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

Reaction About The National Sports and Physical Education Association Standards

The National Sports and Physical Education Association (NASPE) came up with the 3rd edition of the National Guidelines and Standards for the Physical Education Teacher Education (PETE) which provides programs with guidance on the 2008 Initial and Advanced national physical education teacher training standards. Below are the INITIAL PETE Standards and reaction or view about each category: 1. Scientific and Theoretical Knowledge. Physical education teacher candidates know and apply discipline-specific scientific and theoretical concepts critical to the development of physically educated individuals. This standard assures that the teacher candidate has the scientific bases which could explain the concepts critical to the progress of an individual. The elements which must be done by the teacher started in describing and applying the scientific concepts related to the movement, physical activity and fitness, followed by identifying historical, philosophical and social perspectives of physical education issues and legislation, then lastly, analysing motor skills and performance concepts. It is very important for the teacher to know what he is teaching to the learners. This will help the teacher find ways on how to attack or target and plan for a physical fitness activity that is very effective and scientific. This is the most important thing to provide effective and purposeful program for physical education. 2. Skill-Based and Fitness-Based Competence. Physical education teacher candidates are physically educated individuals with the knowledge and skills necessary to demonstrate competent movement performance and health-enhancing fitness as delineated in NASPE's K-12 Standards. After having the knowledge about the bases of the concepts in developing physically educated individuals, a teacher candidate should also know how to demonstrate different movements and fitness activities. He must reach and maintain a health-enhancing level of fitness throughout the program. This is important in conducting variety of physical activities and maintain the level of fitness. It also stated that there should be no discrimination among the persons with disabilities. Teacher candidates with special needs are encouraged to modify or use different ways in providing physical activities. . Planning and Implementation. Physical education teacher candidates plan and implement developmentally appropriate learning experiences aligned with local, state and national standards to address the diverse needs of all students. This refers to the ability of the teacher candidate in designing, planning, managing and implementing learning experiences. Teacher should provide a progressive activities to meet the needs of the learners, especially today there is an increasing number of persons with a poor- healthy lifestyle. . Instructional Delivery and Management. Physical education teacher candidates use effective communication and pedagogical skills and strategies to enhance student engagement and learning. A physical educator must possess an effective verbal and non- verbal communication skills to encourage them to participate and get interested with all the planned physical activities. This is an effective avenue to promote fitness and wellness. A teacher who does not know how to communicate and deliver the competencies is not effective. Delivery and communication is a very important standard to make all the learners understand the importance of engaging to physical activities and enhance their abilities and skills. 5. Impact on Student Learning. Physical education teacher candidates utilize assessments and reflection to foster student learning and to inform instructional decisions. This standard refers to the employment of assessment and evaluation of the physical fitness activities. The importance of the assessments and reflection is knowing how effective the designed program or activities. It is also important to identify which part of the program needs to be improved and be adjusted. This helps the teacher to know the effect of the activities to the learners. 6. Professionalism. Physical Education teacher candidates demonstrate dispositions essential to becoming effective professionals. It is very important for the teacher to be a model of character/ behaviors, dignity and respect. Teacher must believe that all students can become a physically educated individuals. (REFERENCE: 2008 National Initial Physical Education Teacher Education Standards National Association for Sport and Physical Education ) In general, NASPE’s standards for the Physical Education Teacher Education will provide all the professional physical education teachers a guide and tool in achieving its mission- to enhance knowledge, improve professional practice, and increase support for high quality physical education, sport, and physical activity programs. Physical Education teachers must be aware of this standards to properly direct the learners. Sadly, not all physical educators are familiar with these standards. The reason why, especially in our country, Philippines they see physical education as a non- academic subject and always given the less priority. As the head- teacher of our institution, I will make sure that all my physical education teacher will follow this standards.

Impact of Computer on Our Society

Ilorin Being a paper presented at the closing ceremony of the 1st computer training and issuance of certificate by Ascetic Computer Centre on the 15th September 2007 Introduction At this closing ceremony of the 1st computer training and issuance of certificate by Ascetic Computer Centre, let us lift our eyes toward the challenges that await us in the years to come.It is our great good fortune, as organisers, that time and chance have put us not only at the edge of a chapter in the lives of these graduands, but on the edge of a bright new prospect in their affairs —a moment that will define their course, and their character, for many years to come. Guided by the ancient vision of a promised future, let us set our sights upon a set of graduands of new promise. However, our march to this new future seemed less certain than it did yesterday. We must vow to set a clear course to renew our generation.We should thank the organisers for their vision towards the creation of new Nigeria ns who will appreciate problems, exhilarated by challenges, and strengthened by achievements, Nigerians with better employment opportunities, who will be job creators. Computer is gaining vast popularity globally in recent years. Its use, which extended information-processing capabilities, are influencing organizations of all types and sizes bringing about changes in institutional goals, relations and operations.A large percentage of the activities in any institution or organisation comprise the processing of communicating information in the production and distribution processes. In the developing countries, computers are becoming part of everyday activities because of the kind of information they generate and their speed of delivery (Award 1988). 1 What is a Computer A computer is an electronic device, which accepts and processes data by following a set of instructions (PROGRAM) to produce an accurate and efficient result (INFORMATION). Since the ultimate aim of computer is to prod uce information, the art if computing is often referred o as information processing. The values of the computer lie solely on its high speed (due to its electronic nature), ability to store large amount of data, the unfailing accuracy and precision. These account for its supremacy over manual computation. The computer industry began in the late forties with a very small initial investment, and has been increasing both in strength and importance. When one looks back with analytical mind, we can conclude that computer technology keeps on advancing with remarkable increase in speed, accuracy and reliability.Computing in whatever field, science, business, and industry is reaching directly or indirectly into various aspects of our society thereby, without loss of generality has shrunk the world into such a compactness that no part can afford to lack behind or live in isolation. The advent of electronic computer was hailed by the world as a great revolution, like any industrial revolution , it promised to free man from simple routine jobs of repetitive nature by providing computing power. The first to have exploited this facility was the search for scientific enquiries.This was not unconnected with the fact that the designers of these systems were scientists themselves. Several problems have been eluding satisfactory solutions, though numerical methods of solutions exist but involved a very huge accomplished. Not only did computer make reliable solutions possible it equally opened new application methods or areas. To quote but a few are the optimization techniques of Operations Research (OR), the awe-stricken field of space research, the molecular restructuring in Biochemistry etc. It would have been tedious inexhaustible, incomplete and inaccurate to list all the possible applications of computer. There is no limit tot he uses and applications of computer; hence there is hardly a branch of science that can resist computer invasion.After science was business. Because of the natural conservatism, oppressive and exploitative nature of this class coupled with their cautions approach to things, did not deem the computing machine fit until its worth and capabilities had been proved. What came to be recognized and embraced by this class was the importance of computer for decision aking and data processing, for these reasons, elaborate mathematical tools like Operations Research (OR), Critical Path Method (CPM), and Program Evaluation and Review Techniques (PERT) which were developed in the early fifties attained respectable height in the eyes of this class. Common examples of data processing are payroll, accounting, inventory management, banking, airline seat reservation etc. These required a lot of input and output and relatively little computing. Hence the costs of computing in such areas tend to be closely bound by inputting the data and outputting the results.Some applications like airlines seat reservation, banking business and inventory control , call for real-time systems, which are dedicated to a particular application. They furnish â€Å"immediate† responses to input signals. For examples, it is easier today for one to know his statement of account in a bank the moment signals for such requests are sent to the computer. Similarly debited or credited accounts are updated almost immediately for further transactions. The Need for Computer Most of our national projects could better be accomplished with the use of computers.Consider the registration of voters for election, common entrance examination into Nigeria Secondary Schools and conducting head counts (census) to mention only a few. These involve a huge volume of data, and would naturally be unwise if accomplished manually as it would be tiring, inaccurate and full of errors. 3 Going through the history/evolution of computers, the search for a realistic head count by the United States census bureau in 1890 led to the development of an electro-mechanical machine that helped greatly during the census by cutting down the man-hour required for the processing of the census data.The accuracy of computer cannot be over-emphasized and it conforms to the objective of using the computer. A cashier in a departmental store would definitely find life boring if all calculations, issuance of receipts and giving of change would be done manually for each customer after each transaction. But with the aid of an adding machine the job is done accurately and he feels relieved. Going from the adding machine to the computer itself, the ability of the computer to perform repetitive tasks makes things easier.Once the computer is programmed using the adequate software the whole job is done with ease. The need for computer in our banking system cannot be underrated because of the huge amount of transactions and the accuracy desired. Similarly in the data processing environment where the bulk of the job is either sorting, merging files, updating information, searchin g for a particular key in a pile of data etc. , all these the computer does with ease and accurately too. In a developing economy like ours, the speed of the computer is again one of the distinguishing factors that make it inevitable.From the saying that â€Å"Time is Money†, speed is equally synonymous to time, and since computers work as a phenomenal speed coupled with its ability to access records or information directly from remote locations, efforts should be directed towards introducing computer into every facets of human endeavour. Computer and Unemployment The extent to which the computer has come to permeate all levels of our society is immeasurable. In fact, it does not matter, what you plan to do for a living, you will encounter the computer.Its impact is analogous to that of the automobile and television. Things could be quite different with computers, but it has become part 4 of our society. The automobile is largely responsible for the air pollution and congesti on of our cities today. The television has been accused of literally â€Å"rotting our minds†. Technology is usually a bit of mixed blessing and the computer is no exception. There is a popular slogan and fear that computer causes unemployment. From a professional point of view, it is untrue.The problem therefore is the ability to distinguish between unemployment and job displacement. Hence with a thorough distinction between the two, computer should be seen as a saviour from slavery. Before considering the question of displacement and unemployment, it might be necessary once again to define computer. Computer as earlier defined, is an electronic device or machine, which accepts data, following some sets of logical instructions to produce the needed results. Therefore we have to ask ourselves, can this so-called computer operate without the full assistance of human being?Can we just go to the computer for a complaint and have our problems solved without having to call on some pre-written programs meant for specific assignments, and written by programmers of course? The answer to these questions is NO. It is true that behind every successful man there is a woman, also behind the successful operations of computers there is a brain (the man). Computer on its own is just an empty box or a junk, and can in no way do any intelligent job, but with programs written the jobs are done.Therefore if a computer is given a job with the logical step to follow, it can do it better, faster and more accurately than human beings and these are some of the advantages. Consider the developed countries like Japan, USA, UK etc. , where their industries are filled with Robots. The word Robot means labour. Robots are no human beings but rather are machines that can be programmed to carry out complex and tedious task without getting bored or tired. Robots are blind, deaf and have no sense of touch. Therefore jobs that are hazardous, tedious, that could be left undone are done by these Robots.Considering an assembly plant where the 5 only thing a man does in such a plant is just to take the assembled goods out of the plant to give chance for the Robots to start assembling another. What a miracle it is to know that if a Robot breaks down in the course of its duty, almost immediately a fellow Robot (Doctor Robot) will attend to it to put it back to work. Think of the most dangerous tasks, which for the love of our dear lives we cannot do, these Robots do them. Ample examples are, blast furnace, disaster area (caused by poisonous gas) marshy areas etc. of course Robots do these jobs not thinking of any relations or parents and in fact, at a faster speed enhancing productivity. How does computer displace people and who are those displaced? As earlier mentioned, computer can only do a routine job and cannot think in any form. Now come to think of some well-structured organizations, UAC, SCOA and Leventis etc. , there are skilled personnel and unskilled workers/cl erks. The daily job of these unskilled workers are mere routine jobs like accounting procedures, oading and assembling goods which can be taken over by computers that will do it better, faster and in fact, more reliable thereby enhancing greater productivity. These labourers so displaced by computer can be taken to such areas as sales since more articles are produced. These workers should go out soliciting for markets. While the managers, engineers and technician can not be displaced because they as skilled in their job, they do real thinking. Therefore to supplement these greater efficiency and productivity of the computer, these skilled workers should be kept in an airconditioned office, and in fact, think of things yet to happen.No wonder the United States of American sees nothing left on earth again and hence proceeded to exploit the outer space. With these productive forces in operation, the prices of goods and the workers conditions of service would be improved. 6 Recently, th ese big time companies embarked on agriculture. These unskilled workers could be better utilized there, and more of them is needed for such jobs. In Africa, there are popular terms like laziness, redundancy, unproductively, etc. These are happening because there are no challenges to face.What we do mostly are routine jobs which could be boring thereby creating unhappiness and in such a situation we become less productive. The routine jobs should be given to computers while a conducive atmosphere be created for the skilled workers to think of ways of making the continent self reliant. Computer and Job Creation Let us consider a particular case study of an information system, the effect of computer and how it helps creating jobs. An information system means the collection and processing of data to yield useful information for decision making.To collect data, enumerators are needed to actually go to the field for data collection, typist are needed too and other people employed in the c ourse of recording the data and finally statisticians computer operators use the computer for processing the data to give useful results (information). Again think of the case of our consultancy services. Any company going into such ventures like agricultural business needs a consultant having in his service Agricultural scientists, soil scientists and host of other professionals in allied discipline to perform the feasibility studies.They give useful information to customers are regards the type of crops to plant, the planting seasons, the fertilizers to apply and when, the type of pests attracted by such plants etc. , all these lead to greater productivity and this is one of the things the attention of our professionals should be directed to. Come to think of the perennial problems of Cancer, AIDS and some other deadly diseases, which we have no solutions to. Our scientist and medical personnel should use most of their time addressing their minds through intensive research towards providing a remedy to such ills of the society while the computer is left to do their routine jobs for them. History has it that the early jobs where computers were employed were in accounting, payroll, ledger etc. , all of which had fixed procedures or routine hence it was easier to computerize these systems to enhance productivity and save workers from boredom. However, it must be recognized that computer requires lesser number of personnel, it can produce more and it is not likely to go on maternity leave, nor go on strikes, nor demand overtime or old age pension etc.Also the use of computer creates more jobs such as consultancy, developing and selling of software and hardware while the displaced workers could be trained as salesmen to market the goods or taken to such areas like agriculture where they can serve humanity. Therefore computer will lead to re-arrangement in the organizational set up and this will lead to greater productivity. Conclusions Computer offer innumerable benefits in enriching the quality and quantity of goods and services in any organisation.Despite the prevalent nature of computer in virtually every aspect of human endeavours, it has not been widely integrated into the production and distribution processes in Nigeria. Its integration will not only revolutionize the economy, it will engender the development of individual’ innate scientific inquiry mind and their critical thinking abilities. COMPUTER PROVIDES LONGER LIFE, REDUCES WORKING HOURS AND GREATER REMUNERATION IN RETURN.REFERENCES Ayo, C, K. (1994). Computer literacy: Operations and appreciation. Egbe: Alanukitan Press Walton, D. (1984). Blob (Computer Program): Applied system knowledge (ASK). London: Unwin Ltd 8

Whose Interests Should Be the Paramount Concern Essays

Whose Interests Should Be the Paramount Concern Essays Whose Interests Should Be the Paramount Concern Paper Whose Interests Should Be the Paramount Concern Paper Generally speaking, the free trade policy is better to the consumers, but this will bring big challenge to the native reducers. However, if the government implements protective trade policy to prohibit the foreign goods from coming Into the native country, this will short down the supply of foreign goods and the consumers choices. This kind of policy makes the consumers have to spend more money on the import goods. Every coin has two sides, so is the foreign trade policy. The enterprises and the consumers benefits are controversial, so the government should balance them, when the government sets up the foreign trade policy. 1 . The Introduction of the problem The foreign trade policy ant protect the producers and the consumers benefits at the same time, so when we set up the foreign trade policy, we should obey this principle: Maximize ones benefit at the condition that the other ones lest loss, in order to get overall benefit. To an enterprise with low level of productive, It may hope to stand stable In the native market: however, to an enterprise with high level of productive, it may hope to get a large space in the international market. Therefore, the producers produce capability determines the producers benefit wanting. The consumers income determines their benefit wanting. Too poor man, it must make sure that he can live a normal life firstly, at this moment, his benefit wanting Is that he can buy his necessities at the lowest price; to a rich man, his economy level determines he can have more wanting. He may care about the price of articles of luxury, rather than that of food. So the rich ones benefit wanting is quite different from the poor ones. The producers capability of productive and the consumers Income are relative to the a countrys development of economy, so we can get a producers and consumers FIFO Dental wanting determinants canal. Producers Capability Economic Development Level of Productive Producers Benefit Demand Consumers Benefit Consumers Income Demand Figure 1 . Producers and Consumers Benefit Demand Chain When the government sets up the foreign trade policy, it firstly should make out the countrys level of economy and the producers level of economy and the consumers consumption wanting in order to find out their own benefit wanting. The government then should compare the different interest groups benefit wanting and sets up the 62 September, 2008 appropriate foreign trade policy under the principle: Maximize one groups benefit on the condition that the other one has the fewest losses, in order to get the overall benefit. The analysis of how to set up the foreign trade policy 2. 1 Dividing the economic developmental stage Walt Whitman Roster was used to point out that the development of economy should be divided into six stages: Traditional society stage, Preconditions for take-off stage, Take-off stage, Drive to maturity stage, Age of High mass consumption and pursue quality stage. However, Cheney, another American economist, advised to divide the economy into three phases: Initial stage of economy, Industrialization stage and Developed economy stage. The Chinese economist, Lie You divided the development of economy into five phases: Generation stage, the stage of development, growth stage, strong stage and mature stage. As Lie Hypertension was based on the Rows and Cheneys viewpoint, so this article will take the Lie Hues theory to divide the development of economy. 2. 2 Policy Suggestions at each stage 2. 2. 1 T he first stageGeneration Stage The agricultural sector is the main sector in the society. The producers are all small farmers in the unit of family. So at this stage, the producers are also consumers, and they need lots of food. However, due to the low productivity, there will be more need than supply. On the other hand, due to the constriction of nature condition, the native agricultural goods are very rare. So the government should take up the free trade policy in order to import some other agricultural goods. 2. 2. 2 The second stageThe Stage of Development In this period, although the agricultural sector is still the main productive sector, the proportion of the agricultural sector in the GAP begins to crease; some of the rural labor force are transferring to the city. During this period, the industrial sector will take the place of the agricultural sector, becoming the first sector. As the industry in the native country is in the early stage, its really very Doolittle Tort teen to compete Witt ten Torrent companies, so ten government NAS to take up protective trade policy to the industrial sector. In this period, as peoples salary is still at a low level, consumers still spend lots of money on the daily necessities, only a few consumers are in need of some kinds of industrial products. Therefore, the protective trade policy will not hurt the consumers benefit. The level of mechanization in agricultural production is still very low, and the productivity and efficiency are also very low. The agricultural producer needs to be protected to resist the competition from the foreigners. Compared with industrial sector, the government should give some protection to the agricultural sector in the form of subsidiary etc. 2. 2. 3 The third stageGrowth Stage In this period, the economy in the country has have made rapid progress and the ratio of revenue to GAP declines hardly, even less than that of service industry. However, with the development of industry, the level of mechanization in agricultural production has been improved obviously. The agricultural production can not only make the native peoples needs, but also have surplus. So the government can implement free trade policy to the agriculture and help it export aboard. The enterprise in industry sector also gets an obvious progress and the ratio of industry sector to GAP has been further improved. Some enterprises become mature in the market, they are not in a totally passive situation when they compete with the foreign ones. However, they are eager to get lots of advanced technology for both production and management from the foreign countries. On the other hand, peoples living standard and their quality of life are improved; consumers begin to have diversified demand on industrial products. However, in this period, the native enterprises may cant make consumers high needs. So compared with the second stage, the trade policy can relieve some constraints on industrial products; and welcome the foreign enterprises to invest. Service industry and tertiary industry have made great progress, but compared with he ones in developed countries, they still I lack competitiveness. However, at this time, the need of industrial products is still much more than that of service, so the government can implement protective trade policy on tertiary industry. This policy will not bring lots of losses to the consumers and will protect the native enterprises. 2. 2. 4 The fourth StageStrong Stage Actually, lots of medium-level developed countries are at this stage nowadays. Each industry in native country become mature, but still doesnt have absolute advantage in the world. The industrial enterprises are Seibel to 63 Volvo. 3, NO. 9 withstand the competition of the foreign enterprises and their biggest difficulty is how to get a larger market space in the international market. Tertiary industry also makes a progress, most of the businesses are getting mature and some of them have the ability to compete with the foreign competitors. During this period, the consumers have a higher level of income; they have more need in the service industry. So the government can take up free trade policy in the industrial sector, Ana try to Nell ten native companies to go aurora. I en government can Turner increases liberalizing of services, in order to meet the consumers multifarious needs in the service industry. 2. 2. 5 The fifth stage Mature Stage During this period, the service industry has become the economic backbone of the country. Enterprises begin to take the world as their objective market. The consumers dont care about the prices of goods, as they have a high level of income. Therefore, the government should advocate the free trade policy. We have analyzed the consumers and producers main feature in the former content and given lots of suggestion on the trade policy in each stage. However, we still believe that there isnt a common trade policy theory to all the countries. The foreign trade policy should be changed according to the real situation of the country. Generally speaking, at the beginning of the development of economy and at the developed stage, the government can take up free trade policy. However, during the process of the economy, the government should try to use protective trade policy on each industry. 3. Suggestion on foreign trade policy in China Nowadays, each industry is developing very fast. Specially speaking, compared with the developed countries, the production level in agricultural sector still lags behind, so china can not implement free trade policy on agriculture, on the contrary, we should make great efforts to it to improve the international competitiveness of agricultural products.