DipFM

Does this winner only go out at night?

Published on: 01 Sep 2015

Imagine the scene. You want to go to a music Festival but the tickets are expensive.

What do you do?

I know. Why don’t you pay for the tickets with blood rather than money?

Now whilst this statement may sound a bit weird, some creative minds behind the Untold music festival in Romania have come up with an excellent idea which is a classic win – win situation.

In fact, rather than a win – win situation it’s more of a win – win – win situation.

So who are the three winners in this situation?

The organisers of the festival identified the fact that Romania has one of the lowest percentages of people who donate blood (Romania ranks second to last in Europe regarding the number of blood donors with only 1.7% of the population donating blood) and came up with a novel way of helping to increase the amount of blood donations.

They offered free tickets and discounts to people who donated blood.

It was reported that up to 500 people donated blood so all in all a very successful project.

The Blood Transfusion Service was a winner as it received more blood and importantly raised awareness of the need for more blood.

The organisers of the festival were winners as this was a very slick piece of PR for a first-time festival and despite having top DJs such as Avicii and David Guetta headlining the event it was great to have national and global publicity as a result of this.

The third winner were the individuals who gave blood and obtained free tickets.

Mysteriously though, was there a fourth winner?

It hasn’t gone unnoticed that the festival took place in Transylvania which is the home of Bram Stoker’s legendary Dracula.
Dracula survives by drinking fresh human blood.

Was this in fact a ploy to build up the stocks of blood for the mysterious Count Dracula…

Royal Navy seize inelastic items.

Published on: 10 May 2014

A joint operation by the British and Australian navies last month resulted in the largest ever haul of heroin at sea. The drugs weighing 1,032 kilogrammes had an estimated British street value of more than £140 million and were found on a boat 30 miles off the coast of East Africa near Kenya and Tanzania.

This is great news for the authorities but what link does this have with the exams?

HMS EdinburghPrice elasticity of demand (PED) is a core area of pricing theory. PED measures the sensitivity of customer demand to a change in prices and is calculated as

PED  =    % change in demand
% change in price

There is usually an inverse relationship: when price goes up, demand goes down (and vice versa).

Addictive drugs such as the heroin seized by the British and Australian navies however are an inelastic product and in fact are approaching perfect inelasticity. A perfectly inelastic product is a situation where price goes up but the quantity demanded stays the same. In the case of addictive drugs, the drug addicts will still need their “fix” so the quantity demanded by them is largely unaffected by price increases.

If you have enough wine you’ll look even more beautiful…

Published on: 16 Jan 2014

Although it’s difficult to pinpoint the exact time when wine was first made, it is commonly thought to originate from many thousands of years ago.

Since then people have drunk it, enjoyed it and on occasions no doubt regretted it following an almighty hangover the following day.

face_maskOver the years the methods involved in making wine have stayed fairly consistent. Grapes are crushed, the wine is fermented, stored and then drunk.

In management accounting terms the grape skins left over from the crushed grapes are considered to be a by-product.

In other words, the crushed grape skins that are removed during the wine making process have a limited value and are basically thrown away.

Spanish wine maker Matarromera has recently identified a novel use for the grape skins that are left over from the wine-making process.

The left over grape skins are rich in antioxidants and Matarromera has now launched a cosmetics brand called Esdor which mixes these grape skins with other natural products to produce cosmetics including nourishing creams, eye contours and moisturisers. The company claims that their products can help with anti-aging and anti-wrinkling.

Moving back to management accounting terms and given the success of the cosmetics line then the grapes will result in joint products – namely, the wine and the cosmetics.

There’s a saying in English that if someone has had too much to drink then they are “off their face”. Maybe with this wine it will be “on their face” as well.

Man’s best friend as well as a money processor.

Published on: 08 Dec 2013

The bond between man and dog can be pretty strong. It’s difficult to be precise about when the relationship first started but common thought is that the grey wolf was domesticated 20 to 30 thousand years ago. Since then the relationship has strengthened.

dog eats moneyWhilst dogs can provide a range of working support to humans (e.g. guide dogs for the blind, search and rescue support, etc) the majority of dogs are simply loved by their owners for being their pet and a cherished member of the family.

Sundance, a 12 year old Golden Retriever, provided his owner with a unique challenge though and no doubt pushed the boundaries of love between man and his dog.

Wayne Klinel from Montana in America left Sundance alone in his car whilst he grabbed some lunch with his wife.

When he returned to the car he found that Sundance had also had lunch. Sundance’s lunch though was more expensive than his owners as the dogs lunch took the form of five $100 notes that Mr Klinel had left hidden in the car.

Alas for poor Wayne all that was left of the notes were small pieces of some $100 notes.

The U.S. Department of Treasury’s does in fact have a Mutilated Currency Division where people can apply to have mutilated currency replaced.

Now this would be an extremely easy “get rich quick” scheme if you could simply write to the Mutilated Currency Division and say that your dog had eaten some money and to request some replacement money.

Instead, you need some form of evidence to support your claim.

So, your dog has just eaten $500 and you need evidence. What would you do?

Well Mr Klinel decided to follow Sundance around and collect his, how can we say it but, collect his little “dog logs”.

Yes, in true dedication to the task, Mr Klinel collected the droppings of Sundance and using an old metal mining screen and a hose he separated out the bits of dollar notes from the rest of the matter.

After cleaning the bits of notes he assembled them as best he could and sent them off to the Mutilated Currency Division.

Despite no doubt being somewhat surprised by the unusual aroma coming from the envelope that the bits of dollar bills were sent back in, the Mutilated Currency Division did the honourable thing and sent Mr Klinel a cheque for the mutilated money.

Does it matter if the swimmers are naked or not?

Published on: 28 Oct 2013

During the summer holidays at university I was lucky enough to have a temporary job as a life guard at the local swimming pool. Thankfully there were no emergencies and the most exciting thing that happened was when a locker became jammed.

businessman-in-poolI graduated from university and now I’m an accountant. My job now involves looking at figures on spreadsheets rather than figures in the pool.

In Austria, the management of Vienna’s public swimming pools carried out a survey and found that bathers were consuming on average 5,000 litres of chlorinated pool water a day.

5,000 litres of water a day is a significant amount of water. Looking at this from a finance point of view this in turn means that this is a significant amount of cost in replacing the water. In addition, the authorities have to spend £20 per day to replace the chlorine that disappears with the water.

How come so much water is being lost? Surely the swimmers are not drinking the water and it would take an awful lot of splashing to lose that amount of water.

The answer is that apparently a lot of water gets removed from the pool via the material of the swim wear. When a person wearing Boardshorts for example leaves the pool 2.5 litres of chlorinated water is trapped in the material and is removed from the pool.

So, picture the scene. You’re an accountant at a sports complex and are attending a meeting to discuss cost saving initiatives for the year ahead.

Given the above findings then would a cost saving solution be to suggest that swimwear should be banned?

Now whilst this would save the cost of chlorinated water being replaced I think the number of swimmers would decline dramatically.

Importantly though I think they would save on the cost of your salary as you probably wouldn’t be in the job for much longer after that suggestion.

London cab drivers, “the knowledge” and mixed costs…

Published on: 24 Oct 2013

I think that London taxi drivers are brilliant. There’s never a dull moment and if you want a conversation you’ll certainly get one when you’re in a black cab. To be honest, half the time if you don’t want a conversation you’ll still get one.

london-taxiLondon cab drivers have to pass rigorous tests before they are licensed to drive a black cab. “The knowledge” is a term used for the exams that the drivers have to pass and ensures that they know their way around the streets of London without having to refer to satnav systems or maps.

My own personal view though is that “the knowledge” also refers to the fact that the drivers generally have a strong opinion on most things and seem to know everything about everything! To be fair I was quite impressed with the driver of the cab I was in last night. When he found out that I taught finance he went on to point out that the taxi fare I was about to pay him was classified as a “mixed cost” as it was partly a fixed cost (the minimum fare) and partly variable (the charge per mile traveled).

I’ll give him credit where it’s due as he was absolutely right. Fortunately for him though the journey came to an end before I could test him on other costing methods…

Fancy nipping down the pub for a quick pint and maybe grab a latte and a croissant?

Published on: 18 Aug 2013

When I was in my teenage years, pubs in England were a very distinctive place; dark, smoky, slightly smelly, overwhelmingly male and mostly shut.

A legacy of previous societal norms meant that women rarely went into pubs unless they were with men.

A legacy of World War One legislation meant that drinks could not be served after 10.30pm or 11pm.  This generally meant a few hours of seriously intensive binging from about 8pm to 11pm, mostly on two nights per week.

croissantThis state of affairs was not great for earning a commercial return.  Pubs often occupy prime sites at expensive rental.  Trying to recover the operating costs of a business when the assets are only utilised for 10% of the time is a challenge and a half.

The first marketing innovation was to make pubs far more female friendly.

Curtains over windows were abolished in favour of plate glass windows.  Pubs started to sell a choice of wines.  The smoking ban came in.

Women were far now more likely to go to a bar with friends because the environment seemed less intimidating.  Unsurprisingly, where groups of young women went, groups of young men followed.

Doctors worried about the effects of all this on the nation’s health, but the tills kept ringing.

Laws governing opening hours were relaxed a few years ago, with some predictable, but probably transitional, issues of overindulgence, as a nation used to nanny closing the bar at 11pm now continued to serve, as people continued to drink at the, erm, efficient rate the previous law had dictated.

JD Wetherspoon runs a chain of bars in the UK, mostly in sites that previously were not bars. Car showrooms are a particular favourite choice of location because of the big windows that attract passing impulse customers.

They have started to open their city centre bars early in the morning, in an attempt to attract an extra crowd.

Some chains have slightly different staff uniforms in daytime and the evening; pseudo-Parisian coffee bar by day; unfussy drinking den by night.

The result is that JD Wetherspoon claims to sell 400,000 breakfasts per week (only McDonalds are bigger, with 600,000).

A recessionary environment means that customers have become open to the idea of hanging out in Wetherspoons with a cheap latte instead of a more expensive option in Starbucks.  It has achieved this growth remarkably quickly, as it only started to open for breakfast last year.

It’s a wonderful example of innovative business change, asset utilisation and absorption costing.

So, what’s this all about? Are things changing? Is it a load of bear or a load of bull?

Published on: 15 Aug 2013

The major stock markets around the world have been bear markets for the last couple of years but with the end of the recession looking like it’s here we should soon see a switch to a bull market.

Analysts around the world will be arguing one way or another on the timing of the recovery but where do the terms “bear market” and “bull market” come from?

There are two main views on the origin of these terms.

The first view is based on the methods with which the two animals attack.  A bear for example will swipe downwards on its target whilst a bull will thrust upwards with its horns. A bear market therefore is a downwards market with declining prices whilst a bull market is the opposite with rising prices.

The second view on the origin is based around the “short selling” of bearskins several hundred years ago by traders. Traders would sell bearskins before they actually owned them in the hope that the prices would fall by the time they bought them from the hunters and then transferred them to their customers. These traders became known as bears and the term stuck for a downwards market. Due to the once-popular blood sport of bull and bear fights, a bull was considered to be the opposite of a bear so the term bull market was born.

Whatever the actual origin of the terms though I’m sure most people will be relieved when we return to a bull market.

Who earns the most out of the Top Gear presenters?

Published on: 28 Jul 2013

BBC Worldwide has just published its latest annual report and for any fans of the TV programme Top Gear there are some interesting figures.

top-gear-magazineTop Gear is an incredibly successful TV programme. The programme which is so loved by car addicts around the world is the world’s most widely watched factual television programme and is shown in 174 territories. That’s pretty impressive and shows what a global success the programme has become.

It stars Jeremy Clarkson, Richard Hammond (the Hamster) and James May (Captain Slow) but who earns the most out of the 3 presenters?

It will probably come as no real surprise to find out that Jeremy Clarkson received the most last year.

Interestingly though the majority wasn’t from his salary but rather from dividends and a sale of shares.

5 years ago a company called Bedder 6 was set up with the aim to exploit the commercial opportunities of the Top Gear brand.

Top Gear Magazines, live shows and DVDs followed.

So who were the original shareholders of Bedder 6 when it was set up?

Well, the BBC was a 50% shareholder whilst Top Gear executive producer Andy Wilman had a 20% stake and Jeremy Clarkson had a 30% shareholding.

Alas for poor Hamster and Captain Slow the other 2 presenters didn’t hold any shares.

The recently released BBC accounts show that the BBC bought out the shareholdings of Clarkson and Wilman.

How much did Clarkson receive in total from the BBC last year?

He received a salary of £1 million, dividends of £4.86 million from Bedder 6 and £8.4 million for selling his shares in Bedder 6 to the BBC.

In total, he received £14 million from the BBC.

That’s not a bad amount is it?

To be fair to the guy though he’s been instrumental in building the Top Gear brand into a global success with millions of viewers around the world so arguably he deserves the financial rewards that go with it.

With that amount of money hitting his bank account in the last year though one thing he can definitely do is to buy any car that he wants.

Would you have ridden this wave differently?

Published on: 25 Apr 2013

I’ve got a couple of friends who are keen surfers. If you speak to them they will tell you that successful surfing is all down to getting the timing right and catching the wave at the right moment.

billabongIt looks like timing is also an important issue if you happen to hold shares in one of the world’s largest surfing brands.

Billabong is Australia’s largest surfwear company and is currently the target of a takeover bid.

Billabong was set up by Gordon Merchant in 1973 when he started making surf shorts on his kitchen table and selling them to local shops.

The company rode the waves of success over the following 35 years and developed a strong following amongst fashionable surfers (as well as a strong following amongst people who had never been near the sea!)

Back in 2007 the company was valued at A$3.8 billion (approximately £2.5 billion at today’s exchange rate) but unfortunately for the shareholders the global recession bit and faced with increased competition from other fashion brands the sales of Billabong products fell dramatically.

Last February the shareholders turned down an offer of A$842 million (£560 million) to buy the company.

Earlier this year the company reported their largest ever loss after writing off most of the value of its main brand.

It’s not exactly smooth water for the company and they are currently in sale discussions with a consortium made up of a former director and a private equity company. The value of the offer on the table at the moment is A$287 million (£190 million).

£2,500 million to £560 million to £190 million.

As they say in the surfing community, it’s all in the timing.

The ExP Group