The effects of a binding minimum wage

The effects of a binding minimum wage Introduction A binding minimum wage leads to numerous detrimental effects in a competitive labour market. This essay will highlight what these effects are, and what the outcome of these effects will bring to the labour market. A labour market is defined by Parkin as a market where employers are on the demand side and workers are on the supply side. Firms decide how much labour to demand, and the lower the wage rate, the greater is the quantity demanded (Parkin, et al., 2008). It is said to be competitive when there is a surplus of workers that are seeking a job, with few employers willing to hire. A minimum wage is a price floor implemented by the government, which ensures that an employer must pay a minimum rate of pay to an employee, and anything lower than this rate of pay is illegal. A minimum wage is binding if it is set above the equilibrium wage (Parkin, et al., 2008). With a binding minimum, wage adjustments are blocked and the market is prevented from allocating labour resources (Parkin, et al., 2008). The Effects 2.1 The Labour Market due to the minimum wage In the labour market, there is said to be an equilibrium wage. This is where the demand and supply lines on the minimum wage graph intersect, as it is the point that the rate of pay is equivalent to that of the quantity of hours worked/required. A binding minimum wage in a competitive labour market means that this equilibrium point is offset as the rate of pay must rises. This can be shown using the following graph (Parkin, et al., 2008). With relation to part (a) of the Parkins graph previously, it is evident that the wage rate of à ¢Ã¢â‚¬Å¡Ã‚ ¬5 on the Y axis is the equilibrium price, and 21 million hours per week is the equilibrium quantity on the X axis. The minimum wage is below the equilibrium wage rate and is not binding (Parkin, et al., 2008). Where the rate of pay has increased, and all employees are being paid a higher wage, the hiring company cannot afford to hire as many employees as it will be too expensive, because not only do they have to pay wages for the skilled jobs, they also have to pay a higher wage than they would have intended for workers to perform the lower skilled jobs. Therefore this means that there will be workers on the supply side who will not be able to get a job, thus the unemployment rate will rise. This can be shown in part (b) of the graph (Parkin, et al., 2008). With relation to part (b), it can be seen that the minimum wage is à ¢Ã¢â‚¬Å¡Ã‚ ¬6 an hour, which is above the equilibrium wage. The equilibrium wage is now illegal. At a minimum wage of à ¢Ã¢â‚¬Å¡Ã‚ ¬6 an hour, 20 million of hours of labour are demanded and 22 million hours are supplied (Parkin, et al., 2008). This difference that has been created due to the binding minimum wage creates a surplus of 2 million hours of work per week in the graph, which means that the unemployment rate now rises. This new minimum wage also means that unemployed workers are willing to supply the 20 millionth hour for à ¢Ã¢â‚¬Å¡Ã‚ ¬4 (Parkin, et al., 2008). 2.2 Inefficiency of the Labour market due to the minimum wage The minimum wage is not efficient, as Parkin states it results in unemployment wasted labour resources and an inefficient amount of job search (Parkin, et al., 2008). When looking at a minimum wage graph, a deadweight loss is present. This occurs because of a decrease in both the workers surplus and the companys surplus. This is seen in the following graph (Parkin, et al., 2008). Also seen in this inefficiency graph is a potential loss from job search. This loss is said to arise because someone who finds a job earns à ¢Ã¢â‚¬Å¡Ã‚ ¬6 an hour but would have been willing to work for à ¢Ã¢â‚¬Å¡Ã‚ ¬4 (Parkin, et al., 2008). This inefficiency affects the labour market as it means there is a deadweight loss of 1 million hours of work per year. 3.0 What might soften my interpretation? The use of a minimum wage brings numerous detrimental effects to people. When looking at the outcomes of a minimum wage, it delivers an unfair result and imposes unfair rules (Parkin, et al., 2008). Parkin also states that this is unfair because only those who can find a job benefit, whereas the unemployed end up worse off than with no minimum wage (Parkin, et al., 2008).

Kingfisher Airlines Essay

Background: Kingfisher airlines started out as a UB group subsidy, a USD 2 billion diversified conglomerate, which holds more than 60 companies under it which are associated with major industries. The United Breweries group owned the kingfisher airlines. Kingfisher airlines had then commenced its commercial operations in the year 2005 on the 9th of May. Operating with a fleet of four new Airbus A320-200’s, kingfisher airlines had its first travel from Mumbai to Delhi. Subsequently the airliner had even commenced its international maneuvers on the 3rd of September 2008, by interlinking Bangalore and London. However it faced a worsening economic scenario since 2008. The mighty airlines in the present day scenario is facing many bankruptcy problems, pushing the airline to ground many of its destinations and aircrafts. Introduction: It was the year 2006, when kingfisher airlines got listed in the stock exchange after it had been setup in the year 2003. The present day situation for KFA is that it has a staggering Rs.8200 Crore debt and the money to pay for fuel, salaries and airport fees etc. is running out. Due to this KFA has lost all its hopes and has pleaded the government to give them a total  bailout but according to market analysts, the actual flaws in KFA’s business plans and the functioning are due to the endless woes of it , which is the major root problem of the airline. So my research question for the current commentary would be â€Å"Will kingfisher airlines be able to recover from the present debt crisis using the current financial strategies?† Syllabus area covered: SWOT analysis Current Ratio Analysis GPM and NPM ratios – Analysis of the balance sheet Findings: When Deccan Aviation’s Captain G.R Gopinath was looking forward to selling off his airline, then is when Vijay Mallya who kept denying that he couldn’t even think of buying an airline whose business model is so different than that of his had suddenly put in his bid and apparently clinched the deal. It was an interesting deal because KFA had got the license to fly immediately and got immediate listing as soon as it purchased Deccan Aviation but it was not all good, along with the goodies they had even acquired the losses incurred by the airline. The promoter group of the airline that is the UB Group had an experienced set of officials to run its business which majorly includes Vijay Mallya himself. The Airliner’s second problem was that its chairman was acting like an absentee landlord and was concentrating on his other business. The third mistake that Kingfisher Airlines had made was that they could have first consolidated its domestic operations and then got into international flying as then the competition increases a lot and only those with enormous money resources survive. SWOT Analysis: Strengths Weaknesses Strong brand image Financial support from the promoter that is the UB group. First Indian carrier that started out with a whole new fleet of planes. Quality service and innovation Financial issues due to heavy debt borrowing The laying off of employees has caused a bad image. The maintenance costs were very high at ground and airline level. The company still has not met its breakeven. The ticket pricing was very high, not in the affordable range of the commoners unlike its competitors which are priced economically. Opportunities Threats Poor service of air India and problems of strikes in jet airways. Growth in air travel, the number of passengers has increased. Route Rationalization: cutting down business in unprofitable sectors and services to cities.1 Debt Recast: Kingfisher Airlines must ask the banks to reduce the interest rates of the loans and possibly find a local investor to invest some money in their business2. Low cost carriers obtaining the larger market share. Fuel costs also have increased subsequently. Economic slowdown Infrastructure constraints Banks will aver on severe security before giving in any more loans which they need for their operational costs. Some banks may even go up to the extent of calling in all their debt. The airline’s promoter funds will be tapped, which will put pressure on the finances of the UB group Current Ratio Analysis: It can be defined as the company’s ability to meet its short term maturing obligations. The current ratio is calculated using this formula: Current Assets/Current Liabilities. For the year 2012 (as of march 31st) = 16188.35/84428.04 = 0.19 (all values in million INR) For the year 2011 (as of march 31st) = 29738.26/55255.85 = 0.54 (all values in million INR)   3 http://www.marketing91.com/swot-kingfisher-airlines/ 4 http://m.outlookindia.com/story.aspx?sid=4&aid=279017 It can be seen that the current ratio has decreased from the year 2011 to  2012 which indicates a threat to the company as the debt to assets has significantly increased and has not yet been repaid in the right model to improve and come out of the debt crisis. Following is a graph that shows the plotting based on the balance sheet3. We can see that the current ratio is less than 1:1 for both the years which indicates that the short term debts of the business are much greater than its liquid assets, which could spell disaster for its survival if creditors demand payment. Which is the case for kingfisher airlines as there crisis has been increasing and increasing as there are no sources for revenue that can be used to pay out even a part of the debt. If the company’s current ratio falls below 1, it implies that the company has a negative working capital, it is then required for the business to take a closer look at the business and there are no liquidity issues. If the ratio is drastically below 1 it implies that the company has inventories that can be converted into cash and this involves to be seriously concerned into the working which when neglected can lead to a financial crisis like in the case of Kingfisher Airlines. When observed in the financial values the income from operations has increased drastically from march 31st 2011 to march 31st 2012 which can be accounted to the loss in operations and trade. If we observe the employee costs also have been cut down on a large note due to the laying off of the employees and staff members. The aircraft lease rental has been subsidized as the fleet of Kingfisher airlines has decreased. If we compare the quarters between December 31st 2011 and march 31st 2012, we can see that the aircraft fuel expenses are more or less the same, which shows a loophole as to why is there still such high fuel expenses even though the operations and fleet have been reduced or more close to being closed. The losses between the same periods have almost increased more than double the times. Hence we see the net losses of the company to increase from (44.426.95) to (115,152.60) lacs which shows the growing debt crisis of Kingfisher Airlines. Price Movement and Performance Charts of Kingfisher Airlines Index Comparison and Ownership Pattern of Kingfisher Airlines Source:http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scrip code=532747 From the above graphs, it can be clearly seen of what the past, present and future trend of Kingfisher Airlines is going to look like in the respective areas mentioned above. GPM (Gross profit margin) For the year 2011 -4.8% For the year 2012 38.2% It can be seen that the gross profit has been depreciating at an exponential rate which shows that there is absolutely no scope of business for kingfisher airlines, as its functioning and sales have gone down on a drastic rate, thus leading to its mounting losses. NPM (Net Profit Margin) For the year 2011 21.1% For the year 2012 382.01% When we calculate the net profit for the company we can observe the change in it from the year 2011 and 2012 there is difference of about 360% which shows the enormity of the debt that kingfisher airlines is heading towards. The company’s market share has also shrunk a lot due to the onboard crisis. Below is the pictorial representation of the difference in the market share of kingfisher airlines between the financial year 2011 and 2012. FOR THE YEAR 2011 FOR THE YEAR 2012 Analysis: It can be seen that Kingfisher Airlines has gone for public issue before it obtained Deccan Airlines so a part of the money might have been raised from /the money gained out of it. The UB group was the promoter of the company so it had the maximum stake in the Airlines but lately due to the debt crisis its stake is being diluted in order to issue them to other public who can invest money and might raise some capital for the business, doing so it is raising financial pressure on the UB Group. The Going concern status of kingfisher airlines has already been lost which might pose a threat for investors investing in the company which might lead to very bleak chances of survival. Problems: Fuel dues: Kingfisher Airlines had been a nonpayer of fuel bills which lead to many problems for the airliner. HPCL (Hindustan Petroleum Corporation Limited) had abridged the supplies of fuel for the airliner in lieu of non-payment of overdue fuel bills. Delayed Salary: Kingfisher Airlines had not paid salaries to its employees from October 2011 to January 2012, which had caused employee dissatisfaction. It had also been noted that the tax cut from the employee’s income at the source was also defaulted while paying to the tax department. There was a delay in the aircraft lease rentals which has to be paid to GE Commercial Aviation Services, which later lead to repossession of four A320 aircrafts. Airport Authority of India had slammed notices on kingfisher for a due on bills which amounted to about 255.06 crore INR. This had happened because the airliner was working on a cash and carry basis with a daily expense of 0.8 crore INR. Kingfisher Airlines had even service tax arrears which invited the possibility of legal action against the airliner. Kingfisher Airlines was declared as a Non Performing Asset (NPA) by the banks that had lent money for the airliner to carry out its business. Later, KFA suffered more problems such as erosion of net worth, frozen bank accounts, much of its fleet being grounded and suspension of ticket sales by International Air Transport Association (IATA). Kingfisher Airlines share price from Sep-2010 to Sep-2011 Measures Taken: Revenue Inventiveness One world alliance membership would allow KFA to have incoming inland  passenger growth. Co-branded Credit Cards – Kingfisher Airlines had issues the King Club ICICI co-brand card as ICICI bank is one of its major lenders. Kingfisher Express: DTD (Door to Door) Cargo express services to capture the under penetrated air-cargo delivery service. Cost Reduction inventiveness Streamlining distribution channels. Renegotiating vendor agreements – airport and fuel discounts, operating leases at a discount. Control over discretionary spend – reduction in rentals, cost of transport, local conveyance and communication. Optimize space. Operational efficiency: saving on fuel consumption. Equity infusion Debt Re-schedulement Capitalization of its expenses which would lead to the increase in the net income, reduce the stockholder equity and total assets will upsurge for the same amount of expenses. Strategies for Kingfisher to come out from its Debt Crisis: Rescheduling and restructuring of loans- the unsecured loans must be converted into equity share capital then Kingfisher Airlines can avoid the finance cost of the unsecured portion but the promoter’s (UB Group) holding will drastically decrease and even the secured loans can be paid in almost the same manner. Thus the banks will have to increase the period of repayment and decrease the rate of interest on the loans which might help KFA’s operations and possibly the loans might be cleared. There must be efficient strategies to increase the turnover of the company which includes the change in pricing strategy and making it competitive to its co-airlines. Fuel subsidies from the government – KFA must convince the government to give them fuel subsidies by which they can run their airlines and then slowly repay back all its debts. FDI ( Foreign Direct Investment) – there is a larger chance of KFA getting merged with some international airline if the FDI limit is increased which will thus lead to the acquisition of Kingfisher Airlines by an international carrier but will be relieved of its debts and would not then effect the promoter group. Conclusion: The present condition of Kingfisher Airlines can be due to a series of reasons but ultimately it was a rise and all of a giant domestic carrier for India. There are very few chances for the company to bail out from its current situation. The hope of an international merger with Kingfisher might give a ray of hope to the survival of the airlines. If the current debt crisis is not put on hold and keeps increasing, there would be only one door open for Kingfisher Airlines that is to sell out everything to repay all its debts to banks and lenders thus leading to the ultimate collapse of Kingfisher Airlines.

Bessrawl Corporation Essay

1). Inventory: – Under U. S. GAAP, Bessrawl Corporation is allowed to report inventory on its balance sheet at lower of cost or market. Market in this case is defined as replacement cost ($180,000) with net realizable value ($190,000) as ceiling and net realizable value minus a normal profit ($190,000 – $38,000 = $152,000) as a floor. Cost of inventory is $250,000. Since market is lower than cost, inventory is written down to replacement cost of $180,000 and reported on the company’s balance sheet at December 31, 2011. This also led to a loss of $70,000 reported on the company’s income statement for December 31, 2011. However, under IFRS, Bessrawl Corporation had the option to report inventory on its December 31, 2011 balance sheet at lower of cost of $250,000 and net realizable value of $190,000. Since the net realizable value is lower than the cost, the company would have reported $190,000 on its balance sheet for December 31, 2011 and a loss of $60,000 on its income statement for the same period. Thus, under IFRS, Bessrawl Corporation income would be $10,000 larger than reporting under U. S. GAAP, stockholder equity will also be $10,000 larger under IFRS than under U. S. GAAP. 2). Building: – Under U. S. GAAP, Bessrawl Corporation reported depreciation expense of $100,000 each on 2010 and 2011 financial statements. Depreciation expense = ($2,750,000 – $250,000)/25 yrs = $100,000/yr. Under IFRS revaluation model, the depreciation expense on the building was $100,000 in 2010 and the carrying value was $2,650,000 beginning 2011. The building was then revalued to $3,250,000, at the beginning of 2011 resulting in revaluation surplus of $600,000. The depreciation expense for 2011 would be ($3,250,000 – $250,000)/24 yrs = $125,000. So, under IFRS, Bessrawl Corporation would incur additional depreciation expense of $25,000 in 2011, leading to smaller income than under U. S. GAAP. Stockholders’ equity in 2011 will be $575,000 larger under IFRS than under U. S. GAAP. This is equal to the revaluation surplus of $600,000 less the additional depreciation expense of $25,000 in 2011 under IFRS, which will reduce retained earnings. 3). Intangible Assets: – Under U. S. GAAP, an asset is impaired when its carrying amount exceeds the future cash flows (undiscounted) expected to arise from its continued use and disposal of the asset. The brand acquired in 2011 has a carrying amount of $40,000 and future expected cash flows are $42,000, so it is not impaired under U. S. GAAP. Under IFRS, an asset is impaired when its carrying amount exceeds its recoverable amount, which is the greater of net selling price and value in use. The brand’s recoverable amount is $35,000; the greater of net selling price of $35,000 and value in use (present value of future cash flows) of $34,000. As a result, an impairment loss of $5,000 would be recognized under IFRS. IFRS income and retained earnings would be $5,000 less than U. S. GAAP income and retained earnings. 4). Research and Development Costs: – Under U. S. GAAP, research and development costs in the amount of $200,000 would be expense and recognized in determining 2011 income. Under IFRS, $120,000 (60% of $200,000) of research and development costs would be expensed in 2011, and $80,000 (40% of $200,000) of research and development costs would be capitalized as an intangible asset (deferred research and development costs). So the IFRS-based income at December 31, 2011would be $80,000 larger than under U. S. GAAP income. And since the new product has not been brought to market, there is no amortization of the deferred research and development costs under IFRS in 2011. 5). Sale-and-Leaseback: – Under U. S. GAAP, the gain on the sale-and-leaseback (operating lease) is deferred and amortized in income over the life of the lease. With a lease term of five years, $30,000 of the $150,000 gain would be recognized at December 31, 2011 and $30,000 each would be recognized in 2009 and 2010, resulting in a cumulative amount of $90,000 retained earnings at December 31, 2011. Meanwhile, under IFRS, the entire gain on the sale-and-leaseback of $150,000 accounted as an operating lease was recognized immediately in income in 2009. This will result in an increase in retained earnings of $150,000 in that year. No gain would be recognized in 2011. As a result, IFRS income at December 31, 2011 would be $30,000 smaller than under U. S. GAAP income, but stockholders’ equity at December 31, 2011 under IFRS would be $60,000 larger than under U. S. GAAP.

Hiv And Treatment Adherence By Bobbi Marie Pollard

HIV and Treatment Adherence Bobbi Marie Pollard Loyola University Chicago School of Social Work Human Immunodeficiency Virus (HIV) is a chronic illness, however, for those with access to health care and treatment, it is a very manageable condition. Although it is no longer considered a death sentence in developed countries, it is still a highly stigmatized illness. The public may no longer perceive HIV as the plague it once was, yet there has been no decline in the number of new infections per year in the past decade in the United States (Catalan et al., 2000). Today, people are living longer with HIV due to the development of combination antiretroviral drug therapies (ART). ART has provided significant progress in treatment (Linsk et al., 2002). Treatment accessibility and medication adherence are crucial in order to continue manage the disease on both the individual and public level. Overview of HIV/AIDS HIV and AIDS are sometimes used interchangeably, although there is a significant difference, and some HIV positive individuals will never develop Acquired Immune Deficiency Syndrome (AIDS). Testing HIV positive means there are antibodies present in the system. HIV is classified into two phases: symptomatic and asymptomatic. Individuals show signs of a compromised immune system during the symptomatic phase, although with treatment advances, many are living asymptomatically. The progress of the illness can often be evaluated by looking at one’s CD4 and viral load