How Do Student Loans Work

Student Loans Shouldnt Be Your First ChoiceIn no uncertain terms, student loans shouldnt be your childs first stop when it comes to paying for college. Free money, like grants and scholarships, are always preferable to loans.Grants are often awarded based onyour students FAFSA, and they are given out on a first-come, first-serve basis to those who qualify. So, make sure they have theirs finished as soon as possible for each school year, or they could miss out on these excellent opportunities.Scholarships are different. They are awarded based on criteria set by the organization sponsoring the scholarship. Additionally, the vast majority require students to apply directly to be considered. Application requirements vary, and some options are limited to applicants with specific criteria. However, there are a lot of them out there, so your child likely qualifies for more than they realize.The best part about scholarships is that students can apply for them all the way through high school AND college years. So if your child needs loans for the first year, they could possibly secure scholarships for the following years and reduce the amount they need.If you would like to learn more about how your student can score scholarships, join our free webinar for parents and students. Its a great first step towards helping them avoid student loans.What is a Student Loan? You cant answer the question, how do student loans work, without first understanding what a student loan is.A student loan is a lending product designed specifically for college expenses. They are often easier to obtain than other forms of financing, like personal loans, as its generally well understood that incoming college students wont have much on their credit reports.Monies granted through a student loan are meant to handle costs like tuition, room and board, and possibly other educational requirements like books and supplies. How restrictive a loan is about how the money can be used depends on the exact t ype of loan involved and the rules set by the originator.What is an Interest Rate?Another important part of the how do student loans work question is understanding the interest rate.The interest rate represents how much you will ultimately pay the lender for the ability to borrow funds. This is money owed on top of the principal. And it isnt calculated just once. Thats why a $5,000 student loan with a 6 percent interest rate paid over 10 years wont cost you $5,300 in total, but $6,661.To explain how this happens, we must explain compounding interest a little bit. If that makes your head spin, bear with me. I explain it a little later under unsubsidized loans. There is even a video to help you out!Another point I want to make is that, whenever graduates make a payment on a student loan, interest is paid first (like a mortgage.) Only the remainder is applied to the principal balance.The Different Types of Student LoansWhen you are working to understand the answer to the question how d o student loans work, you need to understand the details about the different forms of loans available. Not all student loans are made equal. In fact, there are three primary types of student loans: federal subsidized, federal unsubsidized, and private.Federal Student LoansSubsidized loans typically offer students the best deal. First, the interest rates are lower, saving your child money over the entire life of the loan. Second, interest isnt assessed while your student is in school at least half-time. Third, there is a six-month interest-free grace period after they graduate. In the end, less interest means less owed.Unsubsidized loans still have favorable interest rates, but they dont have all of the interest-free benefits of their subsidized counterparts. This means interest begins accruing almost immediately once the funds are disbursed, and it will cost more to borrow money this way in the long run.Here is a simple video showing how unsubsidized loans accumulate interest before students even graduate.Its a simple, homemade video (nothing fancy!) but it was one of the most straight-forward in my opinion:So based on this video, you will see that borrowing $10,000 per year, a total of $40,000 over the four years in college, ends up becoming a balance of $44,011.89.Now here is the kicker:That $4,011.89 in interest is rolled into the balance. So when the post-graduation payments are calculated, interest is going to be based on this NEW balance of $44,011.89 versus only the $40,000. Its as if the student borrowed that interest and therefore must pay interest on it (again.) As you can see, this snowball affect (compounding interest) ends up costing students a lot of extra money. Some loans will end up almost double the amount borrowed by the time they are paid off.Both federal subsidized and unsubsidized loans are issued by the government, and whether your student qualifies is based on their FAFSA information. The funds allowed is based specifically on your chil ds tuition and annual maximums. No matter what, the loans will not exceed the tuitions costs, so these funds wont pay for extras like laptops or transportation.The interest rates associated with all federal loans, subsidized and unsubsidized, are set by the government. For loans disbursed between July 1, 2017, and June 30, 2018, the rates are 4.45 percent for both kinds of loan. The government can change the interest rates for loans issued on or after July 1, 2018, but any loans disbursed prior to that wont see their interest rates change. Essentially, once you have a federal student loan, that interest rate is locked in for the life of the loan.Private Student LoansNow that you have a solid understanding of the federal loan portion of the how do student loans work question, its time to move on to private loans.Private student loans are different. They arent issued by the federal government, so their terms and qualifications can vary depending on the lender. Often, it is best to vie w these as personal loans instead of student loans, because functionally they are more similar to those than their federal counterparts. On a good note, the money provided might be usable for expenses beyond tuition and room and board. So, if your child needs things like a laptop, public transit passes, etc., these can help pay for those too.Lenders set the rules on private loans they issue, so you want to shop around if you have to go this route. It is sometimes possible to find private student loans with lower interest rates than those offered by the government, but they typically require excellent credit to qualify. For most students with a limited (if any) credit history, that isnt going to happen alone. The lender will probably need a cosigner, and the credit rating of that cosigner will have a strong impact on the rate assigned to the loan.If your child can get all of their expenses handled with grants, scholarships, and federal student loans, it is often the better way to go in most cases. However, if these still leave your child short on the money they need, then private student loans are the next option.Related Articles:Dorm Room Checklist How to Set Up on a BudgetHow to Pay for Grad School Without Student LoansGreat Places to Start Looking for Private Student LoansCredible Easiest to useSimple Tuition Best Network of LendersFirst and foremost, there are great resources to help you compare different student loan options. Using an online tool like CredibleandSimple Tuitioncan simplify your search for student loans by showing you direct comparisons between different lenders. They are basically marketplaces so you can shop around. I personally found them very user-friendly and simple to use. These convenient tools only require a few minutes of your time and can offer you multiple options for your childs funding.3.LendKey FavoriteLenderOne other private student loan source that came up often in my search is LendKey. They are often one of the lender opti ons when you look into the loan comparison tools so I thought wed share some details on them as well.One neat thing they mention is making small monthly payments while in college.While this may sound challenging, it can be as little as $25 per month which helps students avoid the scenario we described earlier where interest builds up and is rolled into the principal once they graduate, thus increasing their payments exponentially. If a student can make these payments while in college, it would save them over $5,000 in the example we showed you. I was very impressed with Lendkey.If you want to see what kind of offerings they have for your situation, you can fill out a quick application here: Click here to view interest rates applyHopefully, with these 3 options, you can shop around because its important you and your student hunt for the best deal!More on that nowHow to Choose the Best Student LoanDetermining how to select the best student loan deal is also part of the answering the how do student loans work question.As with any other loan, your childs first step to finding the best option is to shop around like I mentioned. Why? Because the lowest interest rate might not be available at your current primary bank or other previous lenders.If students must borrow money, we always recommend subsidized loans first since they dont start accumulating interest until students graduate. Next would be unsubsidized from the government. Third would be private student loans. While there may be exceptions this order typically holds true.Order of selecting student loan options (note: there may be exceptions depending on your familys situation):Subsidized loansUnsubsidized loans via governmentPrivate student loansSo if you exhausted your options through FAFSA and the university, you can start with private student loans by using a comparison site like CredibleandSimple Tuition. These can display rates from multiple lenders, allowing you to explore your options at a glance.Your child also needs to look beyond the interest rate when assessing options. Things like origination fees, grace periods, deferment options, repayment plans, and borrower rewards can all change the affordability of a loan. For example, a 4 percent origination fee can hurt just as bad as a one percent interest rate hike. This means every cost and benefit needs to be considered to determine who truly offers the best value.Overall, the key terms and figures you will want to know before borrowing include:Principal amount (borrowed)Interest rateTotal cost for the life of the loan (principal plus total interest)Monthly payments upon graduatingAnd dont forget to factor in money borrowed for the second, third and fourth (or fifth) years. You want to have a total picture for when they graduate and have to start repaying the loans.At the bottom of this post, I put a calculator to help you see what kind of payments you are looking at.Once the top few contenders have been identified, your student should apply to more than one lender. Since they wont know exactly what rate theyll be offered until they apply, theres no better way to actually compare what option is the best without securing the offers.Receiving the Money The idea of paying for college is stressful for students and their parents alike. Add to that the complexity surrounding financial aid packets and student loans, and its no wonder many people feel overwhelmed. To help you navigate through these mysterious waters, and provide you with some peace of mind, here is an overview designed to answer the question, how do student loans work.In this article, we will cover the different types of student loans, how they work, including interest rates and their impact on students payments, and explain how you can simplify your search for the best student loan options.Student Loans Shouldnt Be Your First ChoiceIn no uncertain terms, student loans shouldnt be your childs first stop when it comes to paying for college. Free money, like grants and scholarships, are always preferable to loans.Grants are often awarded based onyour students FAFSA, and they are given out on a first-come, first-serve basis to those who qualify. So, make sure they have thei rs finished as soon as possible for each school year, or they could miss out on these excellent opportunities.Scholarships are different. They are awarded based on criteria set by the organization sponsoring the scholarship. Additionally, the vast majority require students to apply directly to be considered. Application requirements vary, and some options are limited to applicants with specific criteria. However, there are a lot of them out there, so your child likely qualifies for more than they realize.The best part about scholarships is that students can apply for them all the way through high school AND college years. So if your child needs loans for the first year, they could possibly secure scholarships for the following years and reduce the amount they need.If you would like to learn more about how your student can score scholarships, join our free webinar for parents and students. Its a great first step towards helping them avoid student loans.What is a Student Loan? You can t answer the question, how do student loans work, without first understanding what a student loan is.A student loan is a lending product designed specifically for college expenses. They are often easier to obtain than other forms of financing, like personal loans, as its generally well understood that incoming college students wont have much on their credit reports.Monies granted through a student loan are meant to handle costs like tuition, room and board, and possibly other educational requirements like books and supplies. How restrictive a loan is about how the money can be used depends on the exact type of loan involved and the rules set by the originator.What is an Interest Rate?Another important part of the how do student loans work question is understanding the interest rate.The interest rate represents how much you will ultimately pay the lender for the ability to borrow funds. This is money owed on top of the principal. And it isnt calculated just once. Thats why a $5,000 s tudent loan with a 6 percent interest rate paid over 10 years wont cost you $5,300 in total, but $6,661.To explain how this happens, we must explain compounding interest a little bit. If that makes your head spin, bear with me. I explain it a little later under unsubsidized loans. There is even a video to help you out!Another point I want to make is that, whenever graduates make a payment on a student loan, interest is paid first (like a mortgage.) Only the remainder is applied to the principal balance.The Different Types of Student LoansWhen you are working to understand the answer to the question how do student loans work, you need to understand the details about the different forms of loans available. Not all student loans are made equal. In fact, there are three primary types of student loans: federal subsidized, federal unsubsidized, and private.Federal Student LoansSubsidized loans typically offer students the best deal. First, the interest rates are lower, saving your child m oney over the entire life of the loan. Second, interest isnt assessed while your student is in school at least half-time. Third, there is a six-month interest-free grace period after they graduate. In the end, less interest means less owed.Unsubsidized loans still have favorable interest rates, but they dont have all of the interest-free benefits of their subsidized counterparts. This means interest begins accruing almost immediately once the funds are disbursed, and it will cost more to borrow money this way in the long run.Here is a simple video showing how unsubsidized loans accumulate interest before students even graduate.Its a simple, homemade video (nothing fancy!) but it was one of the most straight-forward in my opinion:So based on this video, you will see that borrowing $10,000 per year, a total of $40,000 over the four years in college, ends up becoming a balance of $44,011.89.Now here is the kicker:That $4,011.89 in interest is rolled into the balance. So when the post-g raduation payments are calculated, interest is going to be based on this NEW balance of $44,011.89 versus only the $40,000. Its as if the student borrowed that interest and therefore must pay interest on it (again.) As you can see, this snowball affect (compounding interest) ends up costing students a lot of extra money. Some loans will end up almost double the amount borrowed by the time they are paid off.Both federal subsidized and unsubsidized loans are issued by the government, and whether your student qualifies is based on their FAFSA information. The funds allowed is based specifically on your childs tuition and annual maximums. No matter what, the loans will not exceed the tuitions costs, so these funds wont pay for extras like laptops or transportation.The interest rates associated with all federal loans, subsidized and unsubsidized, are set by the government. For loans disbursed between July 1, 2017, and June 30, 2018, the rates are 4.45 percent for both kinds of loan. The government can change the interest rates for loans issued on or after July 1, 2018, but any loans disbursed prior to that wont see their interest rates change. Essentially, once you have a federal student loan, that interest rate is locked in for the life of the loan.Private Student LoansNow that you have a solid understanding of the federal loan portion of the how do student loans work question, its time to move on to private loans.Private student loans are different. They arent issued by the federal government, so their terms and qualifications can vary depending on the lender. Often, it is best to view these as personal loans instead of student loans, because functionally they are more similar to those than their federal counterparts. On a good note, the money provided might be usable for expenses beyond tuition and room and board. So, if your child needs things like a laptop, public transit passes, etc., these can help pay for those too.Lenders set the rules on private loans the y issue, so you want to shop around if you have to go this route. It is sometimes possible to find private student loans with lower interest rates than those offered by the government, but they typically require excellent credit to qualify. For most students with a limited (if any) credit history, that isnt going to happen alone. The lender will probably need a cosigner, and the credit rating of that cosigner will have a strong impact on the rate assigned to the loan.If your child can get all of their expenses handled with grants, scholarships, and federal student loans, it is often the better way to go in most cases. However, if these still leave your child short on the money they need, then private student loans are the next option.Related Articles:Dorm Room Checklist How to Set Up on a BudgetHow to Pay for Grad School Without Student LoansGreat Places to Start Looking for Private Student LoansCredible Easiest to useSimple Tuition Best Network of LendersFirst and foremost, there are great resources to help you compare different student loan options. Using an online tool like CredibleandSimple Tuitioncan simplify your search for student loans by showing you direct comparisons between different lenders. They are basically marketplaces so you can shop around. I personally found them very user-friendly and simple to use. These convenient tools only require a few minutes of your time and can offer you multiple options for your childs funding.3.LendKey FavoriteLenderOne other private student loan source that came up often in my search is LendKey. They are often one of the lender options when you look into the loan comparison tools so I thought wed share some details on them as well.One neat thing they mention is making small monthly payments while in college.While this may sound challenging, it can be as little as $25 per month which helps students avoid the scenario we described earlier where interest builds up and is rolled into the principal once they graduat e, thus increasing their payments exponentially. If a student can make these payments while in college, it would save them over $5,000 in the example we showed you. I was very impressed with Lendkey.If you want to see what kind of offerings they have for your situation, you can fill out a quick application here: Click here to view interest rates applyHopefully, with these 3 options, you can shop around because its important you and your student hunt for the best deal!More on that nowHow to Choose the Best Student LoanDetermining how to select the best student loan deal is also part of the answering the how do student loans work question.As with any other loan, your childs first step to finding the best option is to shop around like I mentioned. Why? Because the lowest interest rate might not be available at your current primary bank or other previous lenders.If students must borrow money, we always recommend subsidized loans first since they dont start accumulating interest until s tudents graduate. Next would be unsubsidized from the government. Third would be private student loans. While there may be exceptions this order typically holds true.Order of selecting student loan options (note: there may be exceptions depending on your familys situation):Subsidized loansUnsubsidized loans via governmentPrivate student loansSo if you exhausted your options through FAFSA and the university, you can start with private student loans by using a comparison site like CredibleandSimple Tuition. These can display rates from multiple lenders, allowing you to explore your options at a glance.Your child also needs to look beyond the interest rate when assessing options. Things like origination fees, grace periods, deferment options, repayment plans, and borrower rewards can all change the affordability of a loan. For example, a 4 percent origination fee can hurt just as bad as a one percent interest rate hike. This means every cost and benefit needs to be considered to determ ine who truly offers the best value.Overall, the key terms and figures you will want to know before borrowing include:Principal amount (borrowed)Interest rateTotal cost for the life of the loan (principal plus total interest)Monthly payments upon graduatingAnd dont forget to factor in money borrowed for the second, third and fourth (or fifth) years. You want to have a total picture for when they graduate and have to start repaying the loans.At the bottom of this post, I put a calculator to help you see what kind of payments you are looking at.Once the top few contenders have been identified, your student should apply to more than one lender. Since they wont know exactly what rate theyll be offered until they apply, theres no better way to actually compare what option is the best without securing the offers.Receiving the MoneyOnce your child secures their loans, they may be wondering how the money gets from the lender to the school. After all, it is a big part of how student loans wo rk.Well, in the case of federal loans, its pretty simple. Your student will have to identify the school theyll be attending as part of the loan agreement. Then, when it comes time to pay the school, the money is sent directly to the college or university. This means your child doesnt have to worry about coordinating that part of the payment process as the disbursements for that year happen on their own.Private student loans offer more flexibility, so the money can come as a check or direct deposit into your childs bank account. While this is convenient for covering those extra expenses, like the aforementioned laptop, it can leave the burden of paying tuition on your students shoulders if they dont have other funds, such as federal student loans, covering those costs. So, thats something to consider if your child is looking at paying tuition with private loans.When Should You and Your Child Begin?The final part of the understanding how student loans work is learning how to decide wh en your student should start their loan search.If your child is destined for college in the fall, and not all of their required funds have been gathered, then now is the time for them to get started searching for the right student loans. Otherwise, they may miss out if they cant pay tuition on time.Begin by looking through their financial aid packet and see what can be secured there and then determine if other options are needed. If so, its time to get them online to start the search.If your child is younger than a senior, starting the hunt early spring of their senior year is ideal so that you have options.What questions do you have regarding student loans? If so, post them below and I will try to get them answered!Think this will be helpful to your friends or family? Share the love!Free webinar on how to secure third-party scholarships for college:We always suggest exhausting all debt-free options before borrowing student loans. Did you know that it isnt too late to apply to schol arships? Deadlines are as late as August for money for this fall. Join us on our next free webinar to learn more. http://www.thescholarshipsystem.com/freewebinar

The Toys And Games Industry In The UK Example For Free - Free Essay Example

Sample details Pages: 13 Words: 3916 Downloads: 2 Date added: 2017/06/26 Category Finance Essay Type Argumentative essay Did you like this example? Games Workshop PLC (GAW) and Hornby PLC (HRN) are UK based companies operating in the Toys and Games Industry under the leisure market. HRN is a UK brand leader in the model railway hobby. Frank Hornby, the companys founder, established Meccano Ltd in 1907 which become the classic toys of all time. Don’t waste time! Our writers will create an original "The Toys And Games Industry In The UK Example For Free" essay for you Create order In 1920 it introduced the toy trains and thereafter, the innovations followed. In 1986 it became a public company and now it is just called Hornby and rightly maintains the position as a leading model railway manufacturer for more than 20 years. GAW is the most successful and largest futuristic battle-games and tabletop fantasy company in the world. The business is about helping mighty armies to meet headlong on the field of battle. It produces the most successful table top fantasy, Citadel miniatures and futuristic battle games. PART -A: Financial Analysis of HRN and GAW. To evaluate the current Financial Performance and Financial Position of HRN and GAW, Ratio analysis is carried out over the last two accounting periods. Ratio is the comparison of one figure to another relevant figure or figures. According to Myers, Ratio analysis of financial statements is a study of relationship among various financial factors in a business as disclosed by a single set of statements and a study of trend of these factors as shown in a series of statements. The Ratios are distributed as: Financial Performance Financial Position Profitability Efficiency Liquidity Gearing Each of these 4 ratios is justified why it is chosen for analysis and is benchmarked against Time (to establish trends), Industry (to compare performance against competitor) and Expectations (to see if targets have been met). A. PROFITABILITY Profitability is the ability of a company to generate income higher than its expenses and other related costs in order to provide returns to its owners, investors and lenders. Profitability ratio is expressed as the relationship between profits made and other key figures from the income statement and balance sheet of a company such as capital employed, sales, etc. Table 1: SL.NO. PROFITABILITY RATIOS HRN 2010 HRN 2009 GAW 2010 GAW 2009 1. Return on Capital Employed (ROCE)% 10.99 15.68 28.12 14.44 2. Return on Shares (ROS)% or Net Profit Margin 8.06 9.94 12.74 5.99 3. Return on Share-holders funds (ROSF)% On PBT 14.24 19.3 29.15 19.84 On PAT 10.06 13.35 27.27 14.61 The Profitability Ratios are calculated to find out whether the Profit made by the company is satisfactory or not. 1. Return on Capital Employed (ROCE) The ROCE is the primary measure of Business Performance and it compares the profit made before deducting interest and tax (PBIT) with the overall capital used to produce that profit. ROCE = Profit before Interest and Tax x 100 Capital Employed Comparing between the years 2009 and 2010, the ROCE for HRN has reduced by 4.69% and it currently is 10.99% whereas in GAW, it has increased by 13.68% and now stands at 28.12%. Between the two companies, the ROCE for GAW is higher than HRN by 17.13% indicating better returns on capital employed. This is because GAW has repaid most of its loans of 2009 from the profits made and has managed to raise a higher equity on their own which has increased it ROCE in 2010. The average returns in UK is expected to be around 10% of which the investor target or the bank deposit rate is 5% and the risk premium is 5%. Therefore, GAW has earned very good returns compared to HRN. 2. Return on Sales (ROS) or Net Profit Margin (NPM) The ROS measures the Operational Performance and it relates the operating profit (PBIT) to the sales incurred during that period which estimates the percentage of profit earned on every 1 pound of sales made. ROS = Profit before Interest and Tax x 100 Sales In 2010, the ROS for HRN has gone down by 1.88% and is 8.06%; in GAW it has increased by 6.75% and is 12.74%. From these figures, it is estimated that for every one pound of sales made, GAW makes a profit that is 4.68p higher than what HRN is achieving. This is also because in 2010, the revenue and profit made by GAW is twice and thrice respectively as much as in HRN. 3. Return on Share-holders Funds (ROSF) or Return on Equity (ROE) The ROSF or ROE shows how much profit a company has earned in comparison to the total amount of share-holders equity. It is a narrower assessment of profitability compared to ROCE since the loan capital is not involved here. It is computed based on a) Profit before Tax (PBT) b) Profit after Tax (PAT) ROSF = PBT x 100 (OR) PAT X 100 (Share Capital + Reserves) (Share Capital + Reserves) A high ROSF indicates that the company has more profit available for its shareholders. In reference to PBT and PAT, HRN in 2010 shows a decrease of 5.06% and 3.29% respectively whereas GAW shows an increase of 9.31% and 12.66% respectively. GAW shows a steady increase over time and has achieved higher returns (29.15% 27.27%) on shareholders funds in 2010. B. EFFICIENCY. Efficiency Ratios measures the efficiency with which particular resources of the business have been utilised. An improvement in this ratio will lead to improved profitability in the company. Efficiency ratios are calculated to find out whether the stock and debtors of the company are too high. Table 2: SL.NO. EFFICIENCY RATIO HRN 2010 HRN 2009 GAW 2010 GAW 2009 1. Stock/Inventory Turnover Ratio (Times/year) 2.65 2.24 3.03 3.36 2. Stock Period (Days) 138 163 121 109 3. Debtors/Trade/Accounts Receivables (Days) 75 78 29 29 4. Asset Turnover 1.36 1.58 2.21 2.41 1. Stock or Inventory Turnover Ratio: (STR) The STR measures the efficiency of the business in managing and selling its stock which also helps to increase sales. It is expressed as a ratio between the cost of goods sold (COGS) and stock. The faster the inventory sells, the fewer funds are tied up within the company. Stock Turnover = Cost of Goods Sold (times per year) Stock Although HRN shows an increase in stock turnover ratio from 2.24 to 2.65 times/year in 2010, it is still lower than that of GAW which has reduced from 3.36 to 3.02 times/year. HRN shows that their stock turnover is a little over twice a year whereas GAW has a better stock turnover that is three times a year. 2. Stock Period: The Stock Period calculates the average time that stock is held within a firm. The higher the stock-turnover ratio is; the lower the stock period will be. Stock Period = 365 Days Stock Turnover HRN shows a reduction of 25 days in 2010 whereas GAW shows an increase of 12 days. However, GAW has been maintaining a low stock period compared to HRN which proves their efficiency in stock management and provides possibilities to consider future demand, shortages, price rise, etc. 3. Debtors/Trade/Accounts Receivables: Every firm is concerned about how long it takes for its customers to pay the amounts owed by them as it is directly related to the cash flow of the business. This waiting period is known as Debtors period. Debtors Period = Debtors x 365 days Sales The debtors period for HRN has decreased by 3 days in 2010 and is 75 days while GAW maintains it at a lower period of 29 days for both years. A company will normally expect this period to be within 30 days; GAW exhibits better performance here. CASH OPERATING CYCLE: This cycle is the addition of Stock period and Debtors Period which calculates the total time taken for stock to be converted into cash (Liquidity position). Efficiency Ratios Company/Year Games HRN 2009 2010 2009 2010 Stock Period 109 121 163 138 Debtors Period 29 29 78 75 Total in days 138 150 241 213 Indication of liquidity for the company (in months) 4.6 5 8.03 7.1 HRN has reduced the total period from 8 to 7 months in 2010; GAWs period has increased by half a month (from 4.5 to 5) and its still better than HRN. 4. Asset Turnover The Asset Turnover ratio portrays how effectively the assets of a company are being used to generate sales. Asset Turnover = Sales Capital Employed In HRN, for every 1 pound of capital employed, GBP 1.36 worth of sales has been made in 2010 and likewise in GAW, it made GBP 2.21. Both companies show a non-significant decrease while GAW continues to produce a higher asset turnover compared to HRN. The relationship between Profitability and Efficiency: This relationship exhibits the overall returns on funds invested into a business and is determined by the profitability of sales and by efficiency in the use of capital expressed as follows: ROCE = ROS X Asset Turnover = PBIT x Sales = PBIT Sales Capital Employed Capital Employed Sl. No. Company/Year ROS x Asset Turnover = ROCE/Result% (Approx) 1. HRN 2009 9.94 x 1.58 15.70 2. HRN 2010 8.06 x 1.36 10.96 3. GAW PLC 2009 5.99 x 2.41 14.44 4. GAW 2010 12.74 x 2.21 28.15 The Asset Turnover in GAW is close to twice as much as in HRN in 2010 and although an insignificant decrease is noticed in both companies, the primary reason for changes in ROCE is because of relative changes in ROS. Since the ROS for HRN has decreased to 8.06% from 9.94%, its ROCE has decreased to 10.96% from 15.70%. But in GAW, the ROS has increased by 6.75% thereby leading to a significant increase of 13.71% in its ROCE and has hence produced very good returns of 28.15% at the year 2010. C. LIQUIDITY Liquidity Ratios finds out the ability of a business to meet its current liabilities by converting assets into cash quickly in-order to pay back the debtors. Table 3: SL.NO. LIQUIDITY RATIO HRN 2010 HRN 2009 GAW 2010 GAW 2009 1. Current Ratio 2.11 1.48 2.04 1.74 2. Liquidity/Acid Test/Quick 1.38 0.72 1.49 1.14 1. Current Ratio This ratio indicates whether the company has sufficient current assets to pay its immediate liabilities within the same accounting period. Current Ratio = Current Assets Current Liabilities The higher the ratio, the more liquid the business is considered to be. The ideal current ratio is suggested to be 2 times or 2:1. HRN has shown an increase in its current ratio from 1.48:1 to 2.11:1 and it is slightly higher compared to GAW which has increased from 1.74:1 to 2.04:1. Therefore both companies have the ability to pay its liabilities and have been increasingly stable over time and has met the standard expectation of 2:1. 2. Liquidity Ratio or Acid Test/ Quick Ratio: For many businesses, Inventory cannot be quickly turned into cash. So, it is excluded from the current assets for calculations. If the ratio falls below 1:1 then the company is having some liquidity problems. Liquidity Ratio = Current Assets Inventory Current Liabilities HRN shows an increase from 0.72:1 to 1.38:1 in 2010 whereas in GAW, it has increased from 1.14:1 to 1.49:1, which is slightly higher than in HRN at 2010. This change is caused due to the difference in stock levels. Since the ratios have not fallen below 1:1 as expected, both companies show stable liquidity positions although HRN might have faced some problems in liquidity in the year 2009. D. GEARING Gearing means borrowing and it measures how much percentage of the capital employed is borrowed from lenders or the bank. Interest is charged on capital repayments and if a company borrows heavily, it risks becoming insolvent. The advantage of gearing is to increase the returns to owners because the loan interest rates are relatively low compared with the returns that a business can earn. Gearing is calculated to find out whether the company has the ability to repay its loans or debentures. Table 4: SL.NO. GEARING RATIO HRN 2010 HRN 2009 GAW 2010 GAW 2009 1. Capital Gearing 22.82 19.17 3.53 27.23 2. Interest Cover 7.42 8.57 43.72 4.99 1. Capital Gearing: This ratio measures the contribution of long-term borrowing to the capital employed. Capital Gearing = Long-term Borrowings x 100 Capital Employed A low Capital Gearing is preferred. Gearing in HRN has increased by 3.65% in 2010 and is 22.82% whereas in GAW it has greatly reduced to 3.53% in 2010 from 27.23% in 2009. GAW has a very low gearing ratio comparatively and thus its interest payments will also be low. A company is expected to have a gearing ratio of not more than 30%. Although both companies are in a good financial position, GAW is positioned extremely well. 2. Interest Cover This ratio measures the amount of profit available to cover the interest payable. The lower the interest cover the higher the risk of inability to repay the loan along with its interest charges. It is measured as the number of times that the interest could be paid out of the profit earned. Interest Cover = Profit before Interest and tax (times/year) Interest Payable The interest Cover for HRN has decreased from 8.57 times to 7.42 times in 2010 because of the decline in its profitability and the slight increase in its borrowings; in GAW, it has shot up to 43.72 times in 2010 from just 4.99 times in 2009. GAW has a very high Interest Cover and is in a safe position. This is because of the high profit it made, which has enabled the company to pay most of its loans. A company is expected to have a minimum cover of 3 times; 7 times or greater is considered good. If the company is stable over time, the bank will accept lower covers, if its volatile or unpredictable in terms of t heir profitability; the banks will expect standard covers. Therefore, GAW shows that it is doing extremely well in terms of financial position. Thus, the above analysis made using ratios proves that GAWs financial performance and position is better than HRNs. PART B: Industry Analysis and future prospects for industry and investment. GAW and HRN operate in the toys and games (TG) market which is divided into three primary sectors: games consoles, games software and traditional toys and games. The games consoles market consists of all console sales by Nintendo, Microsoft and Sony including handheld systems. The software sector covers all console and PC games. Traditional toys include action toys, activity toys, dolls, games/puzzles, infant/pre-school toys, ride-ons, vehicles and other miscellaneous toys and games. 1. Industry Information: The UK market for TG enjoyed year-on-year growth until a decline in revenues in 2008, followed by a deeper fall in 2009. Sales in the market declined in 2009, reflecting the downturn in the wider UK and global economies. Retail competition has helped to keep prices lower, with the supermarkets offering toys as loss leaders and Internet operation comparisons bringing increasing transparency to the market. The TG market is in line to recover from 2010; early company results for the first quarter indicate a more positive performance. The rise in the under-10s population and the eventual economic upturn will drive growth in sales. The market condition is driven by a number of factors: The trade has long been habituated to declining numbers in its target market, but will now benefit from a higher fertility rate. Tougher economic conditions are likely to mean lower volume sales, but could benefit sectors perceived to offer better value such as games and puzzles. https:/ /academic.mintel.com/sinatra/oxygen_academic/my_reports/display/id=280200HYPERLINK https://academic.mintel.com/sinatra/oxygen_academic/my_reports/display/id=280200anchor=atom/display/id=429664?select_section=429665HYPERLINK https://academic.mintel.com/sinatra/oxygen_academic/my_reports/display/id=280200anchor=atom/display/id=429664?select_section=429665anchor=atom/display/id=429664?select_section=429665 The window of childhood may have shrunk as kids move onto adult interests faster, but the toys and games market has so far proved resilient, although that may not remain so. Old favourites are gaining new fans through nostalgia, as well as the belief that they have proven their worth and offer real quality and value. Christmas is still the big event, accounting for around half of sales, but the trade would benefit from building up sales across the rest of the year. https://academic.mintel.com/sinatra/oxygen_academic/my_reports/display/id=280200HYPERLINK https://academic.m intel.com/sinatra/oxygen_academic/my_reports/display/id=280200anchor=atom/display/id=429662?select_section=429664HYPERLINK https://academic.mintel.com/sinatra/oxygen_academic/my_reports/display/id=280200anchor=atom/display/id=429662?select_section=429664anchor=atom/display/id=429662?select_section=429664 2. Industry Analysis using SWOT: STRENGTHS: Parents support many toys as a way to learn through play. Regular infusion of new products refreshes the market. Awareness of licensed products boosted by extra visibility in other formats (eg TV and film, books, comics, clothing). WEAKNESSES: Kids tastes can be highly unpredictable and sudden fads cause problems in meeting demand. But with no must-have toy or game then sales can be sluggish. Competition growing from more forms of digital media. https://academic.mintel.com/sinatra/oxygen_academic/my_reports/display/id=280200HYPERLINK https://academic.mintel.com/sinatra/oxygen_academic/my_reports/display/id=280200anchor=atom/display/id=429666?select_section=429667HYPERLINK https://academic.mintel.com/sinatra/oxygen_academic/my_reports/display/id=280200anchor=atom/display/id=429666?select_section=429667anchor=atom/display/id=429666?select_section=429667 OPPORTUNITIES: The trend of buying a toy for a new baby increased from 13% in 2003 to 26% now. The more reasons to buy such as childrens parties or to appeal to the traditional image of a happy family all playing a game together directly translates into sales. In an already strong market these views suggest toy companies and retailers could benefit still further by stressing aspects such as the durability and adaptability of their products. https://academic.mintel.com/sinatra/oxygen_academic/my_reports/display/id=280200HYPERLINK https://academic.mintel.com/sinatra/oxygen_academic/my_reports/display/id=280200anchor=atom/display/id=429674?select_section=429675HYPERLINK https://academic.mintel.com/sinatra/oxygen_academic/my_reports/display/id=280200anchor=atom/display/id=429674?select_section=429675anchor=atom/display/id=429674?select_section=429675 THREATS: Sports and hobbies are the other growth area for 7-10s, meaning sales opportunities for products such as craft materials, skateboards, train sets and models. All the major direct competitive sectors such as magazines, video games and books are doing well, showing kids have a great capacity for many forms of entertainment. https://academic.mintel.com/sinatra/oxygen_academic/my_reports/display/id=280200HYPERLINK https://academic.mintel.com/sinatra/oxygen_academic/my_reports/display/id=280200anchor=atom/display/id=429665?select_section=429666HYPERLINK https://academic.mintel.com/sinatra/oxygen_academic/my_reports/display/id=280200anchor=atom/display/id=429665?select_section=429666anchor=atom/display/id=429665?select_section=429666 3. Future prospects for industry: In todays unfavourable economic conditions, consumers will choose more carefully. They will be increasingly looking for games and toys they think deliver good value over time. In the longer term the market will continue to benefit from broader underlying factors as well, including childrens enjoyment of toys, their urge to collect, parental desire to give their children pleasure and help them learn, film and TV influence, and a growing child population. However, is real longer-term growth attainable? On balance yes. But manufacturers could do more to ensure sound growth and their own security by ensuring they keep in step with older childrens changing attitudes, by reducing their reliance on licensed product, and developing high-quality and innovative products whether for their own ranges or for licences. https://academic.mintel.com/sinatra/oxygen_academic/my_reports/display/id=280200HYPERLINK https://academic.mintel.com/sinatra/oxygen_academic/my_reports/display/id=280200 anchor=atom/display/id=429666?select_section=429669HYPERLINK https://academic.mintel.com/sinatra/oxygen_academic/my_reports/display/id=280200anchor=atom/display/id=429666?select_section=429669anchor=atom/display/id=429666?select_section=429669 UK sales of toys, 2003-13  £m  £m at 2008 prices ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬m 2003 2,054 1,756 2,969 2004 2,081 1,850 3,067 2005 2,100 1,956 3,072 2006 2,142 2,045 3,142 2007 2,187 2,143 3,197 2008 (est) 2,078 2,078 2,826 2009 (fore) 2,023 2,055 2,710 2010 (fore) 2,073 2,143 2,819 2011 (fore) 2,123 2,239 2,887 2012 (fore) 2,158 2,347 2,934 2013 (fore) 2,201 2,493 2,993 Prospects for investment: Investor ratios are used to assess the investors returns on their investment. For this purpose, the Earnings per Share (EPS) and the Dividends per share (DPS) are used in calculation. EPS: It is the earnings generated by the business, available to its shareholders and compares profit after tax with number of shares in issue. DPS: This ratio compares a firms dividends with the number of shares receiving the dividend. Not all companies pay dividends. SL. NO RATIO HRN GAW 2010 2009 2008 2010 2009 2008 1. EPS (p) 9.75 11.2 16.2 48.4 17.82 2.4 2. DPS(p) 5 2.7 8.5 25 0 0 SL.NO. INVESTMENT RATIO HRN GAW 2010 2009 2008 2010 2009 2008 1. Dividend Payout% 51.3 24.11 52.63 51.65 0 0 2. Dividend Yield% 3.96 3.97 4.49 7.23 0 0 3. Price Earning (p) 12.91 6.07 11.7 7.15 11.73 72.5 Table 5: 1. Dividend Payout (DP) It measures the proportion of profit that a company pays out to shareholders in the form of dividends. DP = (DPS/EPS) x 100 Over time, HRN has not been stable showing sharp decline and incline; GAW did not pay dividends for 2 years and started in 2010. The average DP in UK is 50%; both companies are paying reasonable dividends. 2. Dividend Yield (DY) It measures the rate of return that an investor gets by comparing the DPS with the market share price. DY = (DPS/Share Price) x 100 The rise or fall in the DY is indirectly proportional to the share price. The DY for GAW is higher than HRN. 3. Price Earnings Ratio (P/E) It relates the share price to the EPS and measures the market/investors confidence in the future of the company. PE = (Share Price/EPS) HRN shows better P/E than GAW which is because of the differences in share price; share price depends on the demands and supply levels in the market. 4. Future Prospects for investment: GAW- The effort put into streamlining the business is already reaping huge rewards, and with the focus shifting to sales improvement, operational gearing means further earnings progress is likely. On a forecast PE ratio of 10 and yielding nearly 6 per cent, the shares are a buy. (Reference: https://www.iconline.co.uk) Hornby have not been so lucky and are recovering from the recession and problems it encountered with its suppliers. However, HRN said it was seeing an early pickup in demand ahead of Christmas based on the hit film Toy Story 3 and producing toys for the 2012 Olympic Games. HRN Earnings are 1.2p higher at 11.9p thereby producing a PE ratio of 12. The dividend is forecast to rise from 5p to 5.7p and to 7p in 2011-12. The shares remain good value backed by some famous toy brands and rising sales via supermarkets. (Reference: https://www.iconline.co.uk MARKET FORECAST: GAW Forecasts (table a) Year Ending Revenue ( £m) Pre-tax ( £m) EPS P/E Div Yield 31-May-11 128.85 17.20 39.80p 11.1 27.46p 6.2% 31-May-12 132.90 18.30 41.75p 10.6 29.96p 6.7% (Reference: https://www.digitallook.com) HRN Forecasts (table b) Year Ending Revenue ( £m) Pre-tax ( £m) EPS P/E Div Yield 31-Mar-11 68.30 6.40 11.90p 13.2 5.70p 3.5% 31-Mar-12 74.50 7.80 14.60p 10.8 7.00p 4.3% (Reference: https://www.digitallook.com) Market Data for GAW HRN (table c) (Reference: https://www.digitallook.com) GAW HRN Currency UK Pounds Share Price 437.50p 155.50p Change Today -5.00p -2.00p % Change -1.13% -1.27% 52 Week High 450.00 172.00 52 Week Low 246.50 113.00 Volume 3,050 23,281 Shares Issued 31.14m 37.99m Forecasts predict that investing in GAW will be better than in HRN. PART -C: Advice on Investment Decision. 1. Assumption of Stephens attitude to risk: In the event of choosing between GAW and HRN, we assume that Stephen will invest in the company that maintains higher profitability in the industry and earns better returns to its shareholders in spite of economic conditions that lead to changes in the share price regularly and also avoiding the risk of large borrowings which may lead to inability of repayment eventually resulting in lower returns and dividends or no dividends at all. 2. Advice on Investment: HRN has got good prospect for growth in the years to come. However, it is not as stable as GAW and comparatively has shown lower performance and position levels. Its producing toys for the Olympics in 2012 will definitely boost its Revenue but what happens after that? Unless it increases its revenue by either increasing the selling price or reducing operating costs, etc, profits made at the moment will not earn returns greater than those in GAW. Therefore, based on the financial and industry analysis, it is strongly recommended that Steven should invest with GAW, considering his approach to risk. Over the last few years GAW has shown a steady and considerably good increase in the area of profitability and has proved itself as an efficient company. It was able to pay back almost all of its debts within a short duration and its liquidity position is three times a year. The company has shown stability over the years and this reflects good management, leadership and financial streng th. Hence, Stephen should choose to invest in GAW rather than in HRN, considering the forecasts made on investments.

Incredible Grace By Amazing Grace - 1078 Words

In today’s society, one takes their childhood journey towards where they stand today. Amazing Grace demonstrates this to examine a child’s perspective living in the neighborhoods of New York City that exist around them. Although, these families try to support their children, some families are in distress, since they have a low income status. However, they still can attain the important life skills, which will enhance and benefit them as they later develop. As a result, these apparent life skills may lead them in the right direction, despite how these difficult circumstances that truly affect them. Thus Kozol creates the overall image of children as innocent. Amazing Grace explores the innocence of children who are born in a society of†¦show more content†¦On the other hand, in Amazing Grace, obtaining real jobs was not common. A personal experience is related from the story: A person who works in a real job at a place like Chemical Bank, she tells me, is a rare exception in the neighborhood. â€Å"Almost no one here has jobs like that. Some are too sick. They live on SSI. (Kozol 14) Social Security is another form of income that a family can receive. Families use this as a solution in order to keep on living. The pursuit to land a quality job is not seen as an advanced option, considering the chances of getting such a job is highly unlikely. Instead, families must take one day at a time. Drugs also play a large factor. Children are always put at risk in the neighborhoods of New York City. Not to mention, drugs are heavily used: â€Å"Crack-cocaine addiction and the intravenous use of heroin, which children I have met here call â€Å"the needle drug,† are woven into the texture of existence in Mott Haven. Nearly 4,000 heroin injectors, many of whom are HIV-infected, live here† (Kozol 4). Drugs are a part of their culture and they cannot do anything about that. They will be surrounded by it, but do not understand why it is there. Drugs are dangerous and should not be seen by the eyes of children. Also, all children in this neighborhood an aware of people having AIDS, since many heroin users are HIV-infected. HIV infection leading to AIDS has been a major cause of death and illness amongst children, teens,

Homelessness in America - 3563 Words

Homelessness in America Social Program: Public Housing Introduction The issue of homelessness is one that I can relate to all too well. About twenty five years ago I found myself among the homeless. My story is simple, I had no formal education and was working a job making minimum wage. I couldn’t keep up with my rent and other living expenses and was finally evicted from my overpriced apartment. At the time I was on a waiting list for public housing for which there was at least a two year waiting period. The fact that I was single, with no children did not help me either. For a while I lived on the streets and in shelters, too ashamed to approach what family members I had with my problems knowing that they were†¦show more content†¦New York City had started to provide publicly funded housing before the act was created and was one of the programs that the government used as a model. According to Bauman, (1987)public housing was not originally created to help the â€Å"poorest of the poor,† it was created to house select segmen ts of the working class, specifically the â€Å"submerged middle class,† who were temporarily outside the labor market during the depression. These benefits were targeted to whites and helped move them to suburbs but kept blacks concentrated in cities and inner suburbs. The distribution of federal benefits made it possible for mostly white working-class people to move out of public housing, and contributed to a downward income shift in the public housing population after the 1940’s. These discriminatory practices were documented by (Massey Denton, 1993). At one time, public housing had been thought of as a solution for inner city poverty, isolation, and as a basic human necessity for less well-off people (Riis 1890; Marcuse 1986b (1978); Stegman 1990). 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Brother, My Brother - Bienvenido Santos BOOK REPORT

A Book Report: â€Å"Brother, My Brother† by Bienvenido Santos ABMA 116 Viennard Concepcion I. Title â€Å"Brother, My Brother† A. Etymology Brother, My Brother was entitling to the author itself. It is like conveying himself as his own brother, saying that no much more can embrace his self very much rather than himself only. A very brief autobiography which focuses on the author’s painful journey back to his past and on how the author goes back to his land but later on go back to the foreign and serve it as his home. B. Reference 1. Literal The story was like the author was representing himself and telling his journey by the means of telling that it is the author’s brother. 2. Symbolic The story was like calling the†¦show more content†¦A lot of the houses that he once knew were more dilapidated and the waters in the areawere black as ever. There were still a lot of Kankong fields in their town and from walking by them he found Apung Genio who used to be his late father’s friend. Apung Genio used to cut his hair as a child and when he greeted the old man he barely recognized Selmo.Selmo re-introduced himself carefully and when Apung Genio remembered him beganto reminisce of his childhood and his father’s. They talked about childhood friends and their adult lives like Dulo who was now a sweepstakes peddler and Ching who had already wontwice.Then Selmo asked Apung Genio on how his children were now. He was told that ApungGenio’s daughters Loreto and Simang have not yet married and may become old maids. Thenhe asked on how Apung Genio’s son Ambo is. Apung Genio hesitated to answer him butshortly reminisced how Selmo and Ambo were c lose friends. Finally he told Selmo that Ambois now in prison. This surprised Selmo but he no longer asked further because Apung Geniotold him that he was feeling dizzy and needed to rest. Selmo then thought that maybe after heleaves Sulucan and return one day he may find out more details on why his friend Ambo was in prison but for now he will just let it be. 2. Conflict Returning to heritage has its own stories to tell; there are the good sides which are thefond memories of long ago and the bad sides which is the

Business System Analysis Cheat Sheet free essay sample

A system is a set of steps (process) put together to accomplish a task. An information system (IS) is an arrangement of people, data, processes, and information technology that interact to collect, process, store, and provide as output the information needed to support an organization. Types of IS : A transaction processing system (TPS): captures and processes data about business transactions. A management information system (MIS): provides for management-oriented reporting based on other computer systems. A decision support system (DSS): provides information to help make decisions. An expert system: captures the expertise of workers and then simulates that expertise to the benefit of nonexperts. A communications and collaboration system: enables more effective communications between workers, partners, customers, and suppliers to enhance their ability to collaborate. An office automation system: supports the wide range of business office activities that provide for improved work flow between workers. Systems analyst – a specialist who studies the problems and needs of an organization to determine how people, data, processes, and information technology can best accomplish improvements for the business. Chap2 : Information systems architecture a unifying framework into which various stakeholders with different perspectives can organize and view the fundamental building blocks of information systems. Knowledge (ERD), process (UML) and communication (Interface). Chap3 : Capability Maturity Model (CMM) – a standardized framework for assessing the maturity level of an organization’s information system development and management processes and products. Model-driven development – a system development strategy that emphasizes the drawing of system models to help visualize and analyze problems, define business requirements, and design information systems. Process modeling – a process-centered technique popularized by the structured analysis and design methodology that used models of business process requirements to derive effective software designs for a system. Data modeling – a data-centered technique used to model business data requirements and design database systems that fulfill those requirements. Object modeling – a technique that attempts to merge the data and process concerns into singular constructs called objects. Object models are diagrams that document a system in terms of its objects and their interactions. Chap4 : Project management – the process of scoping, planning, staffing, organizing, directing, and controlling the development of an acceptable system at a minimum cost within a specified time frame. Process management – the activity of documenting, managing, and continually improving the process of systems development. Joint project planning (JPP) – a strategy in which all stakeholders attend an intensive workshop aimed at reaching consensus on project decisions. Chap5: Discovery Prototyping: a technique used to identify the users’ business requirements by having them react to a quick-and-dirty implementation of those requirements. Rapid Architected Analysis: an approach that attempts to derive system models from existing systems or discovery prototypes. Requirements discovery – the process, used by systems analysts of identifying or extracting system problems and solution requirements from the user community. Approaches include: Fact-finding – the process of collecting information about system problems, opportunities, solution requirements, and priorities via sampling, research, observation, questionnaires and surveys, and interviews. Joint requirements planning (JRP) – the use of facilitated workshops to bring together all of the system owners, users, and analysts, and some systems designer and builders to jointly perform systems analysis. JRP is generally considered a part of a larger method called joint application development (JAD), a more comprehensive application of the JRP techniques to the entire systems development process. Business process redesign (BPR) – the application of systems analysis methods to the goal of dramatically changing and improving the fundamental business processes of an organization, independent of information technology. Agile method – the integration of various approaches of systems analysis and design for applications as deemed appropriate to the problem being solved and the system being developed. Chap6: Use-case modeling – the process of modeling a system’s functions in terms of business events, who initiated the events, and how the system responds to those events. Use-case modeling has roots in object-oriented modeling. Use case – a behaviorally related sequence of steps (a scenario), both automated and manual, for the purpose of completing a single business task. Description of system functions from the perspective of external users in terminology they understand. Use-case diagram – a diagram that depicts the interactions between the system and external systems and users. It graphically describes who will use the system and in what ways the user expects to interact with the system. Use-case narrative – a textual description of the business even and how the user will interact with the system to accomplish the task. Extension use case – a use case consisting of steps extracted from a more complex use case in order to simplify the original case and thus extend its functionality. Abstract use case – a use case that reduces redundancy among two or more other use cases by combining the common steps found in those cases. Depends On – a use case relationship that specifies which other use cases must be performed before the current use case. Inheritance – a use case relationship in which the common behavior of two actors initiating the same use case is extrapolated and assigned to a new abstract actor to reduce redundancy. Chap8: Data modeling – a technique for organizing and documenting a system’s data. Sometimes called database modeling. Entity relationship diagram (ERD) – a data model utilizing several notations to depict data in terms of the entities and relationships described by that data. Entity – a class of persons, places, objects, events, or concepts about which we need to capture and store data. Attribute or elements – a descriptive property or characteristic of an entity. Compound attribute – an attribute that consists of other attributes. Synonyms in different data modeling languages are numerous: concatenated attribute, composite attribute, and data structure. Key – an attribute, or a group of attributes, that assumes a unique value for each entity instance. It is sometimes called an identifier. Concatenated key a group of attributes that uniquely identifies an instance of an entity. Synonyms include composite key and compound key. Candidate key – one of a number of keys that may serve as the primary key of an entity. Also called a candidate identifier. Primary key – a candidate key that will most commonly be used to uniquely identify a single entity instance. Alternate key – a candidate key that is not selected to become the primary key is called an alternate key. A synonym is secondary key. Cardinality – the minimum and maximum number of occurrences of one entity that may be related to a single occurrence of the other entity. Associative entity – an entity that inherits its primary key from more than one other entity (called parents). Foreign key – a primary key of an entity that is used in another entity to identify instances of a relationship. Nonspecific relationship – a relationship where many instances of an entity are associated with many instances of another entity. Also called many-to-many relationship. Normalization – a data analysis technique that organizes data into groups to form nonredundant, stable, flexible, and adaptive entities. First normal form (1NF) – an entity whose attributes have no more than one value for a single instance of that entity. Second normal form (2NF) – an entity whose nonprimary-key attributes are dependent on the full primary key. Third normal form (3NF) – an entity whose nonprimary-key attributes are not dependent on any other non-primary key attributes. System Analysis: Study of an organization’s policies and procedures and processes. It involves breaking down these processes, studying the processes and interactions. The processes are documented using narratives and diagrams.

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