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Macroeconomics Fall 2013
Macroeconomics Fall 2013
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The following data shows how the Abu Dhabi economy has been fluctuating after the recession of 2008. The data shows that the confidence of the firm and the customers have increased. This is after the great economic meltdown of 2009.
It is important to note that the Emirate of Abu Dhabi’s economic status has been resilience and stable when the world faced economic crisis. This is shown in the following data and the statistical yearbook as shown below.
GDP at Current Prices (Million AED) 620,316
GDP Growth Rate 15.9%
Oil Share in GDP 49.7%
Per Capita GDP (Thousand AED) 315.3
Fixed Capital Formation (Million AED) 177,467
Foreign Direct Investment (Million AED) 278,105.4
Oil, Gas and Oil Products Exports (Million AED), 2009 202,437
Non-oil Exports (Million AED) 11,610.9
Re-exports (Million AED) 10,991.7
Imports (Million AED) 86,574.1
Inflation Rate (%) 3.1%
According to the statistics, the revenue and expenditure of the Abu Dhabi government has been greatly affected by petroleum revenue which constitutes 82.6% of the entire 2010’s revenue. The department’s collections revenue and capital revenues contribute 7.3% and 0.1% in that order of the 2010’s revenue. Present expenditure contributes 61.6% of the entire expenditure in 2010. Present transfers 40.2%, salaries and wages 10.3%, and goods and services constitutes 11.2% about of the total revenue. Total capital expenditure accounted for 38.4% of total expenditures, while capital transfers and development expenditures on government projects and capital expenditure on goods and services contributed 24.8% , 12.5% and 1.2% of the total expenditure in 2010 in that order.
Percentage Distribution of Government Revenues (%)
Item 2005 2009 2010 2011*
Total 100 100 100 100
Petroleum royalties and tax revenue 85.9 89.2 82.6 90.6
Department collections revenue 11.6 8.1 7.3 6.5
Capital revenue 2.5 2.7 10.1 2.9
Source: Statistics Centre – Abu Dhabi *Preliminary estimates Abu Dhabi economy Expenditure
Percentage Distribution of Public Expenditures
(%) Item 2005 2008 2009 2010*
Total 100 100 100 100
Current expenditures 77.6 64.3 60.8 61.6
Salaries and wages 15.4 11.4 9.8 10.3
Good and services 15.2 10.8 11.2 11.2
Current transfers 47.0 42.1 39.8 40.2
Capital expenditures 22.4 35.7 39.2 38.4
Development expenditures on government projects 12.8 7.2 10.9 12.5
Capital expenditures on goods & services 1.0 0.2 0.4 1.2
Capital transfers 8.6 28.3 27.9 24.8
Source: Statistics Centre – Abu Dhabi *Preliminary estimates Percentage Distribution of Public Expenditures by Type (%) Item 2005 2008 2009 2010*
Total Expenditure 100 100 100 100
Recurrent Department Expenditure 23.7 26.3 27.6 25.3
Development Expenditure 11.8 6.9 10.8 9.1
Contribution to the Federal Government 42.4 31.8 27.5 32.2
Aid and Loans 18.2 28.0 24.7 23.0
Capital Payments 3.9 7.0 9.3 10.3
Source: Statistics Centre – Abu Dhabi *Preliminary estimates Sources of income in US
Business financing is used in many ways by a business entity in the execution of its duties and responsibilities. Business finance is used to account for variable expenses, overhead costs as well as day to day operating expenses. In our case due to the expansion needs of the company, sources of finance will need to be evaluated to find a more suitable option for the company. A company can raise finances in a number of ways including, equity finance, debt finance and quasi-equity finance (Manasseh, 1990).
Equity Finance
Equity finance is the largest source of finance to any limited company. This is because it forms a basis on which other finances can be raised. Equity finance is the sum total of the company’s ordinary share capital and the retained earnings/revenue reserves of the company (Hofstrand, 2013). The directors of the company can use equity finance as a source of finance because it can raise a substantial amount of money that can suit the expansion needs of the company.
Ordinary Share Capital
Ordinary share capital refers to finance that is contributed by the ordinary shareholders of a business entity. This finance is contributed by the real owners of the company, because it is raised through the sale of the company’s ordinary shares. It is a permanent source of finance for the company and is only redeemable if the company is liquidated (Manasseh, 1990). Ordinary share capital forms a base and security upon which other money can be raised. This form of finance can raise a substantial amount of money to finance the company’s expansion needs.
Retained Earnings (Revenue Reserves)
Retained earnings are a source of finance which comes about as a result of the company’s undistributed profits. It is a cost free source of finance. This helps in the constitution of growth in the amount in equity for the company. It is referred to an equity cost because it can be declared as a bonus issue in future or as extra dividends (Hofstrand, 2013). The directors could also consider using the company’s retained earnings as a source of income because it is cost free. It is considered the largest source of internal source of finance without any cost to the business. It increases the company equity base by ensuring that the gearing levels of the company are minimized making it possible for the company to get debt finance in good terms (Manasseh, 1990). Once it is capitalized it becomes a permanent source of finance to the business entity and the company can use it for long term investments. It can also be used to lower gearing levels by using retained earnings as redeemable preferential shares. It can enhance creditor’s confidence levels in the prospects of the company’s growth levels. Retained earnings can be used to finance fixed assets whose amount could not be financed using other sources of finance.
Quasi Equity
Quasi-equity combines features of both equity finance and debt finance. It is also referred to a preference share capital because it is accorded preferential treatment in comparison to ordinary shareholders. This source of finance is contributed by quasi-owners or preference shareholders (Hofstrand, 2013). Preferential shareholders are accorded preferential treatment in the following events. Liquidation of the company. In the sharing of dividends, preference shareholders receive dividends before ordinary shareholders. Selling preferential shares does not affect the control of the company, because they do not have voting rights. It can be used without restrictions or preconditions compared to debt finance. This source of finance is never secured by tangible assets. The cost is temporary for redeemable preference shares, hence is not a perpetual cost. It has a fixed sum of dividends paid regardless of the profits made by the company. The issuing company can also take advantage of preference shares by redeeming preference shares at par, when their market values exceed the par value because it can issue others and gain from share premium (Manasseh, 1990).
References
Hofstrand, D. (2013). Types and sources of financing for start-up businesses. IOWA State University Extension and Outreach.
Manasseh, P. (1990). A textbook of business finance. Nairobi, Kenya, McMore Accounting Books.
Ray, S. (2012). Effectiveness of green shoe option as a technique of price stabilization in India. Advances in Applied Economics and Finance (AAEF) 281, 2(1), 2012, 2167-6348.
Alturas, Dr. Economic Contribution of Wyoming’s Community Colleges. Web. Mar 2011. 16 Apr 2013 <http://www.caspercollege.edu/impact/downloads/2011_statewide_full_report.pdf>.
Shields, Michael P. Why Should State Government Invest in College Education? An Equilibrium Approach for the US in 2000. Web. Jun 2008. 16 Apr 2013 <http://ftp.iza.org/dp3569.pdf>.
Mac book Electronics, Apple company
Mac book Electronics:
Apple inc. has been one of the companies in the forefront to bring modern communication technology solutions to its clients. This great effort has seen the company go beyond 10% in terms of market share and becoming the top three leaders in providing high technology communication solutions. Macbook has one of its major discoveries in the 21st century. Apple has over the last few years improved the features of its Mac book to reflect the current state of technology and provide the highest level of customer satisfaction. Its latest discovery in the Macbook brand is the discovery of Mac book air introduced in late July this year and duly equipped with 3 processors. Other discoveries in the Mac book brand include the thunder bolt interface, Mac mini, OSX lion, iMac and Mac pro.
A Mac book is a special electronic gadget that has become a key component of education system and popularly used by students, teachers and University professors to undertake their teaching and learning processes. A Mac book is a special Macintosh computer notebook which can be connected to internet and help in research and education purposes. The electronic equipment for first introduced in the market by apple Inc. In the year 2006.Apple has however strived to upgrade the features of the Macbook. The current brands of Mac are highly sophisticated with enhanced capabilities.
Among the features that have been developed in the current Mac books are the portability. For instance the latest Mac book air is probably the thinnest lap top in the world with a thickness of 0.76 inch. The Mac book air also enhanced memory which goes u p to 1.8 GHz for its Central processing Unit. It has a RAM of 2GB and a hard drive of up to 80GB.The Mac book has an in built wireless networking system and a blue tooth which allows it to be mobile (Chambers,3) The Mac book has a highly sensitive multitouch track pad which allows easy control of the electronic devices.
Other features that have been introduced in the Mac book are standard key board which allows for easy usage, an insight camera on top of the screen and this allows the users to take photographs, a USB port, power adaptor, headphones. These features allow the users to different tasks using the same gadget and provide the highest level of convenience to the users.
The Mac books have also undergone special modifications to ensure efficiency in power consumption as the battery can hold charges for a long period. The above features have made Mac book electronics to be the most preferred gadgets by students and the lecturers as they allow for faster communication and delivery of knowledge.
Mac books effectively seek to replace the normal laptops which may not have the features they contain. As described above the Macs can also be used for social purposes as they have additional features that allow the users to socialize with friends. The size and the thickness of the Macs are particularly amazing and the users can carry them around for a long period of time (Miser, 366).
Apple has used the Mac book brands to move information and communication technology from one level to another by ensuring high levels of portability, reliability, convenience and power conservation on their Mac book laptops. This is what the students and the teachers need in this era of globalization and mobility of information. The Mac book therefore makes life easy and allows teaching and learning to take place at any location using the tiny gadgets. Mac is the most preferred electronic gadget for the next generation as people move from one level of technological innovation to another.
Works cited
Chambers, L.Mark. MacBook for Dummies. Hoboken, N.J. : Wiley, 2010. Print
Miser, Brad. Mac Book Pro Portable Genius. John Wiley and sons, 2011. Print
M6A1 Understanding Charts
M6A1: Understanding Charts
Interpretation of data requires analysis skills in which one has to have the ability to interpreted charts and picture presentations. It is argued that a picture is able communicate more than words. Images or picture presentation can portray a lot of information at a glance. The reader has to point out what every presentation means including an analysis of both extremes. In the document presented in this case, the issue of tax collection with respect to business cycle is addressed both in text and chart presentation. The information provides a variation in income tax from other taxes and various expansions as well as contractions in the economy.
In this presentation, income taxes portray the highest extremity than both sales tax and personal income. Personal income appears to be more constant while the taxes go through a system of variations. These variations could be related to business cycles (Gerald, Robert & Geoffrey, 2008). Business cycles may not certainly affect the personal income but influences the government decision to change the tax structure as a way of creating funds to finance its activities during times of economic depression. Economic depression would free personal income leading to shrinkage in the personal income to a lower extreme than sales tax. When the economy is at the boom period, personal income is highest and this initiates an increase in income tax. This means that income tax is more affected by business cycles than sales tax (Carroll, Holtz-Eakin, Rider & Harvey Rosen, 2000). The reason behind this is that business cycles greatly affect personal incomes than the effect created on sales. This is why income tax varies more greatly than any other taxes in the economy. Income tax falls significantly during economic depression periods because firms fire employees or shrink their incomes to avoid losses. During the boom periods, more jobs are created creating a change to generate more funds through income taxes.
References
Gerald Auten, Robert Carroll & Geoffrey Gee. (2008). The 2001 and 2003 Tax Rate Reductions: An Overview and Estimate of the Taxable Income Response. National Tax Journal, Vol. 61 No.3 , 345-364.
Robert Carroll, Douglas Holtz-Eakin, Mark Rider & Harvey Rosen. (2000). Income Taxes and Entrepreneurs: Use of Labor. Journal of Labor Economics, Vol.18 No.2 , 324-351.