WTO forecasts 9% fall in global trade

WTO forecasts 9% fall in global trade

Collapsing global demand will send the volume of world goods trade plunging by 9 per cent this year, the largest drop since the second world war, the World Trade Organisation predicted on Monday.

This compares with anaemic growth of 2 per cent in 2008, reflecting the sharp downturn in the global economy late in the year, and 6 per cent in 2007.

Pascal Lamy, WTO director-general, urged leaders of the Group of 20 countries who will meet in London next week not to raise trade barriers, saying this would hinder recovery efforts.

Courtsy Financial Times

what is Depression

Depression

Depression is a mood disorder. You feel sad and have no joy in life. You may feel that you have nothing to live for. There are many types of depression, from simple depressed mood to Major Depression - a life-threatening illness.

Symptoms could include:

Irritability
Mood Swings
Nervousness
Loss of Appetite
Night Sweats
Lethargy
Depressed Mood
Memory Impairment
Difficulty Sleeping
Social Withdrawal
Feeling Hopeless
Feeling Empty
Feeling of Anger
Loss of Capacity For Enjoyment
Fear
Suicidal Thoughts
Social Isolation
Poor Self Esteem
Poor Hygiene
Problems at Work
Self Depreciation
Threatening Suicide
Finding of Suicidal Intent

Common Causes

Depression often runs in families. This may due to your genes (inherited), learned behavior, or both. Even if your genes make you more likely to develop depression, a stressful or unhappy life event usually triggers the onset of a depressive episode.

Depression may be brought on by:

Alcohol or drug abuse
Childhood events like abuse or neglect
Death of a friend or relative
Disappointment at home, work, or school
Medical conditions such as hypothyroidism ,cancer, or hepatitis
Nutritional deficiencies
Overly negative thoughts about one's self and life, self blame, and ineffective social problem solving skills
Prolonged pain or having a major illness
Sleeping problems
Social isolation (common in the elderly)

Self care steps are

Get enough sleep.
Follow a healthy, nutritious diet.
Exercise regularly.
Avoid alcohol, marijuana, and other recreational drugs.
Get involved in activities that make you happy, even if you don't feel like it.
Spend time with family and friends.
Try talking to clergy or spiritual advisers who may help give meaning to painful experiences.
Consider prayer, meditation

Conclusion

In today's life , no one can avoid stress as a part of life. However depression can be avoided and stress be minimized by taking life and life events positively. So enjoy life and work hard.

What is free cash flow

What is free cash flow

Free cash flow (FCF) is a cash flow available for distribution among all the security holders of a company. They include equity holders, debt holders, preferred stock holders, convertible security holders, and so on.

Free cash flow = (Net Income +Depreciation/Amortization-Changes In Working Capital) cash flow' operations- Capital Expenditure

Explanation

Free cash flow (FCF) represents the cash that a company is able to generate after laying out the money required to maintain or expand its asset base. It is important because it allows a company to pursue opportunities that enhance shareholder value. Without cash, it's tough to develop new products, make acquisitions, pay dividends and reduce debt.
So it is the cash flow actually available for distribution to all investors (stockholders and debt holders) after the company has made all the investments in fixed assets, new products, and working capital necessary to sustain ongoing operations.

Illustration

ABC ltd has following financial data extracted from income statements, balance sheets , cash flow and notes to accounts.

Net income $ 25,000
Depreciation $ 2,000
Working capital changes +$10,000
Capital expenditure $12,000
Then
Free cash flow = (Net Income +Depreciation/Amortization-Changes In Working Capital) cash flow' operations- Capital Expenditure
Free cash flow = (25,000 + 2,000-10,000) 17,000-12,000
Free cash flow =$5,000

Market Efficiency

Market Efficiency

If prices properly reflect available information , then markets are said to be efficient.

Semi strong form efficient

Markets are said to be semi strong form efficient if the prices are unbiased based on all publicaly information

Strong Form efficient

Markets are said to be strong form efficient if the prices are unbiased based on all information (public and private).

Who cares about market efficiency?

1) Investors

If investors find that prices are predictable, then smart investors can earn extra return at the expense of naive investors.

2) Companies

If markets are efficient aggregators of information, then companies can learn from the stock price reactions.

3) Government and public

They are concerned about market efficiency because of the effect on economic growth and allocation of resources.

Effect of structural economic changes on industries

Effect of structural economic changes on industries


The following factors can have a significant effect on the cash flows and risk prospects of different industries

1) Demographics

The study of demographics includes much more than population growth and age distributions. It also includes the geographical distribution of people, the changing ethnic mix in a society and changes in income distribution.

2) Life style.

Consumer behavior is affected by trends and fads.

3) Technology

Trends in technology can affect numerous industry factors including the product or service and how it is produced and delivered.

4) Politics and regulations

The industry analyst needs to project and assess political changes relevant to the industry under study.

LEARNING ORGANIZATION

LEARNING ORGANIZATION

A learning organization is one in which people at all levels, individually and collectively, are continually increasing their capacity to produce results they really care about.

Leaning Organization is important because of following factors:

The organizations that will truly excel in the future will be the organizations that discover how to tap people’s commitment and capacity to learn at all levels in an organization.

It provides competitive advantage.

All organizations exit in more complexes, dynamic and globally competitive environment.

Peter Senge – “The Fifth Discipline”

Learning organizations are where people continually expand their capacity to learn.
Five disciplines are key to achieving an effective learning organization.

Personal Mastery:-enhancing ability to be objective.
Mental Models:-continually scrutinizing our assumptions and picture of the world.
Shared Vision:-creating a new picture for the future.
Team Learning:-creating the capacity to “think together”.
Systems Thinking:-knowledge and tools that allow people to see inter-relationships.

Daniel Tobin’s Five Principles of the Learning Organization

Everyone is a learner.
People learn from each other.
Learning enables change.
Learning is continuous.
Learning is an investment, not an expense

A learning organization tries to do six things

Collect intelligence about the environment.
Learn from the best practices of other organizations.
Learn from its own experiences and past history.
Experiment with new approaches.
Encourage systematic problem solving.Transfer knowledge throughout the organization

Levels of Learning

Managers/leaders need to encourage learning at four levels:

Individual
Group
Organizational
Inter-organizational

The Basis of the Learning Organization Strategy need to be

Transfer Knowledge, not just information.
Knowledge leads to better, safer decisions.
Better-informed.
Knowledgeable and Wiser decisions.

Conclusion

Organizations must learn faster & adapt to the rapid changes in the environment otherwise they will be history. This is the knowledge era and entry is granted only to those who learn, innovate and implement

MOTIVATION

MOTIVATION


Motivation is the inner drive that directs a person’s behavior toward goals. Motivation can be defined as a process which energizes, directs and sustains human behavior. It refers to person’s desire to do the best possible job or to exert the maximum effort to perform assigned tasks. An important feature of motivation is that it is behavior directed towards goal.


Motivational Theories

Motivation theories seek to explain why employees are motivated by and satisfied with one type of work than another. It is essential that mangers have a basic understanding of work motivation because highly motivated employees are more likely to produce a superior quality product or service than employee who lack motivation.

A) Maslow’s Need Hierarchy

Abraham Maslow organized five major types of human needs into a hierarchy .The need hierarchy illustrates Maslow’s conception of people satisfying their needs in a specified order, from bottom to top.

The needs, in ascending order, are:

1. Physiological (food, water, and shelter.)

2. Safety or security (protection against threat and deprivation)

3. Social (friendship, affection, belonging, and love)

4. Ego (independence, achievement, freedom, status, recognition, and self-esteem)

5. Self-actualization (realizing one’s full potential; becoming everything one is capable of being.)

According to Maslow, people are motivated to satisfy the lower needs before they try to satisfy the higher need. Also, once a need is satisfied it is no longer a powerful motivator. Maslow’s hierarchy, however, is a simplistic and not altogether accurate theory of human motivation. For example, not everyone progresses through the five needs in hierarchical order. But Maslow makes three important contributions. First, he identifies important need categories, which can help managers create effective positive rein forcers. Second,it is helpful to think of two general levels of needs, in which lower-level needs must be satisfied before higher-level needs become important. Third, Maslow sensitized managers to the importance of personal growth and self-actualization.

B) Existence Relatedness Growth (ERG) Theory

Alderfer focuses on three needs: existence, relatedness, and growth.

Existence needs are similar to Maslow’s physiological needs, and to the physical components of Maslow’s security needs.

Relatedness needs are those that require interpersonal interaction to satisfy the needs for things like prestige and esteem from others.

Growth needs are similar to Maslow’s needs for self-esteem and self-actualization.

C) McGregor’s Theory-X and Theory-Y

McGregor’s Theory-X represented the traditional management view that employees are lazy, was uninterested in work, and needed to be prodded to perform.

In contrast his theory Y viewed employees as creative, complex, and mature individuals interested in meaningful work.

McGregor believed that under the right circumstances, employees would willingly contribute their ingenuity and their talents for the benefits of the organization. He suggested that the mangers motivate employees by giving them the opportunity to develop their talents more fully and by giving them the freedom to choose the methods they would use to achieve organizational goals. In McGregor’s view the mangers role was not to manipulate employees but to align their needs with needs of the organization so that employees would regulate their own actions and performance. These insights lead researches to investigate the origins and processes of motivation more closely.

D) Expectancy Theory

Expectancy theory states that a person’s motivation to exert a certain level of effort is a function of three things: expectancy (E), instrumentality (I), and valance (V). Motivation = E x I x V.

“E” is the person’s expectancy that his or her effort will lead to performance,

“I” represents the perceived relationship between successful performance and obtaining the reward, and

“V” refers to the perceived value the person attaches to the reward.

E) Reinforcement Theory

In 1911, psychologist Edward Thorndike formulated the law effect: Behavior that is followed by positive consequences probably will be repeated. This powerful law of behavior laid the foundation for country investigations into the effects of the positive consequences, called rein forcers that motivate behavior.Organizational behavior modification attempts to people’s actions.Four key consequences of behavior either encourage or discourage people’s behavior

1. Positive Reinforcement- applying a valued consequence that increases the likelihood that the person will repeat the behavior that led to it. Examples of positive reinforcers include compliments, letters of commendation, favorable performance evaluations, and pay raises. Equally important, jobs can be positively reinforcing. Performing well on interesting, challenging, or enriched jobs is much more reinforcing, and therefore motivating,then performing well on jobs that are routine and monotonous.

2. Negative Reinforcement- removing or withholding an undesirable consequence. For example, a manager takes an employee (or a school takes a student) off probation because of improved performance. Frequent threatening memos admonished people to achieve every one of their many performance goals

3. Punishment- administering an aversive consequence. Examples include criticizing or shouting at an employee, assigning an unappealing task, and sending a worker home without pay. Negative reinforcement can involve the threat of punishment, but not delivering it when employees perform satisfactorily. Punishment is the actual delivery of the aversive consequence.

4. Extinction –withdrawing or failing or failing to provide a reinforcing consequence. When this occurs motivation is reduced and the behavior is extinguished, or eliminated. Examples include not giving a compliment for a job well done, forgetting to say thanks for a favor, or setting impossible performance goals so that the person never experiences success. The first two consequences, positive and negative reinforcement, are positive for the person receiving them:The person either gains something or avoids something negative. Therefore, the person who experiences these consequences will be motivated to behave in the ways that led to the reinforcement. The last two consequences, punishment and extinction, are negative outcomes for the person receiving them: Motivation to repeat the behavior that led to the undesirable results will be reduced.Thus, effective managers give positive reinforcement to their high-performing people and negative reinforcement to low performance. They also punish or extinguish poor performance and other unwanted behavior.

F) Herzberg’s Two-Factor Approach

Herzberg Two-Factor theory divides Maslow’s Hierarchy into a lower-level and a higher-level set of needs,and suggests that the best way to provide motivation for an employee is to offer to satisfy the person’s higher-order needs, ego and self-actualization. Herzberg said that lower-order needs, or hygiene factors, are different from higher-order needs, or motivators. He maintains that adding more hygiene factors to the job is a very bad way to motivate because lower-order needs are quickly satisfied.

G) McClelland (Needs for Affiliation, Power, and Achievement) Theory

McClelland agrees with Herzberg that higher-level needs are most important at work. He believes the needs for affiliation, power, and achievement are most important. He and his associates use the Thematic Apperception Test to identify a person’s needs for achievement, power, and affiliation. People with a high need for achievement strive for success, are highly motivated to accomplish a challenging task or goal,prefer tasks that have a reasonable chance for success, and avoid tasks that are either too easy or too difficult. People with a high need for power enjoy roles requiring persuasion. People with a strong need for affiliations are highly motivated to maintain strong, warm relationships.

H) Adam’s Equity Theory

Adams’s equity theory assumes that people have a need for fairness at work, and therefore, value and seek it. People are motivated to maintain a balance between what they perceive as their inputs or contributions and their rewards as compared to others. This theory seems to work when people feel they are underpaid,but inequity due to overpayment does not seem to have the positive effects on either quantity or quality that Adams’s equity theory would predict.

Analysis of cash flow statements

Analysis of cash flow statements


Cash Flow Statement shows the movement of cash resources during the year. It gives information about sources of income and account heads on which this amount is spent.
It is an integral part of financial statements.

Cash flow statement shows, how cash was generated and how it was used during the period.

Cash flow statement is divided into three components

• Cash Flow from Operating Activities
• Cash Flow from Investing Activities
• Cash Flow from Financing Activities


CASH FLOW FROM OPERATING ACTIVITIES


Cash flow from operating activities is generally derived from the principal revenue producing activities of the business. Cash Flow from Operating Activities is the indicator of success or failure of a business’s operations. If the cash flow from operations is continuously negative, this means that the business revenue is not enough torecover the costs that are incurred to earn it. Therefore, in the long run Cash flow from operations must bepositive.

Examples of cash flows from operating activities are:

• Cash receipt from sale of goods and rendering of services.
• Cash receipts from fees, commission and other revenues.
• Cash payments to suppliers for goods and services.
• Cash payments to and on behalf of the employees.
• Cash payments or refunds of income taxes.


CASH FLOW FROM INVESTING ACTIVITIES

Cash flow from investing activities includes cash receipts and payments that arise from Fixed and Long Term assets of the organization. Cash Flows from Investing Activities shows the investment trend of the business. If it is negative (Outflow) this means that the company is investing in long term assets and is expanding. On the other hand if it ispositive (Inflow) over the years, this means that the company is selling its long term investments.

Examples of cash flows from investing activities are:

• Cash payments to acquire property plant and equipment. These also include payments made for selfconstructed assets.
• Cash receipts from sale of property plant and equipment.
• Cash payments and receipts from acquisition and disposal of other than long term assets e.g.
Shares, debentures, TFC, long term loans given etc.

If assets are held for trading purposes or in normal course of business e.g. car / property dealers and loans given by banks, then cash flow from these are included in Operating Cash Flow.


CASH FLOW FROM FINANCING ACTIVITIES

Cash flow from financing activities includes cash receipts and payments that arise from Owners of the business and other long term liabilities of the organization.
Cash Flows from Financing Activities shows the behavior of investors (both equity capital and debt capital). A positive figure (inflow) shows that funds are being invested in the company and vice versa.

Examples of cash flows from financing activities are:

• Cash received from owners i.e. share issue in case of company and capital invested by sole
proprietor or partners.
• Cash payments to owners i.e. dividend, drawings etc.
• Cash receipts and payments for other long term loans and borrowings.

Long Term Financing Facility (LTFF)

Long Term Financing Facility (LTFF)
for Plant & Machinery:- Second Hand Machinery

Please refer to the captioned Scheme circulated vide MFD Circular No. 07 dated December 31, 2007 and other instructions issued from time to time in the matter.

2. It is advised that henceforth second hand plant & machinery to be used in the eligible sectors / sub-sectors of LTFF Scheme shall also be eligible for financing under the Scheme subject to following terms & conditions:-

i. Only imported second hand machinery not more than three years old will qualify for financing under the Scheme.

ii. Second hand machinery purchased from local suppliers will not qualify under the Scheme.

iii. Further, fixed term loans extended by banks/DFIs against second hand imported machinery prior to the issuance of this circular will not be eligible for refinance.

iv. The useful life of such machinery should be more than the period of loan itself.

v. The borrowers concerned should submit a report from PBA’s approved surveyors (acceptable to bank/DFI concerned) with regard to confirmation that machinery is in order and its useful life is more than the period of loan itself.

vi. Banks / DFIs can avail refinance for a maximum period of three years, to the extent of value of such machinery determined by the approved surveyor; or original cost less accumulated depreciation @ 10% p.a., which-ever is lower.

vii. LCs established from the date of this circular to December 31, 2009 shall be eligible for refinancing from SBP.

3. All other instructions issued on the subject shall remain unchanged.

Top Five Pregnancy Symptoms

Top Five Pregnancy Symptoms

If you have any of these pregnancy symptoms, be sure to take an at home test. If it is positive, it is important that a mother-to-be receive prenatal care early in pregnancy.

Missed Menstrual Period

A missed cycle can be a sign of pregnancy . It is usually the first indicator that conception has occurred, although some women claim to know they are pregnant before they miss a period.

Fatigue

Extreme fatigue can be another indicator of pregnancy, especially if other symptoms are present

Tender Breasts

Tender swollen breasts are another early symptom. While tender breasts are a symptom of an impending cycle, enlarged breasts are not. Sore and swollen breasts with a tingling sensation can be an early indicator of pregnancy.

Nausea and Morning Sickness

Nausea can be a sign that a woman is pregnant. Many women say that they've had nausea up to two weeks before an expected monthly cycle and before any other symptom. Eating crackers before getting out of the bed in the morning can help and eating several smaller meals instead of larger ones can help with nausea.

Frequent Urination

An increased urge to urinate can be an indicator and usually occurs between 6 to 8 weeks out.