The Future of the Entertainment Media Industry and Your Contribution Scholarship Essay

The Future of the Entertainment Media Industry and Your Contribution Within It - Scholarship Essay Example Media and entertainment industry draws me like the magnet to improve my skills and to better my financial prospectus. By the time I graduate from the school, I have decided that my career is in the entertainment industry and sound engineering shall be my specialization. I begin to study the literature on this subject and settle on Full Sail University that offers specialized courses on a series of subjects related to the entertainment industry. This renowned University is rendering yeoman service in the world of recording arts since 1979. The University is moving with the times and it has profound understanding of the professional opportunities available to the students in the industry and trains them accordingly. Perfect audio and sound play a vital role in every segment of the entertainment industry. Movies and entertainment programs on the television that are broadcasted through thousands of channels all over the world provide immense scope to the students of recording arts. I have the opportunity to go through the details provided in â€Å"the University Hall of Fame regarding the extraordinary accomplishments of select Full Sail graduates who have sterling achievements to their credit in their career field.†(Recording, n. p.) I desire to be one of them and shape myself as a top entertainment and media professional. This, I believe, is possible by completing the 20 month/21-month campus bachelor’s degree program. Since the tuition fees devolved for this branch of study are high, possibly at present, I am unable to afford it. I submit my application for Creative Spark Scholarship amounting to $10,000, which will enable me to fulfill my ambition. I expect a favorable decision on my request for scholarship. This is the crucial period in my life, and I hope your benign intervention will do much to change the course of my life for better and

Immigration Today Essay Example | Topics and Well Written Essays - 750 words

Immigration Today - Essay Example It is best to understand first the three major theories of immigrant and ethnic-group integration. The theories are the classic and new assimilation models, the racial/ethnic disadvantage model, and the segmented assimilation model. West Indies, South Asia, Koreans and Cubans considered as the Black Americans because of their color. They have been a victim of racial discrimination and racism. The classic assimilation theory sees immigrant/ethnic and majority groups following a "straight-line" convergence, becoming more similar over time in norms, values, behaviors, and characteristics. This theory expects those immigrants residing the longest in the host society, as well as the members of later generations, to show greater similarities with the majority group than immigrants who have spent less time in the host society. However, old West Indies remains with their culture and beliefs because of the discrimination and racism they experience from white Americans. The second generation of West Indies were able to adopt their belief and values in education. In employment most of them were engaged in self-employment, to avoid discrimination and racism. South Indians, Koreans and Cubans also believe in self employment because of the same reasons of discrimination and racism. ... West Indies, South Asians, Koreans and Cubans live on a community where most of the same origins stay. They usually live together to ensure that they will have a mutual support in an alien land. Immigrants such as West Indies, South Asians, Koreans and Cubans, to the United States tended to maintain a strong national, cultural, and ethnic identity to their homelands. Barriers usually blocked their assimilation. Because immigrants compare socioeconomic opportunities in the host country to those in their countries of origin, they may not perceive these barriers. However, by the second or third generations, they may realize that the goal of full assimilation may be more difficult and take longer than originally presumed. Segmented assimilation is a combination of the straight line assimilation and the racial ethnic disadvantage model. In this model others have noted that some members of immigrant groups become cut off from economic mobility, others find multiple pathways to assimilation depending on their national origins, socioeconomic status, contexts of reception in the United States, and family resources, both social and financial. They theorize that structural barriers, such as poor urban schools, cut off access to employment and other opportunities - obstacles that often are particularly severe in the case of the most disadvantaged members of immigrant groups. Such impediments can lead to stagnant or downward mobility, even as the children of other immigrants follow divergent paths toward classic straight-line assimilation. The 1965 immigration and nationally act has increased the numbers of Asians and other nationality to migrate in US. The revision of this act has helped the immigrants to lessen the

Prevention of Problems and Establishment of Positive Relationship Essay Example for Free

Prevention of Problems and Establishment of Positive Relationship Essay As a teacher, I believe that communication is one of the most important tools in teaching. Communication happened during classroom discussions and whenever the teacher and the students discuss issues in the class (Laslett and Smith 1984). Just like in the family, an open communication aids the students and the teacher in understanding, respecting and listening to what each other have to say. Everything especially the classroom procedure should be discussed appropriately in order to avoid misunderstanding and conflicts. If the students are fully aware about the procedures, then they will be able to avoid committing bad behavior or disobedience. Through open communication, students and teachers can establish a healthy relationship. In addition, teachers should not be too strict to foster a friendly environment conducive for teaching and learning. Criticisms should be done in a constructive way so that students will not get embarrassed but will be motivated to do better. I also believe that praises and positive suggestions are recommended to let the students know that their works are valued. Dealing with different types of students is one of the challenging aspects of being a teacher. In the same manner, this is also a way to learn and to develop the skills as a teacher by merely addressing the different needs of the students and coming up with a best strategy that will be effective for the entire class. Since not all the students are of the same level in terms of academic abilities, a flexible strategy is needed to address all the needs of the students without taking for granted their differences. The following are the different types of students that a teacher can encounter as well as my ways on how to deal with them. As a teacher, it is difficult to deal with students who hardly understand everything that a teacher is saying. Examples of these students are exchanged students from China, Spain, Japan and other countries who have different language. As a general rule, it is very important that the students understand the teacher very well in order to make learning more efficient (Pagewise 2002). Â  To provide a more effective learning, I primarily suggest that these students should undergo an English language and communication class so that the will learn more about the language or even at least know the meaning of the basic words. I would also recommend them to interact more often with their classmates and to participate regularly in the discussions so that they can exercise their skills in communicating in English. As a teacher, I may have the option to appoint them as group leaders so that they will be able to talk in class and get comfortable with the language.

The Drill Stem Component Description Engineering Essay

The Drill Stem Component Description Engineering Essay CHAPTER 3 INTRODUCTION This chapter presents general procedures for drill string design. The design aspects of critical importance and factors controlling drill pipe selection are highlighted. The term Drill Stem is used to refer to the combination of tubulars and accessories that serve as a connection between the rig and the drill bit (RGU lecture slides). It consists mainly of Drill Pipe, Drill Collars (DC) and Heavy Weight Drill Pipes (HWDP) and accessories including bit subs, top drive subs, stabilisers, jars, reamers etc. Drill stem is often used interchangeably with the term Drill String which actually refers to the joints of drill pipe in the drill stem. For the purpose of this report, Drill String will be used to refer to the string of drill pipes that together with drill collars and heavy weight drill pipe make up the drill stem see fig 3.1. 3.1 DRILL STEM COMPONENT DESCRIPTION 3.1.1 Drill Pipe The drill pipes are seamless pipes usually made from different steel grades to different diameters, weights and lengths. They are used to transfer rotary torque and drilling fluid from the rig to the bottom hole assembly (drill collars plus accessories) and drill bit. Each drill pipe is referred to as a joint, with each joint consisting of a pipe body and two connections (see fig 3.2). Drill pipe lengths vary, and these different lengths are classified as ranges, the available or more common ranges include: Range 1: 18 22 ft Range 2: 27 30ft Range 3: 38 40ft. Drill Stem. Fig 3.1: Drill Stem with components. (Heriott Watt University lecture Notes: Drilling Engineering) Drill pipes are also manufactured in different sizes and weights which reflects the wall thickness of the drill pipe. Some common sizes and their corresponding weights include 31/2 in. 13.30 lb/ft and 4 1/2in. 16.60 lb/ft. The indicated weight is the nominal weight in air (pipe body weight excluding tool joints) of the drill pipe. A complete listing of API recognised drill pipe sizes, weight and grades are published in the API RP 7G. The drill pipe grade is an indication of the minimum yield strength of the drill pipe which controls the burst, collapse and tensile load capacity of the drill pipe. The common drill pipe grades are presented in the table below Grade Yield Strength, psi Letter Designation Alternate Designation D D-55 55,000 E E-75 75,000 X X-95 95,000 G G-105 105,000 S S-135 135,000 Table 3.1: Drill Pipe Grades. Drill pipes are often used to drill more than one well, therefore in most cases the drill pipe would be in a worn condition resulting in its wall thickness being less than it was when the drill pipe was brand new. In order to identify and differentiate drill pipes, they are grouped into classes. The different classes are an indication of the degree of wear on the wall thickness of the drill pipe. The classes can be summarised as follows according to API standards: New: Never been used, with wall thickness when to 12.5% below nominal. Premium: Uniform wear with minimum wall thickness of 80%. Class 2: Allows drill pipe with a minimum wall thickness of 70%. It is essential that the drill pipe class be identified in drill pipe use or design, since the extent of wear affects the drill pipe properties and strength. When specifying a particular joint of drill pipe, the class, grade, size, weight and range have to be identified, the specification could therefore appear thus: 5 19.5 lb/ft Grade S Range 2 Fig 3.2: Parts of Drill pipe. (Handbook for Petroleum and Natural gas) 3.1.2 Tool Joints Tools joints are screw type connections welded at the ends of each joint of a drillpipe. The tool joints have coarse tapered threads and sealing shoulders designed to withstand the weight of the drill string when it is suspended in the slips. Tool joints are of two kinds; the pin (male section) and the box (female section). Each drill pipe has a pin attached to one end and a box attached at the other end. This makes it possible for the pin of one joint of drill pipe to be stabbed into box of a previous drill pipe. There are several kinds of tool joints widely used: Joint Type Diagram Description Internal Upset (IU) Tool joint is less than the pipe. Tool joint OD is approximately the same as the pipe. Internal Flush (IF) Tool joints ID is approximately the same as the pipe. The OD is upset. Internal / External Upset (IEU) Tool joint is larger than the pipe such that the tool joint ID is less than the drill pipe. The tool joint OD is larger than the drill pipe. Table 3.2 Types of tool joints. (The Robert Gordon University Lecture Notes: Drill String Design) 3.1.3 Drill Collars Drill collars are thick walled tubes made from steel. They are normally the predominant part of the bottom hole assembly (BHA) which provides Weight on Bit (WOB). Due to the large wall thickness of the drill collars, the connection threads could be machined directly to the body of the tube, thereby eliminating the need for tool joints (see fig 3.3). Drill collars are manufactured in different sizes and shapes including round, square, triangular and spiral grooved. The slick and spiral grooved drill collars are the most common shapes used currently in the industry. There are drill collars made from non-magnetic steel used to isolate directional survey instruments from magnetic interference arising from other drill stem components. The steel grade used in the manufacture of drill collars can be much lower than those used in drill pipes since they are thick walled. Functions Provide weight on bit Provide stiffness for BHA to maintain directional control and minimise bit stability problems. Provide strength to function in compression and prevent buckling of drill pipes. Fig 3.3: Carbon Steel Drill Pipes. 3.1.4 Heavy Weight Drill Pipe Heavy weight drill pipes (HWDP) are often manufactured by machining down drill collars See fig 3.4. They usually have greater wall thickness than regular drill pipe. HWDP are used to provide a gradual cross over when making transition between drill collars and drill pipes to minimise stress concentration at the base of the drill pipe. These stress concentrations often result from: Difference in stiffness due to the difference in cross-sectional area between the drill collar and drill pipe. Bit bouncing arising from rotation and cutting action of the bit. HWDP can be used in either compressive or tensile service. In vertical wellbores it is used for transition and in highly deviated wells, it used in compression to provide weight on bit. Fig 3.4: Heavy Weight Drill Pipe. (Heriott Watt University lecture Notes: Drilling Engineering) 3.1.5 Accessories Drill Stem accessories include: Stabilisers: these are made of a length of pipe with blades on the external surface. The blades are spiral or straight, fixed or mounted on rubber sleeves to allow the drill string rotate inside. Functions of the stabiliser include: Stabilise the drill collars to reduce buckling and bending Ensure uniform loading of tricone bits to reduce wobbling and increase bit life. To provide necessary wall contact and stiffness behind the bit to induce positive side force to build angle when drilling deviated wells. Reamers: used in the BHA to enlarge the well bore diameter and ream out doglegs, key seats, ledges. Drilling Jars: incorporated in the BHA to deliver a sharp blow and assist in freeing the drill string should it become stuck. 3.2 DRILL STRING DESIGN The drill string design is carried out in order to establish the most efficient combination of drill pipe size, weight, and grades to fulfil the drilling objectives of any particular hole section at the lowest cost within acceptable safety standards. In order to design a drill string to be used in a particular hole section, the following parameters need to be established: Hole section depth Hole section size Expected mud weight Desired safety factors in tension and overpull. Desired safety factor in collapse Length of drill collars required to provide desired WOB including OD, ID and weight per foot. Drill pipe sizes and inspection class The drill string design has to meet the following requirement: The working loads (tension, collapse, burst) on the drill string must not exceed the rated load capacity of each of the drill pipes. The drill collars should be of sufficient length to provide all required WOB to prevent buckling loads on the drill pipe. The drill pipes used have to ensure the availability of sufficient fluid flow rate at the drill bit for hole cleaning and good rate of penetration. 3.2.1 Design Safety Factors Design safety factors are applied to calculated working loads to account for any unexpected service load on the drill string. They are used to represent any features that are not considered in the load calculations e.g. temperature and corrosion, thus ensuring that service loads do not exceed the load capacity of the drill pipe. Design safety factor values are often selected based on experience from operating within a particular area, the extent of uncertainty in the operating conditions e.g. when operating in HPHT conditions, a larger safety factor is applied than when operating in less harsh conditions. Some commonly used design safety values are illustrated in the table below Load Design Safety Factor Value Tension 1.1 1.3 Margin of overpull (MOP) 50,000 100,000. MOP of 400,000 have been used in ultra deep wells Weight on Bit 1.15 or 85% of available Weight on bit to ensure neutral point is 85% of drill collar string length measures from the bottom (API RP 7G) Torsion 1.0 (based on the lesser of the pipe body or tool joint strength) Collapse 1.1 1.15 Burst 1.2 3.2.2 Drill Collar Selection The drill collars are selected with the aim of ensuring that they provide sufficient WOB without buckling or putting the lower section of the drill string in compression. 3.2.2.1 Size selection Lateral movement of the drill bit is controlled by the diameter of the drill collar directly behind it. Therefore the size/diameter of the drill collar closest to the bit will be dependent on the required effective minimum hole diameter and the relationship can be given as When two BHA components of different cross-sectional areas are to be made up, it is essential that the bending resistance ratio (BRR) be evaluated. This is important because BHA components have tensile and compressive forces acting on them when they are bent in the well bore. These forces cause stress at connections and any location where there is a change in cross-sectional area. Therefore it is important to ensure that these stresses are within acceptable ranges. The bending resistance (BR) of a drill string component is dependent on its section modulus which is given as Z = section modulus, in3 I = second moment of area, in4 OD = outside diameter, in ID = inside diameter, in The BRR is used to express any change in BR and can be calculated using BRR should generally be below 5.5 and in severe drilling conditions, below 3.5. 3.2.2.2 Connections When selecting connections to be used with drill collars, it is essential to check that the BRR of the pin and box indicates a balanced connection. The BRR for drill collar connection is calculated as the section modulus of the box divided by the section modulus of the pin. The API RP 7G contains tables that can be used to determine BRR for any box and pin OD. BRRs of 2.5 have given balanced connections (RGU Lecture notes, 2005). 3.2.2.3 Weight on Bit The maximum weight on bit required is normally a function of the bit size and type. The rule of thumb is: Maximum WOB of 2000lbf per inch of bit diameter when using Polycrsyalline Diamond Compact bits (PDC) and mud motors. Maximum WOB of 5000lbf per inch of bit diameter when using tricone bits. Other factors controlling WOB include inclination, hole size and buckling. In vertical wellbores the length of drill collars required to provide a specified weight on bit is given by LDC = Length of Drill Collars, ft WOB = Weight of Bit, lb DFBHA = Safety factor to keep neutral point in drill collars. WDC = Weight per foot of Drill Collars, lb/ft Kb = Buoyancy Factor. The neutral point as described by (Mian, 1991) referring to Lubinksi, is the point that divides the drill stem into two portions, with the section above the neutral point in tension and that below in compression. Therefore in order to ensure that the entire length of drill pipes remain in tension, the neutral point of the drill stem has to be maintained within the drill collars. According to the API RP 7G, the height of the neutral point measured from the bottom of the drill collars will be 85% of the total length of drill collars used, with 85% being the safety factor. In inclined wellbores, the angle of inclination has to be taken into consideration when calculating the maximum WOB that can be applied without buckling the drill pipe. This is because although the WOB is applied at the inclination of the wellbore, this weight acts vertically, thus reducing the available weight at the bit. Therefore to allow for this reduction, the buoyed weight of the BHA would be reduced by the cosine of the well inclination, thus WOB in inclined holes is calculated with the formula All parameters remain as defined in equation 5; ÃŽÂ ¸ is the angle of inclination of the well. As a result of the vertically acting weight of the BHA, the drill string tends to lie on the low side of the hole and is supported to some extent by the wall of the well bore. Therefore the pipes above the neutral point could only buckle if the compressive forces in the drill string exceed a critical amount. This critical buckling force is calculated as follows Fcrit = critical buckling force, lb ODHWDP = outside diameter of HWDP, in. ODtj = maximum outside diameter of pipe, in. IDHWDP = inside diameter of HWDP, in. Kb = buoyancy factor. Dhole = diameter of hole, in. ÃŽËÅ" = hole inclination, degrees. Since HWDP are sometimes used to apply WOB in inclined wells, and drill pipes are sometimes used in compression, the critical buckling force is calculated for both HWDP and drill pipes. 3.2.3 Drill Pipe Selection Factors to be considered for drill pipe selection include: Maximum allowable working loads in tension, collapse, burst, and torsion. Maximum allowable dogleg severity at any depth in order to avoid fatigue damage in the drill pipe. Combined loads on the drill pipe. The loads considered when selecting drill pipes to be used in the drill string is dependent on the well depth, well bore geometry and hole section objectives. In shallower vertical wells, collapse and tension are of more importance than burst or torsion. Burst is normally not considered in most designs since the worst case for a burst load on the drill pipe would occur when pressuring the drillstring with a blocked bit nozzle, even with this condition, the burst resistance of the drill pipe is likely to be exceeded. Torsion is of less importance in vertical well bores because drag forces are at minimal amounts unlike in highly deviated wells. The dogleg severity of the well for both vertical and deviated wells is important because of increased fatigue in the drill pipe when it is rotated in the curved sections of the wellbore. A graphical method is recommended for drill pipe selection, with the loads plotted on a load versus depth graph. This makes it possible for loads at particular points on the drill string to be easily visualised, and any sections of the drill pipe that do not meet the load requirements are easily identified and redesigned. 3.2.3.1 Collapse Drill pipes are sometimes exposed to external pressures which exceed its internal pressures, thereby inducing a collapse load on the drill pipe. The worst scenario for collapse in a drill pipe is during drill stem tests when they are run completely empty into the wellbore. The collapse loads are highest at the bottom joint of the drill pipes, as a result, the collapse load would normally control the drill pipe grade to be used at the bottom of the drill string. The API specified collapse resistance for different sizes and grades of drill pipe assuming either elastic, plastic or transition collapse depending on their diameter to wall thickness ratio have been calculated and are published in the API RP 7G with the relevant formulae. The maximum collapse pressure on the drill pipe when it is completely empty can be calculated as follows: Pc = collapse pressure, psi MW = mud weight, ppg TVD = true vertical depth at which Pc acts, ft. On some occasions, the mud weight outside the pipe varies from that inside the pipe, also the fluid levels inside and outside the pipe may also vary. This situation could also induce collapse loads. The collapse loads induced by this scenario can be calculated thus L = Fluid depth outside the drill pipe, ft MW = Mud weight outside the drill pipe, ppg Y = fluid depth inside drill pipe, ft MW = Mud weight inside drill pipe, ppg. The value for Pc is then plotted on the collapse load graph as the collapse load line see fig 3.5. It is recommended practice to apply a design safety factor to the collapse load calculated from equations 8 or 9 (depending on expected scenarios) in order to account for unexpected additional loads as wells as unknown variables. The value of the design factor is often between 1.1 1.5 for class 2 drill pipes. According to (Adams, 1985) the design factor should be 1.3 to account for the fact that new drill pipes are often not used for drill stem tests. The value of the collapse load multiplied by the collapse design factor is plotted on the collapse load graph as the design line, this is then used to select an appropriate grade and weight of drill pipe to fulfil these load conditions. Fig 3.5: Sample Collapse load graph. 3.2.3.2 Tension Load The tensile load capacity of the drill string should be evaluated to ensure there is enough tensile strength in the topmost joint of each size, weight, grade and class of to support the weight of the drill string submerged in the wellbore, hence the need to include buoyancy in the calculations. There has to also be enough reserve tensile strength to pull the drill string out of the well if the pipe gets stuck. The stabiliser and bit weight can be neglected when calculating the drillstring weight. In a vertical wellbore, the forces acting on the drill string are tension from its self weight and the hydrostatic pressure from the fluid in the wellbore. The hydrostatic pressure in the wellbore exerts an upward force on the cross sectional area of the drill string, which is commonly referred to as buoyancy. Therefore the resulting tensile load on the drill string attached to drill collars, taking account of buoyancy is calculated as: FTEN = resultant tensile load on drill string, lb LDP = length of drill pipe, ft LDC = length of drill collars, ft WTDP = air weight of drill pipe, lb/ft WTDC = air weight of drill collars, lb/ft MW = Mud weight, ppg. ADC = Cross sectional area of drill collars, in2 FTEN is plotted on the tension load graph as the tensile load line. The tensile strength values for different sizes, grades and inspection classes of drill pipes are contained in the API RP 7G, and can be calculated from the equation: Fyield = minimum tensile strength, lb Ym = specified minimum yield stress, psi A = cross section area, in2 Fyield is plotted as the minimum tensile strength line on the tension load graph. However, these values (Fyield) are theoretical values based on minimum areas, wall thickness and yield strength of the drill pipes. Therefore, these values only give an indication of the stress at which a certain total deformation would occur and not the specific point at which permanent deformation of the material begins. If a pipe is loaded to the minimum tensile strength calculated from equation 11, there is the possibility that some permanent stretch may occur, thereby making it difficult to keep the pipe straight in the wellbore. In order to eliminate the possibility of this occurrence, 90% of the minimum tensile strength as recommended by the API (American Petroleum Institute), should be used as the maximum allowable tensile load on the drill pipe, i.e Fdesign = maximum allowable tensile load 0.9 = a constant relating proportional limit to yield strength. Fdesign is plotted on the tension load graph as the maximum allowable tensile load line. As with the collapse load, a design factor would be applied to the tensile loads to account for dynamic loads in the drill pipe which occur when the slips are set, as well as prevent the occurrence of pipe parting close to the surface. The product of FTEN and the design factor is plotted as the tension design load line in the tension load graph see fig 3.6. Margin Of Overpull A margin for overpull is added to the tension load to ensure there is sufficient tensile strength in the drill pipe when it is pulled in the event of a stuck pipe. This margin is normally 50,000 100,000lb, but in deeper wells margins of overpull have reached 300,000lb. The value obtained after adding the margin of overpull is also plotted on the tension load graph see fig 3.6. The difference between the calculated tensile load at any point in the drillstring (FTEN) and the maximum allowable tension load would also represent the available overpull. This value represents available tensile strength of the drill pipe to withstand any extra forces applied to the drill string when trying to release it from a stuck pipe situation. FTEN and Fa can also be expressed as a safety factor This safety factor is an indication of how much the selected drill pipe will be able to withstand expected service loads. Due to uncertainty with actual service loads and conditions, a safety factor greater than 1 is always required. Slip Crush Slip crushing is generally not a problem if the slips are properly maintained. However, it is necessary to apply a safety factor for slip crushing when designing the drill string. This helps account for the hoop stress (SH) caused by the slips and the tensile stress (ST) caused by the weight of the drill string suspended in the slips. This relationship between SH and ST can be represented by the following equation SH = hoop stress, psi ST = tensile stress, psi D = outside diameter of the pipe, in. K = lateral load factor on slips, Ls = length of slips, in. = slip taper usually 9 ° 27 45 z = arctan ÃŽÂ ¼ ÃŽÂ ¼ = coefficient of friction, (approximately 0.08) The calculated tensile load is multiplied by the slip crush factor () to obtain the equivalent tensile load from slip crushing: Ts = tension from slip crushing, lb TL = tension load in drill string, lb SH / ST = slip crush factor. Ts is also plotted on the tension load graph as the slip crush design line. Fig 3.6: Sample Tension load graph The general step-by-step procedure for drill pipe selection using the graphical method is given as 1. Calculate the expected collapse load on drill pipe and apply the collapse design safety factor to derive the design load. Use the result to select weight and grade of drill pipe that satisfy collapse conditions. Plot expected collapse load and design load on a pressure vs. depth graph. 2. Calculate maximum allowable tensile load for the drill pipe selected in (1) above. Also calculate tension load on the drill string including buoyancy effects. Plot the tension load, specified minimum yield strength, and maximum allowable tensile load values on axial load vs. depth graph. 3. Apply tension design factor, margin of overpull, and slip crush factor to the calculated tension load and plot the individual results on the axial load vs. depth graph. Of the three factors applied to the tension load, the one resulting in the highest value is selected as the worst case for tensile loads. 4. Inspect graph and re-design any sections not meeting the load requirements. When designing a tapered drill string, the maximum length of a particular size, weight, grade and class of drill pipes that can be used to drill the selected hole section with specified WOB can be calculated as: All parameters remain as defined in equation 10 and 11. Note that equation 16 is only used when the MOP design line is the worst case scenario for tensile loads. When slip crushing is the worst case, the formula below is used SF = safety factor for slip crushing. The lightest available drill pipe grade should be used first in order to ensure that that the heavier grades are used upper section of the drill string where tensile loads are the highest. 3.2.4 Dog Leg Severity Fatigue damage is the most common type of drill pipe failure. It is known to be caused by cyclic bending loads induced in a drill pipe when it is rotated in the curved sections of the wellbore. The rotation of the drill pipe in the curved hole sections induce stresses in the outer wall of the drill pipe by stretching it and increasing its tensile loads. Fatigue damage from doglegs tends to occur when the angle exceeds a critical value. This critical value can be calculated as: C = maximum permissible dog leg severity, deg/100ft E = Youngs modulus, psi (30 x 106 for steel, 10.5 X 106 for aluminium) D = Drill pipe outer diameter, in. L = half the distance between tool joints, (180 in, for range 2 pipe) T = tension below the dogleg, lb à Ã†â€™b = maximum permissible bending stress, psi. I = drill pipe second moment of area, = à Ã†â€™b, is calculated from the buoyant tensile stress (à Ã†â€™t) and is dependent on the grade of the pipe. à Ã†â€™t = T/A, where T is defined in equation 19, and A is the cross sectional area of the pipe body in in2. For grade E pipe, The results from equation 20 are valid for à Ã†â€™t values up to 67,000psi. For grade S pipe, The results from equation 21 are valid for à Ã†â€™t values up to 133,400psi. It is recommended that an allowable dogleg severity (DLS) versus depth chart be plotted for every hole section with a particular drill string design since DLS changes with depth. The chart is plotted with the DLS on the x-axis and depth on the y-axis (see fig 3.7). When DLS lies to the left of the line or below the curve, the drill pipe is in safe operating conditions, and when it falls above or to the right of the curve, it is in unsafe conditions. Fig 3.7: Allowable Dogleg Severity Chart. (Mian, 1991) 3.2.5 Torsion Drill pipe torsional yield strength is important when planning deviated wells and ultra deep wells. In deviated wells, increased drag forces acting on the drill string from its interaction with the wellbore increase torsional loads on the drill pipe. In deeper wells, it is important in stuck pipe situations, in order to know the maximum torque that can be applied to the drill string. The pipe body torsional yield strength when subjected to torque alone can be calculated from the equation: Q = minimum torsional yield strength, ft lb J = polar second moment of area, à Ã¢â€š ¬/32 (D4 d4) D = pipe OD in, d = pipe ID in. Ym = minimum yield strength, psi. 3.2.6 Combined Loads On The Drill String Collapse and Tension The collapse resistance of the drill pipe is often reduced when the drill pipe is exposed to both tension and collapse loads. This happens because tensile loads stretch the drill pipe thereby affecting its D/t (diameter -wall thickness ratio) which controls the collapse resistance of the drill pipe. In ultra deep wells, the effect of combined collapse and tension is experienced when function testing the Blow out Preventers (BOP). It is becoming common practice in ultradeep drilling to equip BOPs with test rams in order to enable the BOP be tested without setting plugs in the well head. This is done to save tripping time due to extreme well depths. An example given by (Chatar, 2010), using 65/8in 27.70lb/ft drill pipe showed that with 65/8in drill pipe having 860kips of maximum allowable tensile loads, at half of this load, the drill string is only capable of withstanding 4,500psi collapse loads, which is often not sufficient for ultradeep drilling BOPs. The corrected collapse resistance of drill pipes under tension can be calculated using the formula Where R represents the percentage of the collapse resistance left when the drill pipe is under tension, therefore in equation 25, the value for R is used to multiply the normal plastic collapse resistance of the pipe to give the collapse resistance under tension. R can also be determined graphically with the following steps 1. Calculate Z using equation 24 2. Enter the ellipse for biaxial stress (fig 3.8) on the horizontal axis with the value for Z and draw a vertical line to the ellipse curve. 3. Draw a horizontal line from the vertical line drawn in (2) above to the vertical axis and read off the value. 4. Use the value from (5) above to multiply the collapse resistance to get the corrected collapse resistance with tension. Fig 3.8: Ellipse of Biaxial yield Strength: Effect of tensile loading om collapse resistance. (RGU Lecture notes: Casing design) Combined tension and torsion The torsional yield strength of a drill pipe is significantly reduced when the pipe is under tension loads. The torsional yield strength of the drill pipe under tension can be calculated with the equation Q = minimum torsional yield strength under tension, ft lb J = polar second moment of area. D = pipe OD in, d= pipe ID in. Ym = minimum yield strength, psi P = total load in tension, lb A = cross sectional area, in2 3.2.7 Tool Joint Performance The makeup torque to be applied to the tool joints when connecting drill pipes is calculated as follows ID = inside diameter, in. OD = outside diameter, in. Values for X, M, B and Q for standard connections are presented in the table be

Profitability and Corporate Leverage Policy of Firms

Profitability and Corporate Leverage Policy of Firms Abstract This study attempts to determine the relationship between the profitability and leverage policy of firms of Fuel and Energy sector of Pakistan. The analysis was implemented on 27 firms in the Fuel and energy sector listed at the Karachi Stock Exchange for the period 2003-2008. Regression was used to find out the relationship between the independent variable (Profitability) and dependent variable (Leverage). We expect the negative relationship between the Profitability and the Leverage Policy of firms in the Fuel and Energy sector of Pakistan, confirming the pecking order theory of capital structure. The results found in our study were not as expected. The results showed that there is inverse relationship between profitability and leverage but our results were not that much significant to accept our hypothesis. So we rejected our pecking order theory hypothesis. Therefore we conclude that because of certain factors such as economic situation of the Pakistan, rising prices of oil all a round the world, interests rates and reliance of firms financing needs mostly on bank financing, pecking order theory model becomes insignificant in the Energy and Fuel sector of Pakistan. Chapter-1 Introduction Capital structure involves different decisions taken by a firm in financing its assets. Generally, a firm can solve this issue through different mixes of debts, equity, or other financial arrangements. It can also combine bonds, TFCs, lease financing, bank loans or many other options with equity in order to boost the market value of the firm. 1.1 Importance of the topic: Optimal capital structure plays a vital role in the overall value maximization of a firm. The strategic management of capital structure ensures access to the capital needed to fund future growth and enhance financial performance. Our focus in this study is to correlate the profit of the firm with its leverage. Importance of the study is to find out that which source of funds either retained earnings, debt or equity, a firm in the Fuel and Energy sector should prefer in order to optimize the profit and the value of the firm. In Pakistan, firms usually prefer short-term borrowing, because commercial banks are the major lenders and they do not encourage long-term loans. Up to 1994 firms did not rely on market based debt; in mid 1994 the government amended the Company Law to help companies to raise debt directly from the market in the form of TFCs (Term Finance Certificates). 1.2 Background of the study: Various capital structure theories had been discussed by many authors to explain the variation of capital structure of different firms. So many researches had also been taken place in order to solve the mystery of optimal capital structure in Pakistani firms. A thorough research study relating to the capital structure was carried by two Pakistani professors Shah and Tahir (2004) which attempted to answer the question of what determines the capital structure of Pakistani Listed firms other than those in financial sector. Booth, et. Al (2001) had also worked on the determinants of capital structures of 10 developing countries including Pakistan, but their data analyzed the firms that were included in the KSE-100 Index from 1980 to 1987. Shah and Tahir (2004) analyzed the data of non-financial firms for the period of 1997-2001 while our study differs from theirs on grounds of different sector, variables and period. 1.3 Objective of the study: The objective of this study is to find out the relationship between the profitability and the corporate leverage policy of firms in the Fuel and Energy sector of Pakistan. We are trying to figure out that the firms that have more profits in the Fuel and Energy sector have lower leverage. Our main focus in this study is to correlate the profit of the firm with its leverage in the context of pecking order theory. According to pecking order hypothesis firms tend to use internally generated funds first and than resort to external financing. This implies that profitable firms will have less amount of leverage. Therefore we expect a negative relationship between profitability and debt of a firm i.e. higher the profits of a firm, the lesser will be its debt. 1.4 Scope of the study: This study is limited on the Fuel and Energy sector of Pakistan. There are 27 firms of that sector which are listed on the Karachi Stock Exchange. But after screening the firms with incomplete data, we have selected 22 firms having complete data for six years from 2003-2008 as the study covers the period from 2003 to 2008. 1.5 Disposition of the study: This study is organized into five stages. In first stage we have described the background of our topic. In second stage review of literature has been done. In next stage we have explained our data and variables used in our analysis. At fourth stage we have discussed the model and the statistical test to be used. While the last stage concludes the results of the test. Chapter 2 Literature Review In this chapter we have gone through the various research studies regarding the leverage and well known capital structure theories. Capital structure refers to specific mixture of debt and equity a firm needs to finance its operations and optimal capital structure plays a vital role in the overall value maximization of a firm. This has given birth to different capital structure theories that attempt to explain the variation in capital structures of firms. The Miller Modigliani theorem showed that the market value of a firm is determined by the risk of its underlying assets and its earning power and is independent of the choices to finance its investments i.e the value of the firm is independent of the capital structure it takes on. But Myers suggested the contemporary thinking on capital structure in form of Static Tradeoff Theory. This explained that a firm initially following a target debt-equity ratio behaves accordingly. The costs and benefits related to the debt option make this target ratio. The costs and benefits are cost of financial distress, tax shields and agency cost. There are different theories that are used to explain the capital structure decisions which are based n the asymmetric information, tax benefits associated with the debt, bankruptcy cost and agency cost. The asymmetric information is related with pecking order framework and the other three are rooted in static trade-off choice. Under the trade off theory firms tried to equate the marginal benefits of an additional unit of debt with the related marginal cost, while holding the firms assets and investments plans. Under this model the key benefits are debt tax deductibility and the mitigation of agency cost while the main cost of additional debt is bankruptcy. Green, Murinde and Suppakitjarak (2002) observed that the tax policy also effect the capital structure decision of firms. Firm are allowed to deduct interest on debt in computing taxable profit under tax ordinance while the payments associated with the equity such as dividends are not tax deductible. Therefore, the tax effect encourages the debt usage by the firm if the rates are higher and more debt increases cash savings in form of after tax proceeds to the owner. Usage of debt in the capital structure of the firm also leads to agency cost which arises as a result of relationship between the share holder and manager while the firms management is the agent and the share holder being the principal. Agent may not choose to maximize their principals wealth. The conflict arises as the managers have less than 100% of the residual claim. Thus, managers may invest in projects that reduce the value of the firm while enhancing their control over its resources. Additional cash flow is the prime source of the agency cost. Debt helps to mitigate this agency cost as the firm is committed to pay out excess cash in the form of interest payments. The probability of bankruptcy increases with the increase in the level of the debt. If the firm goes beyond the optimum level of debt, then it is more likely that the firm will default on the repayment of the loan. As a result of that, the control of the firm will be shifted from share holders to the bond holders or the creditors who will liquidate the firm in order to recover their investment. There are also direct and indirect costs associated with the bankruptcy. Direct cost includes administrative costs of bankruptcy and costs of reorganization in the event of insolvency. While the indirect cost arises when the firm gets into financial distress. It may arise because of the change in the investment policies of the firm if firm foresees possible bankruptcy. In order to avoid the possible financial distress it will cut down the expenditure on certain departments like research and development, training of employees and advertisements etc. Therefore, if a firm is perceived to be close d to bankruptcy customers may be less willing to buy its goods because of low perceived quality of goods and the risk that the firm will not be able to meet its warranty obligation. Employees may also be less interested to work for the firm and creditors are less inclined to extend trade credit. Hence under the static trade off theory the optimal capital structure represents a level of leverage that balances the bankruptcy and the benefits of tax deductibility and mitigation of the agency costs. While The Pecking Order Theory of Myers (1984) and Myers and Majluf (1984), stated that firm while establishing its capital structure follow a hierarchy of financial decisions. First of all firm uses its internal financing i.e. retained earnings in order to finances its projects. In case of need of external financing, they prefer a bank loan first then go for the public debt. Thus in accordance with the Pecking Order Theory, profitable firms while having the available internal funds prefers not to incur debt for new projects. A study was carried by Benito, (2002) which considered the two most influential approaches, the trade off and packing order theories, in understanding capital structure decisions of firms of Spain and United Kingdom. This study made a valuable contribution to our study because of the same objective of testing Pecking Order Theory with reference to capital structure of firms. The resulting data included 6417 Spanish companies over period of 1985-2000 and 1784 British quoted non-financial companies over period of 1973-2000. The results provided significance in favor of pecking order theory, concluding debt ratios found to be significantly inversely related to cash flow and profitability of the firm and vary positively with its investment. In order to find the best empirical explanation for the capital structure of Brazilian firms Medeiros and Cecilio (2004) tested a model to represent the Static Trade-off Theory and Peking Order theory. This theory is helpful for our study because of the same independent variables that is profitability. Profitability all the STT streams sustain that a positive relationship must exist between profitability and debt. The stream based on bankruptcy costs states that these costs increase when earnings fall so that leverage tends to be lower for less profitable firms or those with higher earnings volatility. For the stream focusing on tax benefits, the more profitable the firm the more it benefits from the tax shield provided by interest payments. The agency stream believes that large amounts of free cash flows build up the dispute between shareholders and managers, which make those firms to issue more debt in order to diminish the problem (Fama and French, 2003). According to the POT, retained earnings are the firms best financing option. This type of resource does not produce information asymmetries and can be used promptly for new projects. The information asymmetry caused by equity issues or by more complex securities that require a higher degree of communication with the market is the basis of the POT. It is exactly to dodge the adverse selection premium brought by the information asymmetry that firms opt for internal financing as their major source of resources (Myers, 1984). The relationship between these two variables must be therefore negative. Medeiros and Cecilio (2004) The sample of their study included 371 non-financial firms with shares listed in the Brazilian stock exchanges from 1995 to 2002. The analysis of results of the study led to the conclusion that the pecking order theory provides the best explanation for the capital structure of those firms Another study on the capital structure was carried by Abor, (2008) comparing the capital structure of large un-quoted firms, small and medium enterprises (SMEs) and publicly quoted firms in Ghana using a panel regression model. On the grounds of the similar independent variable this study made a useful contribution to our review literature. The results showed insignificant difference between the capital structures of large unquoted firms and publicly quoted firms. The results of all sample groups showed that the total debt has relatively a high proportion of short-term debt. The results of the regression test indicated that age and size of the firm, profitability, risk, asset structure and managerial ownership are significant influencers in decisions regarding the capital structure of Ghanaian firms. Chiarella et.al (1991) conducted a study in Australia on the determinants of corporate capital structure by seeking to provide evidence on the significance of capital structure determinants in Australian context. This study provided a great support for writing review literature of our study. The analysis was carried on a sample of 226 Australian firms from 1977-1985. The results showed that company non-debt tax shields display a negative relationship with debt ratios. The results also supported the pecking order hypothesis of Myers and Majluf (1984) showing significant negative relationship of profitability with debt ratios and indicating that firms prefer to finance investments with internally retained earnings before issuing debts. The results provided some evidence of size effect indicating that the larger firms tend to employ more debts in their capital structure. Results showed positive but insignificant relationship between cash holdings and debt ratios while confirming the fre e cash flow hypothesis of Jensen (1986). Simultaneously results did not provide any support for growth opportunity and collateral value attributes as determinants of debt ratios. A study on the Malaysian companies regarding the capital structure and the firm characteristics was carried by an Indian professor Pandey (2000). This study is useful for our study because of one of the same independent variable i.e. profitability. The study was carried on Malaysian companies in order to examine their determinants of capital structure using data from 1984 to 1999 while classifying the data into four periods that relates to different stages of capital market of Malaysia. Results of the regression clarified that profitability, size; growth, risk tangible variables have significant impact on all debt types. Results showed persistent and consistent negative relationship of profitability with all debt ratios in all periods, thus accepting the prediction capital structure according to the pecking order theory. A research relating to the capital structure was carried by two Pakistani professors Shah and Tahir (2004) which attempted to answer the question of what determines the capital structure of Pakistani Listed firms other than those in financial sector. Because this study was also carried in Pakistan so it provided a support to a great extent in order to understand the capital structure according to Pakistans environment. A sample of 445 listed firms on KSE were taken and their five year data from 1997-2001 were taken into consideration. Pooled regression results indicated that assets tangibility is positively correlated with debt, concluding that asset structure does not matter in determination of capital structure of Pakistani firms. Size was positively correlated with leverage suggesting that large firms would employ more debt. Growth was found to be negatively correlated with leverage that supports the simple version of pecking order theory that growing firms finance their investmen t opportunities first by their internally generated funds. There was strong relationship between profitability and leverage. Profitability was negatively correlated with leverage that supports the pecking order theory. A study in Hong Kong was carried by Hung, et.al (2002) examing the inter-relationship between profitability, cost of capital and capital structure among property developers and contractors in Hong Kong. The results showed that capital gearing is positively related with assets but negatively with profit margins. Bartholdy and Cesario (2006) analysed the decisions regarding the capital structure of Portuguese non-listed bank financed firms. Primary purpose of the research was to find out the impact of debt tax shield on the decisions regarding capital structure of small non-listed firms. The secondary purpose was to find out that whether the determinants of capital structure of larger listed firms were also same as in case of smaller non-listed firms. The research explained that the solution of two big problems (agency and asymmetric information) for large firms are apparent on the balance sheet as restriction on debt. On the other hand it is less apparent on the balance sheet of smaller firms. This provided the smaller firms with the benefit of tax shield due to more debt. This research has provided a great support in writing our review literature and understanding the relationship between profitability and debt to a great extent. The sample of their research consisted 998 firms with 7765 fi rm years observations. The results concluded that the tax provisions regarding the carry forward of tax losses and debt tax shield play a vital role in determining the capital structure of small non-listed firms. It was also concluded that in order to solve agency problem traditional balance sheet variables were significant in large listed firms but were insignificant for the small non-listed firms with the exception of variables required to solve bankruptcy risk. A research study was conducted in Greece by Eriotis, et.al (2007) aiming to isolate the firm characteristics that effect capital structure. The investigation was performed using panel data for a sample of 129 Greek companies listed on Athens Stock Exchange during 1997-2001. The findings justified a negative relationship between the debt ratio of the firms and their growth, and size appeared to have a positive relation. Gropp and Florian (2008) conducted research study regarding the determinants of the capital structure of banks by examining the capital structure of banks from the prospective of empirical capital structure literature for non-financial firms. The sample of the study includes 200 largest listed banks (100 from US and 100 from EU) from the sixteen different countries (US and 15 EU members) from 1991 to 2004. The results suggest that the capital requirements may only be of second importance for banks capital structures and confirm the robustness of corporate finance findings in a holdout sample of banks. In order to examine the capital structure across countries a study was carried by Rajan and Luigi (1994). The primary objective of the study was to establish whether the choice of capital structure in other countries is based on the factors similar to those influencing capital structure of US firms. Study was on the 8000 non-financial corporations of G-7 countries (USA, Germany, Japan, France, UK, Italy and Canada) for the period of 1987-1991. After correcting the differences ranging from accounting practices to legal and institutional environments between the countries. results of the study showed extent to which firms are levered is fairly similar across the G-7 countries except UK and Germany being relatively less levered. Sakuragawa (2001) conducted another study regarding the capital structure of banks under non-diversifiable risk. The purpose of the research was to study the design of optimal capital structure of a large financial corporation when it faces a non-diversifiable risk. When there is a non-diversifiable risk the intermediary finds it profitable to issue equity because by issuing equity it can reduce the cost and the probability of banks failure. The intermediary designs the optimal capital structure by balancing the marginal benefit of reducing probability of banks failure against the marginal cost of debt-equity swap. Results showed that a large corporation under weaker conditions realizes more efficient allocation by issuing both debt and equity than by issuing only debt. An African study was conducted by cole-man (2007) whose aim was to examine the impact of capital structure on the performance of microfinance institutions. Panel data covering the ten-year period 1995-2004 were analyzed within the framework of fixed- and random-effects techniques. Results showed that the most of the microfinance institutions employ high leverage and finance their operations with long-term as against short-term debt. Results also revealed that the highly leveraged microfinance institutions perform better by reaching out to more clientele, enjoy scale economies, and therefore are better able to deal with moral hazard and adverse selection, enhancing their ability to deal with risk. Fernandez (2003) analyzed the driving forces of capital structure in Chile for the period 1990-2002. The purpose of the research was to study aggregate leverage and interest-bearing liabilities in isolation for all firms, and firms segmented by economic sector. Their sample of the study consisted of 64 firms having the complete information for the whole sample period of 1990-2002. Results while supporting the trade-off theory revealed that the firms favored equity over debt issues to cover their financing deficit because of the Chiles tax and monetary policies. In order to find out the determinants of very small firms financial leverage Barbosa and Cristiana (2003) carried a research. They described the relationship between profitability and financial leverage as: As far as profitability is concerned, the most common expectation in the financial structure literature is for a negative relationship with financial leverage. Toy and others (1974 p.877), Marsh (1982 p.126 footnote 22), Friend and Lang (1988 p.277), Titman and Wessels (1988 p.6) and Barton and others (1989 p.40) all say that in different words. According to them, a firm with a high profit rate, ceteris paribus, would maintain a relatively lower debt ratio because of its ability to finance itself from internally generated funds. The preference for raising capital first from retained earnings may be due, according to Titman and Wessels (1988 p.6), to the costs of issuing new equity or debt that arise because of asymmetric information or transaction costs. Marsh (1982 p.126 footnote 22) raises the possibility that the impact may be due to the tendency of firms to issue new equity immediately after periods of abnormally good performance. Hall and Weiss (1967 p.328) assert that relativel y profitable firms take some of their exceptional returns in the form of reduced risk, through retaining earnings, and, therefore, show lower debt to assets ratios. Rajan and Zingales (1995 p.1451) cite Jensen (1986) who predicts that, if the market for corporate control is ineffective, managers of profitable firms prefer to avoid the disciplinary role of debt. This preference would lead to a negative correlation between profitability and debt. Gupta (1969 p.522) speaks of a theory that extends the first belief above mentioned from the firm level to the industry level. Accordingly, profitable industries, because of the greater availability of internally generated funds related to their high profitability; tend to have lower debt in their financial structure. Last, Gale (1972 p.417-8) interprets leverage as representing the degree of risk or otherwise in the industries in which the firm competes and hypothesizes that leverage should then be negatively related to profitability. This a uthor himself acknowledges that his reasoning is somewhat at odds with previous discussions and theory, though. According to him, low debt to total capital ratios would reflect high industry risk because of two aspects. First, the corresponding capital structures would be the result of higher investment on the part of entrepreneurs, who, differently from lenders, place a lower value on security relative to rewards. Second, high-risk industries are, at least theoretically, associated with higher profitability. Barbosa and Cristiana (2003) Results of their research concluded that the growth, entrepreneurs risk tolerance, size and operational cycle were positively correlated with the financial leverage whereas asset composition, inflation, profitability and business risk are negatively correlated with financial leverage of very small firms. Chapter-3 Methodology In this section, we have explained the source of data, sample size, explanation and measurement of the variables, and the regression model. 3.1 Source of Data In this study financial data of firms listed on the Karachi Stock Exchange under Fuel and Energy sector of Pakistan is taken from the State Bank of Pakistan Publications Balance Sheet Analysis of Joint Stock Companies Listed on the Karachi Stock Exchange 2003-2008. 3.2 Sample size This study is carried on the Fuel and Energy sector of Pakistan. There are 27 firms of that sector which are listed on the Karachi Stock Exchange. But after screening the firms with incomplete data, we have selected 22 firms having complete data for six years from 2003-2008 as our study covers the period from 2003-2008. So we have 132 firm years for the panel data analysis. 3.3 Explanation and Measurement of the variables Basically our study follows the framework of Shah and Tahir (2005). We include only two variables in our study. First variable is leverage (dependent variable) and another is profitability (Independent variable). In this section we describe these two variables and explain how they are measured. 3.3.1 Leverage (Dependent variable) Leverage is explained as percentage of assets financed by debts. Different researchers have measured leverage differently. Frank and Goyal (2003) differentiated between two debt ratios, one based on market value while the other on book value. Debt ratio based on market value relates with the firms future situation whereas on the other hand debt ratio based on book value tends to reflect the past situation. While in our study measuring leverage through book value, we have mainly two reasons in our mind. First, one of the main benefits of debt is tax shield that is the interest payments are tax deductible expense, resulting in cash savings. Once the debt is issued these tax shield advantages do not vary by the market value of the debt. Second point in our mind while measuring leverage through book value is the relationship of debt with bankruptcy risk. The probability of bankruptcy increases with the increase in the debt. Moreover, in case of bankruptcy of a firm, the value of the debt through the book value of the debt is more relevant than the market value of debt. While measuring the financial leverage we faced a problem of choosing either total debt or only long term debt as percentage of total assets. Interestingly many capital structure theories favor long term debt but we have used total debt because the average firm size in Pakistan is small which limits their access to capital market because of technical difficulties and cost involved. So the firms in Pakistan prefer short term borrowing because of the fact that the major lenders in Pakistan are commercial banks and they discourage long term borrowing. Firms in Pakistan did not rely on the market based debt upto 1994, but in the mid of 1994 Government while amending Company Law, allowed firms to raise debt directly in the form of TFCs (Term Finance Certificates) from the market. Thus in our study we have measured the leverage through total debt to total asset ratio. 3.3.2 Profitability (Independent Variable) Profitability has been the main point of distinction between the Static Trade-off Theory and the Pecking Order Theory. Static Trade-off Theory explains that the firm with higher profitability has more reasons to issue more debt while taking tax shield benefit. While on the other hand, Pecking Order Theory presupposes that firms with larger earnings tend to use its internally generated funds i.e. retained earnings initially to fulfill their financial needs then they go for debt. Thus, Static Trade-off Theory expects a positive and direct relationship between profitability and leverage of a firm while Pecking Order Theory suggests negative relationship between the two above said variables. We have measured the profitability as the ratio of Net Income before Tax divided by the total assets. 3.4 Research hypothesis This research study supports the Pecking Order Theory hypothesis and our proposed research hypothesis is There is significant negative relationship between profitability and leverage of a firm. Ho: There is significant negative relationship between profitability and leverage of a firm 3.5 Regression Model Linear Regression analysis has been used in this study. Basically we have used pooled regression type of panel data analysis. By saying this we mean that the companys financial data and time series data are pooled together in a column. The equation for our regression model will be LG= ÃŽ ²0 + ÃŽ ²1 (PF) + ÃŽ µ. Where LG= Leverage ÃŽ ²0= Constant PF= Profitability ÃŽ µ= Error term Chapter 4 Results of the test and interpretation. This chapter contains the results of the descriptive statistics and linear regression test. There are 27 firms in Energy and fuel sector which are listed on the Karachi Stock Exchange. But after screening the firms with incomplete data, we have selected 22 firms having complete data for the six years from 2003-2008 as our study covers that specified period. So we have 132 firm years for the panel data analysis. 4.1 Data Consideration: For data consideration to be suitable for linear regression we graph the P-P plot of dependent and independent variable in order to check that the data is normally distributed. The P-P plots of profitability and leverage are as follows. Above Normal P-P Plot of Independent variable (Profitability) shows that the variable follows a normal distribution. On the other hand dependent variable (leverage) is also said to be fairly normally distributed. In order to show the linear regression model is appropriate for the data or not we graph a scatter plot between profitability and leverage which is as follows: Scatter plot shows that whether linear regression model is appropriate for the data or not. However above scatter plot appears to be suitable for linear regression. 4.2 Results of the test: After running the linear regression test on SPSS we have the following results. Table-1 Descriptive Statistics Total No: Minimum Maximum Mean Standard Deviation Profitability (PF) 132 -0.22 0.43 0.0515 0.12441 Leverage (LV) 132 .00 1.27 0.5588 0.27425 Valid No: (list wise) 132 Table-1 contains the descriptive

Hawthorne Essays -- essays research papers

Nathaniel Hawthorne is considered to be one of the most substantial writers of his time. His most famous novel, The Scarlet Letter truly originated Hawthorn’s version of romantic writing. It was this novel that also originated Hawthorne’s fame. Most of his works deal with or have some relation to Puritan times. The reason for the familiarity in his works is due to the fact that it seems to be influenced by his own Puritan ancestry. It was not until late in Hawthorne’s life that he received recognition. To do this Hawthorne had to change his name and found his own stlye of writing that pertained to his life experiances. His romantic style might have been too modern for the times, but eventually he was understood.   Ã‚  Ã‚  Ã‚  Ã‚  Hawthorne was known for his ability to create such a compelling story in just a few pages. Within these few pages, flows an elaborate and complex story. These stories flow so steadily and with such complexity that Hawthorne seems to create his own romantic style. He does this by incooperateing many different situations that keep the reader intuned to the story.   Ã‚  Ã‚  Ã‚  Ã‚  In many of his short stories there seems to be a character that is infatuated with a person or an object. The reason for Hawthorne creating stories like this could stem from his own experience with infactuation. Hawthorne was a very lonley person. He lived by himself for a long time until he married later in life. In t...

College - Is it Worth it? :: Argumentative Persuasive Essays

College - Is it Worth it? Right now in our society a college education is no longer an option or privilege, but rather a necessity. We are practically raised and conditioned to believe that one needs higher education in order to succeed in life. There is a saying that says "if you think education is expensive, try ignorance." But as technology is constantly advancing and computers are running almost anything, is a college education really necessary? There are people whom have never set foot in a college and are doing better than people who have their master's degree. There are views from both sides that contain a valid argument. The main reason why people go to college is not because they want to but because they have to. Most high school seniors are pressured by their guidance counselors and parents to go to college because it is "the right thing to do." In the essay that Caroline Bird wrote "College is a Waste of Time and Money", she states that students go to college because " . . . Mother wanted them to go, or some other reason entirely irrelevant to the course of studies for which college is supposedly organized." (481) The student may have different ideas about what he or she wants to do in life, but because they think that these "mentors" know what is best for them, they probably end up doing something they do not want to do, resulting in being miserable and resentful. Let's face it, going to college is socially prestigious. Most people go to college only for the title of being called a college student. " For some young people, it is a graceful way to get away from home and become independent without losing the financial support of their parents." (Bird 484) They do not want to be looked down upon so they do what would look best in the eyes of society. It is practically beat into our heads that in order to be a productive citizen of society, you should have some sort of college education. Being a college student is perhaps a more respectable role than being, for example, a janitor or a garbage man because of the negative connotations such jobs receive.