Example Essay on Management era of HIV AIDS - Free Essay Example

Sample details Pages: 10 Words: 3034 Downloads: 6 Date added: 2017/06/26 Category Management Essay Type Essay any type Did you like this example? Section A: Evaluation of John Ross College Corporate Social Investing (CSI) response using Ten Steps of Weeden Step 1 Replace the traditional notions of corporate philanthropy with a broader concept called corporate social investing The term philanthropy is defined as an altruistic concern for human welfare and advancement, usually manifested by donations of money, property, or work to needy persons, by endowment of institutions of learning and hospitals, and by generosity to other socially useful purposes. Philanthropy has been and it is still used by organisations/corporations to help communities. However, Weeden argues that if corporations are to become stronger allies of non-profit organizations, businesses must go beyond altruism when they look for ways to help nonprofits organizations (Weeden, C. 1998: 27). He highlights the need to replace the traditional notions of corporate philanthropy with a broader concept called corporate social investing. Real corporate social responsibility is not about philanthropy. It is much broader and much more demanding of management. According to Corporate Social Investment handbook (200) in Dickinson, corporate social responsibility should shift to more narrowly defined corporate social investment in which corporate giving makes business sense with returns in the form of image, employee moral and social stability. (Dickinson: 3) Weeden claims that corporate payments to non-profit organizations should be declared common business expenses: marketing, advertising, research etc. Prof Du Toit maintains that Business should realise that by investing in society they are not engaging in welfare but in actual investment. (Du Toit 2010: 12) John Ross College has the following community involvement; Supporting cancer relay every year, Helping Amangwe HIV/AIDS Village with toiletry boxes and clothes, supporting several local orphanages with clothes and canned food and donation to SPCA every year. These donations and activities are philanthropic and John Ross College has not embraced the concept of corporate social investing yet although these donations earn the School a good reputation in the community. Don’t waste time! Our writers will create an original "Example Essay on Management era of HIV AIDS" essay for you Create order Step 2 Identify a significant business reason for every corporate social investment and obtain as much business value from social investments as is allowable and practical Social investments need to have a notable link to what the business is all about. CSR should not be done because it is merely the right thing to do. It should be done because it is being business-like to do it. While society benefits from an organizations social investing, the organization is looking for a return. However, not all investments need to improve the bottom line; Reputation building and brand loyalty constitute long term benefits. Weeden points out that corporate social investing, as the term implies, starts with the premise that the investor/corporation is looking for a return. He argues that corporate profits make corporate social investing possible and in turn, social investing uses charity to create conditions that are conducive to making a profit (Weeden, C. 1998: 39). Weeden maintains that social investing disciplines a companys charity (philanthropy) so that it is focused on the same general field of interest that the corporation has marked as its own prima ry business territory. John Ross College as an organization has a number of charitable interventions that provide positive results for communities and the environment.some. The school collects money and other useful items and donates them to non-profit organizations in the community. However, there is no clear significant business reason for these John Ross College donations to the community. In a School setting, Projects like appointing student teachers that the school can support financially while they teach and study at the same time can benefit both the school and the student teachers from the community. Offering extra classes for mathematics can benefit the school because it can improve the school pass rate and also help learners to pass and if this can be extended to learners from disadvantages schools who would like to attend it can earn the school much respect within the community and many new learners to register. Step 3 Limit corporate social investments to non-profit organizations and exclusively public institutions. John Ross College donate to non-profit organizations. However, non-profit organizations like Amangwe HIV/AIDS village and SPCA are well established and have a lot of support from other corporations/organisations. Therefore, John Ross College should revisit its selection criteria so as to apply its corporate social investing where it is needed the most in the community. Step 4 Make an open statement that endorses corporate social investing or supports a broader concept that allows for social investing to be developed Statements about corporations social responsibility provide validation that corporations have taken responsible approaches. According to Weeden, it may take a little time, maybe even a lot of time, for businesses to develop a full-blown social investment strategy, but letting management and employees know that they have a ticket to make the effort is the least a company can do.( Weeden, C.1998: 57) At John Ross College everybody (management, staff, and learners) knows that the school has charity practice. There is charity collection every Thursday in school. Step 5 Send a clear message to employees and other stakeholders that the CEO endorses corporate social investing According to Weeden, social investing does not have a chance unless a companys chief executive gives it the nod. (Weeden, C.1998: 65). The Principal of John Ross College genuinely cares about the problems of the community and believes that John Ross College has a role to play in addressing those problems. She is indeed the most involved person in charity collection and allocation to the non-profit organizations. Step 6 Produce a written corporate social involvement report that includes a review of social investments at least once a year Producing a review of social investments at least once a year can give credibility to a company. Reporting allows companies to implement procedures that are manageable and logical. Furthermore, by reporting, companies demonstrate their creative and effective use of social investments. They move the business ahead while addressing social needs. Professor Du Toit argues that the review of social investments should be evaluated for quite often companies are involved in corporate social responsibility without doing the necessary research beforehand which might lead to investment in society where it is not needed most or most efficiently. (Prof Du Toit: 13) A further point is that the internal communication plan can help in providing feedback to staff and management on the corporate social investing policy and strategy, projects selected, project achievements and volunteer opportunities at existing corporate social investing projects. In a School setting like John Ross College in our case, this can be done through school newsletter, staff notice boards in public space areas, intranet and staff Meetings. In addition, the external communication plan can create public awareness for the schools corporate social investing programme and the school role in community upliftment through school website, school newsletter, public relations programme including press releases and publicity. At John Ross College there is no reporting of corporate social investments. There is indeed need for the development and implementation of the external and internal communication plan regarding social responsibility. Step 7 Commit now or by specified date at least 2.5 percent (3.5 percent for manufacturing corporations that donate product) of an average of a companys last three years of pre-tax profits for corporate social investing At John Ross College there is no formula to calculate corporate social investing expenditure. There is no budget for corporate social investing at all and the school support to no-profit organizations depend on what is collected from staff and learners. Although the students pay the school fees of R600 every month, the school does not use any percentage of this income for its support to non-profit organizations. Step 8 Postpone some or all social investing if projected business conditions warrant such action This step is the emergency brake for corporate social investing. Some or all corporate social investing may be postponed if conditions warrant it. If the emergency brake is applied, corporations can decide to increase future payments to make up for reductions. Another option is reinstating the previous level of giving. Step 9 Lock in influential line and staff leaders as co-owners of the corporate social investing program The Principal of the school should assemble the school corporate social investment committee. The Principal of the school should personally ask influential staff/teachers from across the school to take part. These influential staff/teachers should make a committee and organise meetings throughout the year to develop monitor assess and review the school social investment plan. On the one hand, the corporate social investing committee should ensure that a co-ordinated, coherent and focused social investment strategy is realized. The needs of projects that the school can support should be identified and communicated to the rest of the school to ensure that the whole school is aware of the opportunities available for corporate social investment interventions. The corporate social investing committee responsibilities should include determining the corporate social investing policy and strategy, determining the corporate social investing budget and allocation, selecting projects fo r investment, controlling the corporate social investing expenditure, monitoring the effectiveness of funded projects and reporting to the school and co-ordinating the implementation of an effective corporate social investing communication programme. On the other hand the school management team responsibilities should include final approval of the corporate social investing policy and final approval of the corporate social investing budget. Employees should be encouraged to get involved in projects that the school corporate social investing programme supports. This support can include volunteer time, financial contributions and donations in kind. Social responsibility is for the school and local communities. It is therefore essential that both the school employees and local communities own the process and its outcomes. Without this ownership, commitment will wane and the school will struggle to implement its social responsibility strategies. Employees should also be give n the opportunity to nominate their own projects for consideration for funding and nominated projects should be screened according to the criteria of selection. Step 10 Assign day-to-day management responsibility for corporate social investing to a position that is no more than one executive away from the CEO or COO The corporate social investing requires competent day to day management. The manager handles administration once the plan is in place. There should be a corporate social investing programme co-ordinator who reports on all corporate social investing activities on a regular basis. Recommendations John Ross College Corporate Social Investment practices should definitely: Be closer aligned with core business Put formula-based CSI budgets in line with Step Come up with new and refined CSI strategies with defined benefits for the business Have staff to manage formalised CSI programmes; Form long-term working partnerships with Non-Profit Organisation Put social investment, rather than grant making to the fore, with emphasis on development returns Measure CSI results against output-based objectives and CSI indicators Externally verify CSI results Increase communication about CSI and formal reporting Why it is important for organizations to be involved in supporting HIV/AIDS programmes in organizations and communities from a CSI angle According to Bezuidenhout et al (2003) in Dickinson Corporate social responsibility refers to all of an organizations impacts on society and the need to deal responsibly with the impacts on each group of stakeholders.(Dickinson: 2) Social responsibility activities can be internal or external to the business. Activities that benefit employees is internal social responsibility while aspects such as education, health etc for the community is external social responsibility. Corporate social responsibility means that businesses should play an active role in supporting the community in which they operate. Corporate social investment is part of corporate responsibility and is the investment part of a social responsibility programme. Help to promote a positive image of the business in the community and among employees, customers and others Study in the United States found that consumers who become aware of a companys negative practices: (Business for Social Responsibility), 91% would consider doing business with another company, 85% would transmit the information to family and friends, 83% would refuse to invest in the company, 80% would refuse to work for the company and 76% would boycott the companys products. (Strategies for an Expanded and Comprehensive Response to a National HIV/AIDS Epidemic: 5-7) Companies that have a good reputation often derive economic benefits through customer loyalty to their products/services, greater employee satisfaction, a greater involvement with communities and better access to concerned leaders. (Strategies for an Expanded and Comprehensive Response to a National HIV/AIDS Epidemic: 5-7) Â It will help maintain and gain customers The success of any business depends upon the economic status of the consumers. If consumers cannot afford the product, business will not make profit. So, it is essential that people in community are healthy and wealthy. Corporate social investment for the betterment of health, economic status, environment and other factors for the enhancement of the quality of life of the community would ensure that their profit margin continues. According to Prof Du Toit (2010: 2), consumers are becoming increasingly more aware of the effect of companies on nature and society and if companies are acting irresponsible in respect of nature or society, consumers do not hesitate to not support them. HIV/AIDS negatively affects workforce, market and, ultimately ability to earn a profit. Prof Du Toit (2010: 3) asserts that in the worst affected countries, one in four adults are now affected. He maintains that more than 80% of people dying of HIV/AIDS are in their 20s. And with a disproportionat e number professionals and skilled workers, the disease is hollowing out economies and leaving entire communities composed only of the very young and very old. Increase employee productivity The number of people being affected by HIV/AIDS is increasing daily. This will reduce the labour force in due course. This will result in a drop in skilled people in the business. A drop in the work force will have negative effects on the economy e.g. Low productivity. HIV/AIDS can contribute towards high absenteeism as well Volkswagen do Brazil has a comprehensive has a comprehensive programme for prevention, training and treatment for workers that has seen a 90% reduction in hospitalization and a huge positive impact on morale and productivity. (Prof Du Toit 2010: 4) In 2003, a study on six companies in South Africa and Botswana has identified that costs associated with HIV/AIDS in the work force (increased medical costs, decreased productivity, etc) was as much as 5.9% of the companies labor costs. However, the study demonstrated that all six companies would have earned positive returns on their investments and reduced this costs associated with HIV/AIDS in the work force by as much as 40.4% if they had provided free antiretroviral drugs to employees living with HIV/AIDS. Furthermore, the study has reported that the returns, in terms of cost savings through preventing HIV/AIDS, are as high as 3.5 to 7.5 times the cost of intervention. (The Business Response to HIV/AIDS 2000:18) Bloom, D. et al.2006: 11 are certainly correct in saying that HIV/AIDS affects corporations by increasing costs and reducing productivity. Their argument is that rising costs result from Greater insurance costs (e.g. life insurance premiums in Zambia quadrupled in two years), higher health care costs, increased absenteeism due to illness or caring for infected family member(s), higher recruitment and training costs for new employees and Greater funeral costs, whether due to absenteeism or actual funeral costs. Bloom, D. et al. maintain that declining productivity results from increased absenteeism, high staff turnover resulting in a loss of knowledge, intellectual capital and skills and poor morale due to loss of loved ones and/or fear of discrimination.( (Bloom, D. Et al. 2006:7) It can be concluded that all these effects as stated by Bloom, D. et al. lead to decreased individual and household purchasing power (lower income), resulting in consumers buying fewer goods and services, saving less money and paying fewer taxes. In addition, these effects lead to fewer work force, production of fewer goods and services, reduced market size leading to more competition, fewer businesses surviving and lower profits for those that do survive. ((Bloom, D. Et al. 2006:7) According to Rosen, S. et al, for most companies, HIV/AIDS can raise the cost of labor by 1-2% in companies. Rosen, S. et al conducted a study in the non-agriculture companies in South Africa, Uganda, and Zambia. This study has revealed that, in their last two years of service, employees who died of HIV/AIDS were on leave or absent from work between 18 to 50 days more than other em ployees. (Rosen, S. et al. 2006:8) Increase the effectiveness to attract and retain employees In business, reputation can have both economic and social returns. Many businesses are involved in HIV/AIDS work because they want to protect or develop their corporate reputation internally and externally. Internally, a healthy, skilled and satisfied workforce is a major asset for a company. The employees perception of the company is important for job recruitment and retention. (Strategies for an Expanded and Comprehensive Response to a National HIV/AIDS Epidemic: 5-7) Investors prefer to invest in socially responsible organizations. Firstly, business is arguably the most powerful institution of our society and the major force affecting world conditions, and secondarily, individual business corporations will survive only if they address individual and societal needs and become more effective in their processes. Prof Du Toit (2010: 2) identifies four major stakeholder groups: shareholders, employees, customers and the general public. If a company does not respond to its stakeholders concerns, it can lose customers, valuable staff, investors and access to capital assets and market share. The ILO estimates that as many as 36.5 million people who are engaged in productive activity are living with HIV. Therefore, the ILO maintains that HIV/AIDS must be recognized as a workplace issue and be treated like any other serious illness affecting employees. The ILO argues that this is necessary because on one hand, HIV/AIDS affects the workforce and on the other hand because the workplace, being part of the wide r community, has a role to play in the struggle to prevent the spread and effects of the epidemic. The ILO asserts that the workplace can be a central point for prevention and care within its existing human resource development and training programmes, health and safety structures and it is also the place where standards are set for working conditions, labour relations and the protection of workers rights.( ILO AIDS Interim Report May 2006: 8)

The Bible s Version Of How The World - 1756 Words

For hundreds of years, the majority of the world believed in the Bible’s version of how the world was created. The most common known story is from Genesis 1. In this verse from the Bible, God created the world in six days and then proceed to rest on the seventh which is why we are supposed to rest on Sundays. Each day God creates a different part of the universe. For example, the first day He creates light, the fourth and fifth day He creates all the land animals of the world, and finally on the sixth day He creates humankind, both male and female. This basic story was what most Christians accepted and believed in for thousands of years. Then in 1859, Charles Darwin released his book, On the Origin of Species, which stated that animals†¦show more content†¦It is much easier for people to say that the Bible is wrong and many have because there is not that much proof to back it up. If the Bible is taken literally word for word, a person would be able to say that it is w rong very easily, but by looking at the Bible more abstractly and interpreting it in different ways, it can fit with scientific theories much more closely. By taking a look at each day individually, what happens on and the order of these days, it become clear that creationism is quite similar to how evolution states the universe and world was created. A lot of the following ideas about each day came from an article written by David Wolper in an article called â€Å"Genesis and Science: More Aligned Than You Think?† for the Huffington Post in 2010 with a few of my own throughout. The Big Bang Theory is the scientific theory that attempts to explain how the universe was created. It states that the universe started out in a very small, very dense, and very hot area and then with the help of a huge explosion expanded into the universe we know today. What scientists have failed to prove is where the very small spot or where the first materials of the universe came from. God can be used to answer those questions. Like it states in Genesis 1, on the first day, God created heaven, earth, and light which is the Bible’s version of the Big Bang Theory. There is absolutely no way to

Patriots, Loyalist, and the Neutral Ones Stuck in the Middle Free Essays

Patriots, Loyalist, and the Neutral Ones Stuck in the Middle Today’s America is known for many things; however, one of the things it is notorious for is being a free country. Becoming a free country did not come without many trials and tribulations. The freedom that the American people now have grown so accustomed to started with fierce opposition not only from Britain, but from many of the Englishmen who lived in American colonies. We will write a custom essay sample on Patriots, Loyalist, and the Neutral Ones Stuck in the Middle or any similar topic only for you Order Now The people that supported Britain throughout the American Revolution are referred to as Loyalists. On the other side of the spectrum, the people that strongly opposed Britain’s rule and King George III are known as Patriots. Patriots fought against the acts that Britain wanted to enforce and believed the colonies should have independence from Britain. Last there were the people who were neutral. While the Patriots and Loyalists were large in numbers, those in the neutral party were the minority, often suffering hardship due to their stance. Although the Patriots found unity in the beliefs they held towards Britain, they were a blend of people from many different backgrounds. Patriots were a blended group of people from different social classes, from farmers to lawyers. They did not all share the same education level or common interests. The Patriot party was not fueled by people who were seeking their own power just for the purpose of being free. They were a group of people who felt like Britain was unjust in their tactics of rule. During, and immediately after the military conflict, a ferment of ideas — argued and discussed by an assemblage of remarkable men whose likes have rarely been seen — produced an innovative combination of republicanism and federalism that would serve as a model form of government for humankind, offering fresh political opportunities. † (Cowley and Parker 2001) The Patriots were against what they felt was unfair taxation, which was the beginning foundation of â€Å"no taxat ion without representation. Some Patriots felt that loyalty should still be in place towards King George III; however like those who didn’t express similar loyalties, they felt â€Å"that taxes should be regulated by their own legislatures, not by members of Parliament in Great Britain. † (Houghton Mifflin Harcourt 2011) One of their base core values was liberty. However the liberties they wanted or already had experienced, had been threatened by the Britain’s greed. They opposed being held to rules that were not put in place by the population majority. They felt it was only just that the people in the colonies have rules and regulations that they set instead of following everything that Britain desired. Patriots had an overall want for a common good. The poor people would not be held to things the rich would put in place, instead the people of the colonies would find a common unity to benefit all of its inhabitants. Loyalists were a party of people that would closely identify with today’s slogan â€Å"if it isn’t broke, why fix it†. Everyone living in the colonies had adhered to the rules and regulations set forth in Britain before and in their eyes, change was not necessary. Many lacked the desire to rear against a country with so much power. Unlike the Loyalists opposing group, the demographics were much more similar in those that followed the King. Money was a common factor for them and so was the responsibility of being a business owner. Many business owners had links to Britain that tied their livelihood in America to their loyalties they expressed for Britain. Many Loyalists had ties to Britain’s upper-class through marriage and other family. All factors that can solidify the stance many Loyalists chose. They also feared the upheaval that could arise without being under the control of Britain. They had no way of knowing their families would be safe or that their businesses would not be destroyed. They had no reason to be confident there worries might be unjustified when the Patriots resorted to violence. Britain wasn’t only safe because change is hard; Britain was safe because of the orderliness that they maintained. Loyalists also felt it was a moral issue to not be loyal to King George III. In their eyes, they did not have the power to choose and side when their moral beliefs told them their only option was to be loyal to the crown. Finally there was the group that did not take a solid stance on either side of the debate. The neutral party was not necessarily the easier side to be on though. They tried to keep more to themselves and not be as active as others did. They tried to maintain a low profile and stay out of the way. However, by not choosing to be on one side or the other they were looked at poorly by both Patriots and Loyalists. They continued business with Britain, and followed their own protocol they deemed appropriate for themselves. â€Å"Men of good will simply should not rob and butcher one another, they believed, and many felt that the correct stance was to refrain if at all possible from any form of participation. † (Fellman 1990) Note that â€Å"if at all possible† was not always permitted. â€Å"Nearly half of all colonists did not want to take sides. They wanted to remain neutral in the conflict between the British and the Patriots. But they were forced to choose sided once the war began. (Todd 2001) Everyone living in the American colonies during the war felt the effects. Though not all wanted to be involved, nor did many feel the need to participate, it was unavoidable. Men, women, and children shed blood; there was no one who was not impacted. Being a Patriot, Loyalist, or a neutral party was based on differences varying from monetary and social class, right down to fear of chang e; however, there was no difference when comparing the high emotion and the impact experienced during the American War. Works Cited Cowley, Robert, and Geoffrey Parker. Reader’s Companion to Military History. Wilmington: Houghton Mifflin Harcourt, 2001. Fellman, Michael. Inside War: The Guerrilla Conflict in Missouri During the American Civil War. Oxford University Press, 1990. Houghton Mifflin Harcourt. 2011. http://www. hmheducation. com/fl/pdf/resources/Grade5/T-5-1_SFLETG713311_TGL08. pdf (accessed September 14, 2012). Todd, Anne M. The Revolutionary War. Capstone, 2001. How to cite Patriots, Loyalist, and the Neutral Ones Stuck in the Middle, Papers

Using Financial Statements To Compute Ratios-Myassignmenthelp.com

Question: Discuss About The Using Financial Statements To Compute Ratios? Answer: Introduction BHP is a pioneer in the resource industry and has its presence in the global arena. It is one of the biggest producers of commodities that have iron ore, copper, coal, etc. Further, it has enhanced its activities to conventional and unconventional oil, coal and gas. It is regarded as the biggest producer of commodities such as iron ore, silver, nickel, etc. The main aim of the company is to own, as well as have an operation on the low-cost assets that are divided by geographical constraint and market. It strives to cater to the need of the customers through its resources and growth. The main aim is to extract oil, gas and other minerals from various locations of Australia (BHP Billiton, 2016). The products of BHP can be traced all around the globe and the major sales can be tracked in Singapore, as well as Houston. The workforce consists of 1, 23,850 employees with other contractors that have its reach to more than 130 destinations (BHP Billiton, 2016). The long-term view of the comp any helps the company to cement a strong position in the market. The operations and movement of the company is a proper indicator of the power and fundamentals of the company and has provided a strong support towards economic growth. BHP Billiton is dual listed and has its headquarters in Australia. The primary or the main listing is on the Australian Stock Exchange. Framework The corporate planning of BHP Billiton is strong enabling the company to meet the challenges that pertain to the external environment and enables to increase the total return. The phase that is starting provides the development of the central case that enables bottom up assessment (BHP Billiton, 2016). The planning process is structured in a manner that enables to elbow many uncertainties that exist globally. Moreover, the framework helps in the structuring of the external factors that contains political, technical and governance. Further, the presence of governance and the compliance process makes it sure that the internal control is assessed and the practices do not suffer (Brealey et. al, 2011). Thereby, the framework is structured in a manner that eliminates the situations that are adverse in nature. Sources of Financing The net debt of BHP Billiton consists of liabilities that bear interest and the in tune to this, the group issued Global bonds that sum to US$ 5 billion and consisted of Senior floating rate notes of value US$500. Further, the group consisted no commercial papers that are supported by credit facilities. In the year 2015, the net financing cash flow enhanced to US$284 that increased sharply from US$8.3 million. The company used a hybrid of multi currency and the lower dividend was paid as per the new structured policies. The main aim of the group is to own, as well operate assets that have large life, low cost, and the new policy that contains diversified by market and geography. The monitoring of the group is due with the aid of gearing ratio, the ratio that can be termed as net debt to net debt in addition to assets. The exposure of the group is present to the interest rate risk on the borrowings that is outstanding and other investments (BHP Billiton, 2016). The management of the i nterest rate risk is done through the strategy of portfolio risk management. The group contains debt that is issued at rates that are fixed in nature. Further, the exposure of the group is even present to the interest rate swaps. The activities of finance comprise of receipts from liabilities that have an interest bearing and other earnings from the debt related tools, liabilities repayment that has an interest bearing tag, the revenue from the ordinary shares, buy back, dividend payment, etc. These are the cash flow from financing activities. Further, the component of equity consists of share capital, reserves, treasury shares and retained earnings. Moreover, the share capital that is issue consisted of shares that were supported by public, preferences and the treasury shares (BHP Billiton, 2016). Capital Structure and Financial ratio The capital structure of any company is denoted through the debt equity ratio, debt ratio, and the equity ratio. In the case of BHP Billiton, it is noted that the proportion of debt is higher in all the five years and has crossed 1 meaning the stress of the debt is high. Further, it indicates that the capital of the company is more concentrated on debt. Hence, a huge outflow of the funds will happen by way of interest. The equity ratio of the company stands below 0.50 which means the company has standard equity balance. Higher the equity ratio the best will be the situation (Davies Crawford, 2012). Overall the capital structure means that more reliance is in debt. Financial ratio As per the computation, it can be commented that the liquidity of the company is strong and hence, BHP Billiton can meet the obligations. The current assets are sufficient to match the current liabilities. Further, both current and quick ratio has increased over the span of five meaning stressing on the strong liquidity position of the company. On the other hand, the gross profit of the company is formidable that indicates the strong control over the cost of sales. However, the net profit margin declined in the current year that is a big alert and negative sign on the part of the management (Horngren, 2013). Rio Tinto Rio Tinto, listed on the ASX is a leading company in the mining field and is completely based on the processing of minerals. It has its presence worldwide and a mining group and mainly emphasizes on mining, as well as processing of mineral resources of the Earth. The goal of the company is to generate high returns that are sustainable in the eyes of the shareholders and hence, establish a portfolio that is efficient in nature. Rio has its presence in more than 35 countries and has a workforce of more than 51,000 people (Rio Tinto, 2016). It has its headquarters in the UK. With a presence on a global scale, the group has efficiency in terms of providing correct expertise. The main achievement of the company is with respect to the sustainable development. The group functions in a manner that is containing long-term benefits for the customers and the society as a whole. Strategic advantages like access to the huge and best quality bauxite make it immensely successful. Trend The position of Rio Tinto stands strong due to the strong balance sheet, assets of world class and containing strong drivers of performance. The talented employees are an asset when it comes to the period of volatility (Rio Tinto, 2016). Along with the strong infrastructure and an emerging economy, the long-term perspective of the industry is strong. The company has strong discipline in terms of capital and has strong tamed the capital expenditure. The capital expenditure was reduced from US$4.7 billion in 2015 to the US $3 billion in 2016. The net debt was decreased considerably from US$13.8 billion to the US $9.6 billion. Framework Rio Tinto is mainly engaged with risk management that is important for the smooth running of the organization. It helps in creation, as well as an increment in the value. The risk structure provides a general idea that the company stresses on leaders for the creation of value by the management of the business. The framework provides a general idea that the risk management is another important aspect on how to create value. It is vital for the smooth functioning of the company (Albrecht et. al, 2011). The importance of identification and management of risk rests with every employee and the leaders in the organization. Finance Sources From the annual report, it is clear that the financial resources or access to the company are not limited or constrained. In 2013, bonds were issued by Rio Tinto. Further, it associated with finance limited that helped in the creation of additional amount that stands at $7.5 billion. Moreover, the group has strong links with the bank and of a bilateral nature. To ensure a strong momentum, Rio issued 1,436,542 shares from treasury and 951 allotments of new shares were done. The purchase by trustees stood at 842000 shares (Rio Tinto, 2016). Further, the registrar purchased 1,089,189 shares so that obligations can be honored. The share capital comprised of reserves retained earnings, and share premium. Also, the financing structure consisted of payment related to dividend from the equity shares, repayment of borrowings, and purchase of interest that appears to be of non-controlling nature. Capital Structure and financial ratio The capital structure of Rio Tinto clearly indicates that it is a debt ridden company as in all the five years the debt equity ratio exceeds 1. This means that the company has an over reliance on debt. The equity ratio projects that the equity is below 0.50 that does not boast a strong picture. Hence, a major chunk of profit will go towards interest payment (Graham Smart, 2012). Financial ratio Going by the computation, it can be commented that Rio Tinto has liquidity as projected by the current and the quick ratio. The current ratio is next to the standard ratio of 2:1 implying a perfect ratio. However, the quick ratio is above 1:1 meaning the funds of the company can be invested elsewhere and income can be generated (Libby et. al, 2011). The gross profit of the company is properly balanced. However, there have been fluctuations in the past five years. However, the net profit margin indicates that the company falters when it comes to the management of expenses. It has fluctuated in all the five years and been negative too. BHP Billiton has higher exposure to Oil and Gas The earnings of Rio is majorly concentrated from the aluminum and iron ore that provides a great contribution to earnings of $1.12 billion and $3.95 billion that was projected in the year 2015 and the total earnings stood at $4.54 billion. It needs to be noted that Rio was linked to operation in copper and coal that led to an inflow of $274 million of segment earnings the previous year. On the other hand, BHP earnings come from the iron ore and have strong fundamentals in coal, as well as copper (BHP, 2016). This indicates that both the companies have a strong concentration on iron ore and even in coal and copper. The presence of energy can be witnessed in the case of BHP while Rio lacks in this regard. The sensitivity of the change in profit to price changes of BHP can be answered through the following. The profit after tax of BHP has increased by $600 million if the crude price will increase by $10 per barrel. In the short-term, the exposure of BHP to energy is inefficient because the crude prices have declined to a considerable extent. Hence, the concentration is one iron ore. Flexibility The balance sheet of both the companies is strong or effective in nature with low cost of production that helps both the companies to cater to the demand of the stakeholders. It enables both these companies to consider the supply that is in excess. Therefore, it can be said that both the companies have strong fundamentals and better results can be attained in this regard (Melville, 2013). Management of Capital When it comes to investors of Rio and BHP it can be said that the investors were dejected owing to the deficit in the capital return. The capital management of BHP is weak and hence, far from attainment of the apex (Northington, 2011). On the other hand, Rio Tinto stresses mainly on the shareholder return. However, the capex of Rio declined at a strong pace as compared to BHP. Strategies of Credit BHP stresses mainly on maintenance of a strong credit rating that is A whereas Rio is ready to forgo one grade of credit rating so that the growth strategies can be executed. Approximately 80% of the Rio earnings is generated through the operations of iron ore and the decline in the prices of iron ore is structural in feature meaning that it does not disturb the momentum of the company (Rio Tinto, 2016). The initiatives of productivity and weakness in the local currency may give support to the company. On the contrary, the prices of shares of BHP are getting swayed by the petroleum product exposure Findings Both the companies are debt ridden and hence heavily rely on debt. Therefore, investment in such companies is prone to risk as the company needs to pay huge interest for the debt undertaken (Lapsley, 2012). The profitability of both the companies has undergone immense change. the fluctuation has happened as it both the companies are under the mineral resource group. The external scenario heavily influences the scenario (Correia al, 2005). If the share price of BHP surges there will be more capital gain to the investors as compared to Rio. The ability to bounce back is more prominent in the case of BHP as it has more strong fundamentals as compared to Rio Tinto. Recommendation The above report signifies that both the companies are into the fierce competition and whenever there is a downfall in the marketing; the market condition of both the countries has plunged. It is, therefore, evident that the market scenario plays a leading role in the progress of the both the company. Going by the overall report, it can be commented that both the companies should not be considered for investment as it is running under huge debt. The ratio analysis is a clear indicator of that. Debt ridden companies are prone to heavy drawbacks and hence, must be avoided. References Albrecht, W, Stice, E Stice, J 2011, Financial accounting, Mason, OH: Thomson/South-Western. BHP Billiton 2016, BHP Billiton Annual Report and accounts 2016, viewed 11 September 2017 https://www.bhp.com/investor-centre/annual-reporting-2016 Brealey, R, Myers, S. and Allen, F 2011, Principles of corporate finance, New York: McGraw-Hill/Irwin. Brealey, R. A, Myers, S. A Marcus, A. J., 2015. Fundamentals of Corporate Finance, 8th ed. Australia: McGraw-Hill Irwin. Correia, C, Mayall, P, O'Grady, B Pang, J 2005, Corporate Financial Management, 2nd ed. Perth: Skystone Investments Pty Ltd. Davies, T Crawford, I 2012, Financial accounting, Harlow, England: Pearson.. Graham, J Smart, S 2012, Introduction to corporate finance, Australia: South-Western Cengage Learning. Horngren, C 2013, Financial accounting, Frenchs Forest, N.S.W: Pearson Australia Group. Lapsley, I. 2012, Commentary: Financial Accountability Management, Qualitative Research in Accounting Management, vol. 9, no.3, pp. 291-292. Libby, R, Libby, P Short, D 2011,Financial accounting, New York: McGraw-Hill/Irwin. Melville, A 2013, International Financial Reporting A Practical Guide, Pearson, Education Limited, UK Northington, S 2011, Finance. New York, NY: Ferguson's. Rio Tinto 2016, Rio Tinto Annual Report and accounts 2016, viewed 11 September 2017 https://www.riotinto.com/documents/RT_2016_Annual_report.pdf