Analysis of JD wetherspoon and greene king - Free Essay Example

Sample details Pages: 11 Words: 3225 Downloads: 10 Date added: 2017/06/26 Category Business Essay Type Compare and contrast essay Did you like this example? The following report addresses the likely reasons behind Greene Kings (GK) undervaluation in the stock market compared to its competitor JD Wetherspoon (JDW), the TLS and FAS in general. GKs higher debt level, lack of investor optimism about future growth, low DC albeit high DY, and recent decline in EPS are likely reasons. Revenue and profit for GK and JDW has been impacted by intense competition, tradition conditions, price competition, changing consumer behaviour and impairment charges. Don’t waste time! Our writers will create an original "Analysis of JD wetherspoon and greene king" essay for you Create order JDW is operating in line with its business strategy of focusing on its core business, with net pub increase of 37. GK in contrast drifts from its organic growth strategy, with the net closure of 22 pubs. The following report addresses the likely reasons behind Greene Kings (GK) undervaluation in the stock market compared to its competitor JD Wetherspoon (JDW), the TLS and FAS in general. GKs higher debt level, lack of investor optimism about future growth, low DC albeit high DY, and recent decline in EPS are likely reasons. Revenue and profit for GK and JDW has been impacted by intense competition, tradition conditions, price competition, changing consumer behaviour and impairment charges. JDW is operating in line with its business strategy of focusing on its core business, with net pub increase of 37. GK in contrast drifts from its organic growth strategy, with the net closure of 22 pubs. Both companies have similar gearing and solvency ratios, illustrating stable companies. G K has stronger financial ratios (current 0.73, liquidity 0.66), compared to JDW (0.23 and 0.16 respectively), however its interest cover lies at 1.39, compared to JDW 2.6, which may increase the likelihood that GK would default if profit keeps declining. It is therefore predicted that economic and market conditions would continue affecting profitability in both firms; though low property prices may be an advantage. GK may experience revenue dip if it does not increase revenue and expand pub locations. In accordance to the EMH, share price and financial performance is linked. Therefore GK should aim to reassure its investors on the possibility of future business growth, which could in turn drive share prices higher. The following report addresses Judy Holts questions regarding the effect of financial performance on Greene Kings share price, in relation to that of its competitor (JDW), its market sector (TLS), and the UK market (FAS). The report is outlined as following: The foll owing chapter introduces PE and other valuation ratios, with particular reference to GK, JDW, TLS and FAS, in order to explain the differences in valuation. Following that, a review of both companies financial performance is conducted in light of economic situations and predicted future occurrences, and finally, Judys question on the link between share price and financial performance would be answered, whilst the report is concluded with clear advice in the final chapter INVESTMENT VALUATION EXPLAINED The price-earnings multiple is widely used in investment valuations for comparing the values of companies within an industry, and industries within a market. It is calculated as follows: PE = Share price / Earnings per Share. The PE ratio is a form of earnings multiple, and denotes that the price paid for the shares is a multiple of the earnings per share generated by the company (Damodaran, 2002). Therefore a PE of 10 means that investors buying the companys shares would realise their money back in 10 years. The nature of the PE (being a measure of the price, in relation to earnings) makes it unique to a firm, and most importantly, easily identifiable across a sector. Similar companies are prone to similar economic situations, so investors perceive their actions and operations with similarities. Therefore adverse conditions are prone to affect investor mood to all companies operating within a sector, rather than a single company. PE is also used to depict an undervalued, thus c heap company, from another within its secto. The PE multiple for the travel and leisure sector (TLS 15.38), FTSE All-Share Index (FAS 17.47) and JDW (15.1) are all similar, thereby depicting that the shares of JDW are trading at fair value, while those of GK are undervalued at 10.9. The likely reasons why the PE ratio is different between GK, JDW and the TLS are explained below: Ehrhardt and Brigham (2008) explain that companies with higher debt usually represent higher risks, with relation to their ability to repay interest or avoid bankruptcy. Both GK and JDW have similar revenues for FY09 at  £955 million each (FT, 2010), with similar number of pub outlets (785 and 746 respectively), yet GK has higher liabilities of  £2.36 billion compared to JDW ( £689 million). Repaying such liability with similar revenues may render GKs shares temporarily unattractive due to its inherent risks. The low PE for GK illustrates that the price of its shares are not as high as they should be, compared to competitors. This could be because investors do not generally have high optimism regarding the growth prospects of GK, its earnings forecast or its business activities, regardless of past earnings. The Dividend Cover (DC) is the ratio of a companys dividend in relation to its earnings. It represents the number of times the profit could be used to pay dividends. GK currently has a DC of 1.4, compared to JDW 1.9 (A2), thereby illustrating that JDW is better able to sustain its level of dividend payout even if its profit drops by a considerable percentage, compared to GK. The earnings per share (EPS), depicts how much the company earns on every share issued (A7). JDWs EPS grew by 18% in FY09, while that of GK fell by 10% (Digital Look, 2010). Utilising PE as an effective method of comparing the value of any two companies within a sector have been criticised by Damodaran (2002) for a number of reasons. The earnings per share of several companies usual ly vary due to forecast earnings and management stock options, which may in turn affect the PE multiple derived. PE does not account for differences in the fundamentals of each company, which may explain differences in earnings per shares, or stock market prices. Other investment ratios exist, such as the Dividend Yield (DY) and Enterprise Value Multiple (EVM), which could be utilised in valuing and comparing companies operating within TLS. The Dividend Yield (DY) of both shares represents how much a company pays out each year related to its market price per share. In the absence of stock market appreciation, the DY represents the investors return on stock market investment (Ehrhardt and Brigham, 2009). GK has a DY of 5.27%, while JDW has 2.82% (A3), thus illustrating that GK generally pays investors higher than its competitors based on its share price. However, the DY is not as important as the DC, which is related to the companys earnings (Tsoukalas and Sil, 1999). They a ssert in the absence of genuine growth, DY only temporarily increases stock returns. FINANCIAL PERFORMANCE REVIEW GK and JDW presently operate in a highly competitive industry, their major business is in the pub market, wherein they own, manage or lease pubs. Their major competitors are Punch Taverns Plc, Enterprise Inns Plc and Marstons Plc, all of whom operate on similar business models and sell the same products (Datamonitor, 2009). According to Mintel (2009), pubs are being affected by a reasonable decline in pub visits, nationwide pub closures and a rise in overhead cost of doing business. Figure : Revenue figures for GK and JDW. Source: Orbis (2010) Due to these adverse effects, and also the effect of the economic crisis on the spending power of the average pub visitor, GK and JDW only witnessed marginal increases in their revenue in 2009 (A1). As illustrated in figure 1 below, GK grew its revenue by 1.3% to  £954.6 million, while that of JDW grew 5.2% to 955.1%, JDW thus experienced higher growth rate than GK. According to GKs annual report (GK, 2010), its marginal increase in r evenue is largely as a result of the adverse trading condition within the market, while JDW attributes its revenue increase to its focus on opening new retail pubs, which increased by 37 in 2009 (JD, 2010), thereby boosting its revenue growth. GK closed 22 retail pubs, and experienced a 5.2% revenue drop in its partnering business. GKs strategy, according to the Chairmans statement in its FY09 annual report is to create shareholder value by delivering organic growth across our divisions, however the company has been achieving only marginal growth in its core areas. JDW in contrast aims to maintain its current growth momentum by concentrating its efforts on the sales of foods beverages and net machine income within its pubs. GKs revenues have grown at a faster pace (34.93%) than JDW (17.93) over the past five years (A4). However, the effects of the economy and increasing costs have had a major toll on the profitability of both businesses recently (Walsh, 2009), as illustrated in f igure 2. Figure : Net Income for GK and JDW. Source: Orbis, 2010 GKs net income increased steadily over the past five years up until 2009, when its net income fell by 68.2% from  £124.3 million to  £39.5 million. While that of JDW also fell in 2009, albeit at 28.7%. The impact on profitability for both companies has been jointly attributed as being due to the impact of the economy on the trading conditions of pubs; however, several other factors have been outlined as affecting the profitability of both businesses within the UK. Competition is intense amongst players within the industry. Pubs are located in close proximity and often compete to attract customers. JDW for instance slashed the price of several drinks to as low as 99p, starting a price war amongst several other pub companies (Walsh, 2009). The decline in property values as a result of the economic crisis has resulted in situations whereby pub companies have had to revaluate their assets, and impose impair ment charges for changes in value. GK for instance posted an impairment charge of  £53.5 million against the value of its pubs in 2009 (GK, 2010). The changing customer-spending pattern and visiting habits to local pubs are in turn affecting revenue growth in pub companies, which in turn affects the average profit per pub. Increases in overhead cost also affect profitability (Mintel, 2009). Though both businesses operate within the same sector, GKs business is somewhat more diversified than JDW. GKs interest spans across pub ownership, pub lease, brewing, and a Scottish business, while JDW focuses mainly on pub ownership, with some interests in Hotel. Therefore, their profitability differs significantly as expressed in figure 3. Up until FY09, when the economic crisis took a toll on the profitability of most UK businesses, GK maintained a net income margin range of 9 13%, while that of JDW hovered from 3.2 5.27%. The general decrease in profitability across both compani es is as a result of factors explained above. However, with relation to JDW and GKs main businesses, GK made a profit margin of 18.5% on its pub management business, while that for JDW was 10%, thus illustrating that GK is a more profitable company. In 2008, GKs profitable rose by 1.57 percentage points (ppt), while that for JDW fell by 1.36ppt. Figure : Net Income Profit Margin for GK and JDW. A8 In accordance with the differences that exist in both companies profitability, the balance sheet ratios of both companies differ as expressed in figure 4. GK has a current ratio of 0.73, illustrating that it can afford to pay off 73% of its current liabilities (due within one year), with its current assets (cash, investments, and payables due within the year). Therefore in light of any financial difficulties, GK would only need to raise funds for 27% of its current debt, compared to JDW that has a current ratio of 0.23. Given the current economic conditions, the relative difficult y in obtaining credit and likely threats of interest rates hikes (Datamonitor, 2009); both companies are at a disadvantage. JDWs low current and liquidity ratios illustrate that in the face of severe tradition conditions, which may affect cash flow or profitability, the company may find it hard to meet short term obligations. While, GKs debts of over  £2 billion, though securitized, pose a significant risk, given its revenue of  £955 million (similar to JDW that has lower debt and recently similar profitability). At 6% interest rate (GK, 2010), the company is likely to face yearly interest charges of up to  £120 million (5% of  £2bn). If its profitability continues to decline just like in FY09, the company may also find it hard meeting its future debt obligations. Figure : FInancial Ratios for GK and JDW. Source: Orbis (2010). A6 GKs liquidity ratio also stands at 0.66, which emphasise that in the absence of any inventory sales, GK can still settle 66% of its debt, com pared to JDW (16%). However, the interest cover differs, as JDW can pay off its interests 2.6 times with its net income, compared to GK (1.39 times). This show that JDW is better able to service its  £388.2 million in net borrowings, compared to GK that has over  £2 billion in securitized debt, thereby posing a risk to any of its 2,035 pubs (used as loan security) which could be seized in the event that it cannot maintain interest repayments. Similar profitability levels, albeit different debt levels, puts JDW at a structural advantage, however, this is mediated by its low current and liquidity ratios. Both companies (GK and JDW) have similar gearing ratios of 327.26% and 308.35, and solvency ratios of 21.44% and 19.58% respectively. Thus showing that high gearing is a norm within the Pub industry, and may not represent speculative practices by any of both businesses. The solvency of both companies represents a financially healthy business, being an average of 20% (Hillier et al, 2010). This shows that both companies are likely to continue meeting long term obligations in the foreseeable future, irrespective of their debt levels. In light of the need to conserve cash for future business uncertainties outlined by the CEO of both businesses, GK had a Free Cash Flow (FCF) of  £29.8 million in FY09, while JDW had  £7.15 million. Both companies had substantial retained earnings ( £120.5 and  £23.6 million respectively), though they both invested substantially in capital expenditures ( £57.6 and  £48.3 million respectively). Thus following through on their corporate strategy focus on organic growth and continuous investments. The following are predictions for likely future performance in GK and JDW Given the current UK economic condition, predicted Alcohol Tax (Fletcher, 2010), and consumer lifestyle change which has reduced the total pub visits, it is likely that both companies would experience a future decline in visitors, and impact o n profits. Low property prices pose a significant opportunity for both firms to grow their main businesses, by purchasing and developing more pubs in growth areas. Price wars are likely to continue amongst competitors as they fight to attract and retain customers. Given this, revenue may increase due to an increase in number of pubs; but profits may only increase marginally, due to declining profitability. JDW faces a higher threat due to its business model that focuses on pub management, as opposed to GK that has a diversified portfolio, and makes more profit (45.7% GK, 2010) by leasing its pubs. GK is likely to experience a dip in its revenue if it does not expand its number of retail pubs, or find ways to profitably diversify its business. A major portion of the profit decline resulted from property impairment, which may not be as severe in the future, thereby supporting a rise in net income. SHARE PRICE AND FINANCIAL PERFORMANCE The question as to whether there is a link between the share price of a firm, and its financial performance would be explained both theoretically and empirically given present data. The Efficient Market Hypothesis (EMH) theoretically argues that the share price of a firm already represents all past, present and sometimes the likely future events, such that no news regarding the companys activities could significantly rise or fall a firms share price beyond market expectations (Hillier et al, 2010). This would mean that GKs current share price and undervaluation represents the markets perception of the companys true value, given all available information. Tsoukalas and Sil (1999) express that cash dividends, with high dividend yield, usually convey information regarding the future prospects of the firm. However, in the event that the increase in dividend payout does not translate to future business growth, the stock returns are only temporary. GK has a high dividend yield, but lo w dividend cover, as expressed initially, which illustrates that with current earnings, GK may not maintain its dividend payout. The adverse economic conditions affecting the pub industry, marginal revenue growth the company experienced, and the 68.2% crash in its profitability, all serve to deter investor optimism regarding future growth. JDW in contrast is experiencing higher revenue growth, albeit lower profitability, but its pub openings and pricing strategies, represent an aggressive growth plan, which investors would respond positively to, hence its higher PE. According to Sunde and Sanderson (2009), investors are more interested in future potential, than past performance, because according to the EMH, past performance has already been accounted for in the stock price. In comparison with JDW, GK has higher levels of debt, higher risks of bankruptcy, and as they both have similar solvency and gearing ratios, then JDW may seem to investors as the safer choice even though it h as lower current and liquidity ratios. Therefore considering that the link that exists between financial performance and share prices lies in the firms future potential, JDW has the right to be valued more than GK. As illustrated in the predictions earlier, GK may likely experience a dip in revenue if it is not as aggressive as JDW in increasing revenue, while price wars and changing customer behaviour may likely erode profitability. Increasing its DY, without a corresponding growth potential, may only serve to increase its share price temporarily. In answering the question on whether there is a link between share price and financial performance, yes there is. According to the EMH, the share price already accounts for present, past and likely future performance. In the case of GK, it can only achieve reasonable increase in its share price if it can confidently and truthfully assure investors of the likelihood of future growth, or growth in future earnings and profitability, which could in turn invoke optimism, and revalue the share price higher. Fundamental measures need to be taken to invoke positive investor reception. REFERENCES Damodaran, A. (2002). Investment Valuation. New York: John Wiley Sons. 782pp Datamonitor (2009) JD Wetherspoon and Greene King Company Profiles, publication data 2009, www.ebscohost.com, accessed 19/05/10 Digital Look (2010) Financial Figures for GK Plc and JDW Plc, www.digitallook, 2010), accessed 19/05/10 Ehrhardt, M. C., and Brigham, E. F. (2009) Corporate Finance: A Focused Approach, Cengage Learning, 680pp Fletcher, N. (2010) Pub shares lifted by Wetherspoon results, www.guardian.co.uk/business, accessed: 19/05/10 FT (2010) Greene King Plc and JDW Plc Financials, www.markets.ft.com, accessed 20/05/10 Greene King GK (2010) Our Financials Annual Report FY09, ww7.investorrelations.co.uk/greeneking, accessed 18/05/10 Hillier, D., Ross, S., Westerfield, R., Jaff, J., and Jordon, B. (2010) Corporate Finance: European Edition, McGraw Hill, 895pp JDW (2010) J D Wetherspoon Interim report 2010, www.jdwetherspoon.co.uk/home/investors, accessed: 18/05/10 Mi ntel (2009) Pub Visiting UK November 2009, www.mintel.com, accessed: 18/05/10 Misra, A., and Anil, K. (2007) Economic Value Added as most significant measure of financial performance, Journal of International Business and Economics, Jan 20 2007, accesed from www.britannica.com/bps on 19/05/10 Orbis (2010) Greene King Plc and JDW Plc Financial Data, www.orbis.bvdep.com, accessed 19/05/10 Sunde, T. and Sanderson, A. (2009) A review of the Determinants of Share Price, Journal of Social Sciences, Vol. 5 (3), pp188 192 Tsoukalas, D., and Sil, S. (1999) The determinants of stock prices: evidence from the UK stock market, Management Research news, Vol. 22 (5), pp1 14 Walsh, D. (2009) JD Wetherspoon to cut price of a pint to 99p, www.business.timesonline.co.uk, Jan 3 2009, accessed: 19/05/10

A Mixed Methods Portrait Of Urban Instrumental Music

RESEARCH EVALUATION FORM NAME: DATE: 1. Full citation in APA style: Fitzpatrick, K. R. (2011). A mixed methods portrait of urban instrumental music teaching. Journal of Research in Music Education, 59(3), 229-256. 2. Purpose of the study: The aim of this study was to understand how instrumental music educators negotiate the urban environment in which they teach. 3. Research question(s) posed: 1) What background information do urban instrumental music educators have about the students they instruct and the districts where they teach? 2) What particular abilities do instrumental music educators depend upon to have success in the urban classroom? 3) What thoughts and opinions do educators have concerning teaching instrumental music in†¦show more content†¦6. What data were collected? (If historical, list the primary and secondary sources. If philosophical, list the premises) The researcher used three phases to collect data for this study. Phase 1 of the study was a small focus group of instrumental music educators from the Chicago Public Schools. The focus group served to guide the creation of the survey questionnaire. Phase 2 of the study was the survey, which included questions similar to research questions #1-4. 59% of the surveys that were sent out were successfully returned. Phase 3 of the study, interviews and observations, took place concurrently with Phase 2. Four instrumental music educators from the CPS received a pre-interview, a one-day observation, and a follow-up interview. During the observation, extensive field notes and ensemble recordings were obtained. 7. Primary methodology: Highlight the type Historical: Which category? (it could be more than one) Chronological, Comparative, Oral, Psychohistory, Quantitative, Other (please list) Philosophical: Did the argument advance deductively or inductively? Quantitative [non-experimental] Quantitative [experimental] Qualitative: Highlight which type: grounded theory ethnography narrative phenomenology single case study collective case study Mixed methods: Highlight which type of qualitative methodology grounded theory ethnography narrative phenomenology single

Mahatma Gandhi Introduction free essay sample

The uprising of 1857, known as the Mutiny, had merely served to consolidate the British adventure into an empire. India had effectively passed under British tutelage, so effectively indeed, that instead of resenting alien rule the generation of educated Indians were eager to submit to the Civilizing mission of their foreign masters. Political subjection had been reinforced by intellectual and moral servility. It seemed that the British empire in India was safe for centuries. When Gandhi died it was India, a free nation that mourned his loss. The disinherited had recovered their heritage and the dumb millions had found their voice. The disarmed had won a great battle and had in the process evolved a moral force such as to compel the attention, and to some degree, the admiration, of the world. The story of this miracle is also the story of Gandhis life, for he, more than any other was the architect of this miracle. We will write a custom essay sample on Mahatma Gandhi Introduction or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Ever since his grateful countrymen call him the Father of the Nation. And yet it would be an exaggeration to say that Gandhi alone wrought this miracle. No single individual, however great and wonderful, can be the sole engineer of a historical process. A succession of remarkable predecessors and elder contemporaries had quarried and broken the stones which helped Gandhi to pave the way for Indias independence. They had set in motion various trends in the intellectual, social and moral consciousness of the people which the genius Gandhi mobilized and directed in a grand march. Raja Rammohan Roy, Ramkrishna Paramhamsa and his great disciple, Swami Vivekananda, Swami Dayananda Saraswati, Dadabhai Navroji, Badruddin Tyabji, Syed Ahmed Khan, Ranade, Gokhale, Tilak, Aurobindo Ghosh and Rabindranath Tagore, to name only a few. Each one of them, had in his own, field created a consciousness of Indias destiny and helped to generate a spirit of sacrifice which, in Gandhis hands, became the instruments of a vast political-cum-moral upheaval. Had Gandhi been born hundred years earlier he could hardly have achieved what he did. Nevertheless, it is true, that, but for Gandhi, Indias political destiny would have been vastly different and her moral stature vastly inferior. But though Gandhi lived, suffered and died in India for Indians, it is not in relation to Indias destiny alone that his life has significance. Future generations will not only remember him as a patriot, politician and nation-builder but much more. He was essentially a moral force, whose appeal is to the conscience of man and therefore universal. He was the servant and friend of man as man and not as belonging to this or that nation, religion or race. If he worked for Indians only, it was because he was born among them and because their humiliation and suffering supplied the necessary incentives to his moral sensibility. The lesson of his life therefore is for all to read. He founded no church and though he lived by faith he left behind no dogma for the faithful to quarrel over. He gave no attributes to God save Truth and prescribed no path for attaining it save honest and relentless search through means that injure no living thing. Who dare therefore claim Gandhi for his own except by claiming him for all? Another lesson of his life which should be of universal interest is that he was not born a genius and did not exhibit in early life any extraordinary faculty that is not shared by the common run of men. He was no inspired bard like Rabindranath Tagore, he had no mystic visions like Ramakrishna Paramhansa, he was no child prodigy like Shankara or Vivekananda. He was just an ordinary child like most of us. If there was anything extraordinary about him as a child, it was his shyness, a handicap from which he suffered for a long time. No doubt, something very extraordinary must have been latent in his spirit which later developed into an iron will and combined with a moral sensibility made him what he became, but there was little evidence of it in his childhood. We may therefore derive courage and inspiration from the knowledge that if he made himself what he was, there is no visible reason why we should not be able to do the same. His genius, so to speak, was an infinite capacity for taking pains in fulfillment of a restless moral urge. His life was one continuous striving, an unremitting sadhana, a relentless search for truth, not abstract or metaphysical truth, but such truth as can be realized in human relations. He climbed step by step, each step no bigger than a mans, till when we saw him at the height he seemed more than a man. Generations to come, it may be, will scarce believe, wrote Einstein, that such a one as this, ever in flesh and blood walked upon this earth. If at the end he seemed like no other man, it is good to remember that when he began he was like any other man. Such is the great lesson of his life. Fortunately, he has himself recorded for us the main incidents of his life till 1921 and described with scrupulous veracity the evolution of his moral and intellectual consciousness. Had he not done so, there would have been in India no dearth of devout chroniclers who would have invented divin e portents at his birth and invested him with a halo from his childhood.

Omon Ra Review Essay Example

Omon Ra Review Paper Essay on Omon Ra The book caught me by the arm by accident, my friend forgot it at my house completely forgotten. Not being familiar neither with the personality of the author or his views or his time and manner of writing, read the book with great pleasure. Sometimes getting scary sometimes sad, and sometimes -. Very funny So I wonder wheres it found a metaphor for socialism, grotesque, postmodernism It seems to me very simple here and not connected with the criticism or trembling in relation to socialism in the Soviet Union. Here we are talking about a person, be sure to identity formation and its relationship with society and time. So socialism or Soviet Union it is simply the most convenient way for the understanding of contemporaries. After all, if all dreamed of becoming astronauts. Let course the whole story was a dream of a young man had fallen asleep in the subway, but it struck me to the core, or that there is in humans. This is the story of What Dreams May Come, the story that everything is fine course, the history of the false for a long time, the history of the animal fear of death without OWN SELF . OBLIVION And this book in which everyone will see as in a mirror the fate of their childhood dreams and her mangled corpse reflected We will write a custom essay sample on Omon Ra Review specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Omon Ra Review specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Omon Ra Review specifically for you FOR ONLY $16.38 $13.9/page Hire Writer If you read enabled by the brain, the book will be severe (in a good way something like shock therapy), if turn off the brain it is possible and to laugh heartily over the different kinds of exaggerations and Hochma (that would have been funny if it were not so . Sad) What do you personally find this book you choose. Include the brain or not