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History of Emily Dickinson
Emily Dickinson
In the year 1830, in the month of December, in Amherst Massachusetts, Emily Elizabeth Dickinson was born. Her parents were Emily Dickinson and Edward Dickinson, a lawyer by profession. Her parents had three children, and Dickinson’s siblings were Lavinia and William. She lived in a large house, which had been constructed by her late grandfather. Most of her life was spent at that house. Dickson did not have a life that is eventful and circumscribed, yet she made notable accomplishments in life. Furthermore, in her lifetime, she wrote a total of 1775 poems. This is the most number of poems, which have ever been written in the English language. Each of her poems has her personal touch and are unique, thus the reason why they are considered as master pieces. Many of the readers of her poems are fascinated by the life led by Emily Dickinson (Kirk, 2004.12).
Her background is the prime reason why she became quite successful while writing her poems. She had an inner life that seemed to be brilliant and moreover she had an extremely sharp perception. In Dickinson’s family, the presence of a paternal grandfather did not exist. The latter lived a life, which can be described as being successful. On the other hand, Dickinson’s father known as Edward influenced her in a profound manner. Despite the fact that her father did not have a healthy relationship with her mother, Dickinson loved him (Kirk, 2004.12). Edward might have been withdrawn from matters concerning his family, but Dickinson admired him. Thus, Dickinson made him a character in many of her poems. The relationship she had with her mother did not match up to that, which she had with her father. Dickson’s poetry was not easily understood by Emily Norcross. It is believed that her nature, did not allow her to do so, and she did not have intellectual abilities. When Dickinson was young, she wrote letters, whereby she expressed the relationship she had with her mother.
Dickinson had a small circle of people who were close to her, and she often narrated stories to them. As Dickinson grew older, she had a close relationship with her mother. The relationship grew even more when Edward died, and she had to take care of her mother, who suffered from paralysis. The relationship that existed between Dickson and her brother William is known as being competitive. Fortunately, they had many similar characteristics such as ambition and intellect (Martin, 2002.89). Despite living in the middle of the nineteenth century, Dickson is described as being exceptionally brilliant. Also, the relationship she had with her sister Lavinia is similar to that of her mother and her. Furthermore, Lavinia is responsible for pushing forward and having her sister’s poems published. The latter took place after the death of Dickinson through the help of Mabel Todd and Thomas Higginson. They were the ones who went through Dickinson’s possessions and found her poems. Moreover, they made corrections to her poems by making them more comprehensible.
Only eleven of Dickinson’s poems were published when she was alive, despite having quite a number of them. For example, the famous Amherst White nun image is as a result of the work of some of Dickinson’s family members. The latter is referred to as an epithet, which refers to the white clothes that she wore most of the time. Dickinson’s love life did not attract much attention as she did not have a man in her life. Some poems written by Dickinson were based on unhappy romance and bridal matters. Her lost love known as Johnson faded away and thus, she did not have a happy love life. Researchers have claimed that, in eight years, Dickinson wrote two thirds of her poetry. Moreover, in the year 1862 until 1864, she wrote the remaining poems, which were 681 in total.
A myth existed that Dickinson did not have many friends, but this is false. Before she lost her life, her friendship with other people in the literary had grown tremendously. During this time, Dickinson had the pleasure of meeting Helen Jackson, a crusader for American Indian rights and a writer, as well. Religion played a role in writing and interpretation of Dickinson’s poems. Most of her family members converted to liberal Unitarianism, but she did not as she opted to follow traditional Trinitarian traditions. Furthermore, through examining Dickinson’s poems one easily finds elements of empiricism and science. Also, there are elements, which have no meaningful reason and others, which involve church services. Through her father’s teaching, Dickinson became extremely inquisitive on matters concerning life. She had vast knowledge on matters on the subject of physical sciences. She obtained information from her father’s library, and the books she borrowed from the library at the Amherst College.
In terms of medical conditions, Dickinson did not suffer from any major ailments. The only problem, which affected her, is her vision. The latter occurred in the year 1862, and it cleared away after some time. It is only the uremic poisoning, which is a medical condition that made her lose her life. It seems that Dickinson is one of the most gifted women ever known to mankind. The apocrypha and myths, which exists concerning her are not true as has been witnessed. She is known to have been rebellious towards matters concerning religion and family. Furthermore, she knew that she had a duty to help all those who were in need of her assistance. Despite the fact that civil war took place when Dickinson was alive, she still helped many people. People living in Amherst were conservative, and the civil war did not allow helping others as much. She never got married, but still lived her life in a dignified manner as a woman from New England. Her legacy is known and treasured by most people who are familiar with her work.
There were many poems, which were composed, during Dickinson’s life time, and this proves that she had a gift for writing. Most of her poems were in the form of lyrics, which were short. In her poems, she dealt with many fascinating subjects such as immortality, loss, nature, beauty, religion and austerity, among others. It seems that according to her, death is inevitable thus, the reason why she had a lot of interest concerning it. Some of her sources for her poetry were obtained from the Bible (Farr, 2005.9). This is ironical despite the fact that she was not extremely religious. Some of her influence was obtained from famous authors such as John Keats, Shakespeare and George Herbert. Dickinson is known for her highly developed and personal system, as well as the exceptional use of allusion. Also, she used elements such as seasons, time, places and color in her poems.
Dickinson explored and used rhyme scheme, enjambment and compression in her poems. It shows that she had valuable information regarding the use of poetry stylistic devices. Moreover, it was not an unusual site to see her poems making effective use of punctuation and capitalization. They were used in a manner referred to as idiosyncratic and are common among credible poets. Dickinson’s work is far much better as compared to that of poets in contemporary America. Dickson had created her own unique style of poetry, which is even recognized up to date. After ‘Poems of Emily Dickinson’ publication took place in the year 1890 many people criticized her work. The latter changed as people became more aware about her poems and instead acclaimed her. Dickinson’s thoughts and emotions were praised as they were referred to as being inspiring (Brantley, 2004.56).
People who lived in the 1890’s were more interested in the message of the poems, rather than the techniques of poetry used. Currently, poetry critics are appreciative of the poems written by Dickinson as they have perfect structure and language. Since Dickinson wrote her poems to be viewed as lyrics, people should not be involved in examining their structure. According to a popular poetry critic, known as Karen Oakes, there is feminine discourse in Dickinson’s poems. In order to bring feminine discourse, which is intimate, she used metonymy in her poems. In turn, it makes readers know what she wants to put across in her poems. In her poems, it is evident that there is a struggle between the females and males. The latter believe that they have power, as this is how society is (Vendler, 2004.24). Through her poems, her sexuality is known as she obtains support and safety from females in her life. Some people have claimed that, in some of her poems, there is extensive usage of clitoral imagery and even homoeroticism. The best poem concerning nature by Dickinson is known as poem 986. It has been praised as its content has unique techniques as well as the execution style is perfect. Through reading this poem, Dickinson’s character is known and it seems that she is afraid of sexuality matters. Her personality is witnessed in her poems and this makes her unique. Those who tried to interpret her poems had a difficult task, as she did not date or punctuate them. In turn, Johnson numbered the poems, and this is the format known by people today. Indeed, Dickson is ascribed as being in the list of the best poets.
Conclusion
In conclusion, Dickinson’s life is surrounded by enigmatic details and is of interest to many of her critics and readers, as well. Her poetry is thematic, original and technical, and thus, a reason why a fascination among its readers. Furthermore, she shows her deep interest and knowledge concerning her experience in emotional and intellectual matters. There is no school poet who can be compared to her, due to the rich content of her poems. The only poet of her time who can be compared to her poems is Walt Whitman. It seems that Dickinson will forever be remembered as one of America’s notable poets.
Work Cited
Vendler, Helen. Poets Thinking: Pope, Whitman, Dickinson, Yeats. Cambridge, Mass.: Harvard University Press, 2004. Print.
Brantley, Richard. Experience and Faith: The Late-Romantic Imagination of Emily Dickinson. New York: Palgrave Macmillan, 2004.Print.
Kirk, Connie. Emily Dickinson: A Biography. Westport, Conn.: Greenwood Press, 2004.Print.
Martin, Wendy. The Cambridge Companion to Emily Dickinson. Cambridge: Cambridge University Press.2002.Print.
Farr, Judith. The Gardens of Emily Dickinson. Cambridge, Massachusetts & London, England: Harvard University Press.2005.Print.
History of Economic Thought
History of Economic Thought
Answer to Question 1
The history of economic thought is on different economic thinkers. Adam Smith was one of the greatest initiators of economic though but his contributions were taken over by people often referred to as pre-Adamites. Some of the great contributors of economic though were people like Bernard Mandeville, Thomas Mun, and Richard Cantillon. Their contributions are remarkable but the three contributors had varying philosophies. Their contributions revolved around fields like political economy and economics. The factor contributing to their differences is the establishment of different schools of thought that had different but similar philosophical arguments about political science and economics. All the authors based their thoughts on Adam Smith’s philosophic. Adam Smith is in fact considered the father and founder of modern economics. His predecessors were only developing his ideas especially in the 18th century.
Thomas Mun was an English businessperson from 1517 to 1641. His contribution to the modern economics is mainly viewed through his representation of the early mercantile policy. The policy was stated in his book, “The England’ Treasure by Foreign Trade.” Published in 1664. This contributor to economic thought on international trade was a member of East India Company and widely wrote about the experience he had in this kind of trade. Mun established that England treasure could only increase through trade and by treasure, he meant the country’s national wealth. Thomas Mun went on to suggest courses of actions that England could take to increase its wealth through trade. In his suggestions, Mun pointed out that imports were frugal in consumption and could increase the volume of goods that a country has for export. Imports also would contribute to the utilization various domestic resources including land as the key factor to production. He pointed out that if countries consumption is done in a way that there is no waste, the country would have utilized resource and extra good that can be exported to earn different goods that would in turn add to the country’s treasures. Frugal consumption utilizes the factors of production creating surplus for exporting (Fusfeld, 1988). If such resources are utilized, import requirements are reduced and export of goods would have inelastic demand given that more money is probably made from the higher prices viable (HobsBawm, 1954).
Bernard Mandeville on the other hand contributed a lot on the functioning of markets. He is identified to have had problem in situating his work with development of laissez-faire theory. He was born in Rotterdam in 1670 and he grew to be a contributor of the function market mechanisms as part of economics (Fusfeld, 1988). He made much contribution to the laissez-fair economic theory and advanced many aspects of the modern economics alongside free market economic theory and mechanisms. He suggested and put emphasis on the way conduct patterns emerging from individual ego clashes and guide politicians to influence their social lives. This means that he also contributed to political economics. As a philosopher, political economist, and a satirist, his contribution to philosophy was wide. His philosophy was offensive at the time due to his satirist trait. He could point out that actions of men could hardly have two divisions as lower division or upper division and that a man’s higher life is only fiction introduced mainly by rulers and philosophers (Howell, 2013). He established that divisions among people are done to simplify governments and generate relations within societies. He could point out that virtue is detrimental to a country or society in its intellectual and commercial process. According to his economic philosophy, vices where the best way people or societies progress through activities that initiate inventions as well as economic activities, which he called circulation of capital. Vices would lead people to luxurious lives and could stimulate a society into progressive actions (Howell, 2013).
In the case of Richard Cantillon, his contributions are significant to make him referred to as the founder of political economics. Today, many Australian insights are based on the economic concepts of Richard Cantillon (Jevons, 1957). He was one of the founders of marginalized revolution. He wrote several manuscripts about economic theory and concepts but the most remarkable was the, “Essai Sur La Nature Du Commerce En General,” or the Essai, which was published in the French language in 1755. This publication had a significant influence on economics and economic science but his treaties where neglected during the 19th century but rediscovered towards the end of the century. The rediscovery was done by William Stanley and considered it the birth of political economy making Essai gain significant attention. Essai, written by, Richard Cantillon, was the first treaties that were complete and addressing economic theory. His contribution to political economic and economic theory is largely used in today’s economics. The aspect of enterprise economics is also based on Richard Cantillon (Polanyi, 1957).
The three economic thinkers contributed much on economic enterprise and merchandise. They believed that economic enterprises involved exchange of goods and services and utilization of resources. Cantillon assumed constant equilibrium and evenly rotating economy in which a society cannot entirely rely on its production alone and has to trade with other nations. Thomas Mun had the same idea in which England could benefit more by trading with other nations and that and enterprise was not based on a large-scale production. Bernard Mandeville suggested on the issue of market mechanisms and the way people could be influenced by the interest of a few superior politicians or merchandise (Polanyi, 1957).
Answer to Question 2
The school of thought known as the School of Political Classical Economy was largely supported by Adam Smith, David Ricardo, and Karl Marx. The dimension in this school of thought are centered its developments and the end of the classical political economy. The school thought was based on capitalism, which still exist today (Polanyi, 1957). In capitalism, profits were the main idea of producing goods and services and the product produced should have a value in both consumption and exchange. This is a rule in economics in which case without the essence of gaining from production, there would be no economic growth or economic development. The Classical economic thought was focused on resource utilization even if it meant the oppression of labor. Labor payments were to be structured in a way that the value of labor is more than its compensation (Rothenberg, 2005). These aspects created combination economic aspects both positive and negative such as markets, pricing mechanisms, economic crises, unemployment, and well as the concept of interest rates. This schools reflected economic development in the material world. The school derived the nature of money and exchange value of goods or uses value (Polanyi, 1957).
From the nature of money and production of goods and services, consumers have to consume a product and can offer a price that is lower than the product value according to their perception but the producer’s value is actually higher than the value of the good. The value is generated by labor value and the cost of the other factors of production. In this case, the higher the cost of production the higher value of the product. Little was centered on product quality since a capitalist want to benefit from the factors of production, including labor, as much as possible (Richardo, 1953). There is as well the concept of social capital, which also creates a useful value in that the society will create a value produced through demand and consumption. Without consumption, there would be no trade and hence no production. Beside these values, there is the concept of surplus value, which generates profits and interests of enterprise. There is no much on future attributes of the economy but increased production is mainly done to generate private capitals. The main essence in this case is capital accumulation but hardly on capitalist production. This attitude went on and changed from a capitalist form of enterprise to an enterprise where consumer wants and quality of labor guide production (Marx, 1976).
Adam smith introduces the notion that labor is acts as the source of commodity value. He creates the notion that a commodity has an exchange value and use value. With the exchange value, Smith implies that commodities are exchange for other commodities or money to gain from the extra value from such a commodity (Jevons, 1957). Exchange value exists in a commodity is the owner of the commodity is bound to gain in the exchange. This value is generate by the value of labor employed to produce the commodity. Similarly, use value is the value perceived by the consumer on a product the value is viewed from the perspective of the consumer to pay a price, which is considered parallel to the commodity or service value. If the value of the product were less than the price of the product, the buyer would turn down his or her offer to purchase it.
In his 1976 publication, “An Inquiry into the Nature and Causes of the Wealth of Nations,” Smith reflects over the economy during the industrial revolution and touches on division of labor, productivity processes, and free markets. He describes what build up the wealth on any nation under the classical though framework (Jevons, 1957). According to smith, division of labor leads to increased production and that this aspect makes labor more important than any other factor of production. For this reason, value is mainly related to labor. Division of labor is brought about by advancement in human ability and specialization and leads to a better quality of labor from which value is generated. Ricardo on the other hand considers value of commodity depends on the quantity of labor necessary in producing the commodity. There is a disparity is this case since smith considers the value of a commodity, which could be exchange value of use value, to be based on quality of labor (Richardo, 1953). This quality of labor comes about through division of labor. Contrary to Smiths argument, Ricardo’s view is that value of a commodity is based on the quantity of labor used in the production of the commodity. Exchange value will then depend on the quantity of the other product in the exchange (Fusfeld, 1988).
According to Marx, a commodity has to fulfill some need in order to be exchanged, which creates subjectivity and qualitative aspects hence describing a commodity’s use value. Exchange value is created from the notion that commodities to be exchanged must have some common traits and the nature of production and labor necessity is a common aspect of all products. Exchange value is based on labor requirements while use value is based on subjectivity and the product’s qualitative aspects. The three classical thinkers base the value of products on labor as the main factor in production. Marx differs from Ricardo in that he considers value associated with quality of labor initiated by division of labor. Ricardo sees value as to be generated by the amount of labor employed while Marx considered value to be influenced by a number of factors including labor in general and subjectivity of the product (Marx, 1976).
Answer to Question 3
The Neoclassical Revolution was about developing ideas of the classical school of though and objecting some ideas that were harmful or not applicable in the modern economics. The work of Jevons and Jeremy Bentham has some similarities and idea exchange as far as the idea exchange on neoclassical revolution is concerned. Jevons’ publication, “The Theory of Political Economy,” is mainly on political economy and utilitarianism . The “Principles of Economics,” publication by Jeremy Bentham similarly is on economic though arguing ideas of Adam Smith, Richard Ricardo, and Karl Marx (Howell, 2013). Jevons on his utilitarianism is building on a mathematical theory in economics and part of the work done by Jeremy Bentham in his publication, “Principles of Economics.” In this case, Jevons uses felicific calculus as an instrument of transforming economic sensations into economic quantities. Jevons uses Jeremy Bentham’s calculus although he makes use of this concept in a simpler manner. In is way, he is introducing the mathematics concepts in his political economics theory. Jevons’s theory of utility can hardly be presented without a mathematical concept. The earlier concepts of utilitarianism were based on moral aspect by as part of the neoclassical revolution, Jevons had to abandon this moral concept and borrow the mathematical concept from Jeremy Bentham (Marx, 1976).
According to Jeremy Bentham, utility is the principle that tells whether something is right or is wrong according to the action taken in gaining or producing it. Utility approves or it could disapprove an action according to its aspect of diminishing the happiness of the person seeking it from a commodity or service. People intent to gain benefit from the aspect of property in anything that has value and the benefit is in form of advantages, good, happiness, or pleasure. Utility happens with all attempts to avoid the bad side of something. Bentham takes utility as a moral concept and people looks at valuable things from the positive side and employ moral actions to gain benefits from the valuable commodity or service (Polanyi, 1957).
Bentham’s idea of utility is subjective and based on the idea that utility achieved with respect to persons moral attitude. In his concept of utility is a moral phenomenon without any aspect of measure. He is more concerned with legal reforms and morality about people’s actions to achieve utility from what they do. He establishes that there is an underlying principle of morality on which people base their actions (Jevons, 1957). His concept of utilitarianism brings the idea of consideration of happiness of the majority in an action measure the action in terms of whether it is right or wrong. The concepts of Bentham in utility as a key concept in economics are not measurable but rather, they are subjective. In economics, neoclassical thinkers provide economic concepts that are measurable. Economics hardly considered issues of morality but the laws in business are established to play a role in ensuring fairness in business operation.
Concepts of economics such as fiscal policies are based on business laws whereby the economy is control through condition but not by free mechanisms. Utility is measurable and involve quantitative analysis by a consumer before making decisions on his or actions in purchasing a commodity rather than looking at the moral side of his or her actions. Jevons presents a quantities concept of understanding utility and h drops every idea about the moral concept of utility. If people would fully consider the moral concept of utility, some commodities would not be acquired or purchased (Jevons, 1957). The actions initiated towards the acquisition of a commodity of service are based on the factors like quantity on the product or service, the amount of benefit derived, the amount of satisfaction aspired or expected, and the cost of acquiring the utility. These aspects of utility make Jevons drop every moral idea about utility and incorporate the quantitative measures in establishing the utility derived from a commodity or product (Jevons, 1957).
This analysis on quantities idea of utility is better than the moral principle towards utility by Bentham. The economic world today is full of measurable ideas. Unlike in the classical time when theories where hardly quantitative, neoclassical revolution was established as a way of rectifying the mistakes made by classical economic thinkers. Almost all economic theories have a sense of mathematical concept since economics is based on quantitative analysis of economic events and future trends in economics. It would therefore be difficult to get information about one satisfaction based on the happiness his or her actions have generated on other people (Polanyi, 1957). Utility is a personal phenomenon and an individual would gain utility from a commodity based on various factors other than morality. A person’s level of satisfaction depends on measurable aspects such as the price of a commodity or service, which will determine the person’s level of real income. The quality of service comes in as well as it would be defined by the monetary value placed on the commodity by the consumer. The quality of product is measureable in terms of the level satisfaction derived by the consumer for each unit of service or commodity consumed. The quality may increase the quantity consumed of the product. The most important aspect is the budget constraint of the consumer, which determines the optimal level of satisfaction that the consumer can achieve given the budget constraint. This means that Jevons’s concept is better than Bentham’s moral concept as far as modern economic is concerned. It incorporates all aspects of calculation and computation in economic decision-making processes.
References
Barnes, J. (1984). The Complete Works of Aristole. Princeton : Princeton Univrsity Press.
Fusfeld, D. R. (1988). The economic thought of Karl Polanyi. Journal of economic Issues, 22(1) , 264-268.
HobsBawm, E. (1954). The Crisis of the 17th Century. Oxford: Oxford University Press.
Howell, T. W. (2013). The Seeds of Marx’s Historical Materialism as found in his Doctoral Dissertation . NY.
Jevons, S. (1957). The Theory of Political conomy. New York: Portland State Colleg University Press.
Marx, K. (1976). Capital (Vol. I), trans. by B. Brewster. London: Pen”uin.
Polanyi, K. (1957). Great transformation . Boston: Beacon Press.
Richardo, D. (1953). The Works and Correspondence of David Richardo. London: Oxforn University Press.
Numerical Analysis of Potential Earnings Management 2008 to 2012
Numerical Analysis of Potential Earnings Management – 2008 to 2012
The analysis of potential earnings management of the Six Flags includes a comprehensive ratio and trends analysis for the past five years. In this regard, ratios calculated include accounts receivable relative to sales, the allowance for doubtful accounts relative to accounts receivable, inventory relative to sales, the obsolescence reserve relative to inventory, age of inventory, days’ payables outstanding, prepaid expenses relative to the related expense account, accrued expenses relative to the related expense account, and deferred revenue relative to revenue.
The following table presents the final values of the ratios calculated for the past five financial years.
Ratio 2012 2011 2010 2009 2008
Accounts Receivable to Sales Ratio 0.029 0.019 0.022 0.019 0.157
Inventory to Sales Ratio 0.022 0.021 0.026 0.021 0.194
Obsolescence Reserve to Inventory Ratio 0.031 0.033 0.025 0.019 0.017
Age of Inventory 0.096 0.103 0.120 0.119 0.116
Days Payable Outstanding 38.104 40.433 64.157 46.948 42.675
Prepaid Expense for Spare Parts Inventory for Existing Rides and Attractions to Repair or Maintenance Expense 0.287 0.290 0.277 0.282 0.233
Accrued Interest to Interest Expense 0.050 0.016 0.026 0.604 0.232
Deferred Revenue to Revenue 0.052 0.039 0.028 0.019 0.137
(Six Flags)
The accounts receivable to sales ratio indicate that around 98 percent of sales made by the company are on cash, which is understandable owing to the nature of the business. This ratio has been maintained throughout the period of five years. On the other hand, the company has maintained inventory levels at around two percent of the sales revenue throughout the period under consideration. However, with growth in sales revenues, growth in the percentage of inventory in relation to sales has also increased slightly, as can be noted in the year 2010 (Six Flags).
The inventory turnover, as indicated by the age of inventory ratio for the company, is very low which implies that inventory is sold instantly. The days payable outstanding ratio, on the other hand, increased to two months from 2008 till 2010, but has since declined to 38 days by the end of year 2012. This also means that the cash conversion cycle for the company has improved over the period of three years. As far as the prepaid expenses for repair and maintenance for existing rides and attractions is concerned, the company has maintained around 28 to 30 percent prepayments in this regard. On the other hand, the accruals for interest have been determined to be fluctuating due to variations in the interest expenses incurred during the year. Similarly, the deferred revenues to total revenues ratio indicates that there is no constant proportion of total revenues maintained by the company with regard to other income, since earnings from other sources have fluctuated significantly throughout the period of five years (Six Flags).
Note: The ratio, Allowance for doubtful debts to account receivables, has not been calculated since the company has not provided any details regarding its allowance for doubtful debts in the financial statements for five years.
Trends noted in the revenues earned, net income and net cash from operating activities of the company are presented as follows:
2012 2011 2010 2009 2008
Revenue 5.64% 3.82% 6.90% -10.62% 5.20%
Net Income -1630.17% -103.78% -361.35% 91.26% -53.07%
Cash from Operations 35.17% 323.68% -16.55% -27.77% 1015.04%
The revenues of Six Flags have been jolting since 2008 and there has been no consistency noted in the trends for revenue. The revenues have though shown improvement since 2010, as the company recovered from significant decline in 2009. As far as trends related to net income are concerned, there has been consistent decline noted in net income, apart from the year 2009. The main reason behind this decline is the increased operating costs and other expenses incurred by the company. Moreover, cash generated/used by operating activities has also shown significant variations during the last five years. Although, there is a positive growth rate noted in 2012, but keeping in view past trends, it cannot be implied that the following year will also mark a positive growth in this regard (Six Flags; Rajasekaran).
Earnings Management Incentives
The compensation of executives comprise of base salary, annual incentives, long term incentives and perquisites and benefits. Base salary is determined by negotiation, whereas annual incentives are based on attainment of strategic objectives, which relate to EBITDA, net debt level, satisfaction of guests and maintaining safe and secure environment. The annual incentives are paid as bonuses which represent a certain percentage of basic salaries. In addition, long term incentives, which include stock options or restricted stock units, are determined by evaluating the contribution of executives in increasing the value of company’s stocks. Other perquisites and benefits include health and welfare related payments to executives. Keeping in view the determination of compensation for executives, there are incentives to manage earnings, as noted for annual incentives and long term incentives (Six Flags).
As far as the violation of debt covenants on the part of the company, there are no such instances notified in the Form 10K of the company (Six Flags).
On the other hand, considering the earnings reported by Six Flags, the company has performed well above the expectations and forecasts of analysts. In fact, the company performed over and above expectations continuously in the year 2012 (Hoffman).
Discussion related to Tax Accounts
The effective tax rate for the company during the past three years has been calculated as follows, by considering the net income before tax and total tax expense for the year:
2012 2011 2010
Net Income Before Tax 211,612.00 3,879.00 748,421.00
Income Tax Expense 74,064.00 1,358.00 261,947.00
Effective Tax Return 35.00 % 35.01 % 35.00 %
It can be observed from the above calculations, that the net income of the company has been taxed at the same rate during the last three financial years (Six Flags).
The forecasting of effective tax rate for Six Flags can be considered as complex process, since it is difficult to make projections regarding the profit making ability of the company in the years to come. Although, management has shown optimism by making use of the federal net operating loss carry forward, the reality, however, cannot be assumed with so much surety, as the company has been suffering significant losses in the recent past (Six Flags).
Apart from this, the company has disclosed a valuation allowance in relation to deferred tax assets owing to the uncertainty regarding the utilization of deferred tax assets in the future. The allowance is adequate because the company has based it on the taxable income in the jurisdiction of its operations (Six Flags).
Stock Compensation
The assumptions used to calculate the fair value of stock option grants are based on the Black-Scholes option pricing valuation model. In this regard following assumptions have been made:
S. No. Assumptions
1 The rate used as risk-free rate is the “yield on U.S. Treasury zero-coupon issues with a remaining term equal to the expected term assumption at the time of grant.” (Six Flags F-30)
2 The volatility expected has been based on the common stock volatilities expected by companies of similar business for the same period (Six Flags F-30).
3 The dividend expected has been based on the expectations for the term (Six Flags F-30).
4 The fair value of stock has been expensed out using a straight line method over a period of vested term (Six Flags F-30).
Since the company has considered market trends and yield on U.S. Treasury zero-coupon issues, the assumptions therefore seem to be appropriate and do not indicate management of stock options expense downwards.
The options overhang for Six Flags has been calculated as follows:
Shares
Granted Stock Options and Restricted Stocks 1,467,000
Remaining Stocks 347,000
Total 1,814,000
Outstanding Shares 53,818,762
Overhang 3.4%
(Six Flags)
The percentage of stock options and restricted stocks and remaining options in relation to outstanding shares does not imply that the existing overhang requires high levels of growth for ensuring returns to the investors.
Works Cited
Hoffman, Derek. Six Flags Entertainment Earnings: What Investors Should Watch. 20 July 2013. 23 February 2014. <http://wallstcheatsheet.com/stocks/six-flags-entertainment-earnings-what-investors-should-watch-2.html/>.
Rajasekaran, V. Financial Accounting. New Delhi: Dorling Kindersley Private Limited, 2011.
Six Flags. Form 10K. SEC Filing. Grand Prairie: Six Flags, 2012.
—. Form 10K. SEC Filing. Grand Prairie: Six Flags, 2011.
—. Form 10K. SEC Filing. Grand Prairie: Six Flags, 2010.
—. Form 10K. SEC Filings. Grand Prairie: Six Flags, 2009.
—. Form 10K. SEC Filing. Grand Prairie: Six Flag, 2008.
—. Form 10K. SEC Filing. Grand Prairie: Six Flags, 2007.
—. SCHEDULE 14A. Proxy Statement. Grand Prairie: Six Flags, 2012.