FINANCIAL MANAGEMENT IN SHIPPING Assignment Example | Topics and Well Written Essays - 1250 words

FINANCIAL MANAGEMENT IN SHIPPING - Assignment Example This report is a short study of some of the recent developments in international trade and finance and their impact on maritime transport, suggesting ways how shipping can weather the storm and manage itself financially to remain the most viable and popular mode of international transport. According to International Chamber of Shipping, the international shipping industry is responsible for the carriage of about 90 percent of world trade. Intercontinental trade, the bulk transport of raw materials and the import/export of affordable food and goods would simply not be possible without shipping. Notwithstanding the recent contraction in trade resulting from the present economic downturn, the world economy is expected to continue to grow and shipping will need to respond to the demand for its services. â€Å"Capesize Vessels† weigh from 175,000 tons to 400,000 tons and count as some of the largest craft in the World. They typically carry raw materials such as Iron ore, Steel, Coal and other raw commodities. Where you used to pay up to $230,000 per day to rent one, now you can have one for a measly $2800 per day. Lloyds even reported yesterday that one Capesize vessel was going for $1000 per day. These levels of payment are crippling the Shipping Industry and leading to cancelled orders with Shipyards where it is cheaper to let the shipbuilder keep the deposit. More and more older carriers are being scrapped as their value decreases. In October alone, more shipping tonnage was scrapped than in the previous 2 years. The inevitable result of this will be less tonnage available to transport raw materials. From an economic standpoint, supply will decrease thus theoretically lead to a commensurate increase in leasing prices, thus forcing the Baltic Dry Index up again. In the meantime though, there will be a large increase in job losses in the shipping

FINANCIAL STRUCTURE Essay Example | Topics and Well Written Essays - 1500 words

FINANCIAL STRUCTURE - Essay Example At this stage it becomes essential to address the question of weather financial structure matter for long-run economic growth? Several economists and policy-makers have tried to answer this question and have concentrated on the relative merits of intermediary- versus market-based financial systems. The debate is more than a century old and it commenced with reference to Germany and the United Kingdom in the late nineteenth and early twentieth centuries (Dolar and Meh, 2002). Financial Data and its Importance Financial data correspond to the existing results of the company's strategy and structure. Even though analyzing financial statements can be quite complex, a general idea of a company's financial position can be determined through the use of ratio analysis. Financial performance ratios can be calculated from the balance sheet and income statement. These ratios can be classified into five different subgroups: profit ratios, liquidity ratios, activity ratios, leverage ratios, and shareholder-return ratios. These ratios should be compared with the industry average or the company's prior years of performance. Profit Ratios Profit ratios are used to calculate the efficiency with which the company uses its resources. The more efficient the company, the greater is its profitability. It is useful to compare a company's profitability against that of its major competitors in its industry. In addition, the change in a company's profit ratios over time tells whether its performance is improving or declining.