Gender Roles And Gender Norms Essay - 1610 Words

Ever since we were born, the way people behaved and interacted with us made us the person we are today. Through this socialization, we also learn how the society’s rules and norms that we live in. An example is when children introduced to certain roles that are linked to their biological sex, teaching how a child how a man and woman should behave. When a child is born, parents would typically dress their child according to their sex. If it is a boy, he is dressed in blue, and if it is a girl, she is dressed in pink. In our society, these roles given to us are mainly based on gender norms and standards. It is known that masculine roles have traditionally been associated with physical strength and dominance, while feminine roles have been associated with gentleness, empathy, and nurturing. Whereas boys are told that real men don t cry and are pressured to not express their vulnerable emotions, girls are taught that it is okay to show and discuss their feelings with others. To th is today gender roles in the United States continue to be in a state of flux to a certain degree, although traditional gender norms still applies at times. Masculinity plays a big part of being a male in the society we live in and if one were to break a gender norm, they would be ridiculed. For example, it is a gender norm that men do not use cosmetic products and that it is strictly only for women since it conveys feminine interests. If a man were to go to a department store to buy makeup orShow MoreRelatedGender Roles And Gender Norms Essay1774 Words   |  8 Pages Gender roles are sets of rules, and societal norms that dictate how people should act, or behave in society. Many gender norms are often influenced by the pressures from culture, family, media, and peers. Although gender roles are not biological, many people are still coerced into believing that individuals are not supposed to practice desired wants, or freedom because only certain genders can exercise the right to pa int one’s nails, open doors, pay for a date, and more. Often, gender roles andRead MoreGender Roles And Norms Of Society892 Words   |  4 Pagesthe words â€Å"policeman,† â€Å"fireman,† â€Å"chairman,† â€Å"businessman,† and â€Å"weatherman† seem to be five of the most commonly used ones. The meanings of these words, and especially the qualities they imply, not only describe gender roles and norms in today’s society, but also describe gender roles from previous societies. The first two words on the list are fairly similar because they describe professions which could potentially be extremely dangerous. Policemen and firemen are viewed as heroes in society becauseRead MoreGender Roles And Societal Norms2024 Words   |  9 Pagesrealize that they were setting up gender roles for us as kids, that we aren t completely comfortable with today† (â€Å"Gender Roles in Disney Films†). Now, as adults we realize that Cinderella was mainly about gender roles and societal norms. â€Å"Results suggest that the prince and princess characters differ in their portrayal of traditionally masculine and feminine characteristics, these gender role portrayals are complex, and trends towards egalitarian gender roles are not linear over time† (EnglandRead MoreThe Role Of Sex And Gender As A Cultural Norm1507 Words   |  7 PagesThe role of sex and gender as a cultural norm is everchanging. From definition to terminology to legality and politicization, t hese topics vary from one culture to the next and one era to the next. One of the strongest examples of a culture carrying very different ideas of sex and gender is an early Northern European Culture. Carol Clover, in her essay â€Å"Regardless of Sex: Men, Women, and Power in Early Northern Europe,† identifies a â€Å"one-sex, one-gender model †¦ that plays out in the rawest and mostRead MoreGender Roles Are A Set Of Societal Norms Essay1648 Words   |  7 Pagesâ€Å"Gender roles are a set of societal norms dictating the types of behaviors which are generally considered acceptable, appropriate, or desirable for people based on their actual or perceived sex or sexuality† (Oxford). Is it a boy or girl? What sport will he play? When will she take dance lessons? Women shouldn’t have jobs! Men should work while women take care of the house! Women belong in the kitchen! Men don’t do household chores! These are just some examples of stereotypes adopted by societyRead MoreGender Roles Are Set Of Societal Norms1530 Words   |  7 Pages Introduction Gender roles are set of societal norms dictating the types of behavior which are genrally considered acceptable , appropriate based on their actual or perceived sex or sexuality of the person. Gender roles are also determined by the prevailing cultural norms. Gender stereotypes also alters the the attitudes, traits, and behavior patterns of males and females. Gender stereotypes on the basis of sexism, or the prejudiced beliefs that value males over females. Common forms of sexism inRead MoreGender Roles : A Social Norm For Women1633 Words   |  7 Pagesthought about gender roles growing up. I wanted to shave my legs by the time I was eight, I wanted to wear makeup before I even hit sixth grade, and I used to cry when my mom told me I had to wear pants to school instead of a dress when it was cold outside. I was your stereotypical feminine female. But as I have grown up, I have begun to realize that many people are not like me. I have also begun to realize what many more people expe ct from me. Wearing makeup has become a social norm for women. LittleRead MoreImpact Of Social Norms On Gender Roles3192 Words   |  13 PagesThe purpose of this study is to determine the impact social norms have on gender roles. Social norms can be described as group views of how affiliates should behave in a certain perspective (Baron, 2009). Gender roles are the behavioral norms that are considered appropriate for either males or females in a social or personal relationship (Baron, 2009). This inquiry will test the influence social norms has on gender roles in marriage. There will be a total of 100 college students who will participateRead MoreDoes Gender Role Norms Affect Behavior?1698 Words   |  7 Pages, 2005). These ideas, called â€Å"gender role norms,† affect the way people believe they are supposed to act, think, and even feel depending on their sex (Mahalik et al., 2005). These norms can be learned through simple observation, such as how children of different sexes act in television commercials and what behaviors are reinforced by parents depending on their child’s biological sex. As children grow up, their knowledge on gender norms and judgments on which norms can be violated generally increaseRead MoreGender Roles Are Based On Norms, Standards, Or Beliefs Created By Society931 Words   |  4 PagesGender Research Paper Gender roles are based on norms, standards, or beliefs created by society. American culture created the ideals that masculine roles (men) have traditionally been associated with strength, aggression, and dominance, while feminine roles (women) have traditionally been associated with passivity, nurturing, and motherly. â€Å"When Men Break the Gender Rules: Status Incongruity and Backlash Against Modest Men† focuses on atypical men who behave modestly during a job interview and

The Ancient Civilizations of Central and South America Essay

The Ancient Civilizations of Central and South America Central and South America was once home to some of the ancient worlds most magnificent and glorious civilizations. The Incas, Aztecs, and Mayas were just three of these civilizations. These civilizations ruled the area for many years, and flourished greatly in their own different ways. They were the cause for much advancement in arts, architecture, politics, religion, and society in the world. These civilizations created pyramids, temples, and monuments in honor of their gods and rulers. Their people proved to be intellectually advanced, and they were able to successfully create calendars, alphabets, and predict solar eclipses. They all†¦show more content†¦They began as a tribe of nomads and hunter-gatherers. They were not used to settling and living in one area for many years, and so it was after a few years that they began to form permanent settlements. At this time the Aztecs were not even near being a major empire, as their arrival in the region had absolutely no imp act on the other tribes that were already settled there. It took many hundreds of years for the Aztecs to make a strong-hold in Central America. As this process took place they started to grow as a tribe and made more enemies. Many battles were fought with their neighboring tribes, and the Aztecs had to flee to the islet located on Lake Texcoco. It was there, as an island-city, that Tenochititlan was first built by the Aztec tribe and made their capital city. Overtime it matured into their largest city as well.[1] The city of Tenochititlan went through many hardships, and many wars. But, in the end the Aztec people prevailed and finally began to show their true colors with the makings of a unique civilization and culture that would dominate the Americas for many years. This showed great resilience on their part, and proved to people that they would fight for their survival against anyone. ¹ Tenochititlan was situated perfectly for farming and agriculture. The city was surrounded by about five rivers, and every year these rivers would flood and the soil wasShow MoreRelatedGold and World History: Glittering Motivation for Exploration, Invasion and Development737 Words   |  3 Pagesmost valuable materials all around the world. This jewel has its own glittering appearance and shiny color which induce people to desire to possess it. That’s probably why Europeans in the middle age have explored new continents and invaded other civilizations to find this glittering material. Americans also had given much endeavor to mine that valuable jewel in the time of gold rush. Investigating these events, gold has immensely affected the world history; the Age of Exploration, invasions of SpaniardsRead MoreMayans, Incas, And Aztecs Essay1586 Words   |  7 Pagesto an end, there is one civilization that we can put the blame on, the Mayans. There were many myths and legends th at come from the 3 major civilizations that we’ve all learned about; Mayans, Incas, and Aztecs. The Mayans, Incas, and Aztecs built great and legendary civilizations in Mexico, Central America, and South America and with understanding these three we get a better understanding of the early life in these places. The first of these three is the Maya civilization. Tracing back to the MayansRead MoreEconomy in Early American Civilizations: Maya, Aztecs and Inca865 Words   |  4 Pagesin southern Mexico and northern Central America from the 3rd to the 10th century CE, and they relied on the trade of goods such as obsidian and crops such as cacao beans. Another American civilization was the Aztec civilization. They were located in the Valley of Mexico around the 13th to 16th century CE, and they used slash-and-burn farming to plant crops to trade. The Inca Empire existed from the 13th to the 16th century CE along the Pacific coast of South America near the Andes Mountains. The IncaRead MoreAztec, Inca And Aztec Civilizations1134 Words   |  5 PagesBefore the legendary empires of the Romans and the Greeks, there were other prospering civilizations thriving in parts of Central America and parts of Mexico. The Mayan, Incan and Aztec civilizations were a few of the greatest ancient civilizations in history, but they each had distinct characteri stics that helped them prosper into the great empires that they became. Each had their own fascinating ways of food production, governing system and culture. The Mayans were established first out of theRead MoreSlavery And Its Effects On Society1440 Words   |  6 Pagesspans to nearly every culture, nationality, and religion and from ancient times to the present day. Slavery was a legal institution in which humans were legally considered property of another. Slaves were brought to the American colonies, and were utilized in building the economic foundations of the new world. In the 18th century, new ideas of human rights and freedom emerged out of the European Enlightenment stretching across the Americas and Europe. By the era of the American Revolution, the beliefRead MoreThe Republic Of The Inca Empire1648 Words   |  7 Pagesthe third largest country in South America and is about 3 times the size of California. (New World Encyclopedia) Peru has many different ethnic groups an d was also the center of the Incan Empire. There are still ruins and landmarks that still stand from this ancient civilization. There are also various types of climate regions which truly makes Peru a one of a kind country. History Peru has a long history of people and groups that could possibly pre date the ancient superior compared to the othersRead MoreThe City Of The Aztec Empire953 Words   |  4 PagesWhen thinking of ancient, urban centers many think of ancient capitals such as Rome, Athens, or Cairo. However, across the Atlantic Ocean in Central and South America, there were a number of growing urban centers being built by the Aztec, Mayan, and Incan civilizations. An example of a Central American urban center is Tenochtitlan. Tenochtitlan was the capital of the ancient Aztec capital which is located in present-day Mexico-City, Mexico. The development of this ancient city was dependent on threeRead MoreThe Aztecs Werelocated In Mexico, Built On A Series Of1180 Words   |  5 Pagesruler the Huey Tlatoani. The Huey Tlatoani was the ultimate power in the land. They felt that he was appointed by the gods and had the divine right to rule.The Aztecs had no iron or bronze with which to make their tools and weapons. Therefore, the ancient Aztec people had to develop a means for creating effective tools and weapons without the benefit of these metals. For this reason, many Aztec tools were made with obsidian and chert.Invaders led by the Spanish conquistador Hernan Cortes overthrewRead MoreStearns Book Chapter 1 Notes894 Words   |  4 PagesNotes from Stearns’ text book World Civilization 1:1 The Neolithic Revolution (10-13) †¢ Farming initially developed in the Middle East, the Fertile Crescent. Grains such as barley and wild wheat were abundant. Also, not heavily forested, and animals were in short supply, presenting a challenge to hunters. 10,000 BCE to 8,000 BCE. Notice: it took thousands of years for this â€Å"revolution† so not fast but profound for history. Agriculture was hard for many hunting and gathering peoples toRead MoreA Brief Note On The Civilization And The Indus Valley Civilization860 Words   |  4 Pagessigns of urban life. 2. Indus Valley civilization: The Indus Valley civilization is located in present day Pakistan. This civilization had evidence to provide little indications of no political hierarchy or centralized. 3. Central Asian/ Oxus civilization: A civilization that was economically based on irrigation agriculture and stock raising. This civilization was a focal point of a Eurasian-wide system of intellectual and commercial exchange. This civilization started to fade away by 1700 B.C.E

A criminologist free essay sample

A criminologist blames economic recession and complex financial system as major reasons for the rising white collar crimes in the U. S. â€Å"In huge numbers of cases, people are not aware that they have been victims of white collar crime, for example, subjected to illegally spewed out pollution, or that they have purchased products that are unsafe, or that they have been subjected to corporate price fixing, or to the consequences of commodity speculation, which is believed to be one significant factor in driving up the cost of gasoline at the pump. â€Å"Witnesses† of white collar crime who often do not realize that a crime has occurred , may be confused about what to do in response to it. And our traditional frontline enforcement agencies ha not been organized to monitor and respond to white collar crime. In this case principal gents who handle such cases play an important role in white collar crime. Informers Whistle Blowers: Ethics Text #6. How can corporations ensure that their employees behave ethically? An ethical culture should be a top priority of every business, large or small.The challenge for many organizations is trying to understand what it takes to build one. From an enforceable code of conduct, to ongoing training and communications, to an anonymous reporting hotline, companies can quickly implement ethics and compliance programs and solutions that foster an ethical culture across the enterprise. In many companies today, management is dealing with a hodge-podge of different personalities, belief systems, backgrounds, ethnicities and politic affiliations. These are just a few things that may impede creating a single unified system of ethics.While many may say that right and wrong is what should ultimately determine the culture, others will argue that what is right for the majority may not be right for the minority. Having an ethical culture is an important component to running an effective business today. In fact, with the current state of legal and industry regulations, from Sarbanes-Oxley to HIPAA, not only is having an ethical culture a good idea, it is now practically a requirement. Developing an ethical culture will take more than creating a list of company dos and don’ts; although that list will help.It will take more than issuing a code of conduct via email to a new hire; although that too will help. What it will take is a combination of things. On this page, we focus on the top six steps that have the most effective and direct impact on establishing an ethical culture. The six steps are as follows: 1. Establish an enforceable code of conduct 2. Initial and ongoing training 3. Regular communications 4. Anonymous reporting hotline 5. Enforcement/Action 6. Rewarding employees that live the culture 1. Establish an Enforceable Code of ConductA code of conduct, often referred to as a code of ethics, is the foundation of any ethics program. The code of conduct should not be designed as a reaction to past missteps. An ethical culture is built upon the proactive efforts of the organization. The development of the code of conduct should be led by those at the top of the company, and should also include employees in the process. 2. Initial and Ongoing Training There is a phrase that has been used many times when it comes to training: â€Å"The day we stop learning is the day we die. †One of the most important aspects of developing an ethical culture is the ongoing training that companies can provide to executives and employees. The purpose of training is to help employees know what is expected of them and to help them understand that a strong ethical culture can protect the company’s reputation and actually enhance profits. Employees need to know that their ethical or unethical choices will have a direct impact on the success or failure of the company. In addition, training should also be tailored to specific positions in the company and employees roles.Management may need additional training to help deal with employee issues, while someone in purchasing may need more training on gifting policies and someone in finance needs to understand the company’s position on fraud. 3. Regular Communications Once the policy has been executed and training has started, communicating aspects about the code of conduct can have a significant impact on the ethical culture. Many of these communications come through the human resources department, but the voice of the executive management team is critical in these communications.The goal of communications is to make ethics a live, ongoing conversation. If ethics is something that is constantly addressed, referenced frequently in company meetings, and in personal conversations among managers and employees, then people are more aware and more willing to defend the company’s policies when they see or hear of problems. Employees will hold other employees responsible and accountable for living the company’s values. 4. Anonymous Reporting Hotline The fact that an ethics hotline exists within many companies may be a surprise to their employees. The hotline number or Web site URL is often hidden in the back of an employee handbook or within the dusty binder labeled Corporate Governance. An anonymous hotline provides employees with a confidential way of reporting unethical or inappropriate behavior. Many people are not comfortable with reporting bad behavior for fear of being considered a â€Å"snitch,† possible repercussions if the guilty party learned of who reported him or her, or perhaps impacts on their job. â€Å"Unfortunately, more than two of five employees (42 percent) who witnessed misconduct did not report it through any company channels. Others may want to report their concerns, but are not comfortable going directly to a manager or fellow employee. This is why the anonymous reporting hotline is so important. In its 2006 Report to the Nation on Fraud and Abuse, the Association of Certified Fraud Examiners concluded that â€Å"Occupational frauds are more likely to be detected by a tip (34%) than by other means such as internal audits, external audits or internal controls. 5. Enforcement/Action A code of conduct has to be enforceable, and a company needs to take action when problems arise.Employees should be part of the enforcement and know if and when it has been violated. While 42 percent of employees are reluctant to report unethical behavior, the good news is that the ERC study also found that â€Å"the rate of misconduct is cut by three-fourths at companies with strong ethical cultures, and reporting is doubled at companies with comprehensive ethics programs. † Unethical behavior can have a damaging effect on a variety of aspects of a business, from brand reputation to bottom-line revenues.WorldCom’s and Enron’s names will forever be connected to accounting scandals that led to the Sarbanes-Oxley Act of 2002. Lockheed Martin was forced to pay $2. 5 million for knowingly looking the other way on alleged racial discrimination. Without enforcement, ethical guidelines listed in a corporate code of conduct are simply nice suggestions. 6. Rewarding Employees That Live the Culture The final step in developing an ethical culture is rewarding employees that behave ethically and live the culture that the organization is trying to instill companywide.With an ethics policy in place, ongoing training and communications, the ability to report unethical behavior and strict enforcement, an organization will have the structure in place that will leave little doubt the importance of ethical behavior. Like a manufacturing company that brags about its safety record with signs indicating how many days without an accident, companies should publicly congratulate their employees for adhering to the code of conduct.That performance could be rewarded in terms of a bonus based on how much money the company saved by not having internal issues or having to fight legal battles over unethical business or accounting practices. If an employee completes ethics training, is responsible for blowing the whistle on questionable activities, or provides unique ways for protecting the company’s confidential information, he or she should be recognized publicly by management. Employees need to know that creating an ethical culture is important to everyone from their direct managers to c-level executives.

The Literate Arts What is the Purpose Essay Example For Students

The Literate Arts: What is the Purpose? Essay Four authors that elaborate on the concept of determining the purpose of literate arts education are Paolo Fire in The Banking Concept of Education, Mary Louise Pratt in Arts of the Contact Zone, Richard Rodriguez in The Achievement of Desire, and Richard Miller in The Dark Knight of the Soul. Firers The Banking Concept of Education focuses not mainly on the purpose of the literate arts and education with the literate arts, but the fact that if isnt taught correctly, then it is useless. In detail he describes education as a dehumidifying action in todays schools (323), He also challenges this concept with what he believes education should be as opposed to what it is. In his pinion, education should be a problem-posing way of teaching (321). Fire communicates that it should trigger a deeper, more critical way of thinking and a more prominent drive for inquisition in students learning strategies by saying Knowledge emerges only through invention and re-invention, through the restless, impatient, continuing, hopeful inquiry human beings pursue in the world, with the world, and with each other (319). We will write a custom essay on The Literate Arts: What is the Purpose? specifically for you for only $16.38 $13.9/page Order now Rather than just reading to memorize, he expresses his belief that a student should be taught to challenge and elaborate on what they read. When I read Rodriguez The Achievement of Desire, immediately saw a connection between his and Firers writing. Rodriguez writes about his personal educational experience. He refers to himself as the scholarship boy and describes his learning process as being completely motivated by his teachers. In his writing, he expresses his view of them as being ultimately knowledgeable, and communicates his desire to have the same knowledge as them. To do this he tells of how he isolated himself because this is how he felt he could obtain the same knowledge that his teachers had (515). Eventually Rodriguez writes about his utter loneliness and tiredness of just eating and rereading, and describes that he had a feeling that something was missing when he says l became impatient with books. I wanted experience more immediate. I feared the library silence. Silently scorned the gray, timid faces around me, grew to hate the growing pages of my dissertation on genre and Renaissance literature. In my mind heard relatives laughing as they tried to make sense of title. ) I wanted something couldnt say exactly what (531), He communicates in his essay somewhat of a hidden example of what Fire calls the banking concept of education (31 91 In r-Eires essay, he elaborates on the act that in the banking concept, the instructors make themselves superior to their students in a way that says they are the ones that know everything, while the stude nts are depicted by the instructors to know nothing (313). This makes a connection with the Rodriguez Of some aspects Of his own experiences. Rodriguez and Firers essays are similar in the sense that Rodriguez proves that the banking concept is a legitimate concept. Rodriguez unknowingly uses himself as an example of the banking concept and exhibits an interesting connection between his and Firers opinions. Mary Louise Pratt writes about what she calls the contact zone. She depicts the contact zone through examples of people using literate arts to branch out of their comfort zone in a particular community and up to a more advanced level where they are able to gain an ability to express their intelligible thoughts to people that are experts or at a higher level than themselves (487). Pratt communicates that this ability to use the literate arts well in the contact zone is important in the aspect of expanding and improving oneself intelligibly and as a whole (485, 486). .u7a1a1cf4a90c3ab481cdd8e170965649 , .u7a1a1cf4a90c3ab481cdd8e170965649 .postImageUrl , .u7a1a1cf4a90c3ab481cdd8e170965649 .centered-text-area { min-height: 80px; position: relative; } .u7a1a1cf4a90c3ab481cdd8e170965649 , .u7a1a1cf4a90c3ab481cdd8e170965649:hover , .u7a1a1cf4a90c3ab481cdd8e170965649:visited , .u7a1a1cf4a90c3ab481cdd8e170965649:active { border:0!important; } .u7a1a1cf4a90c3ab481cdd8e170965649 .clearfix:after { content: ""; display: table; clear: both; } .u7a1a1cf4a90c3ab481cdd8e170965649 { 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; } .u7a1a1cf4a90c3ab481cdd8e170965649:active , .u7a1a1cf4a90c3ab481cdd8e170965649:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #2C3E50; } .u7a1a1cf4a90c3ab481cdd8e170965649 .centered-text-area { width: 100%; position: relative ; } .u7a1a1cf4a90c3ab481cdd8e170965649 .ctaText { border-bottom: 0 solid #fff; color: #2980B9; font-size: 16px; font-weight: bold; margin: 0; padding: 0; text-decoration: underline; } .u7a1a1cf4a90c3ab481cdd8e170965649 .postTitle { color: #FFFFFF; font-size: 16px; font-weight: 600; margin: 0; padding: 0; width: 100%; } .u7a1a1cf4a90c3ab481cdd8e170965649 .ctaButton { background-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; } .u7a1a1cf4a90c3ab481cdd8e170965649:hover .ctaButton { background-color: #34495E!important; } .u7a1a1cf4a90c3ab481cdd8e170965649 .centered-text { display: table; height: 80px; padding-left : 18px; top: 0; } .u7a1a1cf4a90c3ab481cdd8e170965649 .u7a1a1cf4a90c3ab481cdd8e170965649-content { display: table-cell; margin: 0; padding: 0; padding-right: 108px; position: relative; vertical-align: middle; width: 100%; } .u7a1a1cf4a90c3ab481cdd8e170965649:after { content: ""; display: block; clear: both; } READ: Recycling EssayRichard Miller addresses the concept that teaching the literate arts may not be as useful and applicable to students lives as many make it seem, He elaborates on the fact that although so much emphasis is put on the importance of making students use strategically critical ways of interpreting what they read, it will not protect them from the real world (423). Millers theory challenges Prates in a vagary Miller implies the unimportance of the literate arts in the future lives of students in the sense that literate arts cannot attend to the issues in our culture, while Pratt stresses the importance of the literate arts in that learning to use them in a self-reflective way can improve ones ability to inferno the issues in our culture, and confronting the real world may be largely considered a problem of the real world in and of itself. Although all four Of the authors mentioned previously have valid points, my opinion in relationship to theirs takes quite a leap. Fries essay is the one could relate to the most seeing that the vast majority Of my thirteen years Of previous education was based upon the banking concept of education. I agree with Firers opinion that the depository way of educating students should be eradicated, however I do not agree that it will have such an abominable impact n the world as he describes it will. Eave the same agreement and disagreement with Millers essay. In my opinion the teaching of literate arts should not be so entirely focused on how it will fix certain problems in our culture or improve our culture, but I have an understanding of how it could affect The fact that all of the authors mentioned in this essay make legitimate points and connect triggers my thoughts. When I combine all toothier ideas and opinions come to a conclusion that perfectly describes how would answer the question Math are the literate arts good for? My belief is that the literate arts are not opposed to be so deeply dug into that they control how society acts and reacts, The literate arts are only considered negative when they are connected to aspects that they dont necessarily need to be connected to, such as the violent culture changes Miller mentions in his essay (423).

The Power Of Music Essays - African-American Music, Music, Blues

The Power Of Music Music is the expression of emotion through the medium of sound. From the very first moment a human heard a songbird and endeavored to recreate that beauty, or beat on a hollow log and found the rhythm compelling, music has become the most powerful freedom given by God. Music, in itself, is a characteristic common and unique to all cultures throughout the world. Every culture in history includes music as an important part of everyday life. Music, as a part of culture, will most often have more roles to play than a source of auditory pleasure. According to anthropologist, Raymond Firth, They have work to do, to serve as funeral dirges, as accompaniments to dancing, or to serenade a lover.(p171) However, the musics form, style, texture, and system of harmony, is a s varied as the personalities found on any given New York City subway train. From simple folk songs, to religious chants; from Carnegie Hall, to the Red Light District in New Orleans; the range and diversity of human music is almost incomprehensible. It has been said that the best way to learn about a people, about its culture, is to observe and listen to its art and music. Music is the most powerful of all the arts because it stimulates, manipulates and dissipates our moods through the emotions. Music, in our culture, functions in many ways; it can make work more enjoyable, create a fraternity among men, encourage a spirit of worship, and be an expression of emotion. Music can make hard work seem easier, or rather, make it tolerable. In the days of slavery in the united states, the birth of the blues, singing while working in the fields was a good way to make the day go by. Singing about your sadness unburdens your soul.(King and Ritz,p110) This same tendency occurs today. Next time you drive past a house that is undergoing construction, or anywhere people are doing hard manual labor, stop and listen for music. Often there is a radio blasting some rhythmically driving Rock and Roll song. (Rock and Roll is a direct offspring of the blues) A friend of mine, who is a carpenter, explained to me this way; Youre just out there workin and gettin all sweaty, and listnin to the music, and pretty soon youre still workin but you dont know it cause your mind is somewhere else. Music can create a tight fraternity among groups of people. Music is often used in the military to organize and coordinate the movements of large groups of people. Short rhythmic melodies, called cadences, are sung by soldiers as they are marching in order to keep a common time and a constant beat. Music has even been used as a form of secret communication in small groups. B.B. King, a legendary blues singer, recalls stories passed down from his great-grandmother, who was a slave. They [the slaves] were also delivering messages in musical code. If the master was coming, you might sing a hidden warning to the other field hands...that was important to the women because the master could have anything he wanted. (King and Ritz,p110) A societies music is what holds it together as a group. According to Edward O. Wilson, a Harvard socio-biologist; Singing and dancing serve to draw groups together, direct the emotions of the people, and prepare them for joint action. (p564) In many tribal cultures, ritualistic singing and dancing precedes many important events, such as; the hunt, war, marriage, birth, and death. Many of the social events in our culture are accompanied by music also, such as dances and graduation ceremonies. Even when shopping at your local grocery store you can hear the soothing sounds of music. To observe the uncanny socially adhesive property of music, attend a modern rock concert. The transformation of thousands of individual personalities into one unified mob, bouncing in unison to the pounding rhythms and loud chords, is almost instantaneous. Arthur William Edgar OShaughnessy describes this power of music wonderfully in an excerpt from We Are the Music Makers. One man with a dream, at pleasure, so go forth and conquer a crown; and three with a new songs measure can trample a kingdom down.

Prostitution in Cuba essays

Prostitution in Cuba essays Despite Castros effort to reduce prostitution and sex tourism, these problems still remain in Cuba. Many articles report that these efforts have not helped because of other regulations around the world. A John Hopkins University report says Canadian and American tourists have contributed to a sharp increase in child prostitution and exploitation of women in Cuba (due to) a current drop in political restriction on travel to Cuba and a crackdown on sex tourism in Southeast Asia (Calzon). These factors have encouraged more tourists to travel to Cuba for sex because they know that Castro will allow them to get away with it. American policy towards Cuba is another factor that has influenced the continual increase in prostitution in Cuba. Castro has been able to use the United States policy to build hostility against the US to justify actions that are not helping Cuba at all. This hostility increases the fear of ordinary Cubans that the US might invade or that right-wing Cuban-American exiles will return from Miami to Havana and take back their property (Esler). Esler went on to say that year on year the conditions for ordinary Cubans get worse, rations down, prostitution up. Tourism, of course, also plays a big role in the staying power of prostitution. With so many people coming to Cuba for this reason, it is difficult to stop an industry which helps the economy so much. The New Republic reported in June 2000 that the government has even begun referring to these women as promoters of tourism (Kielly). Other than for sex, it is thought that few people would visit Cuba if given the chance. The sex, of course, is what most of the tourists come to Havana for. Have no doubts about this. Theyre not here to show solidarity with 40 years of continuous revolution, or to study architecture, and they certainly arent here for the food (Kielly). ...

Water and Its Importance in Broward Countys Environment Term Paper

Water and Its Importance in Broward Countys Environment - Term Paper Example Pollutants taken by this run-off can be released into pathways, ponds, and other systems water with negative ecological effects. In Broward Nation, a major resource of stormwater contamination is scenery run-off. The plant foods, weed killers, and bug sprays we use to keep our lawns looking their best can actually end up doing more damage than good. When it downpours, these pollutants along with other contaminants like fuel and oil can run off from our qualities and into our local storage areas, pathways, and larger systems water like the Everglades and Seaside Ocean. Flower foods, in particular, can cause some serious issues for our water resources. Flower foods promote the development of plankton and marine fresh mushrooms because they contain high levels of nitrogen and phosphorus, two nutritional values that encourage plant development. The out of control development of plankton and unwanted marine vegetation (like hydrilla and cattails) and Water hyacinth damages our ocean often . Once fertilizers get into our waterways, they can cause the rapid development of plankton. Algal biomass atmosphere the water and blocks sunshine, causing stress to marine vegetation. When that vegetation passes away, it sinks to the bottom and is decomposed by parasites. As the parasites feed off the vegetation, it reduces oxygen from the water that seafood and other creatures need to live, and can outcome in large seafood destroys. Plant biomass can also cram pathways, reducing discharge. This often results in the need for chemical treatment, which is not only costly but also plays a role in the contamination of our water.   Excess fertilizers in our water can also cause changes in established surroundings. For instance, cattails can grow so heavy that they press out all local vegetation, allowing exotic and obtrusive vegetation to take hold. This can limit looking by creatures and eventually cause local varieties to seek other places for the environment.

Obama Care Essay Example | Topics and Well Written Essays - 1000 words

Obama Care - Essay Example This may work toward providing more insight into the functions and actions of a company. The above may result in the lowering of health premium prices, which may work toward improving the quality of health care that individuals receive. To those who cannot afford insurance at the beginning, Obamacare works to provide more widespread and available medical care at reduced prices. An increase in the number of individuals who can receive this regular health care can ensure the happiness of individuals, and the overall utility of society (Sandel 59). This can only work with the cooperation of the private companies with the government regulations, while trying to satisfy the people it is meant to serve. These regulations are not meant to downsize or downplay the insurance companies. They are only meant to ensure the public gets the required premiums for the appropriate amount of capital. Obamacare does not restrict the freedom of individuals as many folks tend to believe. On the contrary, it works to satisfy the happiness of majority of the people in society. Minority groups are known to suffer and bear the full brunt of many policies in the United States. However, this bill in its entirety guarantees that everyone benefits from all the said policy implementation plans. Poor people are protected from private companies and some of the policies that they put in place to profit from society’s health needs (Sandel 63). By claiming that there is no right to choose between whether to have insurance or not, individuals are overlooking the bigger picture. This is only one provision in the whole bill, and it should not be used as an excuse to be against... This essay examines the utilitarianism and libertarianism view on Obamacare, and how this may affect individuals in the United States. The researcher states that it is through subsidizing health insurance for poor and poverty stricken families that Obama bill seeks to assist. The main convictions of the bill revolve around the mandated insurance clauses. This is what many people are having a problem with as there are groups that support the presence of such a bill, while others detest the idea of its existence. Obamacare does not restrict the freedom of individuals as many folks tend to believe. On the contrary, it works to satisfy the happiness of majority of the people in society. As seen in this essay on the view on Obamacare, there are some objections about the policies that the bill proposes. Libertarianism often asks the question as to whether the government should interfere in the matters of an individual’s health insurance. In conclusion, the researcher mentiones that the views expressed by the schools of thought offer an individual time to think of the impact such a bill has on society. The coming up of such a bill may have irreparable consequences to society and the individuals in it. However, the researcher also concluds that it would not be wise to ignore the overwhelming benefits that come with such a bill. It is, therefore, society’s place to dissect both sides of the bill and see what may work for them. They can start working toward addressing these issues for the good of all.

SWOT Analysis Research Paper Example | Topics and Well Written Essays - 1000 words

SWOT Analysis - Research Paper Example The airline is known for embracing inventive technology to advance the client experience. The company traces its origins back to 1932; an amalgamation with Star Air service in the year 1934 established the biggest airline in Alaska, which ultimately became Alaska Airlines. Contrasting the rest of the economy, Alaska has been experiencing increasing important revenues from oil dealings and tourism. Air travel is Alaska’s largest type of transportation due to the natural features of the region and weather. Alaska has above one thousand airports along with 3000 avenues of landing. The airline immensely contributes to the state’s economy through air travel because Alaskan travels constitute a large percentage of overall air travelers in the United States. Alaska Airlines is committed towards offering convenient, quality and affordable air transport services to its clients as well as service to the state, nation and vast society. Values of commitment, ethics, integrity and q uality govern the operations of the airline company and are the reasons behind its huge successes. II. Organizational Strengths and Weaknesses Alaska Airlines has a strong and reliable customer base in Alaska State, where it is a dominant player. This is among the strengths that the airline company has in the sense that the company can rely on its vast customer base to expand and introduce new products, which will be readily acceptable in the market (Gates, 2006). A strong customer base is a distinctive strength because it positions a corporation so that it can operate in the market better. Customers are the essence of any company, and a reliable pool of customers who are loyal to a company is good for the firm. Therefore, Alaska airlines can benefit from its large customer base by expanding its operation to serve other regions and countries as well as introducing new services and products. In fact, the most credible significance of this strength is that Alaska airlines can utilize customer feedback to launch its strategies and products. Alaska Airlines is a huge contributor to the economy of Alaska State – this could be another major strength of the company in the sense that it endears the airline company to the government. As a result, the airline can obtain better services. It can be considered a distinctively competent strength because it can propel the company to greater heights in the market. For instance, the airline can benefit from government support in line with its great contribution to the economy. Alaska airline has several weaknesses, which ought to be addressed to avoid any inconveniences in the process of its business operations. The airline relies so much on the geographical and climate conditions, and a majority of its customers hail from the state of Alaska. This is considered as a weakness because should other airline companies venture into Alaska, the company may lose its market share, which is primarily based in Alaska. The organiz ation can minimize this weakness by expanding into other states and countries (Ritcher & Pahl, 2009). The strategy of Alaska Airlines is targeting the passenger traffic as an indicator of its corporate success. This is considered a weakness because it could trigger an organizational failure due to lack of broader strategic planning. In essence, passenger traffic is not

General Dynamics and Lockheed Martin Comparison

General Dynamics and Lockheed Martin Comparison Financial Statement Analysis General Dynamics vs. Lockheed Martin Executive Summary: This analysis provides a comparison of two major companies within the Aerospace and Defense industry, General Dynamics and Lockheed Martin. General Dynamics had an ROE of 25% whereas Lockheed Martin was 49% demonstrating LMT has a higher spread and generated a higher amount of return above its cost of equity capital as compared to GD. GD generates a higher NOPAT margin over LMT (9.4% and 7.8%, respectively) allowing GD to contribute more to ROE as a result of the decreased effect interest expenses have on net income with respect to total sales revenue. LMT has a considerable advantage for generating increased asset turnover, by generating $1.37 for every dollar as compared to GDs $1.08 for every dollar spent on company assets. General Dynamics stock is extremely undervalued (estimated $77.71 compared to closing price of $57.79) whereas Lockheed Martins stock was slightly overvalued ($85.93 compared to closing price of $84.08). Equity valuation indicates that investors were overly opt imistic in LMTs earning potential and pessimistic for GDs earning potential. Despite the valuation, the destiny of this industry remains dependent on governments decisions to decrease military spending, which will have a negative impact on both companies. However, expansion of commercial airlines and partnerships with healthcare industries will have a positive effect on these companies and overall this industry will have a neutral outcome for the upcoming year. General Dynamics (NYSE: GD) General Dynamics is the sixth largest defense contractor in the world and the second largest maker of corporate jets. The company maintains four business groups including aerospace, combat systems, marine systems and information systems and technology. Net earnings for the company increased from 2006-2008 ($1.86 to $2.46), a 24% increase over 3 years. Sales for all groups increased from $24.1 to $29.3 billion from 2006-2008, a 17% increase. The company is based in Virginia and gets 67% of its revenue from the Department of Defense. The aerospace group generated $5.5 billion (19%) in sales in 2008, mostly due to Gulfstream business jet, which include long-range and ultra-long-range jets. In response to the downturn in the economy, the production of large-body and medium-size aircraft were reduced from 87 to 73 and 69 to 24, respectively, in 2008. In product development, Gulfstream introduced 2 additions, which are the ultra-large-cabin, ultra-long-range G650 and the super-mid-size G250. Production of both of these aircrafts, which enter into service in 2011 and 2012, are foreseeable income generators based on orders placed in 2008. The combat systems group generated $8.2 billion (28%) in sales in 2008, mostly driven by demand for combat vehicles, specifically Mine-Resistant, Ambush-Protected (MRAP) vehicles. The combat system group makes, repairs and supports wheeled and tracked armored vehicles and munitions. Combat system product lines include combat vehicles, guns and ammunition systems, mobile bridge systems, armor, chemical, biological and explosion detection systems. Future opportunities include delivering hundreds of tanks and armored vehicles to Saudi Arabia between 2010 and 2012. The marine systems group generated $5.6 billion (19%) in sales in 2008, extremely productive as compared to 2007. The group delivers destroyers, submarines, logistic ship and the first commercial product carrier. Upcoming contracts include doubling production to two submarines per year beginning in 2011, which is predicted to increase revenue and earnings over the next three years. The information systems and technology generated $10 billion (34%) of sales in 2008; its biggest achievement developing a battlefield communications network program and Joint Tactical Radio System (JTRS). Customers include federal civilian agencies and commercial customers, which primarily focus on electronics for land, sea and air-based weapons systems. The acquisition of two companies in the tactical communications and healthcare information technology field are indicative of the direction this group will be making in the upcoming years. Information gathered from Morningstar1, SP500 Industry reports2 and www.generaldynamics.com3 Lockheed Martin (NYSE: LMT) Lockheed Martin is the worlds largest military weapons maker, deriving 84% of its net sales from the United States government, including the Department of Defense. The company is comprised of four operating systems including aeronautics, electronic, space and information systems and global services. Net sales increased 7.3% from 2006 to 2008 ($39.6 to $42.7 billion) and earnings increased 21.8% over three years ($2.5 to $3.2 billion). The company operates in Maryland and employs 146,000 people. The aeronautics segment generated 27% of sales ($11.5 billion) in 2008. The segments primary production are the F-35 Lightning II combat aircraft which is projected to be completed in 2010. The aeronautics segment is focused on making fighter jets and military transport planes and on unmanned military aircraft. The segment also operates the Global Sustainment enterprise to ensure success throughout the life cycle of its aircraft. The electronics systems segment also generated 27% of sales in 2008 and primarily makes land, sea and air-based missiles and missile defense systems. Specifically, this segment is focused on maritime systems and sensors, missiles and fire control, and platform, training and energy. This system also manages and operates the Sandia National Laboratories for the US Department of Energy. Current projects include the Terminal Altitude Area Defense System (THAAD), the Ballistic Missile Defense system and the firehead control system for the Apache helicopter. The space systems segment generated 19% of sales ($8.2 billion) in 2008. This segment is comprised of satellites, strategic and defensive missile systems, and space transportation systems. The US government customers accounted for 96% of this segments sales in 2008. An ongoing partner is NASA; the LMT-built Phoenix Lander will continue to rove on Mars. Another venture is with Boeing, the United Launch Alliance, which provides satellite launch services to the US government. Information systems and global services segment account for 27% of sales in 2008. This segment contains mission solutions, information systems and global services. The US government customers accounted for 93% of the segments sales in 2008. Major products/programs include communication systems, mission and combat support solutions, civil agency programs (US Census), the FAA Automated Flight Service Station, the FBIs Sentinel IT program, and various NASA programs. Collaborations and partnerships with companies around the globe enable Lockheed Martin to grow its international business both with government and industry. The establishment of Lockheed Martin Australia in 2009 indicates an international interest to grow and expand. Information gathered from Morningstar1, SP500 Industry reports2 and www.lockheedmartin.com4 Industry Outlook: Aerospace Defense The aerospace and defense industry relies heavily on US government allocation and the upcoming year will likely bring budget cuts to the defense budget in 2010. However, there are predictions that the conventional military equipment is aging and once the Iraq war ends, there will be a need for repair and replacement. Due to the high levels of deficit spending and an increasing trend for social spending, it is likely there will be cuts in defense spending and the outlook for this industry will decline. On the other hand, it is estimated that there will be an increased growth of global passenger air traffic in 2010 as compared to a decline in 2009. This is based on positive air traffic growth since comparison between 2009 and 2010. Aircrafts that are less fuel-efficient in the US will also need to be upgraded and replaced with newer aircraft. The industry predictions are moderate production cuts at Boeing and Airbus, and declines in the business jet markets due to falling corporate profits. The industry outlook is therefore at a neutral rating, due to decreased military budget but increased commercial air traffic for 2010. Competition in the industry (Boeing, Northrop Grumman, Honeywell and Raytheon) will strive for contracts within the industry. Many of these defense contractors will face uncertainty from upcoming government decisions in the next year and hence the neutral outlook for this industry. Information gathered from Morningstar and SP500 Industry Reports Financial Statement Adjustments The following table contains information on the cumulative adjustment to General Dynamics and Lockheed Martins financial Statements. Adjustments General Dynamics Lockheed Martin Income Statement  · Increase Net Income by $19 million from loss from discontinued operations net of tax  · Increase Net Income by $196 million from deferred portion of income tax  · Decrease Net Income by $70 million for gain on sale of LKEI and ILS net of tax  · Decrease Net Income by $56 million for gain on land sale  · Increase Net Income by $215 million to reverse impairment charge (215 = 314(1-.316)  · Increase Net Income by $72 million to unwind deferred taxes  · Subtract $246 million from Net Income for Pension Income Balance Sheet  · Increase assets by 75% of PV of capitalized leases ($709 million)  · Decrease assets by $7 million to unwind taxes (DTA)  · Adjustments for LIFO reserve not added to Total Assets. Added in denominator of ITR and Current Asset in Current Ratio  · Added 100% of PV of capitalization of leases to Total Liabilities ($946 million)  · Subtracted 25% of PV of capitalized leases to SE ($236 million)  · Decrease SE by $7 million to unwind deferred taxes effect (-DTA; +DTL)  · Increase assets by 75% of PV of capitalized leases ($699 million)  · Decrease assets by $5,390 million to unwind deferred taxes (DTA)  · Increase liabilities by 100% of PV of capitalized leases ($932 million)  · Decrease SE by 25% of PV of operating leases ($233 million)  · Decrease SE by $5,390 million to unwind deferred tax (-DTA; +DTL) Caveats  · Termination of A-12 program in 1991 is an unlikely contingency of $690 and is currently on appeal in the Appeals Court. Cost of Equity Capital Historically, LMT common stock has proven less sensitive to the broad stock market. With a beta of .923 and using the Capital Asset Pricing Model (CAPM), LMT investors require an annual rate of return of 10.2%. Although this is lower than the expected market return of 10.8% (see appendix for calculation and assumptions), it is greater than its industry (Guided Missile Space Vehicles) expected return of 8.7%. However, although LMT may be more volatile as a stock than its competitors, it enjoyed a Return on Equity (ROE) significantly higher than the industry average. In 2008, LMT had an ROE of 49.2% while the industry followed with a 23.4% average ROE. Just as significant and telling is the comparison of LMTs ROE to its own required rate of return. This spread of 39% is an impressive sign as it demonstrates the amount of return LMT generated above its cost of equity capital. This is also impressive to investors at first glance, and will warrant a deeper interest from prospective investors. Much the same can be said for GD when comparing its required rate of return to its ROE. Although the spread was only 12.9%, it is still a good sign that GD generates such a return above its cost of equity. However, unlike LMT GD has a beta greater than 1 and is therefore more sensitive to stock market moves; and has an expected return less than its industry return by approximately 1.25%. NOPAT Margin When we analyze the potential net income in the absence of debt, NOPAT, we observe that General Dynamics (9.4%) generates a higher margin over Lockheed Martin (7.8%), which allows General Dynamics to contribute more to ROE in comparison to Lockheed Martin as a result of the decreased effect interest expenses have on net income with respect to total sales revenue. However, when comparing NOPAT performance to the rest of their industry (Ship Boat Building Repair), General Dynamics comes in slightly below the 9.9% average that was established for 2008, but does not necessarily signify any under-performance in this area since the industry data only takes into account two firms when generating Industry NOPAT margin averages. Lockheed Martin was similarly compared to Industry data, generated by two firms as well, in which NOPAT margins were recorded that were more than double of what was found for similarly classified companies (Guided Missiles Space Vehicles 3.69%). Asset Turnover This portion of the ROE evaluates the efficiency to produce revenue based on the investment in assets made by the company. When we begin to evaluate the simplified Asset TO values provided by the multiplicative decomposition of ROE, we observe a noticeable advantage by Lockheed Martin since they reportedly generate $1.37 for every $1.00 spent on assets. General Dynamics generate slightly lower values at $1.08 for every $1.00 spent on company assets. We then continued to analyze Asset TO, now based on the additive decomposition of ROE to see how other variables affect the turnover rates. When this approach is taken, average assets for both companies in 2008 needed to be adjusted, and was done so by pulling out all non-interest bearing liabilities (NIBL). This is where we noticed that NIBLs for Lockheed Martin ($20,742) were 62.8% higher than those reported by General Dynamics ($12,735). As a result, the Asset TO ratios increased significantly for both companies (LMT 2.05 and GD 4.09 ) with respect to assets dollars invested by each company. As we can observe, unexpected losses in each companys pension fund had led them to classify their losses as liabilities since they will still needed to be accounted for in the near future. The 32% drop in the fair value of the LMT pension fund ($27,259 down to $18,539) in 2008 and the 35% drop in the fair value of the GD pension fund ($7,452 down to $4,823)was felt somewhat more extensively by LMT, since the higher amount lost reflects LMTs larger workforce of 140,000 employees. GD, although enduring a similar percentage drop in fund value, only accommodates a workforce of 91,000, and therefore lost less in overall value amount. Leverage When we analyze leverage, we are analyzing each companys ability and efficiency in using interest bearing debt to generate revenue. The higher the leverage value, the better the ability of a company is at using invested funds (IBLs) to obtain desired revenues. When evaluating LMTs and GDs effect of leverage as a result of their 2008 results, we observe that the numbers generated by LMT (0.17) are over three times higher than those generated by GD (0.05) during the same time period. As we continue to drill down into the effect of leverage, we notice that ROA is also higher for LMT as a result of the large variation in NIBLs between the two companies. Although a higher leverage effect value may indicate that LMT relies more on interest bearing debt to generate more sales revenue, an analysis of interest bearing liabilities for both LMT and GD was performed based on data available at the end of 2007 and 2008. This analysis revealed that LMT had reduced their interest bearing liabilities ($4,407 down to $3,805) while GD, whom recorded a smaller leverage effect, had done the opposite and showed to have increased their interest bearing liabilities ($2,791 increased to $4,024) by the end of 2008. Selected Ratio Comparison: Accounts Receivable Days General Dynamics Industry Lockheed Martin Industry 39.51 32.50 43.62 57.12 From the results presented above, General Dynamics demonstrates that it under-performed the rest of the industry by exceeding the average account receivable days by 7 days. In contrast, Lockheed Martin out-performed the rest of its industry by having recorded an account receivable average of 43.62 days, which means LMT was collecting from customers on an average of 13.5 days ahead of the rest of the industry. Accounts Payable Days General Dynamics Industry Lockheed Martin Industry 33.88 31.50 20.09 19.66 GD is collecting from customers on average over 2 days past the industry average of 31.50 days LMT is collecting just  ½ day over the industry average of 19.66 days Inventory Days General Dynamics Industry Lockheed Martin Industry 25.97 56.62 17.35 13.55 GD is turning inventory on average over 30 days under the industry average of 56.62 days LMT is turning inventory on average over 3 days over the industry average of 13.55 days Interest Coverage General Dynamics Industry Lockheed Martin Industry 29.57 30.43 14.49 5.49 GD could cover its yearly interest expenses 29.57 times in 2008, just under its industry average of 30.43 times LMT could cover its yearly interest expenses 29.57 times in 2008, significantly over its industry average of 5.49 times Equity Valuation The equity valuation of General Dynamics for 2008 produced an estimated share price of $77.71. This price is significantly higher than the closing per-share price of $57.59 for 2008 showing the companys stock was extremely undervalued. According to analyst reports5, some concerns about growth for General Dynamics stem from shrinking credit markets, which would impair the ability to finance business jets. Additionally, it is possible that investors were concerned the aerospace and defense industry would decline with a shift from government defense spending to social spending and deficit spending. Abnormal net income was computed as predicted net income less the cost of equity capital. Predicted net income was computed using 2008 pro forma net income of $2,674 and implementing annual growth rates suggested by Goldman Sachs earnings forecasts5. The growth rates from 2009 through 2013 were -2.9%, 7.3%, 5.2%, 7.3% and 7.8% respectively. The same earnings forecasts were used to calculate the predicted dividends. The predicted dividends from 2009 to 2013 are 577, 617, 643, 671 and 700 respectively. The terminal value assumption used in computing abnormal net income was the competitive equilibrium on incremental real sales assumption. This strategy was chosen because the government is one of General Dynamics most significant customers, comprising approximately 67% of the companys revenue. This lead to the assumption that General Dynamics may not need to invest a large amount of resources in developing new customers and that most of their future growth would be lead by existing custo mers. This assumption provided a terminal value of $21,999. The cost of capital for General Dynamics was calculated using a beta of 1.119, a risk free rate of 5% and a market risk premium of 4%. This produced a cost of capital of 9.5%. The present value of abnormal net income was calculated to be $20,265, by dividing abnormal net income by a discounting factor derived using the cost of capital. The present value of abnormal net income was combined with the initial book value of $9,810 to produce an estimated predicted price of $30,075. This price was divided by the number of shares outstanding according to the 2008 annual report to arrive at an estimated share price of $77.71. The equity valuation for Lockheed Martin for 2008 produced an estimated share price of $85.93, which is slightly higher than the actual share price as of the end of 2008 of $84.08. This shows the stock was slightly overvalued. This shows investors may have been overly optimistic in their opinion of Lockheed Martins earnings potential. Abnormal net income was computed just as that of General Dynamics. Using analysts reports6, estimated (negative) growth rates of (6%), (7%), (6.6%), 11% and 8.92% were applied to the 2008 pro forma net income of $3,114. The same terminal value assumption was used for Lockheed Martin as was used for General Dynamics. The US government is a substantial customer of Lockheed Martins, which lead to the assumption that a large portion of future growth could be attributed to existing customers and few resources could be devoted to developing new customers. The terminal value assumption provided a terminal value of $41,132. The cost of equity capital was calculated using a beta of .923, a risk free rate of 4% and a market risk premium of 5%. The 8.7% cost of capital was used to find the present value of abnormal net income of $37.936. This present value was combined with an initial book value of ($2,758) to produce an estimated price of $35,178. The estimated price divided by the number of s hares outstanding per the Lockheed Martin annual report to arrive at a per-share price of $85.93. References: 1www.Morningstar.com 2www.netadvantgage.standardandpoors.com 3www.generaldynamics.com 4www.lockheedmartin.com 5Richard Safran, Noah Poponak, Goldman Sachs, January 26, 2009. Noah Poponak, Chun-Yai Wang, Sai Krishna, Goldman Sachs, January 27, 2010 6Richard Safran, Noah Poponak, Goldman Sachs, January 22, 2009. Noah Poponak, Chun-Yai Wang, Sai Krishna, Goldman Sachs, January 29, 2010 APPENDIX CAPM = Rf Rate + (Beta*Rmrkt) Given Data Risk Free rate = 3.77% (10 Year Treasury as of 2/18/10) Market Premium (Rmrkt) = 7% (given on page 26 of class notes) LMT Beta = 0.923 Industry Beta = 0.697 GD Beta = 1.119 Industry Beta = 1.298 CAPM Calculations LMT = .0377 + .923*.07 LMT = 10.23% Industry = .0377 + .697*.07 Industry = 8.65% GD = .0377 + 1.119*.07 GD = 11.60% Industry = .0377 + 1.298*.07 Industry = 12.86% Financial Statement Analysis GD LMT 2008 2008 Beginning assets 25,733 28,926 Ending assets 28,373 33,439 Beginning equity 11,768 9,805 Ending equity 10,053 2,865 Beginning interest-bearing liabilities 2,791 4,407 Ending interest-bearing liabilities 4,024 3,805 Net income (pro forma) 2,674 3,114 Sales revenue 29,300 42,731 Other revenue 0 0 Research development expense 474 1,220 Selling, general administrative expense 1,700 2,344 Income tax expense 1,126 1,485 Income tax rate 0.31 0.32 Interest expense 133 341 Beginning inventory 1,621 1,718 Ending inventory 2,029 1,902 Cost of goods sold 25,647 38,082 Beginning accounts receivable 2,874 4,925 Ending accounts receivable 3,469 5,296 Beginning accounts payable 2,318 2,163 Ending accounts payable 2,443 2,030 Shares outstanding 386 393 Closing price per share 57.59 84.08 bloomberg.com Average assets 27,053 31,183 Average equity 10,911 6,335 Average interest-bearing liabilities 3,408 4,106 Average non-interest bearing liabilities 12,735 20,742 Average accounts receivable 3,172 5,111 Average inventory 1,825 1,810 Average accounts payable 2,381 2,097 After-tax interest rate 0.03 0.06 Multiplicative Decomposition of ROE ROE 0.25 0.49 Net profit margin 0.09 0.07 Asset turnover 1.08 1.37 Leverage 2.48 4.92 Additive Decomposition of ROE ROE 0.25 0.49 Market-to-book 2.21 11.53 NOPAT Margin 0.09 0.08 Asset turnover 2.05 4.09 ROA 0.19 0.32 Spread 0.17 0.26 Leverage 0.31 0.65 Effect of leverage 0.05 0.17 Gross profit margin 0.12 0.11 RD to revenue 0.02 0.03 SGA to revenue 0.06 0.05 Accounts receivable days 39.51 43.65 Inventory days 25.97 17.35 Operating cycle 65.48 61.00 Accounts payable days 33.88 20.09 Cash-to-cash cycle 31.60 40.91 Interest coverage 29.57 14.49 Debt ratio 0.65 0.91 Appendix C: General Dynamics Lockheed Martin Financial Statement Adjustments Cumulative Financial Statement Adjustments Summary of Income Statement Adjustments Summary of Income Statement Adjustments Net Income as Reported: $ 2,459 Net Income as Reported: $ 3,217 Discontinued operations 19 Loss on sale of property, (126) Unwind tax effects 196 land, equipment Adjusted Net Income $ 2,674 Reverse of Impairment charge 215 Unwind tax effects 72 Pension Income (264) Adjusted Net Income $ 3,114 Summary of Balance Sheet Adjustments Summary of Balance Sheet Adjustments Total Assets as reported $ 28,373 Total Assets as reported $ 33,439 Constructive capitalization of 709 Constructive capitalization 699 operating leases of operating leases Unwind tax effects (DTA) (7) Unwind tax effects (DTA) (5,390) Adjusted Total Assets $ 29,075 Adjusted Total Assets $ 28,748 Total Liabilities as reported $ 18,320 Total Liabilities as reported $ 30,574 Constructive capitalization 946 Constructive capitalization 932 of operating leases of operating leases Adjusted Total Liabilities $ 19,266 Adjusted Total Liabilities $ 31,506 Total SE as reported $ 10,053 Total SE as reported $ 2,865 Constructive capitalization (236) Constructive capitalization of operating leases (233) of operating leases Unwind tax effects (5,390) Unwind tax effects (7) (DTA+DTL) (DTA+DTL) Adjusted Total SE $ (2,758) Adjusted Total SE $ 9,810 Adjusted Total Liabilities + SE $ 29,075 Adjusted Total Liabilities + SE $ 28,748 General Dynamics Pension Income Pro Forma Calculation 1 Net pension cost (benefit) $ 20 Net postretirement plan cost 56 Total cost $ 76 Net earnings $ 2,459 Percentage 3.1% 2008 2007 2 Funded status pensions $ (2,922) $ 383 Funded status other postretirement plans (640) (642) Total funded status (3,562) (259) Difference $ (3,303) 3 Rate of return on U.S. plan assets 8.1% Expected return 593 Implied asset base 7,330 = 592 / .081 Actual return percentage -32.20% = 2360 / 7330 4 Implied asset base $ 7,330 Pro forma expected rate 7.0% Given Pro forma expected return 513 Less: Original expected return (593) Difference (reduction in pension income) (80) 1 Effective tax rate 68.8% =1-.312 Adjustment (reduction) to net income $ (55) OR: [(.081-.070)*7,330] * (1-.312) = $ 55 Adjusted income $ 2,404 = 2,459 55 Lockheed Martin Pension Income Pro Forma Calculation 1 Net pension cost (benefit) $ 462 Net postretirement plan cost 46 Total cost $ 508 Net earnings $ 3,217 Percentage 15.8% 2008 2007 2 Funded status pensions $ (11,882) $ (879) Funded status other postretirement plans 1426 2017 Total funded status (10,456) 1,138 Difference $ (11,594) 3 Rate of return on U.S. plan assets 8.5% Expected return $ 2,184 Implied asset base 25,694 = 2184 / .085 Actual return percentage -28.62% = 7354 / 25694 4 Implied asset base $ 25,694 Pro forma expected rate 7.0% Given Pro forma expected return 1,799 Less: Original expected return (2,184) Difference (reduction in pension income) (385) 1 Effective tax rate 68.4% =1-.316 Adjustment (reduction) to net income $ (264) Adjusted income $ 2,953 = 3,217 264 General Dynamics Capitalization of Operating Leases Enter interest rate below: 0.039 Enter operating lease commitments below (in millions): 2009 205.0 2010 174.0 2011 131.0 2012 97.0 2013 70.0 2014 thereafter 405.0 Solution: Present value of operating lease commitments $ 945.9 Calculation of Present Value of Operating Lease Payments: 0 205.0 1.000 205.0 1 174.0 1.039 167.5 2 131.0 1.080 121.3 General Dynamics and Lockheed Martin Comparison General Dynamics and Lockheed Martin Comparison Financial Statement Analysis General Dynamics vs. Lockheed Martin Executive Summary: This analysis provides a comparison of two major companies within the Aerospace and Defense industry, General Dynamics and Lockheed Martin. General Dynamics had an ROE of 25% whereas Lockheed Martin was 49% demonstrating LMT has a higher spread and generated a higher amount of return above its cost of equity capital as compared to GD. GD generates a higher NOPAT margin over LMT (9.4% and 7.8%, respectively) allowing GD to contribute more to ROE as a result of the decreased effect interest expenses have on net income with respect to total sales revenue. LMT has a considerable advantage for generating increased asset turnover, by generating $1.37 for every dollar as compared to GDs $1.08 for every dollar spent on company assets. General Dynamics stock is extremely undervalued (estimated $77.71 compared to closing price of $57.79) whereas Lockheed Martins stock was slightly overvalued ($85.93 compared to closing price of $84.08). Equity valuation indicates that investors were overly opt imistic in LMTs earning potential and pessimistic for GDs earning potential. Despite the valuation, the destiny of this industry remains dependent on governments decisions to decrease military spending, which will have a negative impact on both companies. However, expansion of commercial airlines and partnerships with healthcare industries will have a positive effect on these companies and overall this industry will have a neutral outcome for the upcoming year. General Dynamics (NYSE: GD) General Dynamics is the sixth largest defense contractor in the world and the second largest maker of corporate jets. The company maintains four business groups including aerospace, combat systems, marine systems and information systems and technology. Net earnings for the company increased from 2006-2008 ($1.86 to $2.46), a 24% increase over 3 years. Sales for all groups increased from $24.1 to $29.3 billion from 2006-2008, a 17% increase. The company is based in Virginia and gets 67% of its revenue from the Department of Defense. The aerospace group generated $5.5 billion (19%) in sales in 2008, mostly due to Gulfstream business jet, which include long-range and ultra-long-range jets. In response to the downturn in the economy, the production of large-body and medium-size aircraft were reduced from 87 to 73 and 69 to 24, respectively, in 2008. In product development, Gulfstream introduced 2 additions, which are the ultra-large-cabin, ultra-long-range G650 and the super-mid-size G250. Production of both of these aircrafts, which enter into service in 2011 and 2012, are foreseeable income generators based on orders placed in 2008. The combat systems group generated $8.2 billion (28%) in sales in 2008, mostly driven by demand for combat vehicles, specifically Mine-Resistant, Ambush-Protected (MRAP) vehicles. The combat system group makes, repairs and supports wheeled and tracked armored vehicles and munitions. Combat system product lines include combat vehicles, guns and ammunition systems, mobile bridge systems, armor, chemical, biological and explosion detection systems. Future opportunities include delivering hundreds of tanks and armored vehicles to Saudi Arabia between 2010 and 2012. The marine systems group generated $5.6 billion (19%) in sales in 2008, extremely productive as compared to 2007. The group delivers destroyers, submarines, logistic ship and the first commercial product carrier. Upcoming contracts include doubling production to two submarines per year beginning in 2011, which is predicted to increase revenue and earnings over the next three years. The information systems and technology generated $10 billion (34%) of sales in 2008; its biggest achievement developing a battlefield communications network program and Joint Tactical Radio System (JTRS). Customers include federal civilian agencies and commercial customers, which primarily focus on electronics for land, sea and air-based weapons systems. The acquisition of two companies in the tactical communications and healthcare information technology field are indicative of the direction this group will be making in the upcoming years. Information gathered from Morningstar1, SP500 Industry reports2 and www.generaldynamics.com3 Lockheed Martin (NYSE: LMT) Lockheed Martin is the worlds largest military weapons maker, deriving 84% of its net sales from the United States government, including the Department of Defense. The company is comprised of four operating systems including aeronautics, electronic, space and information systems and global services. Net sales increased 7.3% from 2006 to 2008 ($39.6 to $42.7 billion) and earnings increased 21.8% over three years ($2.5 to $3.2 billion). The company operates in Maryland and employs 146,000 people. The aeronautics segment generated 27% of sales ($11.5 billion) in 2008. The segments primary production are the F-35 Lightning II combat aircraft which is projected to be completed in 2010. The aeronautics segment is focused on making fighter jets and military transport planes and on unmanned military aircraft. The segment also operates the Global Sustainment enterprise to ensure success throughout the life cycle of its aircraft. The electronics systems segment also generated 27% of sales in 2008 and primarily makes land, sea and air-based missiles and missile defense systems. Specifically, this segment is focused on maritime systems and sensors, missiles and fire control, and platform, training and energy. This system also manages and operates the Sandia National Laboratories for the US Department of Energy. Current projects include the Terminal Altitude Area Defense System (THAAD), the Ballistic Missile Defense system and the firehead control system for the Apache helicopter. The space systems segment generated 19% of sales ($8.2 billion) in 2008. This segment is comprised of satellites, strategic and defensive missile systems, and space transportation systems. The US government customers accounted for 96% of this segments sales in 2008. An ongoing partner is NASA; the LMT-built Phoenix Lander will continue to rove on Mars. Another venture is with Boeing, the United Launch Alliance, which provides satellite launch services to the US government. Information systems and global services segment account for 27% of sales in 2008. This segment contains mission solutions, information systems and global services. The US government customers accounted for 93% of the segments sales in 2008. Major products/programs include communication systems, mission and combat support solutions, civil agency programs (US Census), the FAA Automated Flight Service Station, the FBIs Sentinel IT program, and various NASA programs. Collaborations and partnerships with companies around the globe enable Lockheed Martin to grow its international business both with government and industry. The establishment of Lockheed Martin Australia in 2009 indicates an international interest to grow and expand. Information gathered from Morningstar1, SP500 Industry reports2 and www.lockheedmartin.com4 Industry Outlook: Aerospace Defense The aerospace and defense industry relies heavily on US government allocation and the upcoming year will likely bring budget cuts to the defense budget in 2010. However, there are predictions that the conventional military equipment is aging and once the Iraq war ends, there will be a need for repair and replacement. Due to the high levels of deficit spending and an increasing trend for social spending, it is likely there will be cuts in defense spending and the outlook for this industry will decline. On the other hand, it is estimated that there will be an increased growth of global passenger air traffic in 2010 as compared to a decline in 2009. This is based on positive air traffic growth since comparison between 2009 and 2010. Aircrafts that are less fuel-efficient in the US will also need to be upgraded and replaced with newer aircraft. The industry predictions are moderate production cuts at Boeing and Airbus, and declines in the business jet markets due to falling corporate profits. The industry outlook is therefore at a neutral rating, due to decreased military budget but increased commercial air traffic for 2010. Competition in the industry (Boeing, Northrop Grumman, Honeywell and Raytheon) will strive for contracts within the industry. Many of these defense contractors will face uncertainty from upcoming government decisions in the next year and hence the neutral outlook for this industry. Information gathered from Morningstar and SP500 Industry Reports Financial Statement Adjustments The following table contains information on the cumulative adjustment to General Dynamics and Lockheed Martins financial Statements. Adjustments General Dynamics Lockheed Martin Income Statement  · Increase Net Income by $19 million from loss from discontinued operations net of tax  · Increase Net Income by $196 million from deferred portion of income tax  · Decrease Net Income by $70 million for gain on sale of LKEI and ILS net of tax  · Decrease Net Income by $56 million for gain on land sale  · Increase Net Income by $215 million to reverse impairment charge (215 = 314(1-.316)  · Increase Net Income by $72 million to unwind deferred taxes  · Subtract $246 million from Net Income for Pension Income Balance Sheet  · Increase assets by 75% of PV of capitalized leases ($709 million)  · Decrease assets by $7 million to unwind taxes (DTA)  · Adjustments for LIFO reserve not added to Total Assets. Added in denominator of ITR and Current Asset in Current Ratio  · Added 100% of PV of capitalization of leases to Total Liabilities ($946 million)  · Subtracted 25% of PV of capitalized leases to SE ($236 million)  · Decrease SE by $7 million to unwind deferred taxes effect (-DTA; +DTL)  · Increase assets by 75% of PV of capitalized leases ($699 million)  · Decrease assets by $5,390 million to unwind deferred taxes (DTA)  · Increase liabilities by 100% of PV of capitalized leases ($932 million)  · Decrease SE by 25% of PV of operating leases ($233 million)  · Decrease SE by $5,390 million to unwind deferred tax (-DTA; +DTL) Caveats  · Termination of A-12 program in 1991 is an unlikely contingency of $690 and is currently on appeal in the Appeals Court. Cost of Equity Capital Historically, LMT common stock has proven less sensitive to the broad stock market. With a beta of .923 and using the Capital Asset Pricing Model (CAPM), LMT investors require an annual rate of return of 10.2%. Although this is lower than the expected market return of 10.8% (see appendix for calculation and assumptions), it is greater than its industry (Guided Missile Space Vehicles) expected return of 8.7%. However, although LMT may be more volatile as a stock than its competitors, it enjoyed a Return on Equity (ROE) significantly higher than the industry average. In 2008, LMT had an ROE of 49.2% while the industry followed with a 23.4% average ROE. Just as significant and telling is the comparison of LMTs ROE to its own required rate of return. This spread of 39% is an impressive sign as it demonstrates the amount of return LMT generated above its cost of equity capital. This is also impressive to investors at first glance, and will warrant a deeper interest from prospective investors. Much the same can be said for GD when comparing its required rate of return to its ROE. Although the spread was only 12.9%, it is still a good sign that GD generates such a return above its cost of equity. However, unlike LMT GD has a beta greater than 1 and is therefore more sensitive to stock market moves; and has an expected return less than its industry return by approximately 1.25%. NOPAT Margin When we analyze the potential net income in the absence of debt, NOPAT, we observe that General Dynamics (9.4%) generates a higher margin over Lockheed Martin (7.8%), which allows General Dynamics to contribute more to ROE in comparison to Lockheed Martin as a result of the decreased effect interest expenses have on net income with respect to total sales revenue. However, when comparing NOPAT performance to the rest of their industry (Ship Boat Building Repair), General Dynamics comes in slightly below the 9.9% average that was established for 2008, but does not necessarily signify any under-performance in this area since the industry data only takes into account two firms when generating Industry NOPAT margin averages. Lockheed Martin was similarly compared to Industry data, generated by two firms as well, in which NOPAT margins were recorded that were more than double of what was found for similarly classified companies (Guided Missiles Space Vehicles 3.69%). Asset Turnover This portion of the ROE evaluates the efficiency to produce revenue based on the investment in assets made by the company. When we begin to evaluate the simplified Asset TO values provided by the multiplicative decomposition of ROE, we observe a noticeable advantage by Lockheed Martin since they reportedly generate $1.37 for every $1.00 spent on assets. General Dynamics generate slightly lower values at $1.08 for every $1.00 spent on company assets. We then continued to analyze Asset TO, now based on the additive decomposition of ROE to see how other variables affect the turnover rates. When this approach is taken, average assets for both companies in 2008 needed to be adjusted, and was done so by pulling out all non-interest bearing liabilities (NIBL). This is where we noticed that NIBLs for Lockheed Martin ($20,742) were 62.8% higher than those reported by General Dynamics ($12,735). As a result, the Asset TO ratios increased significantly for both companies (LMT 2.05 and GD 4.09 ) with respect to assets dollars invested by each company. As we can observe, unexpected losses in each companys pension fund had led them to classify their losses as liabilities since they will still needed to be accounted for in the near future. The 32% drop in the fair value of the LMT pension fund ($27,259 down to $18,539) in 2008 and the 35% drop in the fair value of the GD pension fund ($7,452 down to $4,823)was felt somewhat more extensively by LMT, since the higher amount lost reflects LMTs larger workforce of 140,000 employees. GD, although enduring a similar percentage drop in fund value, only accommodates a workforce of 91,000, and therefore lost less in overall value amount. Leverage When we analyze leverage, we are analyzing each companys ability and efficiency in using interest bearing debt to generate revenue. The higher the leverage value, the better the ability of a company is at using invested funds (IBLs) to obtain desired revenues. When evaluating LMTs and GDs effect of leverage as a result of their 2008 results, we observe that the numbers generated by LMT (0.17) are over three times higher than those generated by GD (0.05) during the same time period. As we continue to drill down into the effect of leverage, we notice that ROA is also higher for LMT as a result of the large variation in NIBLs between the two companies. Although a higher leverage effect value may indicate that LMT relies more on interest bearing debt to generate more sales revenue, an analysis of interest bearing liabilities for both LMT and GD was performed based on data available at the end of 2007 and 2008. This analysis revealed that LMT had reduced their interest bearing liabilities ($4,407 down to $3,805) while GD, whom recorded a smaller leverage effect, had done the opposite and showed to have increased their interest bearing liabilities ($2,791 increased to $4,024) by the end of 2008. Selected Ratio Comparison: Accounts Receivable Days General Dynamics Industry Lockheed Martin Industry 39.51 32.50 43.62 57.12 From the results presented above, General Dynamics demonstrates that it under-performed the rest of the industry by exceeding the average account receivable days by 7 days. In contrast, Lockheed Martin out-performed the rest of its industry by having recorded an account receivable average of 43.62 days, which means LMT was collecting from customers on an average of 13.5 days ahead of the rest of the industry. Accounts Payable Days General Dynamics Industry Lockheed Martin Industry 33.88 31.50 20.09 19.66 GD is collecting from customers on average over 2 days past the industry average of 31.50 days LMT is collecting just  ½ day over the industry average of 19.66 days Inventory Days General Dynamics Industry Lockheed Martin Industry 25.97 56.62 17.35 13.55 GD is turning inventory on average over 30 days under the industry average of 56.62 days LMT is turning inventory on average over 3 days over the industry average of 13.55 days Interest Coverage General Dynamics Industry Lockheed Martin Industry 29.57 30.43 14.49 5.49 GD could cover its yearly interest expenses 29.57 times in 2008, just under its industry average of 30.43 times LMT could cover its yearly interest expenses 29.57 times in 2008, significantly over its industry average of 5.49 times Equity Valuation The equity valuation of General Dynamics for 2008 produced an estimated share price of $77.71. This price is significantly higher than the closing per-share price of $57.59 for 2008 showing the companys stock was extremely undervalued. According to analyst reports5, some concerns about growth for General Dynamics stem from shrinking credit markets, which would impair the ability to finance business jets. Additionally, it is possible that investors were concerned the aerospace and defense industry would decline with a shift from government defense spending to social spending and deficit spending. Abnormal net income was computed as predicted net income less the cost of equity capital. Predicted net income was computed using 2008 pro forma net income of $2,674 and implementing annual growth rates suggested by Goldman Sachs earnings forecasts5. The growth rates from 2009 through 2013 were -2.9%, 7.3%, 5.2%, 7.3% and 7.8% respectively. The same earnings forecasts were used to calculate the predicted dividends. The predicted dividends from 2009 to 2013 are 577, 617, 643, 671 and 700 respectively. The terminal value assumption used in computing abnormal net income was the competitive equilibrium on incremental real sales assumption. This strategy was chosen because the government is one of General Dynamics most significant customers, comprising approximately 67% of the companys revenue. This lead to the assumption that General Dynamics may not need to invest a large amount of resources in developing new customers and that most of their future growth would be lead by existing custo mers. This assumption provided a terminal value of $21,999. The cost of capital for General Dynamics was calculated using a beta of 1.119, a risk free rate of 5% and a market risk premium of 4%. This produced a cost of capital of 9.5%. The present value of abnormal net income was calculated to be $20,265, by dividing abnormal net income by a discounting factor derived using the cost of capital. The present value of abnormal net income was combined with the initial book value of $9,810 to produce an estimated predicted price of $30,075. This price was divided by the number of shares outstanding according to the 2008 annual report to arrive at an estimated share price of $77.71. The equity valuation for Lockheed Martin for 2008 produced an estimated share price of $85.93, which is slightly higher than the actual share price as of the end of 2008 of $84.08. This shows the stock was slightly overvalued. This shows investors may have been overly optimistic in their opinion of Lockheed Martins earnings potential. Abnormal net income was computed just as that of General Dynamics. Using analysts reports6, estimated (negative) growth rates of (6%), (7%), (6.6%), 11% and 8.92% were applied to the 2008 pro forma net income of $3,114. The same terminal value assumption was used for Lockheed Martin as was used for General Dynamics. The US government is a substantial customer of Lockheed Martins, which lead to the assumption that a large portion of future growth could be attributed to existing customers and few resources could be devoted to developing new customers. The terminal value assumption provided a terminal value of $41,132. The cost of equity capital was calculated using a beta of .923, a risk free rate of 4% and a market risk premium of 5%. The 8.7% cost of capital was used to find the present value of abnormal net income of $37.936. This present value was combined with an initial book value of ($2,758) to produce an estimated price of $35,178. The estimated price divided by the number of s hares outstanding per the Lockheed Martin annual report to arrive at a per-share price of $85.93. References: 1www.Morningstar.com 2www.netadvantgage.standardandpoors.com 3www.generaldynamics.com 4www.lockheedmartin.com 5Richard Safran, Noah Poponak, Goldman Sachs, January 26, 2009. Noah Poponak, Chun-Yai Wang, Sai Krishna, Goldman Sachs, January 27, 2010 6Richard Safran, Noah Poponak, Goldman Sachs, January 22, 2009. Noah Poponak, Chun-Yai Wang, Sai Krishna, Goldman Sachs, January 29, 2010 APPENDIX CAPM = Rf Rate + (Beta*Rmrkt) Given Data Risk Free rate = 3.77% (10 Year Treasury as of 2/18/10) Market Premium (Rmrkt) = 7% (given on page 26 of class notes) LMT Beta = 0.923 Industry Beta = 0.697 GD Beta = 1.119 Industry Beta = 1.298 CAPM Calculations LMT = .0377 + .923*.07 LMT = 10.23% Industry = .0377 + .697*.07 Industry = 8.65% GD = .0377 + 1.119*.07 GD = 11.60% Industry = .0377 + 1.298*.07 Industry = 12.86% Financial Statement Analysis GD LMT 2008 2008 Beginning assets 25,733 28,926 Ending assets 28,373 33,439 Beginning equity 11,768 9,805 Ending equity 10,053 2,865 Beginning interest-bearing liabilities 2,791 4,407 Ending interest-bearing liabilities 4,024 3,805 Net income (pro forma) 2,674 3,114 Sales revenue 29,300 42,731 Other revenue 0 0 Research development expense 474 1,220 Selling, general administrative expense 1,700 2,344 Income tax expense 1,126 1,485 Income tax rate 0.31 0.32 Interest expense 133 341 Beginning inventory 1,621 1,718 Ending inventory 2,029 1,902 Cost of goods sold 25,647 38,082 Beginning accounts receivable 2,874 4,925 Ending accounts receivable 3,469 5,296 Beginning accounts payable 2,318 2,163 Ending accounts payable 2,443 2,030 Shares outstanding 386 393 Closing price per share 57.59 84.08 bloomberg.com Average assets 27,053 31,183 Average equity 10,911 6,335 Average interest-bearing liabilities 3,408 4,106 Average non-interest bearing liabilities 12,735 20,742 Average accounts receivable 3,172 5,111 Average inventory 1,825 1,810 Average accounts payable 2,381 2,097 After-tax interest rate 0.03 0.06 Multiplicative Decomposition of ROE ROE 0.25 0.49 Net profit margin 0.09 0.07 Asset turnover 1.08 1.37 Leverage 2.48 4.92 Additive Decomposition of ROE ROE 0.25 0.49 Market-to-book 2.21 11.53 NOPAT Margin 0.09 0.08 Asset turnover 2.05 4.09 ROA 0.19 0.32 Spread 0.17 0.26 Leverage 0.31 0.65 Effect of leverage 0.05 0.17 Gross profit margin 0.12 0.11 RD to revenue 0.02 0.03 SGA to revenue 0.06 0.05 Accounts receivable days 39.51 43.65 Inventory days 25.97 17.35 Operating cycle 65.48 61.00 Accounts payable days 33.88 20.09 Cash-to-cash cycle 31.60 40.91 Interest coverage 29.57 14.49 Debt ratio 0.65 0.91 Appendix C: General Dynamics Lockheed Martin Financial Statement Adjustments Cumulative Financial Statement Adjustments Summary of Income Statement Adjustments Summary of Income Statement Adjustments Net Income as Reported: $ 2,459 Net Income as Reported: $ 3,217 Discontinued operations 19 Loss on sale of property, (126) Unwind tax effects 196 land, equipment Adjusted Net Income $ 2,674 Reverse of Impairment charge 215 Unwind tax effects 72 Pension Income (264) Adjusted Net Income $ 3,114 Summary of Balance Sheet Adjustments Summary of Balance Sheet Adjustments Total Assets as reported $ 28,373 Total Assets as reported $ 33,439 Constructive capitalization of 709 Constructive capitalization 699 operating leases of operating leases Unwind tax effects (DTA) (7) Unwind tax effects (DTA) (5,390) Adjusted Total Assets $ 29,075 Adjusted Total Assets $ 28,748 Total Liabilities as reported $ 18,320 Total Liabilities as reported $ 30,574 Constructive capitalization 946 Constructive capitalization 932 of operating leases of operating leases Adjusted Total Liabilities $ 19,266 Adjusted Total Liabilities $ 31,506 Total SE as reported $ 10,053 Total SE as reported $ 2,865 Constructive capitalization (236) Constructive capitalization of operating leases (233) of operating leases Unwind tax effects (5,390) Unwind tax effects (7) (DTA+DTL) (DTA+DTL) Adjusted Total SE $ (2,758) Adjusted Total SE $ 9,810 Adjusted Total Liabilities + SE $ 29,075 Adjusted Total Liabilities + SE $ 28,748 General Dynamics Pension Income Pro Forma Calculation 1 Net pension cost (benefit) $ 20 Net postretirement plan cost 56 Total cost $ 76 Net earnings $ 2,459 Percentage 3.1% 2008 2007 2 Funded status pensions $ (2,922) $ 383 Funded status other postretirement plans (640) (642) Total funded status (3,562) (259) Difference $ (3,303) 3 Rate of return on U.S. plan assets 8.1% Expected return 593 Implied asset base 7,330 = 592 / .081 Actual return percentage -32.20% = 2360 / 7330 4 Implied asset base $ 7,330 Pro forma expected rate 7.0% Given Pro forma expected return 513 Less: Original expected return (593) Difference (reduction in pension income) (80) 1 Effective tax rate 68.8% =1-.312 Adjustment (reduction) to net income $ (55) OR: [(.081-.070)*7,330] * (1-.312) = $ 55 Adjusted income $ 2,404 = 2,459 55 Lockheed Martin Pension Income Pro Forma Calculation 1 Net pension cost (benefit) $ 462 Net postretirement plan cost 46 Total cost $ 508 Net earnings $ 3,217 Percentage 15.8% 2008 2007 2 Funded status pensions $ (11,882) $ (879) Funded status other postretirement plans 1426 2017 Total funded status (10,456) 1,138 Difference $ (11,594) 3 Rate of return on U.S. plan assets 8.5% Expected return $ 2,184 Implied asset base 25,694 = 2184 / .085 Actual return percentage -28.62% = 7354 / 25694 4 Implied asset base $ 25,694 Pro forma expected rate 7.0% Given Pro forma expected return 1,799 Less: Original expected return (2,184) Difference (reduction in pension income) (385) 1 Effective tax rate 68.4% =1-.316 Adjustment (reduction) to net income $ (264) Adjusted income $ 2,953 = 3,217 264 General Dynamics Capitalization of Operating Leases Enter interest rate below: 0.039 Enter operating lease commitments below (in millions): 2009 205.0 2010 174.0 2011 131.0 2012 97.0 2013 70.0 2014 thereafter 405.0 Solution: Present value of operating lease commitments $ 945.9 Calculation of Present Value of Operating Lease Payments: 0 205.0 1.000 205.0 1 174.0 1.039 167.5 2 131.0 1.080 121.3