Wednesday, February 26, 2020
Increasing taxes of alcohol - Essay Example According to the health minister, when in the year 2000 the previous government initiated a tax decrease on these products, it led to a drastic increase in the consumption of these products. Official data suggests that the consumption increased form 14 percent to around 60 percent with young girls. Moreover, an even more alarming situation for the government is that the consumption of ready to alcohol drinks is increasing within teenagers and data suggests that girls are even more responsive towards this trend in comparison with boys. The government hopes to reverse this trend with this price increase since the segment is price sensitive plus the government also promises to spend the tax revenue in preventive health schemes. The above-mentioned case in many ways relates to different concepts of economics. The first one can be the very basic relation of price and demand. Economics at its initial level teaches that price charged for any product and quantity demanded of that product enjoy a negative or inverse relationship. If price charged for a product increases than the quantity demand decreases and vice versa1. This case shows a similar kind of a situation. According to the health minister when in year 2000, the previous government decreased the taxes, it led to the decrease in the price charged for it to consumers and this decrease in price led to a drastic increase in the quantity demanded for ready to drink alcohol drinks. Official data suggests that it rose from 14 percent to 60 percent within the segment of young girls. The price demand relationship explains the idea and phenomenon behind this happening. Another important concept of economics applied here is the price elasticity of demand. Sensitivity of quantity demanded to the changes in the price charged is the price elasticity of demand. In order words, it can also be said that it refers to the responsiveness of demand in relation to the changes in price.
Monday, February 10, 2020
Analysis of Financial and Operating Performance of Vodafone - Assignment Example The slow growth of sales is caused by the economic recession that started in 2008, the stiff competition from other mobile companies and internal operations problems. The net profit has also decreased in 2009 by 15% because the costs of selling, administrative and unexplained unusual expenses went up. The decline in the net profit will have an effect on the ability of the company to pay its short and long-term obligations as well as earnings per share. Earnings per share for 2009 is $13 and industry is $15 For 2009, the gearing ratio or debt to equity is 1 meaning company has used up an equal weight of debt and equity financing, while for 2008 it is only .63%. Because of this shift to debt financing, the interest expense of the loans has increased from $1398M in 2008 to $1798M 2009. Debt financing becomes risky because of the volatility of interest rate charges. The limited net profit margin makes it difficult for the company to quickly pay its short-term obligation For instance; its current and the quick ratios for the past two years showed a ratio of less than 1 that gives an idea that Vodafone is going to have difficulty in paying its maturing obligations. Investment returns remain the same for 2008 and 2009. Vodafone had significant higher capital investments in 2009 than in 2008 that included long-term investments and acquisitions of property, plant, and equipment. Sources of funds of these investments are debt and equity financing. The return on assets for both periods has been almost the same in spite of additional investments in assets. Consequently, the ROI provided a negative return that should alarm the company. Several factors have contributed to the decrease in share prices of Vodafone. Vodafone Share price as reported on the London Stock Exchange (high) shows Ã £1.49 for 2005, Ã £1.55 for 2006, Ã £1.54 for 2007, Ã £1.98 for 2008 and a decreased share price of Ã £1.70 in 2009.