Capital generation

Stockholders equity in a company is made up of the capital contributed by the stockholders and the capital generated from retained earnings. The presence of retained earnings on a balance sheet, as shown in Table 9-23, does not necessarily mean that they are matched by an equal amount of cash. In fact, there may be little or no cash available. The retained earnings shown on a balance sheet may be largely fictitious. For example, the assets on a balance sheet may be worth less than shown by at least the value of the retained earnings. 

The problem with this interpretation, however, is that in these passages Marx was considering a particular case in which there is a rise in wages and a fall in the rate of surplus value. It is for this reason that there can be overaccumulation for which increases in capital generate no extra profits. To quote Marx in full ... 

In the early 1990s Dow Chemical considered that it was not exploiting to the full extent its intellectual capital, generated over many years requiring a high-level of expenditure [C-36]. So it set up a small team to examine how it might re-engineer its... 

The other form of capital fetishism takes shape as an illusion that constant and variable capital are equally productive of profit, whereas in reality only the variable capital generates a surplus. Since profit accrues equally to constant and variable capital, it appears to be created equally by both. Appears to whom To the capitalist, certainly, since to him all the factors of production "contribute equally to the formation of the cost-price"/ Marx no doubt was correct in imputing this view to the capitalist, but wrong in thinking that the view is incorrect. The premise that only living labour contributes to the surplus is unteruible (3.2.3). In another... 

The second question concerns the repayment of a loan or something equivalent, as mortgage or life insurance. Let s consider the opposite problem what is the capital accumulated by investing regularly an amount R for which an interest rate i is received The accumulated value consists of a series of n regularly payments, called annuity. In an ordinary annuity the payments occur at the end of each period, so it will accumulate interests on ( -1) periods. Thus the partial capital generated by the first payment is 7f(l + 0 . The second payment brings, etc. The lumped sum accumulated... 

In 1986 when the oil price crashed to 10 a barrel, operators began to look very hard at the requirements for offshore developments and novel slimline, reduced facilities platforms began to be considered. The reduced capital outlay and early production start up capability, coupled with the added flexibility, ensured that all companies now consider subsea systems as an important field development technique. Although the interest and investment in subsea systems increased dramatically, subsea systems still had to compete with the new generation of platforms, which were becoming lighter and cheaper. 

From an overall economic viewpoint, any investment proposal may be considered as an activity which initially absorbs funds and later generates money. The funds may be raised from loan capital or from shareholders capital, and the net (after tax and costs) money generated may be used to repay interest on loans and loan capital, with the balance being due to the shareholders. The shareholders profit can either be paid out as dividends, or reinvested in the company to fund the existing venture or new ventures. The following diagram indicates the overall flow of funds for a proposed project. The detailed cash movements are contained within the box labelled the project . 

Within the project box, the cashflow oi the project (or other investment opportunity) is the forecast of the funds absorbed and the money generated during the project lifetime. Take, for example, the development of an oil field as the investment opportunity. Initially the cashflow will be dominated by the capital expenditure (capex) required to design, construct and commission the hardware for the project (e.g. platform, pipeline, wells, compression facilities). 

The capital cost estimates are generated by the Engineering function, often based on 50/50 estimates (equal probability of cost overrun and underrun). It is recommended that the operating expenditure is estimated based on the specific activities estimated during the field lifetime (e.g. number of workovers, number of replacement items, cost of forecast manpower requirements). In the absence of this detail it is common, though often inaccurate, to assume that the opex will be composed of two elements fixed opex and variable opex. 

If 10% is the cost of capital to the company, then the NPV (10) represents the real measure of the project value. That is, whatever positive NPV is achieved after discounting at the cost of capital, is the net value generated by the project. The 20% discount rate sensitivity is applied to include the risks inherent in the business, and would be a typical discount rate used for screening projects. Screening is discussed in more detail in Section 13.6. 

Other acetyl chloride preparations include the reaction of acetic acid and chlorinated ethylenes in the presence of ferric chloride [7705-08-0] (29) a combination of ben2yl chloride [100-44-7] and acetic acid at 85% yield (30) conversion of ethyUdene dichloride, in 91% yield (31) and decomposition of ethyl acetate [141-78-6] by the action of phosgene [75-44-5] producing also ethyl chloride [75-00-3] (32). The expense of raw material and capital cost of plant probably make this last route prohibitive. Chlorination of acetic acid to monochloroacetic acid [79-11-8] also generates acetyl chloride as a by-product (33). Because acetyl chloride is cosdy to recover, it is usually recycled to be converted into monochloroacetic acid. A salvage method in which the mixture of HCl and acetyl chloride is scmbbed with H2SO4 to form acetyl sulfate has been patented (33). 

The upper limit of efficiency of the biophotolysis of water has been projected to be 3% for weU-controUed systems. This limits the capital cost of useful systems to low cost materials and designs. But the concept of water biophotolysis to afford a continuous, renewable source of hydrogen is quite attractive and may one day lead to practical hydrogen-generating systems. 

Chlorine dioxide has substantial reactivity, which precludes its shipment ia bulk. New technology that allows on-site generation of CIO2 from sodium chlorate [7775-09-9] rather than from chlorine is expected to result ia its more frequent use ia appHcations where capital investment and operators are warranted (24). 

In a similar appHcation, Cape Industries has announced its intention to commission a solvent extraction plant to recover acetic acid from an effluent generated at its dimethyl terephthalate [120-61-6] faciHty (Wilmington, North Carolina) (44,45). The plant was commissioned in Eebmary 1995. In this case, the solvent will be CYANEX 923 extractant [100786-00-3], CYANEX 923 is also a phosphine oxide, but unlike TOPO is a Hquid and can be used without a diluent (46,47). This has the benefit of reducing plant size, capital, and operating costs. 

If the standard deviation of the lot caimot be estimated, a sampling program of greater sample size is required to generate an estimate of the standard deviation for future sampling operations. In some cases, sample size can be increased and sampling costs reduced by the use of automatic samplers. These offer a substantial reduction in labor costs but an increase in capital costs. 

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