Personal Reflection

Personal Reflection

I like the LSEC 307 course I learned a lot of things that will help me to find a job and how to prepare for a professional meeting. I started looking for a job and I had simple CV I give it to HR departments. It was very simple and not professional and some time I mix it up.

I have learned how to express myself strongly in this course and propose a perfect CV. Also, by taking this course I have learnt what to do before and during the interview like, dressing well, coming before the time, prepare well and sure answering all the questions. Furthermore, the meeting part taught me how to control a group of professionals, manage the meeting, listen to others ideas and discuss each one and making recommendations. The presentation taught me how to talk to audience and focus more about some details was missing to me like pointing, voice volume and eye contact. 

To sum up, this course was very good, it helped me in many things I need. Also, the time of giving the course to students is perfect because it just before the graduation where many students looking and applying for jobs. I recommend going deep on the part of speaking to audience

meeting report

Meeting Report

Camel group

On Monday 23^rd Oct 2011, Mohamed Jaber the chairperson started the meeting by welcoming the participants and introducing the subject that is going to be discussed. Then, he pointed out the main points briefly. We began arguing about expanding the college area and facilities. Faris suggested an expanding in the size of the classes by mentioning the problem his class faced week ago and providing modern educational tools. Mohammed and Faisal totally agreed with Faris’s idea. Falah said the students suffered from the lack of parking then he added some ideas like using the empty area and reorganize the size of the parking. Faisal suggested increasing the sport area and buying new machines for the GYM which is kindly poor equipments.

After that, we moved to talk currently about the college system, the administration staff and how to improve the relation between the students and the teachers. Mohammed put forward the idea of providing new majors and offering a PhD program which going to raise the name of the college. Faisal agreed with Mohammed’s suggestion but he was worried about the budget that the college takes from the government doesn’t fit with this idea or the system of the college still can’t apply for these kinds of degrees. Then, we moved forward to discuss about the relation between students, teachers and the managers. Faris suggested a friendly tournament each semester between the students and the teachers. After that, the participants discussed the problem that some of the students don't know who supervise them and who manage the college. Mohammed put up an idea about distributing booklets for the students at the beginning of each semester introducing the administration staff by names and titles. 

Finally, we distributed the actions between the participants. Falah will communicate with the administration about the class size and the parking. Faisal is going to take it to student council about the possibility to expand the sport area. Mohammed will discuss the solutions with Mr. Simon John and the student council. Faris will do a survey about the expending of classes and parking’s. Then we gave some recommendations and we recommend that the report should be presented to Mr. Simon Jones. We also recommend that we should communicate with the student council and to show the survey results to the student council and the administration. The next meeting will be in two weeks and the participants will be confirmed by an email from the chairperson.

Agenda

Agenda

Date of meeting:   19^th Oct,2010                                       Time of meeting : 3:00 p.m.

Venue:   ADMC Room J16                                                    Purpose: Discuss improving college life at ADMC and crate a list of recommendations

Meeting participants:

Participants: Mohamed Alhamadi, Faisal Alkathiri, Falah Alahbabi, Faris Almusabi.

Chair/lead: Mohamed jabber

Note taker: Faisal Alkathiri

Venue preparation:

Tables and chairs for 7 people

Papers and pencils for 7

Agenda:

1-      Providing the best atmosphere for studying

2-      Expanding the college area and facilities

3-      Providing master degrees and offering new majors

4-      Challenge games between teachers and students

5-      Introducing the administration with names and titles

OBJECTIVES:

This meeting is to look at the proposal to provide the best atmosphere for students at ADMC where they can develop and innovate. Also, we are going to discuss about the college’s campus and how it can be improved. After that, we will suggest to the management to provide more master degrees especially in Business and how it will affect us as business students. Some of the students don’t know the managers so we will talk about arranging a friendly tournament each semester in different games between the staff and the students.

We will create a list of recommendations and to be presented to the HCT executive committee and Simon Jones.

 

LSECN307

Capital Structure &

 Financial Leverage

BY:

Mohammed Jaber Al-Hamadi                    H00127955

Faisal Bakheet Ali Alkethairi                      H00215129

Teacher:  Gregory Vrhovnik

SECTION: CL2

15-12-2011 

Capital Structure

“Capital structure is the economic term meaning the funds, materials and tools needed to create the economic, trade and the profit objective of the project, the media or humanitarian work” (What is Capital Structure,2011 ). The best capital structure refers to the most economical and safe ratio between different types of securities. Planning for the capital structure is very important to support the business in the long term. Capital structure relates to the way a firm or organization finances its assets through some combination of hybrid securities, equity, liabilities and debt.

Modigliani-Miller theorem about capital structure

The Modigliani-Miller theorem was developed by Merton Miller and Franco Modigliani. The theorem basically postulates that in the absence of bankruptcy costs, taxes and asymmetric information and in an efficient market, a company's value isn't affected by how it is financed, whatever the company's capital contain equities or debt or a mix of these, or what the dividend policy is.

Capital structure in a perfect market 

"A perfect market is one where individuals and firms can borrow at the same rate of interest; where there are no taxes; where investment decisions don’t get affected by the financing decisions." (What-is-capital-structure,2011). Miller and Modigliani made two findings under such conditions. The first finding was that the firm's real value will be independent of its capital structure. Whereas, the latter finding stated the cost of equity for unleveraged company will be the same to the cost of equity for a leveraged firm, added some more premiums for the financial risk. It tell us  as the leverage goes up, the difficulty of the individual risks will keep shifting between different investors types which make the  total risk stay conserved.

Capital structure in real world

If capital structure is not related to the perfect market, then imperfections which exist in the real world must be the cause of its relevance. There are many theories and thoughts which try to fix some of these imperfections:

·         Trade-off theory

This theory allows the bankruptcy cost to show up. It says that there is an advantage to financing with debt (the bankruptcy costs and the financial distress costs of debt). Also, it says that firms seek to balance their debt levels with the tax advantages of additional debt against the costs of possible financial distress

·         Pecking order theory

The firm will borrow, rather than issuing equity, when internal cash flow is not sufficient to fund capital expenditures. The theory basically tries to order the costs of asymmetric information and mention that the priority of any company is financing from internal financing to equity, preferring to raise equity as a financing means. This theory is slightly weak because it focuses more on borrowing which can reduce the firm end net income after paying the creditors.

Financial Leverage

Financial leverage is the degree of how the business can manage their debts. This degree will show as ratio that will affect the attitude of the investors and lenders.  It became risky when the interest on debt greater than earnings after taxes. The leverage is not always bad; the business takes large amount of debts may that more amount of risk. However financial leverage magnifies increases in earnings per share during periods of rising operating income but adds risks for stockholders and creditors because of added interest obligations (Mifflin Company).

High Leverage

Means that the company takes more risk and the ratio of financial leverage will be high. It may be risky if the business is unable to make payment on their loan. In this situation may lead the business to bankruptcy (What is financial leverage?). Also the company may be able to have new lenders in the future. For example, in 2001 Italian automaker Fiat announced a restructuring intended to reduce financial leverage by cut the firm’s debt    7.5 billion to half. “As part of the restructuring Fiat said it would sell    2 billion of assets, undertake    1 billion rights offering to sell new stock, and issue $2.2 billion in bonds exchangeable for the firm's holding of General Motors Corporation common stock” (Mifflin Company). The restructuring package used to increase equity at the same time reduce the firm’s debt, Fiat was struggling as Europe's fifth-largest automaker.

Low Leverage

Means that the company takes small amount of risk and the ratio of financial leverage will be low. In future this company can meet can meet its debt obligations and there is an opportunity for it to find new lenders.

Effects of financial leverage

1.      Return on Equity

Leverage can increase or decrease the return on equity in different conditions.  For example, if the business borrowing fund with lower amount of interest and use the excess fund in order to maximize returns (Leverage,(finance), 2003).

2.      Net income

Financial leverage magnifies changes in net income compared to changes in operating income. For example, when times are good if the net income increase by 20% because of financial leverage it will reported 30%. Without financial leverage the 20% increases in operating income would produce an equal percentage increase in net income, which means stockholders benefit from financial leverage. Therefore when times are bad and the operating income is falling investment in the firm can be very risky.

3.      Shareholders Wealth

Financial leverage results from utilizing debt to finance assets. The ratio compared with the industrial average. The greater ratio moved the investors to other companies with small financial leverage. In the situation the shareholder wealth will decrease as well as the market value per share.

Conclusion

In a nutshell, capital structure is very important for everyone from the farmer to the businessman. This is very big issue relates to way the family and organization finance their assets through some combination of debt, equity and liabilities. Also, there are many thoughts to create perfect capital market like trade-off theory and pecking order theory. Financial leverage is one of the most important tools in the finance. It can give the manager the degree as a show ratio that will affect the attitude of the managers and the investors and lenders. It’s important to control the leverage to save the business.

Bibliography

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Financial resources, articles, concepts and opinions from QFINANCE - QFINANCE. Retrieved November 29, 2011, from http://www.qfinance.com/balance-sheets-checklists/understanding-capital-structure-theory-modigliani-and-miller

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What is Capital Structure?. (n.d.). The Gemini Geek. Retrieved November 29, 2011, from

http://www.thegeminigeek.com/what-is-capital-structure

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