What Does Circuit Breaker Mean?

Refers to any of the measures used by stock exchanges during large sell-offs to avert panic selling. Sometimes called a "collar." Investopedia explains Circuit Breaker After an index has fallen a certain percentage, the exchange might activate trading halts or restrictions on program trading. For example, if the Dow Jones Industrial Average falls by 10%, the NYSE might halt market trading for one hour. There are other circuit breakers for 20% and 30% falls. What Does Collar Mean? 1. A protective options strategy that is implemented after a long position in a stock has experienced substantial gains. It is created by purchasing an out of the money put option while simultaneously writing an out of the money call option. Also known as "hedge wrapper". 2. A general restriction on market activities. What Does Greenshoe Option Mean? A provision contained in an underwriting agreement that gives the underwriter the right to sell investors more shares than originally planned by the issuer. This would normally be done if the demand for a security issue proves higher than expected. Legally referred to as an over-allotment option. A greenshoe option can provide additional price stability to a security issue because the underwriter has the ability to increase supply and smooth out price fluctuations if demand surges. What Does Hawala Mean? An alternative remittance channel that exists outside of traditional banking systems. Hawala is a method of transferring money without any actual movement. One definition from Interpol is that Hawala is "money transfer without money movement." Transactions between Hawala brokers are done without promissory notes because the system is heavily based on trust. Hawaladars, or Hawala dealers, arrange money transfers that are often backed only by trust, family connections or regional relationships. Hawala originated in South Asia during ancient times, and is used throughout the world today, particularly in the Islamic community as an alternative means of conducting funds transfers. Hundi Hundis were legal financial instruments that evolved on the Indian sub-continent. These were used in trade and credit transactions; they were used as remittance instruments for the purpose of transfer of funds from one place to another. In the era of bygone kings and the British Raj these Hundis served as Travellers Cheques. They were also used as credit instruments for borrowing and as bills of exchange for trade transactions. Technically, a Hundi is an unconditional order in writing made by a person directing another to pay a certain sum of money to a person named in the order. Being a part of an informal system, hundis now have no legal status and were not covered under the Negotiable Instruments Act, 1881. They were mostly used as cheques by indigenous bankers Floor The lowest acceptable limit as restricted by controlling parties. Investopedia explains Floor A floor, or bottom, is the minimum allowable limit. An example of a floor occurs in underwriting. The issuing corporation will declare a minimum acceptable amount at which the investment bank can purchase the securities. This way the corporation ensures sufficient capital acquisition. What Does Ceiling Mean? The highest level of allowance permitted for a certain good, rate, or transaction. Investopedia explains Ceiling Also referred to as a cap, a ceiling is a restrictive measure placed upon certain investments. An example would be a price ceiling or limit attached to an equity order given to a broker.

Daily stock returns Look up the closing share price of the stock and the closing price from the previous day. The prices can be found

by entering the stock symbol on finance websites like Yahoo! Finance or Google Finance (see Resources).

 2Subtract the previous day's closing price from the current day's close. If the stock increased in value, the number

will be positive. A down day will result in a negative number. For example, your stock finished yesterday at $24.75 and today the price fell and finished at $22. Subtracting the prices give a minus $2.75.
3Divide the result by the previous day's close and multiply by 100 to convert to a percentage. Continuing our

example, divide 2.75 by 24.75 for a result of 0.1111. Multiply by 100 to get a daily stock return of -11.11 percent.

Calcualte return on indices in stock market Review the calculation for return: profit divided by investment. If you buy a stock for $50 and it goes up to $100,

your profit is $50: $50 divided by $50 equals 1, or 100 percent.

Get the ticker symbol for each index. The DJIA symbol, for example, is ^DJI. Look up the prices for the DJIA, S&P 500 and the Nasdaq for the past year. Go to Yahoo! Finance (see Resource)

and enter the ticker symbol. Select two dates and note the prices of each index on these dates. Subtract the current price from the purchase price. Divide this number by the purchase price and multiply by 100 for the market percentage return. All three indices track different market segments and may therefore have different rates of return over the same time period. How to calculate beta in excel

Open a new workbook in Microsoft Excel. Enter historical data for the stock and the benchmark in two columns.

Calculate the percent change of the data for both the stock and the benchmark using the formula =((Cell2-Cell1)/Cell1)*100, where cell 1 refers to the previous period data point, and cell 2 refers to a current period data point. Drag the formula down both columns. Calculate the beta using the SLOPE function. The slope function =SLOPE(range of % change of equity, range of % change of index). For example, if we had daily changes to Microsoft's stock price in cells C1:C260 and the daily changes to the S&P 500 in column D1:260, the function would be =SLOPE(C1:C260,D1:D260).

Linear regression interpretation

Right-click on the regression line in your chart, and choose Properties. Check "Display equation on chart" and

"Display R-squared value on chart". Click OK.

2Look at the R-squared value displayed next to the regression line. The R-squared value represents the amount

of variability in the data that is explained by the linear regression analysis. If all the data lies exactly on the regression line, the R-squared value will be 1. If the R-squared value is 0, that means there is no correlation between the two datasets. 3Turn your attention to the equation listed above the R-squared value. It will be of the form "y = m x + b", where m and b have been replaced by numbers. This equation describes the linear regression line. The "m" value is the slope of the line, and the "b" value is the location where the line crosses the vertical axis. You can use this equation to predict values in the dataset based on their value on the horizontal axis; just multiply their horizontal location by the "m" value and then add the "b" value to the result; this will give you the best estimate of the location of that point based on the linear regression analysis. 4Look at the slope of the line. If it slopes downwards to the right, the data is "negatively correlated," if it slopes upward, the data is "positively correlated." Positive correlation means that the datasets tend to agree with or reinforce each other; negative correlation means that they tend to be at odds or mutually exclusive
Calculate CAPM Write down the formula. The CAPM formula is: r = Rf + Beta --- (RM-Rf). In this formula, r is the expected rate of

return, Rf is the risk-free rate and RM is the expected market rate of return.
2Determine the risk-free rate. The risk-free rate is the return you would receive on investments with the lowest

risk. Investors typically used rates from government treasury bonds. Once you determine the rate, plug it into the "Rf" spots in the formula. 3Determine the beta of the stock. A stock's beta reflects the volatility compared with the overall risk of the stock market. Beta can be found on financial websites such as CNBC, Bloomberg or Yahoo Finance. Enter the stock's ticker symbol in the quotes box, and all the stocks information will be displayed, including beta. Plug the number in the "Beta" spot of the formula.

 4Determine the expected market rate of return. The market rate of return is the rate at which an overall market,

such as the S&P 500 or Dow Jones, will grow. This is calculated at your discretion. For example, if you plan to hold a stock for the next five years, and over the past five years the S&P 500 grew at a rate of 15 percent, the market rate of return would equal 15 percent. Once you decide what rate to use, plug it into the "RM" spot of the formula. 5Complete the computation of the formula with the numbers inserted. The result equals the expected rate of return (r) for your investment. If it is the same or higher than your required rate of return, the CAPM suggests you should invest; if it is lower, you should not invest Unsystematic risk
Find the beta coefficient for your stock investment. The beta coefficient for publicly traded companies can be

found on any online investment service, such as MSN Money or USAA Online Stock trading. For this example, IBM and EBay are used. IBM has a beta coefficient of 1.05 and EBay of 1.45.
2Determine the amount of your investments to place in each company. Since IBM has a lower beta, the

unsystematic risk can be reduced by placing a greater percentage of your investment into this company. For this example, 50 percent of the investment will be placed in each company.
3Determine the overall beta (and resulting risk) of your investment portfolio through applying the following formula:

Beta (total) = Percentage of Overall Investment 1 x (Beta Investment 1) + Percentage of Overall Investment 2 x (Beta Investment 2). Beta (Total) = .50 * (1.05) + .50 * (1.45) = 1.25 Estimate the variance of two stocks that you intend to purchase by subtracting the daily returns from the mean returns. Take the square of the difference, then divide by the number of observations.

Total risk calculation

Estimate the variance of two stocks that you intend to purchase by subtracting the daily returns from the mean

returns. Take the square of the difference, then divide by the number of observations.
2

Calculate the total risk of the two securities in isolation by multiplying the variance of each stock with its weight and adding the results.
3

Multiply the weights and standard deviations of the two securities by twice the correlation between the two stocks.
4

Take the square of the weight and standard deviation of stock A and multiply. Repeat the same for stock B and add the two values obtained.
5

Add the values obtained in Step 3 and Step 4 to obtain the portfolio variance or risk.
6

Subtract the total risk estimated in Step 2 from the portfolio risk obtained in Step 5. The difference is the firm-specific risk.
7

Incorporate a large number of stocks into your analysis to diversify the portfolio completely and obtain the best estimate of firm-specific risk for the complete portfolio.
RELATIVE RISK CALCULATION Define the relative risk formula. Relative risk is the absolute risk of a specific group divided by the absolute risk of

all other groups.

2

Calculate the absolute risk of the two comparables. For instance, 50 out of every 1,000 green apples spoil when shipped, compared to 32 of every 1,000 of all other types of apples spoil when shipped. Which means, the absolute risk for green apples is 50/1,000, or 0.05, and the absolute risk for all other types of apples is 30 divided by 1,000, or 0.03.
3

Using the relative risk formula, you plug in the absolute values calculated. So in the above example, green apples were our specific group and the absolute value of green apples was 0.05, so divide this by the absolute value for all other apples which equaled 0.03, or (0.05/0.03) = 1.66. Therefore we can say, green apples are 1.7 times as likely to bruise when shipped compared to all other apples

Annualized stock return

Find the price of the stock on the first trading day of the year. You can find this information by looking at historical

charts at brokerage sites and financial websites.

2Look up the current price of the stock. You can find this information in financial publications like the Wall Street

Journal, and at online financial sites as well. 3Subtract the price of the stock on the first trading day of the year, plus any dividends you received for the current year, from the current trading price of the stock. This is the dollar value gain in the stock. 4Divide the dollar gain in the stock by its price on the first trading day of the year. This is the percentage the stock has gained. For instance, if the stock started the year trading at $10 and now trades at $15, that stock had a 50 percent gain for the time period. 5Calculate the number of months between the first trading day of the year and the current date. Divide that number by 12. For instance, if it is now September, you would divide 9 by 12. 6Divide the number in step 5 by the percentage gain in the stock. For instance, 9 divided by 12 equals 0.75, and 0.75 divided by 50 percent is just under 67 percent. 7Calculate the annualized return of the stock over longer periods of time by going back the relevant number of years, finding the price of the stock and adding in any dividends you received during that time period. For instance, if you purchased the stock three years ago at $10 a share and received a dividend of $1 per share for each year, your total would be $13. You would then subtract that $13 from the current price of the stock and divide that figure by the $13 to get the total return for the three years. Dividing that figure by three gives you the annualized return. You can use the same process to get the annualized return for five years, 10 years or even for the life of the stock.
Stock price index calculation Gather the stock price information for five listed stocks of your choice going back 20 days or one month. You can

find this information on Yahoo! Finance by entering a ticker symbol in "Get Quotes" and clicking on "Historical Prices" in the left-hand pane. You will also need the number of shares outstanding.
2Choose a starting point or base period for your stock. It can be the first day of the range selected in Step 1.

Create three columns in a spreadsheet or on paper. Make one column for the date (Column A), one for the stock (Column B) and one for the price of the stock (Column C). 3Sum Column C (the price of the stock) and divide by five (the number of stocks in your index). This is your priceweighted average. Those stocks with higher prices will affect this average more than price fluctuations in lower-priced stocks. It is the easiest way to calculate stock price index; however, it does not take the size of the company into consideration. 4Calculate market value weighted index. Unlike the price weighted index, the market value weighted index considers company size. Create a Column D with the number of shares outstanding for each stock in the price weighted index. Multiply the number of shares (Column D) by the price (Column C). This is the market capitalization. Let's name this Column E. Sum Column E and divide by five. This is the market value weighted index. A small change in price for a big company will have a greater affect on the value of the overall index value for a market weighted index. This is also known as a capitalization value-weighted index. 5Calculate a modified market capitalization stock index. This is a combination of the price and market-value weighted index. It is calculated in the same way as a market-value weighted index, but a cap (or limit) is set on the largest stocks. Using the example above, you can use an arbitrary cap of 25 percent of the total index value. That is, any stock that represents over 25 percent of the average of Column E should be capped for price fluctuations. This has the affect of "un-weighting" the larger market cap stocks in your index.
Certified Baker (Including Bread and Rolls, Cake and Sweet Goods, Cookies and Crackers) Certified Clinical Nutritionist (CCN) Certified Culinarian (CC) Certified Culinary Scientist Certified Food Defense Coordinator Certified HACCP Auditor Certified Ingredient Service Provider

Certified Master Chef (CMC) Certified Quality Engineer (CQE) Certified Research Chef Clinical Chemist Clinical Chemistry Technologist Dietetic Technician, registered (DTR) New Product Development Professional (NPDP) Certification Professional Engineer (PE) Project Management Professional (PMP) Registered Dietitian (RD) Registered Microbiologist (RE) Registered Microbiologist in Clinical & Public Health Microbiology (RH) Registered Microbiologist in Consumer Products & Quality Assurance Microbiology (RQ) Registered Microbiologist in Research & Development Microbiology (RR) Risk Management Professional (PMI-RMP) Specialist in Microbiology Sensory evaluation methodology ISO sensory standards ISO internal audit Interactive approach of training Statistics applied to sensory evaluation Created new policies pertaining to food quality, stocks, HACCP, scheduling, MSDS, safety training, hiring, standard operating procedures, inventories, and invoice management Expedited the construction of a $1.4 million food science laboratory renovation Overhauled purchasing & receiving systems of a $100,000 food inventory and par stock Executed VIP special events in the Academic Bistro, a full service fine dining restaurant Spearheaded a culture of sustainability including composting, oil reclamation and recycling Managed over 150 maintenance and safety issues and coordinated with facilities to resolve Managed a yearly $60,000 budget for new equipment and capital expenditures Increased employee retention rate and created an employee-of-the-year award Lead weekly sanitation teams for 14,000 square feet of lab space Collaborated with faculty to develop a par sheet and student accessible resources

Circulation Management
Yes, Your Social Media Strategy Needs Design

Design strategy:
In nearly every conference room across the business landscape it's inevitable that at some point the phrase "social media" enters the discussion. Marketers, PR and salespeople are among the first to engage in the discussions, trying to figure how networks can be leveraged to sell more stuff. But I'd like to propose another way to approach the topic. What if we looked at "social media" as a design problem? If you take a trip over to Wikipedia and enter the word "design" you'll see this at the

Periodical Postage Budget Basics

Setting Up Your Circulation Management Systems

As a new publication, there are several things you will want to do in order to establish your magazine in the marketplace. Managing your clients (subscribers) and tracking your circulation revenue and expenses are certainly already part of your business objectives.

Content & Design

Seven Reasons Why All Your New Information Products Should Be Digital
Its imperative that you begin now to create the digital products that will eventually replace your physical products

The last 15 years in the publishing industry have seen a revolution in marketing channels. Publishers now sell more products and generate more revenue on the Internet than from any other source.

Heres the Mequoda Manifesto: Over the next 15 years, publishers will transition to delivering exclusively digital products. And that transformation will be twice as gut-wrenching as the shift to online marketing.

Add

Finance & Business Management

In a digital world where everything seems free, how will anyone make money?
While this story pretends to be about things becoming free, thats only in the sense of free samples; buy one, get one free; bare bones for free in hopes of selling the deluxe version; free but with advertising. You know the drill.

Magazine Startup Costs

We are currently preparing a resource for the key costs associated with starting a new magazine publication. These will be relative financial estimates and business expenses that a magazine publisher should expect to take into consideration in the business planning phase. As this is a very popular topic for startups, we invite you to ask questions about budgeting and costs in our forum as this interaction will also help us to build an outline for general cost considerations. MagazineLaunch Community: Planning and managing a successful start-up

Legal Considerations
Some Internet Legal Resources for Magazine Publishers
"I can't understand how anyone gets through the day without a law degree" - Ruth Gundle, Eighth Mountain Press

Publishing a magazine exposes you to a host of legal responsibilities. Even if at the beginning everyone associated with your magazine is a volunteer, and it's published out of your garage, there will still be some areas of law that affect you - libel, for example, or copyright, possibly zoning regulations.

6 comments Read more

Copyright Permission and Copyrighted Intellectual Property Myths

TEN COMMON COPYRIGHT PERMISSION MYTHS By Attorney Lloyd J. Jassin

Although the First Amendment may appear unconditional on its face, the right to speak and write freely has never been absolute. Intellectual property rights often prevail over an author's "creative license."

Magazine Printing
Cummings Printing
A third generation family owned company for over 90 years, Cummings Printing specializes in the printing of short to medium run publications. Flexible scheduling, superior customer service and quality have been our approach to publication printing. Every job gets the attention it deserves.

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Magazine Printing
Cummings Printing
A third generation family owned company for over 90 years, Cummings Printing specializes in the printing of short to medium run publications. Flexible scheduling, superior customer service and quality have been our approach to publication printing. Every job gets the attention it deserves.

Readership & Audience

It's The Customer Experience, Stupid!
Email service providers are blanketing the world with services and technology. I am a true believer that marketers must engage consumers via email and social channels and must do so in a programmatic and relevant way. However, even with technology, strategy and marketing focus, some programs fail while others succeed.

Revenue & Advertising

How to Talk About Increasing Prices
Did your rates go up this year? Are you concerned about how your customers are going to take it? Are you having a hard time passing along the increase?

Web Site Solution

Commonly, the publishing process includes the stages of the development, acquisition, copyediting, graphic design, production printing and its electronic equivalents, marketing and distribution. However, magazine publishing is not just limited to concept and printing, but it also involves a tedious process before it even reaches the newsstands. Editorial, commercial, informational and entertainment content are among the most commonly used content for many and most magazine publications, that involves a multi-faceted skill set that not lonely involves warm bodies, but costs money as well. For the publication business, cost is relative- the better the talent, the pricier it gets. This is also reflective in the commercial aspect of distribution and marketing- the better the quality, the more it costs money to pay for the product. Another factor for consideration is that book and magazine publishers spend a great deal of time and money buying and commissioning copy, which for many publishers would add more weight, quality and repute to their products.

For a small publishing company or press, it is possible to rely mainly on commissioned material, but as activity and business increases, the need for more works like subscribing to syndicated materials or outsourced printing manuscripts may overwhelm the publisher's commissioned circle of writers. First is the need for solicited material, which forms part of the actual concept and framework of a magazine publication. Next and among the most common practice in acquiring material is that writers often submit a proposal, for which the majority of unsolicited submissions come from previously unpublished authors. These unsolicited manuscripts through what is called a slush pile , where editors which sift through the material to identify manuscripts of sufficient quality or revenue potential. Established and reputable writers are oftentimes represented by a literary agent, who markets their work to publishers and negotiate contracts for their writing materials. Upon acceptance and endorsement for publication, commissioning editors negotiate the purchase of intellectual property rights and agree on royalty rates for book publications, and copyright license or permission for magazine publications, depending on the material for publication. This is followed by the editorial process, that takes place once the immediate commercial decisions are taken and the technical legal issues resolved, book authors may be asked to improve the quality of the work through rewriting or smaller changes, after which the editorial staff will edit the work, the process which could also apply to syndicated materials either with a single article or a series. Magazine publishers usually adopt a house style, oftentimes a format which makes it unique for a specific publishing company, be it a writing style or a lay-out design and the editorial staff will copy edit to ensure that the work matches the style and grammatical requirements of each market. Material editing may also involve structural changes and requests for more information. The last in the process of magazine publishing is marketing and distribution, that releases the product to the main market, thus, giving us our adored and subscribed magazine publishing

HOW TO CALCULATE STOCK MKT INDEX Decide what index you want to calculate and add up the totals for the closing price at the end of the day for the

stocks in the index. For example, select the DJIA and sum the closing prices for the 30 components of the DOW as of May 28, 2010: Alcoa, American Express, Boeing, Bank of America, Caterpillar, Cisco, Chevron, DuPont, Disney, General Electric, Home Depot, Hewlett Packard, IBM, Intel, Johnson & Johnson, Morgan Chase, Kraft, Coca Cola, McDonald's, 3M, Merck, Microsoft, Pfizer, Procter & Gamble, ATT, THE TRAVELERS COS, United Technologies, Verizon, Walmart and Exxon. You can download this information to an Excel spreadsheet from djaverages.com and let Excel sum the totals.
2

Find the Dow Divisor at barrons.com (see Resources). Go to the "Market Lab" tab on the right and click "Market Data" in the drop down window. In the column headed "Stocks" click on the second item: "Dow Jones Half-Hour Averages." This page gives you the divisor and half-hour averages for the 30 Industrial, 20 Transport, 15 Utilities and 5 Composite indexes. The Dow Divisor is a number that takes into account stock splits and dividends that don't fundamentally change the value of a company but do effect a straight price-weighted average
3

Calculate the Dow Jones Industrial Average by adding the 30 stocks together and dividing that total by the DOW Divisor for that day

Price-Weighed Index

Locate the prices of the stocks in the index. The Dow Jones focuses on only 30 stocks in order to calculate their index. Since it is one of the most popular, use its method for example purposes. You can look up prices on various investment Websites such as CNBC.com (the Dow 30 are listed below in the "tips" section).

Add the price of each of those stocks together.

3

Divide the final result by the Dow Jones Industrial Average Divisor. The divisor is meant to balance out different types of stocks over various industries in the Dow 30. It also takes into account things such as stock splits. From time to time, the divisor is adjusted. (The current divisor is listed below.) The equation for calculating the price weighted index is: Sum of Stocks / Index Divisor = Index Average.

Market-Cap-Weighted

Determine the market capitalization of all stocks within the index. The market cap is reached by multiplying the number of outstanding shares of stock by the price of the stock. As an example, if a stock has a price of $10 and there are 1 million shares on the market, then the market cap is $10 million.

Add all of the market cap amounts together.

3

Divide the sum of the market caps by the current divisor. Like the Dow Jones, the divisor will change over time and is issued by the actual stock exchange. The formula reads: Sum of Market Caps / Divisor = Stock Index Average
1

Select a group of stocks to include in the index. To make the index worthwhile, you should include at least five stocks in the index.
2

Calculate each stock's weighting in the index by multiplying the price per share by the number of shares outstanding for each stock. For example, suppose you wanted to create a very simple index with two stocks. Stock A is trading at $10 per share and has 1,000 shares outstanding while Stock B is trading at $12 per share and has 1,500 shares outstanding. The weighting for Stock A would equal $10 x 1,000 = 10,000 while the weighting for Stock B would equal $12 x 1,500 = 18,000.
3

Sum the weightings. This sum is the value of the index at Time 0 (the day on which you begin tracking the performance of the group of stocks). The performance of the stocks will be measured, or indexed, to this specific day. In this simple example, the base value of the index at Time 0 equals 10,000 + 18,000 = 28,000.
4

Repeat Steps 2 and 3 for each trading day for the group of stocks. For this example, suppose that on the second day of trading Stock A rises to $11 in value and Stock B rises to $15 in value. Suppose that the number of shares outstanding for each stock remains the same. The value of the index on the second day is equal to ($11 x 1,000) + ($15 x 1,500) = 33,500.
5

Divide the value of the index on any given day by the base value of the index at Time 0, calculated in Step 3. This calculation will tell you how the group of stocks has performed relative to the base date. In this example, the index has gone up by 33,500/28,000 = 20 percent. BASE DIVISOR
Research the market price and number of shares outstanding for all the stocks in the index. This depends on the index. Every index has a different set of stocks. For instance, the Dow is an index of 30 stocks. Contact the management of the index to know for sure. 2

Multiply the number of shares outstanding by the price of the stock for each company held in the index. This number is referred to as the market capitalization. For instance, if a stock with 10 million shares outstanding has a price of $1, the current market cap is $10 million.
3

Sum all the market caps together. Assume the total market cap for the portfolio is $100 million.
4

Determine the market index price. This price is published on a daily basis by the index. Popular indexes are published in the financial section of most newspapers. Assume the market index price is $10,000.
5

Calculate the base divisor. Divide the market cap by the market index price for the current base divisor. For instance, if the current market cap is $100 million and market price of the index is $10,000, the base divisor is also $10,000

Mcdonald's Business Strategy

A key element of McDonald's strategy since the beginning has been the policy of the company to own all property on which a McDonald's outlet was built, regardless of whether that location was franchised or company-owned. Rental income varies from property to property, but it has been estimated that McDonald's generates more money from its rent than from its franchise fees. McDonald's real estate holdings and rent generated from these holdings are an important component of the company's value and income. McDonald's is unique in the fast-food industry in that it owns much of its real estate. In most cases, McDonald's restaurants are located on prime high-traffic real estate that is highly visible and easily accessible. McDonald's conditions for a franchise location include a corner lot with at least 35,000 square feet of land whose entrance and exit were facilitated by a traffic light. McDonald's also earns money by marketing excess land. The company was also testing new methods for raising revenue, such as selling retail merchandise in certain stores. In 2002 Jim Cantalupo came out of retirement to lead McDonald's turnaround back to profitability and restore the image of one the world's best known brands. The new strategy was called the McDonald's Plan to Win and focused on what the company identified as its five key drivers of success: people, products, place, price, and promotion. The first driver of exceptional customer experiences would focus on people, the employees who dealt with the customers on a daily basis. In response to a customer service ranking that rated McDonald's dead last in the fast-food industry, even lower than the IRS. McDonald's vowed to do a better job of staffing its restaurants at busy times and rewarding employees for delivering outstanding customer service. An interactive e-learning program to cost-effectively train employees in customer service attitudes and skills would be instituted. By reducing the menu and using

Worlds leading food service retailer McDonalds has more than 32,000 restaurants serving over 50 million customers each

day in more than 119 countries.

McDonalds competitors in India McDonalds competes with fast food chains like Pizza Hut, Dominos Pizza, Papa Johns,

Nirulas and KFC in India.

McDonalds Supply Chain McDonalds has a dedicated supply chain in India and sources 99% of its products from within the

country. The company has strong backward integration right up to the farm level.

Quick service restaurants in India By October 2009, McDonalds India had more than 170 quick service restaurants in India.

Dominos Pizza, which began operations in India in January 1996, has over 275 stores across 55 cities in the country. KFC has 46 restaurants across 11 cities in India. (KFC is one of the 5 brands owned by Yum!. KFC is a $12 billion global brand and a leading quickservice restaurant (QSR) in many countries.) Nirulas, one of Indias oldest food chains (completed 75 years in service in March 2009), has a network of around 62 outlets in five states across Northern India. Nirulas, established in 1934 has interests in hotels, restaurants, ice cream parlours, pastry shops and food processing plants. Nirulas was the first to introduce burgers in India.

Food Industry in India In India, food industry and particularly informal eating out market is very small. In India, over quarter of a

million customers visit McDonalds family restaurants every day. The Indian fast food market is valued at $1-billion (Rs 4,547 crore) aprrox.

MFY (Made for You) food preparation platform MFY is a unique concept (cooking method) where the food is prepared as the

customer places its order. All new upcoming McDonalds restaurants are based on MFY. This cooking method has helped McDonalds further strengthen its food safety, hygiene and quality standards. McDonalds has around 10 MFY restaurants in its portfolio.

How McDonalds manages to keep its prices down? Fast-food chains face a tough time balancing between margin

pressures and hiking prices which can hurt volumes. Consequently, the chains have to increase rates or rework their strategies. Affordability has been the cornerstone of McDonalds global strategy. Some of its measures to achieve this include Bulk buying, longterm vendor contracts, and manufacturing efficiencies.

McDelivery Online In India, McDonalds first launched home delivery of meals in Mumbai in 2004. McDonalds now has plans

to launch web-based delivery service in India (across 75 McDelivery cities) in 2010, a pilot for which has already been tested by it in Hyderabad. The company hopes to add 5 per cent to sales via Web delivery. McDonalds web-based delivery model will be based on serving the customer quickly wherein the drive time does not exceed seven minutes because its food has to be eaten within ten minutes of preparation. The footfalls in India are amongst the highest in the world, but the average bill is amongst the lowest. At present (March 2010), Dominos Pizza (operated by Bhartia Group-promoted Jubilant Foodworks under a master franchise agreement) has a 65% market share in the home delivery segment.

Most Preferred Multi Brand Fast Food outlets: In 2009, McDonalds India won the CNBC Awaaz Consumer Awards for the third

time in the category of the Most Preferred Multi Brand Fast Food outlets.

McDonalds India in 2010 In 2010, McDonalds India plans to open 40 more outlets. The company has also earmarked a

budget of Rs 50-60 crore to market its new products and initiatives for consumers. Its new marketing campaign is titled Har Chotti Khushi Ka Celebration in other words celebrate little joys of life where it positions McDonalds as a venue for enriching life of consumers. In South India, McDonalds has 29 outlets and plans to add 10 more by end of 2010.

Taco Bell in India In March 2010, Taco Bell, the Mexican specialty chain owned by US-based fast food brands operator Yum!

Restaurants launched its first outlet in Bangalore, India. The company which also operates brands like Pizza Hut and KFC plans for contract farming to open up to 100 outlets by 2015 and also expand into Tier-II and -III Indian cities eventually.

Local Vegetarian Menu: In India, McDonalds does not offer pork or beef-based products. Its menu is more than 50 per cent

vegetarian. The fast food retail chain has separate production lines and processes for its vegetarian and non-vegetarian offerings.

High Real-Estate costs in India: In many countries, in a Quick Service Restaurant (QSR) a customer comes in, buys and then

leaves. This is known as a revolving door concept. But an Indian customer believes in a dine-in culture. This adds to the real estate costs which goes as high as 20-25 per cent as compared to 10-15 per cent globally.

The most important meal for QSRs- Morning Meals (Breakfast):According to market research company, the NPD Group,

breakfast accounted for nearly 60 per cent of the restaurant industrys traffic growth over the past five years in the U.S. Quick service restaurants sold 80 per cent of the over 12 billion morning meals served at US restaurants for the year ending in March 2010.

OOH Branding: According to Rameet Arora, senior director marketing, McDonalds India (West and South), McDonalds India

may be the largest out-of-home branding (OOH) in the country. McDonalds India has restarted OOH (out-of-home branding) after a 7 to 8 year break to reach to their target group.

Employees and Customers: In India, McDonalds employs 5,000 people and serves half a million customers a day via its 169

family restaurants. McDonalds has 85,000 employees and serves 2.5 million customers a day in the UK.

McDonalds has developed three strategies for sustaining the competitive advantage. These are customer value, convenience, and optimal business operations. Together with the information technology strategies, it helps the company to create new and innovative ideas for the company. The McDonalds restaurants are described by the functions of the team as miniature manufacturing facilities. With the McDonalds objective of improving the suite of its business systems which supports the store, the management of McDonald has developed ways of using effective marketing and management strategy its overall operations. In order to adapt with the latest trends of having healthier menus, the company extends their services for family retreats and as a centre of community for senior citizens. The means for the former one are its innovation with their products to offer healthier foods. As this trend continues, an extension of more people -oriented strategies is needed. The company also conducts studies and surveys as part of their business strategy to better know which among the different alternatives serves the objective of McDonalds the best. To achieve customer convenience and satisfaction, one of their key initiatives is on the improvement of the ambience and looks of their stores in the country. The adherence of the company to put WIFI technology in their stores for instance has also become one of the attractive forces for customers. For the achievement of customer value, focus of the company remain on real-time information flow which permits instant corrections of the menu and prices in response to preferences and changing needs of the customers and competitive environment. Extent of the Strategy Used by McDonald
McDonalds has been recognized as a highly flexible corporation. This company feature has been evidenced by its vast product differentiation. This is one of the companys major strategies in entering foreign markets. Teriyaki burgers in Japan, McPork Burgers and McTempeh in Indonesia, McSpaghetti in the Philippines and McLox Salmon sandwiches in Norway are some of the concrete examples of McDonalds ability to modify its products based on international tastes and preferences which they also done with their British market. While minor product changes are required for these countries, vast changes would have to be done for Britains case. With this approach, the products of McDonald had become more appealing to their customers even those health conscious individuals. As McDonalds typically serve beef burgers and non-spicy food items, the company would have to drastically change its menu for the Britain market to provide healthier menus for British people. For instance vegetable salads and chicken kebabs were also served to cater to the health conscious population. These are some of the many changes that McDonalds did in order to gain entry to the Britain market. In addition to product differentiation, regulation of the products prices is also a top priority. Effective promotions and advertising were also integrated into the companys international strategy. One of these tactics include the companys promotional offers of various items like Internet cards, compact disc, concert tickets, caps, T-shirts and international trips . This promo had been done as the company collaborated with other organizations including Coca-cola, Sony, MTV, and General Motors. In addition, the McDonald also conducts programmes for children as part of their strategic management. Furthermore, the advertising strategies of McDonalds had given emphasis on creating an image of family comfort. Rather than just being an ordinary fast food that serves quality meals, McDonalds intends to appeal to the market by building a fast food image where families can get together, enjoy and relax. Overall, the international strategy of McDonalds for Britain has been effective. In general, the focus of these strategies was the customers. Customers play a significant role to a business success or failure. Being an important business element, meeting the needs and preferences of the consumers is the utmost priority of almost all businesses. McDonalds has clearly shown the importance of this concept by

adapting to the Britain culture, its people and their tastes. By reaching out to the British market, McDonalds was able to successfully establish itself in Britain.

Synopsis
The subject of Inside Job is the global financial crisis of 2008. It features research and extensive interviews with financiers, politicians,journalists, and academics. The film follows a narrative that is split into five parts. The film focuses on changes in the financial industry in the decade leading up to the crisis, the political movement toward deregulation, and how the development of complex trading such as the derivatives market allowed for large increases in risk taking that circumvented older regulations that were intended to control systemic risk. In describing the crisis as it unfolded, the film also looks at conflicts of interest in the financial sector, many of which it suggests are not properly disclosed. The film suggests that these conflicts of interest affected credit rating agencies as well as academics who receive funding as consultants but do not disclose this information in their academic writing, and that these conflicts played a role in obscuring and exacerbating the crisis. A major theme is the pressure from the financial industry on the political process to avoid regulation, and the ways that it is exerted. One conflict discussed is the prevalence of the revolving door, whereby financial regulators can be hired within the financial sector upon leaving government and make millions. Within the derivatives market, the film contends that the high risks that began with subprime lending were transferred from investors to other investors who, due to questionable rating practices, falsely believed that the investments were safe. Thus, lenders were pushed to sign upmortgages without regard to risk, or even favoring higher interest rate loans, since, once these mortgages were packaged together, the risk was disguised. According to the film, the resulting products would often have AAA ratings, equal to U.S. government bonds. The products could then be used even by investors such as retirement funds who are required to limit themselves to the safest investments. Another point is the high pay in the financial industry, and how it has grown in recent decades out of proportion to the rest of the economy. Even at the banks that failed, the film shows how bank executives were making hundreds of millions of dollars in the period immediately up to the crisis, all of which was kept, again suggesting that the risk/benefit balance has been broken. One topic which few others have addressed is the role of academia in the crisis. Ferguson notes, for example, that Harvard Universityeconomist, and former head of the Council of Economic Advisers under President Ronald Reagan, Martin Feldstein, was a director of theinsurance company AIG and former board member of the investment bank J.P. Morgan & Co.. Ferguson also notes that many of the leading professors and leading faculty members of the economics and business school establishments often derive large proportions of their incomes from either engaging as consultants, or speaking engagements. For example, current dean of the Columbia Business School, Glenn Hubbard received a large percentage of his annual income from either acting as a consultant or through speaking engagements. Hubbard was also affiliated with KKR and BlackRock Financial. Hubbard as well as current chair of Harvard's department of economics, John Y. Campbell, deny the existence of any conflict of interest between academia and the banking sector.

The film ends by contending that despite recent financial regulations, the underlying system has not changed; rather the remaining banks are only bigger, while all the incentives remain the same, and not a single top executive has been prosecuted for their role in the global financial meltdown. [edit

Operational performance of McDonalds will be the focus of this essay particular on certain measures of the operational performance, as indeed there will be discussions on the supply chain performance measures and customer satisfaction performance measures as ideally functioning for McDonalds business environment. There can be process of choosing appropriate supply chain performance measures which can be due to the complexity ofMcDonalds measures of performance. There research integration of the measuring of supply chain like, Beamon (1996), presented number of characteristics as found within effective performance measurement as analyzing the measures based on McDonalds effectiveness, the operational performance measurement have changed over the years and that McDonalds will need to always consider the basis of performance operation measurement as there places a factor for supply chain and customer satisfaction performance that can be necessary in order to present relevant measures as McDonalds need upon Iimproving world class restaurant business performance. Main Points: The two measures
A. Supply chain performance measure for McDonalds

Supply chain management, analysis, and improvement for McDonalds is becoming important of which sector the company belongs as the measuring of supply chain depends on the supply chain logistics management at McDonalds as well as the measuring of supply chain process affecting McDonalds real world applicability. The customer responsiveness measures include lead time, stock out probability as well as the fill rate as corresponding to the operational performance measures used by McDonald as appropriate for supply chain analysis, the measuring of customer satisfaction (Christopher, 1994) with ample base pointing to supply chain performance measures (Johnson and Randolph, 1995). The use of single performance measure is attractive for McDonalds because of the simplicity and the company must ensure that if a single performance measure is utilized, the measure is being adequately describes the McDonalds system performance. Thus, Beamon (1996), have identified and evaluated various individual supply chain performance measures noted that, significant weaknesses were present into the performance measures evaluated, based on measurability and consistency. Aside, Maskell (1991) suggests that the type of performance measures required for McDonalds can be directly related to the customer service strategy chosen by the company and determine if McDonalds operational performance is meeting strategic goals and that, the performance measure will steer McDonalds business direction. For example, product quality at McDonalds can be measured in many different ways. Although it may be difficult to choose the individual performance measures, it is vital that the performance measures are related to the strategic goals of McDonalds. Consequently, important supply chain characteristics at McDonalds thus measure better customer related resources, as an integral part of McDonalds supply chain. Furthermore, flexibility is vital to the success of McDonalds supply chain, since the supply chain exists in an uncertain environment (Slack, 1991). For example, a reduction in McDonalds system resources may negatively affect their supply chains flexibility as McDonalds supply chain measure may be currently utilizing its resources efficiently, producing in desired output, but will McDonalds supply chain be able to adjust to changes in, for instance, McDonalds product demand, customer service unreliability, the introduction of innovative products and or supply shortages, truly flexibility serves as an important consideration in McDonalds supply chain performance measure. B. Customer satisfaction measures for McDonalds

The customer relations manager at McDonalds is responsible for collecting the customer satisfaction information from the fast food, restaurant areas in order to access guest satisfaction information and take appropriate operational performance measures as well as impeding positive action for satisfaction performance. The McDonalds manager may routinely circulate through the restaurant and the need to talk to their customers as they are receiving performance services at its best. This is perceived to be the most critical measure for operation performance at McDonalds placing in certain solution to customer problems and improving McDonalds current level of satisfaction. The McDonalds managers believe that observing at the time of service and talking to the customers on real-time serves as crucial element of monitoring satisfaction level of McDonalds customer. McDonalds believe that great customer satisfaction as well as information is a valuable decision making tool as the McDonalds customer remains on the restaurant premises, encourages McDonalds employees and managers to be responsive and communicative with customers. Amiably, feedback from McDonalds customers after their visit, such as fax and letters is also considered as an important indicator of guest satisfaction. The real-time decision-making is implemented by McDonalds operating departments that have large degree of customer interface such as fast food services and the customer relations, as there is service delivery at McDonalds involving high degree of customer interface as McDonalds managers prefer to monitor customer satisfaction using ways of communication and observation by personal presence. As Fisher (1992, p. 21), argue that setting standards for performance measures may impose conflicts with continuous improvement at McDonalds as he noted that, if standards were not carefully set, they had the effect of setting norms rather than motivating satisfaction improvement (p. 22). However, although McDonalds has wealth of services and products that can be measured and assessed, the most critical aspect is seen to be the overall impression gained by the customers during their use of the place to dine and other reasons. McDonalds operational performance management are required to strike in strong balance between providing an overall customer satisfaction experience and operating in to several restaurant product and services and McDonalds will achieved the success in satisfaction measure through continuous observation and real time supply chain measures by McDonald heads. The main effort of McDonalds performance management and McDonalds employees is to satisfy their customers on a real time basis (Fitzgerald and Moon, 1996) and essential for customer satisfaction measures at McDonalds to talk constantly to their loyal customers and receiving their reactions and responses are seen as key satisfaction measurement indicators, helpful in gaining an awareness of problems and possible complaints.

Conclusion

In conclusion therefore, operational performance measures for McDonalds supply chain and customer satisfaction performance integrates a solid weight in keeping the restaurant intact into the business arena despite several economic crisis that the companies face today as McDonalds current supply chain performance measurement serves an adequate measure and are being consistent with McDonalds the strategic goals and does consider the value placed by customer satisfaction grounds although the use of McDonalds supply chain performance measures may be commonplace in real restaurant settings but, not common within supply chain modeling. The next step for McDonalds can be to develop framework for measuring supply chain performance linking to satisfaction modes of customers that can be in terms of McDonalds decision process and operational performance pattern which requires real time performance measures during operation and communication within McDonalds operation areas Thus, performance measurement practice in the case of McDonalds implies to customer satisfaction from within there indicates performance operation levels and McDonalds financial measures from the effective management stature.

STRATEGIC DIRECTION AND FINANCIAL PERFORMANCE

The strength of the alignment between the Company, its franchisees and suppliers (collectively referred to as the System) has been key to McDonalds success over the years. This business model enables McDonalds to consistently deliver locally-relevant restaurant experiences to customers and be an integral part of the communities we serve. In addition, it facilitates our ability to identify, implement and scale innovative ideas that meet customers changing needs and preferences.

McDonalds customer-focused Plan to Winwhich is centered around being better, not just bigger provides a common framework for our global business yet allows for local adaptation. Through the execution of multiple initiatives surrounding the five key drivers of exceptional customer experiences People, Products, Place, Price and Promotionwe have enhanced the restaurant experience for customers worldwide and grown sales and customer visits in each of the last six years. This Plan, coupled with financial discipline, has delivered strong results for shareholders. We have exceeded our long-term, constant currency financial targets of average annual Systemwide sales growth of 3% to 5%; average annual operating income growth of 6% to 7%; and annual returns on incremental invested capital in the high teens every year since the Plans implementation in 2003, after adjusting 2007 for the Latin America developmental license transaction. Given the size and scope of our global business, we believe these financial targets are realistic and sustainable, while keeping us focused on making the best decisions for the long-term benefit of shareholders. In 2009, we continued to elevate the customer experience by remaining focused on the Companys key global success factors of branded affordability, menu variety and beverage choice, convenience and daypart expansion, ongoing restaurant reinvestment and operations excellence. Locally-relevant initiatives around these factors successfully resonated with consumers driving increases in sales, customer visits and market share in many countries despite challenging global economies and a contracting informal eating out market. As a result, each reportable segment contributed to 2009 global comparable sales and guest counts, which increased 3.8% and 1.4%, respectively. In the U.S., we grew sales and market share with comparable sales up for the 7th consecutive year, rising 2.6% in 2009. This performance was the result of a continued focus on classic menu favorites such as the Big Mac and Quarter Pounder, increased emphasis on everyday affordability, and the national marketing launch of the new McCaf premium coffees and premium Angus Third Pounder. Complementing these efforts were our strategies related to convenient locations, extended hours, efficient drive-thru service and value-oriented local beverage promotions. In conjunction with the introduction of the McCaf premium coffees, reinvestment was needed in many restaurants to accommodate the new equipment required to prepare these beverages as well as facilitate the national introduction of smoothies and frapps in mid-2010. In most cases, this reinvestment involved expanding and optimizing the efficiency of the drive-thru booth, enabling us to better serve even more customers faster. In Europe, comparable sales rose 5.2%, marking the 6th consecutive year of comparable sales increases. This performance reflected Europes strategic priorities to upgrade the customer and employee experience, enhance local relevance, and build brand transparency. Initiatives surrounding these priorities encompassed: leveraging our tiered menu featuring locally relevant selections of premium, classic core and everyday affordable menu offerings as well as dessert and limited-time food promotions; and reimaging nearly 900 restaurants including adding about 290 McCafsan upscale area with coffeehouse-style ambiance inside an existing McDonalds restaurant. In addition, we addressed growing interest in portable snack offerings with platforms such as the Little Tasters in the U.K., launched

breakfast in Germany and increased our convenience with extended hours. In order to support greater menu variety, we completed the roll-out of a new more efficient kitchen operating system in substantially all of our European restaurants. Finally, we enhanced customer trust in our brand through communications that emphasized the quality and origin of McDonalds food and our sustainable business practices. In APMEA, we continued to execute our four growth platforms of breakfast, convenience, core menu and value. Comparable sales rose 3.4% primarily due to the ongoing momentum of our business in Australia where multiple initiatives surrounding menu variety including the launch of the premium Angus burger, greater convenience and reimaging further strengthened our brand relevance. In addition, across the segment, we enhanced our convenience by increasing the number of restaurants open 24-hours to over 4,600, expanding delivery service to more than 1,300 locations including about 300 in China, and enhancing drive-thru efficiency. We sustained the momentum of our breakfast business, currently in about 75% of our restaurants, by increasing customer awareness and visit frequency with the launch of premium roast coffee in key markets like Japan and China and promoting it through successful sampling programs. We continued to appeal to customers with branded affordability menus, especially our value lunch platforms, and highlighted classic menu favorites like the Quarter Pounder. Our customer-centered strategies seek to optimize price, product mix and promotion as a means to drive sales and profits. This approach is complemented by a focus on driving operating efficiencies and effectively managing restaurant-level costs by leveraging our scale, supply chain infrastructure and risk management practices. Our ability to successfully execute our strategies in every area of the world contributed to improved profitability as measured by combined operating margin of 30.1% in 2009, an improvement of 2.7 percentage points over 2008. Strong global performance positively impacted cash from operations, which totaled $5.8 billion in 2009. Our substantial cash flow, strong credit rating and continued access to credit provide us significant flexibility to fund capital expenditures as well as return cash to shareholders. About $2.0 billion of cash

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from operations was invested in our business primarily to open 868 restaurants (511 net, after 357 closings) and reimage about 1,850 existing locations. After these capital expenditures, we returned our free cash flow to shareholders through dividends and share repurchases. In 2009, we returned $5.1 billion consisting of $2.2 billion in dividends and $2.9 billion in share repurchases. This brought the total return to shareholders to $16.6 billion under our $15 billion to $17 billion target for 2007 through 2009. Cash from operations continues to benefit from our evolution toward a more heavily franchised business model as the rent and royalty income received from owner/operators is a very stable revenue stream that has relatively low costs, and is less capital-intensive. In addition, we believe locally-owned

and operated restaurants help us maximize brand performance and are at the core of our competitive advantage, making McDonalds not just a global brand but also a locally-relevant one. To that end, for 2008 and 2009 combined, we refranchised about 1,100 restaurants, increasing the percent of restaurants franchised worldwide to 81%. Refranchising impacts our consolidated financial statements as follows: Consolidated revenues are initially reduced because we collect rent and royalty as a percent of sales from a refranchised restaurant instead of 100% of its sales. Company-operated margin dollars decline while franchised margin dollars increase. Margin percentages are affected depending on the sales and cost structures of the restaurants refranchised. Other operating (income) expense fluctuates as we recognize gains and/or losses resulting from sales of restaurants. Combined operating margin percent improves. Return on average assets increases primarily due to a decrease in average asset balances.
This excerpt taken from the MCD 10-Q filed May 5, 2009.

Strategic Direction and Financial Performance McDonalds customer-centered Plan to Win which is focused on being better, not just bigger provides a common framework for our restaurants yet allows for local adaptation. The Plan facilitates the execution of multiple initiatives surrounding the five factors of exceptional customer experiences people, products, place, price and promotion. Through the execution of these initiatives, we have enhanced the McDonalds experience for customers worldwide, growing sales and guest counts in each of the last five years. This Plan, coupled with financial discipline, has delivered strong results for shareholders. Our continued commitment and ability to deliver a relevant restaurant experience that provides consumers with a broad range of quality menu choices, affordable prices and unmatched convenience is driving operating performance. In the first quarter 2009, our results were driven by strong comparable sales across all geographic segments despite one less trading day in the quarter due to 2008 being a leap year. In the U.S., the business continues to gain market share as consumers visit McDonalds more often for the classic taste of core products, convenient locations and operating hours, and compelling value across the menu.

These factors, combined with increased sales of chicken, breakfast and beverages, contributed to a comparable sales increase of 4.7% for the first quarter. Europe delivered solid first quarter comparable sales of 3.2% despite the shift in timing of Easter-related school and business holidays from March 2008 to April 2009. Our European business continues to gain market share as tiered-pricing menus, seasonal food events and day-part expansion in the morning and late night hours connect with customers. Europes locally relevant strategies continue to drive performance, and the segment is expected to strengthen as the year progresses. 13
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APMEA reported strong first quarter comparable sales of 5.5% and an 11% constant currency increase in operating income driven by everyday affordability, menu choice and convenience. The Company remains committed to returning value to shareholders through share repurchases and dividends. During the first quarter 2009, the Company repurchased 14.6 million shares of its stock for $823.2 million and paid a quarterly dividend of $0.50 per share or $553.4 million. For the full years 2007 and 2008 and first quarter of 2009 combined, the Company returned $12.9 billion toward the $15 billion to $17 billion targeted cash return to shareholders by the end of 2009. Given our strong balance sheet and operating performance, we fully expect to meet the target this year. The Company continues to optimize its restaurant ownership mix, cash flow and returns through its refranchising strategy. The Company expects to refranchise 1,000 to 1,500 Company-operated restaurants between 2008 and 2010, primarily in its major markets. For the full year 2008 and first quarter of 2009 combined, the Company refranchised about 770 restaurants. This shift to a greater percentage of franchised restaurants is expected to negatively impact consolidated revenues as Company-operated sales shift to franchised sales, where we receive rent and/or royalties. In addition, the Company expects a decrease in Company-operated margin dollars and an increase in franchised margin dollars. The impact on margin percentages will vary based on sales and operating costs of refranchised restaurants. Operating Highlights Included: Global comparable sales increase of 4.3% despite one less trading day in the quarter due to 2008 being a leap year Combined operating margin increased 150 basis points (80 basis points in constant currencies) to 27.6% Net income per share was $0.87, up 7% (17% in constant currencies), including a $0.04 per share gain

from the sale of the Companys minority interest in Redbox and $0.08 per share of negative impact from foreign currency translation Returned nearly $1.4 billion to shareholders through share repurchases and dividends

What Does Lipstick Entrepreneurs Mean? Independent, self-employed businesswomen who sell makeup or other female-oriented products and services. Lipstick entrepreneurs are viewed as leaders of the "femterprise" movement. In periods of economic crises there is often a surge of femaleowned start-up businesses or "female enterprises," due in large part to the perceived job security, income potential and flexibility to accommodate a busy family schedule. Investopedia explains Lipstick Entrepreneurs Mary Kay, Avon and Arbonne are three of the most well-known female-oriented businesses that target lipstick entrepreneurs. Avon U.K. has identified eight primary types of lipstick entrepreneurs:

1.

The Meritocrat a formerly successful career woman who has chosen self-employment. 2. The Rescuer a woman who pursues self-employment as a way to provide for her family, often as a result of her husband's job or income loss. 3. The Horizontal Juggler most often a middle-aged woman who begins her own business in addition to managing childcare duties. 4. The Double Hitter - a woman who is able to compress a full-time job into part-time hours and run her own business on the side. 5. The Domestecutive most often a woman already caring for young children at home who begins a home-based business to provide additional income for her family without having to incur costs for full-time childcare. 6. The Passionista a woman who chooses to turn a hobby into her full-time personal business. 7. The Fledgling a young woman, typically still in college or recently graduated, who opts to launch her own business either full-time or part-time to earn income and pay off student debt. 8. The Freewheeler a woman nearing, or in, retirement who chooses to start a business.

Infopreneur is a person whose primary business is gathering and selling electronic information.[1] This term is a neologism portmanteau derived from the words "information" and "entrepreneur". An infopreneur is generally considered an entrepreneur who makes money selling information on the Internet. They use existing data and target an audience. The term is often used on the Internet. The word infopreneur was registered as a trademark (USPTO) on February 1 1984 by Harold F. Weitzen. In 1988, H. Skip Weitzen published "Infopreneurs: Turning Data Into Dollars" (John Wiley & Sons). a woman noticed that many of Ebay's classified ads were poorly worded... After spending two days writing a 5page special report on "How to Write a Good Ebay Ad" she offered it on Ebay for $10 per download. She sold 108 copies and made a whopping $1080 in the first 72 hours!The best part was that it continued sell 24 hrs/day, 7 days a week...

A professional juggler's niche website teaches people how to juggle... He offers lots of great free information, incorporates a few pay-per-click ads, and recommends links to juggling products and books where he earns a commission on all referred sales.

Instead of publishing a book on self-promotion, a publicist decides to offer the twenty chapters as individual reports for $10 each... Available 24/7 through her website, she makes more money selling three chapters than she would with the entire book in traditional distribution channels.

A man teaches people how to train parrots to talk... His website offers a mix of free high quality content, special reports for $8 each, and links to related books and products where he earns a commission on all referred sales

Viral marketing, viral advertising, or marketing buzz are buzzwords referring to marketing techniques that use pre-existing social networks to produce increases in brand awareness or to achieve other marketing objectives (such as product sales) through selfreplicating viral processes, analogous to the spread of viruses or computer viruses. It can be delivered byword of mouth or enhanced by the network effects of the Internet.[1] Viral marketing may take the form of video clips, interactive Flash games, advergames, ebooks, brandable software,images, or text messages. The goal of marketers interested in creating successful viral marketing programs is to create viral messages that appeal to individuals with high social networking potential (SNP) and that have a high probability of being presented and spread by these individuals and their competitors in their communications with others in a short period of time.

A green-collar worker is a worker who is employed in the environmental sectors of the economy. Environmental green-collar workers (or green jobs) satisfy the demand for green development. Generally, they implement environmentally conscious design, policy, and technology to improve conservation and sustainability. Formal environmental regulations as well as informal social

expectations are pushing many firms to seek professionals with expertise with environmental, energy efficiency, and clean renewable energy issues. They often seek to make their output more sustainable, and thus more favorable to public opinion, governmental regulation, and the Earth's ecology.

Crowd funding (sometimes called crowd financing, crowd sourced capital, or street performer protocol) describes the collective cooperation, attention and trust by people who network and pool their money and other resources together, usually via the Internet, to support efforts initiated by other people or organizations. Crowd funding occurs for any variety of purposes, from disaster relief to citizen journalism to artists seeking support from fans, to political campaigns, to funding a startup company or small business[1] or creating free software. One of the pioneers of crowd funding in the music industry have been the British rock group Marillion. In 1997 American fans underwrote an entire US tour[2] to the tune of $60,000, with donations following an internet campaign - an idea conceived and managed by the fans before any involvement by the band. Marillion has later used crowd funding with great success as a method to fund the recording and marketing of several albums, Anoraknophobia,[2] Marbles[3] and Happiness Is the Road.[4] Crowd funding in the film industry was pioneered by french entrepreneurs and producers Guillaume Colboc and Benjamin Pommeraud from company fr:Guyom Corp. when they launched a public internet donation campaign in August 2004[5] to fund their film, Demain la Veille (Waiting for Yesterday).[6] Within 3 weeks, they managed to raise nearly $50,000, allowing them to shoot their film.

hedgehog concept
(HEJ.hawg kon.sept) n. An idea or concept that, if done extremely well and to the exclusion of almost everything else, can help a person's career or a company's business achieve their full potential.
"Walgreens' hedgehog concept is to run the best, most convenient drug stores with high profit per customer visit," Jorndt continued. "We know who we are and what we are all about running drug stores. We work like crazy to execute it in our stores." Rob Eder, "Out-foxing the hedgehog's rivals," Drug Store News, March 25, 2002

Earliest Citation:
The fox knows a little about many things, but the hedgehog knows only one big thing very well. The fox is complex; the hedgehog simple. And the hedgehog wins. Our research shows that breakthroughs require a simple, hedgehog-like understanding of three intersecting circles: what a company can be the best in the world at, how its economics work best, and what best ignites the passions of its people. Social entrepreneurs are individuals with innovative solutions to societys most critical social problems. They are ambitious and constant, tackling major social issues and offering new ideas for wide-scale change. The main aim of social entrepreneurs is to work for social and environmental goals. Social entrepreneurship ventures are most commonly associated with the voluntary and not-for-profit sectors, but this need not to rule out making a profit

 The primary difference between the business and the social entrepreneurs is the purpose for setting up the venture. While the business entrepreneurs' efforts focus on building a business and earning profits, the social entrepreneur's purpose is to create social change. A business entrepreneur may create changes in the society, but that is not the primary purpose of starting the venture. Similarly, a social entrepreneur may generate profits, but for him/her that is not the primary reason for starting the venture. Ambush marketing means an attack from the hidden position A promotion tactic designed to associate a company, product or services with a particular event or to attract the attention of people attending the event, without payment being made for an official sponsorship Direct ambush Marketing. In 1994 football world cup master card received exclusive rights for using world cup logo, but a rival sprints communications used the logo without permission. This is direct attack but can be defended by loss. Indirect ambush Marketing. Several ways it can take place like sponsoring the broad cast of the event, sponsoring sub categorized of major event. Sponsor broadcast of the event Purchasing advertising time around relays of the competitors event Engage in major non sponsorship promotions Corporate hospitality and ticketing Is used by companies to intrude [pon public consciousness surrounding a sports property. Thus, it avoided the cost of paying expensive sponsorship fees while gaining the benefit of associating with a sports property at the expense of sponsor.

Executive Summary
Introduction Jolly's Java and Bakery (JJB) is a start-up coffee and bakery retail establishment located in southwest Washington. JJB expects to catch the interest of a regular loyal customer base with its broad variety of coffee and pastry products. The company plans to build a strong market position in the town, due to the partners' industry experience and mild competitive climate in the area. JJB aims to offer its products at a competitive price to meet the demand of the middle-to higher-income local market area residents and tourists. The Company JJB is incorporated in the state of Washington. It is equally owned and managed by its two partners.

Mr. Austin Patterson has extensive experience in sales, marketing, and management, and was vice president of marketing with both Jansonne & Jansonne and Burper Foods. Mr. David Fields brings experience in the area of finance and administration, including a stint as chief financial officer with both Flaxfield Roasters and the national coffee store chain, BuzzCups. The company intends to hire two full-time pastry bakers and six part-time baristas to handle customer service and day to day operations. Products and Services JJB offers a broad range of coffee and espresso products, all from high quality Columbian grown imported coffee beans. JJB caters to all of its customers by providing each customer coffee and espresso products made to suit the customer, down to the smallest detail. The bakery provides freshly prepared bakery and pastry products at all times during business operations. Six to eight moderate batches of bakery and pastry products are prepared during the day to assure fresh baked goods are always available. The Market The retail coffee industry in the U.S. has recently experienced rapid growth. The cool marine climate in southwest Washington stimulates consumption of hot beverages throughout the year. JJB wants to establish a large regular customer base, and will therefore concentrate its business and marketing on local residents, which will be the dominant target market. This will establish a healthy, consistent revenue base to ensure stability of the business. In addition, tourist traffic is expected to comprise approximately 35% of the revenues. High visibility and competitive products and service are critical to capture this segment of the market. Financial Considerations JJB expects to raise $110,000 of its own capital, and to borrow $100,000 guaranteed by the SBA as a ten-year loan. This provides the bulk of the current financing required. JJB anticipates sales of about $491,000 in the first year, $567,000 in the second year, and $655,000 in the third year of the plan. JJB should break even by the fourth month of its operation as it steadily increases its sales. Profits for this time period are expected to be approximately $13,000 in year 1, $36,000 by year 2, and $46,000 by year 3. The company does not anticipate any cash flow problems.

1.1 Mission
JJB aims to offer high quality coffee, espresso, and pastry products at a competitive price to meet the demand of the middle- to higher-income local market area residents and tourists.

1.2 Keys to Success

Keys to success for JJB will include: 1. 2. Providing the highest quality product with personal customer service. Competitive pricing.

Company Summary
JJB is a bakery and coffee shop managed by two partners. These partners represent sales/management and finance/administration areas, respectively. The partners will provide funding from their own savings, which will cover start-up expenses and provide a financial cushion for the first months of operation. A ten-year Small Business Administration (SBA) loan will cover the rest of the required financing. The company plans to build a strong market position in the town, due to the partners' industry experience and mild competitive climate in the area.

2.1 Company Ownership

JJB is incorporated in the state of Washington. It is equally owned by its two partners.

2.2 Start-up Summary

JJB is a start-up company. Financing will come from the partners' capital and a ten-year SBA loan. The following chart and table illustrate the company's projected initial start-up costs.

Start-up Requirements
Start-up Expenses Legal Premise renovation Expensed equipment Other Total Start-up Expenses Start-up Assets Cash Required Other Current Assets Long-term Assets Total Assets Total Requirements $70,000 $12,000 $65,000 $147,000 $211,000 $3,000 $20,000 $40,000 $1,000 $64,000

Start-up Funding
Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets Liabilities and Capital Liabilities Current Borrowing $0 $77,000 $70,000 $0 $70,000 $147,000 $64,000 $147,000 $211,000

Long-term Liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities Capital Planned Investment Patterson Fields Other Additional Investment Requirement Total Planned Investment Loss at Start-up (Start-up Expenses) Total Capital Total Capital and Liabilities Total Funding

$100,000 $1,000 $0 $101,000

$55,000 $55,000 $0 $0 $110,000 ($64,000) $46,000 $147,000 $211,000

JJB offers a broad range of coffee and espresso products, all from high quality Columbian grown imported coffee beans. JJB caters to all of its customers by providing each customer coffee and espresso products made to suit the customer, down to the smallest detail. The bakery provides freshly prepared bakery and pastry products at all times during business operations. Six to eight moderate batches of bakery and pastry products are prepared during the day to assure fresh baked goods are always available.

Market Analysis Summary

JJB's focus is on meeting the demand of a regular local resident customer base, as well as a significant level of tourist traffic from nearby highways.

4.1 Market Segmentation

JJB focuses on the middle- and upper-income markets. These market segments consume the majority of coffee and espresso products. Local Residents JJB wants to establish a large regular customer base. This will establish a healthy, consistent revenue base to ensure stability of the business. Tourists Tourist traffic comprises approximately 35% of the revenues. High visibility and competitive products and service are critical to capture this segment of the market.

4.1.1 Market Analysis

The chart and table below outline the total market potential of the above described customer segments.

4.2 Target Market Segment Strategy

The dominant target market for JJB is a regular stream of local residents. Personal and expedient customer service at a competitive price is key to maintaining the local market share of this target market.

4.2.1 Market Needs

Because Washington has a cool climate for eight months out of the year, hot coffee products are very much in demand. During the remaining warmer four months of the year, iced coffee products are in significantly high demand, along with a slower but consistent demand for hot coffee products. Much of the day's activity occurs in the morning hours before ten a.m., with a relatively steady flow for the remainder of the day.

4.3 Service Business Analysis

The retail coffee industry in the U.S. has recently experienced rapid growth. The cool marine climate in southwest Washington stimulates consumption of hot beverages throughout the year. Coffee drinkers in the Pacific Northwest are finicky about the quality of beverages offered at the numerous coffee bars across the region. Despite low competition in the immediate area, JJB will position itself as a place where customers can enjoy a cup of delicious coffee with a fresh pastry in a relaxing environment.

4.3.1 Competition and Buying Patterns

Competition in the local area is somewhat sparse and does not provide nearly the level of product quality and customer service as JJB. Local customers are looking for a high quality product in a relaxing atmosphere. They desire a unique, classy experience. Leading competitors purchase and roast high quality, whole-bean coffees and, along with Italian-style espresso beverages, coldblended beverages, a variety of pastries and confections, coffee-related accessories and equipment, and a line of premium teas, sell these items primarily through company-operated retail stores. In addition to sales through company-operated retail stores, leading competitors sell coffee and tea products through other channels of distribution (specialty operations). Larger chains vary their product mix depending upon the size of each store and its location. Larger stores carry a broad selection of whole bean coffees in various sizes and types of packaging, as well as an assortment of coffee- and espresso-making equipment and accessories such as coffee grinders, coffee makers, espresso machines, coffee filters, storage containers, travel tumblers and mugs. Smaller stores and kiosks typically sell a full line of coffee beverages, a more limited selection of whole-bean coffees, and a few accessories such as travel tumblers and logo mugs. During fiscal year 2000, industry retail sales mix by product type was approximately 73% beverages, 14% food items, eight percent whole-bean coffees, and five percent coffee-making equipment and accessories. Technologically savvy competitors make fresh coffee and coffee-related products conveniently available via mail order and online. Additionally, mail order catalogs offering coffees, certain food items, and select coffee-making equipment and accessories, have been made available by a few larger competitors. Websites offering online stores that allow customers to browse for and purchase coffee, gifts, and other items via the Internet have become more commonplace as well.
Strategy and Implementation Summary JJB will succeed by offering consumers high quality coffee, espresso, and bakery products with personal service at a competitive price. 5.1 Competitive Edge JJB's competitive edge is the relatively low level of competition in the local area in this particular niche. 5.2 Sales Strategy As the chart and table show, JJB anticipates sales of about $491,000 in the first year, $567,000 in the second year, and $655,000 in the third year of the plan.

Sales Forecast
Year 1 Unit Sales Espresso Drinks Pastry Items Other Total Unit Sales Unit Prices Espresso Drinks Pastry Items Other 135,000 86,000 0 221,000 Year 1 $3.00 $1.00 $0.00 148,500 94,600 0 243,100 Year 2 $3.15 $1.05 $0.00 163,350 104,060 0 267,410 Year 3 $3.31 $1.10 $0.00 Year 2 Year 3

Sales Espresso Drinks Pastry Items Other Total Sales Direct Unit Costs Espresso Drinks Pastry Items Other Direct Cost of Sales Espresso Drinks Pastry Items Other Subtotal Direct Cost of Sales $33,750 $43,000 $0 $76,750 $38,981 $49,665 $0 $88,646 $45,023 $57,363 $0 $102,386 $405,000 $86,000 $0 $491,000 Year 1 $0.25 $0.50 $0.00 $467,775 $99,330 $0 $567,105 Year 2 $0.26 $0.53 $0.00 $540,280 $114,726 $0 $655,006 Year 3 $0.28 $0.55 $0.00

Management Summary Austin Patterson has extensive experience in sales, marketing, and management, and was vice president of marketing with both Jansonne & Jansonne and Burper Foods. David Fields brings experience in the area of finance and administration, including a stint as chief financial officer with both Flaxfield Roasters and the national coffee store chain, BuzzCups. 6.1 Personnel Plan As the personnel plan shows, JJB expects to make significant investments in sales, sales support, and product development personnel.

Personnel Plan
Year 1 Managers Pastry Bakers Baristas Other Total People Total Payroll $100,000 $40,800 $120,000 $0 10 $260,800 Year 2 $105,000 $42,840 $126,000 $0 10 $273,840 Year 3 $110,250 $44,982 $132,300 $0 10 $287,532

Financial Plan JJB expects to raise $110,000 of its own capital, and to borrow $100,000 guaranteed by the SBA as a ten-year loan. This provides the bulk of the current financing required. 7.1 Break-even Analysis JJB's Break-even Analysis is based on the average of the first-year figures for total sales by units, and by operating expenses. These are presented as per-unit revenue, per-unit cost, and fixed costs. These conservative assumptions make for a more accurate estimate of real risk. JJB should break even by the fourth month of its operation as it steadily increases its sales.

Break-even Analysis
Monthly Units Break-even Monthly Revenue Break-even Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost $2.22 $0.35 $32,343 17,255 $38,336

Pro Forma Profit and Loss

Year 1 Sales Direct Cost of Sales Other Total Cost of Sales Gross Margin Gross Margin % Expenses Payroll Sales and Marketing and Other Expenses Depreciation Utilities Payroll Taxes $260,800 $273,840 $287,532 $491,000 $76,750 $0 $76,750 $414,250 84.37% Year 2 $567,105 $88,646 $0 $88,646 $478,459 84.37% Year 3 $655,006 $102,386 $0 $102,386 $552,620 84.37%

$27,000 $60,000 $1,200 $39,120

$35,200 $69,000 $1,260 $41,076

$71,460 $79,350 $1,323 $43,130

Other Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales

$0 $388,120 $26,130 $86,130 $10,000 $3,111 $13,019 2.65%

$0 $420,376 $58,083 $127,083 $9,500 $12,146 $36,437 6.43%

$0 $482,795 $69,825 $149,175 $8,250 $15,650 $45,925 7.01%

7.3 Projected Cash Flow The cash flow projection shows that provisions for ongoing expenses are adequate to meet JJB's needs as the business generates cash flow sufficient to support operations.

Pro Forma Cash Flow

Year 1 Cash Received Cash from Operations Cash Sales Subtotal Cash from Operations Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $491,000 $491,000 $567,105 $567,105 $655,006 $655,006 Year 2 Year 3

New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance

$0 $0 $0 $0 $491,000 Year 1

$0 $0 $0 $0 $567,105 Year 2

$0 $0 $0 $0 $655,006 Year 3

$260,800 $143,607 $404,407

$273,840 $186,964 $460,804

$287,532 $237,731 $525,263

$0 $0 $0 $0 $0 $0 $0 $404,407 $86,593 $156,593

$0 $0 $0 $10,000 $0 $20,000 $0 $490,804 $76,301 $232,894

$0 $0 $0 $15,000 $0 $20,000 $0 $560,263 $94,744 $327,637

7.4 Balance Sheet The following is a projected Balance Sheet for JJB.

Pro Forma Balance Sheet

Year 1 Assets Current Assets Cash Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation $65,000 $60,000 $85,000 $129,000 $105,000 $208,350 $156,593 $12,000 $168,593 $232,894 $12,000 $244,894 $327,637 $12,000 $339,637 Year 2 Year 3

Total Long-term Assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth

$5,000 $173,593 Year 1

($44,000) $200,894 Year 2

($103,350) $236,287 Year 3

$14,574 $0 $0 $14,574 $100,000 $114,574 $110,000 ($64,000) $13,019 $59,019 $173,593 $59,019

$15,438 $0 $0 $15,438 $90,000 $105,438 $110,000 ($50,981) $36,437 $95,456 $200,894 $95,456

$19,907 $0 $0 $19,907 $75,000 $94,907 $110,000 ($14,544) $45,925 $141,381 $236,287 $141,381

7.5 Business Ratios The following table represents key ratios for the retail bakery and coffee shop industry. These ratios are determined by the Standard Industry Classification (SIC) Index code 5812, Eating Places.

Ratio Analysis
Year 1 Sales Growth Percent of Total Assets Other Current Assets Total Current Assets Long-term Assets Total Assets Current Liabilities Long-term Liabilities Total Liabilities Net Worth Percent of Sales Sales 100.00% 100.00% 100.00% 100.00% 6.91% 97.12% 2.88% 100.00% 8.40% 57.61% 66.00% 34.00% 5.97% 121.90% -21.90% 100.00% 7.68% 44.80% 52.48% 47.52% 5.08% 143.74% -43.74% 100.00% 8.42% 31.74% 40.17% 59.83% 35.60% 43.70% 56.30% 100.00% 32.70% 28.50% 61.20% 38.80% 0.00% Year 2 15.50% Year 3 15.50% Industry Profile 7.60%

Gross Margin Selling, General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets Additional Ratios Net Profit Margin Return on Equity Activity Ratios Accounts Payable Turnover Payment Days Total Asset Turnover Debt Ratios Debt to Net Worth Current Liab. to Liab. Liquidity Ratios Net Working Capital Interest Coverage Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout

84.37%

84.37%

84.37%

60.50%

74.74% 0.49% 5.32%

71.43% 1.76% 10.24%

71.39% 6.87% 10.66%

39.80% 3.20% 0.70%

11.57 11.57 66.00% 27.33% 9.29% Year 1 2.65% 22.06%

15.86 15.86 52.48% 50.90% 24.18% Year 2 6.43% 38.17%

17.06 17.06 40.17% 43.55% 26.06% Year 3 7.01% 32.48%

0.98 0.65 61.20% 1.70% 4.30%

n.a n.a

10.79 27 2.83

12.17 29 2.82

12.17 27 2.77

n.a n.a n.a

1.94 0.13

1.10 0.15

0.67 0.21

n.a n.a

$154,019 2.61

$229,456 6.11

$319,731 8.46

n.a n.a

0.35 8% 11.57 8.32 0.00

0.35 8% 15.86 5.94 0.00

0.36 8% 17.06 4.63 0.00

n.a n.a n.a n.a n.a

Sales Forecast
Month Month Month Month Month Month Month Month Month Month Month Month 1 2 3 4 5 6 7 8 9 10 11 12

Unit Sales Espresso Drinks Pastry Items Other Total Unit Sales Unit Prices Espresso Drinks Pastry Items Other Sales Espresso Drinks Pastry Items Other Total Sales Direct Unit Costs $15,00 $22,50 $30,00 $37,50 $37,50 $37,50 $37,50 $37,50 $37,50 $37,50 $37,50 0 0 0 0 0 0 0 0 0 0 0 $37,500

0% 5,000 7,500 10,000 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500

12,500

0% 2,000 3,000 6,000 8,333 8,333 8,333 8,333 8,333 8,333 8,333 8,333 0% 0 0 0 0 0 0 0 0 0 0 0

8,333 0

7,000

10,50 16,00 20,83 20,83 20,83 20,83 20,83 20,83 20,83 20,83 0 0 3 3 3 3 3 3 3 3 20,833

Month Month Month Month Month Month Month Month Month Month Month Month 1 2 3 4 5 6 7 8 9 10 11 12

$3.00 $3.00 $3.00 $3.00 $3.00 $3.00 $3.00 $3.00 $3.00 $3.00 $3.00

$3.00

$1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

$1.00 $0.00

$2,000 $3,000 $6,000 $8,333 $8,333 $8,333 $8,333 $8,333 $8,333 $8,333 $8,333 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

$8,333 $0

$17,0 $25,5 $36,0 $45,8 $45,8 $45,8 $45,8 $45,8 $45,8 $45,8 $45,8 $45,83 00 00 00 33 33 33 33 33 33 33 33 3

Month Month Month Month Month Month Month Month Month Month Month Month 1 2 3 4 5 6 7 8 9 10 11 12

Espresso 0.00 Drinks % $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 Pastry Items 0.00 % $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 0.00 % $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

$0.25

$0.50

Other Direct Cost of Sales Espresso Drinks Pastry Items Other Subtota l Direct Cost of Sales

$0.00

$1,250 $1,875 $2,500 $3,125 $3,125 $3,125 $3,125 $3,125 $3,125 $3,125 $3,125

$3,125

$1,000 $1,500 $3,000 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

$4,167 $0

$2,25 $3,37 $5,50 $7,29 $7,29 $7,29 $7,29 $7,29 $7,29 $7,29 $7,29 0 5 0 2 2 2 2 2 2 2 2 $7,292

Personnel Plan

Month Month Month Month Month Month Month Month Month Month Month 1 2 3 4 5 6 7 8 9 10 11 Managers 0% $8,333 $8,333 $8,333 $8,333 $8,333 $8,333 $8,333 $8,333 $8,333 $8,333 $8,333 Pastry Bakers

Month 12 $8,333

0% $3,400 $3,400 $3,400 $3,400 $3,400 $3,400 $3,400 $3,400 $3,400 $3,400 $3,400

$3,400

Baristas Other Total People Total Payroll

0% 0%

$10,00 $10,00 $10,00 $10,00 $10,00 $10,00 $10,00 $10,00 $10,00 $10,00 $10,00 0 0 0 0 0 0 0 0 0 0 0 $10,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

10

10

10

10

10

10

10

10

10

10

10

10

$21,7 $21,7 $21,7 $21,7 $21,7 $21,7 $21,7 $21,7 $21,7 $21,7 $21,7 33 33 33 33 33 33 33 33 33 33 33 $21,733

General Assumptions Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont Mont h1 h2 h3 h4 h5 h6 h7 h8 h 9 h 10 h 11 Plan Month Current Interest Rate Long-term Interest Rate

Month 12

10

11

12

10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 % % % % % % % % % % %

10.00%

10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 % % % % % % % % % % % 30.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 % % % % % % % % % % % 0 0 0 0 0 0 0 0 0 0 0

10.00%

Tax Rate Other

25.00% 0

Pro Forma Profit and Loss Month Month Month Month Month Month Month Month Month Month Month Month 1 2 3 4 5 6 7 8 9 10 11 12 $17,00 $25,50 $36,0 $45,8 $45,8 $45,8 $45,8 $45,8 $45,8 $45,8 $45,8 $45,8 0 0 00 33 33 33 33 33 33 33 33 33

Sales Direct Cost of Sales Other Total Cost of Sales Gross Margin Gross Margin % Expense s

$2,250 $3,375 $5,500 $7,292 $7,292 $7,292 $7,292 $7,292 $7,292 $7,292 $7,292 $7,292 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

$2,250 $3,375

$5,50 $7,29 $7,29 $7,29 $7,29 $7,29 $7,29 $7,29 $7,29 $7,29 0 2 2 2 2 2 2 2 2 2 $30,50 $38,54 $38,54 $38,54 $38,54 $38,54 $38,54 $38,54 $38,54 $38,54 0 2 2 2 2 2 2 2 2 2 84.09 84.09 84.09 84.09 84.09 84.09 84.09 84.09 84.09 % % % % % % % % %

$14,750 $22,125

86.76% 86.76%84.72%

Payroll

$21,733 $21,733

$21,73 $21,73 $21,73 $21,73 $21,73 $21,73 $21,73 $21,73 $21,73 $21,73 3 3 3 3 3 3 3 3 3 3

Sales and Marketing and Other Expenses Depreciati on Utilities Payroll Taxes Other Total Operatin g Expense s Profit Before Interest and Taxes

$2,250 $2,250 $2,250 $2,250 $2,250 $2,250 $2,250 $2,250 $2,250 $2,250 $2,250 $2,250 15 % $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 5% $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100

15 % $3,260 $3,260 $3,260 $3,260 $3,260 $3,260 $3,260 $3,260 $3,260 $3,260 $3,260 $3,260 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

$32,34 $32,34 $32,3 $32,3 $32,3 $32,3 $32,3 $32,3 $32,3 $32,3 $32,3 $32,3 3 3 43 43 43 43 43 43 43 43 43 43

($17,59 ($10,21 ($1,84 3) 8) 3) $6,198 $6,198 $6,198 $6,198 $6,198 $6,198 $6,198 $6,198 $6,198 ($12,59 $11,19 $11,19 $11,19 $11,19 $11,19 $11,19 $11,19 $11,19 $11,19 3)($5,218) $3,157 8 8 8 8 8 8 8 8 8

EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sa les

$833

$833

$833

$833

$833

$833

$833

$833

$833

$833

$833

$833

($5,528)($2,763) ($669) $1,341 $1,341 $1,341 $1,341 $1,341 $1,341 $1,341 $1,341 $1,341 ($12,89 ($8,28 ($2,00 $4,02 $4,02 $4,02 $4,02 $4,02 $4,02 $4,02 $4,02 $4,02 9) 9) 7) 4 4 4 4 4 4 4 4 4

75.87% 32.50% 5.58% 8.78% 8.78% 8.78% 8.78% 8.78% 8.78% 8.78% 8.78% 8.78%

Pro Forma Cash Flow Month Month Month Month Month Month Month Month Month Month Month Month 1 2 3 4 5 6 7 8 9 10 11 12 Cash Received Cash from Operation s $17,00 $25,50 $36,00 $45,83 $45,83 0 0 0 3 3$45,833 $45,833$45,833 $45,833$45,833 $45,833$45,833

Cash Sales Subtotal Cash from Operatio ns Additional Cash Received Sales Tax, VAT, HST/GST Received New Current

$17,0 $25,5 $36,0 $45,8 $45,8 $45,83 $45,83 $45,83 $45,83 $45,83 $45,83 $45,83 00 00 00 33 33 3 3 3 3 3 3 3

0.00 %

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

Borrowing New Other Liabilities (interestfree) New Longterm Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investmen t Received Subtotal Cash Received Expendit ures Expenditu res from Operation s Cash Spending Bill Payments Subtotal Spent on Operatio ns Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repaymen t of Current Borrowing Other Liabilities Principal Repaymen t Long-term Liabilities Principal Repaymen t $21,73 $21,73 $21,73 $21,73 $21,73 3 3 3 3 3$21,733 $21,733$21,733 $21,733$21,733 $21,733$21,733 $11,40 $15,07 1 6$15,076 $15,076$15,076 $15,076$15,076 $15,076$15,076

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$17,0 $25,5 $36,0 $45,8 $45,8 $45,83 $45,83 $45,83 $45,83 $45,83 $45,83 $45,83 00 00 00 33 33 3 3 3 3 3 3 3 Month Month Month Month Month Month Month Month Month Month Month Month 1 2 3 4 5 6 7 8 9 10 11 12

$1,106 $3,295 $7,196

$22,8 $25,0 $28,9 $33,1 $36,8 $36,81 $36,81 $36,81 $36,81 $36,81 $36,81 $36,81 39 28 29 34 10 0 0 0 0 0 0 0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$22,8 $25,0 $28,9 $33,1 $36,8 $36,81 $36,81 $36,81 $36,81 $36,81 $36,81 $36,81 39 28 29 34 10 0 0 0 0 0 0 0 ($5,83 $7,07 $12,6 $9,02 9) $472 1 99 4 $9,024 $9,024 $9,024 $9,024 $9,024 $9,024 $9,024 $64,1 $64,6 $71,7 $84,4 $93,4 $102,4 $111,4 $120,4 $129,5 $138,5 $147,5 $156,5 61 33 03 03 26 50 74 98 21 45 69 93

Pro Forma Balance Sheet Month Month Month Month Month Month Month Month Month Month Month Month 1 2 3 4 5 6 7 8 9 10 11 12 Startin g Balanc es

Assets Current Assets

Cash Other Current Assets Total Current Assets Long-term Assets

$70,000 $64,161 $64,633 $71,703 $84,403 $93,426

$102,45 $111,47 $120,49 $129,52 $138,54 $147,56 $156,59 0 4 8 1 5 9 3

$12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000

$82,00 $76,16 $76,63 $83,70 $96,40 $105,4 $114,4 $123,4 $132,4 $141,5 $150,5 $159,5 $168,5 0 1 3 3 3 26 50 74 98 21 45 69 93

Long-term Assets $65,000 $65,000 $65,000 $65,000 $65,000 $65,000 $65,000 $65,000 $65,000 $65,000 $65,000 $65,000 $65,000 Accumulat ed Depreciati on Total Longterm Assets Total Assets Liabilitie s and Capital Current Liabilities Accounts Payable

$0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 $55,000 $60,000

$65,00 $60,00 $55,00 $50,00 $45,00 $40,00 $35,00 $30,00 $25,00 $20,00 $15,00 $10,00 0 0 0 0 0 0 0 0 0 0 0 0 $5,000 $147,0 $136,1 $131,6 $133,7 $141,4 $145,4 $149,4 $153,4 $157,4 $161,5 $165,5 $169,5 $173,5 00 61 33 03 03 26 50 74 98 21 45 69 93

Month Month Month Month Month Month Month Month Month Month Month Month 1 2 3 4 5 6 7 8 9 10 11 12

$1,000 $3,060 $6,820 $10,898 $14,574 $14,574 $14,574 $14,574 $14,574 $14,574 $14,574 $14,574 $14,574

Current Borrowing Other Current Liabilities Subtotal Current Liabilitie s

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$1,000 $3,060 $6,820

$10,89 $14,57 $14,57 $14,57 $14,57 $14,57 $14,57 $14,57 $14,57 $14,57 8 4 4 4 4 4 4 4 4 4

Long-term $100,00 $100,00 $100,00 $100,00 $100,00 $100,00 $100,00 $100,00 $100,00 $100,00 $100,00 $100,00 $100,00 Liabilities 0 0 0 0 0 0 0 0 0 0 0 0 0 Total Liabilitie s Paid-in Capital Retained Earnings

$101,0 $103,0 $106,8 $110,8 $114,5 $114,5 $114,5 $114,5 $114,5 $114,5 $114,5 $114,5 $114,5 00 60 20 98 74 74 74 74 74 74 74 74 74 $110,00 $110,00 $110,00 $110,00 $110,00 $110,00 $110,00 $110,00 $110,00 $110,00 $110,00 $110,00 $110,00 0 0 0 0 0 0 0 0 0 0 0 0 0 ($64,00 ($64,00 ($64,00 ($64,00 ($64,00 ($64,00 ($64,00 ($64,00 ($64,00 ($64,00 ($64,00 ($64,00 ($64,00 0) 0) 0) 0) 0) 0) 0) 0) 0) 0) 0) 0) 0) ($12,89 ($21,18 ($23,19 ($19,17 ($15,14 ($11,12 9) 7) 5) 1) 7) 4)($7,100)($3,076)

Earnings Total Capital Total Liabilitie s and Capital Net Worth

$0

$948 $4,971 $8,995 $13,019

$46,00 $33,10 $24,81 $22,80 $26,82 $30,85 $34,87 $38,90 $42,92 $46,94 $50,97 $54,99 $59,01 0 1 3 5 9 3 6 0 4 8 1 5 9

$147,0 $136,1 $131,6 $133,7 $141,4 $145,4 $149,4 $153,4 $157,4 $161,5 $165,5 $169,5 $173,5 00 61 33 03 03 26 50 74 98 21 45 69 93 $46,00 $33,10 $24,81 $22,80 $26,82 $30,85 $34,87 $38,90 $42,92 $46,94 $50,97 $54,99 $59,01 0 1 3 5 9 3 6 0 4 8 1 5 9

1. Musharakah (Partnership) 2. Mudarabah (Passive Partnership) 3. Diminishing Partnership 4. Bay al-murabahah (Sales Contract at a Profit Mark-up) 5. Ijarah (Leasing) 6. A Lease Ending in the Purchase of the Leased Asset 7. Salam 8. Al-istisna (Contract of Manufacture) and Al- istisna Al-Tamwili (Financing by Way of istisna) 9. Jualah 10. Wakalah 11. Takaful 12. Sukuk 1. Musharakah (Partnership) Musharakah literally means sharing. In the Islamic finance literature it refers to a joint enterprise in which all the partners share the profit or loss of the joint venture. Musharakah as a financial contract refers to an arrangement where two or more parties establish a joint commercial enterprise and all contribute capital as well aslabour and management as a general rule. The profit of the enterprise is shared among the partners in agreed proportions while the loss will have to be shared in strict proportion of capital contributions. The basic rules governing the musharakah contract include: i) Profit of the enterprise can be distributed in any proportion by mutual consent. However, it is not permissible to fix a lump sum profit for anyone. ii) In case of loss, it has to be shared strictly in proportion to the capital contributions. iii) As a general rule all partners contribute both capital and management. However, it is possible for any partner to be exempted from contributinglabour/management. In that case, the share of profit of the sleeping partner has to be in strict proportion of his capital contribution. iv) The liability of all the partners is unlimited. As a mode of finance, an Islamic bank can advance money to a client using the contract of musharakah. Normally the bank will use the option of being a sleeping partner. The contract can be more widely used by Islamic funds whereby the unit holders can assume the role of sleeping partners. The contact can also be used in securitized assets. TOP 2. Mudarabah (Passive Partnership) Mudarabah is a special type of partnership. This is a contract between two parties : a capital owner (called rabb al-mal) and an investment manager (called mudarib). Profit is distributed between the two parties in accordance with the ratio that they agree upon at the time of the contract. Financial loss is borne by the capital owner; the loss to the manager being the opportunity cost of his own labour, which failed to generate any income. i) While the provider of capital can impose certain mutually agreed conditions on the manager, he has no right to interfere in the day-to-day work of the manager. ii) mudarabah is one of the fiduciary contracts (uqud al-amanah). Mudarib is expected to act with utmost honesty, iii) The liability of the rabb al-mal is limited to the extent of his contribution to the capital. iv) The mudarib is not allowed to commit the mudarabah business for any sum greater than the capital contributed by the rabb al-mal. v) All normal expenses related to mudarabah business, but not the personal expenses of the mudarib, can be charged to the mudarabah account .

vi) The contract of mudarabah can be terminated at any time by either of the two parties on giving a reasonable notice. (This condition may create serious problems in the context of modern commercial enterprises. However, using the Golden Principle of Free Choice the parties can agree on any conditions in the contract that will regulate the termination so as not to cause any damage to the enterprise). vii) No profit distribution can take place (except as an ad hoc arrangement, and subject to final settlement), unless all liabilities have been settled and the equity of therabb al-mal restored. As a mode of finance applied by Islamic banks, on the liabilities side, the depositors serve as rabb-almal and the bank as the mudarib. Mudarabah deposits can be either general, which enter into a common pool, or restricted to a certain project or line of business. On the assets side, the bank serves as the rabb-al-mal and the businessman as the mudarib (manager). However the manager is often allowed to mix the mudarabah capital with his own funds. In this case profit may be distributed in accordance with any ratio agreed upon between the two parties, but the loss must be borne in proportion to the capital provided by each of them. TOP 3. Diminishing Partnership This is a contract between a financier (the bank) and a beneficiary in which the two agree to enter into a partnership to own an asset, as described above, but on the condition that the financier will gradually sell his share to the beneficiary at an agreed price and in accordance with an agreed schedule. TOP 4. Bay al-murabahah (Sales Contract at a Profit Mark-up) There is another sale contract known as bay al-murabahah, which refers to a sale in which the seller declares his actual cost and the parties agree on adding a specific profit margin. Basically, this is a two party buying and selling contract. No financial intermediation is involved. The Islamic banks have created a mode of finance by combining the concepts of bay muajjal and bay al-murabahah. They use this contract as a mode of finance in the following manner. The client orders an Islamic bank to purchase for him a certain commodity at a specific cash price, promising to purchase such commodity from the bank once it has been bought, but at a deferred price, which includes an agreed upon profit margin called mark-up in favour of the bank. Thus, the transaction involves an order accompanied by a promise to purchase and two sales contracts. The first contract is concluded between the Islamic bank and the supplier of the commodity. The second is concluded between the bank and the client who placed the order, after the bank has possessed the commodity, but at a deferred price, that includes a mark-up. The deferred price may be paid as a lump sum or in instalments. In the contract between the Islamic bank and the supplier, the bank often appoints the person placing the order (the ultimate purchaser) as its agent to receive the goods purchased by the bank. The basic rules governing the murabahah contract include: i) The subject of sale must exist at the time of sale. ii) The subject of sale must be in the ownership of the seller at the time of sale. iii) The subject of sale must be in the physical or constructive possession of the seller. iv) The delivery of the sold commodity to the buyer must be certain and should not depend on a contingency or chance. v) As in any sales contract the price must be specified and once specified it cannot be increased in case of default. vi) The time of delivery must be specified. vii) The payments schedule must be specified. 5. Ijarah (Leasing) In the simple lease contract the usufruct generated over time by an asset, such as machinery, airplanes, ships or trains is sold to the lessee at a predetermined price. This is called an operating lease, as opposed to a financial lease. The operating lease has a number of features that distinguish it

TOP

from other forms of leasing. Firstly, thelessor is himself the real owner of the leased asset and, therefore, bears all the risks and responsibilities of ownership. Secondly, the lease is for a specified short-term period (for a month, a quarter, or a year) unless renewed by mutual consent of both the parties. TOP 7. Salam salam is a sales contract in which the price is paid in advance at the time of contracting, against delivery of the purchased goods/services at a specified future date. Not every commodity is suitable for a salam contract. It is usually applied only to fungible commodities. Some basic rules governing the salam sale are given below: i) The price should be paid in full at the time of the contract. ii) Goods whose quality or quantity cannot be determined by specification cannot be sold through the contract of salam. An example is precious stones. iii) Goods can be sold only by specifying the attributes. They cannot be particularized to a given farm, factory or area. iv) The exact date and place of delivery must also be specified. 8. Al-istisna (Contract of istisna) of Manufacture) and Al- istisna Al-Tamwili (Financing by Way

Al-istisna is a contract in which a party orders another to manufacture and provide a commodity, the description of which, delivery date, price and payment date are all set in the contract. Any party can cancel the contract after giving a notice to the other before the manufacturing work starts. istisna is similar to salam in the sense that both are exceptions to some general conditions of sale However, there are some differences between the two which are summarized below: i) The subject of istisna is always a thing which needs manufacturing, ii) In the case of salam full payment of price is necessary whereas in case of istisna the payment can be delayed. iii) The time of delivery in case of salam must be specified at the time of the contract. In the case of istisna this is not necessary. 9. Jualah It is contract to perform a given task against a prescribed fee (in a given period). The services of real estate agents are a good example. For example, someone places his house for sale with a real estate agent, say within three months. If the real estate agent is able to sell it, he gets an agreed compensation (usually a percentage of the sale price). If he fails to sell it, he gets nothing and loses his effort and publicity costs. TOP 10. Wakalah Wakalah is a contract whereby somebody (principal) hires someone else to act on his behalf i.e. as his agent for a specific task. The agent is entitled to receive a predetermined fee irrespective of whether he is able to accomplish the assigned task to the satisfaction of the principal or not as long as he acts in a trustworthy manner. He would be liable to penalties only if it can be proved that he violated the terms of the trust or acted dishonestly. In the case of a financial wakalah contract, clients give funds to the bank/company that serves as their investment manager. The bank/company charges a predetermined fee for its managerial services. Entire profit or loss is passed back to the fund providers after deducting such a fee. 11. Takaful

An alternative for the contemporary insurance contract. A group of persons agree to share certain risk (for example, damage by fire) by collecting a specified sum from each. In case of loss to anyone of the group, the loss is met from the collected funds. A Takaful company has the following features: i) The company is not the one who assumes risks nor the one taking any profit. Rather, it is the participants, the policy holders, who mutually cover each other. ii) All contributions (premiums) are accumulated into a fund. This fund is invested using Islamic modes of investment and the net profit resulting from these investments is credited back to the fund. iii) All claims are paid from this fund. The policy holders, as a group, are the owners of any net profit that remains after paying all the claims. They are also collectively responsible if the claims exceed the balance in the fund. iv) The company acts as a Trustee on behalf of the participants to manage the operations of the Takaful business. The relationship between the company and the policy holders is governed by the terms of mudarabah contract. Therefore, should there be a surplus from the operation, the company (mudarib) will share the surplus with the participants (rabb-al-mal) according to a pre-agreed profitsharing ratio. TOP 12. Sukuk These are secondary instruments based on returns from real assets. Sukuk are meant to mobilize resources from the market based on the strength of ones balance sheet, credentials, track record, good will and prospects of the proposed project. These are basically, certificates of ownership which are negotiable in secondary markets. Islamic scholars offer the following general guidelines for issuing of securitized Islamic financial instruments: a) Instruments should represent share in equity, real assets, usufruct, money or debt or a combination of some or all of these; i. instruments representing real physical assets and usufructs are negotiable at market price, ii. instruments representing debts in their negotiability to the rules of hawalah, iii. instruments representing money are subject to the rules of sarf in their negotiability, iv. instruments representing a combination of different categories are subject to the rules relating to the dominant category; that is, if debts are relatively larger, the portfolios negotiability will be subject to hawalah al-dayn;