FILE - In this May 18, 2020 file photo, a woman walks past the Alaska Capitol in Juneau. Alaska lawmakers are set to convene amid a near decade-long run of deficits and economic fallout from the ongoing coronavirus pandemic. Go-to reserve accounts are depleted, and tough decisions await on how to use the state's nest-egg oil-wealth fund. It's unclear who will lead those debates: neither the House nor the Senate has organized. (AP Photo/Becky Bohrer, File)
With the Permanent Fund dividend question so front-and -center in the debate before the Alaska Legislature, Ive been thinking about the original intent of the dividend. As I learned from Gov. Jay Hammond it was to create a vested interest in protecting the principal of the Fund from excessive government spending; thus, investing more in the Permanent Fund. He was also adamant about giving each Alaskan a share of the oil resource they collectively own. In his book, Tales of Alaskas Bush Rat Governor (published in 1994), Hammond reflected, Today, most Alaskans recognize that without the dividend program, the billions now invested in the Permanent Fund would have long since been squandered. In terms of creating an interest in protecting the rainy-day account (now at $77.8 billion), the dividend has been a huge success, larger than Gov. Hammonds woodpile. I highlight the term interest because it differs from the sense of entitlement that pervades the current how much debate.
The whole design of the Permanent Fund was to be able to fund government off the interest earned. To accomplish this meant determining what budget is the right size for providing essential public services. This has been the focus of the Alaska Legislature since about 2015. According to fiscal analyst Cliff Groh, The state of Alaska has cut the budget substantially it is 43% lower this year than eight years ago.After adjusting for population and inflation, the states spending is lower now than before the big oil revenues started to arrive four decades ago.
Without commenting on whether or not this is the right size, it appears that the Alaska Legislature has finally come to agreement on the level of government spending. As noted in a recent opinion piece, Speaker Louise Stutes (R-Kodiak) said, Today, there is broad agreement that the level and type of services is close to where the state needs to be. Now the focus switches to the PFD side of the equation. As it turns out, in order to sustain a meaningful dividend check, the state must now either overdraw or look at taxes.
In a recent article on Gov. Dunleavys dividend plan, Sen. Natasha von Imhof, (R-Anchorage) pointed out that it doesnt make sense to tax Alaskans in order to pay them a dividend - unless the tax proposal has some other policy objective, like switching from a regressive tax to a progressive tax, where the tax rate increases with an increase in the taxpayers income.
I absolutely agree with Sen. von Imhofs assessment that it makes no sense to tax for the sole purpose of a generating a handout back to the taxpayer. Its all administrative costs, with little to no public benefit.
The other aspect of the ongoing debate in the Legislature that I find troublesome is the just this once thinking. As Speaker Stutes said, What the disagreement now boils down to this year is whether to spend more than we can afford just this once. Thats like saying, Lets eat the seed corn just this once.
How did we get to this point in our fiscal considerations? In part we got here because of massive tax breaks given to the producers of Alaskas legacy oil fields. In part, we got here because many Alaskans think of the PFD as an entitlement. And in this regard, its important to note that once there is a sense of entitlement, it will be extremely difficult to overdraw just this once for a higher PFD amount.
The dividend program was not set up to become the obstacle in gaining a budget sustainably funded by Permanent Fund earnings; rather it was established to be a pathway toward fiscal stability not only for Alaskans today but for future generations. As noted earlier, the dividend program succeeded in creating such a pathway. Now we must decide if we want this pathway to continue for future generations or not.
If the only way to keep future generations in mind is to reduce the check amount to a level that avoids an overdraw, so be it. I realize this is easy for me to say because I have enough income where Im not dependent on a PFD check to make ends meet. If there is a way to make the dividend more needs based and still not overdraw, that could work as well. Ultimately, the objective should be to set or alter the PFD amount in a way that it acts as personal-floatation-device for future budgets.
Kate Troll, a longtime Alaskan, has over 22 years experience in coastal management, fisheries and energy policy and is a former executive director for United Fishermen of Alaska and the Alaska Conservation Voters. Shes been elected to local office twice, written two books and resides in Douglas. She is a former board member of Alaska Common Ground, which has hosted several forums on the states fiscal situation.
The views expressed here are the writers and are not necessarily endorsed by the Anchorage Daily News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary(at)adn.com. Send submissions shorter than 200 words to [email protected] or click here to submit via any web browser. Read our full guidelines for letters and commentaries here.
Kate Troll, a longtime Alaskan, has over 22 years experience in coastal management, fisheries and energy policy and is a former executive director for United Fishermen of Alaska and the Alaska Conservation Voters. She's been elected to local office twice, written two books and resides in Douglas.
A project report on waste water treatment. This project report will help you to learn about: 1. Introduction to Waste Water Treatment 2. Basic Parameters in Waste Water Characterisation 3. Biochemical Characteristics 4. Stages 5. Domestic Waste Water Treatment 6. Wastewater Discharged 7. Chemical Specifications 8. Classification of Treatment Methods for Industrial Waste.
The composition of municipal waste water varies from place to place. Sometimes industrial wastes also mix with sewage. The type of treatment of waste water thus depends upon its characteristics and the desired quality of water after treatment.
The purpose of waste water treatment is to remove/reduce organic and inorganic substances, nutrients toxic substances kill pathogenic organisms etc. so that the quality of discharged water is improved to meet the permissible level of water to be discharged in some water body, on land or agricultural field.
Treatment of water thus aims at reduction of BOD, COD, eutrophication, etc. of receiving water bodies and prevention of bio-magnification of toxic substances in food chain and prevention of disease due to pathogenic organisms present in the waste water.
Sources information for the individual points of origin waste components, individually or at least by classes, rate of discharge during production run (average and maximum). Periodic discharges due to batch operation. Duration and frequency of production runs. Susceptibility to emergency discharges or spills.
Suspended solids are determined by filtering suitable aliquot of sample through a previously weighed sintered grooch crucible and drying the crucible in an oven at 103 105C to constant weigh. The difference in the initial and final weight of the curcible gives SS content, mg/1.
Allowing 1 litre of the sample to settle for about 1 hr at 20C in an 1 ra cone. The volume of settleable matter in the tapered conical tube is recorded as ml/1. The settleable solids may be expressed in mg/1 also.
Determined by evaporating a known volume of the waste water sample and drying the residue for 24 hrs. in oven at 103-105C. Followed by weighing. This gives the total solids content of the sample which comprises the dissolved as well as suspended solids.
Oxygen present in the sample oxidize in divalent mass generation its higher valency with precipitates as a brown hydrates, oxides after addition of NaOH and KI upon acidification manganese reverts to divalent state and liberate iodine from KI equivalent to DO content of the sample which is titrated against 1 standard N/80 solution of sodium thiosulphate using starch as an indicator.
Micro-organisms can utilize organic substance as food and oxides them to obtain energy for their life process. Some bacteria are also capable to utilize, reduce inorganic substance such as Fe2+, S2-and NH3 to obtain energy.
In the biological degradation of sewage and other wastes (caused by various types of living organisms or bacteria) organic matter is converted into fragments consisting of acetic acid. When sufficient oxygen is present such as in aerobic system. Oxygen is reduced while the organic matter is oxidised into CO2 and water.
The amount of oxygen required by a mixed population of micro-organisms on oxidising organic matter present in a sample, under strictly aerobic conditions, is generally known as B.O.D., and is directly related to the extent of pollution (by sewage or other oxygen- demanding wastes).
The rate of bacterial oxidation at any instant is proportional to the amount of the oxygen-demanding waste left at the instant, i.e., this reaction follows first order reaction and theoretically will be completed in infinite time.
However, it has been observed that about 70 80% of the total B.O.D. is exerted in first 5 days. The sample is therefore incubated for 5 days at 20C and the B.O.D. values determined are reported as B.O.D. A polluted sample may consume more oxygen in 5 days than present in water (nearly 9 mg/1 at 20C). Hence before analysis it is diluted with a specially prepared Dilution Water.
The dilution water is prepared by passing air in distilled water for 1 2 days so as to make it saturated by dissolved oxygen. In one liter of this 1 ml each of phosphate buffer MgCl2, CaCl2 and FeCl3 are mixed. The sample so diluted is taken in two bottles. The D.O. of one is determined immediately and that of the other after 5 days incubation. The B.O.D. of the sample is then calculated by
Measurement of D.O. content of the sample before or after in combustion at 20C for 5 days or glutonic BOD at 27C for 3 days. If the sample does not contain any oxygen, it is supplied with oxygen and the depletion caused is calculated as the B.O.D. measurement. Microbial organisms or seed may also have to provided B.O.D. is expressed in mg/1.
In C.O.D. determination the organic matter is completely oxidised to CO2 and H2O, the C.O.D. values are greater than B.O.D. values which represent the amount of oxygen that bacteria require for stabilizing biologically oxidisable matter.
The C.O.D. tests are performed with the same objectives as those of B.O.D. test. C.O.D. test results are obtained in 5 hours whereas B.O.D. results are obtained in 5 days. In comparison to B.O.D., there is least interference in C.O.D. test.
When the waste water aliquot of the sample is refluxed with a known excess of oxidizing agent potassium dichromate in the 50% sulphuric acid solution in the presence of AgSO4. Silver sulphate as catalyst and mercuric sulphide.
Waste water, whether domestic or industrial have several undesirable components, the organic and inorganic pollutants that are potentially harmful to the environment and human health. The treatment of waste water and its proper management has become a necessity in order to conserve this vital resource.
The main aim of waste water treatment is the removal of contaminants from water so that the treated water can be reused for beneficial purposes. The waste water treatment is carried out in three stages: Primary, Secondary and Tertiary or advanced waste treatment.
Waste water, contains a wide variety of solids of various shapes, sizes and densities. The primary treatment is of general nature and is used for removing suspended solids, odour, colour and to neutralize the high or low pH in the case of industrial effluents.
Screening devices are used to remove coarse solids from waste water. Coarse solids consist of sticks, rags, boards and other large objects that often and inexplicably, find their way into waste water collection systems.
Because the primary purpose of screens is to protect pumps and other mechanical equipment and to prevent clogging of valves and other appurtenances in the waste water plant, screening is normally the first operation performed on the incoming waste water.
Waste water screens are classified as coarse or fine, depending on their construction. Coarse screens usually consist of Vertical bars spaced 20-60 mm apart and inclined away from the incoming flow. Solids retained by the bare are usually removed by manual raking in small plants, while mechanically cleaned units are used in larger plants.
Fine screening (10-20 mm) consist of woven-wire cloth or perforated plates mounted on rotating disk or drum partially submerged in the flow, or on travelling belt. Fine screens should be mechanically cleaned on a continual basis.
The quantity of solids removed by screening depends on screen-opening size. Screened solid are coated with organic material of a very objectionable nature and should be promptly disposed-off to prevent a health hazard and/or nuisance condition. Disposal in a sanitary land fill, grinding and returning to the waste water flow, and incineration are the most common disposal practices.
As mentioned above screenings are sometimes shredded and returned to the waste water flow. A hammer mill device is most often used for this purpose. Most often; a shredding device called a comminutor is located across the flow path and intercepted the coarse solids and shreds them to approx. 0.8 mm in size. These solids remain in the waste water.
Many kinds of comminutes are available. Basic parts include a screen and cutting teeth. The screen may be a slotted drum that rotates in the vertical plane. Stationary teeth then shred material that is intercepted by the screen.
Other types use as stationary semi-circular screen and rotating or oscillating cutting teeth. Another device, called a barminutor, uses a vertical bars screen with a cutting head that travels up and down, the rack of bars, shredding the intercepted material.
Shredding devices should be located ahead of pumping facilities at the treatment plant. Grit removal ahead of the shredder will save wear on the cutting head. Usually, however, grit chambers are located at or above ground level to facilitate grit handling, and pumps may be necessary to lift the sewage to them. In this case, shredding is done ahead of the pumps and cutter wear must be tolerated.
Municipal waste water contains a wide assortment of inorganic solids such as pebbles, sand, silt, egg shells, glass and metal fragments. Operations to remove these inorganics will also remove some of the larger, heavier organics such as bone chips, seeds etc. Together, these comprise the material known as grit in waste water treatment systems.
Most of the substances in grit are abrasive in nature and will cause accelerated wear on pumps and sludge handling equipment with which it comes in contact. Grit deposits in areas of low hydraulic shear in pipes, sumps and clarifiers may absorb greases and solidify.
The latter should not be allowed to settle along-with, otherwise it gets entangled with the inorganic matter causing septicity of waste water and requiring unnecessary labour and expenses for removal. A velocity of flow between 0.15 to 0.3 m/sec is practically considered sufficient for this purpose.
Grit removal facilities basically consist of an enlarged channel area where reduced flow velocities allow grit to settle out. Many configurations of grit tanks are available. At-least two separate chambers should be provided, one to take care of low flow and the other for the high flow. A period of detention of 1 minute is commonly employed. Grit chambers are cleaned by hand, mechanically or hydraulically.
Hand clearing is done only in the case of smaller plants, is less hygienic and odour free though somewhat easier for disposing of the removed material than in the case of mechanical cleaning. In hydraulic-cleaning, the deposited material is flushed out under fire-streams directed from a central point and removed through pipes in the side-walls or bottom of the chamber.
A skimming tank is a chamber so arranged that the floating matter like oil, fat, grease etc., rise and remain on the surface of the waste water (Sewage) until removed, while the liquid flows out continuously under partitions or baffles.
It is necessary to remove the floating matter from sewage otherwise it may appear in the form of unsightly scum on the surface of the settling tanks or interfere with the activated sludge process of sewage treatment. It is mostly present in the industrial sewage. In ordinary sanitary sewage, its amount is usually too small.
The chamber is a long trough shaped structure divided up into two or three lateral compartments by vertical baffle walls having slots for a short distance below the sewage surface and permitting oil and grease to escape into stilling compartments.
The rise of floating matter is brought about by the blowing air into the sewage from diffusers placed in the bottom. Sewage enters the tank from one end. A theoretical detention period of 3 minutes is enough.
The traps must have sufficient capacity to permit the sewage to cool and grease to separate. Frequent cleaning through removable covers is essential for satisfactory operation. Grease traps are commonly employed in case of industries, garages, hotels, and hospitals.
In this step, the settleable solid are removed by gravitational settling under quiescent conditions. The sludge formed at the bottom of the tank is removed as under flow either by vacuum suction or by raking it to a discharge point at the bottom of the tank for withdrawal. The clear liquid produced is known as the overflow and it should contain no readily settle- able matter.
The sedimentation operation in waste treatment applications may be carried out in rectangular horizontal flow, circular radial flow or vertical flow basis. Fig. 7.8 shows the three main types of arrangements.
In rectangular tanks, feed is introduced at one end along with the width of the tank and the overflow is collected at the surfaces, either across the other end or at different point along the length of the tank. An endless conveyor scrapes the floating material into a screen through which it also pushes the settled solids into a sludge hopper.
Flotation may be used in place of sedimentation, primarily for treating industrial waste water containing finely divided suspended solids and oily matter. Flotation technique is used in paper industry to recover fine fibres from the screened effluent and in the oil industry for the classification of oil bearing waste. It is also used for treating effluents from tanneries, metal finishing, cold-rolling and pharmaceutical industries.
Particles of density very close to that of water are very difficult to settle in normal sedimentation tanks and take a long time for separation. In such cases, the separation can be speeded up by aerating the effluent where by air bubbles are attached to the suspended matter.
This has the effect for increasing the buoyancy of the particles as a result; the particles float to surface from where they can be readily removed. To aid in the flotation process, chemical coagulants such as aluminium and ferric salts or polymer coagulant-aids are often used. These chemicals increase the flocculent structure of the floated particles so that they can easily entrap the air bubbles.
1. In dispersed air flotation, air is introduced directly into the liquid through a revolving impeller or through diffusers. The air bubbles generated in dispersed air flotation systems are normally about 1 mm in diameter and they usually cause turbulence which breaks up fragile floe particles.
Due to this, dispersed air flotation is not favoured technique in the treatment of municipal wastewater, although it finds a limited application in treating industrial wastes containing oil, grease and fine powders.
2. In dissolved air flotation, air is intimately brought into contact with the waste water at a pressure of several atmospheres when air is dissolved. The pressure on the liquid is reduced to atmospheric level through a backpressure valve, there by releasing micron-sized bubbles.
Suspended solids and oil are carried to the surface of the flotation tank by these minute air bubbles. A typical flotation system is shown in Fig. 7.10. Here, the entire flow is pressurized and held in the retention tank so that the air gets dissolved in the liquid.
The intense mixing of air and waste water in the pressurization system often degrades flocculent suspensions or oil emulsions following chemical treatment. A portion of the clear effluent is recycled for pressurization to prevent such degradations.
Compressed air is introduced into the discharge of the recycle pump and intimate contact is achieved in the retention tank. The recycled flow is then returned through a back pressure valve (where the pressurized air is released and mixed with the influent for flotation. The time in the flotation tank is about half an hour.
If the industry is producing carbon dioxide then only this method should be utilized for neutralizing the pH, otherwise it would be costly affair. Here carbon dioxide is passed in alkaline effluent to make its pH almost 7. (i.e. Neutral value).
The biological process of sewage is a secondary treatment involving removing, stabilizing and rendering harmless very fine suspended matter, and solids of the waste water that remain even after the primary treatment has been done.
Since much of the organic material in waste water may be colloidal or dissolved, the primary treatment processes are largely ineffective in removing it. The organic matter still represents a high demand for oxygen which must be reduced further so that the effluent may be rendered suitable for discharge into the water bodies.
Thus, the principal requirements of a biological waste treatment process are an adequate amount of bacteria that feed on the organic material present in waste water, oxygen and some means of achieving contact between the bacteria and the organics.
In the activated sludge system, the waste water is brought into contact with a diverse group of micro-organisms in the form of a flocculent suspension in an aerated tank, whereas in the biological film system, also known as trickling filters, the waste water is brought into contact with a mixed microbial population in the form of a film of slime attached to the surface of a solid support system. In both cases the organic matter is metabolized to more stable inorganic forms.
The essential features of activated sludge process are: an aeration stage, solids-liquid separation following aeration, and a sludge recycle system. Waste water after primary treatment enter and aeration tank where the organic matter is brought into intimate contact with the sludge from the secondary clarifier.
The effluent from the aeration tank containing the flocculent microbial mass, known as sludge, is separated in a settling tank sometimes called a secondary settler of a clarifier. In the settling tank the separated sludge exits without contact with the organic matter and becomes activated to the aeration tank as a seed; the rest is wasted.
If all the activated sludge is recycled, then the bacterial mass would keep increasing to the stage where the system gets clogged with solids. It is therefore, necessary to waste some of the micro-organisms, and this wasted sludge is the one which is processed and disposed of. The process flow diagram for a typical activated sludge plant is given in Fig. 7.11.
The secondly commonly used biological waste treatment process is the trickling filter method. Trickling filters are also called percolating filters. It has good adaptability to handle peak shock loads and the ability to function satisfactorily after a short period of time.
Milk processing, paper mill and pharmaceutical wastes are among those treated by tricking filters. Conventional trickling filters normally consist of a rock bed. 1 to 3 metres in depth, with enough openings between rocks to allow air to circulate easily.
The influent is sprinkled over the bed packing (See Fig. 7.12) which is coated with a biological slime. As the liquid trickles over the packing, oxygen and the dissolved organic matter diffuse into the film to be metabolized by the micro-organism in this slime layer. End products such as NO3, CO2 etc. diffuse back out of the film and appear in the filter effluent.
As the micro-organisms utilize the organic matter, the thickness of the slime film increases to a point where it can no longer be supported on the solid media and gets detached from the surface. This process is known as sloughing. A settling tank following the trickling filter removes the detached bacteria film and some suspended matter.
The concentration of solids in the primary sewage sludge is about 5 percent; the activated sludge contains less than 1 percent solids; from trickling filters has about 2 percent solids. The common unit operation of sludge treatment and disposal involve concentration or thickening, digestion, conditioning, dewatering, oxidation and safe disposal.
The aerated lagoon system consists of a large pond that is equipped with machines aerations to maintain an aerobic environment and to prevent settling of the suspend biomass. The population of microorganisms in an aerated lagoon is much lower than that in an actual sludge system because there is no sludge recycle.
Usually the primary and secondary treatments are sufficient to meet waste water effluent standards. However, if water produced is required to be of higher water quality standards (in case the water to be put to some direct reuse) then advanced waste water treatment is carried out.
These methods may be introduced at any stage of the total treatment process as in the case of industrial waste waters or may be used for complete removal of pollutants after the secondary treatment.
The wastewater treatment processes are basically concentrating or thickening processes on which the suspended solids are removed as sludges. The impurities in the wastewater are concentrated into solid form and are then separated from the bulk liquid. This concentrated form is referred to as sludge.
Conventional sewage treatment plants are based on biological decomposition of nontoxic organic wastes, using bacteria. Such biological decomposition is conducted under aerobic conditions, i.e. in the presence of plenty of oxygen.
Of O2 by aeration and on the total load organic material which requires oxidation. The organic load is expressed in terms of B.O.D. i.e. biochemical oxygen demand which means mg of O2 needed to decompose the organic material in 1L waste water.
Domestic sewage, 165; industrial waste water, 200; paper industry 372; food industry, 747; metal industry 13. Evidently such a heavy load is likely to upset the capacity of most natural water bodies so that sewage treatment is essential for maintaining the water quality.
These are secondary waste treatment methods by biological processes. After primary treatment for removal of insoluble matter i.e. grit, grease, scum etc. and sedimentation, the resulting sludge is subjected to secondary treatment.
The aerobic treatment process the biodegradable organic matter is utilised by the bacterial cells (microorganisms) for their growth and metabolism and in the process huge quantity of cell mass and CO2 are generated. About 50% of biodegradable C present in the waste water is converted into cell mass and the rest into CO2.
Among the available processes, the most important is the Activated Sludge Process. This is shown in Fig. 7.17. It is a continuous flow flocculated growth process in which bacterial floes (activated sludge) are separated from treated effluent by a clarifier and recycled to the aeration tank to maintain a high degree of process intensity.
The microbial cell matter which is formed as part of the waste degradation process is generally kept in the aeration tank till the microorganisms reach their saturation point of growth when the cells flocculate well to form settleable solids.
These solids settle out in a settler and part of it is discarded. The bulk of the solids, return sludge, is recycled to the bottom of the aeration tank and encounters the fresh sewage. The return sludge and the influent sludge provide optimum conditions for rapid degradation of organic matter.
Oxidative degradation is accomplished mostly by chemoheteraoropic bacteria and ciliated protozoa. Effective degradation is caused by predominant gerera like Pseudomonas, Zoogloea, Flavobacterium, Alcallgenes etc.
Nitrification in the Activated Sludge process (ASP) proceeds by the action of the genera Nitrosomona, Nitrospira, etc. in the first step and by Nitrobacter, Nitroseoccus etc. in the second step. Denitrification takes place by the action of the genera Pseudomonas, Microccus etc.
In these processes about 95% of biodegradable C is decomposed into biogas (c.f. 50% in aerobic process) and the rest 5% into biomass. Three main steps are involved in the breakdown of organic waste under anaerobic conditions.
These steps are essentially hydrolysis of biopolymers to monomers, fermentation of monomers to volatile acids and methanogenesis. The anaerobic degradation of carbohydrate takes place as follows; polysaccharide to pyruvate and pyruvate to lactic acid or ethanol.
The microbial species responsible for anaerobic degradation are: Actinomyces, Arthrobacter, Cirobacter, Escherichia, lactobacillus, Micrococcus etc. Anaerobic treatment is illustrated in the flow-sheet Fig. 7.18.
This technique is used extensively for concentration and separation of metal ion from large volumes of natural and waste waters. The total free metal ion content of a water sample is determined by passing the sample through H+ cation exchanges and titrating the acid liberated with a standard alkali solution. Another aliquot may be titrated with EDTA to estimate the total hardness of water.
Ion exchange chromatography provides an excellent method for concentration and separation of ions from waste water. The ions are first concentrated on a suitable ion exchange column and then selectively eluted to be measured polarograhically, spectrophotometrically, radio metrically etc. Ion exchange membranes are also useful for separation and concentration of metal ions prior to analysis.
Treating the waste is first step of processing of the waste when it comes directly from the industry. Waste is observed as three states of matter as solid, liquid and gas; then its treatment is decided.
Physical treatment can be defined as a process or processes where by undesirable constituents of an effluent are removed by separation. Those constituents that need to be removed may be suspended solids, dissolved solids, or liquids other than the normal bulk phase of the effluent which is in most instances is water.
The principle on which this works is the matter to be separated should have higher specific gravity than the phase in which it is dispersed. Chemical addition is done to increase the specific gravity. Plants used for these are described below:
This is most popular and oldest method. The initial plants simply consisted of a rectangular or square tank where effluent entered at one end and the clarified effluent has been discharged at the other end with the suspended solids settling out as a sludge at the bottom.
As with many settlement plant, uniform distribution is needed so that the full volume of tank is needed for the liquid solid separation process. One advantage of this type of plant is that, due to the large discharge area normally used, gentle flow occurs through the plant, provided of course no short circuiting occurs.
The principle of operation of this type of clarifier is that freshly flocculated water or effluent come into contact with previously formed particles which have been optimised in size. Consequently collision occur between these particles causing induced flocculation of the freshly treated water.
In this way size of particles is increased, improving rates of sedimentation. A plant to be designed for an effluent or water having a consistent suspended solids content and flow velocity. Sludge is usually continuously removed to maintain the blanket consistency. This type of plant is often called a sludge contact clariflre. It has very reduced free surface area.
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This article was co-authored by Brad Hurvitz. Brad Hurvitz is a Certified Swimming Instructor for My Baby Swims, an adolescent swimming school based in La Jolla, California. Brad is trained as an Infant Swimming Resource (ISR) instructor with ISR's Self-Rescue program. He specializes in training children aged six months to six years of age survival skills like floating on their back to breathe and swimming back to the wall, while also educating parents on how to better keep their kids safe. He has a Master of Business Administration from Oregon State University. wikiHow marks an article as reader-approved once it receives enough positive feedback. This article has 11 testimonials from our readers, earning it our reader-approved status. This article has been viewed 475,729 times.
Teaching another person to swim is very rewarding. However, it's not an easy, as there is a lot to cover and you need to be absolutely aware of what the person is doing at all times, to ensure that the person is both safe and is swimming correctly. If you're keen to teach someone to swim, you're now the "teacher" and your pupil is the "learner", and it's time to get into the water.
Not quite! The "sink-or-swim" approach actually reinforces a person's fear of the water; it does not help them overcome it. This can actually increase a person's fear of swimming as they may associate this scary experience with swimming from now on. Theres a better option out there!
Yes! Even taking a few steps into a pool can be a major achievement for someone who is afraid of the water. Take them into the shallow end of the pool, and hold their hand if necessary for moral support. Read on for another quiz question.
Not exactly! Diving requires a certain form, and some people can't master it. For everyday swimming, you likely don't need to dive, so you don't need to introduce someone who is afraid of water to diving. Click on another answer to find the right one...
Nope! Floating on your back can be scary because you can't see the water below you. Introduce someone who is afraid of water to swimming in a gentler way, perhaps by just taking those first steps into the water! Choose another answer!
Not necessarily! Whether you practice kicking on your back or front, you should have the person hold on to the side of the pool. This way, they still feel safe and in control while learning how to kick! Choose another answer!
Correct! Someone learning to swim may be more comfortable watching their legs in the water so they can see that they are doing the motions correctly. It is also less scary than lying face first in the water! Read on for another quiz question.
Absolutely! Introduce new strokes, such as the backstroke and breaststroke, and have the learner tell you which ones they like best. Don't put too much pressure on the student, and make it fun so that they want to try new things! Read on for another quiz question.
Not quite! If you teach someone the most difficult strokes, they might become intimidated. Instead, teach them easy-to-master strokes, and make it fun with games and encouragement! Click on another answer to find the right one...
Not necessarily! You don't want to put too much pressure on a new swimmer to learn different strokes. Keep the atmosphere calm and casual so that they are more comfortable trying new things. Guess again!
Not quite! A learner may want a life jacket or flotation device when navigating the deep end. This does not mean they aren't ready to tackle it, just that they need some added security. Click on another answer to find the right one...
Nice! If your student frequently stops to check that they are in shallow water, they are probably not confident or strong enough to head to the deep end. Wait until they can swim the pool length without stopping to touch the bottom. Read on for another quiz question.
Nope! There is no magic age when a person is ready to swim in the deep end. It is more about a person's comfort level and skills. They should be able to swim the length of the pool without touching the bottom! Guess again!
Not exactly! Blowing bubbles in the water is one of the first things that you do when learning to swim. While it can help a new learner, it is not an indication that someone is ready for the deep end. Theres a better option out there!
To teach someone to swim, help the person get comfortable in the water by staying relaxed and giving them floaties to hold on to at the shallow end. You can also hold your hand under their stomach so they can practice the arm stroke while staying buoyant. Next, have the person hold onto the edge of the pool as they practice how to kick. Once they feel confident, encourage them to lift their feet off the bottom in the shallow end while they hold your hand. Additionally, get the learner to swim short distances in the shallow end by standing a few steps away from them. For tips on how to take someone to the deep end and how to teach them to jump in, read on! Did this summary help you?YesNo
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And (my new favorite word coming up) according to this source, there is no specific difference between BE and AmE regarding to flotation/floatation confusion. I'd like to point out, his site has similar sources to back up his findings.
The spelling flotation is not etymologically justifiable, but is more common in use, probably because it disguises the hybrid formation, so that the word appears more conformable to the general analogy of scientific terms.
Further searching produced a result which surprised me. It's Scots, laddie. The term "floatation" is widely used in Scotland, as opposed to the UK in general, being much more common than "flotation". While this can be confirmed by searching the web for floatation and reading Scottish related entries, a good idea of what will be found is obtained by searching the web for
All 3.69M / 10.9M Australia 420 k / 2.29 M England 266k / 2.23M Scotland 2.01 M / 445 k USA 689 k / 3.52 M Scottish 2.38 M / 261 K Scots 2.327 M / 659 k NZ 252 k / 1.18 M "South Africa" 181k / 994 k Wales 117 k / 341 k "pinyin" 37k / 206 k
These example sentences are selected automatically from various online news sources to reflect current usage of the word 'flotation.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.
1. Size of the Company 2. Nature of Industry 3. Investors 4. Cost of Floatation 5. Legal Requirements 6. Period of Finance 7. Level of Interest Rate 8. Level of Business Activity 9. Availability of Funds 10. Taxation Policy 11. Level of Stock Prices
1. Control 2. Risk 3. Income 4. Tax Consideration 5. Cost of Capital 6. Trading on Equity 7. Investors Attitude 8. Flexibility 9. Timing 10. Legal Provisions 11. Profitability 12. Growth Rate 13. Government Policy 14. Marketability 15. Company Size 16. Maneuverability 17. Financing Purpose
The management control over the firm is one of the major determinants of capital structure decisions. The equity shareholders are considered as the real owners of the company, since they can participate in decision-making through the elected body of representatives called Board of Directors.
The policy decisions are taken in general meetings of the equity shareholders and the day to day working will be supervised through Board of Directors. When the promoters do not wish to dilute their control, the company will rely more on debt funds. Any fresh issue of shares will dilute the control of the existing shareholders.
A firm with high business risk prefer to have low levels of debt, since the volatility of its earnings is more. A firm with low level of business risk can have higher debt component in capital structure, since the risk of variations in expected earnings is lower.
Increase of return on equity shareholders depends on the method of financing and its impact on EPS and ROE. If the levels of EBIT is low from EPS point of view, equity is preferable to debt. If the EBIT is high from EPS point of view, debt financing is preferable to equity. If the ROI is less than the cost of debt, financial leverage depress ROE. When the ROI is more than cost of debt, financial leverage enhances ROE.
Under the provisions of the income-tax act, the dividend payable on equity share capital and preference share capital are not deductible, causing the high cost of equity funds. Interest paid on debt is deductible from income and reduces a firms tax liabilities. The tax saving on interest charges reduces the cost of debt funds.
Cost of different components of capital will influence the capital structuring decisions. A firm should posses earning power to generate revenues to meet its cost of capital and finance its future growth. Generally the cost of equity is higher than the cost of debt, since the debt holders are assured of fixed rate of return and repayment of principal amount after the maturity period.
A company raises debt at low cost with a view to enhance the earnings of the equity shareholders. The cost of debt is lower due to tax advantage. A fixed rate of return is payable on debt funds. Any excess earnings over cost of debt will be added up to the equity shareholders.
In a segmented market, different sets of investors measure risk differently or simply charging different rates on the capital that they invest. By choosing the instrument that taps the cheapest market, firms lower their cost of capital. However, the trade-off in terms of availability of funds always exist.
It is more important consideration with the raising of debt is flexibility. As and when the funds required, the debt may be raised and it can be paid off and when desired. But in case of equity, once the fund raised through issue of equity shares, it cannot ordinarily be reduced except with the permission of the court and compliance with lot of legal provisions.
The time at which the capital structure decision is taken will be influenced by the boom or recession conditions of the economy. In times of boom, it would be easier for the firm to raise equity, but in times of recession, the equity investors will not show much of interest in investing. Then the firm is to rely in raising debt.
The growing companies will require more and more funds for its expansion schemes, which will be met through raising debt. The fast growing companies will have to rely on debt than on equity or internal earnings.
The government policies and capital market regulation is a major determinant in capital structure. For example, increase in lending rates may cause the companies to raise finances from capital market. Rigid capital market policies may cause to raise finances from banks and financial institutions. Monetary and fiscal policies of the government will also affect the capital structure decisions.
The companies with small capital base will rely more on owners funds and internal earnings. But large companies have to depend on capital market and can tap finances by issue of different varieties of securities and instruments.
The balancing of capital structure is drawn when the firm has Maneuverability on funds raised by expanding and contracting the outstanding balances to the funds requirement of the firm. By having different types of securities with different maturity periods, recall provisions, the company can optimize its capital structure and enhance its borrowing power.
The capital structure decisions are taken in view of the purpose of financing. The long-term projects are financed through long-term sources and in the form of equity. The short-term projects are financed by issue of debt instruments and by raising of term loans from banks and financial institutions.
The use of fixed bearing securities, such as debt and preference capital along with owners equity in the capital structure is described as financial leverage or trading on equity. This decision is most important from the point of view of financing decisions.
By having debt and equity in the capital mix, a company will have an opportunity of deploying certain amount of debt (instead of whole equity capital) with an intention to enjoy the benefit of reduction in the percentage of tax (as interest is debited to Profit and Loss A/c). The benefit so enjoyed will be passed on to the equity shareholders in the form of high percentage of dividend.
If the assets are financed, through the debt, it yields higher return than the cost of debt. Earnings per share increase without an increase in the owners investment. The earnings per share also increases when the preference share capital is used to acquire assets. (If r > kp) (r = return on investment and kp = cost of preference share capital).
Therefore, financial leverage is an important consideration in planning the capital structure of a company. The most popular method of examining the impact of leverage is to analyse the relationship between Earnings per Share and various levels of Earnings Before Interest and Taxes under different methods of financing. EBIT EPS (Earnings before Interest and Taxes Earnings Per Share) analysis is an important analytical tool at the disposal of a finance manager to get an insight into the firms capital structure.
Ordinarily, debt securities increases the risk, while equity securities reduces it, risk can be measured to some extent by the use of ratio, measuring, gearing and time interest earned. The risk attached to the use of leverage is called Financial Risk. Financial risk is added with the use of debt because of the increased variability in the shareholders earnings and threat of insolvency. A firm can avoid or reduce the risk, if it does not employ debt capital in the capital mix.
But, it reduces the returns to equity shareholders too. Hence a finance manager must employ the debt capital in such a way that, the benefit of that should maximise the returns to equity shareholders. However, in the long run EPS alone will not be considered as a determinant factor for structuring the capital. Wealth maximisation concept should be kept in mind.
In the initial stages, a firm can meet its financial requirements through long-term sources, particularly by raising equity shares. Once the company starts getting good response and cash inflow capacity is increased through sales, it can raise debt or preference capital for growth and expansion programmes of the company.
Ploughing back of profits will also be used as a source, which provides flexibility and less dependence on the outsiders funds. The firm with stable sales can employ a high degree of leverage as they will not face difficulty in meeting their fixed commitments. The company which is having high sales and having the capacity of generating more sales revenue will opt for more amount of debt for their financial requirements.
The fixed charges of these instrument can be easily paid by such revenue will opt for more amount of debt for their financial requirement. The fixed charges of these instrument can be easily paid by such revenue and can increase the returns to equity shareholders.
In contrast to this, a company which is having less sales revenue must reduce its burden towards debt, because of the inability of the company to pay interest on debt. Otherwise, it takes the company directly liquidation. Hence the policies of growth and stability will directly influence the capital structure.
The attitude of the management towards retaining the control over the company will have direct impact on the capital structure. If the existing shareholders want to continue the same holding on the company, they may not encourage the issue of additional equity shares. Fresh issue of equity share reduces the interest and holding over the company.
The divisible profits percentage of such company will also come down. In the long run it affects the market value of the shares. Hence, in the normal practical situation, the existing equity shareholders directs the management to raise the additional source only through debentures or preference shares.
However, issue of debentures and preference shares also be influenced by the reputation that is enjoyed by the company. If the creditworthiness of a firm is good, it can raise the funds according to the desire of the existing shareholders.
The cost of capital refers to the expectation of suppliers of funds. The objective of knowing the cost of capital is to increase the returns on investments, so that, a firm should earn sufficient profits to repay the interest and instalment of principal to the lenders. Hence, it is also known as the maximum rate of return of a firm earn on its investments, so that the market value of equity shares of the company does not fall.
In the real life situation, a finance manager evaluate the cost of equity by considering the percentage of dividend and the capital gains expected by equity shareholders. The cost of debenture is assessed by taking the assured percentage of dividend. Therefore, different type of sources of funds will have different types of costs. Debt is a cheaper source of fund when compared to other sources.
The return on total capital employed can be maximised by minimising total average cost of capital. Careful decision has to be made in selecting the size of debt, because, beyond a particular ratio (D:E) debt increases the risk of a firm. Hence cost of capital influences the capital structure.
Cash flow ability of a company will have direct impact of the capital structure. Cash flow generation capacity of a firm increases the flexibility of finance manager in deciding the capital structure. Cash generated by a company or availability of a continuous supply of cash increases the reputation of a company.
Cash flows permits the company to meet its short-term obligations. A firm will have the obligation to pay dividend to equity shareholders, interest to banker and debenture holders. Cash flow generating capacity of a company helps in meeting this commitment. Sound cash flows facilitates the finance manager in raising funds through debt.
Flexibility means the firms ability, to adopt its capital structure to the needs of changing conditions, its capital structure should be flexible, so that without much practical difficulties, a firm can change the securities in capital structure. Redeemable preference shares and redeemable debentures increases the flexibility of capital structure, as it can be redeemed at the discretion of the company.
Different securities will have different fixed commitments of interest or cost. Interest cost on the borrowings will have permanent obligation on the company. Obligation of dividend on preference share is not permanent, it becomes a commitment only when a company earns profit. The nonpayment of preference dividend can cause a set back to the companys reputation, but, it does not result in insolvency.
The dividend on equity shares is not at all a forced obligation. As a policy, a company may give dividend regularly but it is free to retain certain amount of profit as retained earnings. This can be used as a source of funds for expansion and diversification programmes. Thus, from the fixed charges of a firm, it can decide the ratio of debt to equity mix. Hence capital structure is influenced by the fixed charges of different securities.
Restrictive covenants are commonly included in long-term loan agreements and debentures. These restrictions curtails the freedom of a company in dealing with financial matters and put it in an inflexible position. Covenants in loan agreements may include restrictions or to raise additional external finances.
A company may also be required to maintain a certain amount of working capital or to maintain certain ratios, such as debt equity restrictions may be quite reasonable from the point of view of creditors as they are meant to protect their interests; but they reduce the flexibility of company to operate freely and may become burdensome if conditions change. Therefore, a company should ensures while issuing debentures or accepting other forms of long-term debt that a minimum of restrictive clauses, that circumscribe its financial action in future, are included in debt agreements.
A company must have maximum flexibility in its capital structure to maximise the returns on investment. This can be maintained by having redeemable preference share and debenture of the firms discretion. This helps the company to replace different securities easily. When a firm has excess cash, it can repay or redeem preference shares and debentures. If inadequacy in cash arises. It can issue additional securities. Hence, terms of redemption influences the capital structure.
The flexibility of the capital structure also depends on the companys debt capacity. If a firm has less amount of debt with more amount of equity capital, it has the potentiality of raising debt finance whenever it requires. The unused debt capacity facilitates flexibility in the capital structure. Therefore cost and benefit of each mix should be evaluated before taking a final decision on the Capital Structure.
The purpose of finance is another factor that influence the capital structure. If a firm is engaged in business transactions, it can make use of Debt and Equity mix or can enjoy leverage benefits. If funds are needed for non-profit organisations to build social welfare measures, it can meet its requirements only through equity capital. For an existing company, funds may be required for expansion or diversification. It may be financed through retained earnings, debentures or preference capital. Hence purpose of business influences the capital structure.
Funds are needed to make investments on fixed assets and current assets. Fixed assets investments can be met by long-term sources, viz., through the issue of equity, debentures or preference. A portion of current asset investments are also financed by long-term sources. Short-term sources are used for meeting the working capital requirement. Hence Asset Structure (both fixed assets and current assets) influences the capital structure.
If the size of business is small, the requirement of finance is too little. If the size of the business of a firms is large, large amount of capital is required. If a firm plans to raise smaller amount of capital, it selects only few securities in its capital structure. If it need more capital, number of different securities will be selected to raise funds with more flexibility in the capital structure.
The nature of industry, method of production, type of product, etc., will also influence the capital structure. A public utility concern which has a unique support and identify form the State and Central Government (Food Corporation of India, Mysore Power Corporation) can raise funds through preference shares or debentures.
A capital-intensive industry engaged in manufacturing iron and steel products may have high equity and less debt capital. A trading company, which has less asset structure, has to depend mainly on equity or preference capital to meet their capital requirement.
Now the investors are cautious over the investments. Political, socio-economic factors of the country made the investors to be very alert in their portfolio management. Hence, capital market is moving from equity to debt and debt to deep discount bonds. The finance manager must be careful in selecting the securities for capital structure.
The cost of floatation refers to the expenses a firm incurred during the process of public issues. Advertising, campaigning, printing of application forms, fees of merchant bankers, underwriting commission, brokerage, etc. The finance, manager has to evaluate such expenses with particular reference to each financial instrument. Cost of floatation of debt is comparatively less when compared to cost of floatation of equity. He should try to reduce this cost by: proper mix of debt and equity in the capital structure.
The legal and statutory requirement of the government will also influence the capital structure. SEBI guidelines on investors protection, maintaining D:E ratio and current ratio, promoter contribution, etc., will have direct bearing on capital structure. Besides this, the monetary and fiscal policies of the government also affect the capital structure decision.
Funds are required for different period for different purposes. Short-term (1-3 years) funds are required to meet working capital requirements. Hence, it is raised through commercial banks (O.D, Cash Credit).
Medium-term finance (8-10 years) is required to meet expansion and diversification purposes and which can be raised through issue of preference or debenture capital. Funds are needed permanently for a company to meet its capital expenditure. This can be raised by issuing equity shares. Hence, period of finance will also influence the capital structure.
The rate of interest will have a direct impact on borrowed funds. If the expectation of the banker or financial institution is more to get high percentage of interest, a firm can postpone the mobilisation of funds or can make use of retained earnings. Hence, it affects the capital structure.
When a level of business activity of a firm is raising, it requires more funds for expansion and diversification. The company may opt for raising additional funds through issue of debentures, preference share or it can borrow term loans. Hence, it affects the capital structure.
The availability of money in the capital and money market will directly influence the companys financial structure. Free flow of money in the economy encourages a corporate to raise funds-through securities without much difficulties. Hence, a finance manager has to study the flow and availability of funds before he decides about the capital structure.
High corporate tax, high tax on dividend and capital gains directly influence the decision of capital structure. High tax discourages the issues of equity and encourages to issue more amount debt instrument, as the fixed charges on these securities, i.e., interest can be directly charged to Profit and Loss Account for income tax calculations. Hence, capital structure of a company is affected.
If the general price level of stocks or raw materials are constant over a period of time, management prefers to invest such funds either through equity or preference capital, in other words, long-term or medium-term financing. If the prices are fluctuating too widely (impossible to predict), short-term source is the best alternative for investments.
The principles determining the choice of different source of capital funds are antagonistic to each other. For example, cost principle supports induction of additional does of debt in the business which may not be favoured from risk point of view because with additional debt the company may run the risk of bankruptcy.
Similarly, control factor supports strongly for issue of bonds but maneuverability factor discounts this step and favours the issue of common stock. Thus, to design suitable pattern of capital structure for the company finance manager must bring about a satisfactory compromise among these conflicting factors of cost, risk, control and timing.
Any decision relating to pattern of capital structure must be made in the light of future developments which are likely to take place in the economy because the management has little control over the economic environment. Finance manager should, therefore, make predictions of the economic outlook and adjust the financial plan accordingly.
Tempo of business activity, state of capital market, state regulation, taxation policy and financial policy of financial institutions are some of the vital aspects of the economy which have a strong bearing on capital structure decision.
If the economy is to recover from current depression and the level of business activity is expected to expand, the management should assign greater weightage to maneuverability so that the company may have several alternative sources available to procure additional funds to meet its growth needs and accordingly, equity stock should be given more emphasis in financing programmes and avoid issuing bonds with restrictive covenants.
Study of trends of capital market should be undertaken in depth since cost and availability of different types of funds is essentially governed by them. If stock market is going to be plunged in bearish state and interest rates are expected to decline the management may provide greater weightage to maneuverability factor in order to take advantage of cheaper debt later on and postpone debt for the present.
However, if debt will become costlier and will be scarce in its availability owing to bullish trend of the market, income factor may receive higher weightage and accordingly, the management may wish to introduce additional doses of debt.
The existing taxation provision makes debt more advantageous in relation to stock capital in as much as interest on bonds is a tax deductible expense whereas dividend is subject to tax. Although it is too difficult to forecast future changes in tax rates, there is no doubt that the tax rates will be adjusted downwards.
If financial institutions adopt harsh policy of lending and prescribe highly restrictive terms, the management must give more significance to maneuverability principle and abstain from borrowing from those institutions so as to preserve the companys maneuverability in capital funds.
However, if funds can be obtained in desired quantity and on easy terms from the financial institutions it would be in fitness of things to assign more weight to cost principle and obtain funds from the institution that supplies cheaper funds.
There are industries whose products are subject to wider variation in sales in response to national income. For example, sales of the refrigerators, machine tools and most capital equipments fluctuate more violently than the income. As against this, some products have low income elasticity and their sales do not change in proportion to variation in national income.
The management should attach more significance to maneuverability and risk principles in choosing suitable source of funds in an industry dealing in products whose sales fluctuate very markedly over a business cycle so that the company may have freedom to expand or contract the resources used in accordance it business requirements.
Further, the management would be averse to secure loan for additional funds since this would go against the interests of the owners and-the company would run the risk of bankruptcy during the lean years which could spell depth knell of the company.
Public utility concerns are generally free from inter-industry competition. Accordingly, profits of these concerns in the absence of inroads of competitors are likely to be relatively more stable and predictable. In such concern the management may wish to provide greater weightage to cost principle to take advantage of financial leverage.
But where nature of industry is such that there is neck to neck competition among concerns and profits of the business are, therefore, not easy to predict, risk principle should be given more weightage. Accordingly, the company should insist on equity stock financing because it would incur the risk of not being able to meet payments on borrowed funds in case bonds are issued.
Decision to make up capitalisation is subject to state control. For example, debt-equity norm has been prescribe as 4:1 and equity and preferred stock norm as 3:1. The equity capital to be subscribed in any issue to the public by promoters should be less than 25 per cent of the total issue of equity capital for amounts up to Rs. 100 crore and 20 per cent of the issue for amounts above Rs. 100 crore.
The management should also take into consideration policy of the financial institutions. For instance, the general debt-equity norm prescribed by the Indian financial institutions for providing assistance to medium and large scale projects is 1:5:1. The promoters are required to contribute a minimum of 20-25 per cent of the cost of the project.
Smaller companies confront tremendous problem in assembling funds because of their poor creditworthiness. Investors feel loath in investing their money in securities of these companies. Lenders prescribe highly restrictive terms in lending.
This is why common stock represents major portion of the capital in smaller concerns. However, the management should also give special consideration to the factor of control because if the companys common stock were publicly available, some large concern might hold a controlling interest.
In view of this, the management might insist on debt for further financing so as to maintain control or common stock should be sold in closed circle so that control of the firm does not pass in the hands of outsiders.
Large concerns have to employ different types of securities to procure desired amount of funds at reasonable cost because they find it very difficult to raise capital at reasonable cost if demand for funds is restricted to a single source. To ensure availability of large funds to financing future expansion programmes, larger concerns may insist on maneuverability principle.
Contrary to this, in medium-sized companies who are in a position to obtain the entire capital from a single source, leverage principle should be given greater consideration so as to minimize cost of capital.
Control principle should be given higher weightage in private limited companies where ownership is closely held in a few hands. This may not be so imminent in the case of public limited companies whose shareholders are large in number and so widely scattered that it becomes difficult for them to organize in order to seize control.
In proprietorship or partnership form of organization manoeuvrability factor may not be helpful owing to limited access of proprietary or partnership concerns to capital market. Control is undoubtedly an important consideration in such organization because control is concentrated in a proprietor or a few partners.
With greater stability in sales and earnings a company can insist of leverage principle and accordingly it can undertake the fixed obligation debt with low risk. But a company with irregular earnings will not choose to burden itself with fixed charges. Such company should, therefore, pay greater attention to risk principle and depend upon the sale of stock to raise capital.
A company, which has invested major portion of funds in long-lived fixed assets and demand of whose products is assured, should pay greater attention to leverage principle to take advantage of cheaper source. But risk principle will outweigh leverage principle in company whose assets are mostly receivables and inventory whose value is dependent on the continued profitability of the individual concern.
Younger companies find themselves in difficult situation to raise capital in the initial years because of greater uncertainty involved in them and also because they are not known to supplier of funds. It would, therefore, be worthwhile for the management to give more weightage to manoeuvrability factor so as to have as many alternative open as possible in future to meet their growth requirements.
In a sharper contrast to this, established companies with good earnings record are always in comfortable position to raise capital from whatever sources they like. Leverage principle should, therefore, be insisted upon in such concerns.
A company with high credit standing has greater ability to adjust sources of funds upwards or downwards in response to major changes in need for funds than the one with poor credit standing. In the former case, the management should pay greater attention to manoeuvrability factor and should aim at improving credit standing of the latter by improving its liquidity and earnings potential.
Attitude of the persons who are at the helm of affairs of the company should also be analysed in depth while assigning weights to differed factors affecting the pattern of capitalisation. The management attitude towards control of the enterprise and risk in particular has to be minutely observed.
Further, if the managements chief aim is to stay in office, they would insist more on risk principle and would be loath in issuing bonds or preferred stock which might land the company in greater risk and endanger their position.
But if the members of the Board of Directors have been in office for a pretty long time, they would feel relatively assured and would prefer to insist on the leverage principle and assume more risk by resorting to further borrowing in their attempt to improve the companys earnings.
A plethora of studies have been conducted to explore various factors affecting capital structure or determinants of capital structure in different countries, different sectors and overtime. Companies consider a number of factors while designing capital structure.
Assets may be tangible (i.e. physical) or intangible (like goodwill, patent etc.). In deciding about firms capital structure, form of assets held by a company plays an important role. Tangible fixed assets serve as collateral securities for debt. In case of financial distress, the lenders can access these assets and sell them to realize funds lent by them.
Companies with higher tangible fixed assets can afford to have higher proportion of debt capital because they have less expected costs of financial distress. On the other hand, companies with higher intangible assets have lower debt capital due to higher costs of financial distress.
Profitability is measured in terms of ROI (Return on Investment) or Operating Profit Ratio. The higher the operating profit ratio the higher may be debt ratio because in that case the chances of not meeting interest cost will be low.
It is not sufficient to have operating profits to service debt capital. Interest and repayment of debt capital requires cash outflows. Hence another important factor to be considered while designing capital structure is cash flows or cash profits. If there is no scarcity of cash, then the company may afford to have higher debt ratio.
Firms with high market-to-book value ratios have high growth opportunities. These firms have a lot of investment opportunities. But there is also a higher cost of bankruptcy and financial distress if they start facing financial problems. These firms employ lower debt ratios to avoid the situation of financial distress. Hence, growth firms would prefer to take debt with lower maturity period to keep interest rates down and to retain the financial flexibility.
Due to interest deductibility, debt reduces the tax liability and increases the firms after tax cash flows. Firms also have non-debt tax shields available to them like depreciation, carry forward losses, etc. This implies that firms with larger non-debt tax shields would employ low debt as they may not have sufficient profit available to them.
Financial flexibility means that a company is able to adapt its capital structure to the needs of changing conditions. The company should be able to raise funds whenever needed for profitable projects, without undue delay and higher cost. It should also redeem its debt whenever warranted by the future conditions. So, the financial plan of the company should be flexible enough to change the composition of the capital structure.
Financial slack, which in a way is reserve capacity of funds, includes unused debt capacity, excess liquid assets and access to various untapped sources of funds. If a company borrows to the full limit of its debt capacity, it will not be in a position to borrow additional funds for financing of any unforeseen and unpredictable demands. Therefore, company should maintain some financial slack and maintain financial flexibility.
These costs are incurred when the funds are raised externally either through debt or equity. Generally, cost of issue of debt is less than the issue cost of equity which encourages the companies to use debt more than equity. Retained earnings do not have any floatation costs and therefore many large firms prefer to use internal equity rather than raising funds through external debt or equity capital.
If the management of the company does not want to dilute its control over the company then new funds are generally raised through debt capital. This way they ensure that more equity shareholders are not added to the company and the existing shareholders exercise control over the company.
Capital structure of a firm also depends upon the capital market conditions. External equity is generally issued only when investors confidence is high in equity market and cost of equity is low. If capital market condition is not good then the company has no option but to raise debt capital.
Capital structure may be determined at the time of formation of the firm or at later stages. But determining optimal capital structure at the time of formation is very important and it should be designed very carefully. Management of any firm should set a target capital structure and the subsequent financing decisions should be made with a view to achieve the target capital structure.
Construction of capital structure, is difficult, since it involves a complex trade-off among several factors or considerations. Keeping in view the objective of wealth maximisations in mind capital structure has to be determined.
Debt is the cheapest source of long-term finance, when compared with other source of equity, because the interest on debt finance is a tax-deductible expense. Hence, debt can be accepted as tax-sheltered source of finance, which helps in shareholders wealth maximisation.
Flexibility is the most important and serious factor, which needs to be considered while determining capital structure. Flexibility is the firms ability to adopt its capital structure to the needs of the changing conditions. Changing conditions may need more funds for investments or no need of having funds that are already raised.
Whenever there is a need to have more funds to finance profitable investments, the firm should be able to raise funds at less cost and without delay. On the other hand, whenever there is no need to keep borrowed funds, the firm should be able to repay them. The above two conditions are fulfilled only when there is a flexible capital structure.
In other words, the financial plan of a firm should be able to change according to their operating strategy and needs. The flexibility of capital structure depends on the flexibility in fixed charges, covenants and debt capacity of the firm.
Equity shareholders have voting rights to elect the directors of the company. Raising funds by way of issue of new equity shares to the public may lead to a loss of control. If the management wants to hold control on the firms then it may require to raise funds through non-voting right instruments that is debt source of finance. But the firm needs to pay interest compulsorily on debt finance.
Debt finance is preferred only when the firms debt service capacity is good. Otherwise, the creditors may seize the assets of the firm to satisfy their claims (interest). In this situation the management would lose all control. It might be better to sacrifice a measure of control by some additional equity finance rather than run the risk loss of all control to creditors by employing too much debt.
Widely held companies can raise funds by way of issue of equity shares, since shares are widely scattered and majority of the shareholders are interested in the returns. At the same time if they are not satisfied with the firm, they will switch over to other firms where they expect higher returns.
Industry standards provide a benchmark. Firms can use industry leverage ratio as standard for construction of capital structure. Because industry standard may be appropriate to the firm. But it does not mean that firms in the industry are having optimum capital structure. Put it simply, they may be using more leverage or less leverage, but it suggests that whether the firm is out of line or not, if it is, it should know the reasons why and be satisfied that there are good reasons for it.
Use of more or less financial leverage depends on the seasonality of the business. Low degree of financial leverage (less debt) is preferable when a firms business is seasonal in nature. In other words, more equity finance is preferable when a firms business is the nature of seasonal business. For example, businesses involved in producing and sale of umbrellas, fans, air coolers, require to use less debt capital in their capital structure.
Use of more debt may make a firm unable to pay interest obligations in the lean period, which would lead to financial distress. On the other hand, industries involved in business where there is no seasonality, like consumer non-durable products (food items, soaps, etc.,) or with items in habitual use (cigarette) or all those products, which have an inelastic demand and are not likely to be subjected to wide fluctuations in sales, can use more debt in their capital structure, since they are able to earn regular profit.
Competition in the industry also determines the capital structure. When there is no or less competition (public utility corporations like gas, electricity, etc.,) firms can use less equity or more debt in their capital structure, since they can sell products at higher prices.
On the other hand, competitive firms like garment industry, home appliances industry have to use more equity in their capital structure, because of competition, they may not be able to sell more units and cannot earn more profits.
Industry life cycle consists of infancy stage, growth stage, maturity stage and declining stage. When the industry is in infancy stage, a firm should use less debt capital or more equity capital in is capital structure, because the profit earning capacity is less due to less sales whereas when a firm is in growing stage (fast) and having more profits, it can go for more debt or less equity that helps to maximise shareholders wealth.
Agency cost is the cost that arises when there is a conflict of interest among owners, debenture holders and management. Conflict may arise due to the transferring of wealth to debt holders in their favour. The agency problem is handled through monitoring and restrictive covenants, which involve costs that are called agency costs.
The financing strategy of a firm should seek to maximise the agency cost, by way of employing an external agent who maximises in low-cost monitoring. Management should use debt finance to the extent that it maximises the wealth of shareholders, not beyond that.
These represent are size and credit standing among other companies (within or outside industry). Small firms ability to raise funds from outside is limited when compared to large firms. Small firms have to depend on owners funds for financing activities. In other words, investors perceive that investment in small firms is more risky than the large firms. On the other hand, large firms are forced to make use of different sources of funds, because no single source is sufficient to provide for their needs.
When it comes to the credit rating characteristic of a firm enjoying high credit rating it may get funds easily from the capital market, when compared to other firms, which are having low credit rating. Because investors and creditors prefer to invest and grant loans to high credit rating firms, since the risk is less.
Timing of the public offer is also one of the important factors considered while planning capital structure. Public offering should be made at a time when the state of the economy as well as capital market is ideal to provide the funds. For example 2003 to 2004 period Vijaya Bank, IOB, Union Bank, TCS, IOC, NTPC have come up with IPO is due to the ideal capital market and the economy.
Prices as well as yield on securities depend on the monetary policy pursued by the government. Scarcity of debt money and equity funds leads to high interest rates and low price earnings (P/E) ratios.
Before issuing an issue of a particular instrument to the public or investors to raise funds, there is a need to know the investors requirements. Investors may be institutional investors (LIC of India, GIC, UTI), as well as individual investors. Some investors are ready to take risk (bold investors), who prefer capital gains and control and hence, equity shares are suitable to them.
On the other hand, investors (cautious) who are interested in safety of the investment and stable returns, prefer to invest in debentures, since they satisfy their needs and preference shares are very much suitable to the investors who (less cautious) prefer stable returns and share in profits.
Period of finance also plays a crucial role in determination of capital structure. A firm can issue redeemable debentures or preference shares, when the finance is required for a limited period. For example for 5 years, the firm can issue 5 years redeemable debentures or preference shares. But equity share capital is the best source when the firm needs finance for unlimited period.
Debt source of finance is suitable when a firm is planning to invest in productive purpose. For example a firm is planning to raise funds for social responsibility (non-productive purpose), it can raise funds from equity source.
There are some guidelines on the issue of shares and debentures issued by the government that are very important for construction of capital structure. For example the controller of capital issues, now SEBI grants this consent for capital issue when, (a) debt- equity ratio does not exceed 2:1 (higher ratio may be allowed for capital intensive projects), (b) the ratio of preference capital to equity capital does not exceed 1:3 and (c) promoters hold at least 2.5 per cent of the equity capital.
The capital structure of a company is planned initially when the company is floated. The initial capital structure must be designed very carefully, since it will have long-term implications. However, the capital structure decision is a continuous one and has to be taken every time whenever a firm needs additional finances. There are a number of factors which affect the capital structure of a firm.
Usually small sized firms depend on owned capital and retained earnings for their long-term funds. This is because these firms face great difficulties in raising long-term loans. However, if they are able to raise some long-term loan, it will be available at a very high rate of interest and on inconvenient terms. A lot of restrictions are put by debt-holders, specifically by the financial institutions which curtail the freedom of the management to run the business. Hence, long-term loans are neither available nor preferred by small sized firms.
Also, it is quite difficult for small companies to raise share capital by issuing shares in the capital market. Reasons are Firstly, the capital base of small companies is so small that they are not allowed to be registered on the stock exchange. Secondly, since the size of issue will be small, cost of issuing shares will be more in comparison to the large sized companies. Thirdly, there is a risk of loss of control by existing shareholders because the shares of small company are not widely scattered and the new shareholders can easily organise to get control of the company.
In contrast, large sized firms can raise long-term loans at comparatively cheaper rates and on easy terms and can also issue equity shares, preference shares and debentures to the public. Because of issue of larger number of shares, the cost of issue is also low in comparison to small sized firms. Hence, a large company can employ various sources of finance and has flexibility in designing its capital structure.
The companies, which have regular and increasing sales and earnings, may resort to higher debt, i.e., high degree of leverage in their capital structure. This is because such companies will not face any difficulty in paying the interest and debts on time. On the other hand, the companies, which face frequent fluctuations in sales and earnings, should not employ higher debt because they run the risk of being unable to pay the interest and the principal on time which would cause financial distress.
If there is keen competition in an industry, the firms in that industry should use relatively a greater proportion of equity than debt. On the other hand, the industries which do not have high degree of competition will have a tendency of stable sales and therefore, the firm engaged in such type of industry can afford to use more debt.
If a firm is in its initial stages, the chances of its failure would be high. Hence it should put more emphasis on the use of equity capital. It should avoid the use of long-term loans which require fixed payment of interest. When the firm grows and reaches maturity it may resort to long-term debts.
This ratio measures the ratio of fixed interest payments in relation to the profitability of the business. It determines whether the company has the capacity to meet its fixed interest obligations or not. The higher the coverage ratio, the greater will be the capacity of the firm to meet its obligations of interest payment and hence more amount can be used as debt.
Sometimes, the interest coverage ratio of a firm is quite high but it does not have sufficient cash to pay its fixed charges in time which include payment of interest, principal and preference dividends. This may be due to the reason that the firms income is blocked within the firm in the form of high inventory, debtors and sometimes purchase of fixed assets.
Hence, whenever a company thinks of raising additional debt, it must analyse its future cash flows to meet its fixed charges. The companies which expect larger and regular cash inflows in future can use larger amount of debt in their capital structure. The capacity of the company to generate cash flows to meet its fixed charges can be examined by using the ratio of net cash inflows to fixed charges. The greater the ratio, the greater will be the capacity of company to use the debt.
The cost of different sources of capital has a vital effect on the capital structure of a firm. Different sources of capital must be combined in such a proportion that the cost of capital is minimum and the degree of risk is within manageable limits. Debt is a cheaper source of finance in comparison to equity capital due to two reasons (i) The rate of interest on debt is lower than the rate of dividend expected by equity shareholders, and (ii) Interest on debt is deductible from profits while computing tax whereas the dividend is paid out of post-tax profits.
Rate of corporate tax is likely to have a significant bearing on the capital structure of a company. Interest on debt is tax deductible whereas dividend is paid out of post-tax profits. Hence, higher the rate of tax, greater will be the advantage of using debt as compared to preference and equity capital. More use of debt in the capital structure of a company helps to increase the profits available to equity shareholders.
The existing management of the company does not want to lose their control over the company. Equity shareholders have a right to vote and appoint directors in the meeting of the company and hence, in case the company raises funds through issue of new equity shares, there is risk of dilution of control. A group of shareholders can purchase all or most of the new shares and control the company. To avoid the risk of loss of control, the companies prefer to issue preference shares or debentures because they do not have voting rights and elect the directors.
However, it should be remembered that if the company borrows more than its interest and debt repaying capacity, the lenders may seize the assets of the company to satisfy their claims. In such a case the management would lose all control. Hence, it might be better to sacrifice some control by issuing some additional equity shares rather than run the risk of losing all control by raising too much debt.
Capital structure of a firm should be flexible, i.e., the firm should be capable of changing its sources of funds in either direction i.e., increase or decrease, in response to changes in the needs for funds. It should be capable of raising additional funds without undue delay and cost, whenever needed and it should also be able to decrease the funds by redeeming the preference capital and debentures when the funds are not needed.
It should also be able to substitute one source of finance for another to achieve economy. For instance, if the funds are available at 14% rate of interest presently and the company has outstanding debt at 18% rate of interest, it can save interest cost if it can replace the old debt by the new debt. Preference shares and debentures offer the highest flexibility in the capital structure of a firm because they can be redeemed at the discretion of the firm.
Capital market conditions go on changing from time to time. Sometimes there may be depression while at other times there may be boom conditions in the capital market. If the share market is depressed, the company should not issue equity shares, but issue debentures because the investors would prefer safety than profitability. On the contrary, in the boom period in the share market, the investors want to earn speculative incomes, and hence at such times, it will be appropriate to raise funds by issue of equity shares even at high premium.
Firms which enjoy high credit standing from the viewpoint of investors and lenders in the capital market are in an advantageous position to raise finance on easy terms and from the sources of their choice. But in case the firms credit standing is poor, the firm will not be able to get finance from the source of its choice.
The use of fixed cost sources of finance, such as debts and preference share capital is termed as trading on equity or financial leverage. In case the assets acquired from the debt funds yield a return greater than the cost of debts, the profits available to equity shareholders or the earning per share (EPS) will increase.
EPS will also increase by the use of preference share capital but it will increase more in case of use of debt because the interest paid on debt is deductible from profits while calculating the tax. Hence, the alternative methods of financing must be analysed by the management to examine their effect on EPS.
The Government issues guidelines for the issue of shares and debentures from time to time. While designing its capital structure, the firm should consider these guidelines and also the relevant provisions of different laws framed by the Government. In addition, it should also take into consideration the rules framed by Securities and Exchange Board of India (SEBI), the stock exchanges and the norms set by financial institutions from time to time.
Flotation costs are the costs incurred at the time of raising finance. These include underwriting commission, brokerage, cost of printing and publicity etc. Normally, the flotation cost of raising debt is lower than that of issuing the shares. This may encourage a company to raise debt than issue shares. But flotation costs are not a significant consideration to decide about the source of finance because flotation costs as a percentage of funds raised will decline with the increase in size of the share issue.
While making capital structure decisions, the debt equity ratio of the firm should be compared with the debt equity ratios of other firms belonging to the same industry, having a similar business risk. If the debt equity ratio of a particular firm is different than the industry standard, it acts as a warning to the management and the management should ascertain the reasons for the deviation.
Investors may be classified in different categories on the basis of their outlook towards risk and return. Some investors are of enterprising nature. They prefer to take higher risk to earn higher return and hence equity shares should be issued to meet their requirements. On the other hand, some investors are of conservative nature. They do not want to take higher risk and are satisfied with lower return and hence debentures of preference shares should be issued to meet their requirements.
While determining the proportion of various securities in a firms capital structure, it is very useful to seek the opinion of institutional investors, investment bankers and lenders. They possess information about the capital structure of large number of companies and know as to the demand of various securities in the capital market.
Hence, their opinion can be very useful while taking a decision about the capital structure. Similarly, prospective lenders and investors should also be consulted because it is they who will ultimately provide finances to the company. The type of securities which they will prefer to invest is very important information for the company.
Lastly, the attitude of the management towards all the factors discussed above will finally determine the capital structure of the firm. Management of various firms differs in skills, judgement and experience. Some managements are enterprising and they are prepared to take higher risk to reduce the cost of capital. Such managements do not hesitate to use more of debt in their capital structure. On the other hand, some managements are conservative and they do not want to take high risk. They prefer the use of more amount of equity capital in comparison to debt.
The above factors must be considered while designing an optimum capital structure of a company. However, these factors do not yield an optimum capital structure by themselves because some of these factors are conflicting in nature. For example, the debt is a cheaper source of finance and hence a company should use more amount of debt to reduce the cost of capital but the enlarged use of debt increases the risk and hence the company cannot use more amount of debt. Moreover, it should be remembered that
Financial theory has not developed to the point where data related to these considerations are fed at one end of a computer and an ideal financial structure pops out of the other. Consequently, human judgement must be used to resolve the many conflicting forces in laying plans for the types of funds to besought. R. W. Johnson
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Float (, Rebiteto?, lit. Levitate) is a recurring spell in the Final Fantasy series. It causes the Float status, which is generally used to avoid Earth-elemental attacks in battle while avoiding floor traps and damage floors in dungeons.
Float is a White Magic spell that has a casting time of 1 and costs 8 MP. In the 3D versions, casting Float a second time removes the status. Rosa learns this spell at level 35 in 2D versions, and at level 38 in the 3D versions; and Porom learns it at level 40; while Tellah learns it after Mount Ordeals; and Fusoya comes with it initially.
Float is a Level 2 Time Magic spell that costs 10 MP. It can be bought in the Phantom Village for 300 gil, or found at Castle Surgate in a hidden passage. Float can be cast by both Chrono Controller and Omniscient. The player may utilize this ability by catching and releasing a Gaelicat or Poison Eagle.
The Float spell can be drawn from Gesper, Thrustaevis, and Blood Soul. Junctioning 100 Floats to Elem-Def-J grants 50% protection from the Earth element. Float is one of the very few spells that cannot be obtained by refining. Casting Float in battle lowers compatibility with Brothers by 0.4.
Float is a White Magic spell that costs 6 MP. It can be learned from Feather Boots, Lamia's Tiara and Stardust Rod. Both Eiko and Dagger can use the spell. It can be reflected and works with Return Magic. The enemy Yan also uses the spell as a counter attack.
Levitate is a forbidden magic. This much is known only because of a mention that Zonpa-Zippa used it in one of his prototype Cardians to allow it to move by hovering about. What type of magic it is was not specified, but given that Zonpa-Zippa is a White Mage and that Levitate has historically often been White Magic it is conjectured that Levitate is here classed as White Magic.
In the Zodiac versions, Float is Time Magick License 7. It can be learned for 80 LP, and costs 16 MP to cast. It can only be used by the Time Battlemage job class. The spell can be found in the Tchita Uplands.
Float allows the user to hover in the air for a moment after jumping. In Chain of Memories and Re:Chain of Memories it is the ability of the Wight Knight card, is a panel in 358/2 Days, and in Birth by Sleep is an ability of the Peter Pan D-Link.
The Japanese name is levitate. [view edit purge]Levitation (from Latin levitas "lightness") is the process by which an object is held aloft, without mechanical support, in a stable position. Levitation is accomplished by providing an upward force that counteracts the pull of gravity (in relation to gravity on earth), plus a smaller stabilizing force that pushes the object toward a home position whenever it is a small distance away from that home position.
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