Persian Proverb Doubt Is The Key To Knowledge Philosophy Essay

Persian Proverb Doubt Is The Key To Knowledge Philosophy Essay I have been quite fascinated by the many changes that keep happening to what seems to be a certainty and realized that doubt has traditionally played a significant part in the philosophy of knowledge. The ancient Greek philosophers debated the issue of knowledge and the relevance of doubt. Plato described knowledge as justified true belief1 the key word being belief which in itself is subject to interpretations by individuals. The famous French philosopher Renee Descartes tried to define knowledge in terms of certainty and in his arguments the path to certainty begins with doubt. In his book Meditation 1 What can be called Doubt, he says I realised that it was necessary, once in the course of my life, to demolish everything completely and start again right from the foundations if I wanted to establish anything at all in the sciences that was stable and likely to last.2 So is there any truth in the Persian saying Doubt is the Key to Knowledge? Is this purely an epistemological rhetoric or will it hold true in areas of knowledge as diverse as science and arts? Nobel laureate and leading physicist, Richard Feynman described doubt in relation to science as follows: Scientific knowledge is a body of statements of varying degrees of certainty -some most unsure, some nearly sure, none absolutely certain. A strong parallel can be drawn between his statement and space research. What made man land on the moon or explore the possibility of life on Mars? As a knower, I know that if we would not have doubted the probability that man could live on the moon, space expeditions to the moon would have stopped after the near life and death drama of Apollo 13. The Apollo3 series of expeditions seemed to have established that the moon was completely uninhabitable because of its inability to sustain water. The desire to know and doubting what was already known, led to the Indian unmanned space expedition to the moon. The Indian space craft Chandrayaan discovered traces of ice on the moons surface. So, can man really live on the moon? Science generally relies on a set of deductive logic to prove their hypothesis. Euclids two dimensional geometry is a classic case of using modus ponens or deductive logic to prove assumptions or hypothesis. Going by this, one could easily argue as follows: Man needs oxygen and water to live. Water contains oxygen. Ice is formed from water. Ice has been found on the moon therefore, man can live on the moon. www.plato.stanford.edu/entries/knowledge-analysis/à ¢Ã¢â€š ¬Ã‚ ¦ modus ponens xenodochy.org/article/popper.html www.rep.routeledge.com/article/DA026SECT4 www.space.com/8193-caused-apoll-13-accient.html Popper doubted this process of deductive truism and said it cannot prove a theory true every time. In his theory of falsification he argued that modus ponens is purely truth preserving and therefore a better alternative is modus tollens which uses the conditions of denying to falsify the assumption e.g. if P implies Q and Q is false, then P must also be false. Poppers falsification theory pointed out no scientific theory is ever conclusively verified, no matter how many tests it has survived4 For example, Schizophrenia has all along been seen as a chronic relapsing psychotic disorder that primarily affects thought and behaviour.5 A recent study by the University College of London has established by means of an experiment that in some cases, the perceptions of schizophrenic people is more accurate than those without schizophrenia. Therefore a doubt is created whether schizophrenia is really a psychotic condition or are there other dimensions to it. Going by the argument that deductive knowledge doesnt always hold good, I can safely surmise that we do not have adequate information to conclude that man can live on the moon and therefore more questions need to be asked. On the other hand doubting every scientific fact leading to unnecessary research and information overload could lead to a situation of complete paralysis in our normal day to day life. For example, if we were to doubt that oxygen is a life giving substance, then it could lead to critical situations in medical emergencies. Similarly while dealing with society at large and friends and relatives in particular, if we were to doubt everything to seek more knowledge, we are most likely to find ourselves with very little knowledge and even fewer friends! Peoples emotions, intentions and their behavioural traits like honesty, integrity, sincerity etc. should not be doubted. There will be rare cases where people may want to deceive, but that by itself cannot lead to a doubt about people in general. _____________________ science.martinsewell.com/falsification.html priory.com/schizo.htm. Shakespeare said If music be the food of love, play on6.Wonderful as it sounds and probably not argued too much, yet people have researched the effect that music has on plants. There is one school of thought that believes and claims to have empirical data to prove that plants respond well to sedentary classical and similar genre of music but they wilt under the influence of hard rock and similar music. Drawing a parallel with human life they argue that hard rock, metal etc is actually detrimental for human growth and therefore should be banned. Traditional botanists however argue that the so called empirical data based on research is purely coincidental and there is no correlation between music and growth of plants. They resort to another set of evidence which shows that growth of plants is related to a number of factors that are not related to music such as condition of soil, temp, moisture content etc. On a third dimension, music itself has different genres enjoyed by different people. Therefore is music also subject to perception or is it absolute? Does it really impact plant detrimentally or otherwise? If we doubt the basis of the claims and counterclaims and pursue with investigation from all angles, then, knowledge will progress and facts can be established. Science notwithstanding, art is abstract enough to create its own set of debates which normally focuses on the likes and dislikes of the perceiver. This leads me to wonder, if art and aesthetics are synonymous then to what extent is beauty a necessary ingredient for something to be considered art? Platos theory of forms claimed that It is by beauty that beautiful things are beautiful. Immanuel Kant, an 18th century German philosopher on the other hand claimed that aesthetic experience is not a matter of understanding or reason, (and hence not true knowledge), but is a matter of judgment [Critique of Judgment].7 Taking this argument further, the painting by Eduord Manet8, Luncheon on the Grass, was hotly debated when it was first exhibited in 1863. Most of all it was not viewed as an art, but as an affront to society. The painting, depicting a naked woman sitting amidst two fully clad men, all of whose images were contemporary and almost identifiable as one among the viewers, earned the painter the wrath of the critiques and masses. Yet an earlier painting by Thomas Coutre in 18479, Romans in The Decadence of the Empire depicted a scene with Romans lying about with many naked women in various poses of sensuality. It appears to me, that a nude in classical settings such as the ancient Greek or Roman empires was considered acceptable but a nude in contemporary setting was not. Either way, the painting, known for its controversy today hangs as a masterpiece in the Musee D Oray in Paris. 6. www.enotes.com/shaespeare-quotes/music-food-love-play 7 www.creatorix.com.au/philosophy/t03/g010.html 8 http://blog.photos2view.com/2008/05/27/art-and-controversy.htm 9 http://www.essentialart.com/acatalog/Edouard_Manet_prints_Luncheon_on_the_Grass.html As a student of visual arts in IB, I was told that there are three basic colours red, yellow and blue. While using the computer, trangely I found that the primary colours were red, green and blue, otherwise called the RGB format. So, what are the basic colours? The answer lay in the different mediums where they are used. Red, yellow and blue are primary colours which are used in while mixing dyes to achieve other shades and colours on a painting canvas. Red, green and blue are used where there are overlapping shades to be used while projecting on screens such as in LCD panels or monitors for computer screen. My doubt about the basic colours led me to seek additional information. The key to knowledge in this area of art was learning how to mix primary dyes in painting and this learning has been both experimental and experiential. Taking the Platonist view that knowledge is justified true belief, I can now reasonably claim to have knowledge that red and yellow if mixed in equal proportions would give the colour orange or shades of orange. Whether the area of knowledge is science or arts, doubts and questions remain. Some answered with a reasonable amount of justification which points to a probable definitive answer based on information available at that point in time and others remain unresolved leading to further doubts. Therefore the question is knowledge absolute or is it infinite? We can never know unless we doubt all knowledge leading us to seek more and more information. The downside do we doubt everything in life or should we accept some events as empirical realities. The answer? It is situational. At the end, as a knower, when I look at the word doubt I can safely say that the Persian saying Doubt is the Key to Knowledge is not just an epistemological rhetoric; it is indeed a means to gain more knowledge. In the words of H L Mencken an influential writer and critic of the 20th century, Men become civilized, not in proportion to their willingness to believe, but in proportion to their readiness to doubt.9 ___________________________ www.leopoldsegedin.com/essay_detail_mona_lisas_smile.cfm www.notable-quotes.com/d/doubt_quotes.html

What Is the Relationship Between Social Change and Changes in Space and Time?

What is the relationship between social change and changes in space and time? Illustrate with examples drawn from at least two of : changes in cities, changes in media, changes in intimacy. In looking at the relationship between social change and changes in space and time. We first require understanding of what social change is. Sociologists from every school of thought agree that social change is inevitable within our society. Social change is a highly diverse debate that has been analysed by theorist’s looking at the effects of social change on society. Anything that is socially constructed can be altered. Little changes are triggered by larger changes taking place. Urban life changed and progressed toward an industrial society. Space and time has been reordered. The working day was determined by the seasons, and by the amount of daylight there was. This however has changed, and the working day is now structured around clock time. Space within the home has changed. With family units not as large as previously had been and the availability of better housing conditions, families do not spend the same time together. In looking at some of the theories that have been documented with regards to changes in media and changes in intimacy we begin to acquire an understanding of how sociological change has had an impact. The new media phenomenon holds a lot of potential for benefiting society. â€Å"Belonging to a digital culture binds people more strongly than the territorial adhesives of geography† (Mackay pg. 123) Many who are not able to use conventional methods of communication are given an outlet whereby they can. Many are unable to visit places of interest to them and ICTs host many features allowing people to view and learn about places they would in most cases not be able to physically visit. â€Å"Internet communities – which are seen as binding people together in some sort of common culture in which imagined realities are shared† ( Hugh Mackay pg. 159) The new ICTs can also be contested in that with having no physical contact can leave individuals feeling alone, isolated from others and could produce a desire for the physical presence of others. Together, today’s networks constitute a new form of society† (Hugh Mackay pg. 141). Internet does not alienate between creed, colour, ethnicity or disability and therefore it can be suggested that this multicultural society brings with it a form of social structure and community without any prejudice. There is no stigma attached to it. Castelles views the new technological devices of our society as the beginning of a rev olutionary change. Globally the new forms of media have transformed the ways of communication and the availability of information. Timeless time and the space of flows† (Hugh Mackay pg. 141). By this he means that with new technology being made available there is no longer a need or reason for waiting time to exist. Everything is instantaneous, and can be acquired at the touch of a button. Snail mail has been replaced with e-mail. We are able to access many things at any time of the day or night. Also there is no physical space taken up. Cyberspace allows the exchange of all forms of information without the requirement of physical documentation. If the nineteenth century was the age of the telegraph and telephony, and the twenty – first century becomes that of biotechnology, it is not necessarily the case that the intervening era of late modernity is to be conceived as the ‘information age’† (Golding pg. 129) Golding does not agree with Castells view that there is a revolutionary change taking place due to the development of ICTs. His view is that social changes throughout the years are due to evolutionary developments. â€Å"Brief history of the electric telegraph shows that significant reordering of time and space began long before the internet† (Mackay pg. 142). He suggests that communication with others via e-mail hosts the same enthusiastic doctrine as is held by those wishing to write in the conventional way. Also the enthusiasm held by the introduction of ICTs was just the same as had been with the invention of the semaphore telegraphs. â€Å"In the future, it is claimed, ICTs will unlock the door to a society of unlimited resources. The plentitude of the information economy will end deprivation and need. † (Golding, pg. 130). Golding does not foresee this happening as the use for ICTs will always require manufactured upgrades and money being spent to ensure the running of them. The only form of media that he views as having ‘consistently high penetration’ (Golding pg. 130) is television. The cultural imperialism thesis looks at the media expanding throughout the world. It is generally assuming that the exportation of different cultures from West to East is not beneficial within society. Schiller denotes that this approach is pessimistic. â€Å"Cultural exports not only restrict other countries’ development of their own production industries, but also, quite insidiously, manipulate and shape cultural values. (Mackay pg. 145). He does not believe that any good can come from knowledge being shared in this way. There is in his view, an adverse effect on different cultures generated by this method. Negroponti is optimistic about the introduction of the media sources. Internet allows us to have access to anything at any time of night or day. Everything in his view will flourish. He sees those entering the sector will grow and get better with time as the creation of new technologies advances through time. It has become easier to communicate with each other regardless of location. There has been an increase in dating sites which can be accessed at any time and by anyone. There has been a transformation from traditional conventional ideologies about what is termed intimacy. Due to media there are many more public arenas for the discussion of both personal and public relationships. â€Å"Cyberspace offers the possibility of the increased development of personal relationships in an apparent disembodied space† (Woodward pg. 191). There are fewer secrets held within the boundaries of relationships. This generates a freedom of self in a way whereby people can decide their identity. It can be suggested that this manner of communication allows those within society to talk openly about their lives as the information given is received by a faceless audience. This however does not always prove to be a beneficial factor as there is a threat of undesirable people choosing to become part of a society they would not ordinarily live within the realms of. There is no threat as to ones true identity, no questions require truthful answers. Intimate relationships were at one time kept secret from the public domain what went on behind closed doors stayed there. â€Å"Selling – point is the minutiae of the daily lives and personal relationships of the rich and famous†( Woodward pg. 186). Magazines make the most profit when they are selling stories about celebrities and the scandals associated with them . Giddens â€Å"transformation of intimacy† (Woodward pg. 201) shows that there has been a change socially within the realms of intimacy. He looks upon marriages as only being beneficial to the participating partners for as long as they gain fulfilment from it. He sees an increase in equality within marriages. â€Å"Relationships between women and men which aspire to the pure relationship are more equal, with men as well as women being concerned with the emotional quality of the relationship and being prepared to make investment in this form of intimacy† (Woodward pg. 201)Another factor suggested by Giddens is what he denotes as â€Å"Plastic sexuality† Women can decide if they want to reproduce and by what method they want to reproduce by. They are free to enter into sexual relationships without the threat of becoming pregnant. â€Å"This search for personal satisfaction through intimate relationships leads to greater reflexivity. † (Woodward pg 202. ) Giddens does not however, document accounts of those within ethnic minorities, or make reference to relationships whereby intimacy is achieved without closeness for example with the use of prostitution, thus not holding true to his assumptions on pure relationships. Intimacy can be between friends, it does not always involve partners having a sexual relationship. Lynn Jamieson believes that inequalities still remain within society. As she states â€Å"There are significant disjuncture between public and private stories about personal relations, especially in the context of the more optimistic variants of idealized discourses of transforming intimacies. (Woodward pg 203. ) Unlike Giddens she does not see equality within partnerships. Material circumstances account for much of the unhappiness that exists. Divorce rates are still high and in the majority of cases are instigated by the women. Another factor that challenges Giddens theory is that she suggests domestic violence is still concurrent and therefore shows the depths to which inequalities lie. In conclusion, we can see that social change has altered the organization of society. â€Å"Changes in the boundaries between public and private space. These boundaries are not fixed in time and space but are continually being redrawn and transgressed† (Woodward pg. 186). People adapt to changes and accustom themselves to their presence. From looking at the changes within space and time we can see how there has been a move from rural to industrialised society to the developing technology. We as a nation are aware of what is happening globally and it is easy to contact and communicate with others worldwide. We can acquire information about almost anything that interests us. There are no longer boundaries or space that can stop interaction with others. Time is no longer a barrier. Although there lies many debates and questions regarding social change the only thing that can be agreed upon is that there will always be changes within our society. Reference: Hugh Mackay cited in â€Å"Social Change† edited by Tim Jordan and Steve Pile, Open University Press, Milton Keynes 2002 Kath Woodward cited in â€Å"Social Change† edited by Tim Jordan and Steve Pile, Open University Press, Milton Keynes 2002 Lynn Jamieson, @From â€Å"the family† to sex and intimacy (1998) cited in â€Å"Social Change† edited by Tim Jordan and Steve Pile, Open University Press, Milton Keynes 2002 Word Count: 1550 approx

Fdr And The Great Depression - 783 Words

QBERT: (Quote) â€Å"The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.† (Background) Franklin Delano Roosevelt quoted this at his second Inaugural Address on January 20th, 1937. (Explanation) Throughout his terms, FDR has had many successful outcomes during his presidency into what shapes our nation today. (Relationship) FDR progressed with many achievements to help America revive and prosper. (THESIS) The response of Franklin Delano Roosevelt s administration to the problems of The Great Depression was effective because they created the New Deal program, revived enterprise, and made better use of the country s land. Acknowledgement of other side- There was different opinions on how FDR managed situations such as Huey Long who believed FDR was doing nothing for the country. Topic Sentence Point 1: FDR disproved critics by creating various programs that assisted many people and improved the country’s economy. Supporting evidence: FDR created The New Deal which was made up of many effective programs. Example: â€Å"The country now enjoys the safety of bank savings under the new banking laws, the careful checking of new securities under the Securities Act and the curtailment of rank stock speculation through the Securities Exchange Act† (Text 3 Lines 23-25). Explanation: These programs recovered the public confidence in the security of savings and changed the policiesShow MoreRelatedFdr And The Great Depression1842 Words   |  8 Pagesswiftly and effectively as FDR either. He set out to bring an end to the Great Depression, which had been created by fear itself. Undaunted, FDR and Congress, together, were able to pass a whopping 15 major bills in FDR’s first 100 days in office as a part of his New Deal. 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Expansion programmes in business - Free Essay Example

Sample details Pages: 9 Words: 2615 Downloads: 5 Date added: 2017/06/26 Category Business Essay Type Analytical essay Did you like this example? Executive Summary Hobart plc is a small and sedately growing UK based company, engaged in the business of productions and sales of soft drinks. The company has recently embarked upon a major expansion programme, through acquisitions, as well the setting up of manufacturing facilities in the emerging markets of East Europe. Both the asset base and the long-term borrowing of the company have increased significantly in the last year. Don’t waste time! Our writers will create an original "Expansion programmes in business" essay for you Create order The expansion initiative has also resulted in increases in overheads, without any corresponding enhancement in sales, and has caused a drop in profitability and strain on working capital resources. A detailed financial analysis, based upon examination and analysis of operating parameters and financial ratios reveals that while the current profitability of the company is under pressure, the situation should improve significantly as the returns from the recent investments start coming in and the expansion plans gain traction. The shares of the company are currently trading below book value, primarily because of the reduced profitability of the company in 2006. The fundamentals of the company, and their overall operating parameters, however, continue to be strong and the share should show marked improvement in the medium term, as recent investments start yielding results. While there is little chance of the shares of the company improving sharply in the near future, prospects for inv estors willing to hold the shares for a period of at least two years appear to be extremely attractive. 1. Introduction Hobart plc is a UK based manufacturer of soft drinks, active mostly in the small institutional market. While the majority of its customers are in the pub and restaurant segment, the company also tries to reach retail customers through small supermarkets. In recent years, the company has attempted to grow through acquisitions in the UK, as well as in Eastern Europe, with the establishment of a production unit, in Poland, in 2006. This report attempts to analyse the working of Hobart through (a) a study of its financial figures for the last two years, (b) its key ratios for a further two year period and (c) a comparative analysis with a local competitor, a company which is also small in size and operates in similar markets, in order to determine the suitability of investing in the company. The report is for the specific use of prospective investors. It ma kes use of financial statements and attempts to come to conclusions, mainly through ratio analyses, of relevant financial, capital and operational parameters. The report has sequential sections that describe the prospective users of this report, discuss the general limitations of ratio analysis, contain the financial analysis, and finally detail the findings, conclusions and recommendations. The appendices contain details of the mathematical working, used in computing the ratios. 2. Users Users of financial analyses primarily comprise of two distinct segments, internal, and external, to the company. Internal users include members of the management, as well as other employees. The list of external users is of course much larger and consists primarily of stakeholders who have personal interests in the performance of the company. Shareholders, suppliers, customers, lenders, investors and concerned regulatory bodies are members of this list of external users. Apart from these grou ps, other external users include industry watchers, analysts, policy makers, members of economic and financial think tanks, and of course competitors. (Osteryoung, Constand, and Nast, 1992) This particular exercise, as stated earlier, makes use of competitor data for arriving at conclusions. Corporate performance becomes relevant for these users for different reasons, with different users looking at diverse parameters for their individual assessment purposes. Lenders, for example, may, primarily look at the extent of interest cover provided by earnings, as well as information on the extent of borrowing, currently in use by a company. Gearing and Shareholderà ¢Ã¢â€š ¬Ã¢â€ž ¢s ratios will be able to provide these users important information on the relationship between borrowed and owned funds, and the adequacy of capitalisation. Investors may find it worthwhile to analyse the Earning per Share and the Price/Earning ratios in order to decide on buying and selling decisions, and to assess whether the analysis reveals any information that could lead to profitable investment decisions. Comparison of P/E ratios, with other firms in the same business would provide information about under or overvaluation of the scrip in the equity market and help in decision-making regarding to buying or selling shares. Long-term shareholders would on the other hand look at fundamentals, corporate performance and prospects for the future, in order to assess the worth of their investments. Members of the management would need to analyse financial statements, primarily to assess corporate performance, and to set targets for the future. This user group would mainly examine operational ratios, vis-ÃÆ'  -vis profitability and liquidity, and use their findings as a base for carrying out improvements in efficiency and setting targets. (Osteryoung, Constand, and Nast, 1992) It is probably in their hands that its use becomes most beneficial, for the progress and well-being of the corpor ation. 3. Limitations of Ratio Analysis Ratio Analysis continues to be one of the most basic tools in use for financial analysis. Business schools and professional accountancy courses deem its usage to be intrinsic to analytical exercises in finance, and parameters abound for acceptable limits for the different ratios in common use. Ratios help in analysing the operational and financial health of companies, especially with regard to issues like solvency, leverage, liquidity, operational efficiencies, and profitability. Ratios of related figures, for example, stocks of finished goods and sales, or current assets and current liabilities, are determined and tracked over time to assess the financial health or operational efficiency of particular companies. However, ratio analysis also has many serious limitations, which, if unattended, can invalidate its conclusions. These limitations have come to be widely accepted by financial experts, who now use ratios in conjunction with a host of other information. Ratio analysis primarily depends upon an analysis of published figures; any inaccuracies in the preparation of these figures will automatically affect the validity of the inferences provided by its usage. (Wells, 2001) In an era distinguished by creative accounting and corporate scams, illustrated by the demise of Enron and the collapse of Arthur Anderson, financial statements are looked at with scepticism. Notwithstanding the requirements of Sarbanes Oxley and the convergence of international accounting practices, the first limitation of ratio analysis stems from the questionable reliability of accounting statements. Ratios again depend upon financial figures that pertain to either revenue or capital items, which can, in turn, be subject to completely different influences, depending upon the size of the company and the nature of its business. While a weak current ratio could denote liquidity problems in a small company, it could just be an indicator of s upplier exploitation in the case of large and financially strong companies, which have the muscle to extract longer payment periods from their suppliers. The same ratio may thus need to be analysed differently for organisations of different sizes. To give another illustration, debt equity ratios are generally far larger for capital-intensive businesses like cement than for FMCG companies like Unilever, where working capital needs are significant, and investments in plant and machinery are remarkably low. It is also important to consider that ratios reflect the financial status of a company at a particular point of time. These analyses will thus not be able to reflect the effect of any subsequent developments, positive or negative. The reliability of accounting documents, the essentiality of different ratios to reinforce and not contradict each other, the size of the business, the nature of the business or industry, and the date of preparation of the analysis are capable of influe ncing the interpretation of ratios, thus need particular attention. (Giacomino, and Mielke, 1993) 4. Financial Analysis This exercise is predominantly dependent upon the use of ratios in key operational areas for its findings, conclusions and recommendations. While other information available on data pertaining to earlier years as well as on a competing company, namely Adelaide plc helps in the analysis, the validity of the exercise is subject to the limitations of ratio analysis, elaborated in some detail in the previous section. The analysis pertains to five significant financial and operational areas, namely, (a) profitability, (b) asset utilization, (c) liquidity, (d) capital structure, gearing and risk and (e) investments. The appendix contains details about the premises involved and the calculations undertaken for the preparation of these ratios. The table, provided below gives a snapshot of the various ratios used for the analysis. While computation of ratios for Hob art for 2006 and 2005 are from available financial information, the ratios for Hobart for 2004, as well as for Adelaide, for 2006 and 2005 are from directly obtained data. While a few ratios are unavailable, as is evident from the empty grids on the table, the available data is sufficient for some detailed preliminary analysis. Ratio Group Ratio Hobart 2006 Hobart 2005 Hobart 2004 Adelaide 2006 Adelaide 2005 Profitability Operations Return on Capital Employed 6% 20% 18% 17% 19% Asset Turnover 1.36 1.45 Gross profit Margin 38% 40% 41% 36% 39% Net Profit Margin 5% 14% 13% 13% 15% Trade Receivables Period 50 days 41 days 37 days 29 days 28 days Asset Utilisation Asset Turnover 1.13 1.48 Stock Turnover 49 44 Liquidity Current Ratio 1.43 2.79 1.7 2.3 2.0 Quick Ratio 0.89 1.68 1.3 1.5 1.4 Capital Structure, Gearing Risk Gearing Ratio 44 % 36% 32% 25% %24 Shareholderà ¢Ã¢â€š ¬Ã¢â€ž ¢s Ratio 56% 64% Interest Cover 1.55 times 6.25 times Investment Earnings per Share 0.04 GBP 0.24 GBP Price/ Earnings 17.5 times N/A A preliminary financial analysis of Hobartà ¢Ã¢â€š ¬Ã¢â€ž ¢s performance does not make for very happy reading. The first problem relates to sales growth, which is growing excruciatingly slowly, creeping up at a rate of less than 10 % per annum. The last year, which saw a growth of less than 5 % was exceptionally poor. Considering that sales figures also include the effect of price rises, it is possible that volume growth was even poorer than that reflected by financial figures. The year 2006 has been poor in terms of net profitability, despite a marginal increase in sales, and little change in gross margins. While the Gross profit margin has dipped marginally from 40% to 36%, the net profit margin has crashed from 14% to 5%, with a corresponding dip on the Return on Capital, which has dipped from 20 % to 6%. This drop in profitability has occurred because of a sharp increase in administrative expenses, which have gone up by 2000 GBP, practically 6.7 % of revenues. Other than this, the other major cause for worry with regard to operational efficiencies arises from the increase in trade receivables, which have been increasing steadily during the last three years. Trade receivables in 2006 were at 50 days of sales, compared to 37 days in 2004. This could possibly be due to an increase in terms of payment and needs investigation in detail. Prima facie, the ratios denote a sharp fall in profitability, because of an increase in administrative expenses, and this could certainly be a cause for concern. This expense, along with a few other factors evident from a perusal of the accounting statements, needs analysis in the context of recent acquisitions, and the installation of manufacturing facilities in Poland. Capital structuring figures and ratios indicate a significant increase in long-term assets, as well as funding, through the issue of debentures. However, the increase in the value of long-term assets is significantly higher than the funds obtained from debe ntures. This factor, compounded by the increase in administrative expenses, which have eaten up much of the yearà ¢Ã¢â€š ¬Ã¢â€ž ¢s operational profits, has led to the balance of the increase in long term assets having to be funded from the internal funds of the company. The ratios pertaining to short-term liquidity, i.e. current ratio and quick ratio have worsened accordingly. In comparison to Adelaide, Hobart appears to be a significantly larger company with both sales and assets that are practically four times the former. The wisdom of comparing the ratios of these two companies is thus questionable. However, the key operational ratios of both companies were reasonably similar before 2006, when Hobart put its expansion plans into motion. Adelaide follows a practice of revaluing its long-term assets, and as such may have an even smaller asset base than that evident from the financial records. 4. Conclusions and Recommendations Hobart is in the middle of a major expansion exercise, in the UK and in Eastern Europe, through acquisitions, and installation of manufacturing facilities. These activities have obviously resulted in a strain on current operations and profitability, as expenses, including interest costs, have increased without a corresponding increase in sales or gross profits. Even though the price of the share is currently trading at less than its book value, the PE ratio of 17.5, compared to the industry average of 11, indicates that the companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s plans have the approval of investors and market watchers. The company should see a sharp increase in revenues and earnings as its investment plans bear fruit. Even otherwise, Hobart is adequately capitalized and financially and operationally strong enough to ride out the current drop in profitability, until sales increase in response to investments. The price of the share, at 70 p appears to be extremely attractive for investing, if bought with an intention to hold for at least tw o years. While there appears to be little chance of the share price appreciating in the immediate future, it should certainly appreciate strongly in the medium and long term. Long-term investors, if they buy at current market prices, should find their investment in Hobart to be extremely rewarding. Appendix This appendix contains details regarding the computation of various ratios used in the report. A. Profitability Ratios 1. Return on Capital Employed = Profit before Interest and Tax/ Capital Employed at the beginning of the year Details 2006 2005 Capital Employed at the beginning of the year is equal to Total assets less Current Liabilities 22000 20000 Profit before Interest and Tax 1400 4000 Return on Capital Employed 0.06 0.2 2. Asset Turnover Ratio = Sales/ Capital Employed at Start of the Year Details 2006 2005 Capital Employed at the beginning of the year is equal to Total assets less Current less Current Liabilities 22000 20000 Sales 30000 29000 Asset Turnover Ratio 1.36 1.45 3. Gross Profit Margin = Gross Profit/ Sales * 100 Details 2006 2005 Gross Profit 11400 11600 Sales 30000 29000 Gross Profit Margin 0.38 0.40 4. Net profit Margin = Net Profit (Profit before Interest and Tax) / Sales * 100 Details 2006 2005 Net Profit 1400 4000 Sales 30000 29000 Net Profit Margin 0.050 0.14 B. Asset Turnover Ratios 5. Fixed Asset Turnover = Sales/ Fixed Assets Details 2006 2005 Fixed Assets (Non Current Assets) 26560 19600 Sales 30000 29000 Net Profit Margin 1.13 1.48 6. Stock Turnover Ratio = Inventory/ Cost of Sales X 365 Details 2006 2005 Inventory 2500 2100 Cost of Sales 18600 17400 Stock Turnover Ratio 49 44 C. Liquidity Ratios 7. Current Ratio = Current Assets (Inventory and Trade Receivables)/ Trade Payables Details 2006 2005 Current Assets 2500 + 4100 =6600 2100 + 3200 = 5300 Trade Payables 4600 1900 Current Ratio 1.43 2.79 8. Quick Ratio = Trade Receivables/ Trade Payables Details 2006 2005 Trade Receivables 4100 3200 Trade Payables 4600 1900 Current Ratio 0.89 1.68 D. Capital Structure, Gearing and Risk Ratios 9. Gearing Ratio = (Total Liability à ¢Ã¢â€š ¬Ã¢â‚¬Å" Current Liability) / Capital Employed Details 2006 2005 Total Liability à ¢Ã¢â€š ¬Ã¢â‚¬Å" Current Liability 18000-6000 = 12000 11000 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 3000 = 8000 Capital Employed = Total Assets less Current Liabilities 26560 + 6600 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 6000 = 27160 19600 + 5400 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 3000 = 22000 Gearing Ratio 0.44 0.36 10. Shareholderà ¢Ã¢â€š ¬Ã¢â€ž ¢s Ratio = Shareholderà ¢Ã¢â€š ¬Ã¢â€ž ¢s Funds/ Capital Employed Details 2006 2005 Shareholders Funds 15160 14000 Capital Employed 27160 22000 Shareholderà ¢Ã¢â€š ¬Ã¢â€ž ¢s Ratio 0.56 0.64 11. Interest Cover = Net Profit before Interest and Tax/ Interest Details 2006 2005 Profit before Interest and Tax 1400 4000 Interest 900 640 Shareholderà ¢Ã¢â€š ¬Ã¢â€ž ¢s Ratio 1.55 6.25 H. Investment Ratios 12. Earnings per Share = Earnings/ Number of Shares Details 2006 2005 Profits after Tax 350 2360 Number of Shares 10000 10000 Earnings per Share (GBP) 0.04 0.24 13. Price/ Earnings Ratio = Price per Share/ EPS Details 2006 2005 Price per Share (GBP) 0.70 N/A Earnings per Share 0.04 0.24 Price/ Earnings Ratio 17.5 N/A Bibliography Giacomino, D. E., Mielke, D. E., 1993, Cash Flows: Another Approach to Ratio Analysis. Journal of Accountancy, 175(3), 55+. Osteryoung, J., Constand, R. L., Nast, D.,1992, Financial Ratios in Large Public and Small Private Firms. 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