Financial analysis- DIA Annual Accounts (31 Dec. 2010)

The company must aim for financial  equilibrium at all times, maintaining its stability. Next we will look at the current situation regarding financial equilibrium of DIA.

DIA is a distribution chain which was founded in Spain nearly 30 years ago, their strategy has been working on the quality-price formula until they based it in central focus of its mission .This mission is reflected in a policy of optimizing costs in order to offer consumers solutions to their food and commodity requirement at lower prices than the market.

For the economic financial analysis of a company we use Balance Sheet and P&L account. After the knowledge acquired in class and analyzing both financial documents 2009 and 2010 from DIA, my first and clear finding is that short term liabilities are greater than the current assets of the company.

More specifically its current assets ( expressed in thousands €) account for 383.959 and its current liabilities are 1.050.243. Therefore part of the fixed assets are being financed by short term resources.

This may be dangerous for the company since the may not be sufficient liquid or convertible-to-liquid resources yo meet current debts.

However DIA is not in an irreversible situation. It has  options such as liquidating part of its non current assets to obtain cash, increase capital or seek new loans.

When we study the financial position of the company from the liquidity perspective we are measuring the ability of DIA to meet its debts and obligations in the short term.

With the general liquidity ratio we measure the relation between availability of cash in the short term and the cash recquired to meet the corresponging short term debts. In the case of DIA the result is 0,36, this means short liquidity, a possible option would be converting sort term debt in lobger financial debts.

In relation to the Working Capital (-666,28) the company has working capital defficiency. The Management of working capital involves inventories, cash, accounts receivable and accpunts payable.

The Acid Test Ratio which removes the inventory (204.408) from current assets is also known as quick ratio as it measures the ability of a company to meet short term debts with the most liquid assets, liquid being regarded as immediate cash because their prices are relatively stable when they are sold to the open market.

Studying the estructure of the various components of the liabilities, so the company´s sources of finance we calculate de Debt Ratio which is 1,16. Being this ratio greater than 1 DIA can still have access to the market for external resources.

Debt structure ratio is 0,18, this ratio described the composition of the liabilities of the company and we can see predominantly the liabilities are composed of short term debt (lto be paid in less than a year).

They are also very important the Efficiency ratios, and we can obtain useful information from them.

Looking to the Accounts Collection Period we have a result of 4,30 days.

Calculating the Accounts Payment Period the final result is 97,68 days.

These two results tell us that DIA is paying late to its suppliers but collecting its money early.The first one indicates the average number of days will occur between the sales being made and the payment received.This is a general average as we do not know the average length of time the crédito clients take to pay, we considera all sales.

Analyzing this company we see that average payment period is greater than average recovery period, the financial Management is being carried out adequately.

Regarding the asset turnover (companys efficiency at using its assets in generating sales or revenue) the obtained result is 1,73 in year 2010 while it was 1,65 in 2009. This means DIA is currently using its assets in a more efficient way.

It is interesting that this ratio also indicates pricing strategy, as companies with low profit margins tend to have high asset turnover result, while those with high profit margins have lower asset turnover.

The inventory turnover of DIA is currently in 2010 at 14,8 while in 2009 was 13,5. This result may imply Sorong sales. Calculating it with the cost of goods sold this shows how many times a company’s inventory is sold and replaced over a period.

http://www.diacorporate.com/diawebapp/web/archivos/DIA%20Annual%20Accounts%202010%20and%20DR.pdf


DP: World funding and NGO’s

Modern world has made great progress in order to have a permanent aid system. Institutions such as The World Bank, for instance, have converted themselves into actor among the development of many nations. Even though this funds were created to help countries to progress, the system is generating loses, in the sense that much of that money is managed through States, and for it to really reach people, the typical bureaucracy of these, and sometimes that of the organizations in charge of projects- such as NGO’s,- consume a big amount of those resources

The most notorious world institutions in charge of funding development, link to developing countries through local governments. Even when it’s clear that in many cases these are elected by their people, this doesn’t mean that development funds are managed legitimately necessarily. Corruption and bureaucracy are natural phenomena in Latin-American countries for instance, meaning that it’s not always true that funds disappears because “someone stealed them” (very common belief in Latin America’s mindset), but sometimes State’s sizes takes a great amount of the resources precisely because how big they can be.

In addition to the actual international system, it’s know that NGO’s consume funds just by the fact of their existence, due to their operational costs. Taking this as a natural fact, it’s worth to ask ourselves to which extend do the NGO’s work for the people rather than themselves. Wanting to participate to the most far extend from the funding is always a threat, which doesn’t mean in any case that all organizations have to function this way, great intentions are often found among their directors. Because of the factors just mentioned, funding coming from abroad has its constraints, it has to pass by the government hands to arrive to NGO’s, and from there on the real purpose of the money (social projects and development) enters in the game.

The combination of the world’s actual system with the operating costs of NGO’s, constitute two constraints for effective social project funding. If bureaucracy from world organizations (and States) would be lower and funding could have direct connections from these to the NGO’s- not having to go through governments- social actions could have greater extend, quality and better response. Less indirect models can be an option to address challenges just mentioned, and even if reality is not prefect when changing, it’s either perfect as it is, justifying the space for changes. It is certain that the international organizations have to reinforce governments, as for they are local institutions, but this fact shouldn’t exclude direct funding when it can be more appropriate to foster solutions in the developing world.

Hugo Slim (2002). By what authority? The Legitimacy and Accountability of Non Gonvernmental Organizations. The International Council on Human Rights Policy International Meeting on Global Trends and Human Rights (Geneva, 2002).

 


D.P.#2: The impact of limited approaches on development goals

In my previous post, I presented the idea that governments not only ignored the Club of Rome warnings and recommendations, but also acted in the opposite way, constantly trying to promote the economic growth at any cost. The result is was a rising inequality in the world, pretty much as predicted by the group. As motivations that lead politicians to behave in this way, I mentioned the preferences for local and short term results, instead of global and long term achievements. These features were brilliantly summarized in the graph below, taken from the “Limits of Growth”.

As we can see, people’s perspectives are concentrated on the next weeks within the familiar sphere, and the importance of the situation decreases as we move toward bigger social groups and longer periods. There are some motivations that clearly influence this behavior, and in this text I’ll explore those related to the closer groups, focusing on geopolitical issues.

The first thing to have in mind is that there is an important psychological regarding this behavior. As studied by Gustav Le Bon, Sigmund Freud (1992), Abraham Maslow (1943), among others, humans, as most of other animals, need to feel that they are part of a group, like family, community, country or any other social group with a shared interest or feature. There are many ways people behave in order to manage this multiple identities. Brewer (2001), a prominent contemporary psychologist, presents an approach in which people “segregate different group identities to different domains so that multiple identities are not activated at the same time (e.g., adopting national identity in the international arena, occupational identity when economic interests are at stake, and ethnic identity in the cultural domain)”. Another psychologist, Tajfel (1974) states that these feeling of belongingness to each of the several groups we are usually part of, may come from the distinctiveness we want to have from other groups or from the fact that the external group are perceived as common threat.

The combination of the theories above, explain a little bit the idea of why humans’ social groups tend to think locally and be concerned exclusively about the problems that are closer to them or to the groups they belong to. Stronger the ties with the group members are, more concerned people are about its issues, as we saw in the graph above. Applying the theory for politics, an explanation for the politicians’ the local-oriented vision emerges. Besides the fact that they are leaders of huge groups, usually there is a strong necessity for them to have their power legitimated by people, through elections. Voters are expecting them to act in favor of their groups, and if the concerns about a common good result in a situation worse for these groups, even if it’s based on short term considerations, they will be punished in the polls.

Despite this situation, a few things have changed in the world during the latest times, resulting in changes on this approach in a global level. Firstly, the globalization brought people closer, exposing even more the common features we share with people around the world and tightening the knot we have among different regions or groups. Secondly, countries realized that the negative outputs of other countries in terms of economic, social and environmental issues affect directly their own performance. This was what Jay Forrester and his students called negative loops within a system that affects the outcome of the system as a whole, in the context of the System Analysis studies used afterwards by the Club of Rome.

To conclude, it’s important to mention that economic crisis in the developed countries moved us a few steps back in this positive path we can see for our common future. Anyway, initiatives such as the global warming fighting agreements, that now are expected to count on every country in the world, shows that we are able to think globally and get a better common result for our societies. The participation and enforcement power of organizations such as the United Nations seem to be critical on this track, as long as they assure promoting equal treatment to people and countries all over the world.

 

References:

Simmons, MR 2000, Revisiting the Limits to Growth: Could the Club of Rome have been correct, after all?. Available at: http://greatchange.org/ov-simmons,club_of_rome_revisted.html

Freud, S 1922, Group Psychology and the Analysis of the Ego, 6th edn (1949), The Hogart Press and The Institute of Psycho-Analysis, London.

Maslow, AH 1943, A Theory of Human Motivation, Psychological Review, vol. 50, no. 4, pp. 370-396.

Brewer, MB 2001, The Many Faces of Social Identity: Implications for Political Psychology, Political Psychology, International Society of Psychology, vol. 22, no. 1, pp. 115-125.

Tajfel, H 1974, Social identity and intergroup behavior, Social Science Information, Sage.

 


DP Blog #4. What makes a great teacher?

Abstract: In my group work for development we are looking into Save the Children and their education programs. In preparation for my research I revisited Blackwell’s Philosophy of Education, “In this important survey, an international group of leading philosophers chart the development of philosophy of education in the twentieth century and point to significant questions for its future.” Education is the tool that mobilizes development. It allows individuals to move forward, the create innovative paths to development both personal and in the community. This blog entry is in response to a class discussion we had on our teachers and What makes a great teacher? This blog is not in relation to my previous blog where I am investigated the failure of national indicators and assessment of an indicator that accurately accesses a nation.

A great teacher is one that is kind, caring and insightful that drives them to be academically and morally attentive.

There are no strict guidelines for what personal qualities a teacher must possess in order to be a good teacher. Each student is different, each student’s personal attributes must be accounted for in order for a teacher to further their individual learning process. The personal qualities a teacher must possess that I view as crucial may be bias to my personal educational career and what I found necessary in order for me to learn, however, I do believe that all teachers must have an academic and moral devotion that will give them the ability to successfully teach. A teacher must take the time to reflect and be insightful to both the curriculum and the students who are receiving it. A teacher must be creative and intuitive to the learners needs. The teacher must have charisma and creativity so that they may produce a dynamic learning environment for the student. A teacher must teach the material in a variety of ways so that it will be accessible to the variety of learners. A good teacher is one that assumes and fully commits themselves to their responsibility to the student. The teacher must have both an intellectual and moral attentiveness to their students. “Educational ends are neither, clear, fixed, unitary nor evaluatively straightforward, and are not achieved (primarily) through technical means/ end processes which can be mastered through scientific or technical knowledge and skill.”(360) A teacher who is to master the profession is one who lives the profession in all areas of their lives; a good teacher is also a good student.

David Hansen in his article Understanding Students , writes that a teacher must be reflective to both the curriculum and the student. A good teacher must work with the student to learn the curriculum and then guide the student to formulate his or her own conclusions. A good teacher does not work within a 9-5 framework but instead is constantly working and learning so that they are better equipped to coach and lecture the student. Hansen suggest that teachers are to acquire a “intellectual attentiveness helps orient teachers’ moral sensibilities.” (355) My teacher’s stability and commitment to my learning fostered and encouraged my academic self. I was able to achieve academic success from the variety of teachers that possessed reflective insight into my educational needs. Through my teacher’s own reflective accord teacher’s sought out to foster my moral self first and foremost that consequently led me to becoming more intellectually attentive. Nel Noddings proposal is that “schools and teaching be redesigned so that caring has a chance to be initiated in the one caring and the completed in the cared for.” (376) A teacher must care for the student. If a teacher is to combine the reflective insight that McLaughlin attest with Hansen’s intellectual and moral attentiveness you have the means of becoming a good teacher. If a teacher is to embrace Nodding’s testimony for a care and love then you will have a great teacher, a teacher that has all the personal qualities to be a great teacher.

Terence McLaughlin’s Beyond the Reflective Teacher, he writes that a teacher must love what they are teaching, by loving the subject matter their enthusiasm will demand respect from the students and encourage curiosity. A “teacher must have knowledge and understanding of wide ranging sorts, the ability in the light of that knowledge and understanding to make rational practical judgments about what to do in particular circumstances, skills to carry out what is decided and dispositions (motives and tendencies) to actually do what is judged appropriate.”(359) A teacher must employ a wide range of interpersonal skills so that they may to their best of their ability portray the academics in an accessible manner. A teacher must never stop learning and reflecting, they must constantly work towards enticing children to learn and grasp academics. A teacher’s enthusiasm is contagious to the learner and will make teaching natural instead of forced. “Artistry is an exercise of intelligence and a kind of knowing, revealed in arts such as problem framing, implementation and improvisation.”(361) A teacher is to be creative and must set no limits on what is to be learned and should instead work with their classroom to develop a curriculum that further educates to moral and academic student.

Nel Noddings, The One–Caring as Teacher, he writes about the need for a teacher to be caring and kind. These qualities are often over looked but are so very important to becoming a great teacher. A teacher encourages the student to look inward, to create their own questions and then seek out the answers. A teacher will then recognize her students as an “ethical agent, will make his own selection from the presented possibilities and so, in a very important sense, she is prepared to put her motive energy in the service of his projects.”(373) Nel Nodding asserts caring in his article, which is paralleled to Hansen’s moral attentiveness. “The special gift of the teacher, then, is to receive the student, to look at the subject matter with him. Her commitment is to him, the cared for, and he is- through that commitment-set free to pursue his legitimate projects.”(373) If a teacher is caring in demeanor it creates a safe environment for the children to learn. There are no “distinctive aims of teaching…distinguish the work from other social endeavors such as doctoring, parenting, counseling, and nursing. Such aims characterize teaching as a unique practice with its own recognizable activities and obligations.”(351) Teaching is one of the only professions that must employ a wide range of personal attributes and pedagogy in order to be successful. To receive the student in a kind and caring manner is being morally attentive and then by working through questions and answers with the student the teacher is academically attentive to the students learning of logic and reason. “so that they may more successfully employ Hansen’s moral and intellectual attentiveness.

Hansen states that there are a wide variety of human dimensions that a teacher must be insightful and reflective into in order to be a great teacher. Academics are the foundation for a learned self but it is the moral attentiveness of the teacher that educates the student in a more humanitarian way. David Hansen states that to understand one’s students, you need not get to know each student intimately. Instead the teacher is to carry themselves in a manner that is accessible to the student and allows the student to feel comfortable to question the material and reflect on their own understanding. A teacher is to master the academics in order to be intellectually attentive. A teacher must also recognize and embrace the moral ideology undertones of the academics and work to illustrate an accurate portrayal of the curriculum. A teacher must never stop learning about themselves and growing as a person in order to encourage such in their students. A morally strong teacher is able to be more attentive to the learning process.

Hansen warns teachers that they present some humility to their love of the material so that they do not inject their own beliefs onto the student but instead is attentive to the child and their learning process and helps guide them to their own conclusions. “The process is intellectual because it presumes the teacher’s familiarity with the subject, including its logic and structure. It presupposes a sense of the values that inhere in subject matter.”(353) They are to offer the facts and then with the student look into the material and allow the child to interrupt and formulate their own opinions and understandings. Beyond the academics there is a greater sense of duty of the teacher and that is the moral attentiveness. “they presuppose that a person’s life will be better rather than worse for learning the kinds of things teachers are charged with teaching: for example, thoughtful reading, writing, numerating, thinking, and problem solving.”(353) A teacher is to set an example for what is means to be a good citizen; they need to embody a humanitarian worldview. The teacher heartens students to accept diversity and questions injustice, “being intellectually attentive to students presumes a certain moral tenacity on the part of the teacher, which translates into not giving up on or prejudging young people.”(354) When a teacher leaves their biases and stereotypes at the door they serve as an example for a civil citizen. A teacher’s patience, respectfulness and humility transcend in their lessons and indirectly submerge the student into ideals of humanity. “Intellectual attentiveness draws on teachers’ knowledge of subject matter, including knowledge of its logic and structure as well as its relevant facts, and knowledge of psychology, culture, cognition, emotional development, and more…Moral attentiveness is perhaps even more demanding because it involves pondering and treating students in a larger frame of individuality than the intellectual.”(355) A good teacher must embrace and live as a moral human being, by leading such a lifestyle they are then more able to successfully teach the academics at hand and indirectly teach the student to be morally attentive.

A good teacher is determined in the eyes of the learner, what works for some students may not work for others. A good teacher must employ a wide range of personal qualities in order to be successful. First and foremost they are to be kind and caring moral human beings as noted by Noddings. They may be the only role model the student has and must work extra hard to serve as a strong example of a citizen. A teacher has no choice but to employ McLaughlin’s reflective skills and leave their worries and concerns at the door and provide a happy, safe, insightful learning environment. When a teacher is caring and reflective is creates an academically and morally attentive self. Moral attentiveness allows the student to be academically involved. A teacher’s must appreciate the student’s coming of reason and help strengthen the student’s moral and academic self so that they may further grow as a student and as a human. “The terms they employ highlight the teacher’s capacity and willingness to pay fine grained attention to classroom contexts and student individuality.”(354) A teacher must be well learned so that they may accurately teach. A teacher is to be fully committed to the classroom, insightful and reflective to all the students’ mannerism and progress. A teacher is constantly teaching, the most important aspect of a teacher is that they constantly set an example for a moral person, the moral attentiveness and kind and caring nature will last longer then the immediate lessons at hand and instead will install the necessary life lessons to the student.

Source: Philosophy of Education, An Anthology. Malden, MA: Blackwell, 2007.


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DP3: System thinking in Development

My previous chapters outlined the dimension of the problems which curb truly development in today’s society. Nowadays, it looks like a phase of transition: just to recall some facts, consider how the world is changing quickly with few developing countries closing the gap thanks to impressive economic growth; how somewhere else circumstances are not such favorable and the journey struggles to start; how population is exponentially increasing as well as the gap between the “haves” and the “not haves”. In western countries, a stagnant and looming internal economic scenario is accompanied by active international “participation”: international institutions, government agencies, programs and NGOs proliferate more and more in the attempt to compensate historical faults and help promoting a more fair, healthy and sustainable world.

Nonetheless, before advancing concrete actions targeted to address and improve society development, other factors should be considered in order to be effective in a global scale; those factors answer somehow the following questions: what will drive our actions?   What is the final aim of those actions? Which are the principles which lead decision making in development? Are they universally recognized? Does our principles and values match the destination principles, believes and values? Does our strategy help achieve the desired state, which fulfill the expectation of the most?

To help sustain my argument today and answer those questions, I will refer to a quite new practice of problem solving called system thinking:

a system is an entity which cannot be explained as just the sum of his part, but thanks to the bigger outcome (overall system behavior) risen from all the complex interactions between the components and between the components with the surroundings.

Therefore, we find a first distinction among:

the system as a whole;

the components;

the relations between them;

the surroundings;

According to this theory, every component of the system has a value, is meant to have a specific function for the system to work. They are apparently independent parts pursuing specific objectives, while in reality the myriad of interconnections make them highly interdependent and contributing to an overall common goal: the system development, the system evolution, the system continuance, the system success.

Another important assumption of such philosophy states that if one of more parts suffer an alteration, the whole system as well its behavior is likely to be affected.

It sounds like suggesting that if the wished state of the system is to be achieved and maintained, certain mechanisms should be protected and always respected.

After this brief introduction, basic conclusions appear evident for everyone:

I like pretty much this theory because it can be applied for every planning process; from a very simplistic point of view, this is how our world basically works: a huge number of complex variables (organisms, or individuals for instance), which interact together and with the surrounding in order to sustain life and prosper (reproduce, attain quality of life etc.).

Let’s try to apply it in few development perspectives:

The vision of our society:

The classic view of our society (“mickey mouse model) was or is an economic-centered model, as society capital (for instance workforce, expertise) and environmental capital (natural resources) are supposed to be substitutable by financial capital (assets) making the last the most important.

Fortunately nowadays the wise economist should recognize that economy it totally dependent upon the society it wish to serve and at the same time, prosperity in society will eventually be achieved only if biosphere is healthy and can continue to provide vital services. Social fabric and natural resources cannot be substituted by financial capital.

From the system point of view we can affirm that, as economy is a subsystem in society, it will work properly when problems leading society to decline will be addressed; this is why instead of pursuing economic growth it will require to pursue human development first, while preserving and maintaining ecosystems’ functions.

Another example come up to my mind when thinking of the idea of partnership: every partner has a fundamental function for the partnership to work; Interactions between partners is what lead them to successful common results in order to better satisfy personal interests in the external world (surroundings). The personal interest should be secondary, overcame by the general interest which is the only assurance for the first to be achieved more satisfactorily. The partnership holds conflicts and tensions, but they can be disabled when a new “whole” is created, something more powerful that the sum of its parts.  Result, components, relations…in my vision they are expressed as development, people, dialogue.

The system thinking theory also affirms that apart from having an important value, every part is different and has a different function. Those differences united in a harmonic symbiosis help create a bigger unique.  This consideration led my reflection to the concept of diversity: our society has an amusing level of diversity inside; think about all the cultures, all the races, the believes, the difference between generations, the ones between places…our world is incredibly diversified.  The only very difference that should be leveled is the one referring to human rights, to equality of possibility, equal distribution of prosperity. So our action in this sense should protect diversity and enhance equity. Are our strategies of promoting development in this direction?

I believe they don’t. Our western-centered approach to development assumes that the “developing” population has nothing valuable to teach us. We feel entitled to go there, show them how economy should work, suggest our complex mechanisms, apply our way of management, transmit what education is for us, implementing our solutions. Has someone ever asked to the others directly affected by measures how the world should be? Even if western aptitude is changing, even if it recognizes the right of other to be and is trying to help them, our lack of humility, our self-centered world is undermining what usually boosts a system: diversity.

To conclude I attempt to gather in a few points the basic principles that system theory teaches us in term of development:

 


DP2.- Cradle to cradle: Waste = Food

I want to start my second post with the ad campaign ran by Shell: “Don’t throw anything away, there is no away”. As you can see there are smokestacks pumping out flowers instead of gases.

It would be great just have positive externalities from the industries and the rest of the companies…

Q: Does it sound idealistic? Utopic?

A: It’s not!

It’s a project that can become true…

Despite the ad was a greenwashing campaign, the phrase echoes in my head like a mantra. What do we think “away” means?  This planet is the only house we all have, and Mother Nature, as a mother, teaches us how to act.

Q: When have we seen waste in nature? …

A: There is no waste in nature.

Imagine the CO2 exhaled by humans and animals, it is useful for plants to growth, then animals can consume these plants as food, and then they will produce organic waste that will turn in to food for flies. The upshot is that the soil nutrients always go in cycles in which the waste of some beings becomes food for others.

Everything was part of this perfect cycle until the industry came and we created substances that cannot be returned to the ground harmlessly, but as a negative externality that causes damage to the environment, animals and people.

Regarding that it is easy to divide every  product material into two categories:

1.- Biological nutrients: are the products or materials that with the proper design can be returned into natural cycles, It is to be food for soil microorganisms or other animals.

2.- Technical nutrients: are the products or materials that with the proper design can be  returned into the technical cycle, It is to be raw materials for industry again and again.

When the population started to grow, we also started to take more land resources than we were able to replace starting a conflict over land, resources and food. Therefore, we started to develop intensive systems such as synthetic fertilizers that increased agricultural production but that also eroded the land in a very aggressive way. At the same time, we “forced” other parts of the world to import food and other products nonstop.

Nowadays disposable products are literally filling our lives. When these products are throwing away, they do not just occupy space, but contain valuable nutrients for both industry and nature that we are wasting, leaving them to die. It is the cradle to grave system we are living in, cause nowadays products as people have graves.

I don’t know when was the first day in which unpacking new products, things we would use for the first time made ​​us feel powerful, because that’s true, having things makes us feel powerful, more things do you have, more powerful do you feel!

How powerful we are with so many things!

Then whenever we want to end those products life, we will throw them away! But one moment… where if we agreed there is no away?!

As we just have this planet, our waste have to live here with us, and I am sure we don’t want to make our home a dump… or someone wants to?

If the answer is no, we just have one option. Imitate nature and eliminate the waste concept. All products can supply both biological and technical metabolism with the proper design, so we can rich a nerver-ending cycle!

Let’s do it! :)



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