6 Top College Interview Tips How to Prepare Effectively

6 Top College Interview Tips How to Prepare Effectively SAT/ACT Prep Online Guides and Tips A large number of the top universities either suggest or require interviews. To give yourself the best chance to establish a decent connection in your meetings, and to improve your odds of getting acknowledged to these schools, you ought to totally get ready for your meetings. In this article, I'll clarify precisely how get ready for a collegeinterview, and I'll give you nitty gritty school talk with tipsthat should make you increasingly agreeable and certain during the meeting procedure. Presentation toCollege Interviews A meeting furnishes the school with a chance to offer you more data about the school and response any of your inquiries regarding the school and the application procedure. Moreover, the meeting offers the school a chance to become familiar with you, your inclinations, and how you’ll have the option to add to the school. Just a little level of universities suggest or require a meeting. Most enormous state funded colleges don’t offer meetings in light of the fact that theysimply havetoo numerous candidates. Normally, the schools that offer meetings are specific private universities. Check a school's site or contact the affirmation office to decide whether meetings are offered and how to plan one. Meetings can be nearby, for the most part with a confirmations agent, or off-grounds close to where you live, as a rule with an alum of the school. Additionally, they can be evaluative, implying that your meeting impacts confirmation choices, or they can be enlightening, implying that they’re simply intended to give you more data about the school or one of its projects. Two schools thatoffer evaluative meetings are Harvard and Princeton while Cornell and Vassar have enlightening meetings. Which Colleges Require Interviews? Check outthe complete rundown of universities that expect meetings to find out pretty much the entirety of the schools that suggest or require interviews. The entirety of the Ivy League schools outside of Cornell either suggest or require interviews. Different schools that suggest or require interviews incorporate Duke, Emory, Bowdoin, University of Chicago, MIT, and Georgetown. A few schools that offer discretionary meetings incorporate Stanford, Tufts, Vanderbilt, and Vassar. Duke suggests meetings, and it has refreshed the vibe of its mascot. (Duke University Archives/Flickr) Instructions to Set Up a College Interview When you choose which schools you’re applying to, see whether they offer meetings. Likewise, you have to make a note of how and when to set up interviews. For schools that give interviews, you’ll frequently be reached after you present your application with data about setting up a meeting. For the most part, interviews are led in the fall in case you're applying early, and they're directed in the winter in the event that you apply under customary decision.If you're given the choice of having a meeting, you should meet. Meeting shows the school that you're truly keen on joining in, and exhibiting interest can help your odds of picking up affirmation. Likewise, the meeting offers the school a chance to become familiar with you outside of what's in your application, and you get the opportunity to get familiar with the school. For what reason Do You Need to Prepare For an Interview? Most universities stress that meetings are open doors for the school to become more acquainted with progressively about you and for you to become acquainted with increasingly about the school. You may accept that since you think about yourself, there’s no genuine need to get ready. You may believe that you should simply sincerely respond to the inquiries you’re posed. While the facts confirm that you essentially simply need to authentically address inquiries concerning yourself, readiness can help youappear progressively sure and givemore nice answers. Likewise, in the event that you plan, you'll have the option to pose inquiries that exhibit your enthusiasm for the school and show that you've done considerable examination. Some extra readiness can help separate you from the a large number of understudies who are meeting for these particular schools. On the off chance that you get ready, you can be as certain as this person. Step by step instructions to Prepare for a CollegeInterview Your groundwork for your meetings comprises ofthree significant segments: research, rehearsing answers to questions, and getting ready inquiries to pose to the questioner. I’ll disclose how to do every one of the three and how they’ll advantage you during your meeting. Stage 1: Research the School A long time before your meeting, you should explore however much about the school as could be expected. Concentrate your exploration on why the school would be a solid match for you and your needs. Since you should have done broad exploration before you chose to apply, this ought to be for the most part survey and shouldn’t be too tedious. Consider how the school will have the option to address your issues and what you're searching for in a school. You can explore anything important to you, regardless of whether it's identified with scholastics, grounds life, extracurriculars, concentrate abroad projects, or sports. On the off chance that you need to seek after a particular major, you can find out about its course necessities, teachers, and any extraordinary projects for understudies in that major. Utilize the school's site, school discoverers, search sites, and manuals to assist you with finding out about the school. Your examination will assist you with planning for addresses you might be asked, and it will assist you with concocting inquiries for your questioner. Stage 2: Prepare for Your InterviewAnswer Look at this article for a particular guide on the inquiries you ought to get ready for. Some normal ones include: For what reason would you say you are keen on this school? What are your scholarly qualities? What do you intend to do a long time from now? The inquiries you'll be posed relate to your character, character, objectives, and why you figure the school would be a solid match for you. To get ready, you should write down certain notes and practice your reactions to the most well-known inquiries questions. Recollect that the school needs to find out about what makes you remarkable. In this way, in case you're gotten some information about your most prominent quality, don't simply say that you're persevering. That is a reaction that could be given by a great many understudies. On the off chance that you believe you're particularly persevering, you can uncover an account that exhibits your remarkable hard working attitude. Having the option to offer explicit models will make your responses a lot more grounded and increasingly credible. While it is anything but a poorly conceived notion to work on addressing regular inquiries, you would prefer not to attempt to remember your answers or work them out in exactly the same words. You ought to seem conversational in the meeting, and you would prefer not to need to worry about recalling the specific expressions of your readied answers. Fuse data from your investigation into your answer concerning why the school would be a solid match for you. Attempt to incorporate data that is not very shallow or self-evident. Don't simply say you need to be a specialist and the school has a decent pre-drug program. Go into more profundity. Shouldn't something be said about the pre-medications program makes it a decent program for you? What assets or classes that the school offers bid to you? You can do a counterfeit meeting with an educator, advocate, parent, or companion. Have someone ask you regular meeting inquiries and work on reacting as though you were in the meeting. Stage 3: Prepare Questions for Your Interviewer Recollect that the meeting isn't just an open door for the questioner to find out about you; it’s additionally an open door for you to study the school. Posing inquiries shows you’re drew in and that you’re paying attention to the school choice procedure. Allude to this post for good inquiries to pose in a meeting. I suggest planning at any rate 2-3 inquiries. Here are two or three instances of good inquiries: What counsel would you have for me as an approaching green bean? I caught wind of (embed name of nearby occasion). Have you taken part? What's it like? Your inquiries ought to either be identified with your exploration about the school, individual inquiries for the questioner (however not improperly close to home), or identified with something the questioner said or uncovered during the meeting. At the point when you plan questions, don't concoct questions that can be effectively replied through essential exploration. Try not to ask where the school is found or in the event that it has a specific major. You should know the responses to those inquiries before the meeting. Much the same as your responses to inquiries questions, your inquiries for the questioner ought to be more profound and show thought. 3 College Interview Tips for the Day Of Constantly of your collegeinterview, you ought to be amazingly educated about the school, arranged to respond to regular inquiries questions, and have a couple of inquiries arranged for your questioner. Here are some school talk with tips to follow the day you meet. By this point, your difficult work is generally done, and now you get an opportunity to become familiar with the school and show what a genius you are. Tip 1: Dress Well With regards to school talk with clothing, it’s better to decide in favor of looking excessively formal than excessively easygoing. You need to seem like you’re paying attention to the meeting, and you need to introduce yourself in an expert way. Tip 2: Be Punctual I expect this abandons saying, yet ensure you’re on schedule. Nothing gives a more regrettable early introduction than appearing late to a gathering. In the event that something out of your control occurs and you’re running late, contact the questioner to let him/her know. Tip 3: Relax On the off chance that you’ve made essential arrangements and you’re gracious to your questioner, in all likelihood, your meeting might have the option to help your odds of affirmation. Additionally, so you don't pressure excessively, recollect that the meeting is just a minor factor in deciding if you're acknowledged to a school. Attempt your best to simply act naturally. These universities need to learn abou

Poland And Czech Reform Essays - Decommunization, Economy Of Poland

Poland And Czech Reform After the fall of socialism, a few unique nations concluded that it was time to change both current monetary and political arrangements. Two nations that have had major monetary changes are Poland and the Czech Republic. In any case, the procedure of that change is unique, every nation had an alternate thought of how to become another monetary force in the 1990's. In December 1989, the new government, drove by individuals from the worker's organization Solidarity, propelled a change program intended to change Poland's economy into a free-advertise framework. Cost controls were lifted, while wage controls were forced. State undertakings were changed into business entities, and many were booked for possible privatization or buy by outside financial specialists. The rebuilding of the Polish economy brought about an enormous cutback of laborers and a fast ascent in joblessness. Poland's GDP declined strongly in 1990 and 1991. Poland had depended vigorously on agribusiness and would have been simpler to change if its depleted mechanical districts could have been relinquished. Poland may have been the first to attempt a quick, clearing transformation, esteemed by the press as stun treatment. This change was to a private enterprise and free market. It was likewise the first to defeat the resultant drop in monetary yield. Monetary development returned as ahead of schedule as the main portion of 1992, and voters ought to have started to see the benefits by September 1993. Nonetheless, instead of reformers picking up endorsement, the renamed socialist gathering caught the biggest number of seats in the Polish parliament in the decisions that month. This was one more advance back for the transforming process. After its underlying decay, Poland's economy started to improve. Yearly GDP expanded somewhere in the range of 1992 and 1997, when it came to $135.7 billion. Modern creation expanded by around 12 percent in 1994, which, went with by a 2 percent drop in joblessness, spoke to a significant increment in labor efficiency. Swelling stayed above government objectives however consistently declined, with a yearly pace of 30 percent in 1994 dropping to 18.5 percent in 1996. Albeit several endeavors were moved to private possession during 1994 and 1995, the pace of privatization was commonly moderate; the private a lot of GDP stayed at around 60 percent in 1995 and 1996. Be that as it may, a new constitution embraced in May 1997 submitted the nation to seeking after a market economy and further privatization. In the early and mid-1990s Poland's remote obligation was fundamentally mitigated by concessions from loan bosses, which served to draw in expanding levels of outside venture. The aftereffect of stun treatment for Poland was to develop out after the fall of the previous ruling socialism, to take a wide margin in monetary turn of events. Another nation, only south of Poland, the Czech Republic likewise monetarily transformed in the early 1990's. The Czech Republic has been generally among the most monetarily created areas of Europe. At the point when the Communists came to control in Czechoslovakia in 1948, they made a profoundly brought together monetary framework. Almost all perspectives of financial arranging and the board went under the control of the focal government. The greater part of the nation's monetary resources were put in state hands; financial administrators and leaders were cut off from their partners in the West; and remote exchange was led only with other Socialist nations. In spite of the fact that the economy stayed solid by Eastern European principles, with perhaps the best quality of living in the Communist world, the arrangements embraced by the Communist government prompted long haul financial decrease in Czechoslovakia. After the breakdown of Communism in 1989, the new pioneers of Czechoslovakia needed to manage this inheritance. In the mid 1990's, the post-Communist government moved rapidly to change over the economy to a framework in light of free venture. Various change measures were embraced, including a voucher privatization plan, which gave residents, for a low regulatory expense, coupons that could later be exchanged for stock in organizations. The voucher plan effectively moved huge pieces of the economy to private proprietorship. By December 1994 in excess of 80 percent of firms in the Czech Republic were privatized or had settled on a privatization technique. Business blasted in Prague what's more, different urban areas in the mid 1990's as business visionaries built up new organizations. The legislature has additionally prevailing in restoring exchange with the West and acquiring significant degrees of outside venture. The normal standard of living in the Czech Republic dropped to some degree in the mid 1990s as market changes were presented, however as of late, the economy has started to recoup. Swelling was around 10 percent in late 1994, not exactly 50% of what it was in 1991. Total national output (GDP) expanded by

MW corporation Free Essays

Structure and execute a DCF valuation of all the MW saves utilizing APV. What amount are the stores worth? Is your gauge bound to be one-sided high or low? What are the wellsprings of inclination? Answer: The DCF valuation of all the MW holds utilizing APV Indicates that the total assets of the portfolio is around $516. 30 million. We will compose a custom exposition test on MW partnership or then again any comparable subject just for you Request Now The gauge Is bound to be one-sided on the higher side. The information for the projections was gathered by Morgan Stanley and Amoco. In this manner, the likely lacking and potential stores evaluated might be not quite the same as the ctual holds. Amoco can get higher valuation by anticipating higher stores. Likewise, Amoco and Morgan Stanley anticipated that the cost of an oil barrel will keep on ascending for the following 15 years from the present cost of S 20. 4 for each barrel to S 443 for every barrel. This expanding estimation of per barrel can essentially build the valuation of the oil fields. COSTS: The expenses In the projections were assessed dependent on the chronicled expenses and money overhead investment funds that Amoco expected to spare from the offer of MW oil. Be that as it may, Apache had extremely low expenses and was a productive administrator of properties. Likewise, since the MW fields were worked by Amoco; this would bring about progressively potential reserve funds to Apache. liable to one-sided on the higher side. The DCF valuation utilizing APV is appeared in the following page. Intrigue charge shields: Assumed coupon on obligation 12. 32% Assumed starting obligation 182. 7 Year 1 intrigue 22. 5 Tax rate 36% Year 1 duty shield 8. 1 Assumed expense of obligation 12. 00% Growth rate - 4. 06% Value of assessment shield (unendingness) 50. 4 Value of â€Å"Additional assets† 25. 0 Total estimation of MW 516. 3 2. How might you structure an examination of MW as an arrangement of benefits set up and choices? In particular, which parts of the business ought to be viewed as resources set up and which as alternatives? The entire arrangement of MW comprises of 5 sections: I. Demonstrated created holds it. Demonstrated lacking stores iii. Plausible stores ‘v. Potential stores v. Different open doors choices as capital consumptions are related with demonstrated lacking stores, likely saves and potential stores, and the organization can pick whether to make these uses basing on the then common costs of oil and flammable gas. Step by step instructions to refer to MW company, Papers

RICHARD III A monologue from the play by William Shakespeare Essay Example For Students

RICHARD III A monolog from the play by William Shakespeare Essay A monolog from the play by William Shakespeare RICHARD: Look what is done can't be currently amended:Men will bargain unadvisedly sometimes,Which night-time offers relaxation to repent.If I took the realm from your sons,To present appropriate reparations Ill offer it to your daughter;If I have killed the issue of your womb,To animate your expansion I will begetMine issue of your blood upon your daughter.A grandams name is minimal less in loveThan is the gushing title of a mother;They are as kids yet one stage below,Even of your metal, of your very blood,Of every one of the one agony, put something aside for a night of groansEndured of her for whom you offer like sorrow:Your kids were vexation to your youth,But mine will be a solace to your age.The misfortune you have is nevertheless a child being king,And by that misfortune your girl is made queen.I can't make you what corrects I would;Therefore acknowledge such consideration as I can.Dorset your child, that with a dreadful soulLeads disappointed strides in outside soil,This reas onable union rapidly will call homeTo high advancements and incredible dignity.The lord, that calls your beauteous little girl wife,Familiarly will call thy Dorset brother:Again will you be mother to a king,And all the remnants of distressful timesRepaired with twofold wealth of content.What! we have numerous goodly days to see:The fluid drops of tears that you have shedShall returned once more, changed to arrange pearl,Advantaging their adoration with interestOf multiple times twofold addition of happiness.Go at that point, my mom; to thy little girl go;Make striking her modest years with your experience;Prepare her ears to hear a wooers tale;Put in her delicate heart th yearning flameOf brilliant sway; familiarize the princessWith the sweet quiet long stretches of marriage joys;And when this arm of mine hath chastisedThe insignificant dissident, dull-brained Buckingham,Bound with triumphant wreaths will I comeAnd lead thy girl to a champions bed;To whom I will retail my victory wo n,And she will be sole victoress, Caesars Caesar.

Earmarked Tax in Public Sector Essay Example | Topics and Well Written Essays - 4750 words

Reserved Tax in Public Sector - Essay Example For example, reserving of charges for ensuring the earth is usually applied in the US, Europe and other western nations. Besides, charges that are gathered from fuel utilization and engine vehicles are dispensed for the development of national and state roadways (Anesi, 2003). Moreover, worried about the expanding wellbeing related issues, World Health Organization (WHO) has additionally expanded the worldwide duty pace of cigarettes and other tobacco related items to 10% which will guarantee an extra income age of 7%. Be that as it may, the income rate produced can increment in higher pay nations contrasted with lower pay nations. In any case, the individuals from WHO expressed that notwithstanding the precarious increment in the duties charged for cigarettes and tobacco items, individuals are not disheartened in constraining their dependence levels regardless of the pay status of the nation (Prakongsai and et. al., 2008). Section 1: Literature Review According to Brett and Keen (20 00), reserving has the chance of influencing the appointive result because of the choices of the policymakers and delegate voters. It has been seen in such manner that the policymakers regularly will in general use reserving to inspire the voters’ faith so as to win impressive measure of votes against the contending party. Subsequently, it tends to be proposed that reserving of duties ought to either be completely executed or canceled, like the procedures received by the Australian government which doles out the whole measure of betting expenses towards filling a specific need (Brett and Keen, 2000). In any case, Garrett (2001) contended that reserving of charges is powerful in changing the conduct of the residents in a large portion of the nations causing a profound effect over the financial pattern. Notwithstanding, it merits referencing that whenever reserved expenses are occupied from their anticipated purposes, it can make certain impediments for the policymakers (Garret t, 2001). Consequently, it very well may be inferred that reserved duties can be powerful in changing the conduct of the residents towards specific items and practices that will in general influence the wellbeing of the individuals by a huge degree. As saw by Mossialos and Dixon (2002), medicinal services frameworks depend on trustworthy components that have an entrance to human, consumable and capital assets. Profiting these trustworthy components require satisfactory monetary assets for foundation cost, satisfactorily remunerating the representatives offering human services administrations and acquiring costs for drugs and other consumable prescriptions. In addition, these measures are on a very basic level embraced by the administrative experts for producing income, and overseeing them in as per their significance. Since, the expenses are expanding step by step and assets are in effect rare, policymakers are confronting immense difficulties in achieving reserves. In this way, it very well may be proposed that control of expenses and expanding the subsidizing can improve the social insurance administrations (Mossialos and Dixon, 2002). As per the discoveries of Kanavos (1999), the absolute consumption on medicinal services part brought about by the UK comprises of individual clinical administrations which incorporate wandering consideration, clinical products and in-tolerant consideration.

How a companies distinctiveness affects capital structure - Free Essay Example

Capital structure the term has vast meaning in Finance and Accounting. As we know all firms need operating capital to support their sales. To acquire that operating capital, funds must be raised, usually as a combination of equity and debt. The firms mixture of debt and equity is called its capital structure. Although actual levels of debt and equity may vary somewhat over time, most firms try to keep their financing mix close to a target capital structure. The capital structure decision includes a firms choice of a target capital structure, the average maturity of its debt, and the specific sources of financing it chooses at any particular time. As with operating decisions, managers should make capital structure decisions designed to maximize the firms value. As researchers moved on examining deeper the notion of capital structure, several theories emerged, all of which conclude on the existence of an optimal capital structure based on balancing the benefits and costs of debt financing. The main benefit of debt financing is the fact that interest payments are deducted in calculating taxable Income, allowing a tax shield for the firms. This tax shield allows firms to pay lower taxes than they should, when using debt capital instead of using only their own capital. The costs of debt can be viewed mainly from two different aspects. First, there is an increased probability that a firm may not be able to successfully deal with its Debt obligations (i.e. interest payments); thus, there is an increased probability of bankruptcy. Second, there are agency costs of the lenders monitoring and controlling the firms actions. There are additional costs concerning the notion of capital structure of the firm that arise from the fact that managers possess more information about the Firms future prospects than do investors. The effect of taxation on capital structure has been thoroughly investigated as a determinant of capital structure. Except for the tax aspects there are also some other approaches that attempt to explain the determination of the capital structure. These approaches examine the debt level determination from the perspective of asymmetric information and agency costs, as already mentioned above. (Jensen Meckling 1976) identify the existence of the agency problem which arises due to the conflicts either between managers and shareholders (agency costs of equity) or between shareholders and debt holders. After the concise but brief background discussion of capital structure we will have a look on companys background which is included in our research. Pakistan State Oil Ltd: PSO was established in the mid-1970s when the Government of Pakistan merged three Oil Marketing Companies: 1.Esso Eastern, 2.Pakistan National Oil (PNO) and 3.Dawood Petroleum as part of its Nationalization Plan. Pakistan State Oil Company Limited is that countrys foremost oil marketing and supplying company. Formerly a state-run agency, Pakistan State Oil occupying just about 70% of Pakistans total refined petroleum products market, and more than 80% of the total furnace oil market, the major petroleum market in the country. Pakistan State Oil also supplying 60% of the countrys diesel oil market. in spite of a countrywide working network of more than 3,750 PSO-branded filling stations, several of which incorporate ease stores, PSOs share of the customer gas and lubricants markets has dropped to presently 40%, due to Shell Pakistans forceful spreading out of its own retail network. Shell remains PSOs largest challenger in the nation state, with an oil and gas market of more than 25%. The Shell Pakistan Ltd: The Shell trade name has been enjoying a 100-year history in this division of the globe, if we just look back to 1899 while Asiatic Petroleum, the faraway eastern advertising arm of two companies: Shell transportation Company and Royal Dutch Petroleum Company started importing kerosene oil from Azerbaijan to the subcontinent. Even in the present day, the legacy of the long-ago is observable in a storage tank moving the date 1898. The familiar history of Royal Dutch Shell plc, in subcontinent dating back to 190, it was the time when joint venture was took place between The Royal Dutch Petroleum Company and The Shell Transport Trading Company for supply of petroleum products to Asia. on the way to improve their distribution capabilities in 1982, the business concern of the Burma Oil Company Limited and the Royal Dutch Shell plc were amalgamated and in the result Burma Shell Oil Storage Distribution Company of India was came into existence. After the freedom of Pakistan in 1947, the name was altered to the Burma Shell Oil supplying Company of Pakistan. When 51% of the shareholding power was transferred to Pakistani investors, the name was changed to Pakistan Burma Shell (PBS) Limited; this was the period of 1970. Attock Petroleum Ltd: Attock Petroleum is one of the fastest rising oil marketing companies in Pakistan, with successfully established its system of petrol pumps in Punjab and Khyber-Pakhtunkhwa. Attock Petroleum is currently strengthening its being there in most important metropolitan areas such as upper Punjab, Karachi, and Lahore. Attock Petroleum is also operating a quality assurance unit for enhanced controls and improved customer service at sites, for on-site testing of petroleum products. At present Attock Petroleum has 149 outlets in Pakistan. Sui Southern Gas Company: The Sui Southern Gas Company (Formerly Sui Gas Transmission Company Limited) was incorporated in 1954. The present shape of the company was incorporated on March 30, 1989, with the mergers of three new companies, that is to say Karachi Gas Company Limited, Sui Gas Transmission Company Limited and Indus Gas Company Limited. SSGC is Pakistans top integrated gas company. The company is occupied the business of transmission and supply of natural gas in southern division of Pakistan. SSGC transmission system extends from Sui (Baluchistan) to Karachi (Sindh). Sui Northern Gas Pipelines Ltd: The SNGPL is the leading natural gas company in North and Central Pakistan in the course of a widespread network in Khyber-Pakhtunkhwa and Punjab. Sui Northern Gas Pipelines was integrated as a private limited Company in 1963 and transformed into a public limited company in January 1964, and also listed on all the three Stock Exchanges of Pakistan. The Company has more 42 years of extensive working experience in operation and maintenance of high-pressure gas transmission and gas circulation systems. It has also extended its activities to carry out the designing, planning and construction of pipelines, both for other organizations and itself. According to the OGDCL Report of oil and gas industry, Pakistan has normally daily natural gas production of 73 net million cubic feet and oil production is about 3,800 net barrels. In spite of such a huge potential, Petroleum department of Pakistan has reported high trade deficit due to key difference between export and import value. Imported oil products of Pakistan have reached $6.5 billion in 2009 and government plan at formulating policies to reduce import reliance and promote self-reliance by triggering exploitation. Pakistans emerging economic market requires a great intension of Policy makers, Leaders, and specially the educational institution and student researcher. Previously in Pakistan research have been done only in few fields of capital structure like: Listed non-financial firms Capital Structure by Attaullah Shah Safiullah Khan. Cement Industrys Capital Structure by Syed Tahir Hijazi Yasir Bin Tariq. Stock Exchange listed Firms Capital Structure by Waliullah Mohammed Nishat. Capital structure refers to the mix of debt and equity used by a firm in financing its assets. The capital structure choice is one of the important decisions made by financial management. In our thesis we have analyzed the oil and gas marketing companies on the basis of capital structure. The reason behind this analysis was that only few of the researches were taken on this topic. In Pakistan like many developing countries the corporate financial structure choices heavily depend on the existence of functioning markets and legal system in which investors can diversify risk. Before 1990s the financial sector mainly accommodated the financial needs of the corporate sector. As a result economic efficiency remained low and growth suffered from poor mobilization of resources. The financial market in Pakistan is quite vulnerable to shocks and has several imperfections because of weak institutional framework and macro-economic Instability. Another most important factor that affects the local and foreign investors is the poor law and order situation and lack of trust in the government of Pakistan. Our paper shed light on the determinants of the capital structure of the major Pakistani oil and gas firms listed on the Karachi stock exchange. When we had to start our thesis we focused on many areas on which the research was not done, after lot of thinking and research and by taking our supervisor in confidence we came on a conclusion to do our research work on the determinants of the capital structure. We then took oil and gas marketing companies of Pakistan for analysis. For our research we have seen the impact of independent variables on dependent variable leverage. PURPOSE OF THE STUDY: Purpose of this study is to identify firms characteristics that may have influence on leverage. There are several characteristics that must play role while deciding upon capital structure of leverage. For instance; Market conditions, risk, size of firm, time frame in business, earning volatility and many others. Finally the purpose is to check which factors are important for money lenders, financial institution and bond holders. PROBLEM STATEMENT: In Pakistan formally research has been not very serious issue to consider, but now most of universities and especially HEC is funding to many research projects in education. These research papers are not only contributing fruitfully towards student understanding but also toward corporate sector of country. Previously in Pakistan research has been done only very few areas, oil and gas marketing companies still remains unexplored. So we have found a room to get into with the hope this research would be helpful for students as well as corporate sector. A hypothetical situation has been narrated here to solve the problem. These problems companys manger may face time to time. Oil and Gas Market companies have been a very famous company in their business. They aimed to expand their business in various cities of Pakistan. But they have been facing a shortage of capital structure. Now company interested to change their mix of capital structure. We being a student of Air University hired to come up with the solution of this problem. Whether they go for equity finance or debt finance? Which factors would effects companies leveraging process? How company can get optimal capital structure?. THEORETICAL FRAMEWORK INDEPENDENT VARIABLES Profitability (PF) Tangibility (TN) Size (SZ) Current ratio (CR) Debt to Equity ratio (DE) DEPENDENT VARIABLE Leverage (LG) Complete detail of theoratical framework has give at the end of chapter Two. HYPOTHESIS DEVELOPMENT Current ratio: Ho: There is a negative relationship between Current ratio and Leverage. H1: Higher the current ratio, higher the availability of external funds/Leverage. Size: Ho: There is a negative relationship between size and leverage. H1: size and leverage has positive relationship. Profitability: Ho: Firms with higher profitability will have higher leverage. H1: there is negative significant relationship between profitability and leverage. Tangibility: Ho: There is a negative relationship between tangibility and leverage. H1: There is positive significant relationship between tangibility and leverage. Debt to Equity Ratio: Ho: There is a positive relation between debt-equity ratio and leverage H1: There is a negative relation between debt-equity ratio and leverage. ACRONYMS: LG = Leverage of firms PF = Profitability of firms TN = Tangibility of firms SZ = Firm size CR = Current ratio of company DE = Debt to Equity ratio of company CHAPTER TWO LITERATURE REVIEW: The capital structure of an every firm is very significant since it linked with the capability of the firm to meet up the needs of its stakeholders. (Modigliani Miller, 1958) were the first ones to point out the topic of capital structure and he argued that capital structure is immaterial in shaping the firms value and its future performance. (Modigliani Miller, 1963, pp.443- 453) showed that their model is only valid if there is no more concept of tax system. And tax relaxation on interest of debt payments will grounds a rise in firms value if equity is traded for debt. Capital structure is pretty much important decision for firms, so that they can get the most out of returns to their various stakeholders. In addition to a suitable capital structure is also very important to firm as it will help in dealing with the competitive surroundings within which the firm operates. (Modigliani Miller 1958) said that an optimal capital structure exists if the risks of going bankruptcy are of fset by the tax savings advantage of debt. If this optimal capital structure is recognized, a firm would be able to take full advantage of returns to its stakeholders further these returns would be pretty much greater than returns obtained from a firm whose capital is mixture of only equity (all equity firm). Modigliani and Miller (MM theory): Contemporary capital structure theory began in 1958, when professors Franco Modigliani and Merton Miller (hereafter MM) published what has been called the most influential finance article ever written.9 MMs study was based on some strong assumption, including the following: No brokerage costs. Zero or no taxes. There is no bankruptcy cost. Investors and corporations can borrow at the same rate. Free information flow to investors same as companys managers about the future investments opportunities. EBIT has not been affected by the use of debt. So if above assumptions hold true, MM theory proved that the firms value have not been affected by change of capital structure. hence the following situation must exist: VL = Vu = SL + D Here VL is the value is the value of a levered firm, which is equal to VU, the value of an identical but unlevered firm. SL is the value of the levered firms stock, and D is the value of its debt. MM theory also suggests that if assumption holds true, it does not matter how a firm finances its operations, so capital structure decisions would be irrelevant. MM also provided us with evidences about what has been necessary for capital structure to be relevant and hereafter to affect a firms value. MMs work marked the beginning of modern capital structure investigation, and later research has been focused on relaxing the MM theory assumptions for the development of a more accurate concept of capital structure. Trade-off theory: The pioneering work of (Modigliani and Miller 1958) is the catalyst for all the aforesaid capital structure theories. Amongst which trade-off theory says if tax and bankruptcy cost do exist, there remains an optimal capital structure which the firms predetermine and try to move towards it in due course of time. This optimal capital structure involves a trade off amongst the major three variables namely corporate and personal taxes, bankruptcy cost and agency conflicts. Increasing debt in the capital structure reduces the tax liability of the firm because of the tax shield on interest. Hence, it increases the after tax cash flow to the firm. As the tax shield offers higher post tax return, it is positively related to leverage. Again, when the debt increases significantly there is a risk for firms to get defaulted on their payment. This perceived default risk increases the cost of debt in the form of bankruptcy cost. The optimal Capital structure endeavors to trade off the benefits of tax shield in the form of after tax cash inflow and the cost of bankruptcy at higher debt equity ratio. Agency cost theory: This theory envisages that the agency cost i.e. the cost due to conflict of interest between principal and agent is a major determinant of capital structure. (Jensen Meckling 1976) were the first one to develop the research in this area, building on the earlier work of (Fama Miller 1972). Jensen Meckling identified two types of conflict, firstly conflict between shareholders and managers, secondly between shareholders and debt holders. Argument between shareholders and managers arises for the reason that managers are not the claimants of the profit but receive managerial remuneration. So they want to raise their pay off by increasing perquisites such as private jets, plush offices etc, that add to the cost of the company and lower profit. Increasing debt commits the firm to pay out cash. So it reduces the amount of free cash flows offered to the managers and the opportunities of such profligacy and empire building (Jensen 1986). Moreover increase in the share of debt in the capital structure by holding the absolute investment of managers constant, increases managers share of equity, if any, and mitigate the loss arising out of the conflict between the mangers and shareholders. Conflict between the debt holders and shareholders arises because of the difference in the risk appetite and the expected return. Debt holders are concerned about the current profit as it will ensure their return whereas equity shareholders might be willing to forgo the current profit for long-term capital appreciation. As a result equity shareholders could invest even in risky projects with long gestation periods, which damage the interest of debt holders. Managers of firms have been acting as agents of the owners. They were hired by owner to work for him and have been given benefits by owners. However managers are mainly interested in accomplishing their own targets which may differ from the maximization of the firm value which is the maximization of the owners benefit. They will act in their own interests seeking perquisites, higher salaries, job security and different cases have been reported that they directly exploit firms cash flows. It is obvious that the interests of the manager not only differ but in many cases they even oppose to those of the owners. Consequently, an interest conflict has been raised between the shareholders and the managers. However, the managers have attained the authority to manage the firm. Thus, the owners may only try to discourage these value transfers through controlling monitoring, such as administration by independent directors; these monitoring and control actions presuppose costs, the so-called agency costs. Perfect control is however extremely costly and thus, shareholders pursue to be dependent on solutions that has not been much expensive but kept on eye over managers operations. A reliable tool can be the use of debt capital which even adds value to the firm. Leverage has been one of the tools that will force managers to make and pay out cash, simply because interest payments are compulsory. Interest payments will reduce the amount of remaining cash flows the so-called free cash flows after the investment decisions of managers. Thus, debt can be viewed as a smart device to minimize the cost of agency. In this situation, the optimal capital structure will be resulting by the equilibrium be tween the benefit of debt against costs of debt; so firm preferred that amount of debt which will minimize its overall agency cost. Pecking-order theory: (Myers Majluf 1984) in their pioneering work on pecking-order theory show that if the investors are not well informed about the information which the insiders have, the equity of that firm may be severely mispriced. In their paper they also show that if any firm wants to fund its new project by new equity then the equity can be so undervalued that the new investors will be better off by getting more value than the projects NPV. So the organization will go for such a source which is not underpriced by the market like internal funds or riskless debt. So, in case of information asymmetry companies should follow an order of financing. (Myers 1984) refers to this order as the pecking order. As per the pecking order the firm first goes for internal funds and then for low risk debt and finally equity. As we have three major capital structure theories in the literature, it becomes an interesting task to test which theory characterizes the behavior of Indian firms in their determining the ca pital structure during the bullish phase of capital market. There are many empirical studies (Bradley, Jarrell, Kim 1984), (Titman Wessels 1988), (Rajan Zingales 1995), (Wald 1999) and (Booth et al. 2001) which have been done to test the applicability of the above mentioned capital structure theories in the developed and developing countries. Market Timing Theory: Market timing, a comparatively old initiative (Myers, 1984), is having a new surge of fame in the academic literature. In study by (Graham Harvey 2001), managers carry on to offer support for the plan. Consistent with the behavior of market timing, firms inclined to issue equity subsequent a stock price run-up. Furthermore, researches that analyze long-run stock profits following business financing events find proof reliable with market timing. (Lucas McDonald 1990) investigate a dynamic adverse selection model that mix essentials of the pecking order with the market timing theory, which can give details of pre-issue run-ups but not post issue Under performance. (Baker Wurgler 2002) said that capital structure is best perceived as the cumulative effect of precedent attempts to time the market. The basic suggestion is that managers look at existing circumstances in both debt market and equity markets. If they found a need of financing, they use whichever market presently looks more favorable. If neither market looks positive, they may go for defer issuances. On the other hand, if present conditions look strangely favorable, funds possibly will be raised still if the firm has no need for any funds at this time. While this idea seems reasonable, it has not anything to say about most of the factors conventionally considered in studies of corporate financing. However, it does propose that stock returns and debt market circumstances will play a significant role in capital structure decisions. The first paper on capital structure was written by (Miller Modigliani in 1958) Showing that subject to some restrictive situation, the impact of leveraging on the worth of firm is immaterial; the conceptually provided that the worth of firm is not dependent upon the capital structure decision given that certain conditions are met. Because of the unrealistic assumptions in MM irrelevance theory, research on capital structure gave birth to other theories. According to the traditional (or static) trade-of theory (TOT), firms select optimal capital structure by comparing the tax benefits of the debt, the costs of bankruptcy and the costs of agency of debt and equity, that is to say the corrective role of debt and the fact that debt effects from informational cost than outside equity. (Modigliani Miller 1963), (Stiglitz 1972), (Jensen Meckling 1976), (Myers 1977) and (Titman 1984). The Trade Off theory says that a firms adjustment toward an optimal leverage is influenced by three factors namely taxes, costs of financial distress and agency costs. (Baxter 1967) argued that the extensive use of debt increases the chances of bankruptcy because of which creditors demand extra risk premium. He said that firms should not use debt beyond the point where the cost of debt becomes larger than the tax advantage. In the so-called Pecking Order Theory (POT) (Donaldson, 1961), (Myers Majluf 1984), (Myers 1984) because of asymmetries of information between insiders and outsiders, the company will prefer to be financed first by internal resources, then by debt and finally by stockholders equity. The debt ratio depends then on the degree of information asymmetry, on the capacity of self-financing and on the various constraints which the company meets in the access to the various sources of financing. So, in the pecking order world, observed leverage reflects the past profitabi lity and investment opportunities of the companies. The dynamic trade-off theory (DTOT) tries a compromise between TOT and POT (Fischer et al 1989) and (Leland 1994). Although, due to information asymmetries, market imperfections and transaction costs, many companies allow their leverage ratios to drift away from their targets for a time, when the distance becomes large enough managers take steps to move their companies back toward the targets. While the POT explains short-run deviation from the target, the traditional TOT holds in the long run. Following this approach, leverage must converge toward a target leverage ratio. That would not bee the case following POT because managers make no effort to turn around changes in leverage. Two additional theories also reject the idea of timely meeting toward a target leverage ratio. According to the theories of market timing and inertia, the capital structure is the result at a given time of an historical process. Supporters of the market timing approach (Jalilvand Harris 1984), (Korajczyk et al., 1991) and (Lucas McDonald 1990) also (Jung et al., 1996), (Loughran et al., 1994) and (Baker Wurgler 2002) argue that companies will sell overpriced equity shares. Companys share prices will fluctuate around their factual value, and managers inclined to issue shares when the market-to-book ratio is high. A small debt ratio must thus follow a long period of high market-to-book ratio. According to the managerial inertia approach (Welch 2004) companies do not adjust their debt ratio to the fluctuations of the market value of their equity. High market-to-book ratio must thus be accompanied by small debt. (Graham and Harvey 2001) find that chief financial officers in the USA express concern about earnings volatility in capital structure choices. According to (Mohammad M Omran John Pointon 2009) study, one of our issues of interest is whether debt is negatively associated with earnings volatility, in which case firms react to the risk, and manage it by reducing debt. On the other hand, if debt is found to be positively associated with earnings volatility, then they do not appear to manage the risk. (Ayesha Mazhar Mohamed Nisar 1997) have been discussed the determining factor of capital structure of Pakistani firms. They selected a sample from Pakistani companies registered on Islamabad Stock Exchange. The sample is divided into two sub-samples of private and government owned companies to make comparison between both sectors. The sample comprised 91 Pakistani companies out of which 80 companies are private and 11 are government owned covering the period of 1999-2006. They have taken debt to equity as a proxy of leverage of a firm, and tangibility of assets, profitability, size, growth, tax provision and return on assets as independent variables. They use correlation to determine the degree of association between different variables. Spearmen correlation is used for all independent variables association with dependent variables. Regression is also used to measure the relationship between dependent and independent variables. (Attaullah shah and saifullah khan 2007) they used two variants of penal data i.e. constant coefficient model and fixed effect model to calculate the determinants of capital structure of Karachi Stock Exchange listed non-financial firms from1994 to2002. Pooled regression investigation was applied with the hypothesis that there were no industry or time effects. Though, by means of fixed effect dummy variable regression, the coefficients for an amount of industries were significant displaying there were significant industry effects later we accepted the late model for our investigation. He had measured effect of seven explanatory variables is measured on leverage ratio which is designed by dividing the total debt by total assets. (Safdar Ali Butt ArshadHasan 2009) had explores the association between capital structure and corporate governance of stock exchange listed companies in an equity market. The study considered the period of 2002 to 2005 for which 58 randomly selected non-financial listed companies from Karachi Stock Exchange has been investigated by using multivariate regression line analysis with fixed effect model method. Managerial ownership has negative relationship with debt to equity ratio indicating that concentration of ownership induces the managers to lower the gearing levels. Institutional ownership has positive relationship with capital structure which is consistent with corporate governance philosophy but this relation is statistically insignificant. Traditional determinants of capital structure like size and profitability have significantly effect on corporate financing decisions. Profitability is negatively related with debt to equity ratio and it is consistent with pecking order hypot hesis. Similarly, size has positive relationship which shows that large firms can arrange debt financing due to long term Relationship and better collateral offering. (NengjiuJu, Robert Parrino, Allen M. Poteshman, and Michael S. Weisbach 2005) these paper inspect optimal capital structure choice by means of a dynamic capital structure model that is standardized to reflect genuine firm features. They also examine the relation between firm value and capital structure. They estimate indicate that the impact on firm value of moderate deviations from optimal capital structure is small. This paper suggests that the trade-off model performs reasonably well in predicting capital structures for firms with typical levels of debt. This paper also shows that the major forces affecting a firms financing decisions are corporate taxes and bankruptcy costs. (Mohammad H. Mohammad, 1995) .they examined the determinants of firms capital structure in Malaysia covering the period between 1986 to 1990. There are significant inter-industry differences in capital structure among Malaysian companies. Highly-leveraged firms are more likely to earn higher profits than less-leveraged firms. Similarly the relation between firms profit and equity ratio is also positive and is reflected in terms of the importance of efficient capital markets. (Laurence Booth, VaroujAivazian, AsliDemirguc-Kunt and Vojislav Maksimovic 1999) has analyzed capital structure of firms in ten developing countries and provides indication that these choices are affected by the same variables as in advanced countries. But, there are constantly repeated differences across countries, when corporations choose to use of debt financing; they are altering some predictable future cash flows away from equity pretenders in exchange for cash up front. The issues that drive this decision remain mysterious regardless of a vast theoretical literature and years of experimental tests. The quantity of proof is large, and so it is frequently all too relaxed to provide some pragmatic support for nearly any idea. It is satisfactory for a given paper but more challenging for the general expansion of our thoughtful of capital structure choice. As an outcome, in current decades the literature has not had a concrete experimental basis to differentiate the strengths and we aknesses of important theories. Numerous theories of capital structure have been proposed which theory shall we take seriously? Of course, opinions differ. Remarkably, nearly all corporate finance textbooks inclined to the trade-off theory because deadweight taxation and bankruptcy has been considered key operators. (Myers 1984) projected the pecking order theory in which there is a financing order of retained earnings, debt, and in the last equity. In recent times, the idea that firms are engage in market timing has gain popularity. In conclusion, agency theory lurks in the background of a lot theoretical conversation. Agency concerns are frequently collected into the trade-off structure largely interpreted. Advocates of these types of models are frequently point to experimental proof to support their preferred theory. (Harris Raviv 1991) and (Titman Wessels 1988). Both these two standard papers point up a serious empirical difficulty. They have been augmented over basic facts. According to (Harris Raviv 1991), the accessible studies normally agree that leverage increases with tangible fixed assets, growth opportunities, non debt tax shields, firms size and shrinkages with promotion expenses, instability, RD expenditures, expected bankruptcy, profitability and exceptionality of the product. On the other hand, (Titman Wessels 1988) found that their outcome do not provide sustain for an effect on debt ratios due to non debt tax shields, indemnity value, future growth and volatility. (Myers 1977). managers emphasis on book value of leverage because debt has been well supported by assets than by growth opportunities. Book leverage has given preference due to fluctuation of financial market. And managers believe that market leverage facts are not reliable in making the corporate financial policy. According to (Graham Harvey 2001), various number of managers point out that they do not remix their capital structure in reaction to equity market engagements. This is because of adjustment costs avert firms from rebalancing each time. Supporters of market leverage claim that the book value of equity is mainly a plug number used to set of scales to both sides of the balance sheet instead of administratively relevant number (see, Welch 2004). (Welch 2004) additionally point out that the book value of equity can be negative also while assets cannot be. The book value represents the old data that what has happened in the past. So book value measurements have been backward looking. It measures what has been taken place in past. Market value changes with the time so it is assumed to be forward looking. So there is no point these two methods of measurements must match (Barclay, Morellec and Smith 2006). Examining the agency costs of debt from the debt holders point of view we have to analyze the moneylender and borrower relationship. When a money lender offers funds to a firm, the interest rate charged has been based on the lenders valuation of the firms risk. This arrangement creates incentives for the firm to increase its risk without increasing current borrowing costs. An agency cost of debt has been arising when there is a risk of default. If company debt is free of default risk, then debt holders have not been concerned with the value and risk of firm. After obtaining a loan at certain, locked rate from a bank or through the sale of bonds, the firm can increase its risk. Managers may be tempted to take actions that transfer value from the firms creditors to its shareholders. For example, managers borrowed more and pay cash to shareholders or may invest in risky projects. To avoid this situation lenders impose certain monitoring and controlling techniques on borrowers. Debt holders typically protect themselves by including provisions that prohibit the management of the firm to significantly alter its business or financial risk. These limitations normally refer to the asset acquisition, dividends payments, executive salaries and level of networking capital. These protective covenants allow the lender to monitor and control the firms risk. Alternatively, if no protective covenants are accepted by the firm, creditors may demand high returns in form of high interest rates. However all these actions enclose some direct or indirect costs that the firm is subject to; these are the agency costs of debt, from the debt holders point of view. In exchange for incurring agency costs by agreeing to cope with the restrictions placed by the lenders, the firm and its owne rs benefit by obtaining funds at a lower cost. The optimal capital structure has been shaped at this specific level when the paybacks of the loan that shareholder has been received, equilibrium with the interest of debt enforced by the debt holders. (Myers Majluf 1984) assumed that managers make decisions with the goal to maximize the wealth of existing shareholders. Therefore, they avoid issuing undervalued stock unless the value of transferred share from old to new shareholders is additional as compared to off-setted net present value of the growth chance. This suggested that the new shares only be issued at a lesser price as compared the imposed price estimation of firm value by real market analysis. Therefore, the public offering of new equity issuance has been unswervingly inferred as a negative signal, in the logic that existing stockholders possess overestimated shares. This negative signal results in the stock price decline. Indeed, several studies have confirmed that the announcement of a stock issue have resulted in a decline of the stock price. That is why several firms tend to follow the pecking order financing pattern. The pecking order theory suggested that firms firstly will go for retained earnings, if there is no point of asymmetry information then they will prefer debt and lastly they will move to issuance of new equity for any further requirements of equity. Consequently, highly profitable firms likely to use less debt as compared to those firms that have not been very money-spinning. Numerous scholars have been confirmed the effects of profitability on firms leverage. (Kester 1986) and (Friend Lang 1988) concluded that there is a significantly negative relation between profitability and leverage ratio. (Rajan Zingales 1995) and (Wald 1999) also found a significantly negative relationship among profitability and leverage ratios for the USA, UK and Japan. At this point we should mention that the notion of information asymmetry implies that firms should maintain some reserve borrowing capacity which will allow them to take advantage of good investment opportunities by issuing debt capital if necessary. The notion of asymmetric information is also used to combine the growth opportunities of a firm with its capital structure. Growth causes variations in the value of a firm. Larger variations in the value of the firm are often interpreted as greater risk. That is why a firm that has considerable growth opportunities will be considered as a risky firm and will face difficulties in raising debt capital with favorable terms. Thus, it will employ less debt in its capital structure. On the other hand, the cash flows of a firm which value is most likely to remain stable in the future are pred ictable and its capital requirements can be financed with debt more easily than these of a firm with growth potential. (Myers 1977) argues that firms with growth potential will tend to have lower leverage. The bottom line, there has been no worldwide theory of the debt or equity choice. There are numerous useful provisional theories that have been used to approach the determinant of capital structure, each one with different view. In our thesis work we analyzed few specific factors that played a role in determining the capital structure of Oil and Gas marketing companies of Pakistan. THEORATICAL FRAME WORK INDEPENDENT VARIABLES Profitability (PF) Tangibility (TN) Size (SZ) Current ratio (CR) Debt to Equity ratio (DE) Dependent Variable Leverage (LG) We have taken six variables out of which leverage is taken as a dependent variable. We take the total Debt (Total Liability) to total asset ratio as proxy for Leverage (dependent variable). For potential determinants of leverage, we study five independent variables namely Tangibility, Size, Profitability, Debt to Equity ratio and Current ratio. EXPLANATION OF VARIABLES: In cross-sectional study of the capital structure determinants, (Rajan Zingales1995) has been examined the factors which may explain the used of leverage. namely, market-to-book ratio i.e. growth, size, profitability, and tangibility. But our study of capital structure follows the framework of (Nikolaos Eriotis Zoe Ventoura 2007) they used tangibility of assets, Firm size, Profitability. But in our study we have also used two more variable that measure more reasonably leverage of firm i.e. Debt to Equity ratio and Current Ratio. For detail measure of variables and formulas used please consult appendix Table II DEPENDENT VARIABLE Measure of Leverage (LG) In the literature the term Leverage can be interpreted in different ways. The specific choice of the term leverage depends on the objective of the research. We take leverage as the ratio of total liability to net total assets. Net total assets are the total assets excluding all the fictitious assets and revaluation reserves and debit balance of profit and loss account. One question that has been raised is whether we should take the book value or the market value of debt. (Thies Klock 1992) and (Fama French 2000) support the consideration of book value of leverage. As the market value of debt is dependent on so many exogenous factors, which are outside the control of an organization, book value better reflects the true value of the firms leverage. So, we take book value of debt (total liability proxy) as well as of net total asset. The Leverage denotes to the proportion of assets funded by debt. Earlier investigations have been used diverse measures of leverage. (Frank Goyal 2003b) mentioned that the dissimilarity between debt ratios grounded on market value. And other grounded on book values is that the previous inclined to absorb firms future condition. However the later mirrors the past state. (Fama French 2002) identified few irregularities arising due to the used of two unlike ratios. Conferring to them Pecking Order and Static Tradeoff theories applied to the book value of debt, but not sure about the market value of debt. One more consideration of explaining the reasonable calculation of leverage is by taking total or long term debt numerator and total assets in denominator. However theories of capital structure study only long term debt to denote leverage, but we have been used the long term and short term debt (total debt) because in Pakistan firms are of average size or small size, so they some time have short debt for leveraging their projects. Due to this getting access to capital markets have been difficult in terms of technical formalities and cost of debt (shah Hijazi 2005). In Pakistan short term debt has been one of the favorite leveraging technique, because commercial banks are primary lenders so they dont preferred long term debt. Since 1994 firms has been discouraging to rely upon market based debt, but after the 1994 government changed the corporate rules and regulations to allow companies to get debt from the market in form of TFC (term finance certificate). (Booth et.al. 1995) had also mentioned this point that developing countries including Pakistan prefer short term financing than long term financing. INDEPENDENT VARIABLES Tangibility of Assets (TG) (Titman Wessels 1988), (Rajan Zingales 1995) and (Fama French 2000) support the importance of the tangibility (ratio of fixed to total assets) for leverage. The value of collateral of fixed assets for the gearing level of the firm is manifested by the tangibility of that firm. However, the direction of influencing the level of leverage is not clear by any of these studies. (Galai Masulis 1976), (Jensen Meckling 1976) and (Myers 1977) in their papers present the argument that stockholders of levered firms are prone to overinvest that gives rise to the classical conflict between shareholders and bondholders. But if the debt is secured against the fixed assets, the firm is restricted to use the borrowed funds for the same project for which it has borrowed. By this fact, creditors get an improved guarantee of repayment, and thus the chances of recovery are higher. Since this does not happen without collateralization of the fixed assets, the proportion of debt increases with the avai lability of more fixed assets in the balance sheet of the firm. Hence, the trade-off theory predicts a positive relationship between the tangibility and leverage in any firm. In contrast, the agency cost model predicts a negative relationship of tangibility with leverage in any firm (Grossman Hart 1982). We calculate tangibility by finding out the ratio of the total fixed assets (gross fixed assets excluding intangible assets) and 30 days average market capitalization of the firm.

Financial Analysis Of Alapis Pharmaceutical Firm Finance Essay - Free Essay Example

ALAPIS SA, a Greek public pharmaceutical firm, employing 741 employees, is engaged in the manufacture and distribution of detergents and cosmetics, veterinary pharmaceuticals, nutritional supplements, animal accessories and organic products, as well as human pharmaceuticals, medical devices and health materials. The Company operates several subsidiaries that supply a variety of pharmaceuticals, medical equipment, and hygienic products to drug stores and hospitals. Animal feeds, pet food and accessories are some of the Companys veterinary product offerings. ALAPIS S.A.s cosmetics and detergents product portfolio includes fabric softeners, bleachers and personal hygiene products, whereas the organic products segment contains agrochemicals, seeds, chemicals and aquaculture products. On June 10, 2010 Alapis implemented its strategy to focus on its core business Pharmaceutical segment and proceeded in the disposal of its non-Human Health activities, namely in Cosmetics and Liquid Detergents, Animal Health and Medical Devices sector. The CompanyÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€¦Ã‚ ¸s equity capital, as of the end of FY2010, amounted to ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬588.360.132, divided into two 245.150.055 shares (a decrease from 1.961.200.440 in a reverse split; pro rata one new share for every 8 existing ones), each with nominal value ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ 2.40 (up from ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬0.30 of nominal value per share). The major shareholder of the firm, since December 2010, is Mr. Mario Al-Jebouri who controls 15.206% of the CompanyÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€¦Ã‚ ¸s total outstanding voting rights, and who, since February 2011, has been appointed the new Vice-Chairman (Non-executive member) of its Board of Directors. RATIO ANALYSIS Liquidity In Table 2-1 we can see first the change in the current ratio and quick ratio over the fiscal years 2008 and 2010. The significant drop of the current ratio in 2010 is attributed to the 47.13% fall in current assets over the previous year against a 119 % increase in current liabilities in the same year. Of the total decline in current assets the drop in inventory contributed 2.78 percentage points[1], while the fall in accounts receivable 29.67percentage points. The reduction in inventory and accounts receivable led to a decline in both the number of days of accounts receivable and the number of days in inventory increases. Then, we turn our attention to the basic three activity ratios; these ratios that measure the firms ability to convert different accounts within its balance sheets into cash. We can use these ratios in order to expresses the length of time (in days) that the takes to sell inventory, collect receivables and pay its accounts payable. Table 2-1 shows that the company, as its inventory turnover ratio fell, increased the number of days (from 18 days on 2008 to 70 days in 2010) it takes to convert its inventory to sales, either as cash or accounts receivable. This increase is attributed o the 264% increase of average inventory over the period 2008-2010. Table 2ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒ ¢Ã¢â€š ¬Ã‹Å"1: The Firms Liquidity Ratios 2009 2008 2010 Current Ratio 1,269 1,304 0,325 Quick Ratio 1,218 1,218 0,302 Receivable Turnover Ratio 2,21 0,95 0,91 Average days sales uncollected 165,20 382,62 403,16 Inventory Turnover Ratio 20,40 3,16 5,24 Average days inventory on hand 17,90 115,40 69,66 Payable Turnover Ratio 6,44 0,48 1,26 Average days Payable 56,64 753,55 289,15 Figure 2ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒ ¢Ã¢â€š ¬Ã‹Å"1: Activity Ratios for Alapis S.A., 2008-2010 Profitability We start our analysis of the firms profitability by looking at the most the most widely used measure of profitability, i.e. that of the return on equity (); this is defined as net income (i.e. profit after tax) divided by (average) common stockholders equity (Ross et al., 1999: 35). Table 2-2 shows the firms rapid deterioration of ROE from 2.82% in FY 2010 to the troublesome -84.59% in 2010. These results do not include and any figures for discontinued operations. Of course the main driver in the falling course of the return on equity was the falling profit margin (in Table 2-4 we see that financial leverage could not enhance the companys ROE; notice the significant increase in the firms debt-to-equity ratio). As we can see the profit margin plunged from 9.79% in FY 2008 to -310% in FY2010. Table 2ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒ ¢Ã¢â€š ¬Ã‹Å"2: The Firms Profitability Figures 2008 2009 2010 Profit Margin (%) 9,797 18,76 -310,00 Asset Turnover (%) 17,873 7,86 13,23 Return on Assets (%) 1,751 1,48 -41,00 Return on Equity (%) 2,812 2,46 -84,59 Figure 2ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒ ¢Ã¢â€š ¬Ã‹Å"2: Profitability Ratios for Alapis S.A., 2008-2010 This immensely negative figure for the profit margin was down of course to the impact of the 792.494.000ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ worth of the impairment charge in FY 2010; that figure concerned only the continuing operations. Indeed, In application of the IFRS and specifically IAS 36, Alapis proceeded to the audit of impairment of the GroupÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€¦Ã‚ ¸s goodwill stemming from the acquisition of controlling interest at subsidiaries, the Group proceeded with an impairment of the goodwill related to intangible and tangible assets from continuing operations amounting to a total amount of ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ 840,5 mil. which impacted the results for 2010. The magnitude of the impairment was affected to a great extent by the adverse changes of financial parameters and components such as the discount rate, the market risk factor, the systematic risk factor, all of which were affected by the global financial crisis and the impact on the Greek economy. It should be noted however that the majority of the impairment is attributed to the significant impairment of goodwill that was created in 2007 when Alapis was formed through the 4-way merger as well as the subsequent company acquisitions. Cash Flow Adequacy Table 2-3 shows that all cash flow multiplies decreased through time. This of course has to do with the fact that operating cash flow plummeted from ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬195,310,000 in 2008 to just ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬58,293,000 in 2010. If we leave aside the thorny year of 2010, the problem with the falling operating cash flow in 2009 is not to be found in the operating profitability (roughly the same in 2008 and 2009), but to the working capital charges. Specifically, the huge increase in trade receivables in 2009 (compared with a decrease in 2008) brought the operating cash flow down from ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬195,310,000 in 2008 to ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬97,065,000 in 2009. Table 2ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒ ¢Ã¢â€š ¬Ã‹Å"3: The Firms Cash Flow-Adequacy Figures 2008 2009 2010 Cash Flow Yield (%) 4,544 1,987 -0,065 Cash Flow to Sales (%) 44,514 37,276 20,235 Cash Flow to Assets (%) 7,956 2,931 2,676 Gearing Ratio Table 2-4 shows the firms hugely erratic interest coverage ratio, which is used to determine how easily the company can pay out of its operating income its interest expenses on outstanding debt. Notice how the firms ability to meet its interest expenses became questionable after FY2009. Clearly, the company cannot go one like that as a going concern; it must either reduce leverage or increase operating profitability. If we exclude from our analysis FY2010, the interest coverage ratio fell as the quite robust increase in operating profit (from 74,856,000ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ in 2008 to 129,178,000ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ in 2009) could not cover the immense increase in the firms (net) finance cost (from 294,000ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ in 2008 to 51,436.000ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ in 2009). One of the reasons accounting for the increase in finance cost is the increase in interest expense on non-current borrowings; this expense rose from ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ 12,648,000 to ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ 23,263,000 in 2009. Table 2ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒ ¢Ã¢â€š ¬Ã‹Å"4: The Firms Gearing Ratios 2008 2009 2010 Debt to Equity Ratio 0,606 0,664 1,063 Interest Coverage Ratio 251,040 1,511 -9,070 Market Strength Table 2-5 also shows very erratic investment ratios. At this point we need to clarify that in order to calculate the price earnings ratio we have divided the market price per share at the end of the fiscal year by the earnings over the last 12 months, while in order to estimate the dividend yield we have used the share price at the beginning of the fiscal year. As we can see from Table 2-4, the only decent fiscal year when it comes to the dividend yield was FY2009 when an investor who had bought shares of the company at the beginning of the year would have landed an 8.13% dividend yield. In 2008 the dividend yield was a non-existent 0.60%. This is attributed to the fact that in 2008 the companys net profits (after tax) were significantly reduced (by almost 46%), and as a result the companys management decided to distribute a dividend per share of 0.011ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ against 0.025ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ for 2007; this represent a 56% reduction in the dividend payout for the FY2008. For 2010 we see that the dividend yield was zero as the company distributed no dividend because of the losses incurred in the same fiscal year. The firms P/E is illustrative as to the growth prospects the market had attached to the firm. Specifically, by the end of FY2008 much investors were willing to pay ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬13.23 for ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬1 of  current earnings, while by the end of the next fiscal year that figure went down to ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬1.38 pay euro of earnings per share. This tenfold reduction in the P/E ratio, which occurred despite the fact that the companys earnings per share rose from 0.04 in 2008 to 0.33 in 2009, is indicative of how gloomy are the markets expectations with the regard to the growth prospects of Alapis. Table 2ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒ ¢Ã¢â€š ¬Ã‹Å"5:The Firms Investment Ratios 2008 2009 2010 Price/Earnings Ratio[2] 13,229 1,380 NA Dividends Yield[3](%) 0,608 8,136 0,000 FUTURE PROSPECTS The adverse conditions that prevailed throughout 2010 in combination with the stringent austerity measures Greece has taken as was expected took a toll on healthcare expenditure; this in turn significantly affected the domestic pharmaceutical sector. Right now the main problem the sector faces is overall delay of payments by the Greek State to the pharmaceutical companies, a problem that may further dent turnover and profit margins 2010 CONCLUSIONS The decrease in the companys turnover can be attributed to three factors. First, there was the reduction in the pharma prices imposed by the State during the 4th quarter of 2010. More specifically, in May 2010 the Greek state applied a horizontal price reduction on approximately 12,000 drugs. Second, as the pharmacies decided to destock in view of the new pricing environment that led to a lot of product returns to the Company. Third, the company decided to proceed with the sale of some activities. We may argue that the basic risk ahead for the company is the price risk, as the Greek State (according to L.3840/31.03.2010) is the price setter for a medicine produced, packaged or imported in the country; this price must not exceed the average of the three lowest prices of that particular medicine as sold within the European Union (EU) member states. This pricing system is expected to be to the detriment of the company s future as the GDP and labour costs in some EU member states, such as Bulgaria, Romania, and Poland, are 40% of the respective Greek figures, and as a result the price of the same piece of medicine is expected to be quite low in these countries.