Harriet Beecher Stowe s Uncle Tom s Cabin - 1015 Words

Mrs. Shelby and Marie St. Clare in Uncle Tom’s Cabin Brandi N. Harris November 20, 2014 A Paper Presented to Meet Partial Requirements For HIS 2111 Dalton State College Introduction Harriet Beecher Stowe’s Uncle Tom’s Cabin was a novel written in times of unrest where slavery was a controversial topic and women s rights were still suffering. Uncle Tom’s Cabin showed the grim reality of slavery and showed the importance for women to gain a societal role beyond the domestic domain. The reading contains a number of major characters throughout the novel. The two most notable characters we will discuss is Mrs. Shelby and Marie St. Clare. Throughout this paper we will compare and contrast these two characters and give specific examples to illustrate the similarities and differences between these two unique individuals. The first character we will discuss is Emily Shelby who is the wife of Arthur Shelby who is a Kentucky Plantation owner and the owner of Uncle Tom. Mrs. Shelby is a kind, loving, and Christian woman who is strongly opposed to slavery and takes it upon herself to treat them with most respect. Mrs. Shelby from a spiritual standpoint cares about her slaves relationship with God and teaches his word to them. Mr. Shelby and Mrs. Shelby treat the slaves with kindness but differ significantly in regards to slavery. Unlike other women of this time period, Mrs. Shelby stands by her views and morals regardless if herShow MoreRelatedUncle Tom s Cabin By Harriet Beecher Stowe901 Words   |  4 PagesHarriet Beecher Stowe’s Uncle Tom’s Cabin was a story that described the real life plight of an American Slave. Kentucky farmer George Shelby amassed enormous debts and faces the possibility of losing everything he owns. To settle his debts he makes the decision to sell two of his slaves, Uncle Tom and Eliza’s son Harry. Eliza is a young, beautiful quadroon girl who George Shelby’s wife took on as a daughter. Eliza overhears a conversation between George Shelby and his wife concerning the impendingRead MoreUncle Tom s Cabin By Harriet Beecher Stowe Essay1351 Words   |  6 PagesIn Un cle Tom’s Cabin, Harriet Beecher Stowe uses the character of Augustine St. Clare to play a very important role in expressing her views of abolition to the reader throughout the novel. St. Clare is, in himself, a huge contradiction of a character, as his way of life is supported by the same system that he despises, slavery. St. Clare professes multiple times in the book that slavery is wrong, yet he holds slaves and refuses to release them, making him a hypocrite whose morals are right, mainlyRead MoreUncle Tom s Cabin By Harriet Beecher Stowe1295 Words   |  6 PagesUncle Tom’s Cabin, one of the best classic novels by Harriet Beecher Stowe takes place in Kentucky on Mr. Shelby’s land. In Uncle Tom’s Cabin, the author communicates to the reader the horrific actions and aftermaths of slavery. She does this by telling the story of slaves who were sold to unpleasant masters, showing slavery rips apart families and loved ones, and by showing how children - both free and slave - are affected by slavery. In Uncle Tom’s Cabin a main point to take away from the bookRead MoreUncle Tom s Cabin By Harriet Beecher Stowe1008 Words   |  5 PagesIn the 1800’s,a horrible sin of slavery took America by storm. Africans were brought to the United States as slaves. They were sold like animals, separated from their families, and forced to work for wealthy white men. They underwent torture, famine, and verbal abuse, the sole reason for their mistreatment being their skin color. Movements were made, protests held, but what no one was expecting was a short white lady by the name of Harriet Beecher Stowe to make the change that no one had yet achievedRead MoreUncle Tom s Cabin By Harriet Beecher Stowe1522 Words   |  7 PagesLincoln is quoted as saying, â€Å"So you’re the little woman who wrote the book that started this great war.† upon meeting Harriet Beecher Stowe for the first time. The book that the former president is referring to is Uncle Tom’s Cabin, a 1850s book about the moral wrongs of slavery. It has been said to be the most influential anti-slavery book that has ever been written. Harriet Beecher Stowe is an effective author. She uses numerous literary devices such as facile characters, character foils, and symbolismRead MoreUncle Tom s Cabin By Harriet Beecher Stowe1357 Words   |  6 PagesUncle Tom’s cabin Uncle Tom s Cabin from the author Harriet Beecher Stowe, was first published in 1852 was a book that tackled the repulsive acts of slavery. In this paper I will discuss my overview and opinion on this book. It is clear if you have a general idea of this book you would know how to this novel ultimately inspired the civil war. As said by our 16th Abraham Lincoln when he met the author â€Å"so you’re the women who brought this Great War† Uncle Tom’s cabin has had a great influence onRead MoreUncle Tom s Cabin By Harriet Beecher Stowe975 Words   |  4 PagesThere are numerous likenesses and contrasts between the lives of the slaves from Uncle Tom s Cabin, composed by Harriet Beecher Stowe, and that of the wage slaves from Sinclair s The Jungle. Featured mutually in each books, was slavery. Along with that, both novels allocate the authors’ perspectives on the issue. In Sinclair’s book, he wrote about the lives of the wage slaves, how capitalism aff ected the wage slaves. Meanwhile, Stowe’s consisted more on a religious aspect, going in depth of howRead MoreUncle Tom s Cabin By Harriet Beecher Stowe1019 Words   |  5 PagesUncle Tom’s Cabin by Harriet Beecher Stowe is â€Å"one of the most famous books in the world† she is considered to be the woman that started the civil war. This book presents Anti-slavery ideas using Religion, Maternity and the idea of Gender Roles to promote the idea of Anti-Slavery. Throughout Uncle Tom’s Cabin there are â€Å"slave problems†,how slavery destroys and crumble families by splitting apart mother and child along with husband and wive.Stowe argues that these slavery brings out the femininityRead MoreUncle Tom s Cabin By Harriet Beecher Stowe1760 Words   |  8 PagesHarriet Beecher Stowe was born in June 14, 1811 in Lichfield, CT and was the sixth of her family’s eleven children. Beecher’s parents taught their children that their primary life goal was to make their mark. All seven sons became ministers, Isabella (the youngest) founded the National Women’s Suffrage Association, and Harriet revealed the horrifying truths and dissolved the social injustice of slavery. During her 85 years Beecher published thirty novels, but her bestselling book Uncle Tom’s CabinRead MoreUncle Tom s Cabin By Harriet Beecher Stowe Essay1090 Words   |  5 PagesUncle Tom’s Cabin was the most popular story in the mid to late 19th century. There are nearly thousands of copies of that novel sold. The author Harriet Beecher Stowe was an amazing author and abolitionist. The purpose of her writing Uncle Tom’s Cabin is to influence other people to abolish slavery. Uncle Tom’s Cabin was based on Religion and the abolition of slavery. Uncle Tom’s Cabin was epic story in the mid 1800’s because it represents the cruelty of slavery and religious beliefs. Stowe kind

Bullying At School Is A Big Problem - 1977 Words

Bullying Epidemic Bullying at school is a big problem that is found in all the schools in the United States and across the world. Since the late 1990s there have been several fatal school shootings committed by victims of bullying that have brought bullying major media attention. This has resulted in an increase of awareness about the harmful effects on the kids being bullied as well as the bullies themselves. This has brought a large amount of local, state, and nationwide programs designed to try to prevent bullying or to at least try to contain the problem. â€Å"In an effort to adequately address the problem, many schools are taking a proactive approach through prevention and intervention, but how do we know if and when such intervention is effective? First and foremost, we must have an accurate understanding of the dynamic and complex phenomenon of bullying across development and as it spans the multiple levels of the social ecology† (Casper, Meter, Card, 2015, par 2). Many psycholog ists, sociologists, and school administrators have been publishing research on school bullying. Bullying is a significant threat to many children because it causes psychological problems not only for those who get bullied but also those who do the bullying. Even though bullying is a significant problem the are few solutions that can help prevent or significantly reducing bullying like reporting bullying, know the characteristics, and passing laws. What is Bullying? What is the definitionShow MoreRelatedBullying Has Been A Big Problem In Our School System For1745 Words   |  7 PagesBullying has been a big problem in our school system for many years, but it has escalated over the past decade due to the new era of modern technology. Unanimously, we can agree that our daily lives greatly depend on technologies; the internet, cellphones, computers, tablets, IPad etc. Although the uses of technology positively impacted our lives, there is also the downside when it uses have negative connotations. For instance, modern technology made it very easy to engage in cyberbullying, perpetratorsRead MoreEssay on We Must Confront Bullying As a Nation722 Words   |  3 PagesAnyone who has been bullied knows that pretending as if the perpetrator does not exist is virtually impossible. In fact bullying is a serious matter that we as a society must confront and strive to abolish. Since bullying can occur in a variety of ways, one must first understand its nuan ces to recognize that bullying is taking place and then realize the gravity of bullying. Bullying affects an entire community of kids. A single student who bullies can have a wide-ranging impact on the students, notRead MoreBullying Essay1509 Words   |  7 PagesBullying comes in many different forms and can happen to anybody. It may start off as a game or as an annoying comment, and as time goes by it starts to escalate. Everyone knows what it feels like and no one particularly likes the feeling. Bullying happens to take place more at school, and for someone who may not fit in it can be a living nightmare. The head of the school needs to make and enforce stronger rules into fixing this problem. It causes the person who is bullied to have a low self-esteemRead MoreThe Effects Of Bullying On Everyone s Bullying1220 Words   |  5 Pages2016 The Effects of Bullying on Everyone Bullying and in its many various ways effects everyone in a lot of ways. A lot of the people are being humiliated and hurt. Victims of bullying commit suicide because people that are being bullied think bullying will not stop. Bullying is a big problem in many countries, it is a problem that everyone can experience at anytime and anywhere. Bullying can be the number one problem everyone experiences in daily basis. Bullies think that bullying is fun. Bullies areRead MoreBullying . In Life There Is No Perfect Picture For A Non-Violent1379 Words   |  6 Pages Bullying In life there is no perfect picture for a non-violent world, but then we turn to school, work forces and sadly enough, we as a community reach the point of having to find ways to prevent bullying. Bullying as we see is as a whole can create a foundation that certain people don’t want to particularly be involved with, such as school environments, workforces or even a neighborhood. This is a worldwide incident that is going on and people are getting hurt emotionally, physically and evenRead MoreBullying Should Be Addressed For The Proper Development Of Children1347 Words   |  6 PagesBullying is a very strong word to all the people around the world but some time people may not know if they are bullying other people. Bullying to all of us means something different. This is why I consider it very hard to judge and punish bullying as definitely what is bullying? Is bullying when you just fight with a kid or simply insult him and he insults you back, is it when you tease him for something he does, or is it when you take things from him without his permission is that bullying? StudiesRead MoreTeens as Victims of Cyberbullying1482 Words   |  6 Pagesof cyber bullies,† Richard Webster from the â€Å"Cyber bullying is when a person or a group is trying to embarrass and harm or intimidate those who are weaker than them†. â€Å"Cyber bullying to texting: What’s on your kids ‘Cell?† What is cyber bullying? The Stop bullying Organization explains what the meaning of cyber bullying is. Cyber bullies are able to use cells phones and the internet to make it very easy bully other people. Lawmakers and Schools should take more action towards people who are beingRead MoreCyberbullying, An Online Harassment Of Children By Others1581 Words   |  7 Pagescyberbullying that can be understood. Most cyberbullying instances happen at home and is often brought to the school campus. School systems are left unsure of how to response to the bul lying while balancing legal and ethnic responsibilities. Students across the nation are being bullied online and are bringing to school the residual effects of these personal attacks The issues include traditional bullying, teen social media use and cyberbullying. The issue of cyberbullying cannot truly be addressed unlessRead MoreCell Phones Persuasive Essay813 Words   |  4 Pagesphones in school is occurring more and more. Do students deserve to have their cell phones for use during instruction time or school hours? Research states that cell phones are no benefit to students in school. Others claim to state that cell phones are in fact, beneficial to students and will not damage the learning environment for students. These arguments have been more plentiful in schools all over the country. Some schools have decided and ruled out cell phones, but other schools are still tiedRead MoreHigh School Cliques896 Words   |  4 PagesCliques in Schools High school has always been a tough time for most teenagers. It is a time when classes are harder, schedules are tighter and most students are twice as mean. High school â€Å"marks a time of extensive and sometimes rapid growth for adolescents† (Clique Formation). A step up from junior high, â€Å"the unfamiliar environment subjects students to vast array of new experiences, problems and decisions† (Clique Formation). Most teenagers experience problems once they hit high school like peer

Why Did the Us Introduce Marshall Aid Free Essays

Why did the US introduce Marshall Aid? The main reason why the US introduced Marshall Aid was to prevent the spread of Communism. In 1946 almost the whole of Eastern Europe was Communist, this was due to the actions of Stalin, he wanted to build up a line of countries around Russia and use them as a â€Å"buffer zone† to protect the USSR from being attacked. Britain had troops in Greece and was fighting a Civil War against the Communists in fear that it too would fall under Stalin’s Communist rule. We will write a custom essay sample on Why Did the Us Introduce Marshall Aid or any similar topic only for you Order Now The USA stepped in when the British announced that they could no longer afford to keep their troops in Greece, Truman feared that the whole of Eastern Europe would become Communist (the idea of Communism was very popular in times of hardship, the communists believed that the wealth of the richest people should be shared out among the poor) so he agreed to pay for military supplies, weapons, economic aid and British troops to be sent to Greece and Turkey. The USA’s aid soon became known as The Truman Doctrine. This was the idea that communism should not be allowed to grow and gain territory, and that it was America’s ‘duty’ to fight for liberty. It was agreed that they would send resources to any Government that was threatened by communism. The Truman Doctrine was significant as it divided the world, showing that Capitalism and Communism were in opposition, which suggested that the East and the West could no longer co-operate. This emphasised the many difference between them. The Marshall Plan started the Truman Doctrine in June 1947, when it was announced that $17 billion should be given to Europe to help rebuild their inefficient economy and prevent the spread of communism. For the USA, Marshall Aid was introduced to make the idea of Capitalism appear more appealing, it was also introduced to try and prevent communism spreading. This now highlights how terrified they were of Communism and to what extent they would go to prevent it influencing the whole of Europe. For the countries in Europe that received aid through the Marshall Plan it was seen as a way of rebuilding their economies and preventing communism in their own country. How to cite Why Did the Us Introduce Marshall Aid, Papers

Eco-Products, Inc. free essay sample

Margins were low and salaries were small. Friends and family supplied funds for business operations. This early history was suggestive of a life-style business. B. Discuss Eco-Products’ revenue growth-based â€Å"business model† that evolved over the 2004 through early 2008 period in terms of (a) production versus distribution, (b) product line development, (c) branding, etc. The company remained a local marketer of green janitorial paper and building supplies until 2004 when the company was set on a new course with both business supply and building supply divisions. The management team was expanded and sales in the business supply division grew rapidly as a result of a focus on brand and Internet strategies. a) In 2004-05 Eco-Products remained primarily a distributor of eco-friendly products such as biodegradable disposable drinking cups, etc. that were purchased from a variety of manufacturers. As the business focus shifted from retail sales to wholesale distribution, pressure increased to produce their own brand of eco-friendly products. Product suppliers were selected in China and Taiwan. ) Steve Savage emphasized the development of a signature Eco-Products line from a Polylactide (PLA) resin from renewable resources such as corn and sugarcane. This allowed the firm to offer a full, uniquely designed line of environmentally friendly products. However, lead times were long since orders from the Asian original equipment manufacturers took from 7 to 12 weeks to be filed. c) As wholesale distribution grew, existing product manufacturers restricted Eco-Products’ ability to sell many products in the wholesale marketplace. After identifying Asian manufacturers, the â€Å"Eco-Products† branded line of compostable cups and food containers hit the market in March, 2007. C. What is the size of the domestic and global markets for foodservice disposable packaging? Who are the major competitors producing/selling environmentally-friendly food service products. What intellectual property or competitive advantages does Eco-Products, Inc. possess? The global food service disposable industry produces an estimated $30 billion in sales annually. Biodegradable products represented the fastest growing segment of the industry and had sales estimated to exceed $700 million in 2008. Eco-Products previously carried the Fabri-Kal, International Paper, and Georgia Pacific paper product lines. These firms became direct competitors when Econ-Products decided to produce its own eco-friendly products line. It is difficult to produce intellectual property or competitive advantages in an industry where product production technology is reasonable simple and where there are several major competitors. In fact, the firm had a net loss in 2007 due in large part to the nearly $200,000 (actually $186,726) in interest expense associated with the obtaining of a line of credit which was $2,843,242 at the end of December, 2007. As sales â€Å"ramp up† in the future, it is important to â€Å"spread† the â€Å"fixed† and â€Å"semi-fixed† operating expenses in order to improve the operating profit margin and the firm’s value. E. Exhibit 4 presents Eco-Products’ Statement of Cash Flows for 2007. Was the firm building or burning cash in its operating activities? When also considering cash flows from investing activities, was Eco Products in a net cash build or burn position in 2007? In Chapters 4 and 6 we discussed the preparation of the Statement of Cash Flows. We use the indirect method which begins with an accounting period’s (usually one year) net income (or loss) and adds back non-cash deductions (depreciation and amortization). We then adjust these income statement amounts by changes (between last year and this year) in non-interest bearing working capital accounts shown on the balance sheet to get net cash flow from operations. We also calculate cash flows from investing activities and cash flows from financing activities. In actual practice, accountants use the direct method for preparing the statement of cash flows which aggregates all individual transactions made throughout the year that impact accounting cash flows. Thus, because of the lack of detail, the indirect method for preparing the statement of cash flows is sometimes difficult to exactly reconcile with the more detailed results provided from the direct method. Also, as noted in the prior question, only the 2007 balance sheet was audited. Other financial statements were only â€Å"reviewed by a CPA firm. This makes it more difficult to separately prepare (using the indirect method) a statement of cash flows for Eco-Products for 2007. While many of the changes in balance sheet accounts between 2006 and 2007 match with the amounts presented in the consolidated statements of cash flow in Exhibit 4, others do not. Thus, for this question we suggest that students concentrate on Exhibit 4 to determine the extent to which Eco-Products was building or burning cash in 2007. In Chapter 4 we presented a short method for determining whether a firm had been building or burning cash. The short method sums the net cash used in operating activities and the net cash used in investing activities. 2007 Cash Build/Burn = net cash used in operating activities + net cash used in investing activities = -2,891,887 + -356,745 = -3,248,632 Thus Eco-Products had a cash burn of over $3 million in 2007. A more detailed method for estimating cash build or burn was provided in Chapter 5. Cash Build = Net Sales – Increase in Receivables = 10,867,104 – 965,683 = 9,901,421 Cash Burn = Income Statement-Based Operating, Interest, and Tax Expenses + Increase in Inventories (Changes in Payables and Accrued Liabilities) + Capital Expenditures Note: there may be deferred income taxes as well as changes in other less common current asset and current liability accounts (as shown in Exhibit 4) that must be accounted for in determining net cash used in operating activities. These include prepaid expenses and other assets, income tax receivable, deposits, other current liabilities, deferred lease liability, and deferred revenue and are considered below. Cash Burn = 10,786,740 [i. e. , 7,726,455 + 1,822,206 +1,102,437 + 187,918 (interest other expenses) + -23,276 29,000 (deferred income tax)] + 1,553,188 + 664,003 (i. e. , 589,743 + 64,260 + 10,000) 84,156 (44,800 + 39,356) 126,467 (i. e. , 3,966 + 16,913 + 105,588) + 356,745 = 13,150,053 Net Cash Burn = Cash Burn – Cash Build = 13,150,053 – 9,901,421 = 3,248,632 F. Describe the early rounds of financing that occurred from Eco-Products’ inception in 1990 through 2006. Beginning in 2007, the need for external financing began increasing. Describe the sources, amounts, and types of financing obtained during 2007and the early part of 2008. Exhibit 5 in the case summarizes previous rounds of financing. Eco-Products was started with $8,000 in seed money in 1990. Additional equity investments from the founders, family, friends, and employees for purchase of inventory and to support the building supply division occurred in 1995, 1999, and 2003. As sales began increasing rapidly in 2007, there was a need to finance more working capital, particularly inventory. In 2007, $220,000 was raised from 14 investors which included friends, family, and angels. An additional $2. million was raised from 30 angel investors in late 2007 and during the spring of 2008 through a private placement memorandum. Excerpts from the memorandum are shown in Appendix A. G. In mid-2007, Eco-Products’ management prepared a five-year (2007-2011) projection of revenues and expenses (see Exhibit 1). What annual rates of growth were projected for ne t sales? Make a â€Å"back-of-the-envelope† estimate of the amounts of additional assets needed to support the sales forecasts. How might these assets be financed? Prepare a â€Å"rough† estimate of the possible size of external financing needed to support these sales projections. First, let’s review recent actual sales growth rates: YearSales/RevenuesPercent Increase 2005 $3,649,799 2006 $5,751,78757. 6% 2007$10,867,10488. 9% Financial Projections (made in mid-2007) in Thousands of Dollars: Change YearSales/Revenuesin Sales Percent Increase 2007 $9,200 2008 22,000$12,800139. 1% 2009 38,000 16,000 72. 7 2010 55,000 17,000 44. 7 2011 78,000 23,000 41. 8 Actual revenues for 2006 were 5,751,787 or in Thousands of Dollars rounded to 5,752. The five-year compound rate of growth between 2006 actual revenues and projected 2011 revenues of 78,000 is: PV = -5752 FV = 78,000 N = 5 I%Yr = 68. 44% It is also worth noting that actual sales or revenues for 2007 of $10,867,104 substantially exceeded the mid-2007 forecast of $9. 2 million. Over the 2005-2007 period, Eco-Products changed from being primarily a retail distributor of eco-friendly paper and plastic products produced by other manufacturers to a wholesale distributor of its own â€Å"branded† eco-friendly products. If we assume that the sales to assets relationship that existed at the end of 2007 would hold going forward, we have: 2007 Sales to Total Assets = 10,867,104/5,647,015 = 1. 24 times And, 2007 Total Assets/Sales = 5,647,015/10,867,104/= . 5196 = 52. 0% Thus, it will take approximately a $. 52 investment in assets to support each $1. 00 increase in sales. Using the actual 2007 revenues, we have the following estimates for the change in both sales and assets: ChangeAssets/Change YearSales/Revenuesin Sale x Sales = in Assets 2007 (actual)$10,867 2008 22,000$11,133. 52$5,789 2009 38,000 16,000. 52 8,320 2010 55,000 17,000. 52 8,840 2011 78,000 23,000. 52 11,960 Total = $67,133 Total = $34,909 Based, on these estimates, Eco-Products will need to acquire nearly $6 million in assets in 2008 and nearly $35 million over the 2008-2011 period. Recently 2008 sales forecasts have been revised to 45 million which would more than double the amount of assets needed for 2008. Additional assets can be financed in part through the generation of net profits or income and the retention of those profits in the business. Some spontaneous financing will also occur through an expected increase in accounts payable and accrued liabilities. Any remaining asset financing needs will need to be met through the raising of external debt and equity funds. In Chapter 6, we introduced the a basic additional funds needed (AFN) equation which can provide a quick â€Å"back-of-the-envelope† estimate of future external financing needs. AFN = (Total Assets/Sales)(Change in Sales) – (Accounts Payable + Accrued Liabilities)/(Change in Sales) – (Next Year’s Sales)(Net Income/Net Sales)(Retention Rate) 2007 Total Assets/Sales = 5,647,015/10,867,104 = . 5196 = . 520 (rounded) 2007 (Accounts Payables Accrued Expenses)/Sales = 568,131/10,867,104 = . 052 2007 Net Income/Sales = -36,199/10,867,104 = -. 003 Note: Eco-Products must return to profitability in order to finance its sales growth and to add to firm value. Exhibit 1 projects an EBITDA/Sales margin of 8. 5%. A net profit margin of 4. 25% (8. 5% x . 50) might be achievable and is used here for illustrative purposes. A 100% retention rate also is assumed. Two AFN estimates are prepared for 2008: 1) 2008 sales estimate (in $ Thousands) made in mid-2007 = $22,000; with a change of $11,133 ($22,000 $10,867) 2) 2008 sales estimate (in $ Thousands) made in early-2008 = $45,000; with a change of $34,133 ($45,000 $10,867) 1) 2008 AFN for Sales of $22,000 = . 20(11,133) . 052(11,133) – 22,000(. 0425)(1. 00) = 5,789 – 579 – 935 = 4,275 2) 2008 AFN for Sales of $45,000 = . 520(34,133) . 052(34,133) – 45,000(. 0425)(1. 00) = 17,749 – 1,775 – 1,913 = 14,061 The 2008 AFN ranges from $4. 275 million for $22 million in sales to $14. 061 million for $45 million in sales or revenues. The large AFN est imates are due in large part to working capital needs primarily in the form of higher accounts receivable and inventory. The amount of funds tied up in inventory is problematic due to supply chain lead times and supplier terms (see Figure 2). Furthermore, relatively little supplier financing is provided and the business does not generate large profit margins. As a result, Eco-Products will likely need to improve its supply chain model. Note: Actual 2008 operating results are presented in the Epilogue (What Happened) at the end of this teaching note: 2008 Actual Sales/Revenue: $34. 378 million (well below the early 2008 estimate of $45 million due to a slowing economy, greater competition, and supply chain issues) 2008 Net Income: $1. 338 million (resulting in a 3. % net profit margin) 2008 Year-end Inventory: $12,223 million (excess inventory was produced in anticipation of higher sales which did not materialize) H. Eco-Products’ management developed a Confidential Private Placement Memorandum (PPM) dated October 16, 2007 in an attempt to raise $3,500,000. Appendix A contains excerpts from the PPM. 1. What is meant by a Regulation D offering? What is an accredited investor and how many investors can participate in the PPM? [You may wish to review materials from Chapter 8 and its appendices when answering these PPM-related questions. Regulation D (or Reg D) is a registration that offers a safe harbor from registration of securities with the SEC. Due to uncertainty about what constitutes a nonpublic offering, the SEC provided some â€Å"safe-harbor† conditions that will result in guaranteed exemption as a private placement. An â€Å"accredited investor† was first defined under the Securities Act of 1933 and Section 4(6) provided that there is no limit to the number of accredited investors so long as the offering amount does not exceed $5 million. The definition of an â€Å"accredited investor† was expanded to include eight categories of accredited investors under Rule 501 of Regulation D (see Chapter 8, Appendix B). Banks, private business development companies, and other specified organizations are considered to be accredited investors. Directors, executive officers, or general partners of the issuer of the securities being offered or sold are considered to be accredited investors. A natural person with individual net worth (or joint net worth with that person’s spouse) exceeding $1,000,000 is deemed an accredited investors. Also, a natural person who had individual income in excess of $200,000 in each of the two most recent years (or $300,000 of joint income with one’s spouse) and who has a reasonable expectation of the same income level in the current year also is considered to be an accredited investor. There is no limit as to the number of investors (accredited or unaccredited) under Reg D: Rule 504 which has an offering limit of $1 million. Under Reg D: Rule 505 (offering limit of $5 million) and Reg D: Rule 506 (no offering limit) there may be a maximum of 35 unaccredited investors but no limit on the number of accredited investors. . Considering the planned use of proceeds, discuss the pros and cons of trying to raise $3,500,000 in increments as small as $50,000 each. A $3. 5 million private placement memorandum fall under Reg D: Rule 505 which has a $5 million offering limit in a 12-month period. While there is no limit on the number of accredited investors, there is a limit of 35 unaccred ited investors. At the extreme, raising $3. 5 million all in minimum $50 thousand amounts would require 70 different investors. At this minimum amount, only $1. 5 million could be generated from the maximum 35 unaccredited investors (i. e. , 35 x $50 thousand). Raising funds in small amounts requires more time, effort, and cost. Since there is a need to quickly build up working capital, particularly inventory, raising funds in relatively small amounts over an extended period of time could impede the firm’s ability to grow its sales. 3. Summarize the risk factors listed by management in the Private Placement Memorandum. Which factors do you believe are the most crucial in determining the future success of Eco-Products? Appendix A provides excerpts for Eco-Products 2007 Private Placement Memorandum. Risk factors include: a) Need for new product development b) Being subject to patent infringement laws c) Reliance on importing products from overseas suppliers d) Competition will continue to increase e) Supply could be constrained by raw material availability f) Subject to federal and state, as well as foreign, regulations g) Subject to product liability claims h) Need to hire and retain skilled personnel i) Need to successfully manage growth ) Impact by general economic conditions k) Restrictions on the transferability of, and no pubic market, for firm’s stock l) Determination of offering price was arbitrarily determined by current owners m) No expectation to pay dividends in foreseeable future Supply chain-related risks (availability to obtain raw materials and reliance on importing products from overseas suppliers), the need for new product development, and increasing competition clearly will be important if Eco-Products is able to achieve profitable sales growth and added to firm value in the future. Of course, the ability to avoid/manage the other risk factors listed by management also will have a major impact on the firm’s future success. I. Identify and discuss the factors and developments that led to the previously unexpected revenue growth during the first-half of 2008 by Eco-Products. Is such growth likely to be sustainable in the near future? What possible developments might interrupt or change this rapid rate of sales growth? In mid-2007, management forecasted full-year 2007 sales to be $9. 2 million with a sales forecast of $22 million for 2008 (refer to Exhibit 1). Then, the â€Å"perfect storm† hit. Oil prices spiked to new heights and general awareness of environmental issues intensified. Orders for products made from renewable resources skyrocketed and Eco-Products experienced large and sudden increases in sales. In early 2008, forecasted 2008 full-year sales were increased to $45 million. The ability to meet and maintain such growth targets would depend on consumer demand for eco-friendly products, the ability to fulfill orders given the firm’s long inventory cycle, how competitors (particularly some very large firms) will react, and overall economic conditions. Actual 2008 sales were a little under $35 million (see the Epilogue, What Happened, at the end of this teaching note). This over $10 million short-fall in sales from the early 2008 forecast of $45 million was associated with a decline in economic activity (recession), increased competition, and a supply chain problem that made it difficult to first avoid stocking out of inventory and then accumulating excess inventory. By the end of 2008, inventory had increased to more than $12 million compared to $2. 4 million at the end of 2007. J. Explain Eco-Products’ supply chain model that existed in early 2008. Describe the strengths and weaknesses of such a model from an operations viewpoint. What are the implications of this supply chain model on Eco-Products working capital financing needs and its cash conversion cycle? The supply chain model used by Eco-Products resulted in a long inventory cycle (for a relatively simple production process). Raw materials were often purchased in the U. S. or from suppliers in other countries, shipped to manufacturers in Asia, with the final products being shipped back for sale in the U. S. This long inventory cycle tied up cash and made it difficult to stock adequate inventory in some time periods, or produce excess inventory at other times. A long supply chain cycle involves larger asset financing requirements, particularly in the form of inventory. As shown below, both assets to sales and inventory to sales increased dramatically as the firm changed from a seller of products manufactured by other firms to a business model whereby Eco-Products became a manufacturer and wholesaler of eco-friendly products. 2005 Total Assets/Sales = 795,465/3,649,799 = . 179 = 21. 8% 2006 Total Assets/Sales = 2,103,478/5,751,787 = . 3657 = 36. 6% 2007 Total Assets/Sales = 5,647,015/10,867,104 = . 5196 = 52. 0% 2005 Inventory/Sales = 361,906/3,649,799 = . 0992 = 9. 2% 2006 Inventory/Sales = 862,728/5,751,787 = . 1499 = 15. 0% 2007 Inventory/Sales = 2,415,916/10,867,104 = . 2223 = 22. 2% Actual 2008 Results: 2008 Total Assets/Sales = 18,903,838/34,378,138 = . 5499 = 55. 0% 2008 Invento ry/Sales = 12,222,801/34,378,138 = . 3555 = 35. 6% Total assets to sales increased from 52. 0% for 2007 to 55. 0% in 2008. Of course, the primary reason for the need to finance more assets relative to sales was due to the increase in the inventory to sales ratio which increased from 22. 2% in 2007 to 35. 6% in 2008. The inability to efficiently manage inventory levels was due, at least in part, to the supply chain model being employed by Eco-Products. An examination of the Cash Conversion Cycle (CCC) also helps illustrate the working capital problem faced by Eco-Products. CCC Calculations: Inventory-to-Sale Conversion Period (Inv. CP): 2005 Inv. CP = 361,906/(2,584,326/365) = 361,906/7,080. 4 = 51. 1 days 2006 Inv. CP = 862,728/(3,684,492/365) = 862,728/10,094. 5 = 85. 5 days 2007 Inv. CP = 2,415,916/(7,726,455/365) = 2,415,916/21,168. 4 = 114. 1 days Sale-to-Cash Conversion Period (Rec. CP): 2005 Rec. CP = 101,690/(3,649,799/365) = 101,690/9,999. 5 = 10. 2 days 2006 Rec. CP = 862,728/(5,751,787/365) = 862,728/15,758. 3 = 54. 8 days 2007 Rec. CP = 1,330,562/(10,867,104/365) = 1,330,562/29,772. 9 = 44. 7 days Purchase-to-Payment Conversion Period (Pmt. CP): 2005 Pmt. CP = 123,429/(2,584,326/365) = 123,429/7,080. 4 = 17. 4 days 2006 Pmt. CP = 526,555/(3,684,492/365) = 526,555/10,094. 5 = 52. 2 days 2007 Pmt. CP = 568,131/(7,726,455/365) = 568,131/21,168. 4 = 26. 8 days Cash Conversion Cycle (CCC): 2005 CCC = 51. 1 days + 10. 2 days – 17. 4 days = 43. 9 days 2006 CCC = 85. 5 days + 54. 8 days – 52. 2 days = 88. 1 days 2007 CCC = 114. 1 days + 44. 7 days – 26. 8 days = 132. 0 days The dramatic increase in the cash conversion cycle from 43. 9 days in 2005 to 132. 0 days in 2007 reflects the change in the firm’ business model from a seller of products manufactured by other firms to a manufacturer/wholesaler of eco-friendly products, as well as the firm’s supply chain model which resulted in a long inventory conversion period which was 114. days in 2007. Dividing 365 days by 114. 1 days results in an inventory turnover of 3. 2 times per year. This is a very low turnover for products that require very short production times. For reference, the actual CCC calculations for 2008 were as follows: 2008 Inv. CP = 12,222,801/(26,041,166/365) = 12,222,801/71,345. 7 = 171. 3 days 2008 Rec. CP = 3,109,920/(34,378,138/365) = 3,109,920/94,186. 7 = 33. 0 days 2008 Pmt. CP = 3,804,210/(26,041,166/365) = 3,804,210/71,345. 7 = 53. 3 days 2008 CCC= 171. 3 days + 33. 0 days – 53. 3 days = 151. 0 days This further increase in the CCC meant that even more financing was required to support the actual 2008 sales. K. In mid-2008, Eco-Products management sought to quickly (hopefully) raise an additional $2 million in external financing through a single private equity investment. The term sheet prepared by Greenmont Capital is presented in Appendix B. 1. After considering a number of possible private equity investors, Greenmont Capital was selected by Eco-Products’ management. Discuss the pros and cons of selecting a small locally-based private equity firm relative to a larger private equity investor? Large private equity firms have large amounts of funds to invest and will have a portfolio of several projects being simultaneously financed. Large private equity firms also usually can move quickly in providing funds to specific ventures and are likely to have broad industry and managerial expertise to offer in support of the venture’s management team. However, given multiple investments, their working arrangements with a specific venture may be more impersonal. A small private equity firm will invest in fewer ventures and thus can devote more specific focus on understanding the business model of each of their venture investments. While a small private equity firm may have limited overall industry and managerial expertise, they will concentrate their investments in industries and firms they know and understand. However, small private equity firms likely will have smaller amounts to invest and may take longer to raise funds from their investors. As a result, ventures needing large amounts of immediate financial capital may be hindered if they try to work with a small private equity firm. 2. Review the investment terms presented in Appendix B and comment on any factors in the term sheet that might be â€Å"deal breakers. If you were representing Eco-Products top management, which terms might you want deleted or modified from the term sheet? Now, if you were representing Greenmont Capital, which terms would be important in protecting its investment capital? It might be helpful to first review Chapter 11, Figure 11. 6 which provides a list of â€Å"Typical Issues Addressed in a Term Sheet. ’ A term sheet should summarize the proposed principal terms with respect to a specific financing vehicle to be used to finance a venture. Included should be an identification of the issuer, the investor(s), the type of security being used, the price of the security being offered, and the amount of financing to be raised and an agreed to ownership position. In the proposed term sheet shown in Appendix B, Eco-Products is issuing Series A Convertible Preferred Stock (initially convertible on a 1:1 basis into shares of the company’s common stock) at a price of $1. 50 per share to Greenmont Capital Partners. A total of $2 million will be raised in exchange for a 7. % ownership position on a fully-diluted basis (including shares reserved for any employee option pool including additional warrants being offered to Greenmont). The proposed terms of the Series A Preferred Stock are spelled out in Appendix B and include: dividends, liquidation preference, conversion, automatic conversion, anti-dilution provisions, voting rights, board of directors, board meetings, protective provisions, information rights, registration rig hts, right of participation, purchase agreement, employee pool, stock vesting, restrictions on sales, co-sale agreement, and employment agreements. The term sheet also addresses â€Å"other matters† that include: confidentiality, indemnification, legal fees and expenses, and conditions precedent to financing. A possible â€Å"deal breaker† would be the number of warrants being offered to Greenmont Partners in the term sheet proposal. The July 18, 2008 term sheet proposal provides for Greenmont to receive 1. 5 million shares of Series A Convertible Preferred Stock initially convertible on a 1:1 basis into shares of Eco-Products common stock. The term sheet proposal also provides for a 25% warrant coverage (i. . , warrants to purchase additional Series A Preferred Shares at an exercise price of $1. 50 per share). This would amount to 333,333 warrants ($1. 5 million shares times . 25) which potentially dilutes Eco-Products equity ownership. Eco-Products likely would want the proposed â€Å"warrants† provision to be modified downwards or even deleted. Eco-Products also may want to modify downwards the proposed à ¢â‚¬Å"dividends† provision for the Series A Preferred Stock which provides for cumulative dividends of 8% of the original purchase price per annum. Greenmont Capital, in an effort to protect its investment capital, would want to maintain the warrants provision. Anti-dilution provisions also are very important since additional equity capital will be needed to finance Eco-Products growth and this capital is likely to come from other private equity investors. 3. Some analysts employ a relative value method that uses multiples from comparable firms to estimate the value of a target venture. Exhibit 9 contains enterprise value-to-sales information for a number of possible comparable firms for the purpose of valuing Eco-Products. Estimate the enterprise value of Eco-Products. What portion of equity ownership should Eco- Products be willing to give up for the $2 million Greenmont Capital investment? Although Eco-Products had been in business since 1990, its business model changed between 2005 and 2007. Eco-Products became a manufacturer and wholesaler of eco-friendly products at a time when oil prices were at record highs and concern about the environment reached new heights. Sales grew rapidly in 2007. However, the firm operated at a loss in 2007. Thus, by 2008 Eco-Products possessed characteristics of a high sales growth venture that needed to still find a way to produce bottom line profitability and ultimately free cash flows for the equity investors. When trying to value such a venture, analysts may differ widely as to what they believe are reasonable values. As discussed in the text, ventures may be valued using a discounted cash flow (DCF) method (see Chapters 9 and 13), a venture capitalist (VC) short-cut method (see Chapter 10), or a relative valuation method (see Chapter 14). Analysts often attempt to value a firm on the basis of its top line (sales), its rough cash flow (as reflected in EBITDA), and/or its bottom line (net income). Here we concentrate on examining the relative valuation data provided by Greenmont Capital Partners in Exhibit 9 which included financial information on 7 â€Å"possible† transactions. Five of the transactions occurred While some analysts might argue for including all available transactions, a case could be made for including the five transactions that occurred during 2007 and which may be more representative of the valuation multiples that prevailed in mid-2008. The Insulair acquisition was in July, 2006 and had an enterprise value to revenue multiple that was several times higher than any of the other transactions. The Newspring acquisition occurred in March, 2005 and thus was over three years prior to the current mid-2008 valuation date. The average enterprise value to revenue multiple for the Tendercare International, Waddington, Van Houtte, Matrix Packaging, and Prairie Packaging transactions was 1. 55 times. Unfortunately, no information was available for EBITDA (except for the dated Newspring transaction) or net income multiples. As noted in the case, sales estimates changed rapidly in the case. Eco-Products management in mid-2007 had forecasted 2008 sales to be $22 million. By early 2008, the 2008 sales estimates were revised upwards to $45 million. Trailing twelve months revenues for the twelve months ended in June, 2008 were $19. 7 million. Exhibit 8 shows quarterly revenues increasing rapidly over the past three quarters with revenues amounting to almost $13. 5 million for the first-half of 2008. Thus, to reach the $45 million in forecasted sales for all of 2008, the second-half of the year sales would need to be $31. 0 million. However, as Eco-Products entered the second-half of 2008, there was reason for some concern due to an inventory-related problem and the fact that consumer spending and overall economic activity were slowing considerably. A range of possible values for Eco-Products using an enterprise value to sales multiple of 1. 55 might be: Sales or Rev. xMultiple = Value 12-Month Trailing Sales $19. 7 million 1. 55 $30. 535 million Management’s Forecast$45. 0 million1. 55 $69. 750 million Actual 2008 Results$34. 4 million1. 55 $53. 20 million At the end of 2007, Eco-Products had a line of credit outstanding of $2,843,242, long-term debt (including the current portion) of $164,411, and long-term capital leases (including the current portion) of $215,530 for an interest-bearing debt plus capital leases total of $3,223,183 or approximately $3. 2 million rounded. Thus, the enterprise values shown above should be reduced by about $3. 2 million each. The equity value using trailing sales would be $27. 3 million while the equity value using management’s $45 million sales forecast would be about $66. 5 million. Furthermore, it was likely that even more interest-bearing debt was outstanding as of mid-2009. For example, the $4 million line-of-credit (of which $2. 8 million was outstanding at the end of 2007) was increased to $8 million on July 1. Larger interest-bearing debt obligations would have further reduced the equity value of the firm. Note: As can be seen from the actual 2008 results, the lines of credit at the end of 2008 amounted to slightly more than $8 million, long-term debt (including the current portion) was nearly $. 5 million, and long-term capital leases (including the current portion) was nearly $. 3 million. Thus, the total interest-bearing debt plus long-term capital leases amounted to approximately $8. 8 million. In the proposed term sheet (see Appendix B), Greenmont Partners valued Eco-Products equity at $29. 6 million as of mid-2008. This amount was about $2. 3 million more than the equity value of $27. 3 million (30. 5 million $3. 2 million) estimated based on 12-month trailing sales. Greenmont Partners’ post-money ownership (including shares reserved for the employee option pool but not the warrants to be issued to Greenmont) can be estimated as: $2,000,000/($29,587,500 + $2,000,000) = $2,000,000/$31,587,500 = 6. 3% Or, using pre-money and post-money shares the calculations would be: Pre-money shares (fully diluted to account for the employee option pool) = $29,587,500/$1. 50 = 19,725,000 shares Shares issued to Greenmont = $2,000,000/$1. 50 = 1,333,333 Post-money shares = 19,725,000 + 1,333,333 = 21,058,333 Greenmont Partners’ ownership = (1,333,333 shares)/(21,058, 333 shares) = 6. 33% Of course, the potential dilution impact of the 333,333 (1,333,333 x . 25) warrants to be issued to Greenmont also need to be taken into consideration in determining Greenmont’s ownership percentage on a fully diluted basis. Greenmont’s potential total shares = 1,333,333 + 333,333 = 1,666,666 Total post-money fully-diluted shares = 21,058,333 + 333,333 = 21,391,666 Greenmont’s ownership position on a fully-diluted basis = 1,666,666 shares/21,391,666 shares = . 0779 = 7. 8% rounded As noted in the following epilogue, Greenmont Partners negotiated a larger percentage ownership as Eco-Products struggled to meet its revenue targets due to inventory-related problems and the rapidly slowing economy during the last-half of 2008. According to the 2008 balance sheet, 1,366,666 shares of preferred stock were actually issued to Greenmont, instead of the previously negotiated 1,333,333 shares (an increase of 33,333 shares). Adding the 333,333 warrants resulted in Greenmont Partners having potential 1,699,999 fully-diluted shares. EPILOGUE: What Happened Finance deal. Steve Savage and Greenmont Capital Partners signed a $2 million Series A investment round on July 1, 2008. Greenmont’s valuation was not the highest of those Savage received, but it was close. Savage chose Greenmont over others because the valuation was fair and provided the intangible benefits of a strategic partnership, and the Greenmont team was beset with industry veterans. Greenmont’s terms sheet contained what Savage considered were standard provisions and covenants and negotiations went smoothly. Ellie’s Organic Home Center, the retail operation, was the main sticking point for Greenmont because they felt the retail operation distracted from the company’s core competencies. The valuation excluded Ellie’s and the terms contained a provision preempting any activity involving â€Å"the investment of funds in Ellie’s Organic Home Center in excess of $200,000 beyond its current approved operating budget. † Recession. Following the investment, Eco-Products struggled to meet revenue targets. Prior to the Greenmont deal, Eco-Products had never been accountable to outside investors for its performance and, at that time, introducing new products impeded accurate sales forecasts. The company faltered when a recession hit the market in late 2008 and sales slumped by as much as 30% industry wide. Greenmont ended up with nearly 8% of Eco-Products, shares fully diluted including an employee pool, up from its original 6. 3% share prior to adding the 333,333 warrants as part of the deal. Savage continued to believe he made the right decision, regardless of these difficulties, but â€Å"I should have kept the PPM going,† he stated. Recovery. Eco-Products overcame the decline in spending that most consumer good companies and manufacturers experienced beginning in the fall of 2008. The 2008 financial statements are given in Exhibits 1 and 2. One year later Eco-Products’ â€Å"GreenStripe† product line was being sold through than 450 distributors and the company launched a retail product line. In June of 2009, Savage resigned as CEO. The company replaced its CEO-Founder with an executive accomplished in growing established companies, the former CEO of Corporate Express who took that company from $50 million to $5 billion in revenue. Savage became Executive Chairman and looked to planned to conduct another round of private equity financing, this time for $5 million to operations. He stated: This $5 million in financial capital is more than enough unless the core business really takes off, or the new products lines really take off, or an attractive merger and acquisition comes along. Then that money could go up in smoke. I figure a pre-valuation equity stake of $9. 5 million and still in the single-digits. I hope to give myself and some others that have been part of the five previous rounds an opportunity to take money off the table. I never have†¦. and I hold 9 million of the 21 million shares.