Free Cash Flow with a Firms Capital Expenditure

Free Cash Flow with a Firms Capital Expenditure Free cash flow and capital expenditure go side by side. What is important to find out is the existence of an association between the two in Sugar Industry of Pakistan by means of ascertaining the strength of their relationship. Annual financial statement data for 27 sugar mills of Pakistan, listed on Karachi Stock Exchange (KSE), was taken to calculate free cash flow and annual capital expenditure over the 2000-08 period. Linear regression test was run on the data to study the relationship between the two variables. The results hence proved an association confirming an existence of a relationship. Introduction Overview of the Sugar Industry of Pakistan Pakistan is the 5th largest country in the world in terms of area under sugarcane cultivation, 11th by production and 60th in terms of yield. Sugarcane is the primary raw material for the production of sugar. Since independence, the area under cultivation has increased more rapidly than any other major crop at around one million hectares. The sugar industry in Pakistan is the 2nd largest agro based industry comprising 81 sugar mills out of which 27 are listed on Karachi Stock Exchange. The annual crushing capacity of the industry is over 6.1 million tones. Sugarcane farming and sugar manufacturing contribute significantly to the national exchequer in the form of various taxes and levies. Sugar manufacturing and its by-products have contributed significantly towards the foreign exchange resources through import substitution. Sugar production is a seasonal activity. The mills, at an average operate for 150 days a year whereas the supplies are made throughout the year. As the industry n ow has large daily crushing capacity there are efforts to reduce the production even further. About the subject The purpose of this research is to examine the significance of free cash flow in relation with firms capital expenditure. Many researchers have studied the relationship built around free cash flow and have argued that managers have to play a vital role in deciding where free cash flow eventually ends up. Something known as an agency problem is widely discussed and commented on by several researchers. This problem talks exactly about the conflict of interest between managers and shareholders. Shareholders are interested in earning as much dividends as possible which would increase their value. On the contrary, managers think for themselves. They tend to invest the available cash flow in projects that would not necessarily increase shareholders value but ensure that the tenure of the manager is as extended as possible. New investments would mean more responsibilities on managers thus their uninterrupted length of service is required in the long term interest of the firm. Going one step ahead of agency problem, this study is related to free cash flow which shows an association and a relationship with the capital expenditure. Free cash flow is a  measure of financial performance and one of the sources of capital expenditure in firms. Managers can either disburse the available cash among shareholders in the form of dividends after  keeping aside the money required to expand or maintain its asset base or hold it back for developing new products, making acquisitions, and reducing debt. At this point in time, it is imperative to note that negative free cash flow in itself is not bad. If free cash flow is negative, it  could show that a company is developing new products, reducing debts or even making large investments. If these cash out flows earn a high return eventually, the strategy has the potential to pay off in the long run. Capital expenditures (CAPEX) are those cash outflows that create future benefits for the firm. A capital expenditure is incurred when a business outlay funds to acquire or upgrade physical assets such as property, industrial buildings or equipment. CAPEX is commonly found on the Cash Flow Statement as an investment in plant, property and equipment or something similar in the investing section. Companies listed on stock exchange will often list their capital expenditures for the year in annual reports, which allows shareholders to see how the company is using their funds and whether it is investing in its long term growth. The hypothesis tested in this study is accepted and thus a relationship between free cash flow and capital expenditure is established. Literature Review Cash flow is determined by integrating the cash receipt and disbursement items from the income statement with the change in each balance sheet item; the sum of the cash inflows equals the sum of the cash outflows. Whereas capital expenditure is the amount a company spends buying or upgrading fixed assets, such as equipment, during the year and acquiring subsidiaries, minus government grants received. The free-cash-flow (FCF) hypothesis by Jensen (1986) suggests that excess cash flow is wasted on value-destroying expenditure because managers have a personal motivation to grow the asset base of the firm rather than dispense cash to shareholders in the form of dividends. Cash flow has always been somewhat of a puzzle in the literature on the determinants of investment. Gugler (2004) argues that in a strictly neoclassical world, cash flow does not belong in an investment equation. Even than pragmatic studies dating back over 4 decades invariably document that cash flow and investment are positively related. The influence of internally generated cash flow on financing capital investment expenditure is well studied. But what is less well understood is the cause behind this influence. Modigliani and Millers (1958) Irrelevance proposition asserts that firms undertake all positive net present value (NPV) investments regardless of the financing source. Firms that pay low dividends rely more heavily on cash flow as shown by Fazzari, Petersen and Hubbard (1988). The first two gentlemen also found that such firms use working capital adjustments and not external financing to maintain the needed capital expenditure in order to smooth cash flow fluctuations. They further argued that in order to save cash flow, firms choose a low dividend payout policy. Calomiris and Hubbard (1995) proved that those firms have heaviest dependence on cash flow to finance capital expenditure which pay the highest taxes associated with undistributed profits. Devereux and Schiantareelli (1990) found that as compared to smaller firms in the UK, the large firms depend more heavily on cash flow financing. The reason they pointed out for such a trend was the manager/shareholder agency problems in these large firms mainly because of lower managerial ownership and higher costs associated with monitoring mechanism. In this thesis, further evidence have been provided on the role of free cash flow and capital expenditure through observing the data provided by the Karachi Stock Exchange. To measure the market reaction to such expenditure plans, the over and above returns around capital announcements have been used. It was moreover, found that the impact capital expenditure has on firm value that is financed by cash flow depends upon the characteristics of the firm making the expenditures. Firms show a strong positive relation between the level of undistributed cash flow and the level of announced expenditure, although large firms depend less heavily on cash flow as compared to the small firms and those firms that have high managerial ownership. Jensen (1986) suggested that those firms which had a large level of free cash flow were likely to squander it on unprofitable investments. As a result undistributed cash flow must play an important role in explaining capital expenditure by these firms. In addition, certain firms are more prone to the agency problems of free cash flow, especially the large firms which, as discussed by Devereux and Schiantarelli (1990), generally have a more diverse ownership structure. Jensen (1993) discussed such firms as the ones that have more costly internal control mechanisms. About small firms, Jalilvand and Harris (1986) commented that they are more vulnerable to suffer from cash flow restraint mainly because they have limited access to external captial markets due to higher transaction costs of public security isssues and the information problems. Therefore, Vogt (1997) believes that small firms tend to have profitable and at the same time unexploited investment opportunities. The available ca sh flow should be the main source of capital expenditure by these firms. Moreover, if cash flow is used by these firms to fund the capital expenditure, such an announcement must show a positive reaction in terms of appreciated stock prices. Jensen (1986) argues that there are agency costs coupled with free cash flow. His study broadens that argument and speculates that shareholders form their valuation decisions on firms reputations regarding free cash flow exploitation. This notion was tested by examining the stock price responses to equity offers, which generally aggravate the cash flow quandary, for firms differentiated by their recent avaricious behavior. The results suggested that shareholders react more positively to equity issue announcements if firms have obtained only assets related to their key business than to other equity issue announcements. On another occasion, Jensen and Meckling (1976) explained the agency problem between managers and shareholders. They unarguably stated that managers are supposed to be the representatives of the shareholders. But they tend to make those decisions that will maximize their own benefits as opposed to the shareholders value. In order to restrict them from doing so, they must either be provided incentives or be monitored. They further argued that in firms where managers have low level of insider ownership, have greater incentives to invest in unprofitable projects that stretch the firms beyond its optimal size and the expected return on new capital expenditure can be negative for such firms. Such actions would obviously be inconsistent with firms value maximization objective. Jensen (1986) suggests that stock prices are tendered downward to imply agency costs coupled with a firms free cash flow. In particular, managers have an enticement to use unfettered funds to benefit themselves instead of the shareholders. John and Nachman (1985) claim that agency costs can be alleviated through reputation building. Particularly, they demonstrate that the agency problem of underinvestment can be determined through reputation. The observed results recommend that managers build reputation through covetous activity whereas the shareholders state their response on pre-acquisition activity. In an ideal world, managers would disburse the entire free cash flow among the shareholders provided; the interests of shareholders and managers complement each other. This would maximize shareholders wealth and allow them to use the available cash for capitalization. Amihud and Lev (1981) however argued that managers have an enticement to minimize their employment risk. Employment ris k aims to explain the insecurity inbuilt in a managers tenure or the term of employment. Managers have an option of increasing the certainty of their tenure by diversifying the real asset portfolio of the firm and they do it by purchasing those assets that are unrelated to the primary line of business of the firm. Managers have an option of financing diversification projects by using the free cash flow that has been held back and not been distributed to shareholders, thus they need not seek funds from the capital markets. Easterbrook (1984) believes that it is easy to watch the managerial behavior of the firms when they seek funds from the well-performing capital markets. Therefore, on one hand it becomes difficult to keep a check on the performance of managers if they use the hoarded cash flow for the purpose while on the other hand, investors are unable to measure free cash flow as they are incapable of scrutinizing the investment opportunity schedule of the firm. Shareholders are expected to take any unencumbered cash request negatively, coming from the management for the purpose of diversifying. Unless they are provided sufficient proof, they will assume the request to be the acquisition of free cash flow. As a result of this ambiguity, stock prices will fall and show the residual loss caused by the probable misuse of free cash flow by management. Further, managers may wish to expand firm size, irrespective of the fact that it increases shareholders wealth or not, based on the assumption that exec utive promotion and compensation are positively related to firm size (Donaldson 1984; Baker 1986; and Baker, Jensen, and Murphy 1988). Cash flow is related to the expected return from new investment as shown by Myers and Majluf (1984). Those firms which have a shortage of cash flow and liquid assets might let go profitable investment expenditure instead of issuing mispriced securities to fund the investment. As a result, these firms might have unexploited investment opportunities that would increase firm value if sufficient cash flow could be generated to finance them. Capital expenditure of high ownership firms must show a dependence on cash flow and positive excess returns must be observed for these firms when they declare new capital expenditure. Morck, Shleifer, and Vishny (1988) described high levels of insider ownership to be associated with high levels of cash-flow-financed capital expenditure because of managerial-establishment issues. Firms with high insider-ownership levels might wish to finance expenditure with cash flow solely to avoid loss of control associated with weakening their ownership position or restrictions imposed by creditors. Lehn and Poulsen (1989) and McLaughlin, Safieddine, and Vasudevan (1996) defined Free Cash Flow to be operating income before depreciation, less interest expense on debt, less income taxes, less preferred and common dividends. Vogt (1997) calculated both cash-flow measures net of interest expense and dividends in order to control for managerial decisions affecting the level of undistributed cash flow. Ignoring these other decision variables might create a bias in the observed relation among cash flow, capital expenditure, and market returns. As an example he referred to a firm with high levels of cash flow that does not manipulate the agency problem. Such a firm will minimize undistributed cash flow by choosing high interest and/or dividend levels. It might pursue profitable investment expenditure and is unlikely to rely heavily on cash flow for financing. This firm must be associated with positive market responses around expenditure announcements. Using a cash-flow figure gross of interest expense and dividends would incorrectly combine positive market returns to firms with high cash flow rather than the correct low level of cash flow that it actually maintains. Vogt (1997) used 421 firms to observe relationship between cash flow and capital expenditure. When these firms announced expenditure increases, the level of announced capital expenditure seemed to be positively and strongly related to the level of cash flow. The strength of this relation increases for firms with profitable earlier investment opportunities, as firm size declines, and as the proportion of insider ownership increases. His further analysis suggested that considerable diversity exists in the capital markets response to capital expenditure financed by cash flow. The positive and statistically significant excess returns found in the sample of firms announcing increases is concentrated in the smallest of the sample firms, in firms with low cash flow relative to capital expenditure, and, to a lesser extent, in firms with high levels of insider stock ownership. Tests explaining the cross-sectional variation in returns reveal that excess returns for medium and small firms in the sample are positively associated with unexpected increases in planned expenditure. These tests also suggest that the capital market responds more favorably to the announced expenditure by small firms when the planned expenditure is more dependent on cash flow. On the other hand, excess returns for the largest firms in the sample are negative, however not statistically significant. Vogt (1997) observed that due to the fact that small firms and high ownership firms are most likely to face the liquidity crunch associated with asymmetric information, they are also the most likely to let go profitable investment opportunities in times of cash flow shortages. As cash flow rises, the set of profitable capital investment projects the firm can carry out also increases. As a result, capital expenditure announcements are met with positive shareholder reactions, particularly when expenditure is dependent on cash flow. Vogt (1997) concluded by observing that the apparent diversity in the markets response to capital expenditure decisions suggests different capital expenditure financing policies for firms that seek to augment shareholder value. The market values of small firms, firms with significant insider ownership, and firms that are generally cash flow confined appear to be improved, on average, by financing capital expenditure with cash flow. These firms might consider policies of saving undistributed cash flow through low payout and leverage policies. Such an action therefore encourages new capital expenditure from internally generated funds. However, all other firms seem to be less dependent on a cash flow retention policy to facilitate capital expenditure. In 1986 while explaining the free cash flow (FCF) hypothesis Jensen (1986), focuses on the agency issue. He argues that managers can increase their wealth at the cost of shareholders by not paying out the funds from a firms free cash flow in the form of dividends or debt financed share repurchases, rather investing them in unprofitable investment prospects. Devereux and Schiantarelli (1990), Strong and Meyer (1990), Oliner and Rudebusch (1992) and Carpenter (1993) later studied the role that agency problems play in the cash flow-investment relationship. Their findings turned out to be conflicting vis-a-vis the importance of free cash flow. Strong and Meyer (1990) found that share prices of firms that undertake investment expenditure with unrestricted cash flow experience negative performance while Oliner and Rudebusch (1992) found little evidence regarding ownership structure affecting the cash flow-investment relationship. The firms dividend decision has connotation for the FCF theory. According to Lang and Litzenberger (1989), dividends are one means of eliminating free cash flow. Vogt (1994) developed a model in this research paper where he showed that firms with the opportunity to exploit free cash flow will follow low dividend payout policies and cash flow will have a strong influence on investment expenditure. On the other hand, if firms are confined from obtaining external funds because of whatever reason, those firms with profitable investment opportunities will maintain low dividend payout policies in order to preserve on cash flow. Therefore his model was found to be consistent with Fazzari, Hubbard, and Petersen (1988); it predicts that low payout firms should be associated a strong cash flow-investment relationship. There has been considerable empirical evidence which indicate that internally generated funds are the primary way of financing firms investment expenditures. Gordon Donaldson (1961), in a detailed study of 25 large firms, concludes as follows: Management strongly favored internal generation as a source of new funds even to the exclusion of external funds except for occasional unavoidable bulges in the need for new funds. A later survey of 176 corporate managers by Pinegar and Wilbricht (1989) discovers that managers prefer cash flow to finance new investment over external sources as 84.3% of sample respondents showed their preference for financing investment with cash flow. Vogt (1994) explains the relationship of cash flow and capital expenditure by analyzing the free cash flow theory of Jensen (1986). As monitoring is assumed costly, and managers can benefit from overinvestment, he predicts that cash flow will significantly influence investment expenditure after controlling for the cost of capital. Investment expenditure of firms not paying dividend will be more influenced by cash flow than investment expenditure of firms that pay dividends. This follows because no-dividend firms are able to retain all cash flow and still not reach the retention constraint. For liquidity-constrained firms, cash flow and changes in the stock of the firms liquid assets should have a significant influence on investment expenditure. Firms with many profitable investment opportunities or large information asymmetries will have investment expenditure that is most sensitive to changes in cash flow, and should conserve on cash flow by paying low or no dividends. Firms indicat ing a liquidity constraint by not paying dividends will have the most significant cash flow/investment relationship. In a study; Fazzari, Hubbard, and Petersen (1988) discovered that cash flow has a strong effect on investment expenditure in firms with low dividend payout policies. They argue that this result is consistent with the belief that because of asymmetric information costs associated with external financing, low payout firms are cash flow confined. One reason these firms keep dividends to a minimum is to preserve on cash flow from which they can fund profitable investment prospects. Later in the year 1993, Fazzari and Petersen (1993) found that the same group of firms paying low dividends, even out fluctuations in cash flow with working capital to maintain desired investment levels. This result is consistent with the findings done by Myers and Majluf (1984) which states that the underinvestment problem arising from asymmetric information can be alleviated by the liquid financial assets. Carpenter (1993) studied the relationships between debt structure, debt financing, and investment expenditure to test the theory of free cash flow, comparing the restructured firms with the non-restructured firms. He observed that firms had increased their investment expenditure that was restructured by substituting large amounts of external equity with debt as compared to non-restructured firms. To him these results seemed to be inconsistent with free cash flow behavior. He believed that cash flow committed to debt maintenance must be correlated with reductions in later investment expenditure. Devereux and Schiantarelli (1990) and Strong and Meyer (1990) conducted studies that support the free cash flow interpretation. Strong and Meyer (1990) studied separately the investment and cash flow of firms in the paper industry into sustaining investment and discretionary investment, and total cash flow and residual cash flow. Discretionary investment and share price performance are negatively and strongly related. Discretionary investment and residual cash flow are found to be positively and strongly correlated. This evidence suggests that residual cash flow is frequently used to finance unprofitable discretionary investment expenditure. Study conducted by Vogt (1994) related to cash flow and capital expenditure predicts that firms not paying dividends should exhibit the strongest relationship, while those paying high dividends should show the weakest relationship between cash flow and investment expenditure. His result suggested that cash flow-financed capital expenditure is slightly inefficient and provides facts in support of the Free Cash Flow hypothesis. Regarding the small firms that paid low dividends over the sample period, Vogt (1994) commented that such firms relied heavily on cash flow and changes in cash to fund capital expenditure. Cash flow-financed growth by small, low-dividend firms is likely to be value- creating, whereas cash flow-financed growth is value destroying for large, low-dividend firms. He concluded by suggesting that managers of cash flow-rich companies may consider increasing dividend payouts as a method of increasing the efficiency of their capital expenditure decisions. A continued hig h-dividend-payout policy may also signal to shareholders that extra and expensive monitoring of capital expenditure decisions is unnecessary. Furthermore, since capital expenditures typically add to the amount of assets under managerial control and create more predictable future cash flows, such expenditures generate the opportunity to exploit free cash flow in following periods. Alti (2003) found out that investment is sensitive to cash flow. The sensitivity is substantially higher for young, small firms with high growth rates and low dividend payout ratios. The uncertainty these firms face about their growth prospects amplifies the investment-cash flow sensitivity in two ways. First, the uncertainty is resolved in time as cash flow realizations provide new information about investment opportunities. This makes investment highly sensitive to cash flow surprises. Second, the uncertainty creates implicit growth options relate to long-term growth potential but not to investment in the near-term. Having a weaker relationship with the value of long-term growth options, cash flow acts as a useful instrument in investment regressions. Gentry (1990) analyzed capital expenditure with total cash flow and found out that the percentage of cash flows going to capital investment ranged from an outflow of 60 percent or more. The giant companies invested a higher percentage of their total outflow in plant and equipment than companies in the other size categories. The small companies invested the lowest percentage of their total outflows in capital. There has been a research done previously that was applied to agricultural firms by Jensen (1993). The results were found to be consistent with previous studies for nonagricultural firms which showed that internal cash flow variables are important in explaining investment. It was found that the addition of internal cash flow variables can improve the explanatory power of agricultural investment models. In terms of elasticity, investment was more responsive to internal cash flow variables. Worthington (1995) has found that cash flow measures industry-level investment equations positively and significantly, even after investment opportunities are proxied by capacity utilization variables. The effect of cash flow is greater in durable goods industries than in non durable goods industries. Moyen (2004) explained the fact that the cash flow sensitivity of firms described by the constrained model is lower than the cash flow sensitivity of firms described by the unconstrained model can be easily explained. In both models, cash flow is highly correlated with investment opportunities. With more favorable opportunities, both constrained and unconstrained firms invest more. Raj Aggarwal (2005) conducted a study in which he concluded that investment levels are significantly positively influenced by levels of internal cash flows. Also, the strength of this relationship generally increases with the degree of financial constraints faced by firms. Overall, these findings seem strong to the nature of the financial system and indicate that most firms operate in financially incomplete and imperfect markets and find external finance to be less attractive than internal finance. Research Methodology Introduction The hypothesis tests the relationship between free cash flow and capital expenditure, concentrating on the Sugar Industry of Pakistan. The aim is to ascertain the strength of the relationship between the variables. In order to do that, linear regression seems to be the best test as it attempts to model the relationship between two variables by fitting a linear equation to observed data. One variable is considered to be an independent variable while the other is considered to be a dependent variable. The objective of multiple linear regression analysis is to use the independent variables whose values are known to forecast the single dependent value selected by the researcher. (Hair, 2006) Data Annual financial statement data for 27 sugar mills of Pakistan listed on KSE is taken to calculate free cash flow and annual capital expenditure for the period 2000 through 2008. Variable 1. Independent variable = Free Cash Flow (FCF) 2. Dependent variable = Net Capital Expenditure Independent variable: The FCF is calculated they way Lehn and Poulsen (1989) and McLaughlin, Safieddine, and Vasudevan (1996) defined it. It is operating income before depreciation, less interest expense on debt, less income taxes, less preferred and common dividends. Free cash flow = Operating income before depreciation – interest on debt – income taxes – preference common stock dividend. Dependent variable: Net capital expenditures are those where funds are used to acquire or upgrade physical assets such as property, industrial buildings or equipment. Change in fixed assets over a year is taken as net capital expenditure by the firm. Net capital expenditure = Current year fixed assets – last year fixed assets. Net capital expenditure = Ln (FA) Ln of fixed assets is taken to control the variability of the data. Sampling criteria Sample companies that are taken for the purpose of research are 27 sugar mills of Pakistan that are listed on Karachi Stock Exchange. Hypothesis Free Cash flow has a significant relationship with capital expenditure. Data analysis Annual financial statement data for 27 sugar mills of Pakistan, listed on Karachi Stock Exchange (KSE), was taken to calculate free cash flow and annual capital expenditure over the 2000-08 period. Model Summary R R Square F Sig. 0.302 0.091 23.676 0.000 Predictors = (Constant), FCF Dependent Variable = Ln FA The researcher has used statistical software SPSS 13.0 to process the data and run regression analysis on the variables. The results are interpreted in light of statistical text book by Hair (2006). All FCF and (ln) FA figures are in Million Rupees. R value: It is the sample correlation coefficient between the outcomes and their predicted values, or in the case of simple linear regression, between the outcome and the values being used for prediction. R value of 0.302 means that the strength of the relationship between FCF and capital expenditure is 30.2%. R squared value: the coefficient of determination, R2 is the amount of variance in the dependent variable that can be explained by the regression model. The R square of 0.091 means that 9.1% of the variability in the data is explained by the predictor. Out of the total free cash flow, 9.1% is used for capital expenditure. The F test for the regression model is significant which proves that regression model is best fit. Regression model summary is showing that FCF has a positive impact on net capital expenditure. Coefficients Model Unstandardized Standardized Sig. Coefficients Coefficients B Std. Error Beta (Constant) 3.251 0.107 0.000 FCF 0.004 0.001 0.302 0.000 Dependent Variable: Ln FA Unstandardized Equation: Ln FA = 3.251 + 0.004 FCF Standardized Equation: Ln FA = 0.302 FCF If FCF changes by 1 million, ln of net capital expenditure changes by 0.004, which means Net Capital expenditure increases by 1.004008 million. The regression coefficie

Can We Have Beliefs or Knowledge Which Are Independent of Our Culture Essay

The main aim of the essay is to find out if we have beliefs or rather knowledge which are independent of our culture. To do my investigation, I am going to follow different areas of beliefs and culture that I need. Culture is roughly perhaps a range of activities which are cultivated as a pattern of behaviour in a group of humans over time, and the manifest fruits of that behaviour. This would presumably include manifestations like the arts as well as structural behaviours such as organisational ethics. The next thing to do is to look at the word, independent. These days, it implies separation or lack of relation between two entities. It can also mean that there is no clear relationship and hence we can imagine the two entities in this case to be culture and beliefs/knowledge to have little to do with each other. Belief is faith, trust or theory that doesn’t need corroboration or evidence. Also, a belief is a system of thought that is compromised of the information we have accumulated and stored in our brains. Collectively this provides a worldview and mechanism by which we interpret new information and assess how our experience in the world should be managed. What is important to understand is that such a belief does not have any intrinsic validity beyond the fact that it is the way in which data has been organized within our brains and it appears to provide us, individually, with a model against which we interpret the world around us. Beliefs can be religious or societal. Furthermore, Knowledge according to my definition is the means by which â€Å"facts† can be gathered to reinforce, or refute, different aspects of the information contained within our belief system. Often, it is asserted that something is â€Å"true† or â€Å"factual†, but neither of these are actually relevant since the only consequence of knowledge that we are interested in is accuracy. However, even in the interest of accuracy we are often forced to generalize because a â€Å"fact† simply isn’t accurate as a general statement or description. Asserting that a particular â€Å"fact† is true is simply a mechanism we use to argue that we are presenting it as being free of deception. Factual information is, by definition, true. What should be questioned is its accuracy or applicability to any particular circumstance. As it turns out the fundamental problem is in interpreting the knowledge we possess against the belief system we hold. If we believe that the world is subject to being understood by query, then we will tend to hold a more scientific view of things. If we believe that the world is full of mysteries that can never be understood, then we will tend to be more inclined to accept that external agencies are at work. I want to be clear that I’m not arguing that religion and science are incompatible with one another, because there are clearly many people that can comfortably bridge that gap within their respective belief systems. The difficulty comes from the extrapolation of knowledge into unknown areas. To me the obvious argument is this: culture is a pattern or the results of such a pattern formed from human intellectual activity. Human intellectual activity tends to be based on beliefs or knowledge, which in turn are developed from information constructed out of data. Or you might say human intellectual activity constructs beliefs/knowledge from information constructed from data. This data is obtained from sensory perception and the interactions of various organs such as the brain and various chemical factories like the adrenal glands. My argument on this topic is that we can indeed have beliefs or knowledge which are independent of our culture. Firstly, I am going to justify my argument with some theory of my own knowledge. Some people such as Christians believe in God and that he created everything in the world let alone the world itself. For this reason, those people who believe in God have a belief that, to overcome every obstacle in life one has to pray to God to seek for help so as to overcome the obstacles. For example that person of that kind is Father Desmond Tutu who is a true believer and a Christian from South Africa. So all this is Religion not culture. This is probably not dependent on our culture. Belief deals with different aspects of life. We mostly need belief in areas such as religion, science, law, mathematics, ethics and arts. Over many years technology has improved a lot and this has all been due to discoveries. To acquire the knowledge of improving technology over that many years, culture was not needed or required. This is where I’m heading (indeed we have beliefs or knowledge which are independent of our culture). The fact that ethical belief showed a similar pattern of activation to mathematical belief suggests the physiological difference between belief and culture. In claim, â€Å"1+1=2†; we know this is true because we are accustomed to answer to symbolic language and we are forced to believe in it until we find proof that it’s wrong, or if there is another way to arrive to the same answer. Therefore, we have beliefs that are independent to our culture because of new ways that we can prove things without following the rituals and practices from our culture. Few people are the ones that take the decision of having independent beliefs, since others are either scared or confused if by disobeying the culture? s ideas are not correct. This is an essential reason for why we belief in what we are taught since we were born. Natural Scientists have built up our belief that there is such thing as force of gravity which its work is to attract things towards the Earth and cause them to fall to the ground. From the knowledge that we attained from the natural sciences, we know that when one throws an object (any object) upwards into the air, there is a time when it is going to decelerate and stop at an instant of time then makes its way down back to the ground being pulled down by the force of gravity. All this is from the perspective of the scientists on what makes objects to fall back when thrown into the air but not their knowledge from their culture and this justifies my argument. Moreover, there are some followers of a movement called legio maria in Palestine. These people have a belief that there is a black messiah called Melko Simeo Ondentto who will come back after nearly two decades to collect his followers and go with them to heaven. All this is not from their culture but it is from their knowledge and belief. In conclusion, even though we have beliefs or knowledge which are independent of our culture, there are some beliefs and knowledge which are dependent of our culture. in our culture, children were not allowed to eat certain foods because it was believed that it would make them grow quickly and lead them to adulterous activities. Nowadays, effects of taking in everything are alarming in terms of adultery. Seeing a teenager pregnant nowadays is a norm and it is evident that what our forefathers believed is happening.

Attaining Food Security For A Growing Population And...

Attaining food security for a growing population and alleviating poverty while sustaining agricultural systems under the current scenario of depleting natural resources, negative impacts of climatic variability, spiraling cost of inputs and volatile food prices are the major challenge before most of the Asian countries (Bhan and Behera, 2014). In addition to these challenges, the principal indicators of non-sustainability of agricultural systems include; soil erosion, soil organic matter decline, and salinization. These are caused mainly by: (i) intensive tillage induced soil organic matter decline, soil structural degradation, water and wind erosion, reduced water infiltration rates, surface sealing and crusting, and soil compaction; (ii) insufficient return of organic material (Bhan and Behera, 2014). Therefore, a paradigm shift in farming practices through eliminating unsustainable mode of conventional agriculture is crucial for future productivity while sustaining the natural r esources. Conservation Agriculture (CA), a concept evolved as a response to concerns of sustainability of agriculture globally, has steadily increased worldwide to 124.8 M ha (FAO, 2012). CA is a resource-saving agricultural production system that aims to achieve production intensification and high yields while enhancing the natural resource base. Continuous rice – wheat cropping sequence in the Indo-Gangetic Plains has resulted in a number of ecological and other disorders like development ofShow MoreRelatedTerm Paper on Islami Bank Limited17265 Words   |  70 Pagesthe shareholders. Islami Bank Bangladesh Limited also performs foreign exchange business. In this process, the bank endeavors to contribute to the betterment of the society. 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Judge (2011) Organizational Behaviour 15th Edition New Jersey: Prentice Hall393164 Words   |  1573 Pagesskills also helps organizations attract and keep high-performing employees. Regardless of labor market conditions, outstanding employees are always in short supply.2 Companies known as good places to work—such as Starbucks, Adobe Systems, Cisco, Whole Foods, Google, American Express, Amgen, Pfizer, and Marriott—have a big advantage. 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Workplace Substance Abuse - 723 Words

I do not think that there is a precedent for this issue. I see drug use in the workplace as being a distinct issue. It is of sufficient severity to merit its own status in negotiations with unions and to have its own policies. The outcomes are severe amputation, major lawsuits and they need to be dealt with, without leaning on some obscure past precedent as a crutch. Around 75% of all illicit drug users are employed (NIDA, 2008) and that makes this a serious issue for the company, since there is near-certainty that drug use occurs among members of the workforce. A new policy needs to be created here. There are long-term ramifications of the decision, which is precisely why a new policy needs to be created. The process should be governed by the good of the long-term future, since the problem has the potential to be so significant. Any individual affected now is not relevant, since this policy needs to be established company-wide. Cost to the company is definitely a factor, but we are also committed to providing a safe and healthy environment for all of our workers. Knowing that between 10-20% of workers who die on the job test positive for drugs and alcohol makes this a serious issue (OSHA, 2011). How the company handles this decision is going to affect all departments. In this case, the objective is to set company-wide policy. The decision might have consequences outside the company. A negotiation with this union to get a drug-testing program could open the door forShow MoreRelatedSubstance Abuse On The Workplace1724 Words   |  7 Pages Substance abuse is one of the largest growing problems in the world. In addition to the growth and wide-spread popularity of alcohol and ‘recreational drug use, the international drug trade and alcohol distribution garners tens of billions of dollars a year in both legal and illegal revenue. This simply serves as an indicator for how common drug and alcohol has become on a global scale. Although there is a portion of the worldwide population which uses substances in a moderated and controlledRead MoreSubstance Abuse in the Workplace2219 Words   |  9 PagesSubstance Abuse in the Workplace: Substance abuse in the workplace has become a widespread problem as misuse of alcohol and other drugs is an epidemic in todays society. The problem of substance abuse remains a serious problem in many workplaces despite of the encouraging efforts by the local, state, and national government. As a result of the widespread and serious problem of substance abuse, especially alcohol, no workplace is immune from the practice and its effects. Notably, because of itsRead MoreA Substance Abuse Free Workplace983 Words   |  4 PagesA SUBSTANCE ABUSE FREE WORKPLACE 1. Describe the effect of illegal or prescription drug and alcohol use in the workplace. How does this affect productivity? Today in the United States, 73% of drug users are employed, costing American businesses billions of dollars annually in lost productivity and health care costs. Studies reveal that employees who abuse drugs have a tremendously harmful effect on the workplace—they are more likely to have extended absences from work, show up lateRead MoreThe American Psychiatric Association s Dsm V ( 2013 )1702 Words   |  7 PagesIntroduction As the opioid epidemic takes hold throughout American’s rural counties, public health departments are struggling to mitigate the health threats presented by substance abuse and addiction. While detailed longitudinal data is unavailable, many areas that report increased rates of drug abuse also report increased hospital admissions and accidental deaths. While the relationship between these outcomes is not explicit, it is important to implement interventions that address health issuesRead MoreDrug Free is the Way to Be1053 Words   |  4 PagesThere are employees who use or abuse drugs, legal or not, that cause interference within the workplace. According to the Human Resource Manager Eileen Esquer, from Isagenix International, when the use of drugs start to disrupt an employee’s job, they generate expensive health costs and loss of productivity for businesses. A controversial issue in the business industry is with employment drug testing. Companies that organize drug te sting will provide safe working conditions. Although, employers whoRead MoreAddiction Is A Mind Altering Substance977 Words   |  4 PagesAddiction is a compulsive need to habitually use a mind altering substance. Addiction can target anyone, even someone who works in the healthcare field, who trained to aid patients with medication. When a healthcare professional is addicted to a substance, it should be immediately reported for the safety of that nurse s clients. Just because a nurse has an addiction does not mean that their career is over because there are many programs that can help them fight the addiction and regain their titleRead MoreChemical Addiction : The Healthcare Setting985 Words   |  4 PagesChemical Addiction in the Healthcare Setting Addiction is a compulsive need to habitually use a mind altering substance. Addiction can target anyone, even someone who works in the healthcare field who trained to aid patients with medication. When a healthcare professional is addicted to a substance, it should be immediately reported for the safety of that nurse s client. Just because a nurse has an addiction does not mean that their career is over because there are many programs that can help themRead MoreThe Job Of A Human Resource Representative949 Words   |  4 Pagessample or oral swabs as detection for substance misuse. Drug testing in the workplace certainly holds most employees to a higher standard as far as their life outside of work. However, there are millions of employees who are flying below the radar and continuing with the lifestyle that they have known regardless of workplace drug testing or not. The abuse and use of drugs and can pose serious health problems; some more serious than you would ever consider. Dru g abuse is an immense problem for everybodyRead MoreSubstance Abuse and Chemical Dependency1703 Words   |  7 Pageswebsite, Substance abuse is used to describe a pattern of substance (drug) use leading to significant problems or distress such as failure to attend work/school, substance use in dangerous situations (driving a car), substance-related legal problems, or continued substance use that interferes with friendships and or family relationships. Substance abuse, as a disorder, refers to the abuse of illegal substances or the abusive use of legal substances. Alcohol is the most common legal drug of abuse. ChemicalRead MoreSubstance Abuse And Its Effects On The United States1050 Words   |  5 Pages4000 B.C. narcotics were used, but during the 19th century is when the active substances in drugs were found. Many of these substances were given over the counter and weren t regulated, which meant that people could easily obtain substances such as morphine, cocaine, landuam, and many others. During the early 1900s, an estimate of about 250,000 people were abusing a substance within the United States. Substance abuse is a serious problem which can affect one s physical and psychological capabilities