The Theories And Implications On Corporate Financial Decisions Finance Essay

The Theories And Implications On Corporate Financial Decisions Finance Essay This paper concerns mainly on exploring the area of corporate valuation models and their implications in assessing the value of corporate firms. The models to be reviewed and analyzed are Economic Value Added (EVA), Capital Asset Pricing Model (CAPM) and Free Cash Flow (FCF). The selected models would be used on 5 publicly listed firms in the Bursa Malaysia. The aim of this study is to analyze the three models on how it can be utilized in helping a firm to create, sustain and access its corporate value. This paper consists of six parts, which are introduction, literature review, importance of theories and its implications on corporate financial decisions in Malaysia, application of concepts, tenets, fundamentals, technical issues, etc to the five chosen firms, methodology to analyze 5 years financial data of the selected firms and conclusion. Introduction In this paper, three corporate valuation models have been chosen as our main concern, which are Economic Value Added (EVA), Capital Asset Pricing Model (CAPM) and Free Cash Flow (FCF). We then apply the selected valuation models and methodologies to five publicly listed firms in the Bursa Malaysia from the food and beverage industry. The five companies are Dutch Lady Milk Industries, Fraser Neave Holdings Berhad, Nestle Ltd, QSR Brands Bhd and Yeo Hiap Seng (M) Berhad. Summary will be made by reviewing ten journal articles under the literature review part for a preliminary understanding of the models. This paper includes four journal articles for EVA as well as another seven journal articles for FCF and CAPM. In addition, we will identify the importance of the theories and describe its implication on corporate financial decisions in Malaysia. This study has provided us a great learning opportunity by accessing the company value of the real corporate firms. It also provides us a lear ning platform in how to utilize the valuation tools to evaluate companys performance for investment purpose in the future. Literature Review Economic Value Added (EVA) Economic Value Added (EVA) is a corporate valuation tool developed by Stern Stewart Co. to assist managers in their decision making by incorporate two basic principle of finance inside. The first principle is the financial goal of any company for shareholders wealth maximization and the second one is that a companys corporate value is based on the extent to which investors expect future earnings to exceed or fall short of the cost of capital. Another way to explain is that, EVA is developed to align decisions with shareholders wealth. According to Stewarts study in 1994, it is proved that EVA as the single best tool of measuring wealth creation on a contemporaneous basis and the result in describing changes in shareholders wealth is about 50 percent better than its greatest accounting-based rival of EPS, Return on Asset (ROA) and Return on Equity (ROE). EVA model assist managers in better investment decisions making, to identify improvement opportunities as well as to consider the short-term and long-term benefits for a firm. Based on Taubs study in 2003, it is observes that most of the valuation models used among industries focus only on the financial or accounting information. Unlike EVA, it combines factors like accounting, market and economy information in a companys performance evaluation. Various studies have proved the superiority of using EVA over other traditional models for evaluate companys performance due to its transparency and capacity to obtain more important information. According to Kudla and Arendts study in 2000, EVA can eliminate the arising conflicts and confusion when a company employs multiple measures like EPS, Return on Investment (ROI), Return on Equity (ROE) and Net Operating Profit after Tax (NOPAT). Furthermore, EVA can also be used as a tool to eliminate economic distortions of General Accepted Accounting Practice (GAAP) to focus decisions on the actual economic outcomes. It promotes better evaluation of decisions that have an impact on the income statement and balance sheet or trade-offs between each other. Also, EVA managed to cover every aspect of the managerial cycle through the use of the capital charge against NOPAT. There are also studies indicate that EVA is a superior measure of the managerial decisions quality. From Fishers study in 1995, EVA is suggested to be treated as a reliable pointer in estimating a firms value growth in the future. Also, according to Sterns study in 1989, the purpose of EVA is to change the management behavior as well as their performance, leading managers to act in the owners interest. It can be used as a motivation tool to encourage managers to create shareholder value by being a basis for management compensation. Importance of the theories and implications on corporate financial decisions in Malaysia As business grows wider and complex across the border, there is a demand for better valuation tool to evaluate the performance of the business. It is important to adopt more innovative performance metrics so that the companys management behaviors can be closely monitored to achieve the goal of maximizing the shareholders benefits. It is also important to access a firms value for any decision making regarding business expansion or contraction. According to the article of The Chartered Institute of Management Accountants (CIMA), Latest Trends in Corporate Performance Measurement (1992), many companies were experiencing difficulties in implementing measurement frameworks and these statements have been brought to today. There is a study conducted by Dr. Issham Ismail in Malaysia with the purpose to examine the relationship between EVA and the company performance in Malaysia. The study indicates that EVA has a strong relationship with stock return as compared to other measures due to its focus on long-term performance. EVA enhances stock performances by including more informational content in describing the stock returns. According to the study, EVA is considered as a better alternative to other traditional valuation tools such as EPS, ROE, etc. Its characteristic of transparency and capacity to provide more important information helps investors in Malaysia to make better investment decision as well as the resources allocations decisions. Besides that, EVA and MVA can be also treated as performance measures and signals for any strategic change (Lehn and Makhija, 1996). There is another study conducted by Norfarah, Suhaila and Wan Mansor in Malaysia regarding the adoption of EVA on real estate corporations in Malaysia. In Malaysia, real estate sectors have grown to become a large sector and continue to develop for the past two decades even through difficult economic period. Some has been performing well in the industry such as IOI Properties and Boustead Properties Bhd while some of them are experiencing hardship like Country Heights, Land General, and Damansara Realty. In order to identify the company potential of adding more shareholders value, an alternative corporate valuation model has been introduced, which is EVA, proposed by Stern Stewart Management Services. The adoption of EVA is considered to be more comprehensive as its measurement tool provides a clearer picture of whether a business is raising or reducing shareholder wealth. Most of the multinational companies such as Sony, Coca-Cola and Monsanto have formally announced their adoption and implementation of EVA as management systems in their quest of the value. On the other hand, EVA based performance plan produces positive result towards a company management. There is a study on the effects of adopting management bonus plans based on residual income measures. According to Wallaces study in 1997, EVA based performance plan motivates managers to utilize companys assets in a more productive and efficient way. This hence, reduce of the conflict between managers and shareholders interest and the decreasing agency cost eventually help the company to boost its profit after the adoption of the residual income based incentives plans. As a result, EVAs superiority is proved in encouraging managers for shareholder wealth creation. However, in order to work out the EVA compensation system, it requires large commutation effort and extensive training for both managers and their subordinates. Lastly, EVA and its practical applications as a management control system for performance measurement which helps manager to make better investment decisions. Methodology Economic Value Added is an evaluation tools used to examine a companys true economic profitability because it factors in net operating income after taxes interest minus the opportunity cost of capital deployed to earn that net operating income. In other words, EVA tells whether a companys financial performance is higher or lower than the minimum required rate of return for shareholders or business lenders. Besides that, EVA also tells investors if their amount of invested capital in the business is providing them a higher return than their minimum, or if it is better to shift their capital elsewhere. There are few steps required in calculating EVA and this is how Economic Value Added (EVA) is used by the financial analysts. Annual reports from the five selected firms have been sourced respectively in this report. First of all, we have to identify the earnings before interest and tax (EBIT) from the income statement. Next we have to calculate the Net Operating Profit after Taxes (NOPAT) by deducting the Income Tax Expenses from the EBIT. Afterwards, we need to determine the invested capital deployed in the business by deducting Non-interest Bearing Current Liabilities from Total Assets. Then, we need to calculate the Weighted Average Cost of Capital (WACC) using the Capital Asset Pricing Model (CAPM). WACC calculated by adding Risk Free Rate with Beta multiply by Market Risk Premium, where Market Risk Premium is calculated by deducting Risk Free Rate from Market Return. Take WACC multiply with the Invested Capital and finally, EVA can be found by deducting the multiplication of WA CC and Invested Capital from the Net Operating Profit after Tax. The calculation formulas for EVA are as follows: EVA = NOPAT (WACC * Invested Capital) where, NOPAT = Profit Lost Before Interest and Tax Income Tax Expenses and, Invested Capital = Total Assets Non-interest bearing Current Liabilities and, Cost of Equity, WACC is calculated by using CAPM Model where, WACC = Risk Free Rate + ( Beta * Market Risk Premium ) where, Market Risk Premium = Market Return Risk Free Rate Free Cash Flow Literature Review Free cash flow (FCF) refers to the cash generated by the assets of the business available for distribution to all the shareholders and it cant be affected by the businesss capital structure. A firms stock value is calculated by projecting the future free cash flow (FCF) that will be generated by the business assets and then compute the present value of FCF by discounting them at the appropriate required rate of return. FCF appeared to be an appropriate valuation model to be used when (1) the firm doesnt pay dividends at all or pays out lesser dividends than dictated by its cash flow, (2) free cash flow tracks profitability or (3) the analyst takes a corporate control perspective. The present value of FCF is the most fundamentally useful valuation tool used in assisting any investing decisions like investment opportunities appraisal and corporate valuation (Arumugam, 2007). It can also be used to measure the potential of investment opportunities as well as to forecast the firms future performance by accessing its corporate value. Based on an article written by Ben Lardes in March 2010, a companys free cash flow reflects a lot of information about the company performance. Obviously the higher the free cash flow of a business is, the more money you can expect to earn as the businesss shareholder. Every firm has different FCF, which is depends on how well is their performance over the periods. For instance, a well performing firm may have a good amount of positive cash flows. On the contrary, a firm may not have a positive cash flow at all if it has been struggling to succeed. A firm will have a negative FCF if its expenses are exceeding its income. By looking at the FCF, a company can decide whether to go on with its current business direction or to change its management operation. However, negative FCF does not always signify problems within a business. The negative FCF may be due to the preparation of business expansion in the future. The age of a company and its circumstances should always be in the consider ation before judging it purely based on its free cash flow. According to the study conducted by McClure, although FCF has its merits, it still has some limitations and the most significant one would be the garbage in, garbage out principle. Predicted FCF is used as the main input in DCF calculation to evaluate any investment decisions, thus the quality of FCF is very important in the valuation process in order to get an appropriate and reliable outcome. If all the FCF values have found to be inaccurate, then it will be useless in assessing the firms stock price. Therefore, the ability to make good future projections of FCF is critical. The more you confident about the future cash flow, the better project evaluation you can made, leading to a desirable profit from your investment. In this case, the forecast of potential cash flow appeared to be the tricky part, as you are required to prepare a full financial model to get a better estimation. This requires some serious analysis of the business, the macro-economic environment, the legal and regu latory framework and the competitive landscape (Cartmail, 2010). Importance of the Theories Implications on Corporate Financial Decisions in Malaysia Investing decisions can be made based on a simple analysis like selecting your desire firm with a product you expect to have high demand in the future. The underlying expectation is that the company will continue to produce and sell high-demand products and will generate cash flow back to the business. The second part is that the companys management will know where to spend this cash to continue its operations whereas the third assumption is that all of these expected future cash flows are worth more today than the stocks current price.   Free cash flow (FCF) tracks the remaining operating cash flow for the shareholders after laying out the money a firm required to expand or sustain its asset base. It is important as it allows business to pursue more opportunities that could enhance shareholders value. Present value of all free cash flows is the key indicator of a firms equity value. The growing FCF is often a prelude to increased profits. Firms that facing surging FCF as a result of revenue growth, debt elimination, improvement of operational efficiency and others, can reward their investors tomorrow. Thats the reason investors cherish FCF as a sound valuation metric. The odds are good when a firms FCF is increasing, it is believed that the firms share value will soon be increased as well. An important thing to note is that, negative FCF is not bad in itself, however it could represent a sign that a firm is engaging in large investments (Investopedia, n.d.). DCF is one of the favorable and sound tools to be used in corporate valuation because it can produce outcome, which has the closest value to an intrinsic stock value. Unlike other valuation tools like P/E ratio, DCF analysis relies on FCF. It is believed that FCF reflects a clearer view of a firms ability in generating cash, as profits can sometimes be clouded by accounting tricks, but cash flow cannot. The reason is because cash flow generation is hardly to be influenced by accounting assumptions and practices. Also, FCF is a trustworthy measure that eliminates most of the arbitrariness and guesstimates found in reported profits (Investopedia, n.d.). Other than that, FCF can be considered as a forward-looking metric because it depends more on future prospects rather than past results. In addition, it also enables expected operating strategies to be included in the valuation as it allows varies business components to be valued separately. On the other hand, free cash flow theory has important implications for the leverage effect on a firms investment financing decisions. The FCF model implies that for an over-investor, an increase in leverage should lead to a reduction in unprofitable investment spending. Additional leverage will leave less amount of free cash flow at the discretion of the managers at the same time that it increases the intensity level at which the companys activities can be closely monitored. Overall investment will become more efficient as the firm substitutes contractually obligated debt service for negative net present value investments. Empirically, the reduction in unprofitable investment spending should contribute to an increase in the firms stock price that reflects the improved efficiency of managerial investment decisions. Methodology Free Cash Flow (FCF) is the cash generated by the companys assets and it is available for distribution to all the shareholders. It is used to tracks the remaining operating cash flow available for the shareholders after laying out the money a firm required to expand or sustain its asset base. It is calculated by deducting Net Investment in Operating Capital from Net Operating Profit after Tax (NOPAT), where NOPAT is calculated by deducting Income Tax Expenses from the Profit Lost before Interest and Tax (EBIT) and Net Investment in Operating Capital is obtained by using the Operating Capital at time t to minus the Operating Capital at time t-1. Operating Capital is calculated by adding up Net Operating Working Capital (NOWC) and Net fixed Assets, where NOWC is calculated by deducting Non-interest Bearing Current Liabilities from Operating Current Assets. The calculation for FCF is as followed: Free Cash Flow (FCF) = Net Operating Profit after Tax (NOPAT) Net Investment in Operating Capital where, NOPAT = Profit Loss before Interest and Tax (EBIT) Income Tax Expenses and, Net Investment in Operating Capital = Operating Capital at time t Operating Capital at time t-1 where, Operating Capital = Net Operating Working Capital (NOWC) + Net fixed Assets where, NOWC = Operating Current Assets Non-interest bearing Current Liabilities Capital Asset Pricing Model Literature Review Basically, Capital Asset Pricing Model (CAPM) is based on Markowitz (1959) and Tobin (1958), who introduced the risk-return portfolio theory. The primary implication of the CAPM is the mean-variance efficiency of the market portfolio. The efficiency of the market portfolio implies that the positive linear relationship between expected returns and market betas is exists and only beta is playing a significant role in explaining the expected returns of stocks. Several attempts have been done to test the implications of the CAPM using historical rates of returns of securities and historical rates of return on a market index. The CAPM is relies on several assumptions with the fact that every investor wants to maximize the expected satisfaction of their wealth. An addition to the risk aversion is that all of them are having the same expectations towards the returns of the securities. The returns of the securities follow a normal distribution, which characterizes the phenomenon of homoscedasticity. Besides that, CAPM also assume that every investor is allowed to borrow any amount of money at the risk free rate. Finally, there are no taxes or other barriers which lead to an imperfection of every market, that is, the market is assume to be in equilibrium and have a perfect competition among all the participants in the market. According to Grigoris and Stavross study in 2006, one of the earliest empirical studies that support the theory of CAPM is that of Black, Jensen and Scholes [1972]. By using monthly data of return and portfolios rather than individual stocks, Black et al tested whether the cross-section of expected returns is linear in beta. By constructing a portfolio made up by an amount of securities, investors managed to diversify away most of the firm-specific risk, thus increasing the precision of the beta estimates and the expected rate of return of the portfolio. This approach eliminates the statistical problems that arise from measurement errors in beta estimates. The data found to be consistent with the predictions of the CAPM, at which the relationship between the average return and beta is close to linear and that portfolios with high (low) betas will have high (low) average returns. There is another classic empirical study that supports the theory conducted by Fama and McBeth in 1973. In the study, they examined whether there is a positive linear relation between average returns and beta. In addition, the author also investigated whether the squared value of beta and the volatility of asset returns can explain the residual variation in average returns across assets that are not explained by beta alone. There are several studies in the early 1980s suggested that there were deviations from the CAPM risk return trade-off due to other variables that affect this tradeoff. The objective of the studies was to find the missing components that CAPM omitted in explaining the risk-return trade-off and to identify the variables that created those deviations. Banz [1981] tested the CAPM by examining whether the size of firms can explain the residual variation in average returns across assets that remain unexplained by the CAPMs beta. CAPM is being challenged by indicating that firm size does explain the cross sectional-variation in average returns on a particular collection of assets better than beta. The author concluded that the average returns on stocks of small firms were higher than the average returns on stocks of large firms, vice versa. This study has known as the size effect. The general reaction to Banzs [1981] findings, that CAPM may be missing some aspects of reality, was to support the view that although the data may suggest deviations from CAPM, these deviations are not as significant to invalidate the theory. Importance of the theories and implications on corporate financial decisions in Malaysia CAPM, which is a theoretical representation of the financial markets behavior, can be used in the estimation of a companys cost of capital. Despite the limitations, the model can be a superior addition to the analytical tool kit of financial manager. The modern financial theory relies on three major assumptions. First, we assume the participants in the securities market are dominated by rational, at which all the investors are risk averse. Risk-averse person often seek to maximize satisfaction from the returns on their investment. CAPM also assume a perfect competitive market, which is in the equilibrium. It means that the financial market is populated with highly sophisticated and well informed buyers and sellers, meaning that the financial market has the characteristic of transparency. The third assumption implies that investors will choose to hold diversified portfolios, means that every investor wants to hold a portfolio that could reflects the stock market as a whole. Although i t is impossible to own the market portfolio, it is relatively easy and inexpensive for investors to eliminate specific or unsystematic risk and construct a portfolio that tracks the stock market through diversification. Another significant problem is that, it is not possible for investors to borrow at the risk-free rate in the real world. This is because the risk associated with individual investor is particularly higher than the risk associated with the Government. This inability to borrow at the risk-free rate means that the slope of the SML is shallower in practice than in theory. However, CAPM is generally considered as a better method to calculate the cost of equity and it explicitly takes into account the sensitivity of a companys security return to market risk. It is clearly superior to the WACC in providing discount rates to be used in investment appraisal. Research has shown the CAPM to stand up well to criticism, although the arguments against CAPM have been increasing in the recent years. Investment managers in Malaysia have widely applied CAPM as well as its sophisticated extension as the investment valuation metric. CAPMs application to corporate finance is the recent development. Although it has been employed in many utility rate-setting proceedings, it has yet to gain widespread use in corporate circles for estimating companies cost of equity. Methodology The Capital Asset Pricing Model indicates a simple linear relationship between expected rate of return and systematic risk or market risk of a security or portfolio. The model is an extension of Markowitzs (1952) portfolio theory. The researchers who are commonly credited with the CAPM development are Sharpe (1964), Linter (1965) and Black (1972) and that is the reason CAPM is normally referred as SLB model. Markowitz (1952) developed a concept of portfolio efficiency through the combination of risky assets that minimizes risk for a given return or maximizes return for a given risk. Variance of expected returns has been used as the measure of risk and then the efficient portfolio will be developed to minimize risk for a given rate of return. The equation of CAPM indicates the relationship between cost of capital and market returns. The general idea behind CAPM is that investors need to be compensated for two reasons: time value of money  and risk. The time value of money is represented by the risk-free rate, Rf  in the equation and investors are being compensated for the forgone opportunity cost and time value of money due to their investment over a period of time. The other half of the equation represents the risk and the risk premium is the compensation for the investors for taking on any additional risk. It is calculated by using a risk measure (Beta) to the market premium (Rm-rf). The calculation of CAPM is as followed: Ri = Rf + ( Beta * Market Risk Premium ) where, Market Risk Premium = Rm Rf where, Ri = return on equity or portfolio Rm = return on the market portfolio Rf = return on risk-free asset Beta = sensitivity of security or portfolio to the systematic risk The equation indicates that the expected rate of return on asset i is equal to the rate of return on the risk-free asset plus a risk premium. The risk premium is calculated by multiplying beta with the difference between the expected rate of the return of the market portfolio and the risk-free rate. Risk free rate can be obtained from the return on Malaysian Treasury bill at particular time of the stock trading while beta can be calculate from the historical prices of stock and the market and the market return can be calculated based on the market index. To calculate the beta value, we need to first calculate the covariance of the security and the market. Second, we need to calculate the variance from market return. Next, we need to divide covariance of the particular security and market by variance of market to obtain the value of beta.

Hindi matter on fashion Essay

Agriculture is the backbone of Pakistan’s economy. Pakistan today is among one of the World’s fastest growing population, now estimated as over 170 million. Due to lack of large river regulation capability through sizeable storages, the country is already facing serious shortages in food grains. Given the present trend, Pakistan could soon become one of the food deficit countries in the near future. Therefore, there is a dire need to build storages for augmenting agriculture production. reservoirs have already lost about 5,000,000 acre feet (6.2Ãâ€"109 m3) due to sedimentation. Electricity needed Employement India wants its supremacy in the region; therefore, it is not resolving the water and Kashmir disputes. Politics has strong links to trade as political disputes led to blocking of trade India should display seriousness to practically resolve Kashmir and water disputes for trade and economic cooperation between Pakistan and India. Pakistani traders and industrialists want trade ties with India despite some reservations. There are chances of war on the water issue. Improvement in bilateral ties could benefit both the countries, but friendship should not be made at the cost of Kashmir and water. Climate affects the IWT or India’s building of reservoirs It gives India rights to the natural flow of water of the Indus’ three eastern tributaries – the Ravi, Sutlej and Beas – while Pakistan controls the main Indus channel itself and two western rivers, the Jhelum and Chenab. Pakistan has increasingly raised concerns about data sharing and transparency, particularly because the upper reaches of all of the rivers lie in Indian-controlled territory, giving that nation greater scope for control of the entire Indus river system. harvesting summer stream water into 3,000 litre gravity-fed storage tanks. Up to 30 percent of water is lost from the country’s unlined irrigation canals, experts said.

How Did Penicillin Help the Allies Win Wwii?

How did Penicillin help the Allies win WWII? Branna Prine Word Count: 1,894Table of Contents Plan of the Investigation†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 3 Summary of Evidence†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 4-5 Evaluation of Sources†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 6 Analysis†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 7-9 Conclusion†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 0 Bibliography†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 11 A. Plan of the Investigation The scope of the investigation concerned the magnitude of penicillin and how it helped the allies win World War II (WWII). The researcher scrutinized the invention and process in which penicillin came to be, the different types of penicillin we have and use today, how it was used to help us more than any other drug in history at one point, and how it came to save thousands of lives in WWII. The researcher’s method was to use multiple primary resources such as articles written by scholars, medical professionals, and historical investigators. The evidence that was found was evaluated and observed for origin, value, and purpose of penicillin and its use in WWII. B. Summary of Evidence In 1928, Sir Alexander Fleming discovered the first natural mold of Penicillin(Tames 5). Even though his â€Å"creation† was mostly on accident, Fleming had been itching to discover a new â€Å"wonder drug† since he first became interested in being a scientist(5). Though the knowledge of disease causing bacteria was somewhat understood at the time, medical researchers had yet to find a chemical able to rid the body of the potent bacteria while not harming the body at the same time. Fleming’s first form of Penicillin was just what was needed to kick off the ultimate breakthrough of medicine. Even then, it wasn’t until another decade after this discovery that people really started needing and using Penicillin to save lives(History of Penicillin). Although Fleming is credited with this important discovery, it took the start of WWII to pursue medical scientists to strengthen the effect the drug had on people. It’s all thanks to a total of 39 different groups of scientists that hundreds of thousands of fighting men’s lives were saved(World War II and Peoria). Penicillin was considered to be the war’s official wonder drug because of the unbelievable effects it had on infections and deadly diseases. The use of this drug is what made WWII different from any previous war(World War II and Peoria). Before Penicillin was introduced to the allies of the war, soldiers rapidly died from infections such as Staphylococcal(staff), streptococcal(strep), and pneumococcal(pneumonia) (World War II and Peoria). Since death was the ultimate outcome of these infectious diseases, the number of available soldiers to fight dropped immensely and expeditiously. Due to the shortage of men, sergeants called for men to be recruited no matter their experience; as long as they were 18 years old(Inside WWII). That then led to more deaths of young cadets because of the lack of knowledge of what to do on the battle field. At that point of time, the allies came to the conclusion that what they needed was a wonder drug ready to use when needed. That’s when Howard Florey and Ernst Chain were forced in with their team of scientists to use Fleming’s Penicillin mold and improve it to where it cured a grown man of a life threatening infection or disease; and make a quantity of hundreds of thousands(World War II and Peoria). After a total of 39 separate drug laboratories in the U. S. ad given their all to synthesize inorganic Penicillin, in 1941, they created a version 20 times more potent than what they started out with in 1939(22). By the autumn of 1943 the war doctors were using the drug on only American and Allied military patients with life-threatening infections. Since a single infection usually called for two million units of Penicillin(single ampoules held 100,000 units), rati oning who got what treatment was crucial(World War II and Peoria). The scientists shortly discovered that, while the new version of Penicillin was of very good quality, their new focus needed to be directed on quantity of the drug. By 1945, the team of scientists brilliantly came up with an amazingly effective technique that supplied the allies with 7,952 billion units of the strongest possible version of penicillin at the time(World War II and Peoria). Though the injections were painful(the needles had to be large enough to allow the medicine to flow through) and had to be given every four hours, soldiers agreed it was worth being able to live and continue fighting to the victory of WWII(23). By the end of it all, the magnificent wonder drug saved the lives of hundreds of thousands of warriors and even more citizens in the U. S. and has continued to fulfill its duty all the way up to today’s time(World War II and Peoria). C. Evaluation of Sources â€Å"World War II and Peoria† was the title of the article that helped the researcher the most to come to a conclusion on how Penicillin helped the allies win WWII. The article’s purpose was to further inform people about the studies and development of penicillin during WWII. The article talked about the illnesses and wounds the soldiers fighting in WWII came in contact with and how Penicillin helped them fight and survive through it all. This particular unit differed from the rest because it did not have its focal point on how Penicillin came to be, but rather its purpose and usage in WWII. However, it did have some limitations of information on specific numbers and names of soldiers that were affected by the wonder drug. The point of view that the article used was from a college professor who had dabbled in history as well as medicine. The professor’s name was Jennifer Rosenburg and she had posted this information around 2000. The second most helpful article’s title was â€Å"Inside WWII . The purpose of the article being written was to tell a more medical side of the war as opposed to the blood and guts. Although, it still lingered on with the facts and details of the war itself too much, which limited it with important details it should have withheld about the medical side of the war. But, because of the focusing on one little part at a time problem, the researcher ended up to find it very valuable. It stated facts that were focused on the medicine during the war instead of the medicine in general. The origin of this information was found by Dr. Steven Lister. He was a doctor during the war, so this gave him a personal experience and the researcher found great value in this type of first hand information. D. Analysis During the period of penicillin gaining importance, World War II was going on. This specific war was fought from 1939 to 1945 by the Axis: Germany, Italy, and Japan; and the allies: Australia, Belgium, Brazil, Canada, China, Czechoslovakia, Denmark, Estonia, France, Greece, India, Latvia Lithuania, Malta, The Netherlands, New Zealand, Norway, Poland, South Africa, United Kingdom, United States, USSR, Yugoslavia, and many others(The Axis and the Allies). The war was fought by more than fifty countries in the world. The main causes of the war for the U. S. and Britain were The Great Depression and the Treaty of Versailles(Wars and Battles 1939-1945). Around 1943, the Allies really started to need help because they were losing so many soldiers due to infections caused mostly by severe battle wounds which ultimately led to the being outnumbered and overtaken by the Axis. That is where Penicillin came in. Scientists spent over $2,000,000 trying to perfect and learn more about the drug(World War II and Peoria). They eventually found out that what this drug did, once successfully inserted in the body, was it located the source of the infection and fought only the harmful bacteria( Tames 15). As opposed to the other drugs, at the time, which destroyed not only dangerous bacteria, but the vital bacteria used for fighting infections naturally found in the body(16). The drug, therefore, saved over hundreds of thousands of men(World War II and Peoria). A few months after the Allies received the drug, the Axis groups started to surrender, which officially ended the war in 1945 with the Allies‘ being the victorious group(Wars and Battles 1939-1945). Under the circumstances that the allies started winning after penicillin came into the picture, that was considered to be one of the main, but least recognized, expositions for the victory of the allies. Of all the evidence the researcher has came up with to support this claim, the three main pieces of evidence are as follows: only two years after penicillin was thoroughly introduced to the war, the allies won; so many lives were saved –on and off the battlefield–how could it not have such a huge impact; and they must have known it was going to be a huge help, otherwise they would not have invested so much money in the whole process of innovating and testing the drug(World War II and Peoria). The first point was the victory of the allies shortly after penicillin came to use in the war. When they fought without the drug, the allies were losing by a drastic amount considering the vast number of men that died every day from infections on their battle wounds and had suffered without the care that penicillin provided(23). The soldiers suffered for a total of about three and a half years before they actually got penicillin shipped in that had an affect on people(World War II and Peoria). However, when they did get the wonder drug in, they spent about six months learning the different side effects, insertion ways, and preparations needed before they gave the soldiers all they needed to keep them alive and fighting(World War II and Peoria). The second point, was that there was such a large number of people saved by the drug, that it had to have made some kind of a difference in the way World War II ended. In less than a year, penicillin saved 187 lives just of people in America(21). In the war, penicillin took the death toll, caused by wound infections, from over 12 percent down to less than 1 percent on average(23). That would mean the allies side of the war would have had a 12 percent advantage over the axis in the battle at this time due to the drug keeping the soldiers dying from wound related infections. The last point stated was with all the time, money, and dedication with bettering this drug, penicillin obviously had a huge impact on World War II The U. S. spent over $2,000,000 trying to perfect the drug to make it effective enough to cure a whole army of men versus enough for one or two individual people. The money not only paid for the equipment needed, but for the 39 different groups of scientists hired to innovate and test the drug to reach the desired goal(History of Penicillin). E. Conclusion When Penicillin started out, it was but a simple form of mold. Then, When Fleming discovered it destroyed bacteria in the human body without harming the human in any way. He then had over 30 different teams of scientists work at improving this mysterious new drug to make it potent enough to help a man overcome pneumonia. After years and years of experiments and millions of dollars spent, they finally got what they had been working for. They sent as much as they could to the troops fighting WWII at the time. The doctors at the war stations gave it to the men in critical condition and the drug got them back on their feet and fighting in about a week. F. Bibliography Works Cited â€Å"The Axis and the Allies. † The Countries Who Fought in World War Two. Mandy Barrow, 2010. Web. 12 Nov. 2011. . â€Å"The Drug Safety. † The Drug Safety. The Drug Society, 2011. Web. 26 Sept. 2011. . â€Å"How Penicillin Came to Be. Alexander Fleming in WWII. J. Miller. Web. 28 Sept. 2011. . â€Å"Inside WWII. † History Learning Site. Chris Trueman, 2000. Web. 28 Sept. 2011. . Prine, Patricia R. â€Å"Moma's Notes. † Personal interview. 2 Oct. 2011. Tames, Richard. Penicillin: a Breakthrough in Medicine. Chicago: Heniemann Library, 2001. Print. â€Å"Wars and Battles, 1939-1945. † United States American History. Web. 12 Nov. 2011. . â€Å"World War II and Peoria. † 20th Century History. Jennifer Rosenburg, 2001. Web. 26 Sept. 2011. . â€Å"WWII and Medicine. † Medicine in World War II. 2001. Web. 27 Sept. 2011. .

Private Investments in Human Capital Growth in Asian...

This essay will be explaining that why macroeconomics stability is one of the key success factor that contributes to the tremendous economic growth in the last forty years of development in asian countries like singapore, hong kong and south korea. The objective of a government economic policy is to achieve stability. A volatile business cycle is not ideal to the economy as the rapid growth of an economy with high demand and inflation will lead to a recession as the long term inflationary growth will not be sustainable. Macroeconomics stability ensures that the country minimizes its exposure to external shock and volatility against the global market which will in the end leading to sustainable economic growth. Some of the safety†¦show more content†¦The overall national economic output will increase when the employment rate is high. When employment rate is high, the wages of the worker increases then leads to a rise in price for consumer good which causes inflation to increases hence the employment rate has an inverse relationship to inflation. Singapore has been trying to balance between the inflation and unemployment rate because when there is a high volatile fluctuation between the employment rate and inflation, the business cycle span reduces making the economy vulnerable to recession most of the time. Low and stable inflation is a key factor in long term sustainable growth which will lead to a steady, healthy and predictable economy hence attracting foreign investors into singapore to set up business to boost the economy by allowing them to plan for long term strategy. One of the key factor to manage the inflation rate effectively is through monetary policy. Currency stability allow investors to develop long term strategy and minimize exchange rate risk. As Monetary Authority of Singapore(2014) states that adopting the management of exchange rate as it is ideal in terms of the small economy of singapore where it is easier to manage through direct intervention within the foreign market. It is seen as an effective mitigation to curb the high inflation rate for singapore economy However, having just human capital is not sufficient to sustainShow MoreRelatedWhy The East Asian Miracle Really Helped East Asia s Economical Growth1484 Words   |  6 Pageseconomic growth before, The East Asian Miracle, occurred. The East Asian miracle has really helped East Asia’s economical growth. During this semester we have come across The East Asian Miracle, and how it came about. I have read The Four Little Dragons, also the World Bank report and Balassa’s article. Each one of the readings have different and similar arguments in why The East Asian Miracle happened. 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