Voting in Elections Should Be Made Compulsory Essay Example for Free

Voting in Elections Should Be Made Compulsory Essay Compulsory Voting in Election, though highly desirable, cannot be attained due to a number of reasons. Some common reasons that come to mind without pondering a lot are: health issues of voters; which might bar them from exercising vote with a perception that no election is important than their health. Although a passion is seen amongst certain invalids; who are often carried to polling booth by their family on back ; a majority skips the same; especially ones living in metropolitans. They consider carrying their sick and bedridden family members to polling booth as a burden . Another major reason could be male chauvinistic attitude of Indian men ; who always underestimate thoughts and actions of their women. They especially prefer confining their women within the home on polling day. This is the one major reason of fewer number of female voters as compared to males; particularly in villages and small towns. Another reason; for turning off the voters for polling is the increased incidences of violence, booth capturing and criminal activities at polling booth; Making voters reluctant for voting. Such incidences can be easily observed in underdeveloped as well as developing nations with high corruption. A few other reasons; which handicaps Constitution in making polling compulsory or rather Imposing punishment could be the distance between pooling booth and voter’s residence. The situation gets worsened if accompanied by adversities like heavy snow; torrential downpour, scorching heat or thunderstorm; the control of which is beyond the power of Government as well as voters.

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Modernization is define as the positive connotation used to changing society through bringing technologies, productions, and better standard of living for the process of development. Modernization theory was first emerged in Europe in the seventeenth century and has more or less influence Most of the countries became modernized through using appropriate and suitable form of modernization theories in their country. An example of countries that have applied well modernization theory and have succeed in achieving modernization is Turkey, however Afghanistan the country that have failed in processing modernization during reign of King Amanullah khan. This paper will intend to provide comparative analysis of state building and modernization in Afghanistan during King Amanullah Khan Regime and Turkey during Mustafa Kamal Ataturk. It will focus on cause and effect relation between different features of both countries such as, societal structure, geo-political position, and socio-economic as cause and political development as an effect that led to failure of modernization in Afghanistan and prosperity and success in turkey. Historical Background of Afghanistan: Afghanistan is a multi-ethnic society within an olden history started from 3000 B.C. It is a landlocked country which has been considered as an entryway or coli door for most of the invaders through history. Afghanistan as a country come to an existence in 1747 by Ahmad Shah Durani who led the foundation of first Durani Empire. Ahmad Shah was able to bring together different people from different ethnic groups to work as a one nation. Afghanistan as a modern state come to existence in the 19th century whereas this was the time when other countries in Asia, Africa, and Middle East w... ...started modernization process he faced opposition from a large number of uneducated people. Since he could not built schools or education institutions due to lack of luxury, people did not have the ability to understand and analyze his processes and became against him. Harrison has mentioned four stages of Barrington Moore’s theory of modernization the book of â€Å"the sociology of modernization and Development†. According to Barrington the first theory is â€Å"Organic Evolutionary mode†, the second is â€Å"conservative modernization†. Third one is â€Å"evolutionary modernization, and the last theory is â€Å"industrialization by formal and informal colonization†. If we apply the mentioned theories inAmanullah’s reforms the second one can be perfectly applicable, since Amanullah khan used led state modernization from top to down which can likely cause the society to upraise against it Essay -- Modernization is define as the positive connotation used to changing society through bringing technologies, productions, and better standard of living for the process of development. Modernization theory was first emerged in Europe in the seventeenth century and has more or less influence Most of the countries became modernized through using appropriate and suitable form of modernization theories in their country. An example of countries that have applied well modernization theory and have succeed in achieving modernization is Turkey, however Afghanistan the country that have failed in processing modernization during reign of King Amanullah khan. This paper will intend to provide comparative analysis of state building and modernization in Afghanistan during King Amanullah Khan Regime and Turkey during Mustafa Kamal Ataturk. It will focus on cause and effect relation between different features of both countries such as, societal structure, geo-political position, and socio-economic as cause and political development as an effect that led to failure of modernization in Afghanistan and prosperity and success in turkey. Historical Background of Afghanistan: Afghanistan is a multi-ethnic society within an olden history started from 3000 B.C. It is a landlocked country which has been considered as an entryway or coli door for most of the invaders through history. Afghanistan as a country come to an existence in 1747 by Ahmad Shah Durani who led the foundation of first Durani Empire. Ahmad Shah was able to bring together different people from different ethnic groups to work as a one nation. Afghanistan as a modern state come to existence in the 19th century whereas this was the time when other countries in Asia, Africa, and Middle East w... ...started modernization process he faced opposition from a large number of uneducated people. Since he could not built schools or education institutions due to lack of luxury, people did not have the ability to understand and analyze his processes and became against him. Harrison has mentioned four stages of Barrington Moore’s theory of modernization the book of â€Å"the sociology of modernization and Development†. According to Barrington the first theory is â€Å"Organic Evolutionary mode†, the second is â€Å"conservative modernization†. Third one is â€Å"evolutionary modernization, and the last theory is â€Å"industrialization by formal and informal colonization†. If we apply the mentioned theories inAmanullah’s reforms the second one can be perfectly applicable, since Amanullah khan used led state modernization from top to down which can likely cause the society to upraise against it

A paragraph on APA citation Racism in Middle East Essay

              Racism is one of the biggest challenges for people living in Middle East. It exists between domestic citizens and foreigners, across the ethnic groups and religions. Although religion could be the only way to integrate people, it has not been possible and instead it forms part of racism. Akbaba (2009 p. 324) argued that, â€Å"the deliberate and selective restrictions on religious minority groups may strengthen the ethnoreligious identity of those groups†. Racism is the main cause conflicts and wars among communities thus hindering it socioeconomic progress and as a result, the society lives in poverty. According to Ahmed, Nicolson, & Spencer, (2000) racism hinders populations from getting education and advancing their career thus their literacy progress being hindered. Therefore, it is important to find solution in the region so that people could assume their socioeconomic roles to improve their lives. However, this has not been an easy task to Middle East. Poor governance and political interference had led to worsening of the situation through trying to get solution through force by police officers and other authorities rather than solving it.                   The executive and legislative measures that have followed these initiatives ‘ have included mass arrests, secret and indefinite detentions, prolonged detention of ‘‘ material witnesses, ’’ closed hearings and use of secret evidence, government eavesdropping on attorney-client conversations, FBI home and work visits, wiretapping, seizures of property, removals of aliens with technical visa violations, and mandatory special registration, (Semati, 2010 p. 265).                  Lack of racism solution in Middle East can be attributed to selfish leaders who would like to remain in power for longer time and ignorant citizens who are not concerned about their development of the region. According to Ahmed et al, (2000) people in Bangladesh are aware of racism and its effects but have no time to solve the issues. A solution to racism can be found through courageous leaders who are informed and are concerned with the future of Middle East (Cohen-Almagor, 2013; Karsh, 2012; Baumann, 2013). References Ahmed, B., Nicolson, P., & Spencer, C. (2000). The social construction of racism: the case of second generation Bangladeshis. Journal of Community & Applied Social Psychology, 10(1), 41-46. Akbaba, Y. (2009). Who discriminates more? comparing religious discrimination in Western democracies, Asia and the Middle East. Civil Wars, 11(3), 321-358 Baumann,, L. (2013). The impact of national culture on project management in the Middle East. Lars Baumann, Cohen-Almagor, R. (2013). The failed peace process in the Middle East 1993-2010. Israel Affairs. N.p Karsh, E. (2012). The Middle East’s real apartheid. Journal for The Study of Antisemitism, p. 38. Semati, M. (2010). Islamophobia, culture and race in the age of empire. Cultural Studies, 24(2), 256-275. Source document

Drug Testing in the Workplace - 1739 Words

Drug Testing in the Workplace: A Costly Mistake Abstract The issue of drug testing in the workplace has sparked an ongoing debate among management. There are many who feel that it is essential to prevent risks to the greater public caused by substance abuse while on the job. However, others believe that the costs far outweigh the benefits and that it is an invasion of privacy. Putting all ethical issues aside, evidence presented in this paper supports the latter. The costs of drug testing are excessive and only a small percentage of employees are actually found to be substance users. Drug testing in the work place has a negative effect on productivity; contrary to what was originally intended. It actually decreases productivity†¦show more content†¦Yet another example of how these drug tests are flawed. The strongest reason for opposing drug testing however, is the invasion of privacy. This occurs primarily in urinalysis, the most common drug screening process. Not only does this violate a persons private life, it can open up, and reveal a number of other ailments that the employee may be suffering and which that individual wishes to hide and keep it to himself. A urinalysis for example can make public such diseases as an employees heart condition, depression, epilepsy, diabetes, and for women the same test can also confirm whether she is pregnant or not. Each of these conditions is a private and personal manner, and the employer has no right to involve itself in these matters. Another argument that proponents of drug testing use is the supposed decrease in productivity. Shepard and Clifton (1998) conducted a study of high tech industries and concluded that managers did not feel that drug testing improved productivity. In fact, it found that companies that have drug testing programs actually exhibited lower productivity levels than similar companies that did not drug test. The reason for this could be a possible perceived concept that management does not trust its employees and the relationship between the employer and the employees suffers greatly. This creates an awkward and hostile environment for everyone in the workplace.Show MoreRelatedDrug Testing And The Workplace1394 Words   |  6 Pagessubstance abuse in the workplace. The implementation of drug testing by companies grew in recent years. American workers have seen a dramatic increase in the use of drug testing in the previous years. Drug testing is implemented to assure safe workplaces for Ame rican workers. Drug testing can reduce the company’s health care and insurance costs. Even though drug testing has become common in the workplace, there is little research that exists regarding this matter. Overall, drug testing affects the decisionsRead MoreDrug Testing in the Workplace1281 Words   |  6 PagesDrug Testing in the Workplace Thesis statement: Administering a drug and alcohol policy can be challenging, but it can also be beneficial to the manufacturing company. I. Administering a drug and alcohol policy can be challenging. A. The company must comply with State and Federal laws when administering the drug and alcohol policy. B. The company must make sure the implementation of the test is done in a uniform manner. C. Some employees may bring law suits against the employerRead MoreDrug And Alcohol Testing On The Workplace1663 Words   |  7 PagesDrug and Alcohol Testing in the Workplace Due: Monday Dec 1, 2014 COMM-220-F Rebecca Walsh By Brett Tate and Brandon Bracko November 17, 14 Introduction People often question drug and alcohol testing in the work place. It is a controversial subject that has a range of mixed emotions. But where do you draw the line when it comes to crossing the boundaries of prying into one’s personal life? This report will explain the legal, and ethical issues surrounding the topic of drug and alcohol testing inRead MoreThe Effects Of Drug Testing On The Workplace1540 Words   |  7 Pagesinterview for a job, received a call that they were hired, and then heard their future employer say that they will have to do a drug test before they can start this new job? â€Å"Although many people think that illegal drugs such as marijuana, heroin, cocaine and other street drugs became a problem for youth in the 1960’s the truth of the matter is that there has always been a drug problem in the United States when it comes to substance abuse†(testcountry.org). This past summer I had an interview at RusselRead MoreDrug Testing in the Workplace Essay2964 Words   |  12 PagesDrug Testing in the Workplace Throughout recent years, applicant drug testing has become one of the most prevalently used strategies by many organizations to control substance abuse in the workplace. Drug testing is a selection tool used by organizations to determine whether or not an individual has previously used drugs and/or alcohol. Most employers find that drug testing, if done correctly, is a worthwhile investment associated with increased workplace safety, lower absenteeism, fewer on-the-jobRead More Drug Testing in the Workplace Essay3750 Words   |  15 Pages   Ã‚  Ã‚  Ã‚  Ã‚  Drug testing has become a very big issue for many companies. Approximately eighty-one percent of companies in the United States administer drug testing to their employees. Of these, seventy-seven percent of companies test employees prior to employment. Even with the commonality of drug testing, it is still a practice that is generally limited to larger corporations which have the financial stability, as well as the human resources to effectively carry out a drug testing program. In the UnitedRead MoreDrug Testing and Issues of Privacy at the Workplace753 Words   |  3 PagesDrug Testing Issues of Privacy Drug Testing Issues of Privacy Drug testing in the workplace is a touchy issue for both employers and employees. Employers who drug test current and potential employees do so for several reasons. There are some industries and tasks which are very sensitive because of the material used, or the processes involved in the work, or because the work concerns matters of national security. There are numerous practical reasons for employers to test employees for illegalRead MoreDrug Testing For Workplaces And Government Help891 Words   |  4 PagesRunning head: DRUG TESTING Drug Testing: Drug Testing in all Work Places Cassandra C. Shaffer Dabney S. Lancaster Community College ADJ 211, Criminal Law, Evidence and Procedures I 04 September 2016 Abstract â€Æ' Drug Testing for Workplaces and Government Help 1. Definition of the Problem In today’s time and age, you have many work places that do have drug testing but in others you do not have any. The people that do drugs and have a job think that it is okay to do what they are doingRead MoreAgainst Drug Testing In The Workplace Essay1752 Words   |  8 PagesAbstract The issue of drug testing in the workplace has sparked an ongoing debate among management. There are many who feel that it is essential to prevent risks to the greater public caused by substance abuse while on the job. However, others believe that the costs far outweigh the benefits and that it is an invasion of privacy. Putting all ethical issues aside, evidence presented in this paper supports the latter. The costs of drug testing are excessive and only a small percentage of employeesRead MoreEssay about Drug Testing in the Workplace1829 Words   |  8 Pagesensure the safety of all our employees in the latex factory, we ask that you pee in to this plastic cup.† While this may not be the best way to bring about a company’s drug testing policy to a new hire, the fact remains that in most every position today, if no urine sample is given, it translates into â€Å"no job for you!† Drug testing, a once rare and uncommon policy, is now among many employers a requi rement for any new or existing job position. Although seen by some as an infringement on one’s constitutionally

High Intensity Training Versus Traditional Exercise...

As a general guideline, a review paper equivalent to a 20 minute oral presentation might be 5-10 pages and include 10 or more references. Shorter papers and fewer references would be appropriate if there is greater critical analysis of the subject area. Literature review: High-intensity training versus traditional exercise interventions for promoting healthï ¼Å½ Emerging research examining high-intensity intermittent training (HIIT) indicates that it may be more effective at reducing subcutaneous and abdominal body fat than other types of exercise. In addition, it may promote health in various ways. I will focus on the comparison of HIIT and traditional exercise on the exercise performance, fat loss, fitness, insulin resistance, etc. Possible mechanisms underlying HIIT-induced fat loss and implications for the use of HIIT in the treatment and prevention of obesity are also discussed. High-Intensity Interval Training versus Traditional Exercise Interventions for Promoting Health Abstract: Keywords: 1. Introduction: High-intensity interval training (HIIT) as a compromise between time-consuming moderate-intensity training and sprint-interval training requiring all-out efforts, is emerging as a potential time efficient strategy for health promotion. Current recommended guidelines of 150 minutes of moderate physical activity per week is reduced by half to 75 minutes if the week’s activity is done at a vigorous intensity (ACSM, 2014). HIIT, when compared to Traditional Exercise

The Role of Social Class in Priestlys, An Inspector Calls

Priestley mainly uses the characters in the play to present his views, especially Mr and Mrs Birling, to present his ideas about class and society. In the Birling family, Mrs Birling is the most upper class, and is always referring to the lower class female factory workers such as Eva Smith as ‘girls of that class’. She seems to think that working class people are not humans at all. In the beginning, Priestley describes the Birlings’ house as ‘a fairly large suburban house’ with ‘good solid furniture of the period’, showing they are upper-middle class and that they have money. They also have servants such as a maid and a cook. Priestley wants to give us an idea that the Birlings are upper class both in possessions and attitudes. The†¦show more content†¦The events of the play reveal that most people in the upper-middle class (Mr and Mrs Birling and Gerald) look down on the lower class with derision (‘girls of that classâ₠¬â„¢) and the only middle class person in the play (the Inspector) seems to detest the upper-middle class because he believes in socialism. The moral of the play is that everyone is part of a community, and everyone is responsible for each other, it does not matter whether they are lower class or upper class (‘[W]e don’t live alone. We are members of one body. We are responsible for each other.’). Priestley believed in socialism, he uses the Inspector to express his thoughts about this. This is the main message that he wanted the audience to take away. In ‘An Inspector Calls’, Priestley presents different ideas about class and society. His main idea is socialism. He believes that we ‘don’t live alone. We are members of one body. We are responsible for each other.’ That whether we are upper class or lower class, we are responsible for each other and we shouldn’t look down on other people or think that they aren’t huma n but creatures just because they are a lower social class than us. Priestley tries to present the idea that society will only work if we work together and are responsible for each other. Otherwise, there would be noShow MoreRelatedWrite About Inspector Goole’s Role in the Play. How Far Is He a Believable Policeman? How Does Priestly Use the Inspector in the Play?2740 Words   |  11 PagesWrite about Inspector Goole’s role in the play. How far is he a believable policeman? How does Priestly use the Inspector in the play? In this essay I am going to be exploring the role and function Priestly gives the inspector in â€Å"An Inspector Callsâ€Å". I am going to break down his role in the play, explore his effects on the other characters, analyse his stage presence, show his intention in coming to the Birling household and also how Priestly utilises the inspector’s personal qualities. I am alsoRead MorePriestleys Main Aim in An Inspector Calls Essay2480 Words   |  10 PagesPriestleys Main Aim in An Inspector Calls Priestly’s main aim in An Inspector Calls is to draw attention to the roles and consequences of capitalism in society and he achieves this successfully. As he managed to shock audiences of the earlier decades and through the play capitalist attitudes are portrayed as immoral and hypocritical to a modern audience we can see that the play has been successful to a certain extent. J.B. Priestly was born in 1894 and lived throughRead MoreAnalysis of An Inspector Calls by J.B. Priestly1844 Words   |  8 PagesAnalysis of An Inspector Calls by J.B. Priestly ‘An Inspector Calls’ is a twentieth century drama written by J.B. Priestly in 1947 but takes place in 1912. This story is about the Birling family celebrating their daughter, Sheila’s engagement to Gerald Croft. A few pages into the story, an Inspector called Goole which means ‘spirit in death’ interrogates the family and the story of Eva’s death unfolds. As it progresses each character realises their connection toRead MoreDifferent Attitudes and Perceptions Between Generations in the Play An Inspector Calls967 Words   |  4 PagesDifferent Attitudes and Perceptions Between Generations in the Play An Inspector Calls Works cited Missing J.B. Priestlys play An Inspector Calls, written in 1945, is set in the spring of 1912 in the household of an upper middle class family in the north of England. The plot of the play is based around the Birling familys involvement in a young womans suicide and

Valuation Report General Electric

Question: Discuss about the Valuation Report General Electric. Answer: Introduction Valuation implies the process of estimating the worth of something. In regards to the valuation of firm, it is the value of firms assets that is put under consideration in the valuation exercise. The valuation of the firms assets is a challenging task because it involves application of various techniques and different perceptions (Kruschwitz and Loeffler, 2006). It is to be noted that the value of firms assets could be determined differently by different people pursuing different purposes. For example, the valuation of the firms assets may be required for the purposes of computation of income tax liability or it may be required for computation of sales price in case of merger and acquisitions. Thus, it is in effective the purpose that is required to be kept in mind while carrying out the valuation of the firm (Kruschwitz and Loeffler, 2006). Further, there are various techniques and methods which are applied in valuation such as net assets method, earnings growth rate method, discounted free cash flow method. These methods involve application of different methodologies, for example, net assets method computes the value of asset based on the balance figures (Larrabee Voss, 2012). However, the balance sheet figures can also be adjusted in the light of market values. Further, the earnings growth rate method provides for valuation of the firm based in the estimation of future earnings of the firm. In the same manner, the discounted cash flow method provides for computation of the value of firm based on the present value of the free cash flows. Among these all methods, the discounting of free cash flows is the most commonly applied method for the purpose of valuation of the firm (Larrabee Voss, 2012). In the context developed above, the report presented here covers the valuation of General Electric Company, which operates for infrastructure development and generation and distribution of electricity (General Electric, 2016). The valuation of the company has been carried out by applying the discounting of free cash flows to the firm. Further, two analytical techniques have been adopted in computing the value of the company. In the first technique, the value of overall company has been computed by taking the free cash flows to the company. In the second technique, the free cash flows to the equity have been computed separately and the value of equity has been arrived based on discounted value of the free cash flows attributable to the equity holders. Growth and Cash Flow Projections Computation of free cash flows and growth rate is the primary step in the valuation process. The free cash flows represent cash flows generated by the business after meeting all the spending requirements. Thus, the free cash flows represent the amount available with the company to infuse in the expansion activities (Wahlen, Baginski, Bradshaw, 2014). In other words, the free cash flows also represent the resources available with the company to enhance the value of the shareholders and therefore, the use of cash flows is considered the most suitable to compute the value of firm. The firms value is computed by discounting the future expected free cash flows by the appropriate discount rate. Thus, there are two most critical elements that play essential role in determining the value of the firm those elements are future expected cash flows and discount rate (Wahlen, Baginski, Bradshaw, 2014). The computation of future expected cash flows involves analysis of the past cash flows of the firm and determination of the expected growth rate that can be perceived to be maintained in future. The past years cash flows are taken as the basis to estimate the future cash flows applying the future expected growth rate. In regards to use of past years cash flows, it is always advisable to use of the average figures (Wahlen, Baginski, Bradshaw, 2014). For example, in the case of valuation of General Electric, the average of past five years cash flows can used to determine the future expected cash flows. After arriving at the average past free cash flows, it becomes essential to compute the future growth to determine the future expected cash flows. The computations in regards to General Electric have been shown below. Average Free Cash Flows General Electric: Past five Year Free Cash Flows for Firm 2016 ($M) 2015 ($M) 2014 ($M) 2013 ($M) 2012 ($M) Earnings before interest and tax 14,055.00 11,649.00 26,711.00 26,267.00 29,788.00 Less: Tax @35% 4,919.25 4,077.15 9,348.85 9,193.45 10,425.80 After tax EBIT 9,135.75 7,571.85 17,362.15 17,073.55 19,362.20 Add: Depreciation and amortizations 4,997.00 4,847.00 9,283.00 9,762.00 9,192.00 Add/Less: Decrease (increase) in GE current receivables 1,514.00 383.00 (1,913.00) (485.00) (879.00) Add/Less: Decrease (increase) in inventories (1,389.00) (314.00) (872.00) (1,368.00) (1,274.00) Add/Less: Increase (decrease) in accounts payable 1,198.00 (541.00) 305.00 360.00 (437.00) Add/Less: Increase (decrease) in GE progress collections 1,836.00 (996.00) (515.00) 1,893.00 (920.00) Total 17,291.75 10,950.85 23,650.15 27,235.55 25,044.20 Less: Capital expenditure (2,775.00) (4,289.00) (7,465.00) (7,575.00) (8,935.00) Free cash flows to the firm 14,516.75 6,661.85 16,185.15 19,660.55 16,109.20 Average 16,617.91 Note: In the year 2015 company incurred net loss of $6,145 million and the free cash flows of the company are also deviating from the normal trend. Therefore, the year 2015 has been considered as abnormal and hence ignored in computing average free cash flows. The free cash flows as computed above shows that the company has capability to produce $16,618 million cash flows on a per year basis. It could be observed that the free cash flows to the firm include the cash flows generated for the debt holders also, beside the equity. However, the free cash flows for equity are computed after deducting the re-payments of debt. Further, in computing the free cash flows for equity, the net earnings attributable to equity are taken into consideration rather than EBIT. In respect of General Electric, the computation of free cash flows for equity is shown in the table given below: General Electric: Past Five Year Free Cash Flows for Equity 2016 ($M) 2015 ($M) 2014 ($M) 2013 ($M) 2012 ($M) Net earnings (loss) attributable to GE common shareowners 8,176.00 (6,145.00) 15,233.00 13,057.00 13,641.00 Add: Depreciation and amortizations 4,997.00 4,847.00 9,283.00 9,762.00 9,192.00 Add/Less: Decrease (increase) in GE current receivables 1,514.00 383.00 (1,913.00) (485.00) (879.00) Add/Less: Decrease (increase) in inventories (1,389.00) (314.00) (872.00) (1,368.00) (1,274.00) Add/Less: Increase (decrease) in accounts payable 1,198.00 (541.00) 305.00 360.00 (437.00) Add/Less: Increase (decrease) in GE progress collections 1,836.00 (996.00) (515.00) 1,893.00 (920.00) Total 16,332.00 (2,766.00) 21,521.00 23,219.00 19,323.00 Less: Capital expenditure (2,775.00) (4,289.00) (7,465.00) (7,575.00) (8,935.00) Free cash flows to the firm 13,557.00 (7,055.00) 14,056.00 15,644.00 10,388.00 Less: Net Debt payments (1,135.00) (24,459.00) (6,112.00) (14,230.00) (2,231.00) Free cash flows for equity 12,422.00 (31,514.00) 7,944.00 1,414.00 8,157.00 Average 7,484.25 Note: In the year 2015 company incurred net loss of $6,145 million and the free cash flows of the company are also deviating from the normal trend. Therefore, the year 2015 has been considered as abnormal and hence ignored in computing average free cash flows. It could be observed that the company has the ability to generate free cash flows of an amount of $7,484.25 million on per annum basis. Estimations of Growth The growth rate has been computed at two stages. At the first stage the variable growth rate (discrete cash flows) has been computed and at the second stage, the stable growth rate has been calculated. It is assumed that the free cash flows of the firm will grow at rate computed at the first stage for the next 10 years and then the growth would stabilize at the rate computed at the second stage. Estimation of a discrete cash flow growth (First Stage): ROE*Retention ratio Year Net profit for equity ($M) Equity ($M) ROE (%) Retention ratio Growth rate 2012 13,641.00 128,430.00 10.62% 49.28% 5.23% 2013 13,057.00 136,783.00 9.55% 41.06% 3.92% 2014 15,233.00 136,833.00 11.13% 5.32% 0.59% 2015 (6,145.00) 100,138.00 -6.14% 0.00% 0.00% 2016 8,176.00 77,491.00 10.55% 7.00% 0.74% Average growth of past five years 2.10% Note: It is assumed that for the next 10 years, the free cash flows of the company will grow at the average rate computed above. The growth rate as arrived at the first stage is 2.10% which is computed using return on equity and the retention ratio. The second stage growth rate has been calculated with reference to the growth in the gross domestic product as shown below: Year GDP ($M) (World Bank, 2017) Growth rate 2012 16155255 2013 16691517 3.32% 2014 17393103 4.20% 2015 18036648 3.70% 2016 18415418 2.10% Average GDP growth rate 3.33% It could be observed that the average growth rate of gross domestic product of the United States has been 3.33% in the past five years. In the long term, the company can not grow more rapidly than the overall economy; therefore, it is assumed that the growth rate of General Electricity in the long run would be 2.50% i.e. is less the average GDP growth rate. Estimated Future Free Cash Flows Using the average free cash flows of past years and the growth rates as computed above, the free cash flows for the next 10 years and the terminal value have been computed as shown in the table given below: Estimated Free cash flows for firm Year FCFF ($M) Remarks 2017 16,966.35 16617.91*(1+2.10%) 2018 17,322.10 ------Do--------- 2019 17,685.31 2020 18,056.13 2021 18,434.72 2022 18,821.26 2023 19,215.90 2024 19,618.81 2025 20,030.18 2026 20,450.16 Terminal cash flows 21,131.29 21131.29*(1+3.33%) Estimated Free cash flows for equity Year FCFF ($M) Remarks 2017 7,641.18 7484.25*(1+2.10%) 2018 7,801.40 -----Do---------- 2019 7,964.97 2020 8,131.98 2021 8,302.49 2022 8,476.58 2023 8,654.31 2024 8,835.77 2025 9,021.04 2026 9,210.19 Terminal cash flows 9,516.95 9210.19*(1+3.33%) Determination of Discounting Rate The future expected free cash flows of General Electric have been computed as shown in the above section. Now, the next step is to determine the appropriate discount rate to calculate the present value of these cash flows. The appropriateness of the discount rate would depend upon the fact that whether the cash flows for the firm are used or cash flows for equity are used. When the valuation is carried out using the cash flows to the firm, the appropriate discount rate is weighted average cost of capital (Pratt Grabowski, 2010). However, in case when the cash flows to equity are used, the cost of equity is considered to be appropriate discount rate. The weighted average cost of capital represents the cost of using all the capital resources which includes both the debt as well as the equity (Pratt Grabowski, 2010). However, the cost of equity represents the cost of using equity funds only. For the purpose of computation of weighted average cost of capital, it is essential to work out the cost of equity and cost of debt. The cost of debt can be computed by referring to the interest cost and the total amount of outstanding debt. However, the computation of cost of equity is not that simple (Pratt Grabowski, 2010). There are various considerations and different perceptions of the people about the cost of equity. Few consider dividend as the primary factor for computation of cost of equity and others relate it to the market risk premium on the stock. The dividend growth model provides solution to those who prefer dividend and capital asset pricing model provides solution for those who consider that market risk premium drives cost of equity (Pratt Grabowski, 2010). The dividend growth rate model is applied to compute the intrinsic value of the stock. The calculation of intrinsic value as per this model is carried out with the help of expected dividend, cost of equity, and the growth rate (Shapiro, 2008). This model provides that discounting the values of dividend to be received in future at the cost of equity would yield the intrinsic value. The dividend growth rate model assumes that the dividend will growth in future at the rate that is currently prevailing and it further assumes that the cost of equity will remain constant (Shapiro, 2008). This model provides following formula to calculate the intrinsic value of the stock: Intrinsic Value of Stock= D1/(Ke-g) Here, D1 is the expected dividend, Ke is the cost of equity, and g is the dividend growth rate (Shapiro, 2008). This formula can also be applied in computing the cost of equity. The cost of equity can be calculated if the expected dividend and growth is available and current prevailing price of the stock is assumed to be the intrinsic value of the stock. The cost of equity of General Electric by applying the dividend growth rate model has been computed as under: Cost of Equity: Dividend model A. Market Price of Stock (Po) (Yahoo Finance, 2017) 30.02 B. Expected dividend 0.998 C. Growth rate of dividend 7.36% D. Cost of Equity 10.69% Dividend growth rate Year Dividend per share ($) 2012 0.700 2013 0.890 2014 0.890 2015 0.920 2016 0.930 Growth Rate 7.36% Further, apart from dividend growth rate model, there is another most widely used model for computation of capital assets pricing model. The capital asset pricing model computes the expected return by using risk free rate of return, risk premium, and systematic risk. The CAPM model is based on the analogy that the investor would want as minimum return that equals the risk free rate plus the premium for risk (Sharifzadeh, 2010). Further, the premium for risk is also adjusted for the systematic risk which is represented by beta of the security. The beta measures volatility of the securitys return in comparison to the overall market return. The CAPM return is computed using the following formula: CAPM= Rf + Beta (Rm-Rf) Here, Rm is the market return and Rf is the risk free rate of return In respect of General Electric, the CAPM return has been computed as under: Cost of Equity: CAPM model A. Risk free rate (CNBC, 2017) 2.38% B. Market rate of return (SP500 2016 return) 15% C. Beta (Yahoo Finance, 2017) 1.1 D. CAPM 16.66% It could be observed that the cost of equity of the company by applying the dividend growth rate model is 10.69% while as per CAPM model it is 16.66%. It depicts that when dividend is considered as the primary parameter, the company seems less risk, however, when the stock price is taken as basis, the company appears to be more risky. Considering these fluctuations in the cost of equity arrived under two different models, it is advisable to use average for the purpose of computation of weighted average cost of capital. The average cost of equity is worked out to be 13.67%. Besides the cost of equity, two other important elements of weighted average cost of capital are cost of debt and cost of preferred stock (Pratt Grabowski, 2010). In respect of General Electric, it has been observed that preferred stock is negligible and hence it has been ignored in computing the weighted average cost of capital (General Electric, 2016). The cost of debt has been computed as under: Cost of debt: Net finance cost ($M) 5,025.00 Less: Tax @35% 1,758.75 After tax cost of debt 3,266.25 Borrowings amount 135,794.00 After tax cost of debt (%) [3517.50/135794] 2.41% The after tax cost of debt of General Electric has been worked out to be 2.41%. Further, it is essential to work out the market value weights to compute the weighted average cost of capital, which is shown below: Market Value Weights Debt Equity Total Market value of equity shares ($M) (Yahoo Finance, 2017) 261,440.00 Add: Retained Earnings 139,532.00 Value of debt (short term borrowings+ long term borrowings) 135,794.00 Total 135,794.00 400,972.00 536,766.00 Weights 0.25 0.75 It could be observed that the market value of companys common stock has been taken based on the current prevailing price of the stock. Further, since, most of debt of the company is in the form of borrowings from banks and financial institutions, therefore, the value of debt has been taken as per the latest audited statement of financial position (General Electric, 2016). Considering the above shown calculations in respect of cost of equity, cost of debt, and market value weights; the weighted average cost of capital of the company is worked out as under: Weighted Average Cost of Capital Debt Ordinary Shares Total Cost of Finance 2.41% 13.67% Market Weights 0.25 0.75 WACC 0.61% 10.21% 10.82% Final Valuation of Equity Shares The two crucial steps of valuation of the firm such as calculation of free cash flows and discount rate have been completed. Now, the final step is to compute the value of firm and value of equity by applying present value technique. In order to compute the value of firm, the calculation of present value is divided in two parts such as present value of discrete cash flows and present value of terminal cash flows (Larrabee Voss, 2012). In respect of General Electric, the value of equity has been computed under two approaches. The first approach seeks to compute value of overall firm and then the value of equity is arrived at after deducting there from the value of debt. In this approach, the free cash flows are computed for the overall firm and discounting of these cash flows is carried out at the weighted average cost of capital. The second approach seeks to compute the value of equity directly. In this approach, the free cash flows are computed for equity only and discounting of these cash flows is carried out by applying the cost of equity. In respect of General Electric, the value of equity under the first approach is arrived at as follows: Present value of discrete cash flows for next 10 years Year FCFF ($M) PVF @10.82% PV of Cash Flows ($M) 1 16,966.35 0.902 15,309.83 2 17,322.10 0.814 14,104.71 3 17,685.31 0.735 12,994.46 4 18,056.13 0.663 11,971.60 5 18,434.72 0.598 11,029.25 6 18,821.26 0.540 10,161.08 7 19,215.90 0.487 9,361.25 8 19,618.81 0.440 8,624.37 9 20,030.18 0.397 7,945.50 10 20,450.16 0.358 7,320.07 Total 108,822.12 Present value of terminal cash flows Terminal cash flows ($M) 21,131.29/ (10.82%-3.33%) 282,063.06 Total value of Firm ($M) (108,822.12+282,063.06) 390,885.18 Less: Value of Debt 135,794.00 Total value of Equity 255,091.18 No of Shares Outstanding Yahoo (Finance, 2017) 8,710.00 Per share value of value of equity (255,091.18/8,710) 29.29 The intrinsic value per equity share of General Electric as worked above is $29.29, which is approximately equal to the current prevailing price of the company. The current prevailing price of the company is $30.02 (Yahoo finance, 2017). This implies that the stock of the company is correctly valued at the moment. The value of equity of General Electric under the second approach that is taking the free cash flows for equity is arrived at as under: Present value of discrete cash flows for next 10 years Year FCFF ($M) PVF @13.67% PV of Cash Flows 1 7,641.18 0.880 6,722.25 2 7,801.40 0.774 6,037.83 3 7,964.97 0.681 5,423.09 4 8,131.98 0.599 4,870.94 5 8,302.49 0.527 4,375.01 6 8,476.58 0.464 3,929.57 7 8,654.31 0.408 3,529.49 8 8,835.77 0.359 3,170.13 9 9,021.04 0.316 2,847.37 10 9,210.19 0.278 2,557.47 Total 43,463.15 Present value of terminal cash flows Terminal cash flows 9,516.95/ (13.67%-3.33%) 92,046.11 Total value of Equity $M (43463.15+92046.11) 135,509.26 No of Shares Outstanding 8,710.00 Per share value of value of equity 15.56 It could be observed that the intrinsic value of equity share as worked above is $15.56, which is lower than the value arrived at as per the first approach. Further, this intrinsic value is also lower than the current prevailing market price, which implies that the stock is overvalued. Conclusion This report deals with the valuation of General Electric by applying the free cash method with two different approaches. Under the one approach, the overall value of the firm is computed and then the value of debt is deducted to arrive at the equity value. On the other hand, the second approach seeks to compute the value of equity directly by discounting the free cash flows for equity. From the analysis carried out in this report, it could be observed that there are three main steps to complete the valuation of a firm. These three steps are computation of free cash flows, discount rate, and the present value of the free cash flows. The computation of free cash flows involves analysis of the past trend and the estimations in regards to future growth. In regards to General Electric, it has been found out that the average free cash flows of the firm are $16,617.91 million while the average free cash flows to equity are $7,484.25 million. Further, it is estimated that these cash flows will growth at the rate of 2.10% per annum for next 10 years and then the growth rate would stabilize to 3.33% forever. Further, it has been observed that the discount rate should be selected carefully. The weighted average cost of capital is considered to be best when free cash flows to the firm are to be discounted. However, the cost of equity is taken as the discount rate when the free cash flows to equity are to be discounted. In respect of General Electric, the weighted average cost of capital has been found to be 10.82% and the cost of equity is 13.67%. Further, it has been observed that while calculating the present value, it is essential to divide the cash flows into two categories such as discrete cash flows and terminal value. This bifurcation of cash flows is necessary because different discounting parameters are applied on the discrete cash flows and the terminal value. The final value of equity of General Electric under the firm approach is arrived at $29.29 while it drops to $15.56 when computed under equity approach. References CNBC. 2017. US 10 year bond yield. Retrieved April 7, 2017, from https://www.cnbc.com/quotes/?symbol=US10Y General Electric. 2016. Annual report of General Electric for 2016. Retrieved April 7, 2017, from https://www.ge.com/ar2016/assets/pdf/GE_AR16.pdf Kruschwitz, L. Loeffler, A. 2006. Discounted Cash Flow: A Theory of the Valuation of Firms. John Wiley Sons. Larrabee, D.T. Voss, J.A. 2012. Valuation Techniques: Discounted Cash Flow, Earnings Quality, Measures of Value Added, and Real Options. John Wiley Sons. Pratt, S.P. Grabowski, R.J. 2010. Cost of Capital: Applications and Examples. John Wiley Sons. Shapiro. 2008. Capital Budgeting and Investment Analysis. Pearson Education. Sharifzadeh, M. 2010. An Empirical and Theoretical Analysis of Capital Asset Pricing Model. Universal-Publishers. Wahlen, J.M., Baginski, S.P., Bradshaw, M. 2014. Financial Reporting, Financial Statement Analysis and Valuation. Cengage Learning. World Bank. 2017. Data GDP: USA. Retrieved April 7, 2017, from https://data.worldbank.org/indicator/NY.GDP.MKTP.CD Yahoo Finance. 2017. General Electric Company: Summary. Retrieved April 7, 2017, from https://in.finance.yahoo.com/quote/GE?p=GE Yahoo Finance. 2017. General Electric Company: Valuation Measures. Retrieved April 7, 2017, from https://in.finance.yahoo.com/quote/GE/key-statistics?p=GE