Talent Attraction And Retention In Employee Branding Management Essay

Talent Attraction And Retention In Employee Branding Management Essay Employer branding is one of the most significant developments in recent times. Organisations are increasingly recognising that most brand promises are delivered by people not products. Many studies have shown the gap between an average and a top performer has widened than ever before, and in a downturn, productivity and results matter even more. Having motivated and talented employees can make the difference between business success and failure. Simon Borrow is acknowledged as the creator of the term employer brand as early as 1990 (Thorne K., 2004). According to Ulrich D., 1997, employer branding focuses on how the company is seen by current and potential employees with the aim of winning the war on talent. Moreover, Employer Branding helps in recruitment, retention and in becoming an employer of choice. It sets up the uniqueness of the firm as an employer. It labels the firms principles, systems, strategies and behaviors towards the objectives of attracting, and retaining the firms existing and potential talent employees. Additionally, in a labor market where applicants, more than ever before, are smart consumers constantly assessing the value and rewards of their employment experience, its becoming critical for organisations to communicate and market their strengths and image as an employer of choice for a competitive advantage. 3.1 Talent attraction and retention Figure 1: Talent attraction and retention model Attraction material is often the first point of contact with candidates and so it must resonate immediately with the target audience. Uday Chawla, Managing Partner, Transearch, It is an entire process wherein attracting happens first, which should ideally be followed by retention. If we are able to attract talent but fail to retain them, then the entire process of attracting goes to a waste. Attracting and retaining are inter-dependant. Failure in one area affects the other. One cannot exist without the other. 3.1.1 Talent management. According to SHRM India (2008), in an article titled Corporate Indian companies: Forging New Talent Pipelines and creative career Pathways, in the banking and financial services industry, talent is considered to be premium. Talent management has been high on the agenda of HR professionals in the UK over the past few years. TM is a multi-faced concept that has been championed by HR practitioners, fueled by the war for talent and built on the foundation of strategic HRM. . Since 1997, TM has become increasingly popular when the consultancy firm Mckinsey exposed the war for talent as a critical driver of corporate performance, (Chambers, 1998). The starting point of TM is people, namely talents as mentioned in the article Is talent management just old wines in new bottles? A case of multinational companies in Beijing by Xin Chuai et al (2008). Talent is defined as individuals who have the capability to make a significant difference to the current and future performance of the company Morton (2004, p.6). CIPD defines talent management as the systematic attraction, identification, development, engagement/retention and deployment of those individuals with high potential who are of particular value to an organisation. On the other hand, Duttagupta (2005) asserts that TM assures that a supply of talent is available to align the right people with the right jobs at the right time, based on strategic business objectives. Besides, Stainton (2005) supports this argument by claiming that TM is concerned with having the right roles in the right environment with the right manager to enable maximum performance. For example, The Royal Bank of Scotland (RBS) is currently making the move from succession planning to what it describes as action-oriented talent management. They see this as a more fluid and holistic concept when it comes to getting the right person, in the right place, at the right time. Talent management can also be used to enhance an organisations image and supports employer branding in the labour market as well as providing a means of enhancing employee engagement to improve retention. 3.1.2 Talent management framework In order for Commercial banks to gain competitive advantage they need to develop a strategic approach to talent management that suits their business and gets the best from their people. Talent management can also contribute to other strategic objectives, including: firstly building a high performance workplace, secondly encouraging a learning organisation and lastly adding value to the employer of choice and branding agenda. In an article titled A framework for talent management in real estate. Deborah R. Phillips et al (2009), proposed a talent management framework for industry practitioners. The framework consists of five key elements: attracting, selecting, engaging, developing and retaining employees. Firstly, an organisation have to be creative when developing a recruitment strategy and should adopt modern methods of recruiting such as interactive networking sites, open house events, referral programs, internships, and online job boards. Secondly, it is becoming more common to include an objective measure of performance, such as psychological assessment, in combination with other recruitment tools in order to improve a companys chances of matching the right person to the job. Thirdly, engaged employees are not difficult to spot in an organisation. They are willing to go the extra mile to help the customer (Gostick and Elton, 2007). When HR managers measure their own organisations engagement, they immediately want to find ways to improve engagement among all ranks. On their side, Gostick and Elton (2007) report that employees will stay where there is: a quality relationship with his or her manager; opportunities for personal growth and professional development; work-life balance, a feeling of making a difference; meaningful work and adequate training. Additionally, employee retention is closely linked to an organisations performance management system. Performance management systems should also address how the different generations in the workplace view feedback and the drivers of employee retention. Therefore, the five strategies recommended in the proposed talent management framework measure performance on all sides. It is very easy to recognise the problem and apply the framework but the toughest part lies in the execution. 3.2 Employer of choice As the market for well-qualified and experienced job applicants becomes more competitive and with more people likely to change jobs than they ever have been, employers are becoming increasing aware of the need to manage the image of their organisations that applicants receive. The phrase employer of choice is becoming increasingly common among employers trying to attract new people, and retain key staff. Another point is that the image the organisation creates as an employer and potential employer seems to be recognised as a competitive differentiator in the same way as customer perception has also been held to be. For example, Baver and Aimen-Smith (1996) found that graduates were more likely to apply to organisations that strongly articulate their environmental policies in their recruitment literature, regardless of whether they consider themselves particularly pro-environmental. Moreover, it is important to recognise, as shown in research by Gatewood et al (1993), that the image of an organisation or company will be perceived differently by different people. This suggests that it is particularly important to present a clear, consistent and credible image of organisation to potential applicants. Finally, Employer of choice in recognising the importance of talent as a source of competitive advantage, are looking to win talent by tailoring employment policy to capture the dynamism of the modern era (Ashton et al, 2002). Typical measures might include package of initiatives such as offering career development opportunities, providing challenging, inspiring, enjoyable and flexible work, providing progressive benefits, paying attention to healthy workplace practices, improving incentives and encouraging participation and open communication (CLC,2000; Hewitt Associates, 2000;lowe 2001a) Based on a fact sheet from the Australian Bankers association Inc, the Australian banking industry aims to be an employer of choice and individual banks have adopted people management frameworks aimed at ensuring that: employees maintain a healthy balance between work/life balance, supported by specific policies such as working partly from home; the make-up of the workforce is aligned over time with the broader Australian community and reflects  diversity, including self-identified disability and ethnicity. 3.2.1 Employer of choice strategies The global vice president of recruitment for Philips, Jo Pieters, says it is important to include and measure both internal and external elements of an employer branding exercise and also Each and every employee should act as an ambassador of your brand and that requires a strong and recognised internal and external employee value proposition, One of the most familiar tools of employer branding is employer advertising where organisations use advertising to promote the unique employment proposition they offer potential recruits (Ewing et al., 2002). While advertising is a well accepted tool of employer branding, the employment brand itself encompasses the organisations values, systems, policies and behaviours toward the objectives of attracting, motivating, aligning and retaining the organisations current and potential employees (Gunasekara, 2002). 3.3 Branding concepts Branding has always been an important part of every companys marketing and advertising campaigns. Branding is an ongoing process where all the tangible and intangible elements that constitute a companys image and reputation are organised and communicated. A brand is a symbol that encapsulates that many associations that are made with a name (Gardner and Levy, 1995) and many things can be branded (Levitt, 1980) including the company itself. However, Swystun (2007) argues that a brand is a mixture of attributes, tangible and intangible, symbolised in a trademark, which if managed properly, creates value and influence (p.14). Employer branding may be the least known type of branding yet it is becoming more important to organisation. According to the conference Board report on employer branding (Conference Board, 2001) organisations have found that effective employer branding leads to competitive advantage, help employees internalise company values and assists in employee retention. 3.3.1 Corporate branding The corporate brand provides a source of competitive advantage by bringing together the company vision, culture and values, with organisational systems and networks, to form a unique organisational value proposition for customers (Knox et al., 2000; Hatch and Schultz, 2003). Moroko and Uncles (2008) contend that consumer, corporate and employer branding share similar characteristics; that is, a brand has to be noticeable, relevant and resonant, and unique. Notwithstanding, similarities between corporate branding and employer branding can be observed. According to Ambler and Barrow (1996, p. 187), an employer brand is the package of functional, economic and psychological benefits provided by employment, and identified with the employing company. In addition, Park et al (1986) categorise brands based on how they fulfill the functional, symbolic and experiential needs. 3.3 2Employer branding Employment branding is the process of placing an image of being a great place to work in the mind of targeted candidate pool. Employer branding is similar to the concepts of employer of choice (Fox, 2003). The link between employer branding and employer of choice has been stated by Harrison Kim (2005) Successful employer branding is built on the employers ability to deliver on its promise and when this happens the organisation becomes an employer of choice. According to Martin et al, (2005) the concept was first discussed by marketing academics and after some delay, by a lagging interest from HR academics. In todays knowledge driven company, all departments play a strategic role in bringing the right kind of people into the organisation. Employer branding is defined as a targeted, long-term strategy to manage the awareness and perceptions of employees and related stakeholders with regards to a particular firm (Sullivan, 2004). Furthermore, it conveys your value proposition the totality of your culture, systems, attitudes, and employee relationship along with encouraging your people to embrace and share goals for success, productivity, and satisfaction both on personal and professional levels

Medicine before the Westerners :: Native Americans Health Medical Essays

Medicine before the Westerners Try to imagine the status of medicine before in North and Central America before westerners arrived here. The savages, as the Europeans often referred to them, were lucky to survive with their primitive ways. They lived in what was thought to be primal conditions, what could they offer the civilized settlers from Europe. They couldn’t have any knowledge of medicine not and live in these conditions. Certainly many settlers would have thought how much the indigenous peoples of North and Central America could have learned from them. That notion was wrong. Although the settlers thought of these people as primitive they did quickly note their good health. Some of the earliest European settlers were impressed by the robust stamina of these people in every locality. There was little evidence of disease among the Indians and it was uncommon to find fatal cancer, tuberculosis, or heart disease until modern times. There were no legends of great sickness among the Indians, of course this wasn’t true for the Europeans quickly the black plague comes to mind to mention one such epidemic. Yet given all of this it is an interesting fact, there is little written or taught, even today about the Indian medicine or the history of Indian medicine. There are no great legends of Indian medicine taught. Yet we all have heard of the earliest teachings of Hippocrates, the oath of the modern day medicine men (doctors) is named in his honor. There are others though the real story is that these savages were a wealth of knowledge about medicine. They became a resource for the settlers and were not given credit for their contributions. Although I believe even if they had been given credit, that at the time they would have just stated that the credit went to nature. The fact that their cures were derived more from nature may have been in part able to account for a great benefit that went with Indian medicine; there were few, if any acute side effects. The Cherokee’s based their concepts on medicine on their earlier meanings of the four cardinal directions and the universal circle.

Person centred values Essay

A.C 1.2- Outline the benefits of working with an individual with dementia in a person-centred manner It is important to work with an individual with dementia in a person-centred manner in other to meet the individual’s needs and to provide the best quality care service. The benefits include to ensure quality of life of the individual and to treat the individual as deem fit and necessary. To place the individual at the centre values, individuality i.e. everyone’s differences must be recognized and respected. Choice, privacy, information and activities must be kept confidential. Individual must be empowered to do activities for themselves which means individual must be independent. It is vital for the social care worker to work using these precise methods to establish the needs and wishes of the individual. This will also mean that individuals will feel empowered and in control of their lives, be more confident about making decisions, will feel valued and respected. A.C. 1.3 – Why risk-taking can be part of a person-centred approach see more:define person centred planning Life itself is a risk. We take risk in our daily lives. The person-centred approach to risk includes making an assessment with the people involved in the plan such as the individual, their relatives and other professionals. Risk taking is part of a person-centred approach as this empowers individuals to have choices about what they want to do in their lives as well as to be part of their community. Not allowing individuals to take risks can have a negative impact on an individual’s life which may negate the way they which to live. Taking risks means that you are able to decide and be in control of what you do. You need to ensure that a concern about taking risks is not stopping you living the way you want to. A.C. 2.1 – Describe the role that carers can have in the care and support of individuals with dementia A.C.2.2 – Explain the value of developing a professional working relationship with carers Every day we make many choices. All choices are important, even though some of them are very small. Day-to day choices are often about the cloth we wear, the food we eat, how we spend our money and who we spend time with. Other choices we make include where to work and who to live with, where to live and where to go on holiday. We probably take the freedom to make these choices for granted, but these choices are often made for people with learning disabilities, without paying attention to their wishes. Choice is not only for people who can speak for themselves. People with severe or profound learning disabilities can make many choices for themselves. We will need to develop our observation skills to discover the way in which the person we support expresses their preferences. Over time we will be able to build up a more detailed understanding of how they communicate their likes and dislike s. We can then use this information to involve the person in making more choices. Having choice over a particular part of our life means we have control. This is good for our emotional and mental health, and helps us to feel a real part of the community. Part of our task is ensuring that people with learning difficulties have choice in their lives. Privacy is a basic human need. We all need to do some things alone and to have time to ourselves to do as we please. Our need for privacy depends on our personality, interests and circumstances. We must respect people’s need for privacy whenever it arises. If our work involves supporting a person with their personal care, we will need to make  particular efforts to ensure privacy for them. We are dependent on other people for all aspects of our daily life. Think about the supply of electricity and water to our homes, the food we eat and the transport we use, not to mention access to communication technology such as phones, Television and the internet. More importantly, we are dependent on those close to us for their love, support and affection. It is more accurate to say that we are all independent. We need other people in all areas of our life. There are, however, different types of independence. We can see this with children, as they grow from being totally dependent babies to much more independent teenagers. Gradually, people with learning disabilities are taking more control of their lives. But even today, people with learning disabilities are often on the receiving end of other people’s decisions and planning. They may not have the power to decide on their own lifestyle. Other people, such as service providers, family or support workers, often make these decision for them. Others may be well supported, but lack the confidence or experience to take control of their lives. We have a vitally important role in the empowerment of people with learning disabilities to become independent. People with learning disabilities have the same rights as every other citizen in our society. The fundamental principle means that people with learning disabilities should never be treated in an inhuman or degrading way. They should always be treated politely, and as people of value in their own right. The way ourselves and our colleagues behave towards the people with learning disabilities we support affects the way that other people see them, and the way they see themselves. We should always show consideration to the people with learning disabilities that we work with. Our actions and attitudes should show that everyone is worthy of respect. Every day in our work as a learning disabilities worker, we are a partner with a person with disability we support. We are working with them so that they can fulfill their dreams and ambitions, and so that we can assist them their particular needs. Partnership also involves other people working together, to meet the needs of people with learning disabilities as fully as possible. This may include partnership with other professionals such as social workers, GPs, Physiologists, Psychiatrists, and speech and language therapist. The families of the people with learning disabilities we support are often very important partners in our work. Most family carers  have a wealth of knowledge and experience about their family member. They know their likes and dislikes, their personal history and any other particular medical needs. They are often more than happy to share what they know with new workers. When asking family carers for information, it is important to remember that some families have seen many workers come and go in their relative’s life. They may have repeated the same information very many times. Some may feel disillusioned of past experiences when things have not changed as they had hoped. A major aspect of partnership working is bringing together in an atmosphere where this is simply the accepted way of doing things. In this type of working environment, training, attitudes, procedures and quality standards all have partnership as one of their goals. Successful partnership depend to a large extent upon the amount of effort put into creating an environment in which joint working is seen simply as the way things are done. Discrimination against people with learning disabilities and their families often results in the unfair and unequal treatment of people just because of their learning disability. People with learning disabilities may not be allowed the freedom and opportunities which the Human Rights Act and other laws encourage. They often face prejudice and discrimination. They may be treated unequally and unjustly and denied the opportunities that should be available to them, just as they are to other citizens. Equal opportunities mean that people with learning disabilities should: No longer be marginalized and isolated within society Have the same social statues as other people No longer be subject to exploitation and abuse Have their opinions taken seriously Have their adult status recognized Have the same citizenship right as other people. Failure to give equal opportunities to people with learning disabilities denies our common humanity. It causes anger, frustration, despair, hopelessness and loneliness for the people involved, and keeps them powerless and dependent. The General Social Care Council (GSCC) is the organization set up by the government in 2001 to register and regulate all social care workers. It has produced a Code of Practice which states that social care workers should work in a certain way. A.C 3.1 – Describe the roles of others in the care and support of individuals with dementia It is fundamental ethical principle that every person has the right to determine what happens to his/her own body. This right is reflected in the Rules of professional Conduct and the Core Standards of Physiotherapy practice and is also protected by law. Touching a patient prior to obtaining valid consent may constitute battery under civil or criminal law, or in some circumstances, sexual assault. However, it is important to gain patient’s consent prior to assessment treatment. It is also a matter of common courtesy between the patient and the care assistant and helps to establish a relationship of trust and confidence. Evidence shows that where such a relationship exists, patients are less likely to take a legal action, and this could be why legal action against care assistants is rare. As a broad principle consent should be gained for all activities, even if we want to plump someone’s pillows. It is important that people not only give their consent but also fully unde rstand what they are consenting to and the implications. Consent can be implied, verbal, informal or written. Gaining consent protects both the carer and the person against legal challenges. A health care service consent document supports the rights of patients and families to be informed about the benefit and risk of a proposed treatment or procedure and to make a voluntary decision as to whether to proceed or not. The following must be considered when making a valid consent: i. the patient must have capacity to consent i.e. be mentally competent. ii. Consent must be voluntary i.e the patient must not be acting under duress. iii. The patients must have received sufficient information to make a decision about their treatment. A.C 3.2 – Explain when it may be necessary to refer to others when supporting individuals with dementia To established consent for an activity or action we have to explain the activity or action to the other party so they have the correct information to make an inform decision. If the persons lacks the capacity to make informed decisions alone then we will need to establish who else need to be involved. This information is usually found in the  person’s care of plan or in a communication chart established to cover a range of circumstances. To establish consent to an action or activity we need to: Explain what it is using language familiar to the individual Describe what the action or activity involves Explain the benefits to the individual Explain any potential or actual risks involved in doing it and not doing it Listen to and observe the individual’s response Encourage the individual to ask questions Give the individual time to process the information Confirm consent again immediately prior to any action or activity. A.C 3.3 – Explain how to access the additional support of others when supporting individuals with dementia Consent (permission) must be given before care can be to a person. To even touch a person when forbidden, can be consider assault. If there is nobody available when an intoxicated, unconscious or impaired individual presents for care, consent is â€Å"implied†, as there is nobody to give that consent. It is assumed that consent would be given by family or that person, if they were able to communicate that. The only time that we cannot take saving measures, is when there is a Do Not Resuscitate (DNR) order on that patient. It is considered an emergency if a person is apparently experiencing severe suffering or is at risk of sustaining serious bodily harm. The expectation for emergency treatment applies if: the patient is mentally incapable of making the treatment decision. The delay required to obtain consent will prolong the suffering or put the person at risk of sustaining serious bodily harm. The expectation for emergency treatment also applies if: the patient is apparently capable, but communication cannot occur because of a language barrier or a disability. Reasonable steps have been taken to find a practical means of communicating with the patient but such steps have been unsuccessful, and the delay required to find a practical means to communicate will prolong suffering or put the person at risk of sustaining serious bodily harm in addition, a health practitioner who believes that a person is mentally incapable, or where communication cannot take place after  reasonable steps have been taken, may conduct an examination or diagnostic procedure without consent, if the examination or diagnostic procedure is reasonable necessary to determine whether there is emergency. If a patient presents in an emergency situation, is unconscious, mentally incapable, and with no family available, and no advance directive in place, it is considered reasonable to treat the patient. It is assumed that under these conditions, the patient would consent to treat. If there is a language barrier, and the patient is otherwise capable of giving consent, a reasonable effort must be made to find an interpreter, which includes using the ones through the phone companies. If the patient’s life is in danger, and there is nobody who can communicate with them, then with careful documentation, treatment can be delivered. A.C 4.1 – Demonstrate how to use a person-centred thinking tool in relation to own life to identify what is working and not working People who use services and carers are becoming more active participants in social care provision, training and employment. They are no longer the passive recipients of service. Skills for care committed to ensuring people who use services and carers get an opportunity to have their say and participate in projects, to ensure that activities undertaken by Skills for Care reflect their need, wants and aspirations. Providing individual with empowerment is important. Empowerment is about enabling the individuals we support to contribute and have an influence over the issues which affect the way they live. When individuals make choices, they have more control and feel valued. It is important that we support empowerment of the individuals we work with. Providing individuals with empowerment to make informed choices enables individuals to maintain their rights of choice, equality and opportunity. Active participation is ways of working that recognize an individual’s right to participate in the activities and relationship of their own care or support, rather than just a recipient. Being part of a community is particularly important to individuals who live on their and do not work. It does not matter what kind of something will give them a sense of belonging, a feeling of self-worth and independence. A.C. 4.2 Describe own relationship circle 4.3 Describe how helpful using a person-centred thinking tool was to identify actions in relation to own life Putting active participation into practice means being able to recognize and reduce potential barriers to its implementation. Barriers to implementing an active participation approach can occur where the health and social practitioners: lack understanding of the individual’s personality, history, health and cognitive status and social abilities View the person as a passive recipient of care who is always dependent on others Have low expectations of the person’s ability to develop, change and achieve We are not committed to making an active participation approach to work Lack creativity and flexibility and flexibility in thinking about ways of providing care or support Lack patience and tenacity when pursuing active participation goals Have inconsistent approach, and does not integrate active participation into our care practice to the extent that it becomes part and parcel of our daily care practice Changing attitudes is the key to reducing barriers to active participation. Improving society’s attitudes to, and expectations of, people with disabilities is an important part of this involving the individual and all those people who are significant to them is also crucial to success. A.C. 5.1 – Use person-centred thinking to know and act on what is important to the individual In order to enable individual to make an informed choice, both us and the individual first need to think about what all of the available options are. We are then need to look at what are good and bad about each option. Health and safety are important factors and must be put first for us, the individual and anyone else involved. The Mental Capacity Act in other Standards provides the legal framework for capacity and decision making about health and social care and financial decisions which applies to everyone aged over 16. We will need to consider whether the person we are supporting has capacity to make informed decision s or we need a formal mental capacity review. It is important to note that a person is assumed to have capacity unless it is proved otherwise. There is a four-step way to test for capacity: a person must be able to: Understand the information relevant to a decision Retain the information Use the information as part of decision making process Communicate their decision In supporting a person to make a decision, we have a duty to assist the person in all four of these steps. For example, using appropriate communication methods to help the person to understand and communicate. Capacity is assessed specific to each decision and occasion. For example, a person may have capacity to make a decision in the Moring about what to wear, but not later day in deciding if they want to move home. If someone is assessed as lacking capacity, any decision taken on their behalf must be in their best interests and we must consider if there are less restrictive options. For example, if a decision can be delay until a person is less distressed this is the best course of action. However, if a person does have capacity this over-rides what we may consider as an unwise decision. A.C. 5.2 Establish with the individual how they want to be supported Each individual have a formal assessment as part of their care and support plan. The assessment should contain information about the individual and the type of care and support they need. It will provide the most appropriate options for keeping the individual and anyone else as safe as possible. It will also tell us how to do some tasks where these tasks have been risk assessed and the best option has been established. A particular way of moving and handling is recommended for Mr. X because he has health issues that mean he or she can only be moved another way. Mr. X does not like being moved this way and asks to be moved another way. We should always follow the risk assessment. We should report Mr X’s request to our supervisor/manager. If we are appropriately trained in risk assessment and moving and handling and the change Mr X requires is minor, we may be able to make this change. We should never make changes unless we are trained or our supervisor or manager confirms we can make the change. We should always record any changes in Mr X’s wishes and in the way we perform tasks. Every effort should be made to support Mr X to be moved in the way he wants to be moved. He has the right to make this choice but an appropriately trained  person will need to review the risk assessment first and work out if it is safe for all involved for Mr X to be moved in the way he wishes. A.C. 5.3 – Use person-centred thinking to know and respond to how the individual communicates 5.4 – Be Responsive to how an individual makes decisions to support them to have maximum choice and control in their life When an individual has made decision which we feel is risky, we need to make the individual aware of any consequences involved in the decision; however we should not try to influence the individual with our view or opinions. It is the individual’s freedom of choice to make decisions about their own future and support. Providing they have the right information to make an informed choice and have the capacity to understand their choice; it is part of our duty of care to enable them to do so. Referring to Mr. X in 5.2 above, we might not approve of or like the choice he has made. We might need more moving and handling training, perhaps for a specialist piece of equipment. However, the choice is not ours and we are not allowed to influence Mr X. in suppor ting Mr X to make his decision, we need to listen to him and put his wishes and best interests first. This means the service must be provided in the way Mr X would like, as long as it is safe and approved through care and support plans and risk assessment. This is because the choices belong to Mr x, not to us. He needs to make his own decisions in order to feel he is in control of what happens to him. This leads to positive feelings around dignity, pride and satisfaction. If relative or friend has made a decision about individual’s care, support or life that the individual is not happy or comfortable with, we may need to support the individual to question or challenge the decision. It is important that we obtain and understand the facts and reasons surrounding the decision so we can make sure the individual has a clear understanding If the individual remains sure that he or she is not happy with the decision, once he or she has this information, we can work with the individual to support them to challenge the decision. Any changes that are made as a result of this change must be safe for us, the individual and anyone else involved. We should never make changes unless we are trained to do so or our supervisor or manager confirms we can make the change. We should always record any changes in individual’s wishes and in the way we perform tasks.  It is essential that we understand the Mental Capacity Act and how to work within it’s requirements every day with every individual. A.C. 6.1- Explain how individual identity and self-esteem are linked with wellbeing Spiritual well being is an integral part of mental, emotional and physical health. It can be associated with a specific religion but does not have to be. It is about an individual’s own journey to discover things of importance in their lives and enabling them to find purpose and meaning in life. The effects and impact of spiritual well-being is determined by each individual and can make a huge impact on their lives. Through spiritual well-being, individual can become empowered and realize that even though they have issues, stressors, and challenges, they are not define by their circumstances. In realizing this individual’s gain greater peace, better freedom of self expression, increased manageable over the healing and support process and higher self-esteem. A few of the numerous benefits of spiritual well-being include: Feeling content with our life’s situation Making time to spend alone and find inner peace Taking time to reflect and resolve life’s issues Finding satisfaction in a job well done. Taking part in an active lifestyle rather than merely standing by and watching life as it passes Maintaining balance and control of life Building relationships Feeling purpose and meaning in life Accepting and growing from challenges of life Emotional well-being is based on how individuals feel about themselves. Someone who is emotionally healthy: Understands and adapt to changes Copes with stress Has a positive outlook on life and themselves Has the ability to love and care for others Can act independently to meet his or own needs Everyone, including people who are emotionally healthy, have problems. If something or someone threatens our happiness or well-being, we would feel  uncomfortable emotions such as anger, sadness or fear. When we experience something that enhances our situation, we feel emotions such as joy, satisfaction or a sense of achievement. The way we are brought up and our culture have a great influence on how we feel. They help us to form ideas and decide what we care about. Everyone deals with situations in life differently. What may seem unimportant to our closest friend might be upsetting to us. Sometimes an individual’s self-esteem (the way they feel about themselves) can become so low that everything seems a lot harder to cope with compared with when they are feeling confident. Being emotionally healthy does not mean that we feel happy all the time. Good emotional health is about having lots of different emotions, and being able to accept them and talk about them. Signs that Individuals are not coping well emotionally might include having a lack of self-confidence, having trouble with relationship or feeling unhappy a lot of the time. A.C. – 6.2 Describe attitudes and approaches that are likely to promote an individual’s wellbeing Because we are so different and diverse, we have different and diverse views about every subject. We may not approve of or agree with the views of individual we support but our role is about working with them in ways that support their views. The best way to find out about an individual is to ask questions that are not threatening but show us have a genuine interest in the individual. By encouraging them to talk about themselves and listening to their views, as we will learn a great deal about the individuals we work with. Through this learning, we will be able to meet their needs in ways that are sensitive and supportive of their views making individual feel valued. Our role is to support individuals to feel emotional well-being and to feel emotional wellbeing, individuals need to feel: Appreciated, cared about and loved Safe and secure Extra supported when they feel sad, depressed or lonely That they are not a burden but an important priority Listened to and respected Satisfied with relationships Independent and in control of their lives That they have a purpose and meaning to their lives We will need good communication skills and be able to listen but also to encourage individuals and show understanding and support for what is important to them in life. We could suggest that the individual organizes for someone from their faith or community group. It might be possible for someone from the group to organize travel and support arrangements whilst the individual attend the group. A.C. – 6.3 – Support an individual in a way that promotes a sense of identity and self-esteem Each individual’s spirituality is greatly impacted by the community they are a part of and the relationships they take part in. Spiritual wellbeing is not a practice of isolation but rather of affecting and involving the people around the individual. Spiritual well-being groups and sessions could provide an open and save environment to explore, learn, practice, support and heal. This safe-haven offered in such a group is important to individuals who experience difficulties in their lives. Individuals may be able to find spiritual well-being programs in their local areas. These may include group exploration and experimental practices on the topics of meditation, prayer, forgiveness, personal values, and purpose in life, the role of self-esteem in spiritual connection, healthy relationships and developing an authentic relationship with a higher Power, or God. A.C. – 6.4 Demonstrate ways to contribute to an environment that promotes well-being By promoting an individual’s spiritual and emotional wellbeing, we can help improve their self esteem and make them valued and remain their own person. Building an individual’s self esteem is a first step towards the happiness and emotional well-being of the individuals we support. Focusing on what they can do rather than on what they cannot do, will encourage their independence and feeling of self worth. It is also important to help individuals to deal with stress. Changes in situations and in their ability to do things can cause stress. However, by providing encouragement and positive support we can improve their inner self and quality of life. By providing emotional support, understanding and good quality care, we can improve on individual’s confidence, promoting spiritual and emotional well-being.

A Explanation Of Different Financial Terms Finance Essay - Free Essay Example

Sample details Pages: 21 Words: 6400 Downloads: 9 Date added: 2017/06/26 Category Finance Essay Type Narrative essay Did you like this example? The main objective of the Finance Manager is to manage funds in such a way so as to ensure their optimum utilization and their procurement in a manner that the risk, cost and control considerations are properly balanced in a given situation. To achieve the objective the Finance Manager performs the following functions in the following areas:- The need to estimate/forecast the  requirement of funds  for both the short term (working capital requirements) and the long term purpose (capital investments). Forecasting the requirements of funds involves the use of budgetary control and long-range planning Helps to decide what type of  capital structure  the company needs to have return: whether these funds would be raised: from loans/borrowings or from internal source (share capital) To raise sufficient long term funds to finance fixed assets and other long term investments and to provide for the needs of working capital . Don’t waste time! Our writers will create an original "A Explanation Of Different Financial Terms Finance Essay" essay for you Create order Investment Decision In projects using the various capital budgeting tools like payback method, accounting rate of return, internal rate of return, net present value. Assets management policies are to be laid down regarding the various items of current assets like accounts receivable by coordinating with the sales personnel, inventory with production Dividend Decision Taking into consideration, earnings trend, share market price trend, fund requirement for future growth, cash flow situation and others. Financial negotiation Plays a very important role in carrying out negotiations with the various financial institutions, banks and public depositors for raising funds on favourable terms. Cash Management The finance manager needs to ensure the supply of adequate, timely and cheap fund  to the various parts of the organization. That there is no excessive cash idling around. Evaluating financial performance To need to constantly review the financial performance of the various units of organization generally in terms of ROI (return on investment. Such review assists management in seeing all the funds have been utilized in the various divisions and what can be done to improve it. Dealing with relevant parties in the Financial Markets Where the company is a listed entity, the need to interact with the Stock Exchange To deal with money markets and capital markets for financing or investment of idling funds To foster relationships with bankers, investors, underwriters of equity and bond issuances and other government regulatory bodies. For those who are uninformed, they tend to think the sole function of this position is that of the head of Accounts Payable and Accounts Receivable, but it goes far beyond that capacity. In fact, the finance manager is in charge of any  financing  and accounting function throughout the company. The role of this position involves that of not only financing functions such as Accounts Payable, Accounts Receivable, and Billing, but it also involves that of budget projections and working with the Chief Financial Officer to make sure that the companys funds are stable and assisting with any budget cuts that become necessary. The finance manager is the head of both the Accounts Payable and Accounts Receivable areas of the company. As such, he will be the one to set policy and direct procedures for both areas of  business. That includes hiring staff based upon need, following budget guidelines for expenses including staffing, assuring that procedures are followed by all staff members, setting reasonable quota system to assure work is completed in a timely fashion, and interacting with department supervisors on a regular basis in order to stay abreast of happenings within the department. The finance manager will also compile reports that show all of the conditions within his department including expenditures, open invoices, production standards, quality control standards, and timeliness of both payment of invoices and processing of payments. The finance manager is also responsible for the billing operation of the Accounts Receivable Department and making sure that guidelines for timely billing are followed as well. The finance manager also is the one who will work with other executives in order to develop the budget for each year. He will work with the Chief Finance Officer and Chief Executive Officer in order to develop an equitable solution for each years expenditures in both staff, office supplies, and any other needs that the company has including training, business trips, out of town meetings, and staff entertainment expenses. The finance manager has a very important position within a company, and his decisions will determine the financial stability of the company, at least within the areas that fall under his control. It is also his job to make certain that other departments and areas of the company follow their budgets and make the most use of the companys  money  by avoiding frivolous expenses. Nature of Financial Management Financial management is that part of total management which is concerned primarily with the financial affairs of an organization and the translation of actions, both past and proposed, into meaningful and relevant information for use in the management process. It includes the functions of budgeting, accounting, reporting, and the analysis and interpretation of the financial significance of past events and future plans. It sometimes also includes other related functions such as internal auditing, management analysis, and others. It is not primarily concerned with the technical procedures and methodology of those individual functions. Rather, it is characterized by the coordination and correlation of those functions into an effective and broad system of financial control that will assure that they, collectively more than individually, become an integral part of the management of the organization. Financial management involves the art of interrelating data to obtain a perspective o f the total financial situation that will assist managers in program planning and decision-making. A very simple operating program may require only a minimum of financial management, and this, in some cases, can be provided by the manager himself. Financial Management is also an important field of Management Sciences. It is a combination of Managerial Finance and Corporate Finance. Managerial Finance concerns with the managerial use of financial techniques, whereas on the other hand, corporate finance deals with corporate financial decisions. In both the cases, it is extremely important for Managers in an organization. Financial Management is used to determine the best way to use the  money  available to an organization in order to improve the future opportunities to  earn  money. Thus the financial managers use techniques such as Valuation, Portfolio management, Hedging and capital structure etc for better decisions about the future of an organizat ion. On the other hand, it is also used to interpret financial results in a given year or time period using financial analysis techniques. This helps in judging the actual performance of an organization in that time period. Financial management helps in proper allocation of costs, anticipate future expense, and budgeting for the future. Retained Earnings The accumulated net income that has been retained for reinvestment in the business rather than being paid out in dividends to stockholders. Net income that is retained in the business can be used to acquire additional income-earning assets that result in increased income in future years. Retained earnings are a part of the owners equity section of a firms balance sheet. Retained earnings also called retention ratio or retained surplus, it is the percentage of net earnings not paid out as dividends but retained by the company to be reinvested in its core business or to pay debt.  Retained earnings are one component of the corporations net worth and increase the supply of cash thats available for acquisitions, repurchase of outstanding shares, or other expenditures the board of directors authorizes. It is recorded under shareholders equity on the balance sheet. It is calculated by adding net income to or subtracting any net losses from beginning retained earnings and subtra cting any dividends paid to shareholders, as shown here: Smaller and faster-growing companies tend to have a high ratio of retained earnings to fuel research and development plus new product expansion. Mature firms, on the other hand, tend to pay out a higher percentage of their profits as dividends. In most cases, companies retain their earnings to invest them in areas where the company can create growth opportunities, such as buying new machinery or spending the money on research and development. If a net loss is greater than beginning retained earnings, retained earnings can become negative, creating a deficit. Debenture A debenture is a debt instrument, which is not backed by collaterals. Debentures are backed by the creditworthiness and reputation of the debenture issuer. Besides, a debenture is a long-term debt instrument issued by governments and big institutions for the purpose of raising funds. The debenture has some similarities with bonds but the terms and conditions of securitization of debentures are different from that of a bond. A debenture is regarded as an unsecured investment because there are no pledges (guarantee) or liens available on particular assets. Nonetheless, a debenture is backed by all the assets which have not been pledged otherwise. Normally, debentures are referred to as freely negotiable debt instruments. The debenture holder functions as a lender to the issuer of the debenture. In return, a specific rate of interest is paid to the debenture holder by the debenture issuer similar to the case of a loan. In practice, the differentiation between a debenture and a bond is not observed everytime. In some cases, bonds are also termed as debentures and vice-versa. If a bankruptcy occurs, debenture holders are treated as general creditors. The debenture issuer has a substantial advantage from issuing a debenture because the particular assets are kept without any encumbrances so that the option is open for issuing them in future for financing purposes. Usually, debentures are categorized into the following types and their definitions are also given below: Convertible Debenture:  Convertible bonds  or bonds that can be converted into equity shares of the issuing company after a predetermined period of time. Convertibility is a feature that corporations may add to the bonds they issue to make them more attractive to buyers. In other words, it is a special feature that a corporate bond may carry. As a result of the advantage a buyer gets from the ability to convert; convertible bonds typically have lower interest rates than non-conver tible corporate bonds. Non-convertible debenture: Simply regular  debenture cannot be converted into equity shares of the liable company. They are debentures without the convertibility feature attached to them. As a result, they usually carry higher interest rates than their convertible counterparts. Corporate Debenture:   Debentures issued by companies and they are insecure in nature. Bank Debenture:  This type of debentures is issued by banks. Government Debenture:  This includes Treasury Bond (T-Bond) and Treasury Bill (T-Bill) issued by the government. They are usually regarded as risk-free investments. Subordinated Debenture:  This is a particular type of debenture, which ranks below regular debentures, senior debt, and in some instances below specific general creditors. Corporation Debenture:  Corporation debentures are issued by various corporations. Exchangeable Debenture:  They are like convertible debent ures, but this debenture can only be converted to the common stock of a subsidiary company or affiliated company of the debenture issuer. Seed Capital Seed capital means the initial capital used to start a business.  Seed capital often comes from the company founders personal assets or from friends and family.  The amount of money is usually relatively small because the business  is still in the idea or conceptual stage.  Such a  venture  is generally  at a pre-revenue stage and  seed capital is needed for  research development, to cover initial operating expenses  until a product or service can start generating  revenue, and to attract the attention of venture capitalists. Seed capital is needed to get most businesses off the ground. It  is considered a high-risk investment, but one that can reap major rewards if the company becomes a growth enterprise. This type of funding is often obtained in exchange for an equity stake in the enterprise, although with less formal contractual overhead than standard equity financing. Banks and venture ca pital investors view seed capital as an at risk investment by the promoters of a new venture, which represents a meaningful and tangible commitment on their part to making the business a success. Frequently,  capital providers  will  want to wait until a business is a little more mature before making the larger investments that typify the early stage financing of venture capital funding. Seed capital in other words can be said as money used as the initial investment for a new product or service launch. Seed capital enables businesses to launch a new product or service without depending fully on a business loan. The funds for this form of financing are typically provided by private investors who are looking for a high return on their investment of at least 30 percent. The investors look to invest in an industry with a market of at least $1 billion, and they also want an industry with few competitors for the business. Businesses that typically obtain seed capit al are young companies around one year of age that have not produced a product or service for commercial sale yet. The companies are so new, so it can be difficult to obtain a regular commercial loan that is sufficient for covering all of the related start up expenses. Cash Credit and Overdraft Cash credit  is  a short-term cash loan to a company.  A bank provides this type of funding, but  only after the required security is given to secure the loan. Once a security for repayment has been given, the business  that receives the loan can continuously draw from the bank up to a certain specified amount. This type of financing is similar to a line of credit. Furthermore, cash credit is a facility to withdraw the amount from the business account even though the account may not have enough credit balance. The limit of the amount that can be withdrawn is sanctioned by the bank based on the business cycle of the client and the working capital gap and the drawing power of the client. This drawing power is determined, based on the stock and book debts statements submitted by the borrower at monthly intervals against the security by hypothecating of stock of commodities and/ or book debts. The excess withdrawal of cash is made generally on dema nd from the customer and the customer has to pay interest on the excess amount he/she has withdrawn. The cash credit facility is quite useful to those businesses where cash payment like wages, transportation, cash purchases are to be made and the receivables are not realized in time. An overdraft facility is a formal arrangement with a bank which allows an account holder to draw on funds in excess of the amount on deposit. Overdraft facility financing is most commonly used by businesses as a way of making their  working capital  more flexible, although it can also be available to individuals. Banks which offer this service typically have a number of expectations from customers who use it, and it is important to be aware of these expectations before entering an overdraft facility agreement. The idea behind overdraft facility agreements is that sometimes one needs a bit more money than is available on deposit to deal with various expenses. For example, a business w hich is always slow in March and April might like to use its overdraft facility to make  payroll  and keep current with all accounts and creditors. Or, a business might need to make a big one-time expense which exceeds the funds on deposit. With an overdraft facility, people can repay the funds at their convenience. The bank may charge an overdraft fee for accessing the overdraft facility, and the  interest rate  can be higher than that for other types of loans. The bank also has the right to demand repayment in full. Balancing an overdraft facility wisely can free up capital and make people more stable financially, but unwise use can lead people into a spiral of debt which may be difficult to escape. The amount of an overdraft facility is also curbed; people are not allowed to continually take money out and not repay it. The amount of the overdraft is usually pegged to account history and financial information, with the goal of ensuring that people do not end up borrowing more than they can realistically repay through an overdraft facility. The agreed limit can be negotiated with the bank, and some banks are willing to reevaluate if customers feel that their circumstances have changed. Similar to personal overdraft facilities, a business overdraft is a prearranged spending limit with your bank. Many businesses find an overdraft useful for those times when cash flow is a problem for a short period of time. Overdrafts are not a good option for funding larger needs, such as capital or expansion expenses. For these needs it is less expensive to obtain a separate business loan. Business overdrafts  may also be subject to more fees than a personal overdraft. Examples include fees to open the overdraft, to renew the overdraft, or sometimes even a fee for not using the overdraft. When used judiciously, overdraft facilities can be a great help in managing the occasional financial shortfall. Commercial Paper Commercial paper is a form of financing that consists of short-term, unsecured promissory notes issued by firms with a high credit standing. Generally, only large firms of unquestionable financial soundness are able to issue commercial paper. Most commercial paper issues have maturities ranging from 3 to 270 days. Although there is no set denomination, such financing is generally issued in multiples of $100,000 or more. A large portion of the commercial paper today is issued by finance companies; manufacturing firms account for a smaller portion of this type of financing. Businesses often purchase commercial paper, which they hold as marketable securities, to provide an interest-earning reserve of liquidity. Commercial paper is sold at a discount from its par, or face, value. The size of the discount and the length of the time to maturity determine the interest paid by the issuer of commercial paper. The actual interest earned by the purchaser is determined by certain calculations. Commercial paper is not  usually backed by any form of collateral, so only firms with high-quality debt ratings will easily find buyers without having to offer  a substantial discount (higher cost) for  the debt issue. For the most part, commercial paper is a very safe investment because the financial situation of a company can easily be predicted over a few months. Furthermore, typically only companies with high  credit ratings  and credit worthiness issue commercial paper. Over the past 40 years, there have only been a handful of cases where corporations have defaulted  on their commercial paper repayment. There are two methods of issuing paper. The issuer can market the securities directly to a  buy and hold  investor such as most money market funds. Alternatively, it can sell the paper to a dealer, who then sells the paper in the market. The dealer market for commercial paper involves large  securities  firms and subsidiaries of  bank  holding companies. Most of these firms also are dealers in  US Treasury securities. Direct issuers of commercial paper usually are financial companies that have frequent and sizable borrowing needs and find it more economical to sell paper without the use of an intermediary. In the United States, direct issuers save a dealer fee of approximately 5 basis points, or 0.05% annualized, which translates to $50,000 on every $100 million outstanding. This saving compensates for the cost of maintaining a permanent sales staff to market the paper. Dealer fees tend to be lower outside the United States. Bridge Finance Bridge financing  is a method of  financing, used to maintain  liquidity  while waiting for an anticipated and reasonably expected  inflow of cash. Bridge financing is commonly used when the cash flow from a sale of an asset is expected after the cash outlay for the purchase of an  asset. For example, when selling a  house, the owner may not receive the cash for 90 days, but has already purchased a new home and must pay for it in 30 days. Bridge financing covers the 60 day gap in cash flows. Another type of bridge financing is used by companies before their  initial public offering, to obtain necessary cash for the maintenance of operations. These funds are usually supplied by the  investment bank  underwriting  the new issue. As payment, the company acquiring the bridge financing will give a number of  stocks  at a  discount  of the issue price to the underwriters that equal ly offset the loan. This financing is, in essence, a forwarded payment for the future sales of the new issue. Bridge financing may also be provided by  banks  underwriting  an offering of  bonds. If the banks are unsuccessful in selling a companys bonds to qualified institutional buyers, they are typically required to buy the bonds from the issuing company themselves, on terms much less favourable than if they had been successful in finding institutional buyers and acting as pure intermediaries. There are 2 types of bridging finance which are closed bridging and open bridging. Closed bridging finance is where there is a date for the exit of the bridging finance and is sure that the bridging finance can be repaid on that date. This is less risky for the lender and thus the interest rate charged is lower. Open bridging is higher risk for the lender. This is where the borrower does not have an exact date for the bridging finance exit and may be l ooking for a buyer of the property or land. Capital Market A capital market is a market where both government and companies raise long term funds to trade securities on the bond and the stock market. It consists of both the primary market where new issues are distributed among investors, and the secondary markets where already existent securities are traded.  In the capital market, mortgages, bonds, equities and other such investment funds are traded. The capital market also facilitates the procedure whereby investors with excess funds can channel them to investors in deficit. The capital market provides both overnight and long term funds and uses financial instruments with long maturity periods. The financial instruments are traded in this market such as foreign exchange instruments, equity instruments, insurance instruments, credit market instruments, derivative instruments, and hybrid instruments. The primary role of the capital market is to raise long-term funds for governments, banks, and corporations while providing a platf orm for the trading of securities.  This fundraising is regulated by the performance of the stock and bond markets within the capital market. The member organizations of the capital market may issue stocks and bonds in order to raise funds. Investors can then invest in the capital market by purchasing those stocks and bonds.  The capital market, however, is not without risk. It is important for investors to understand market trends before fully investing in the capital market. To that end, there are various market indices available to investors that reflect the present performance of the market. Every capital market in the world is monitored by financial regulators and their respective governance organization. The purpose of such regulation is to protect investors from fraud and deception. Financial regulatory bodies are also charged with minimizing financial losses, issuing licenses to financial service providers, and enforcing applicable laws. Capital mark et investment is no longer confined to the boundaries of a single nation. Todays corporations and individuals are able, under some regulation, to invest in the capital market of any country in the world. Investment in foreign capital markets has caused substantial enhancement to the business of international trade. The capital market is also dependent on two sub-markets the primary market and the secondary market. The primary market deals with newly issued securities and is responsible for generating new long-term capital. The secondary market handles the trading of previously-issued securities, and must remain highly liquid in nature because most of the securities are sold by investors. A capital market with high liquidity and high transparency is predicated upon a secondary market with the same qualities. Money Market The  money market  is a component of the  financial markets  for assets involved in short-term borrowing and lending with original maturities of one year or shorter time frames. Trading in the money markets involves  Treasury bills,  commercial paper,  bankers acceptances, certificates of deposit, federal funds, and short-lived  mortgage-backed and  asset-backed securities.  It provides  liquidity  funding for the  global financial system. The money market consists of  financial institutions  and dealers in money or credit who wish to either borrow or lend. Participants borrow and lend for short periods of time, typically up to thirteen months. Money market trades in short-term  financial instruments  commonly called paper. This contrasts with the  capital market  for longer-term funding, which is supplied by bonds  and  equity. The core of the money market consists of banks borrowing and lending to each other, using  commercial paper,  repurchase agreements  and similar instruments. The money market is a subsection of the  fixed income  market. We generally think of the term fixed income as being synonymous  to  bonds. In reality, a bond is just one type of fixed income security. The difference between the money market and the bond market is that the money market specializes in very short-term debt securities (debt that  matures in less than one year). Money market investments are also called cash investments because of their short maturities. Money market securities are essentially IOUs issued by governments, financial institutions and large corporations. These instruments are very  liquid  and considered extraordinarily safe. Because they are extremely conservative, money market securities offer significantly lower returns than most other s ecurities. One of the main differences between the money market and the stock market is that most money market securities trade in  very high denominations. This limits access  for the individual investor. Furthermore, the money market is a dealer market, which means that firms buy and sell securities in their own accounts, at their own risk. Compare this to the stock market where a broker receives commission to acts as an agent, while the investor takes the risk of holding the stock. Another characteristic of a dealer market is the lack of a central trading floor or  exchange. Deals are transacted over the phone or through electronic systems. Venture Capital Funds Venture capital  (also known as  VC  or  Venture) is a type of  private equity  capital typically provided for early-stage, high-potential,  growth  companies in the interest of generating a return through an eventual realization event such as an  IPO  or  trade sale  of the company. Venture capital investments are generally made as cash in exchange for shares in the invested company. It is typical for venture capital investors to identify and back companies in high technology industries such as biotechnology and ICT (information and communication technology). A  venture capital fund  refers to a  pooled investment  vehicle that primarily invests the  financial capital  of third-party investors in enterprises that are too risky for the standard  capital markets  or  bank loans. Venture capital funds mean an investment fund that manage s money from investors seeking private equity stakes in startup and  small- and medium-size enterprises with strong growth potential. These investments are generally characterized as high-risk/high-return opportunities. Theoretically, venture capital funds give individual investors the ability to get in early at a companys startup stage or  in special situations  in which there is  opportunity for explosive growth. In the past,  venture capital investments were only accessible to professional venture capitalists. While a fund structure diversifies risk, these funds are inherently  risky. Most  venture capital funds  have a fixed life of 10 years, with the possibility of a few years of extensions to allow for private companies still seeking liquidity. The investing cycle for most funds is generally three to five years, after which the focus is managing and making follow-on investments in an existing portfolio. This model was pioneered by successful funds in  Silicon Valley  through the 1980s to invest in technological trends broadly but only during their period of ascendance, and to cut exposure to management and marketing risks of any individual firm or its product. In such a fund, the investors have a fixed commitment to the fund that is initially unfunded and subsequently called down by the venture capital fund over time as the fund makes its investments. There are substantial penalties for a Limited Partner (or investor) that fails to participate in a capital call. It can take anywhere from a month or so to several years for venture capitalists to raise money from limited partners for their fund. At the time when all of the money has been raised, the fund is said to be closed and the 10 year lifetime begins. Some funds have partial closes when one half (or some other amount) of the fund has been raised. Vintage year generally refers to the year in which the fund was closed and ma y serve as a means to stratify VC funds for comparison. This  free database of venture capital funds  shows the difference between a venture capital fund management company and the venture capital funds managed by them. Present Value Present value means the  current worth  of a future sum of money  or stream of cash flows  given a specified rate of return. Future cash flows are discounted at the discount rate, and the higher the discount rate, the lower the present value of the future cash flows.  Determining the appropriate discount rate is the key to properly valuing future cash flows, whether they are earnings or obligations. The calculation of discounted or present value is extremely important in many financial calculations.  For example, net present value, bond yields, spot rates, and pension obligations all rely on the principle of discounted or present value. If offered a choice between $100 today or $100 in one year  ceteris paribus, a rational person will choose $100 today. This assumes a positive interest rate for the time period. This is described by economists as Time Preference. Time Preference can be measured by auctioning off a risk free se curity like a US Treasury bill. If a $100 note, payable in one year, sells for $80, then the present value of $100 one year in the future is $80. This is because you can invest your money today in a bank account or any other (safe) investment that will return you interest. An investor who has some money has two options: to spend it right now or to save it. But the financial compensation for saving it (and not spending it) is that the money value will accrue through the interest that he will receive from a borrower (the bank account on which he has the money deposited). Therefore, to evaluate the real value of an amount of money today after a given period of time, economic agents compound the amount of money at a given (interest) rate. Most actuarial calculations use the  risk-free interest rate  which corresponds to the minimum guaranteed rate provided by your banks saving account for example. If you want to compare your change in purchasing power, then you shou ld use the  real interest rate  (nominal interest rate  minus  inflation  rate). The operation of evaluating a present value into the future value is called a capitalization (how much $100 today is worth in 5 years?). The reverse operation-evaluating the present value of a future amount of money-is called a discounting (how much $100 that I will receive in 5 years-at a lottery for example-are worth today?). It follows that if one has to choose between receiving $100 today and $100 in one year, the rational decision is to cash the $100 today. If the money is to be received in one year and assuming the savings account interest rate is 5%, the person has to be offered at least $105 in one year so that two options are equivalent (either receiving $100 today or receiving $105 in one year). This is because if you cash $100 today and deposit in your savings account, you will have $105 in one year. Internal Rate of Return (IRR) IRR means the  discount rate often used in capital budgeting that makes the net present value of all cash flows from a particular project  equal to zero. Generally speaking, the higher a projects internal rate of return, the more desirable it is to undertake the project. As such, IRR can be used to rank several prospective projects a firm is considering. Assuming all other factors are equal among the various projects, the project with the highest IRR would probably be considered the best and undertaken first. IRR can be treated as the rate of growth a project  is expected to generate. While the actual rate of return that  a given project ends up generating will often differ from its estimated IRR rate, a project with a substantially higher IRR value than other available options would still provide a much better chance of strong growth. IRRs can also be compared against prevailing rates of return in the securities market. If a firm cant find any projec ts with IRRs greater than the returns that can be generated in the financial markets, it may simply choose to invest its retained earnings into the market. Internal Rate of Return provides a simple  hurdle rate, whereby any project should be avoided if the cost of capital exceeds this rate. Usually a financial calculator has to be used to calculate this IRR, though it can also be mathematically calculated using the following formula: In the above formula,  CF  is the Cash Flow generated in the specific period (the last period being n). IRR, denoted by r is to be calculated by employing trial and error method. Because the internal rate of return is a  rate  quantity, it is an indicator of the efficiency, quality, or  yield  of an investment. This is in contrast with the net present value, which is an indicator of the value or  magnitude  of an investment. An investment is considered acceptable if its internal rate of return is greater than an established  minimum acceptable rate of return  or  cost of capital. In a scenario where an investment is considered by a firm that has  equity holders, this minimum rate is the  cost of capital  of the investment (which may be determined by the risk-adjusted cost of capital of alternative investments). This ensures that the investment is supported by equity holders since, in general, an investment whose IRR exceeds its cost of capital adds  value  for the company. Financial Ratio A  financial ratio  (or  accounting ratio) is a relative magnitude of two selected numerical values taken from an enterprises  financial statements. Often used in  accounting, there are many standard ratios used to try to evaluate the overall financial condition of a corporation or other organization. Financial ratios may be used by managers within a firm, by current and potential  shareholders  (owners) of a firm, and by a firms  creditors.  Security analysts  use financial ratios to compare the strengths and weaknesses in various companies.  If shares in a company are traded in a  financial market, the market price of the shares is used in certain financial ratios. Ratios may be expressed as a  decimal  value, such as 0.10, or given as an equivalent  percent  value, such as 10%. Some ratios are usually quoted as percentages, especially ratios that are usually or alwa ys less than 1, such as  earnings yield, while others are usually quoted as decimal numbers, especially ratios that are usually more than 1, such as  P/E ratio; these latter are also called  multiples.  Given any ratio, one can take its  reciprocal; if the ratio was above 1, the reciprocal will be below 1, and conversely. The reciprocal expresses the same information, but may be more understandable: for instance, the earnings yield can be compared with bond yields, while the  P/E ratio  cannot be: for example, a P/E ratio of 20 corresponds to an earnings yield of 5%. Financial ratios quantify many aspects of a business and are an integral part of financial statement analysis. Financial ratios are categorized according to the financial aspect of the business which the ratio measures.  Liquidity ratios  measure the availability of cash to pay debt.  Activity ratios  measure how quickly a firm converts non- cash assets to cash assets.  Debt ratios  measure the firms ability to repay long-term debt. Profitability ratios  measure the firms use of its assets and control of its expenses to generate an acceptable rate of return. Market ratios measure investor response to owning a companys stock and also the cost of issuing stock. Financial ratios allow for comparisons between companies between industries between different time periods for one company between a single company and its industry average Ratios generally hold no meaning unless they are  benchmarked  against something else, like past performance or another company. Thus, the ratios of firms in different industries, which face different risks, capital requirements, and competition are usually hard to compare. Cash Budget Cash budget means an estimation of the cash inflows and outflows for a business or individual for a  specific period of time. Cash budgets are often used to assess whether the entity has sufficient cash to fulfill regular operations and/or whether too much cash is being left in unproductive capacities. A cash budget is thus a statement in which estimated future cash receipts and payments are tabulated in such a way as to show the forecasted cash balance of a business at defined intervals. The cash budget is one of the most important planning tools that an organization can use. It shows the cash effect of all plans made within the budgetary process and hence its preparation can lead to a modification of budgets if it shows that there are insufficient cash resources to finance the planned operations. It can also give management an indication of the potential problems that could arise and allows them the opportunity to take action to avoid such problems. A cash budget can sh ow four positions. Management will need to take appropriate action depending on the financial position. A cash budget is prepared to show the expected receipts of cash and payments of cash during a budget period. Receipt of cash may come from one or more of the following Cash sales. Payment of debtors (credit sales). The sale of fixed assets. The issue of new shares or loan stock. Receipt of interest and dividends from investments outside the business. Payments of cash may be for one or more of the following. Purchase of stock. Payroll costs or other expenses. Purchase of capital items. Payment of interest, dividends and taxation.