on CAR requirements are introduced and more strict rules are applied when calculate the capital adequacy in the futures, current CAR ratio of SD will be much lower.

So it is very likely that SD has to raise significant amount of capital to meet the new CAR requirement. As a consequence, SD has to raise capital through rights offering, public share issuance or private placements. These capitals raising methods would have a potential dilution effect on the value of stake Unabridged will have in SD. To be specific, there are three dilution effects may have on the stake of Unabridged will hold. First of all, the ownership percentage of share Unabridged have will be deducted when new old one, the value of stock Unabridged hold will reduce.

Lastly, it also decreases the value of stock Unabridged hold through reducing the share’s earnings per share. Therefore, the price Unabridged should pay for its stake will decrease when consider the dilution effects. Furthermore, SD may even not able to raise capital as it does to have government approval or market is in poor conditions. Then the operating of SD will immediate be threaten and the share price Unabridged hold will reduce significantly. Part Appropriate price to pay for The starting point of analyzing whether the valuation of 1. Times book value is appropriate and what is the appropriate valuation range, is the Sad’s tractable shares prices. However several factors should be taken into consideration. First of all, SD has competitive advantages with its national banking licenses, extensive branch network and location. To be specific, SD is one of the China’s eleven Joint-stock ankhs and hold a national banking license. Moreover, SD is also one of the four listed banks in Chinese stock market with 198 branches in 17 cities din, Guan, & ABA, 2009). These merits provide SD a competitive advantage in getting low cost funding.

And the location of SD is in the Pearl River Delta that is considered as the most affluent regions in China. Therefore, SD expected to has fast loan growth due to the region’s economic boom in the future. As SD plays an important role in Pearl River Delta economic development, it has great opportunity for future success. Secondly, Sad’s effective control rights provide huge franchise value for foreign financial buyers or strategic investors and the value is also unique. As Chinese regulation sets that no single foreign investors can own 20% shares in a Chinese commercial bank.

There is no other Chinese commercial banks can provide foreign investors effective control rights in the foreseeable future, expect SD. As a result of Sad’s dispersed shareholder base, Unabridged can get the effective control rights of SD by having 18% shares. And it is important for strategic investors to have control rights, and then they can conduct restructure for troubled banks. Therefore significant control premium should be considered when decide the value of each share to pay for. Moreover, it also provides franchise value to foreign investors in enter and expand in highly regulated banking industry in china.

Furthermore, in this deal, Unabridged can obtain 8 out of the 15 board seats, appoint CEO and set new management team Non, Guan, & ABA, 2009). The challenge part of investing in Chinese banking industry is investors do not have rights to solve corporate governance problem and improve banks credit risk management. Therefore it will be the biggest concern for both uncial and strategic investors to invest in Chinese commercial banks, as they cannot solve the NP problem. However, with this investment, Unabridged can undertake control and make decisions to solve Sad’s problems.

Then SD more likely to become profit in the future and Unabridged can gain from its investment. However, there are still three problems have influence on price Unabridged willing to pay for. Firstly, Chinese banking industry still considered as a high-risk market to invest and share price for it is volatile. Moreover, Sad’s financial performance is poor among credit management. And after getting effective control rights, Unabridged can take action against them. Then SD will likely perform well in future as Unabridged has past experience in dealing with similar case.

Another important issue is SD is under capitalized currently and may require raise capital, and then the share value of Unabridged will be dilution. Furthermore, the 18% shares Unabridged hold is non- tractable shares, this will cause liquidity problems. Specially, it may hard for Unabridged to convert its non-tractable shares to tractable shares because there is still no specific timetable for this. To sum up, even the financial performance of SD is or, but the effective control rights it can provide to Unabridged is very attractive.

And moreover, the value is very unique. This is a challenge investment with great opportunity. Moreover, as Unabridged can form new management team and has right for decision-makings, it more likely SD will perform well in the future as it has competitive advantages. When look back past similar cases, foreign investors had invested four Chinese banks since 1999. The average investment price is around 1. 5 times book value, without effective control rights. Therefore, it is appropriate for Unabridged offer 1. Times book value as the premium for effective control rights.

Finance

How can a manager turn the accommodation of employees’ religious and/or spiritual perspectives Into a competitive business advantage? 2. Dowdy think that It can benefit an organization to provide religious accommodations? Why or why not? 1. How should management accommodate a variety of conflicting spiritual perspectives in the workplace? Working environment peaceful existence is a developing empathy toward an expanding number of associations, workers, and occupation seekers.

In today’s tumultuous business world, figuring out how to amicably esteem different people groups’ profound convictions can end up being very valuable to an association. To suit these distinctive and clashing otherworldly points of view, the administration ought to take the accompanying activities: Forming an executive committee In the organization. This committee should be composed of representatives for each of the various religions found In the organization.

This ensures that the grievances of embers and all Issues affecting them are handled on equal basis and their demands are well presented to the management. Questions regarding an employees religious beliefs are answered by the representative of that particular religion or spiritual belief. 1 . How can a manager turn the accommodation of employees’ religious and/or spiritual perspectives into a competitive business advantage? 2. Do you think that it can benefit an organization to provide religious accommodations? Why or why not? Respective In the workplace? Working environment peaceful existence Is a developing empathy toward an ought to take the accompanying activities.

Leave a Reply