Francis Bacons Classic Essay, Of Truth

Of Truth is the opening essay in the final edition of the philosopher, statesman and jurist  Francis Bacons Essays or Counsels, Civil and Moral (1625). In this essay, as associate professor of philosophy Svetozar Minkov points out, Bacon addresses the question of whether it is worse to lie to others or to oneself--to possess truth (and lie, when necessary, to others) or to think one possesses the truth but be mistaken and hence unintentionally convey falsehoods to both oneself and to others (Francis Bacons Inquiry Touching Human Nature, 2010). In Of Truth, Bacon argues that people have a natural inclination to lie to others: a natural though corrupt love, of the lie itself. Of Truth What is truth? said jesting Pilate, and would not stay for an answer. Certainly, there be that delight in giddiness, and count it a bondage to fix a belief, affecting free-will in thinking as well as in acting. And though the sects of philosophers of that kind be gone, yet there remain certain discoursing wits which are of the same veins, though there be not so much blood in them as was in those of the ancients. But it is not only the difficulty and labor which men take in finding out of truth, nor again that when it is found it imposeth upon mens thoughts, that doth bring lies in favor, but a natural though corrupt love of the lie itself. One of the later school of the Grecians examineth the matter, and is at a stand to think what should be in it, that men should love lies where neither they make for pleasure, as with poets, nor for advantage, as with the merchant; but for the lies sake. But I cannot tell: this same truth is a naked and open daylight that doth not show the masques a nd mummeries and triumphs of the world half so stately and daintily as candle-lights. Truth may perhaps come to the price of a pearl that showeth best by day; but it will not rise to the price of a diamond or carbuncle, that showeth best in varied lights. A mixture of a lie doth ever add pleasure. Doth any man doubt that if there were taken out of mens minds vain opinions, flattering hopes, false valuations, imaginations as one would, and the like, but it would leave the minds of a number of men poor shrunken things, full of melancholy and indisposition, and unpleasing to themselves? One of the fathers, in great severity, called poesy vinum daemonum [the wine of devils] because it filleth the imagination, and yet it is but with the shadow of a lie. But it is not the lie that passeth through the mind, but the lie that sinketh in and settleth in it that doth the hurt, such as we spake of before. But howsoever these things are thus in mens depraved judgments and affections, yet truth, which only doth judge itself, teacheth that the inquiry of truth, which is the love-making or wooing of it; the knowledge of truth, which is the presence of it; and the belief of truth, which is the enjoying of it, is the sovereign good of human nature. The first creature of God in the works of the days was the light of the sense; the last was the light of reason; and his Sabbath work ever since is the illumination of his spirit. First he breathed light upon the face of the matter, or chaos; then he breathed light into the face of man; and still he breatheth and inspireth light into the face of his chosen. The poet that beautified the sect that was otherwise inferior to the rest, saith yet excellently well, It is a pleasure to stand upon the shore, and to see ships tossed upon the sea; a pleasure to stand in the window of a castle, and to see a battle and the adventures thereof below; but no pleasure is comparable to the standing upon the vantage ground of truth (a hill not to be co mmanded, and where the air is always clear and serene), and to see the errors and wanderings and mists and tempests in the vale below*; so always that this prospect be with pity, and not with swelling or pride. Certainly it is heaven upon earth to have a mans mind move in charity, rest in providence, and turn upon the poles of truth. To pass from theological and philosophical truth to the truth of civil business: it will be acknowledged, even by those that practice it not, that clear and round dealing is the honor of mans nature, and that mixture of falsehood is like alloy in coin of gold and silver, which may make the metal work the better, but it embaseth it. For these winding and crooked courses are the goings of the serpent, which goeth basely upon the belly and not upon the feet. There is no vice that doth so cover a man with shame as to be found false and perfidious; and therefore Montaigne saith prettily, when he inquired the reason why the word of the lie should be such a disgrace and such an odious charge. Saith he, If it be well weighed, to say that a man lieth, is as much as to say that he is brave towards God, and a coward towards man. For a lie faces God, and shrinks from man. Surely the wickedness of falsehood and breach of faith cannot possibly be so highly expressed as in that it shall be the last peal to call the judgments of God upon the generations of men: it being foretold that when Christ cometh, He shall not find faith upon the earth. *Bacons paraphrase of the opening lines of Book II of On the Nature of Things by Roman poet Titus Lucretius Carus.

Essay on Conformity vs. Individuality in Schools - 886 Words

As a student, I am often troubled by the rigid routines of the school day, despite the fact that I am actually a very habitual person. The constant ringing of bells, lectures, bellwork, classwork, homework, each a daily practice throughout the school year. Although all of these components promote conformity, which will ultimately support the balance of school and societal norms, they also tend to threaten each student’s own unique characteristics. This then poses the question; to what degree should schools encourage conformity versus individuality? Certainly, a level of conformity is required to achieve a balanced society however, the overall structure of the school day and class, including the methods used to teach and mandatory classes,†¦show more content†¦This includes prohibitions against assault and theft or respect for leaders (Source G). Given that students are at an age where they are extremely moldable, it is imperative that they learn these rules in school. Looking at the actual amount of conformity present in schools, as opposed to the ideal amount, it seems that schools have moved past a healthy level to a point where students don’t often have to genuinely think for themselves. On a basic level, students don’t have to plan or use their judgment to ensure that they arrive to class on time. They become dependent on bells to tell them when they need to be in class and when they are late (Source B). On a more complex level, students rarely have to use their problem solving skills to come to their own conclusions. Learning in the classroom is typically centered around the memorization of facts and methods as opposed to critical thinking. Students are requested to learn the details and regurgitate them on test day, despite the fact that very little of it will be remembered later on. On the rare occasions when students are confronted by a critical thinking question, they often struggle as they have little practice in this a rea. If schools were to put more emphasis on individuality, where students could think freely and responsibly and contribute their own ideas, students would better themselves and societyShow MoreRelatedIndividuality vs. Conformity in High School Essay670 Words   |  3 PagesIt was the first day of school. I was eager to see most of my friends who I went to middle school with. There was one big thing that struck me; I noticed my friends changed. They started dressed differently, acted differently, changed their hair style, and even started wearing makeup. Since the transition fresh out of middle school and into high school, my friends wanted to look older. The biggest factor that bothered me was how they would conform to look like the sophomores, juniors, and seniorsRead MoreSchool Uniforms Should Not Get Them Bullied, It Depends On The Bully870 Words   |  4 Pagesonly way to be accepted is by conforming which is not what we should be pushing for. It’s important to attack the problem by the root. A lot of times the bully may be going through something in their life outside of school which is why they’re lashing out at others. If all the school systems do to fix bullying is make their students wear uniforms, then what will they do once the cliques start to form. At this age, the nature of a child is the same in or out of a uniform and will find any and everythingRead MoreWhy Should We Take Gym Class?1275 Words   |  6 Pagesconcerned parents have raised the issue of individuality vs. conformity, or letting students choose whether or not they want to take the class vs. forcing them to, pertaining to physical education. Conformity is the wise choice-- schools should make gym a mandatory class every year. Because physical education improves a student’s health, encourages teamwork, and boosts academic performance, the sacrifice of individualism is well worth it in the end. Schools must make students conform when it comesRead MorePersuasive Essay On School Uniforms1671 Words   |  7 Pages Hari Mainali South University School Uniform â€Æ' Abstract Freedom of dress is violated by restricting on school uniform. A school and university have their own dress code which does not require a particular dress. Some researcher and scholar suggest misbehavior in the student are the result of banning uniform. But misbehavior is what they acquired in their life. Banning uniform, student can exercise their right to express themselves freely. Student will be able to focus on education and saveRead MoreDifferences between Homeschooling and Public Education780 Words   |  3 PagesWrite a 1,050-to 1,250- word final draft of your compare-and-contrast essay. (Home school vs. public education). Introduction The differences between homeschooling and public education are huge but can be summarized along three lines: firstly, homeschooling is just that, where the parent or an employed governess teaches the child in a home, as compared to a, school setting. Secondly, the home setting employs its own voluntary rules and schedule of education teaching whatever the home educator desiresRead MoreSchool Uniforms Should Not Be A Requirement For School892 Words   |  4 PagesUniforms: Should they be a Requirement for School While in a perfect world many educators say that school uniforms are an asset but I have to say school uniforms are detrimental to the students. School uniforms are a financial hardship on low-income families, make students a target for bullying, infringe on a students’ freedom of expression rights and they teach students a negative lesson about conformity. Show the opposing side of mandatory school uniforms it will be shown that the uniformRead MoreLord Of The Flies, By William Golding And The Perks Of Being A Wallflower1087 Words   |  5 PagesPeace by John Knowles for my AP U.S. History class while I read The Catcher in the Rye by J.D. Salinger over the summer. A Separate Peace explores the rivalry that can lie at the heart of many friendships and conveys the concept of individuality rather than conformity. Similarly, The Catcher in the Rye is the story of a teenage boy who despises the phoniness of society and fears becoming just another phony adult. Both novels share similar characteristics including their utilization of literary devicesRead MoreBullying And Its Effect On Children1366 Words   |  6 Pagescausing this behavior. Primary school is an especially tough time for our young ones. If educators are really looking to put an end to bullying, they have to attack it from the root of the problem (Linder-Altman). What a chi ld is wearing will not get them bullied, it depends on the bully. Making uniforms mandatory in efforts to decrease bullying, only teaches our children that the only way to be accepted is by conforming which is not what we should be pushing for. It’s important to attack the problemRead MoreUniforms Should Not Wear School Uniforms1751 Words   |  8 PagesDuring every school year, the issue on if school officials should or should not entail students to wear uniforms in school is a constant debate among the parents and staff members in school districts. Just like any other controversial issues, there are two sides to the argument representing both the good and bad points that exist behind student being required to wear uniforms in school. Although it can take students time to adjust to transitioning into the policy of being required to wear uniformsRead MoreCurrently There Is A Growing Awareness Of The Prevalence1558 Words   |  7 Pagesregular bullying, whereas less than 10% of adolescents’ aged 17 report any bullying, including bullies and victimization of bullying, on a weekly basis. Baldry (2004) examined the effects of attitude toward bullying and victimization in Italian middle schools. Baldry (2004) aimed to establish young adolescents’ positive and negative judgments according to gender, toward a victim being bullied on the basis of if the victim was bullied in a group or alone; hypothesizing the gender of the bullies and victims

Marketing Mix of LG and SAMSUNG Free Essays

the student’s work and are not examples of our expert essay writers’ work. READ MORE Market segmentation and marketing mix of LG and SAMSUNG This Korean company, which was founded in 1958, combined other two Korean companies named Lucky and Goldstar. Therefore, LG was defined as the two companies, but currently, it means Lifes good. We will write a custom essay sample on Marketing Mix of LG and SAMSUNG or any similar topic only for you Order Now LG Electronics is one of the leaders and innovators of technology in the world, and it focuses on consumer electronics, mobile communications and home appliances (OPPapers, 2010). SAMSUNG Founded in 1938, SAMSUNG has become one of the largest electronics companies in the world. As the most popular electronics company among consumers in the world, Samsung owns a good reputation. Moreover, Samsung occupies more than 20% of total export in South Korea (Samsungish, 2010). Currently, the innovation and high quality of Samsung’s products are recognized by the whole world (SAMSUNG, 2010a). 1. 2 Theory 1. 2. 1 Market Segmentation Market segmentation means that businesses divide their markets into a few sections with similar features, so that they can target different groups of consumers and produce merchandise or service for them. Market segmentation is classified into four methods which are geography, demography, psychology and behaviors (Hall et al, 2008). Marketing mix Marketing mix is defined as â€Å"those elements of a firm’s marketing strategy which are designed to meet the needs of its customers†. There are four factors which are called 4Ps, and they are product, price, promotion, and place (Hall et al, 2008:75). Aims The objective of this report is to analyze the differences of the market segmentation and marketing mix of LG and SAMSUNG. Findings LG LG, a well-known brand around the world, is to sell TVs to rural areas in China (Articlesbase, 2010). Home appliances such as TVs, washing machines, and refrigerators are LG electronics’ major products (LG Electronics, 2010). In addition, LG is adept in using advertisements to attract shoppers (Pakistan Gulf Economist, 2005). SAMSUNG Similarly, Samsung sells its products in the world. It not only sells to cities but also rural areas. In order to privilege consumers, Samsung holds promotional events to attract shoppers. However, Samsung has some products which LG does not produce, such as PC peripherals, print solutions, and memory cards (SAMSUNG, 2010b). Discussion Market segmentation LG An obvious way of segmenting market is geography. LG Electronics sells its merchandise spread all over the world, especially well-known countries, for example, LG digital television in China. Yucheng Zheng (2010), the CEO of LG Electronics (China) Co. , Ltd. , reported that LG launched a project to promote digital television in rural area in China. LG targets at the rural market and provides digital TVs and home applicants for rural consumers. The emphasis of rural segment is â€Å"price competitiveness†. LG is going to reduce the price of its products so that it can develop well (Articlesbase, 2010). SAMSUNG Samsung focuses on rural area as well, for example, the Samsung color TV in rural area and urban area of China. This segment involves â€Å"mass market, low- and medium-end units to rural customers or high-end products to urban customers† (EssayForStudent, n. d). To deal with an extensive product line, a mass market capacitates Samsung to satisfy consumer needs. Because Samsung enters China market late, it faces challenges to be succeeded in mass market. Furthermore, the rural market, which is approximately 80% of the whole market, is aimed by Samsung via the â€Å"low-end units†. However, because of the previous businesses of â€Å"low-cost, low-end color TVs†, Samsung had to exploit a new â€Å"high-end TVs† in urban market. With the remarkable improvement of people’s living standard, the quantity of high-end TVs in urban market in China is increasing though the segment is not big (EssayForStudent, n. d). Marketing Mix LG Product LG pays attention to upper and upper middle classes and provides products for those consumers. High quality and good service of LG products are so progressive that products are output to developed countries (Pakistan ; Gulf Economist, 2005). LG Electronics (2010) in China shows that the products include TV audio video, mobile phones, home appliances, IT products, and air conditioning (LG Electronics, 2010). Price The pricing strategy of LG is â€Å"cost plus fixed mark up†. Following the pricing policy, LG’s formula is â€Å"import cost + reasonable gross profit†. The formula is used to cover the market cost and make profits in any market including China (Pakistan ; Gulf Economist, 2005). An LG’s cell phone called Lollipop cost RMB 2,000 in 2009, when it first appeared in China. Promotion One effective way of promotion is advertisement. As a famous brand, LG advertises its products to get promoted (Pakistan ; Gulf Economist, 2005). LG is accustomed to inviting famous stars to advertise its merchandise. For instance, Kim Tae-Hee, a famous actress, advertised for LG mobile phone and camera. Her advertisements attract young shoppers in China to buy relative merchandise. Place LG’s merchandise is sold throughout the world, especially developed regions. There are numbers of LG retailers in big cities including Guangzhou, Shanghai and Beijing. In addition, LG sells its products in home appliance interlink retail enterprises such as Suning and Gome in China. SAMSUNG Product As same as LG, Samsung also provides mobile devices, TV audio video and home appliances for Chinese shoppers. However, there are some products that LG lacks, such as camera camcorder, PC peripherals, print solutions, and memory cards (SAMSUNG, 2010b). Moreover, â€Å"focusing on the future of wireless communications, Samsung launched futuristic products such as the mobile hone watch, the PDA-phone, the digital camera cum mobile phone, the MP3 mobile phone and its latest model of 3G mobile phone† (123HelpMe, 2010). Price The price of Samsung products is similar with LG. For example, Samsung F480 Mobile Phone, which has â€Å"223 MB Memory, 5 Mega-Pixel Camera with 4 X Digital Zoom†, cost RMB 993-RMB 2,325. Another example, â€Å"Samsung UA40C7000 40â € ³ 3D LED TV, which is 40†³ Screen, Full HD, High Definition, Widescreen, HDMI, Internet, and 1920 x 1080 pixels†, cost RMB 9,320- RMB 15,656 (MyShopping, n. d. ). Promotion Samsung constantly holds sales promotional events. For example, recently, there is an event called â€Å"Samsung Smart TV Promotion† in HongKong. Customers can get a â€Å"FREE Samsung 1TB external Hard Drive and 3D Starter Gift Pack upon purchasing eligible model of 3D LEDTV and 3D LCD TV† from 16th October to 30th November (SAMSUNG, 2010c). The promotion is able to help Samsung expand its sales. Place Samsung sells its products by retailers and home appliance interlinks retail enterprises Suning and Gome as well as LG. Nevertheless, Samsung not only sells products in cities, but also in countryside. Samsung in China took part in a policy named â€Å"home appliances to rural areas† in 2009. This policy was to add profits to the masses that lived in rural areas. Samsung was one of the companies that help rural people improve their living standard. Conclusion In short, the report involves the background of the two competitive companies, theory of market segmentation and marketing mix and comparison between the two companies. Via discussing market segmentation and marketing mix of LG and Samsung, the superiorities of the two companies are obvious to be found. The general strength of Samsung is better than LG, so LG has to be enhanced. Recommendation According to the analyses above, LG is recommended to improve its promotional events so that there will be more consumers to purchase its merchandise. Furthermore, LG is supposed to expand the range of its products to different fields. However, Samsung should classify its segmentation more clearly. As a result, if the two companies reduce the price, the demand of their electronic products will increase. Read more: http://www. ukessays. com/essays/marketing/marketing-mix-of-lg-and-samsung-marketing-essay. php#ixzz2OTcQ9YYp How to cite Marketing Mix of LG and SAMSUNG, Essay examples

Criminology Theories And Delinquency Samples †MyAssignmenthelp.com

Question: Discuss about the Criminology Theories And Delinquency. Answer: Criminal justice theories Criminology theories provide an empirical insight into the factors that are important to explain crime and delinquency. The theory in focus in this paper is the labelling theory. This theory was among the first criminology theories to address both criminality aspect by an individual and the impact of societal reaction on criminal behaviours (Davies, Croall Tyrer, 2010). For a behavior or action to be considered a crime there must be laws in place. For example, during the prohibition era, it was illegal to associate yourself with anything that involves alcohol. This included possessing, manufacturing or distribution of alcohol. Individuals who possessed, manufactured or distributed alcohol were deemed to be criminals . Labelling theorists suggests that a complete picture of deviance or crime cannot be attained just examining the individuals committing the crime and their characteristics (Haugen Musser, 2009). It is common to think that when we refer to a theory in Criminology, it seeks to explain the causes of crime by exploring factors and actions of the individual who is considered guilty of this. Nothing is further from reality, the theory of labeling explains how the social reaction is that which labels someone as a criminal and not the criminal act itself. The labeling theory explains how the community classifies who is not a delinquent and who is a delinquent. Today the theory does not have the same prominence as in the years 1960s and 70s(Inciardi, 2010). This theory uses two concepts that are very interesting which relate to deviation , which are the reaction of the society and lkabelling as a delinquent. This are primary and secondary deviation. The society expresses displeasure on a criminal and puts a label on the person who commits it. The process by which a subject is labeled is simple, with one example is enough to understand how this works. The same theory states that we ar e conditioned by social reaction and act accordingly. Therefore, if society puts a certain label, it is most likely that we act in that way (Merino, 2013). Hypothesis Can the character of a person determine if they are criminals? Research design In research design, various strategies were used to integrate the components of the study in a logical and coherent way. A questionnaire was used to collect the data in which population demographics was used to make the research in relation to crime. The questionnaires had different questions that were based on having people to get the population design (Merino, 2013). Questionnaire General information Which se(gender) are you representing? .................................................. Number of years serving of the respondent. Are you gang affiliated? Yes ( ) ( ) Others-Specify Number of inner city Hispanics that are in criminal activities . Why are young men being involved in criminal activities? What is the percentage population that is being involved in crime? Why does youre department involve in criminal risk management? What duration are criminal offenders stay? Does your family have a crime history? Are you affiliated to any criminal gang in the country ? Hypothesis Test Based on the hypothesis in this study, the conclusion is that the character of a person can determine if someone is a criminal. The hypothesis above is factual, given that the character of a person is based on numerous environmental, social and ecponomic conditions upon which a person is raised. For juveniles growing in hoods, most of them end up in crime. This is due to many factors including the fact that peer influence and other factors are prime in moulding the character. Independent Variables The independent variable identified in this study ranged from the demographic changes, age , subject, religious background, role models, gang membership and heroes. It is seen in the questionnaire that the ages in which one is prone to crime is between the ages of 12- 25. Most of these men who are Hispanics and blacks are affiliated to various gangs. The gangs fight for control over drugs areas and other crimes like controlling prostitution money. They induct themselves in the gangs and start the criminal activities (Parker, 2015). They are also from various religions which includes, Christianity, Islamic religions and other dont profess any religion. The sample of subjects that the people choose from includes the incarceration sentence, counselling, pardon and other methods of dealing with crime (Merino, 2013). Although the questionnaires were the main way of identifying and collecting information. Others included; interviews, observations and telephone calls. Limitations to the study There are various limitations related to the study. The limitations include; Cost of doing the survey or the study Gang threats while conducting the study Lack of interest from the interviews Long working hours Illiteracy from the gang members some of whom were unable to fill the questionnaires appropriately References Davies, M., Croall, H., Tyrer, J. (2010).Criminal justice. New York: Pearson Longman. Haugen, D., Musser, S. (2009).Criminal justice. Detroit: Greenhaven Press. Inciardi, J. (2010).Criminal justice. Boston: McGraw-Hill Higher Education. Merino, N. (2013).Criminal Justice. Farmington Hills, MI: Greenhaven Press. Parker, B. (2015).Criminal Justice. Open Road Media Mystery Thriller.

 Epoca precolombina Essay Example

  Epoca precolombina Essay La coca trasciende desde la à ¯Ã‚ ¿Ã‚ ½poca precolombina hasta nuestros dà ¯Ã‚ ¿Ã‚ ½as. En los à ¯Ã‚ ¿Ã‚ ½ltimos tiempos se le ha dado un uso diferente al que tenà ¯Ã‚ ¿Ã‚ ½a en la antigà ¯Ã‚ ¿Ã‚ ½edad, sin embargo su cultivo es consiente ya desde la à ¯Ã‚ ¿Ã‚ ½poca precolombina. Durante la à ¯Ã‚ ¿Ã‚ ½poca de las grandes culturas andinas, la coca era cultivada de manera racional en las zonas del Cuzco, Pancartambo, Zongo, Cayapa, Totora. El arbusto se producà ¯Ã‚ ¿Ã‚ ½a por un sistema comunitario relacionando su cultivo con el control, un mà ¯Ã‚ ¿Ã‚ ½ximo de pasos ecolà ¯Ã‚ ¿Ã‚ ½gicos y mandando colonos de las zonas productoras, ya durante el imperio incaico como un cultivo de tipo estatal1 Podemos apreciar la importancia que la coca tuvo en las à ¯Ã‚ ¿Ã‚ ½pocas pasadas. 2.1.2 Epoca de la Colonia We will write a custom essay sample on   Epoca precolombina specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on   Epoca precolombina specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on   Epoca precolombina specifically for you FOR ONLY $16.38 $13.9/page Hire Writer La à ¯Ã‚ ¿Ã‚ ½poca de la colonia fue la precursora para la importancia que la coca adquiere en la actualidad como parte de la tradicià ¯Ã‚ ¿Ã‚ ½n. Durante la à ¯Ã‚ ¿Ã‚ ½poca de la colonia, el uso de la coca mediante la masticacià ¯Ã‚ ¿Ã‚ ½n llamado acullico se expandià ¯Ã‚ ¿Ã‚ ½ rà ¯Ã‚ ¿Ã‚ ½pidamente. La sobrexplotacià ¯Ã‚ ¿Ã‚ ½n de la mano de la mano indà ¯Ã‚ ¿Ã‚ ½gena las encomiendas, en los obrajes y especialmente en la mita de las minas hizo de la coca un alimento fundamental en la dieta de los indà ¯Ã‚ ¿Ã‚ ½genas. La coca por sus caracterà ¯Ã‚ ¿Ã‚ ½sticas de uso, tamaà ¯Ã‚ ¿Ã‚ ½o y conservacià ¯Ã‚ ¿Ã‚ ½n permità ¯Ã‚ ¿Ã‚ ½a ser utilizada en largas y agotadoras jornadas al interior de las minas, provee proteà ¯Ã‚ ¿Ã‚ ½nas, vitaminas, quitaba el sueà ¯Ã‚ ¿Ã‚ ½o y era un antifatigante2 El acullico en la actualidad es sobre todo practicado en el à ¯Ã‚ ¿Ã‚ ½rea rural pero ha sido incorporada en el area urbana 2.1.3 La coca en la republica. El valor de la coca se hace notable en el periodo de la Repà ¯Ã‚ ¿Ã‚ ½blica, por esto se acentà ¯Ã‚ ¿Ã‚ ½an el numero de haciendas pertenecientes a un solo propietario. De cierta manera es en el periodo de la Repà ¯Ã‚ ¿Ã‚ ½blica, donde se empieza a conocer la coca con un valor econà ¯Ã‚ ¿Ã‚ ½mico y no como hasta entonces habà ¯Ã‚ ¿Ã‚ ½a sido conocida, incrementando de esta manera la importancia que se le da en la actualidad, e iniciando los cultivos con fines lucrativos. Ya por 1928 se acentà ¯Ã‚ ¿Ã‚ ½a en el sector rural un proceso de concentracià ¯Ã‚ ¿Ã‚ ½n de la tierra, es decir, la formacià ¯Ã‚ ¿Ã‚ ½n de varias haciendas pertenecientes a un solo propietario. Paradà ¯Ã‚ ¿Ã‚ ½jicamente, eran propietarios aquellos que en 1895 no tenà ¯Ã‚ ¿Ã‚ ½an ni una sola hacienda. Este es el caso, de Josà ¯Ã‚ ¿Ã‚ ½ Marà ¯Ã‚ ¿Ã‚ ½a Gamarra, que en 1825 no poseà ¯Ã‚ ¿Ã‚ ½a haciendas y que en 1928 era propietario del 25% de las haciendas de coca en coripata llegando a poseer el 32% en 1952 3 El interà ¯Ã‚ ¿Ã‚ ½s por el cultivo de la hoja de coca en haciendas se incrementà ¯Ã‚ ¿Ã‚ ½ en gran porcentaje durante la à ¯Ã‚ ¿Ã‚ ½poca de la Repà ¯Ã‚ ¿Ã‚ ½blica, sobre todo por los terratenientes, este incremento se dio notablemente entre los feudales, Sin embargo esto dio lugar a que muchos indà ¯Ã‚ ¿Ã‚ ½genas se quedaran sin tierras, las cuales pasaban a manos de los seà ¯Ã‚ ¿Ã‚ ½ores feudales, quienes se convertà ¯Ã‚ ¿Ã‚ ½an en terratenientes, para los cuales trabajaban los indà ¯Ã‚ ¿Ã‚ ½genas. En 1871 el gobierno de Melgarejo, dictà ¯Ã‚ ¿Ã‚ ½ la Ley de Exvinculacià ¯Ã‚ ¿Ã‚ ½n que permità ¯Ã‚ ¿Ã‚ ½a la venta de tierras de las comunidades. En realidad esto fue un mecanismo para expropiar la tierra a los indà ¯Ã‚ ¿Ã‚ ½genas y concentrarla en manos de la clase terrateniente propietaria de grandes haciendas4 L a Ley de Exvinculacià ¯Ã‚ ¿Ã‚ ½n, fue el inicio a lo que posteriormente serà ¯Ã‚ ¿Ã‚ ½a parte de la revolucià ¯Ã‚ ¿Ã‚ ½n de 1952, lo que no ingresa en este tema, pero vale la pena mencionar, pues si bien en la à ¯Ã‚ ¿Ã‚ ½poca de la Republica, genero ingresos para el gobierno, fue ademà ¯Ã‚ ¿Ã‚ ½s causa de un hecho histà ¯Ã‚ ¿Ã‚ ½rico para Bolivia. 2.1.4 Consumo y uso de la hoja de coca hasta el aà ¯Ã‚ ¿Ã‚ ½o 1994. A continuacià ¯Ã‚ ¿Ã‚ ½n podremos observar un resumen del consumo y produccià ¯Ã‚ ¿Ã‚ ½n de la hoja de coca, demanda que satisfacà ¯Ã‚ ¿Ã‚ ½a a los masticadores, por lo que podemos decir que era un consumo y produccià ¯Ã‚ ¿Ã‚ ½n dentro de lo que seà ¯Ã‚ ¿Ã‚ ½ala el autor, legal. Los denominados masticadores, consumen una demanda de 12mil TM de coca cada aà ¯Ã‚ ¿Ã‚ ½o, estudio efectuado en 1981 en siete departamentos de nuestro paà ¯Ã‚ ¿Ã‚ ½s con excepcià ¯Ã‚ ¿Ã‚ ½n de Pando y Beni. Hasta 1992 se aprecia un lento crecimiento, donde existà ¯Ã‚ ¿Ã‚ ½a un volumen de 200mil tambores promedio por aà ¯Ã‚ ¿Ã‚ ½o Otra evaluacià ¯Ã‚ ¿Ã‚ ½n efectuada en el aà ¯Ã‚ ¿Ã‚ ½o 1993, seà ¯Ã‚ ¿Ã‚ ½ala que en el à ¯Ã‚ ¿Ã‚ ½rea de los yungas existà ¯Ã‚ ¿Ã‚ ½an un total de 12mil hectà ¯Ã‚ ¿Ã‚ ½reas destinadas al cultivo de coca, produciendo asà ¯Ã‚ ¿Ã‚ ½ 12mil TM de hoja de coca Otra observacià ¯Ã‚ ¿Ã‚ ½n seà ¯Ã‚ ¿Ã‚ ½ala que un aà ¯Ã‚ ¿Ã‚ ½o despuà ¯Ã‚ ¿Ã‚ ½s, el mercado legal de Villa Fà ¯Ã‚ ¿Ã‚ ½tima comercializà ¯Ã‚ ¿Ã‚ ½ un volumen de 135251 tambores, esta produccià ¯Ã‚ ¿Ã‚ ½n cae para los meses de agosto, septiembre, octubre5. Podemos mencionar que el cultivo promedio durante estos aà ¯Ã‚ ¿Ã‚ ½os fue de 12mil hectà ¯Ã‚ ¿Ã‚ ½reas, lo que producirà ¯Ã‚ ¿Ã‚ ½a 12mil TM de coca, alcanzando a una produccià ¯Ã‚ ¿Ã‚ ½n anual de 200mil tambores de coca legal, tomando en cuenta que un tambor contiene 50 libras, la produccià ¯Ã‚ ¿Ã‚ ½n tendrà ¯Ã‚ ¿Ã‚ ½amos10 millones de libras anuales hasta 1994. 2.2 La transformacià ¯Ã‚ ¿Ã‚ ½n de coca en cocaà ¯Ã‚ ¿Ã‚ ½na Fue el laboratorista italiano Enrique Pizzi dueà ¯Ã‚ ¿Ã‚ ½o de la Botica y droguerà ¯Ã‚ ¿Ã‚ ½a boliviana, quien procesà ¯Ã‚ ¿Ã‚ ½ cocaà ¯Ã‚ ¿Ã‚ ½na en 1857, informacià ¯Ã‚ ¿Ã‚ ½n que logra una mayor precisià ¯Ã‚ ¿Ã‚ ½n en el tema coca- cocaà ¯Ã‚ ¿Ã‚ ½na, pues en la à ¯Ã‚ ¿Ã‚ ½ptica que la prohà ¯Ã‚ ¿Ã‚ ½be se ha condenado el uso tradicional pues se la enmarca en la lista de sustancias controladas por las Naciones Unidas, dà ¯Ã‚ ¿Ã‚ ½ndole un carà ¯Ã‚ ¿Ã‚ ½cter virtual de droga. En realidad, el à ¯Ã‚ ¿Ã‚ ½aislamientoà ¯Ã‚ ¿Ã‚ ½ del alcaloide de una planta, de la manera como sucede dentro de un laboratorio cientà ¯Ã‚ ¿Ã‚ ½fico, esta mucho mà ¯Ã‚ ¿Ã‚ ½s cerca de la creacià ¯Ã‚ ¿Ã‚ ½n que del descubrimiento. Dentro de una planta el principio activo existe naturalmente integrado con otros elementos de los que hay que, efectivamente, aislar mediante tà ¯Ã‚ ¿Ã‚ ½cnicas artificiales. El producto aislado que hasta entonces no existà ¯Ã‚ ¿Ã‚ ½a de forma libre en el universo, es en esencia una fabricacià ¯Ã‚ ¿Ã‚ ½n y entonces, serà ¯Ã‚ ¿Ã‚ ½a mà ¯Ã‚ ¿Ã‚ ½s apropiado hablar de Pizzi y/o Niegan(en este punto da lo mismo) ya no como descubridores ni creadores sino como los fabricantes, los primeros, de la cocaà ¯Ã‚ ¿Ã‚ ½na.6 Este pensamiento puede ser acusado de no estudiar la relacià ¯Ã‚ ¿Ã‚ ½n coca cocaà ¯Ã‚ ¿Ã‚ ½na en un contexto cultural, pues el alcaloide obtenido a partir de la coca, puede producir efectos indeseables dentro este contexto, es asà ¯Ã‚ ¿Ã‚ ½ que no es extraà ¯Ã‚ ¿Ã‚ ½o escuchar que en la proposicià ¯Ã‚ ¿Ã‚ ½n que seà ¯Ã‚ ¿Ã‚ ½ala que la coca al poseer este alcaloide, sea considerada droga, pensamiento que es propio de las Naciones unidas. 2.2.1 Primeros usos de la cocaà ¯Ã‚ ¿Ã‚ ½na. Despuà ¯Ã‚ ¿Ã‚ ½s de ensalzar las propiedades curativas de la cocaà ¯Ã‚ ¿Ã‚ ½na y descubrir que era remedio contra la dependencia de la morfina, heroà ¯Ã‚ ¿Ã‚ ½na y alcohol, se descubrià ¯Ã‚ ¿Ã‚ ½ que su no-regulacià ¯Ã‚ ¿Ã‚ ½n habà ¯Ã‚ ¿Ã‚ ½a sido causa de una nueva adiccià ¯Ã‚ ¿Ã‚ ½n, trayendo consecuencias econà ¯Ã‚ ¿Ã‚ ½micas, sociales y geopolà ¯Ã‚ ¿Ã‚ ½ticas. El mismo mundo cientà ¯Ã‚ ¿Ã‚ ½fico que ensalzà ¯Ã‚ ¿Ã‚ ½ la cocaà ¯Ã‚ ¿Ã‚ ½na, poco a poco, fue descubriendo que el uso desmesurado del alcaloide podrà ¯Ã‚ ¿Ã‚ ½a producir ciertos efectos indeseables y ante esa evidencia, una injustificable pirueta conceptual.7 Los primeros usos de la cocina fueron como ya mencionamos para contrarrestar otras drogas, se convirtià ¯Ã‚ ¿Ã‚ ½ a este alcaloide en una droga maravillosa, sin estigma moral, ni regulaciones, comenzando de esta manera su exportacià ¯Ã‚ ¿Ã‚ ½n desde el Perà ¯Ã‚ ¿Ã‚ ½ a diferentes lugares como ser Europa y Estados Unidos, sin embargo su mayor exportador fue Java (colonia Holandesa. Ya en 1885 la casa de Merck de Alemania empleaba como insumo la hoja de coca para la elaboracià ¯Ã‚ ¿Ã‚ ½n de tableta, elixires, jarabes. Al igual que su competidora la Parke Davis que incluso introdujo al mercado cigarrillos de la hoja de coca. Publicando incluso una monografà ¯Ã‚ ¿Ã‚ ½a dirigida a los mà ¯Ã‚ ¿Ã‚ ½dicos sobre sus virtudes. Ya en esta à ¯Ã‚ ¿Ã‚ ½poca se extiende el uso de la cocaà ¯Ã‚ ¿Ã‚ ½na como anestà ¯Ã‚ ¿Ã‚ ½sico. ,,,Siguiendo la evolucià ¯Ã‚ ¿Ã‚ ½n cronolà ¯Ã‚ ¿Ã‚ ½gica de los usos de la hoja de coca, ya en 1886 un farmacà ¯Ã‚ ¿Ã‚ ½utico de Georgia, John Styth Pemberton, producà ¯Ã‚ ¿Ã‚ ½a un jarabe que contenà ¯Ã‚ ¿Ã‚ ½a cocaà ¯Ã‚ ¿Ã‚ ½na, cafeà ¯Ã‚ ¿Ã‚ ½na y extracto de nuez de cola mezclado con agua y gas carbà ¯Ã‚ ¿Ã‚ ½nico: la historia presenciaba el nacimiento de la Coca Cola, que en poco tiempo se convertirà ¯Ã‚ ¿Ã‚ ½a en una poderosa multinacional(.) En un principio la cocaà ¯Ã‚ ¿Ã‚ ½na era elemento fundamental de la fà ¯Ã‚ ¿Ã‚ ½rmula de la Coca cola; asà ¯Ã‚ ¿Ã‚ ½, la chispa de la vida hacà ¯Ã‚ ¿Ã‚ ½a desde entonces referencia a esa misteriosa cualidad antidepresiva que aà ¯Ã‚ ¿Ã‚ ½n se mantiene. A partir de 1921 se informa que la cocaà ¯Ã‚ ¿Ã‚ ½na habrà ¯Ã‚ ¿Ã‚ ½a sido remplazada por cafeà ¯Ã‚ ¿Ã‚ ½na, manteniendo sin embargo como elemento sustitutivo un extracto de coca saporizanteà ¯Ã‚ ¿Ã‚ ½8 El consumo de esta nueva droga se mantiene a pesar de la prohibicià ¯Ã‚ ¿Ã‚ ½n pero en 1930 cae, no por la ya mencionada prohibicià ¯Ã‚ ¿Ã‚ ½n sino por investigaciones farmacolà ¯Ã‚ ¿Ã‚ ½gicas y por el reemplazo delas anfetaminas, droga con menor precio econà ¯Ã‚ ¿Ã‚ ½mico y que reunà ¯Ã‚ ¿Ã‚ ½a otras ventajas. Podemos notar que el consumo de este alcaloide fue popularizado, incluso se la introdujo en el mercado de una manera libre, y con gran marketing, al mismo tiempo podemos apreciar que al conocer su otra clara fue prohibida, por lo tanto prohibiendo asà ¯Ã‚ ¿Ã‚ ½ la produccià ¯Ã‚ ¿Ã‚ ½n de su materia prima la hoja de coca. 2.2.2 El boom de la demanda de la cocaà ¯Ã‚ ¿Ã‚ ½na. El nacimiento del siglo XX, los avances tecnolà ¯Ã‚ ¿Ã‚ ½gicos, los conflictos sociales, culturales, trajeron consigo el consumo creciente de estupefacientes, los problemas de una sociedad altamente competitiva se expresaron en el incontrolado uso de estimulantes y antidepresivos. Podrà ¯Ã‚ ¿Ã‚ ½a identificarse la finalizacià ¯Ã‚ ¿Ã‚ ½n de la dà ¯Ã‚ ¿Ã‚ ½cada de los 60 con el Inicio del boom de la cocaà ¯Ã‚ ¿Ã‚ ½na, con sus consecuencias perversas, tanto para los paà ¯Ã‚ ¿Ã‚ ½ses productores como consumidores.9 Tres factores ayudan a explicar el vivo interà ¯Ã‚ ¿Ã‚ ½s que empieza a producir el mercado norteamericano por el uso de la coca como remplazante de la marihuana. Podrà ¯Ã‚ ¿Ã‚ ½amos decir que esta droga logro introducirse en el mercado, debido a que las fuerzas represorias iban concentradas en la lucha contra la marihuana y la LDS. el primer factor, es cierta negligencia de las fuerzas represivas, que desde 1965 concretan sus esfuerzos en combatir la circulacià ¯Ã‚ ¿Ã‚ ½n del cà ¯Ã‚ ¿Ã‚ ½Ãƒ ¯Ã‚ ¿Ã‚ ½amo y LSD, lo que permite el ingreso de toneladas de cocaà ¯Ã‚ ¿Ã‚ ½na a precios no prohibitivos.10 Obviamente al estar la mayor parte de las fuerzas represarà ¯Ã‚ ¿Ã‚ ½as concentradas en las drogas ya mencionadas, fue fà ¯Ã‚ ¿Ã‚ ½cil la introduccià ¯Ã‚ ¿Ã‚ ½n de la cocaà ¯Ã‚ ¿Ã‚ ½na, y mà ¯Ã‚ ¿Ã‚ ½s aà ¯Ã‚ ¿Ã‚ ½n lograr que tornase a ser una de las drogas mà ¯Ã‚ ¿Ã‚ ½s consumidas. Existe tambià ¯Ã‚ ¿Ã‚ ½n un segundo factor en el cual se menciona la estructura de las mafias que organizan el manejo o narcotrà ¯Ã‚ ¿Ã‚ ½fico de las drogas. El segundo factor se relacionarà ¯Ã‚ ¿Ã‚ ½a con la estructuracià ¯Ã‚ ¿Ã‚ ½n de las mafias, en principio formadas por los cubanos anti castristas. Y posteriormente por la participacià ¯Ã‚ ¿Ã‚ ½n de los servicios secretos en diferentes tipos de operaciones. Este relacionamiento oscuro del trà ¯Ã‚ ¿Ã‚ ½fico de drogas con servicios de inteligencia, es tambià ¯Ã‚ ¿Ã‚ ½n confirmado por el testimonio del ex agente de la DEA Michael Levine*.11 Podemos mencionar que a partir de esta estructuracià ¯Ã‚ ¿Ã‚ ½n se organizà ¯Ã‚ ¿Ã‚ ½ lo que hoy por hoy conocemos como narcotrà ¯Ã‚ ¿Ã‚ ½fico, logrando crear una cadena interminable y en algunos casos identificables, con estructuras internas que trabajan cuidadosamente cuyo objetivo es el factor econà ¯Ã‚ ¿Ã‚ ½mico que emana a partir del narcotrà ¯Ã‚ ¿Ã‚ ½fico, burlando en ocasiones varias, las fuerzas anti narcotrà ¯Ã‚ ¿Ã‚ ½fico. Podemos mencionar como tercer factor abarca el nacimiento de la cocaà ¯Ã‚ ¿Ã‚ ½na y la filosofà ¯Ã‚ ¿Ã‚ ½a de la sociedad que la consume. el tercer factor mà ¯Ã‚ ¿Ã‚ ½s genà ¯Ã‚ ¿Ã‚ ½rico, se vincula con una erosià ¯Ã‚ ¿Ã‚ ½n de valores autoritarios, derivado de una filosofà ¯Ã‚ ¿Ã‚ ½a de la sociedad del bienestar. A diferencia de la sociedad consumidora de marihuana -constituida por gente disconforme con las pautas del consumo en masa- la cocaà ¯Ã‚ ¿Ã‚ ½na desde su nacimiento constituyà ¯Ã‚ ¿Ã‚ ½ un producto de consumo en masas.12 Podemos decir que al ser la cocaà ¯Ã‚ ¿Ã‚ ½na una droga que fue aceptada libremente por la sociedad basà ¯Ã‚ ¿Ã‚ ½ndose en sus poderes medicinales curativos, se constituyo en un producto de consumo en masas, por lo que despuà ¯Ã‚ ¿Ã‚ ½s al ser prohibido por sus efectos bilaterales, ya era conocido y constaba de muchas personas adictas a à ¯Ã‚ ¿Ã‚ ½l, ademà ¯Ã‚ ¿Ã‚ ½s, podemos mencionar como causas de las cuales emana este tercer factor, los dos factores anteriormente mencionados. A finales de los aà ¯Ã‚ ¿Ã‚ ½os 80 aparecià ¯Ã‚ ¿Ã‚ ½ en el mercado una nueva droga, llamada crack, droga que por su composicià ¯Ã‚ ¿Ã‚ ½n dentro de la cual destacaba como elemento la cocaà ¯Ã‚ ¿Ã‚ ½na y efectos de la misma logra mayor adiccià ¯Ã‚ ¿Ã‚ ½n. La situacià ¯Ã‚ ¿Ã‚ ½n se agravo () debido al consumo del crack, una especie de pasta de cocaà ¯Ã‚ ¿Ã‚ ½na elaborada quà ¯Ã‚ ¿Ã‚ ½micamente mezclando la cocaà ¯Ã‚ ¿Ã‚ ½na con bicarbonato de sodio y producià ¯Ã‚ ¿Ã‚ ½ndola mediante fusià ¯Ã‚ ¿Ã‚ ½n. Esta nueva droga ganà ¯Ã‚ ¿Ã‚ ½ rà ¯Ã‚ ¿Ã‚ ½pidamente adeptos gracias a su menor precio, siendo ademà ¯Ã‚ ¿Ã‚ ½s mucho mà ¯Ã‚ ¿Ã‚ ½s adictiva que la cocaà ¯Ã‚ ¿Ã‚ ½na y produciendo severos daà ¯Ã‚ ¿Ã‚ ½os al organismo en el corto plazo.13 Por esto entre los aà ¯Ã‚ ¿Ã‚ ½os 90- 92 se aprecia una disminucià ¯Ã‚ ¿Ã‚ ½n en el consumo de cocaà ¯Ã‚ ¿Ã‚ ½na, sin embargo el aà ¯Ã‚ ¿Ã‚ ½o siguiente, las estadà ¯Ã‚ ¿Ã‚ ½sticas de consumo de este alcaloide, se incrementaron, siendo parte de este incremento los adolescentes, quienes cambiaron su actitud ante el consumo, la juventud ha perdido el temor o simplemente es indiferente ante el peligro que implica el consumo de drogas( revistaThe Christian Science Monitor, febrero de 1994). 2.2.3 El aumento de la oferta de cocaà ¯Ã‚ ¿Ã‚ ½na Como ya vimos en las dà ¯Ã‚ ¿Ã‚ ½cadas de los 80 y 90, la produccià ¯Ã‚ ¿Ã‚ ½n de coca y cocaà ¯Ã‚ ¿Ã‚ ½na tuvo un incremento, sobre todo en paà ¯Ã‚ ¿Ã‚ ½ses como Colombia, Perà ¯Ã‚ ¿Ã‚ ½, y Bolivia. en Perà ¯Ã‚ ¿Ã‚ ½, la produccià ¯Ã‚ ¿Ã‚ ½n de coca ha pasado de 30000Has. En 1980 a 130000 Has. en 1992. En Colombia a cerca de 50000 Has.; sin embargo es el mayor procesador de cocaà ¯Ã‚ ¿Ã‚ ½na utilizando como insumo la pasta base que se produce en Bolivia y Perà ¯Ã‚ ¿Ã‚ ½. En Bolivia , la produccià ¯Ã‚ ¿Ã‚ ½n a pasado de 12000 Has. a 47000Has. en 1993. En 1987 llegà ¯Ã‚ ¿Ã‚ ½ hasta su techo, con un à ¯Ã‚ ¿Ã‚ ½rea mayor, pero como producto de la polà ¯Ã‚ ¿Ã‚ ½tica de erradicacià ¯Ã‚ ¿Ã‚ ½n de cocales la produccià ¯Ã‚ ¿Ã‚ ½n ha descendido notablemente En el caso de Bolivia,(), una produccià ¯Ã‚ ¿Ã‚ ½n excedentaria de 70000 T. De hoja de coca podrà ¯Ã‚ ¿Ã‚ ½a derivar en la fabricacià ¯Ã‚ ¿Ã‚ ½n de 791 toneladas de pasta, lo que a la vez permitirà ¯Ã‚ ¿Ã‚ ½a la fabricacià ¯Ã‚ ¿Ã‚ ½n de 253 toneladas de pasta base y finalmente la refinacià ¯Ã‚ ¿Ã‚ ½n de93 toneladas de clorhidrato de cocaà ¯Ã‚ ¿Ã‚ ½na.14 La produccià ¯Ã‚ ¿Ã‚ ½n de la hoja de coca y de su derivado, la cocaà ¯Ã‚ ¿Ã‚ ½na, se ha incrementado notablemente, lo que llegarà ¯Ã‚ ¿Ã‚ ½a a ser incongruente, pues se ha prohibido su produccià ¯Ã‚ ¿Ã‚ ½n debido al alcaloide que produce la ya mencionada droga. Los ingresos del circuito mencionado anteriormente en la cita bibliogrà ¯Ã‚ ¿Ã‚ ½fica describe citas astronà ¯Ã‚ ¿Ã‚ ½micas, beneficià ¯Ã‚ ¿Ã‚ ½ndose con la demanda y oferta ya sea de la pasta, como de la pasta base o del clorhidrato de cocaà ¯Ã‚ ¿Ã‚ ½na, los que se sumergen en este mundo. los que se benefician sustancialmente del aumento de la demanda y consiguientemente de la oferta son los nà ¯Ã‚ ¿Ã‚ ½cleos de empresarios, llamados Carteles que ademà ¯Ã‚ ¿Ã‚ ½s generan violencia y corrompen las estructuras jurà ¯Ã‚ ¿Ã‚ ½dicas, policiales, y polà ¯Ã‚ ¿Ã‚ ½ticas de los Estados.15 Podemos ademà ¯Ã‚ ¿Ã‚ ½s seà ¯Ã‚ ¿Ã‚ ½alar que al generar , el narcotrà ¯Ã‚ ¿Ã‚ ½fico, una destructuracià ¯Ã‚ ¿Ã‚ ½n de los Estados y beneficiando a Nà ¯Ã‚ ¿Ã‚ ½cleos empresariales privados, haciendo a los paà ¯Ã‚ ¿Ã‚ ½ses en general mà ¯Ã‚ ¿Ã‚ ½s pobres, hay una institucià ¯Ã‚ ¿Ã‚ ½n que se beneficia indirectamente o directamente del trafico de drogas, nos referimos a los bancos, debido a que del flujo monetario derivado del narcotrà ¯Ã‚ ¿Ã‚ ½fico, una parte mà ¯Ã‚ ¿Ã‚ ½nima se queda en los paà ¯Ã‚ ¿Ã‚ ½ses productores y la parte mayor del mismo, circula entre los paà ¯Ã‚ ¿Ã‚ ½ses consumidores. 2.3 La economà ¯Ã‚ ¿Ã‚ ½a de la hoja de coca y sus derivados en Bolivia. A fines de los aà ¯Ã‚ ¿Ã‚ ½os 70, Bolivia ingresà ¯Ã‚ ¿Ã‚ ½ en una profunda crisis estructural que reflejaba el agotamiento del modelo capitalista, anclà ¯Ã‚ ¿Ã‚ ½ndose en una produccià ¯Ã‚ ¿Ã‚ ½n minera y agraria tradicional. En 1985, gracias a la Nueva Polà ¯Ã‚ ¿Ã‚ ½tica Econà ¯Ã‚ ¿Ã‚ ½mica,(FMI), se logrà ¯Ã‚ ¿Ã‚ ½ controlar la inflacià ¯Ã‚ ¿Ã‚ ½n. Sin embargo hubo ausencia de inversiones por lo que no se dinamizà ¯Ã‚ ¿Ã‚ ½ la economà ¯Ã‚ ¿Ã‚ ½a logrando asà ¯Ã‚ ¿Ã‚ ½ un incremento en la pobreza de grandes sectores de la poblacià ¯Ã‚ ¿Ã‚ ½n. 2.3.1 Estructura agraria. Como sabemos el territorio boliviano presenta tres à ¯Ã‚ ¿Ã‚ ½reas predefinidas: Altiplano, Valles y Trà ¯Ã‚ ¿Ã‚ ½pico. Del total del territorio nacional, menos del 3% esta destinado a actividades agrà ¯Ã‚ ¿Ã‚ ½colas; el 51 esta ocupado con bosques y alrededor del 33% es de pastos y arbustos; solo una fraccià ¯Ã‚ ¿Ã‚ ½n de esta à ¯Ã‚ ¿Ã‚ ½ltima parte es apta para el desarrollo de actividades pecuarias y puede ser destinada a incrementar la frontera agrà ¯Ã‚ ¿Ã‚ ½cola y el desarrollo de la ganaderà ¯Ã‚ ¿Ã‚ ½a.16 A partir de la revolucià ¯Ã‚ ¿Ã‚ ½n de 1952 y la Reforma Agraria, se logro que los indà ¯Ã‚ ¿Ã‚ ½genas tuviesen sus propias tierras, con lo que el incremento de la agricultura fue notable, sin embargo, podemos percibir que nuestro territorio a pesar de ser rico para la explotacià ¯Ã‚ ¿Ã‚ ½n agrà ¯Ã‚ ¿Ã‚ ½cola, es poco aprovechado. Otro fenà ¯Ã‚ ¿Ã‚ ½meno observado en la agricultura es la estructura dual que se presenta en el mismo, pues esta se divide, en la agricultura tradicional y en la moderna, distinguià ¯Ã‚ ¿Ã‚ ½ndose una de la otra de la siguiente manera: La agricultura tradicional se caracteriza por tener como unidad de produccià ¯Ã‚ ¿Ã‚ ½n el minifundio, con formas de produccià ¯Ã‚ ¿Ã‚ ½n atrasadas en las que predomina el arado a traccià ¯Ã‚ ¿Ã‚ ½n animal, no tiene acceso al crà ¯Ã‚ ¿Ã‚ ½dito formal, su produccià ¯Ã‚ ¿Ã‚ ½n se destina bà ¯Ã‚ ¿Ã‚ ½sicamente al mercado interno y al autoconsumo. La agricultura moderna, predominante en la parte oriental, se caracteriza por poseer grandes extensiones de tierra, usar nuevas tecnologà ¯Ã‚ ¿Ã‚ ½as, tener acceso al crà ¯Ã‚ ¿Ã‚ ½dito formal, y destinar su produccià ¯Ã‚ ¿Ã‚ ½n principalmente a la exportacià ¯Ã‚ ¿Ã‚ ½n y a la agroindustria nacional17. Podemos mencionar que la principal limitacià ¯Ã‚ ¿Ã‚ ½n de nuestra actividad agrà ¯Ã‚ ¿Ã‚ ½cola es la de la agroindustria, y la divisià ¯Ã‚ ¿Ã‚ ½n de una estructura en dos partes extremas y desequilibradas.

Free Essays on Poverty And Middleclass

Budgets It is amazing how a few thousand dollars can make such a huge difference in people’s lives. Looking at both budget sheets you can easily tell the difference in lifestyle between the two. It was very hard figuring out a budget sheet for the Blue Family because cuts had to be made in important parts of the budget sheet that people need, like personal things. On the other hand the Whites budget sheet was very easy to fill out. They had plenty of income and you could make their living very comfortable. The Whites budget sheet was very easy to look over and make suggestions for. Do to the income the whites bring in, they live most comfortably. They are the type of family that has no worries by the end of the month because the have plenty of money saved away for emergencies. You can make an assumption that the white’s house hold is very laid back and happy. For the most part when families don’t have to deal with the stress of not having enough money they are usually a happier family. When families have to dill with financial problems they usually have a lot of problems like Divorces, fights, children selling drugs, and bankruptcy. â€Å" One out of four children in the United States (23%) are being raised in single parent families due to financial problems† (Institute for Children and Poverty). The Blue family is looking at an up hill battle with their budget. Their financial situation is not a good on. With the amount of income the blue family brings in they are not living comfortably. A lot of the thing this family will have to go without. But what is most important unlike the White family the Blue families’ children will have to go without a lot of thing children should receive. They will not be able to go shopping and by name brand cloths. Also they won’t be able to go to the movies or by magazines. This is going to cause problems for them socially when they go to school or out in public. With the amount of ... Free Essays on Poverty And Middleclass Free Essays on Poverty And Middleclass Budgets It is amazing how a few thousand dollars can make such a huge difference in people’s lives. Looking at both budget sheets you can easily tell the difference in lifestyle between the two. It was very hard figuring out a budget sheet for the Blue Family because cuts had to be made in important parts of the budget sheet that people need, like personal things. On the other hand the Whites budget sheet was very easy to fill out. They had plenty of income and you could make their living very comfortable. The Whites budget sheet was very easy to look over and make suggestions for. Do to the income the whites bring in, they live most comfortably. They are the type of family that has no worries by the end of the month because the have plenty of money saved away for emergencies. You can make an assumption that the white’s house hold is very laid back and happy. For the most part when families don’t have to deal with the stress of not having enough money they are usually a happier family. When families have to dill with financial problems they usually have a lot of problems like Divorces, fights, children selling drugs, and bankruptcy. â€Å" One out of four children in the United States (23%) are being raised in single parent families due to financial problems† (Institute for Children and Poverty). The Blue family is looking at an up hill battle with their budget. Their financial situation is not a good on. With the amount of income the blue family brings in they are not living comfortably. A lot of the thing this family will have to go without. But what is most important unlike the White family the Blue families’ children will have to go without a lot of thing children should receive. They will not be able to go shopping and by name brand cloths. Also they won’t be able to go to the movies or by magazines. This is going to cause problems for them socially when they go to school or out in public. With the amount of ...

Compare two Member States participation and representation in the Research Paper

Compare two Member States participation and representation in the European Parliament. Questions to answer are on Details section - Research Paper Example My countries of choice are Czech Republic and Belgium. The choice for comparison of the two European member states is because of their variance in entry period. Belgium is one of the founding nations having been present during the formation in 1952, while Czech came much later in 2004. Czech Republic is a young nation formed in 1993 after the split of Czechoslovakia. Belgium became independent in 1830. The time of independence is quite different for the two nations and could have also influenced the social-political and economical development for each nation. The political structure for the two nations also varies. Belgium is a federal state and its political system is based on parliamentary democracy under a constitutional monarchy as the head of state. The government is further divided into the regional government and community government. The kings hold the executive powers, while the prime minister is the head of government and cabinet. The prime minister is appointed by the monarch. The federal parliament has two chambers: the House of Representatives and the senate (The Belgian House of Representatives and Senate, 2004). Czech Republic on the other hand is a parliamentary democracy with separate legislative, executive and judicial powers. The parliament consists of the chamber of deputies and the senate. Unlike Belgium, the government is a presidential system whereby the president is elected on a five year term. It also has a prime minister appointed by the president (Prokop, 2010). The European parliament comprises of 24 representatives who are elected from Belgium. Proportional representation is applied in the electoral system. In this election (European parliament), Belgium comprises of three electoral districts. The system used is referred to as d’Hondt formula and there is no limitation for the representation. After the election, people are still given the chance to overrule the party ruling candidates (European Election Database, n.d.).

Multicultural Mall Essay Example | Topics and Well Written Essays - 250 words

Multicultural Mall - Essay Example In relation to this, their attitude could also be an additional criterion to know how effective the proposal is. If the community gets actively involved, not only patronizing the business but sharing their skills and talents as well as investing in the venture, then it is a sign that the people agree with the project’s establishment. Moreover, the number of people participating will also tell how successful the business is. If there are only a few who are interested in the business, it means that the business could either stagnate or fall. However, when there are numerous people participating, it shows that there are many who are interested in the business. The reason why this is important is because in business, it is known that the people are the ones who will bring the money in. The more prospective customers entering the multicultural mall mean more profit for the businessmen. Moreover, when more tourists are attracted to the place, it implies the success of the enterprise . Lastly, with the convenience of online shopping nowadays, inquiries , requests and patronage tells how well the business is

Primary Research Paper on the Canterbury Tales and Their Historical

Primary on the Canterbury Tales and Their Historical References - Research Paper Example onal accounts, designed to pass the time on the journey but real people, including authors and kings, and real places such as Flanders, France and of course Canterbury, and a few significant events are mentioned which allow us to fix the work in its time and place. In addition to those verifiable details, it is possible also to read between the lines and see how many of the stories do in fact link to actual historical events, even though they do it through indirect means such as parody or allegory. The choice of Canterbury is significant, and the destination of the pilgrims points to the historical figure of Archbishop of Thomas Becket (1118-1170) who was killed on the orders of King Henry II, largely for resisting royal influence on Church affairs. Tensions between Church and State are a feature of the fourteenth century, and this pilgrimage is dedicated to his memory. One major event in the history of that period casts its shadow on the work: a pandemic of bubonic plague, often called pestilence or â€Å"The Black Death† which raged across Europe in 1348-1349 and killed a third of the population of Europe. Chaucer was born around 1340 and so his memory of this would be a factor in his world view, and certainly he witnessed the devastating effects of the plague on the people around him. The Pardoner’s Tale, the Summoner’s Tale and the Physician’s Tale all speak of disfiguring illnesses and fear of death via this means was a very real fact of life in that time for all those who survived the pandemic. One consequence of the decimation of the population was a sudden change in the economic conditions of the time and even more significantly a re-adjustment of the social structures. The beginning of the century saw periods of over-population and famine, where the landed gentry controlled all the resources but the Black Death changed all that : â€Å"The plague shifted the balance of power dramatically and hastened the end of feudalism as a social and economic

Royal Dutch Shell Plc Financial Analysis

Royal Dutch Shell Plc Financial Analysis I. INTRODUCTION a. Topic Chosen and its context In this Research and Analysis project Report, I will be analyzing the financial performance of Royal Dutch Shell Plc. I will be identifying and analyzing the factors effecting the financial position of Royal Dutch Shell plc. The role of non-financial performance indicators which effects the financial position of the company will also be kept in mind. I will analyze the financial position of the company compared to its performance with previous years, with the industry and with its rival (BP). The word Shell will be used in place of Royal Dutch Shell as it is convenient. I will base my comparison on figures of audited annual accounts for the last 3 years. Financial analysis is an effective way of analyzing companys performance. Ratio Analysis is the technique, which will mainly be used for financial analysis. My analysis will also be based upon the comparison of key ratios with main rival of Shell, which will indicate some of the core strategies in seeking a competitive position to achieve its purposes. I will use Life Cycle model to analyze my findings on those markets, which materially contribute towards the companys financial results. Then I will use PEST analysis to analyze different stages identified and nature of Life Cycle. My conclusions will be based on current situation of the company as compared to past years and future expectations using the techniques mentioned above. b. Reasons for selection Reasons for selection of the topic and organization are as follows:  § Wide Information base: Shell, being a public limited company and one of the largest oil and gas concern in the finance sector the availability of timely, relevant, reliable information was an added advantage.  § Relation to my studies: While studying my ACCA, one of the important skills which I have learned is the ability to analyze the financial statements, and such a comprehensive research and analysis project will definitely help in developing the same  § The company: Other reason is the investment prospective and size of the company. The company unveiled the largest expenditure program in its history, spend $36bn in 2008 compared to $25bn last year, as it seeks new sources of oil and gas to boost reserves and production and to better exploit its existing resources. (Ft.com, July2008) Standard Poors, the credit ratings agency, downgraded its long-term rating for BP, the Oil and Gas Company, and upgraded Royal Dutch Shell, BPs closest rival, illustrating the widening perception of the two companys circumstances. SP noted Shells reserves replacement success and said current major projects should sustain its production plateau in the next decade. (Ft.com, September 2008) c. Aims and Objectives The aims and objectives contains the comparison of the financial performance of the petroleum sector to assess the worth of the company in its operational industry .To get an idea about the attitude of the management towards the operations of the company by assessing the companys cash flow position compared to its profits. Also to analyze the risks faces by the company I will take in to account Solvency, Liquidity and Capital structures. d. Research Approach ACCA provides a complete guide about different sections of the report, and also this provides the opportunity to plan and think to allocate my time carefully. This planning will help me to concentrate on each section of the report so that I can focus on core and important areas of the report. This also enables me not to overspend my time in explaining any section of the report. Information mainly collected from annual reports of the company and also different sort of other sources like ACCA text books, internet, newspaper, library etc. Traditional ratio analysis has been used to measure and compare the financial performance of the company over last 3 years with its rivals. Ratio analysis will focus on the following key ratios:  § Profitability Ratios This ratio is the reflection of how well the business is performing in term of profits in order to pay the shareholders. Key ratios are: a. Gross Profit Margin b. Operating Profit Margin c. Return on Average Capital Employed  § Liquidity Ratios Liquidity ratio refers to the state of an assets nearness to cash to meet business short term obligations as they fell due. Key ratios a. Current Ratio b. Quick ratio (Acid Test Ratio)  § Efficiency Ratios These ratios show how efficiently the business is employing those resources invested in fixed assets and working capital. Ratios are: a. Debtor Days b. Creditor Days  § Risk Ratios These ratios are used to assess how healthy and sound the business is in term of capital or finances. Ratios are a. Gearing Ratio b. Interest Cover  § Investors Ratios Both present and prospective shareholders look at these ratios to measure their return and to make economic decisions. Key ratios are a. Earnings per Share b. Diluted Earnings per Share II. INFORMATION GATHERING a. Sources of Information Used The information has been collected from different secondary sources for the preparation of this project. Main secondary sources which are use to gather information is as follows:  § Annual Accounts: The annual audited accounts of Shell are the main secondary source of information to use in this project. These annual audited accounts were available from stock exchange. As it supposed to be accurate and reliable thus provides me with an ideal source of annual accounts of the company. I have used only the audited annual accounts for the last three years of the company though unaudited quarterly review until July was available, to make certain that only reliable and accurate source of information is used in my research and analysis project. These audited annual accounts provides me all the information for the last three years which is essential in computing key financial ratios and also to make a comparison with rivals and industry averages of the company. Annual accounts of the rivals for the last three years are also used to make comparison with the Shell.  § Financial Analysts Report: They are professional people and their views are independent and their analysis helped the shareholders making economic decisions, which in turns affects the very existence of the company.  § Kaplans Tutorial Text: Kaplans tutorial text for Bsc (Hons) in Applied Accounting also helped me a lot for gathering information and also about the different requirements of the reports. It also helped in focusing a particular section of the report and also helped in overall design of the project so that nothing is missing in the project.  § News Papers: Getting in touch with the business section of leading newspapers like The Times, The Independent, Daily Express and The Telegraph was very useful as it provided me guidance on the economy overall and as well the movement in the share prices of different companies. b. Methods Used To Collect Information To collect information various methods are used like,  § Internet: Internet offers a speedy and impersonal way of getting to know the basics of the services that a company provides. (BPP 2005 Paper 3.4) I visited www.shell.com to access the financial reports of the company and press releases. I also visited www.bp.com to get information about the rival company of Shell for the purpose of comparison. Also I visited www.ft.com which really helped me a lot for the up to date information about the Shell and BP. I have also visited www.wikipedia.org to get information which helped me a lot to understand the oil and gas industry. In addition I visited the www.bbc.co.uk to get the latest news and important interviews.  § Use of the E-mail: For communication with Shell people I use to e-mail them during my research whenever I want to get some important information. They responded quickly to answer my query.  § Library Research: Libraries proved quite helpful so some libraries in London, Kaplan Financial College library and City Business Library in Moorgate London for general reading of the newspapers, journals, different books, magazines to get important information about Shell and BP. I spend most of my time in city business library, where I was able to get specific information through different CD ROMS which included different databases search designed specifically for getting information about different companies. Some of the CD ROMs are:  § Financial Analysis Made Easy: This database provided the detailed key financial data in the form of profit and loss accounts and the balance sheet. Also it helped me to get important ratios of the Shell and BP and their comparison with the preceding years in the form of graphs.  § Marketing and Business Information Centre (Data Monitor): This database provided vital information regarding the company, industry and market news for the research and analysis. This database contains records of hundreds of companies in UK and worldwide. When I looked at the Shell data, it really helped me by providing the overview and the detailed information. Then same thing was true for its rival BP. c. Limitations in the Information Gathering A number of difficulties I have faced sometime in getting the required information. For instance, I was expecting to get more information from the newspaper, but actually it was not. The newspaper only provides information about a particular date and some events but in depth information cannot be obtained and also articles are found in different newspaper i.e. nothing is new than others. Similarly when I went to City library, I was not aware of using FAME database, so when I tried to get information from database it took me too long. Moreover it only provides me the financial data in the form of graphs. Another problem which I have faced is the information overload on the internet. Whenever I tried to search something on the net it gives me too many results which some time confused me which information I should use and which is not. d. Accounting Technique Used and Limitations In this report to analyze the financial performance of Shell comparing to BP ratio analysis has been used. Ratios are important tool in analyzing the financial performance of the company. Ratios are used because shareholders and potential investors are primarily concerned with receiving an adequate return on their investment. An earnings per share is a key ratio that is to be used to determine the returns on shareholders fund. Suppliers and lenders are concerned with the security of their debt or loan. So they are mainly focused on the gearing level the company is having and also the interest cover. More over management is concerned with the trend and level of profits, so ratios are the main measure of the success. Furthermore, managements bonuses are linked to the profits of the company. I have calculated the key ratios in an appendix from 2006-2008 for Shell and BP and they did analyze the results. Ratios were used as a tool to assist analysis and to focus attention systematically on important areas. Ratios summarize information in an understandable form and also helped me to identify trends and relationships. There are also limitations of financial statements and ratio analysis as they are based on the past and ratios are not predictive if they are based on historical information. Ratios ignores any future action which is or to be taken by management. Another limitation faced by ratio analysis is the fact that the ratios results may be distorted if there are differences in the accounting policies. (Kaplan Financial Study Text Paper F7) In all, Ratios have limitations but are still regarded as the best tool for analyzing the financial performance of the business and so I also used it. III. ANALYSIS In this section of the report I will explain and analyze the financial performance of Shell and will compare its results with BP.I will also explain Shells financial position in the current year. a. Company History: The Royal Dutch Shell Group was created in February 1907 when the Royal Dutch Petroleum Company and the Shell Transport and Trading Company Ltd of theUnited Kingdommerged their operations. This move was largely driven by the need to compete globally with the predominant American oil company (www.wikipedia.org) b. Financial Analysis: Here is the analysis of the financial data of Shell (Revenue, GP and NP) over the last three years.  § The revenues in 2008 were ($458.4 billion) 28.8% higher than in 2007, when they were ($355.8 billion) 11.6% higher than in 2006. (Appendix)  § The oil and gas prices was One of the main reasons of increase in revenues in 2008  § Brent crude oil prices average $97.14 per barrel in 2008 compared with $72.45 in 2007, while West Texas Intermediate average $99.72 per barrel compared with $72.16 a year earlier. Oil prices saw great fluctuation in 2008. (Annual Report Shell 2008)  § A 6% increase in Gross Profit of Shell in year 2008 and 2007 as compared to gross profit in year. (Appendix)  § Its shows an increase in production costs in line with increase in revenues on high margin products.  § Earnings ($26.5 billion) were lower by 17% in 2008 compared to 2007, when they were ($31.9 billion) 21% higher than in 2006 ($26.3 billion). (Appendix) The decrease in 2008, compared with 2007, reflected the effect of declining oil prices on inventory in the second half of the year, lower production volumes, lower realised refining margins and higher operating costs. These more than offset the positive impact on earnings from higher realised oil and gas prices as well as higher LNG and GTL product prices. (Annual Report Shell 2008) Second quarter 2009 reported earnings were $3,822 million compared to earnings of $11,556 million in the same quarter a year ago. (2nd quarter results 2009, www.shell.com )  § Earnings By Business Segments : All figures in this table are in $million The table shows that earnings in 2008 were higher by 47% in Exploration Production, Gas Power and Oil Sands segments as compare to 2007. On other hand earnings were lower by 100% in 2008 as compare to 2007 in Oil Products, Chemicals and Corporate segments. This 100% reduction in last three segments causes overall reduction of earning in 2008. In the Second quarter Exploration Production segment earnings were $1,334 million compared to $5,881 million a year ago. Earnings compared to the second quarter 2008 reflected the impact of significantly lower oil and gas prices on revenues, lower oil and gas production volumes, higher exploration expenses and non-cash pension charges, which were partly offset by lower royalty and tax expenses. (2nd quarter results 2009, www.shell.com ) Comparison of Shell with BP  § Revenue Growth: Shell and BP revenue over the last three years is shown in the graph: Growth in Revenue in $ Million Shell and BP revenue showed a consistent growth over a period of 3 years. In 2008 Shell revenue 26.9% higher than BP. Which shows that Shell growing consistently as Shell revenue were higher 25.2% 19.9% from BP in 2007 2006 respectively. (Appendix) a. Profitability Ratios The profitability of a company is important and a key measure of its success. The figures shown in the profit and loss account mean very little themselves. However, by expressing them as a percentage of sales they become much more useful. The figures can then be compared with previous years or with other similar companies. (Student Accountant ACCA Magazine, Christopher, 1999.) Gross Profit Margin: Gross profit margin shows earning on sales of a company. In the 2nd quarter of 2009 the gross profit margin has fallen 62% compared to last years 2nd quarter results. An indication of high profit margin is that the company earned well on sales by keeping overhead cost in control. Gross profit margin of 2008 is lower than previous years. Net Profit: Shell net profit margin dropped by 3.2% to 5.8% in 2008 from 9% in 2007. And margin in 2006 was 8.3%.BP net profit margin dropped by 1.5% to 5.9% in 2008 from 7.4% in 2007. The 2006 margin was 8.4%. (Appendix) Growth in Net Profit Shell and BP (%) The profit margin is mainly used as an internal comparison tool. As there are different levels of expenditure involved it is therefore sometimes difficult to accurately compare the net profit ratio for different entities. As compared to BP Shells net profit margin dropped by a higher percentage in 2008.On the other hand if we see the year 2007 the Shell profits are higher than the BP. Return on Average Capital Employed: ROACE reflects the ability of the company to utilize the resources i.e. capital in generating revenue. Capital employed consists of total equity, currant debt and non-current debts. The published segment level contains the computation and calculation of the tax rate and the minority interest components. The strong income generation is the only reason for change in ROACE from18% to 24% between 2006 and 2008. There is a significant decrease in the capital employed from 24% to 18% in 2008 as compare to 2007. A significant decrease in income attributable to shareholders is partly offset by an increase in capital employed, resulted in a decrease in ROACE of 6.0% in 2008(18%) compared to 2007 (24%). The 2006 figure was 23%. (Appendix and Annual Report Shell 2008) ROACE is defined as the sum of the current and previous three quarters income adjusted for interest expense, after tax, divided by the average capital employed for the period. In the 2nd quarter or 2009 the ROAC stands at 8.3% way below the 25.8% in the 2nd quarter of 2008. (2nd quarter results 2009, www.shell.com ) On the other hand BP utilization of its capital resources was showing a sorry picture. BP ROCE has moved in a range of 16% to 19% between 2006 and 2008. BPs ROCE was 19% in 2006, and then reduced to 16% in 2007, followed by an increase of 1% to stand at 17%. This was due to lower income attributable to shareholders in 3 years time. This increase in 2008 was due to some increase in income attributable to shareholders. (Appendix) ROCE Shell and BP (%) The drop in oil price in the second half of 2008 had a significant impact on earnings. The strengthening of the dollar against other main currencies reduced the impact of Shells investment plans on capital employed. b. Efficiency Ratios Debtor Days Shells receivable days has fallen from 76 days in 2007 to 65 days in 2008. The figure for 2006 was 68 days. This was due to the effective and better controlled credit policy. (Appendix) BP on the other hand, showed increase in its collection to 30 days in 2008 from 49 days in 2007. The 2006 figure stands at 53 days. All this reflected an aggressive and comprehensive credit control policy and ability to collect from customers. (Appendix) Creditors Days The payment to creditors from Shell showed improvement in payment to creditors in 2008 if we compare the figures to last three years. As creditors days reduced to 78 days in 2008 from 93 days in 2007, while the figure in 2006 was 87. This improvement shows that company has liquidity to pay off its debts and also helped in making stronger relationship with creditors, which could be Suppliers, lenders. (Appendix) BPs creditors days showed reduction over a period of 3 years i.e. from 82 days in 2006 to 78 days in 2007 and more improved to 46 days in 2008 which showed a good sign for the company. (Appendix) c. Liquidity Ratios Current Ratio As short-term creditors prefer a high current ratio since it reduces their risk. The current ratio measures the adequacy of current assets to meet the companys short-term liabilities as they fall due. Traditionally, a current ratio of 2:1 or higher was regarded as appropriate for most businesses to maintain creditworthiness. However, more recently a figure of 1.5:1 is regarded as a norm. (Kaplan Financial, Paper F7 Study Text) Current ratio for Shell in 2008 was 1.1 and remained Constant between 2006 and 2007 to stand at 1.2. This shows better position for Shell and its ability to pay short term liabilities as they fall due. (Appendix) BP current ratio was also healthy between 2006 and 2007, but in 2008 the ratio was below 1 which may be not a good sign for short term creditors. But it was ok as for as it remains near to 1. (Appendix) One drawback of the current ratio is that inventory may include many items that are difficult to liquidate quickly and that have uncertain liquidation value. SO the quick ratio is an alternative measure of liquidity that does not include inventory in the current assets. (Paper3.6, BPP Professional Education, June 2007) Quick Ratio The quick ratio also known as the acid test ratio eliminates inventory from the currant assets. It provides the acid test of whether the company has sufficient liquid resources (receivables and cash) to settle its short term liabilities. Normal level for quick ratio ranges from 1:1 to 0.7:1. (Kaplan Financial, Paper F7 Study Text) For Shell, liquidity ratio remained unchanged within the industry standards between 2006 and 2008 to stand at 0.9. This shows the companys ability to pay short liabilities from most liquid resources i.e. receivables and cash not inventory. (Appendix) BPs quick ratio showed a sorry picture and remains unchanged on 0.7 between 2006 and 2008, as it was standing at the danger level of 0.7 meaning that BP is not having enough liquid resources to pay off the liabilities due. (Appendix) d. Risk Ratios Gearing: Gearing is the relationship between the companys fixed return capital and its equity capital. Gearing ratio indicates the degree of risk attached to the company and the sensitivity of earnings and dividends to change in profitability and activity level. High geared businesses uses large proportion of fixed return capital, so there are greater chances of insolvency and ultimately return to shareholders grow proportionately more if profits are growing. While low geared businesses provide scope to increase borrowings when potential profitable projects are available and can usually grow more easily. (Kaplan Financial, Paper F7 Study Text) Gearing levels in (%) (2006-2008) Shell maintained smooth profits and more suitable assets for security in order to make use of gearing successfully. Shells gearing level increased in 2008 due to more debts taken as compared to 2006 and 2007. Gearing was 23% in 2008 compared to 17% in 2007. The gearing ratio was 15% in 2006. The increase was due to rise in the total debt. On the other hand, BP gearing level was also high standing between 36% to 28% with 36% in 2008 compare to 28% in 2006, while 2007 figure was 33%, which is higher than Shell. High level of gearing means high risk to business, but this is compensated by a significant increase in profits and the returns to the shareholders. So Shell can borrow more easily in future. Interest Cover Companys interest cover indicates the ability to pay interest out of profits generated. Low interest cover indicates to the shareholders that their dividends are at risk (because most profits are use to pay interest payments) and the company may have difficulty financing its debts if its profits fall. (Kaplan Financial, Paper F7 Study text) Shells interest cover has decreased to 42 times in 2008 compared to 45 times in 2007. The interest covers for 2006 was 38 times. This shows Shells ability to finance its debts and the ability to pay interest out of the profits for sure. As investors are interested in the risk level the company is in, it is a healthy sign. Interest Cover in Times (2006-2008) For BP, there is an increase of interest cover to 30 times as compare to 29 times in 2007 but in 2007 there is a huge reduction in interest cover to 29 times from 49 times in 2006 which clearly indicates the inability of BP to finance its debt and to pay interest out of profits generated. That makes BP riskier than Shell for investment purposes. e. Investors Ratios Earnings per Share (EPS): Earnings per Share for Shell decreased in 2008 from $5 in 2007 to $4.27 in 2008. This was due to decline in profits followed by the repurchase of the shares, which causes a net decrease of 105 million in the number of ordinary shares outstanding as a result of share buybacks. As widespread the use of the EPS as a yardstick for investment decisions. Share price of company might fall if it looks as if EPS is going to be low. EPS increased to $5 in 2007 compared to $3.97 in 2006, this was due to decrease in the number of ordinary shares in 2007 as company repurchased its 112 million shares of common stock for cancellation at a gross cost of $4.4billion.this purchase reduced the number of shares outstanding to 1.7% in 2007 and by 7.3% in total since the commencement of share repurchases following the unification into Royal Dutch Shell and successful completion of Royal Dutch Minority tender (August 2005). (Annual Report Shell 2008) In the first six months of 2009 the EPS for Shell is $1.19 compared to the six month figure of $3.34 of the same period of 2009 (2nd quarter results 2009, www.shell.com ) Earnings Per Share in $ (2006-2008) BPs Basic Earnings per Share increased in 2008 to $1.13 from $1.09 in 2007. This was due to the appreciation in the profits followed by the repurchase of shares, which causes a net decrease of 373 million in the number o shares. Basic EPS decline by 0.01 to stands at $1.09 in 2007 compared to $1.10 in 2006. This was due to the declining of profits of BP. (BP Annual Report 2008) Diluted Earnings per Share(DEPS) : Diluted Earnings Per Share attempts to alert the shareholders to the potential impact on the Earnings per Share due to change in equity share capital in future owing to circumstances which exist now-known as dilution. The most common type of dilution is an option or warrant which gives the holder right to buy shares at time in future at predetermined price. (Kaplan Financial, Paper F7 Study Text) Diluted Earnings Per Share in $ (2006-2008) Shells DEPS reduced due to the reduction in the profits and number of shares to $4.26 in 2008 compared to $4.99 in 2007, while it was $3.95 in 2006. BPs DEPS increased to $1.12 in 2008 from $1.08 in 2007. The figure was $1.09 in 2006. The main reason for this was increase in profits despite shares in numbers was reduced. (Appendix) f. Cash Flow Statement: Shells cash flow from operating activities has increased by 27% reaching a record level of $43.9 billion in 2008 compared with $34.5 billion in 2007 and $31.7 billion in 2006. This improvement in cash flow from operations was a result of reduces working capital in 2008 compared to 2007. The increase in the operating activity in 2007 mainly because of increase in income as well as a reduction in taxation paid in 2007 compared to 2006. In 2009, Shells cash flow from operating activities reduced in the first two quarters to stands at $8478 million compared to $21,030 million in the same period of 2008. (2nd quarter results 2009, www.shell.com ) BPs cash flow from operation declined to $24.7 billion in 2007 compared to $28.2 billion in 2006, but the cash from operating activity increased in 2008. This is menially because of increase in income. (BP Annual Report 2008) Higher capital expenditure in 2008 compared to 2007 made Shell to use its Cash flow in investing activities i.e. $28.9 billion in 2008 compare to $14.6 Billion in 2007. In 2009, Shell continued to invest more with cash flow from investing activities stands at $(13,829) million in six months from $(12,275) million in 2007. (2nd quarter results, www.shell.com) But there was less cash paid out in investing activity in 2007(-14.6 billion) as compare to 2006(-20.9 billion) and the main reason was that the proceeds from sale of asset was higher and les capital expenditure in 2007 as compare to 2006. (Shell Annual Report 2008) BP was also having strong investment with $(22.8) billion in 2008 from $(14.8) billion in 2007. The figure for 2006 was $(9.5) billion. (BP Annual Report 2008) In 2008, as Shell took more debts which results in Shells cash flow from/used in financing activities reduced to $(9.4) billion in 2008 from $(19.4) billion in 2007.As Shell acquired Canada minority interest in 2007 resulting Cash flow from financing activity increased in 2007 from (13.7) billion in 2006. There was a small increase of BPs Net cash flow from/ used in financing activities from (9.0) billion in 2007 to (10.5) billion in 2008 menially because of more dividends paid and less repurchase of shares in 2008. Net cash from financing activities was reduced to $(9.0) billion in 2007 from $(19.0) billion in 2006. (BP Annual Report 2008) Cash and Cash Equivalent of Shell and BP in Billions Cash and Cash equivalent of Shell reached 15.2 billion at the end of 2008, up by 57% as compare to 2007 figure of 9.6 billion. Which is good sign for Shell as there cash and cash equivalent was higher as well in 2007 as compare to 2006 figure of 9.0 billion. BPs cash and cash equivalent also increased to $8.2 billion in 2008 from $3.5 billion in 2007 and also up from 2006 level of $2.5 billion. (Shell and BP Annual Report 2008) This shows that Shell has a sound position and has no problem what so ever in cash flow compared to its rivals. c. Non-Financial Analysis In this section of the report I will be analyzing the corporate social responsibility and the SWOT analysis. Corporate Social Responsibility (CSR) We recognise that our continuing business success depends on helping to meet the worlds growing energy needs in environmentally and socially responsible ways. To manage todays business risks and deliver our strategy, it is critical that we maintain the trust of a wide range of stakeholders. (Shell Annual Report 2008) Environmental Social performance Greenhouse Gas Emissions In 2008 despite growing business, Shell operated facilities emitted 75 million tons of GHGs, (measured on a CO2 equivalent basis), about 7 million lower than the previous year, and nearly 30% below 1990 levels. (Shell Annual Report 2008) Flaring Since 2001, Exploration Production has reduced its natural gas flaring by more than 70%. In 2008, total flaring in Exploration Production dropped again mostly due to reduces flaring in Malaysia and Gabon, as investment and operational improvement programs showed result. In 2008 flaring levels in Nigeria were same as in 2007. Spills Shell has reduced the amount of oil and oil products spilled from operations for reasons, Shell can control, like corrosion or operational failures. Spills from sabotage or extreme weather, like hurricanes, which are harder to prevent, have fluctuated with events. In 2008 the number and amount spilled for operational reasons dropped Royal Dutch Shell Plc Financial Analysis Royal Dutch Shell Plc Financial Analysis I. INTRODUCTION a. Topic Chosen and its context In this Research and Analysis project Report, I will be analyzing the financial performance of Royal Dutch Shell Plc. I will be identifying and analyzing the factors effecting the financial position of Royal Dutch Shell plc. The role of non-financial performance indicators which effects the financial position of the company will also be kept in mind. I will analyze the financial position of the company compared to its performance with previous years, with the industry and with its rival (BP). The word Shell will be used in place of Royal Dutch Shell as it is convenient. I will base my comparison on figures of audited annual accounts for the last 3 years. Financial analysis is an effective way of analyzing companys performance. Ratio Analysis is the technique, which will mainly be used for financial analysis. My analysis will also be based upon the comparison of key ratios with main rival of Shell, which will indicate some of the core strategies in seeking a competitive position to achieve its purposes. I will use Life Cycle model to analyze my findings on those markets, which materially contribute towards the companys financial results. Then I will use PEST analysis to analyze different stages identified and nature of Life Cycle. My conclusions will be based on current situation of the company as compared to past years and future expectations using the techniques mentioned above. b. Reasons for selection Reasons for selection of the topic and organization are as follows:  § Wide Information base: Shell, being a public limited company and one of the largest oil and gas concern in the finance sector the availability of timely, relevant, reliable information was an added advantage.  § Relation to my studies: While studying my ACCA, one of the important skills which I have learned is the ability to analyze the financial statements, and such a comprehensive research and analysis project will definitely help in developing the same  § The company: Other reason is the investment prospective and size of the company. The company unveiled the largest expenditure program in its history, spend $36bn in 2008 compared to $25bn last year, as it seeks new sources of oil and gas to boost reserves and production and to better exploit its existing resources. (Ft.com, July2008) Standard Poors, the credit ratings agency, downgraded its long-term rating for BP, the Oil and Gas Company, and upgraded Royal Dutch Shell, BPs closest rival, illustrating the widening perception of the two companys circumstances. SP noted Shells reserves replacement success and said current major projects should sustain its production plateau in the next decade. (Ft.com, September 2008) c. Aims and Objectives The aims and objectives contains the comparison of the financial performance of the petroleum sector to assess the worth of the company in its operational industry .To get an idea about the attitude of the management towards the operations of the company by assessing the companys cash flow position compared to its profits. Also to analyze the risks faces by the company I will take in to account Solvency, Liquidity and Capital structures. d. Research Approach ACCA provides a complete guide about different sections of the report, and also this provides the opportunity to plan and think to allocate my time carefully. This planning will help me to concentrate on each section of the report so that I can focus on core and important areas of the report. This also enables me not to overspend my time in explaining any section of the report. Information mainly collected from annual reports of the company and also different sort of other sources like ACCA text books, internet, newspaper, library etc. Traditional ratio analysis has been used to measure and compare the financial performance of the company over last 3 years with its rivals. Ratio analysis will focus on the following key ratios:  § Profitability Ratios This ratio is the reflection of how well the business is performing in term of profits in order to pay the shareholders. Key ratios are: a. Gross Profit Margin b. Operating Profit Margin c. Return on Average Capital Employed  § Liquidity Ratios Liquidity ratio refers to the state of an assets nearness to cash to meet business short term obligations as they fell due. Key ratios a. Current Ratio b. Quick ratio (Acid Test Ratio)  § Efficiency Ratios These ratios show how efficiently the business is employing those resources invested in fixed assets and working capital. Ratios are: a. Debtor Days b. Creditor Days  § Risk Ratios These ratios are used to assess how healthy and sound the business is in term of capital or finances. Ratios are a. Gearing Ratio b. Interest Cover  § Investors Ratios Both present and prospective shareholders look at these ratios to measure their return and to make economic decisions. Key ratios are a. Earnings per Share b. Diluted Earnings per Share II. INFORMATION GATHERING a. Sources of Information Used The information has been collected from different secondary sources for the preparation of this project. Main secondary sources which are use to gather information is as follows:  § Annual Accounts: The annual audited accounts of Shell are the main secondary source of information to use in this project. These annual audited accounts were available from stock exchange. As it supposed to be accurate and reliable thus provides me with an ideal source of annual accounts of the company. I have used only the audited annual accounts for the last three years of the company though unaudited quarterly review until July was available, to make certain that only reliable and accurate source of information is used in my research and analysis project. These audited annual accounts provides me all the information for the last three years which is essential in computing key financial ratios and also to make a comparison with rivals and industry averages of the company. Annual accounts of the rivals for the last three years are also used to make comparison with the Shell.  § Financial Analysts Report: They are professional people and their views are independent and their analysis helped the shareholders making economic decisions, which in turns affects the very existence of the company.  § Kaplans Tutorial Text: Kaplans tutorial text for Bsc (Hons) in Applied Accounting also helped me a lot for gathering information and also about the different requirements of the reports. It also helped in focusing a particular section of the report and also helped in overall design of the project so that nothing is missing in the project.  § News Papers: Getting in touch with the business section of leading newspapers like The Times, The Independent, Daily Express and The Telegraph was very useful as it provided me guidance on the economy overall and as well the movement in the share prices of different companies. b. Methods Used To Collect Information To collect information various methods are used like,  § Internet: Internet offers a speedy and impersonal way of getting to know the basics of the services that a company provides. (BPP 2005 Paper 3.4) I visited www.shell.com to access the financial reports of the company and press releases. I also visited www.bp.com to get information about the rival company of Shell for the purpose of comparison. Also I visited www.ft.com which really helped me a lot for the up to date information about the Shell and BP. I have also visited www.wikipedia.org to get information which helped me a lot to understand the oil and gas industry. In addition I visited the www.bbc.co.uk to get the latest news and important interviews.  § Use of the E-mail: For communication with Shell people I use to e-mail them during my research whenever I want to get some important information. They responded quickly to answer my query.  § Library Research: Libraries proved quite helpful so some libraries in London, Kaplan Financial College library and City Business Library in Moorgate London for general reading of the newspapers, journals, different books, magazines to get important information about Shell and BP. I spend most of my time in city business library, where I was able to get specific information through different CD ROMS which included different databases search designed specifically for getting information about different companies. Some of the CD ROMs are:  § Financial Analysis Made Easy: This database provided the detailed key financial data in the form of profit and loss accounts and the balance sheet. Also it helped me to get important ratios of the Shell and BP and their comparison with the preceding years in the form of graphs.  § Marketing and Business Information Centre (Data Monitor): This database provided vital information regarding the company, industry and market news for the research and analysis. This database contains records of hundreds of companies in UK and worldwide. When I looked at the Shell data, it really helped me by providing the overview and the detailed information. Then same thing was true for its rival BP. c. Limitations in the Information Gathering A number of difficulties I have faced sometime in getting the required information. For instance, I was expecting to get more information from the newspaper, but actually it was not. The newspaper only provides information about a particular date and some events but in depth information cannot be obtained and also articles are found in different newspaper i.e. nothing is new than others. Similarly when I went to City library, I was not aware of using FAME database, so when I tried to get information from database it took me too long. Moreover it only provides me the financial data in the form of graphs. Another problem which I have faced is the information overload on the internet. Whenever I tried to search something on the net it gives me too many results which some time confused me which information I should use and which is not. d. Accounting Technique Used and Limitations In this report to analyze the financial performance of Shell comparing to BP ratio analysis has been used. Ratios are important tool in analyzing the financial performance of the company. Ratios are used because shareholders and potential investors are primarily concerned with receiving an adequate return on their investment. An earnings per share is a key ratio that is to be used to determine the returns on shareholders fund. Suppliers and lenders are concerned with the security of their debt or loan. So they are mainly focused on the gearing level the company is having and also the interest cover. More over management is concerned with the trend and level of profits, so ratios are the main measure of the success. Furthermore, managements bonuses are linked to the profits of the company. I have calculated the key ratios in an appendix from 2006-2008 for Shell and BP and they did analyze the results. Ratios were used as a tool to assist analysis and to focus attention systematically on important areas. Ratios summarize information in an understandable form and also helped me to identify trends and relationships. There are also limitations of financial statements and ratio analysis as they are based on the past and ratios are not predictive if they are based on historical information. Ratios ignores any future action which is or to be taken by management. Another limitation faced by ratio analysis is the fact that the ratios results may be distorted if there are differences in the accounting policies. (Kaplan Financial Study Text Paper F7) In all, Ratios have limitations but are still regarded as the best tool for analyzing the financial performance of the business and so I also used it. III. ANALYSIS In this section of the report I will explain and analyze the financial performance of Shell and will compare its results with BP.I will also explain Shells financial position in the current year. a. Company History: The Royal Dutch Shell Group was created in February 1907 when the Royal Dutch Petroleum Company and the Shell Transport and Trading Company Ltd of theUnited Kingdommerged their operations. This move was largely driven by the need to compete globally with the predominant American oil company (www.wikipedia.org) b. Financial Analysis: Here is the analysis of the financial data of Shell (Revenue, GP and NP) over the last three years.  § The revenues in 2008 were ($458.4 billion) 28.8% higher than in 2007, when they were ($355.8 billion) 11.6% higher than in 2006. (Appendix)  § The oil and gas prices was One of the main reasons of increase in revenues in 2008  § Brent crude oil prices average $97.14 per barrel in 2008 compared with $72.45 in 2007, while West Texas Intermediate average $99.72 per barrel compared with $72.16 a year earlier. Oil prices saw great fluctuation in 2008. (Annual Report Shell 2008)  § A 6% increase in Gross Profit of Shell in year 2008 and 2007 as compared to gross profit in year. (Appendix)  § Its shows an increase in production costs in line with increase in revenues on high margin products.  § Earnings ($26.5 billion) were lower by 17% in 2008 compared to 2007, when they were ($31.9 billion) 21% higher than in 2006 ($26.3 billion). (Appendix) The decrease in 2008, compared with 2007, reflected the effect of declining oil prices on inventory in the second half of the year, lower production volumes, lower realised refining margins and higher operating costs. These more than offset the positive impact on earnings from higher realised oil and gas prices as well as higher LNG and GTL product prices. (Annual Report Shell 2008) Second quarter 2009 reported earnings were $3,822 million compared to earnings of $11,556 million in the same quarter a year ago. (2nd quarter results 2009, www.shell.com )  § Earnings By Business Segments : All figures in this table are in $million The table shows that earnings in 2008 were higher by 47% in Exploration Production, Gas Power and Oil Sands segments as compare to 2007. On other hand earnings were lower by 100% in 2008 as compare to 2007 in Oil Products, Chemicals and Corporate segments. This 100% reduction in last three segments causes overall reduction of earning in 2008. In the Second quarter Exploration Production segment earnings were $1,334 million compared to $5,881 million a year ago. Earnings compared to the second quarter 2008 reflected the impact of significantly lower oil and gas prices on revenues, lower oil and gas production volumes, higher exploration expenses and non-cash pension charges, which were partly offset by lower royalty and tax expenses. (2nd quarter results 2009, www.shell.com ) Comparison of Shell with BP  § Revenue Growth: Shell and BP revenue over the last three years is shown in the graph: Growth in Revenue in $ Million Shell and BP revenue showed a consistent growth over a period of 3 years. In 2008 Shell revenue 26.9% higher than BP. Which shows that Shell growing consistently as Shell revenue were higher 25.2% 19.9% from BP in 2007 2006 respectively. (Appendix) a. Profitability Ratios The profitability of a company is important and a key measure of its success. The figures shown in the profit and loss account mean very little themselves. However, by expressing them as a percentage of sales they become much more useful. The figures can then be compared with previous years or with other similar companies. (Student Accountant ACCA Magazine, Christopher, 1999.) Gross Profit Margin: Gross profit margin shows earning on sales of a company. In the 2nd quarter of 2009 the gross profit margin has fallen 62% compared to last years 2nd quarter results. An indication of high profit margin is that the company earned well on sales by keeping overhead cost in control. Gross profit margin of 2008 is lower than previous years. Net Profit: Shell net profit margin dropped by 3.2% to 5.8% in 2008 from 9% in 2007. And margin in 2006 was 8.3%.BP net profit margin dropped by 1.5% to 5.9% in 2008 from 7.4% in 2007. The 2006 margin was 8.4%. (Appendix) Growth in Net Profit Shell and BP (%) The profit margin is mainly used as an internal comparison tool. As there are different levels of expenditure involved it is therefore sometimes difficult to accurately compare the net profit ratio for different entities. As compared to BP Shells net profit margin dropped by a higher percentage in 2008.On the other hand if we see the year 2007 the Shell profits are higher than the BP. Return on Average Capital Employed: ROACE reflects the ability of the company to utilize the resources i.e. capital in generating revenue. Capital employed consists of total equity, currant debt and non-current debts. The published segment level contains the computation and calculation of the tax rate and the minority interest components. The strong income generation is the only reason for change in ROACE from18% to 24% between 2006 and 2008. There is a significant decrease in the capital employed from 24% to 18% in 2008 as compare to 2007. A significant decrease in income attributable to shareholders is partly offset by an increase in capital employed, resulted in a decrease in ROACE of 6.0% in 2008(18%) compared to 2007 (24%). The 2006 figure was 23%. (Appendix and Annual Report Shell 2008) ROACE is defined as the sum of the current and previous three quarters income adjusted for interest expense, after tax, divided by the average capital employed for the period. In the 2nd quarter or 2009 the ROAC stands at 8.3% way below the 25.8% in the 2nd quarter of 2008. (2nd quarter results 2009, www.shell.com ) On the other hand BP utilization of its capital resources was showing a sorry picture. BP ROCE has moved in a range of 16% to 19% between 2006 and 2008. BPs ROCE was 19% in 2006, and then reduced to 16% in 2007, followed by an increase of 1% to stand at 17%. This was due to lower income attributable to shareholders in 3 years time. This increase in 2008 was due to some increase in income attributable to shareholders. (Appendix) ROCE Shell and BP (%) The drop in oil price in the second half of 2008 had a significant impact on earnings. The strengthening of the dollar against other main currencies reduced the impact of Shells investment plans on capital employed. b. Efficiency Ratios Debtor Days Shells receivable days has fallen from 76 days in 2007 to 65 days in 2008. The figure for 2006 was 68 days. This was due to the effective and better controlled credit policy. (Appendix) BP on the other hand, showed increase in its collection to 30 days in 2008 from 49 days in 2007. The 2006 figure stands at 53 days. All this reflected an aggressive and comprehensive credit control policy and ability to collect from customers. (Appendix) Creditors Days The payment to creditors from Shell showed improvement in payment to creditors in 2008 if we compare the figures to last three years. As creditors days reduced to 78 days in 2008 from 93 days in 2007, while the figure in 2006 was 87. This improvement shows that company has liquidity to pay off its debts and also helped in making stronger relationship with creditors, which could be Suppliers, lenders. (Appendix) BPs creditors days showed reduction over a period of 3 years i.e. from 82 days in 2006 to 78 days in 2007 and more improved to 46 days in 2008 which showed a good sign for the company. (Appendix) c. Liquidity Ratios Current Ratio As short-term creditors prefer a high current ratio since it reduces their risk. The current ratio measures the adequacy of current assets to meet the companys short-term liabilities as they fall due. Traditionally, a current ratio of 2:1 or higher was regarded as appropriate for most businesses to maintain creditworthiness. However, more recently a figure of 1.5:1 is regarded as a norm. (Kaplan Financial, Paper F7 Study Text) Current ratio for Shell in 2008 was 1.1 and remained Constant between 2006 and 2007 to stand at 1.2. This shows better position for Shell and its ability to pay short term liabilities as they fall due. (Appendix) BP current ratio was also healthy between 2006 and 2007, but in 2008 the ratio was below 1 which may be not a good sign for short term creditors. But it was ok as for as it remains near to 1. (Appendix) One drawback of the current ratio is that inventory may include many items that are difficult to liquidate quickly and that have uncertain liquidation value. SO the quick ratio is an alternative measure of liquidity that does not include inventory in the current assets. (Paper3.6, BPP Professional Education, June 2007) Quick Ratio The quick ratio also known as the acid test ratio eliminates inventory from the currant assets. It provides the acid test of whether the company has sufficient liquid resources (receivables and cash) to settle its short term liabilities. Normal level for quick ratio ranges from 1:1 to 0.7:1. (Kaplan Financial, Paper F7 Study Text) For Shell, liquidity ratio remained unchanged within the industry standards between 2006 and 2008 to stand at 0.9. This shows the companys ability to pay short liabilities from most liquid resources i.e. receivables and cash not inventory. (Appendix) BPs quick ratio showed a sorry picture and remains unchanged on 0.7 between 2006 and 2008, as it was standing at the danger level of 0.7 meaning that BP is not having enough liquid resources to pay off the liabilities due. (Appendix) d. Risk Ratios Gearing: Gearing is the relationship between the companys fixed return capital and its equity capital. Gearing ratio indicates the degree of risk attached to the company and the sensitivity of earnings and dividends to change in profitability and activity level. High geared businesses uses large proportion of fixed return capital, so there are greater chances of insolvency and ultimately return to shareholders grow proportionately more if profits are growing. While low geared businesses provide scope to increase borrowings when potential profitable projects are available and can usually grow more easily. (Kaplan Financial, Paper F7 Study Text) Gearing levels in (%) (2006-2008) Shell maintained smooth profits and more suitable assets for security in order to make use of gearing successfully. Shells gearing level increased in 2008 due to more debts taken as compared to 2006 and 2007. Gearing was 23% in 2008 compared to 17% in 2007. The gearing ratio was 15% in 2006. The increase was due to rise in the total debt. On the other hand, BP gearing level was also high standing between 36% to 28% with 36% in 2008 compare to 28% in 2006, while 2007 figure was 33%, which is higher than Shell. High level of gearing means high risk to business, but this is compensated by a significant increase in profits and the returns to the shareholders. So Shell can borrow more easily in future. Interest Cover Companys interest cover indicates the ability to pay interest out of profits generated. Low interest cover indicates to the shareholders that their dividends are at risk (because most profits are use to pay interest payments) and the company may have difficulty financing its debts if its profits fall. (Kaplan Financial, Paper F7 Study text) Shells interest cover has decreased to 42 times in 2008 compared to 45 times in 2007. The interest covers for 2006 was 38 times. This shows Shells ability to finance its debts and the ability to pay interest out of the profits for sure. As investors are interested in the risk level the company is in, it is a healthy sign. Interest Cover in Times (2006-2008) For BP, there is an increase of interest cover to 30 times as compare to 29 times in 2007 but in 2007 there is a huge reduction in interest cover to 29 times from 49 times in 2006 which clearly indicates the inability of BP to finance its debt and to pay interest out of profits generated. That makes BP riskier than Shell for investment purposes. e. Investors Ratios Earnings per Share (EPS): Earnings per Share for Shell decreased in 2008 from $5 in 2007 to $4.27 in 2008. This was due to decline in profits followed by the repurchase of the shares, which causes a net decrease of 105 million in the number of ordinary shares outstanding as a result of share buybacks. As widespread the use of the EPS as a yardstick for investment decisions. Share price of company might fall if it looks as if EPS is going to be low. EPS increased to $5 in 2007 compared to $3.97 in 2006, this was due to decrease in the number of ordinary shares in 2007 as company repurchased its 112 million shares of common stock for cancellation at a gross cost of $4.4billion.this purchase reduced the number of shares outstanding to 1.7% in 2007 and by 7.3% in total since the commencement of share repurchases following the unification into Royal Dutch Shell and successful completion of Royal Dutch Minority tender (August 2005). (Annual Report Shell 2008) In the first six months of 2009 the EPS for Shell is $1.19 compared to the six month figure of $3.34 of the same period of 2009 (2nd quarter results 2009, www.shell.com ) Earnings Per Share in $ (2006-2008) BPs Basic Earnings per Share increased in 2008 to $1.13 from $1.09 in 2007. This was due to the appreciation in the profits followed by the repurchase of shares, which causes a net decrease of 373 million in the number o shares. Basic EPS decline by 0.01 to stands at $1.09 in 2007 compared to $1.10 in 2006. This was due to the declining of profits of BP. (BP Annual Report 2008) Diluted Earnings per Share(DEPS) : Diluted Earnings Per Share attempts to alert the shareholders to the potential impact on the Earnings per Share due to change in equity share capital in future owing to circumstances which exist now-known as dilution. The most common type of dilution is an option or warrant which gives the holder right to buy shares at time in future at predetermined price. (Kaplan Financial, Paper F7 Study Text) Diluted Earnings Per Share in $ (2006-2008) Shells DEPS reduced due to the reduction in the profits and number of shares to $4.26 in 2008 compared to $4.99 in 2007, while it was $3.95 in 2006. BPs DEPS increased to $1.12 in 2008 from $1.08 in 2007. The figure was $1.09 in 2006. The main reason for this was increase in profits despite shares in numbers was reduced. (Appendix) f. Cash Flow Statement: Shells cash flow from operating activities has increased by 27% reaching a record level of $43.9 billion in 2008 compared with $34.5 billion in 2007 and $31.7 billion in 2006. This improvement in cash flow from operations was a result of reduces working capital in 2008 compared to 2007. The increase in the operating activity in 2007 mainly because of increase in income as well as a reduction in taxation paid in 2007 compared to 2006. In 2009, Shells cash flow from operating activities reduced in the first two quarters to stands at $8478 million compared to $21,030 million in the same period of 2008. (2nd quarter results 2009, www.shell.com ) BPs cash flow from operation declined to $24.7 billion in 2007 compared to $28.2 billion in 2006, but the cash from operating activity increased in 2008. This is menially because of increase in income. (BP Annual Report 2008) Higher capital expenditure in 2008 compared to 2007 made Shell to use its Cash flow in investing activities i.e. $28.9 billion in 2008 compare to $14.6 Billion in 2007. In 2009, Shell continued to invest more with cash flow from investing activities stands at $(13,829) million in six months from $(12,275) million in 2007. (2nd quarter results, www.shell.com) But there was less cash paid out in investing activity in 2007(-14.6 billion) as compare to 2006(-20.9 billion) and the main reason was that the proceeds from sale of asset was higher and les capital expenditure in 2007 as compare to 2006. (Shell Annual Report 2008) BP was also having strong investment with $(22.8) billion in 2008 from $(14.8) billion in 2007. The figure for 2006 was $(9.5) billion. (BP Annual Report 2008) In 2008, as Shell took more debts which results in Shells cash flow from/used in financing activities reduced to $(9.4) billion in 2008 from $(19.4) billion in 2007.As Shell acquired Canada minority interest in 2007 resulting Cash flow from financing activity increased in 2007 from (13.7) billion in 2006. There was a small increase of BPs Net cash flow from/ used in financing activities from (9.0) billion in 2007 to (10.5) billion in 2008 menially because of more dividends paid and less repurchase of shares in 2008. Net cash from financing activities was reduced to $(9.0) billion in 2007 from $(19.0) billion in 2006. (BP Annual Report 2008) Cash and Cash Equivalent of Shell and BP in Billions Cash and Cash equivalent of Shell reached 15.2 billion at the end of 2008, up by 57% as compare to 2007 figure of 9.6 billion. Which is good sign for Shell as there cash and cash equivalent was higher as well in 2007 as compare to 2006 figure of 9.0 billion. BPs cash and cash equivalent also increased to $8.2 billion in 2008 from $3.5 billion in 2007 and also up from 2006 level of $2.5 billion. (Shell and BP Annual Report 2008) This shows that Shell has a sound position and has no problem what so ever in cash flow compared to its rivals. c. Non-Financial Analysis In this section of the report I will be analyzing the corporate social responsibility and the SWOT analysis. Corporate Social Responsibility (CSR) We recognise that our continuing business success depends on helping to meet the worlds growing energy needs in environmentally and socially responsible ways. To manage todays business risks and deliver our strategy, it is critical that we maintain the trust of a wide range of stakeholders. (Shell Annual Report 2008) Environmental Social performance Greenhouse Gas Emissions In 2008 despite growing business, Shell operated facilities emitted 75 million tons of GHGs, (measured on a CO2 equivalent basis), about 7 million lower than the previous year, and nearly 30% below 1990 levels. (Shell Annual Report 2008) Flaring Since 2001, Exploration Production has reduced its natural gas flaring by more than 70%. In 2008, total flaring in Exploration Production dropped again mostly due to reduces flaring in Malaysia and Gabon, as investment and operational improvement programs showed result. In 2008 flaring levels in Nigeria were same as in 2007. Spills Shell has reduced the amount of oil and oil products spilled from operations for reasons, Shell can control, like corrosion or operational failures. Spills from sabotage or extreme weather, like hurricanes, which are harder to prevent, have fluctuated with events. In 2008 the number and amount spilled for operational reasons dropped