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					   Teachers’ Innovation Teaching Abilities of
       Financial Management Courses
                                        Lan Peng
              (Zhongnan University of Economics and Law, School of Accounting)



Abstract:Teachers‟ innovation teaching abilities of financial management courses are
very important to train financial management profession of undergraduate students to be
aware of innovation,  innovative spirits and abilities. From the connotation of innovative
education, this paper firstly explores the structure of innovation teaching abilities,
characteristics of creative teachers. Secondly, combined with teaching practice, this
paper inquires into how to explore students‟ innovative abilities, to teach differently
according to different students,and to guide correctly. Finally, from department and
office environments, continuing education and teachers‟ self-questioning, this paper
probes into how to train professional teachers‟ innovation teaching abilities of financial
management courses.
Key words: Financial Management Courses; Professional Teachers; Innovation
Teaching Abilities



  Innovation is the soul of national progress, an inexhaustible motive force

for the prosperity of the country. The quality of education is the core. To be

implemented for quality education, and training financial management

professional students‟ sense of innovation, spirits of innovation and

innovation capabilities, the key is to build an innovative, high-quality

financial management professional teaching forces. The paper is on the

teachers‟ innovation teaching abilities in financial management courses.

1. Innovation teaching abilities and creative teachers

1.1 Connotation of innovative education

  Innovation is the driving force of development of all things. It is out of

the old things, to create new things. It is the process that the progress of the


                                             1
internal factors are overcome by the struggle between the backwardness of

the old factors, and eventually develop into the new things. More

specifically, creativity and reform can be merged for innovation. Because it

does not stick to conventions, unprecedented, it is novelty. Because it is

different from commonplace, it is new, original and unique; Also, because

of its progress to society or personal value, it is valuable. The most

fundamental characteristics of innovation is "new", if without “new”and

“original”, it does not matter innovation.

  Innovative education is also called creative education. General

innovative education refers to the activities of impacting, developing and

training human‟s creativities, mainly the training of creative techniques and

thinking. Narrow innovative education refers to education in special

subjects for training students to create quality, cultivate creative thinking

ability, find new problems, solve new problems and create new things.



1.2. The structure of innovation teaching abilities

  "Financial Management Courses" innovation teaching abilities are in line

with the requirements of innovative educational activities, and the

integration of impacting personal characteristics of his(her) innovative

education efficiency.

  Innovative education capabilities include five areas:

  (1)Training students‟ perceptiveness, memory, thinking imagination,


                                      2
emotion ability, willpower, personal mental ability;

  (2)Teaching abilities in innovative education courses;

  (3)Guiding abilities in innovative activities;

  (4)Abilities of developing students‟ innovative considering abilities in

the special knowledge and financial activities;

  ⑸Abilities of evaluating students‟ innovation development.

1.3 The characteristics of creative teachers

  Successful, creative teachers are always good at absorbing the latest

scientific achievements of the financial management education, putting

actively into the teaching and management process of "Financial

Management courses". They are with very original ideas, and can discover

the new effective teaching methods. About the personal quality, they often

manifest as humorous, enthusiastic, optimistic, self-confident. They are

willing to accept different viewpoints and also show strong interests and

active participation with the other things which are outside of their work.

  In the areas of teaching financial management courses, they emphasize

teaching acts and resourcefulness. They have a strong thirst for knowledge

and achievement motivation. About the teaching style and skills, they are

good at constantly changing various teaching methods, inspiring students to

think actively, assist students to be happy to develop new issues, cultivate

the habit of questioning, and encouraging students to participate in

classroom teaching and discuss different viewpoints, giving proper


                                      3
incentives on the innovative achievements of students. They have strong

abilities of controlling the financial management textbooks, and strong

sensitivities on the reaction of the students in the class. They teach by

intuition, are very imaginative, and not rigidly adhere to existing plans or

established procedures.

  At the same time, creative teachers also try to create and maintain a

relationship with students. Teachers and classmates are easy to perform

creation. Mutual incentives, trust, fairness, tolerance, freedom, security, a

collective atmosphere with creation among teachers and students are the

pursuit of creative teachers, and thereby make students become the main

parts of teaching.

2.Innovative teaching practice — — paying attention to individual

characteristics development

  When     teaching   “Modern     Financial    Management”      to   financial

management profession grade 2005, Class 2 with 66 students of Zhongnan

University of Finance&Law, school of Accounting and Finance, I tried to

use innovative teaching. Through creating questions background, I arouse

students‟ initiatively joining, trained students‟ innovative abilities. I only

gave some discussion materials to them as follows:

  The president of Wuhan Jimei Microchips Inc. ( WJMI ) made this

                                         “
statement in the company’s annual report: WJMI’s primary goal is to

increase the value of the common stockholders’ equity over time. ”Later


                                      4
on in the report, the following announcements were made:

  a. The company contributed to Wuhan Song &Dance Troupe.

  b. The company was planning to open a new plant in Huangshi. No

revenues would be produced by the plant for 4 years.

  c. The company was increasing its relative use of debt.

  d. Plans were to utilize nuclear fuel rather than coal to produce

electricity in the future.

  e. The company would decrease its dividend payout rate from 50% to

40%.

  Then I asked students to act as majority or minority stockholders, funds

investing firms, different managers etc, discuss how each of these plans

would be reacted to by WJMI‟s stakeholders, and then how these plans

might affect WJMI‟s stock price.

  66 students each had one role as participants to take part in the activity.

  Name of students who played the role of managers:
       Role as managers                            Name of Students
Chairman                                  Xiaoxiao Zhang
CEO                                       Di Xiao
CFO                                       Chen Zhang
COO                                       Shan Wang
CMO                                       Xiao Lin
Secretary                                 Jinyi Tang



Name of students who play the role of majority stockholders who held

65% shares


                                      5
          Role as majority stockholders                  Name of students
Representative of Double Sheep Inc.(held 25% Yang Yang
shares)
Representative of Passun Inc.(held 15% shares)        Dan Luo

Vice President of Wuhan Branch of Thankgivings Chuanyang Li
Bank, individual shareholder, Mr Ren(held 10%
shares)
Individual shareholder(held 8% shares)                Jianjun Ren
Individual shareholder(held 7% shares)                Li Wang

 Name of Students who played the role of minority stockholders who

total held 20% shares:
Ya Xia,Li Wu,Yuwei Wu,Mingmin Bai,Danting Xu,Chiyi Zhang,Yixi Zhou,
Cheng Zhen,Yunxian Zhang,Naitong Zhen,        Bo    Zhe
                                      Yong Li, Yang, Wang,Zhangchao
Wang,Hui Yuan,Dongdong Zhao,Xiaoling Wang,Haiyang Yao,Fei Teng,Xinwei
Zhang,Yu Yu,Fang Yang,Yuhan Chu,Changran Zhou

Name of students who played the role of banks or financial

institutions:
              Role as banks                             Name of students

Representatives of funds investing firms(held Mengyi Huang , Zhuzhen Chen ,
10% shares)                                       Chengyan Li,Jin Liu
Representatives of Bank of China                  Fan Zhang,Xiaojie Hao
Representatives of Chinese Construction Bank      Qi Li,Yuan Chen
Representatives of HSBC                           Lu Liu,Xin Zhang
Representatives of Standard & Chartered Bank      Bo Hou,Liewen Wang
Representatives of other financial institutions   Pengchen Qi,Jinshuo Lu,Yidi Hu,
                                                  Song Wang,Kun Du,Jintian Huang,
                                                  Yuting Huang,Meng Wang



                                             6
Name of students who played the role of Labor Union who held 5%

shares:
     Role as Labor Union                           Name of students
Chairman                                 Yi Chen
Vice-Chairman                            Xueqin Ma

Members of Labor Union                   Suqiong Huang,Wen Liu,Mengyu Chen,
                                                      Kai
                                         Xiaoliang Du, Liu,Yifei Huang,Yuan
                                         Wang,Hongyue Xu,Shenghui Yang

  Because I did not give background materials about the company, then

gave developing space to students. Those students who studied this course

were high-grade students. Their special knowledge                was very rich.

Students boldly imagined and designed a set of background company

materials.

  Before discussion, students who acted as managers declared the

company background data designed by themselves. After discussion, those

“managers”wrote the report about WJMI‟s summary.

  (1) Company’s background

  Wuhan JiMei Microchips Inc.(WJMI), founded in 1998.Its main

operation were singlechip(SCM) and simulate semiconductor. Its products

includes singlechip, tiny controller, high speed pulse modulator, charge

manage controller, DS controller, independent simulator.

  This company was corporation. Its legal registered capital was 1.25

billion RMB. The company‟s headquarter was in Wuhan, Hubei province of

China mainland. Its products were sold throughout China. Its products were
                                     7
also sold to Eastern and Southern Asia, Africa areas.

  In September 2007, the company held a general meeting, and would

discuss the following questions:

  a. The company would contribute 2 million yuan to Wuhan

Song&Dance Troupe.

  b. The company would spend 600 billion yuan to open a new plant in

Huangshi, Hubei province. No revenues would be produced by the plant

for 4 years, so earnings would be depressed during this period versus

what they would have been had the decision not been made to open the

new plant.

  c. The company was increasing its relative use of debt, whereas assets

were formerly financed with 30 percent debt and 70 percent equity,

henceforth, the financing mix would be 45/55.

  d. The company used a great deal of electricity in its manufacturing

operations, and it generated most of this power itself. Plans were to utilize

nuclear fuel rather than coal to produce electricity in the future.

  e. The company had been paying out half of its earnings as dividends

and retaining the other half. Henceforth, it would pay out only 40 percent

as dividends.

     Financial statements and data provided were following:




                                      8
           Balance Sheets: Assets (millions of RMB)

                                   2006                2005

Cash                           ¥        10           ¥ 16

Short-term inv.                         50               70

AR                                  300                 280

Inventories                         650                 600

  Total CA                     ¥1010                 ¥ 966

Net FA                              990                1090

Total assets                   ¥2000                 ¥2,056

       Balance Sheet: Liabilities and Equity (millions of RMB)

                                    2006                2005

Accts payable                  ¥ 240                 ¥ 280

Notes payable                       260                  326

Accruals                            100                 140

     Total CL                  ¥ 600                 ¥ 746

Long-term bonds                         0                 0

   Total debt                  ¥ 600                 ¥ 746

Common stock                       1,250               1,250

 (100,000,000 shares)

Retained earnings                   150                   60

  Total common equity          ¥1,400               ¥1,310

Total liabilities &equity          2,000               2,056


                                    9
                 Income Statement (millions of RMB)

                                   2006                  2005

Net sales                        ¥2,815               ¥2,400

Operating Cost                     2,400                2,083

EBITDA                           ¥ 415                ¥ 317

Depreciation                           100                100

Amortization                            0                  0

EBIT                             ¥ 315                ¥ 217

Less interest                          15                 17

EBT                             ¥ 300                 ¥ 200

      Taxes(40%)                   120                    80

Net Income                      ¥ 180                 ¥ 120

Common dividend                 ¥ 90              ¥ 60

Addition to RE                   ¥ 90                 ¥ 60

                          Per-share Data

  Stock Price                   ¥18.00                  ¥15.00

  Earnings Per Share            ¥ 1.80                  ¥ 1.20

  Dividends Per Share           ¥ 0.90                  ¥ 0.60

  Book Value Per Share          ¥12.50                  ¥12.50

                    Statement of RE (millions of RMB)

  Balance of RE, Dec.31, 2005                           ¥ 60

  Add: Net Income, 2005                                   180


                                  10
Less: Common Dividend                                  (90)

Balance of RE, Dec.31, 2006                          ¥150

               Statement of Cash Flows   (millions of RMB)

                  OPERATING ACTIVITIES (OPS)

Net Income                                          ¥180

Adjustments:

     Depreciation                                     100

     Increase in AR                                  (20)

     Increase in inventories                          (50)

     Decrease in AP                                   (40)

     Decrease in accruals                             (40)

Net cash provided by ops                            ¥130

         LONG-TERM INVESTMENT ACTIVITIES

Cash used for fixed assets                          ¥ 0

                    FINANCING ACTIVITIES

Sale of s-t investments                               ¥ 20

Decrease in notes payable                               (66)

Payment of dividends                                    (90)

Net cash provided

by financing activities                                (136)

Net change in cash                                       (6)

Cash at beginning of year                               16


                                11
   Cash at end of year                               ¥ 10

Some financial ratios were calculated:

NOWC(05)=(16+280+600)-(280+140) =¥466 million

NOWC(06)=(10+300+650)-(240+100)=¥620million

Total Operating capital(05)=¥1,556million

Total Operating capital(06)=620+ 990=¥1,610million

NOPAT(05)=217×(1-40%)=¥130.2million

NOPAT(06)=315×(1-40%)=¥189million

NCF(05)=120+100=¥220million

NCF(06)=NI+DEP=180+100=¥280million

OCF(05)=130.2 +100=¥230.2million

OCF(06)=189+100=¥289million

FCF(06)= 189-(1,610-1,556)=189-54=¥135million

ROIC(05)=130.2/1,556=8.37%

ROIC(06)=189/1,610=11.74%

The firm‟s WACC was 7.2% in 2006 and 4.8% in 2005.

EVA(05)=130.2-4,8%×1,556=¥55.512million

EVA(06)=189-7.2%×1,610=¥73.08million

MVA(05)=1,500-1,250=¥250million

MVA(06)=1,800-1,250=¥550million



Other financial ratios were as follows:


                                     12
                                         2005                2006

Current ratio                            1.295               1.683

Quick ratio                              0.49                 0.6

Inventory turnover ratio                   4                 4.33

Fixed turnover ratio                      2.2                2.84

Total turnover ratio                     1.41                1.17

Debt ratio                               36%                 30%

Time-interest-earned ratio               12.76                21

Basic earning power                  10.55%                 15.75%

ROA                                      5.84%                9%

ROE                                      9.16%              12.86%

(2) Discussions at the general meeting

  Participants shareholdings: Majority stockholders held 65% , minority

stockholders held 20%, funds investing firms held 10%, Managers(workers)

held 5%.

  For position and identity of participants were different, we “managers”

had to answer respectively, and summarized as follows:

1) Majority shareholders

  At the general meeting, after the introduction of company's future funds

operation plans by managers, majority shareholders show understanding.

  Subsequently, the shareholders expressed concern with Huangshi project,

representative of the largest shareholders - Double Sheep Inc. Investment

                                    13
company, believed that 600 million yuan‟s huge investment and the future

four consecutive years of decline in cash flow would lead to the decline of

stock price or being continuous at a low tide. This would be harmful to

Double Sheep Inc, whose main operation was investment and making

capital gains. Therefore, they required the management to provide more

detailed financial projections and forecast stock price information.

  After a short deliberation, management came up with a Huangshi plan

feasibility study report given by TianShi public accounting firm. The report

showed that Huangshi plan had very good prospects, after four years,

profits could reach unprecedented heights. Double Sheep Inc. Study group

participants company no longer worried.

  However, after that, representatives of Passun Inc. Investment company

holding shares ranking second suddenly stood up and expressed no

confidence in Huangshi plan. Passun Inc. Investment company with a

cautious investment style were worried about the risk of Huangshi

expansion. They asked the management to provide expansion options and

some remedial measures for possible failure.

  Management had made full preparation for the failure of the scheme,

said that even if the Huangshi scheme failed, the company's funds would

not stop, because of company's existing conditions, if not invest Huangshi

plan, in the next 4-5 years, company would idle a lot of money. Huangshi

plan was undoubtedly the investment opportunity with the greatest profits


                                      14
and minimum risk.

  After that, both vice president of Wuhan Branch of Thankgiving Bank,

the individual shareholder Mr Ren who ranked third largest stockholders

and Mrs Rodan put forward relative funds operating problems of Huangshi

project. With rich experience in dealing with banks, they reasoned that

banks would increase loan‟s interest rate as a result of their standpoint of

large fund having more risk. Then the increasing interest would

undoubtedly aggravate financial risk of the firm on the financial situation

with heavy burden now. Even the company would as a whole may be in

financial difficulties.

  To address this issue, management indicated that they would seriously

consider the problem of financing and choose the least cost source of funds.

In the general meeting at the same time, the person responsible for

company‟s management of financial plate syndicated with Bank of China

for a verbal negotiation and consultation, and reached a preliminary

consensus loan, 7-years term with interest rates less than 8%, and this was

totally under the company's financial risk controllable range. Mrs Rodan

was satisfied with this outcome, Mr Ren was more pleased.

2) Minority shareholders

  In the general meeting, minority shareholders who held about 20% of the

shares, put forward a lot of objections and views to five schemes.

Eventually, they adopted only the second plan and the third plan, and


                                     15
opposed to the first plan and the fourth plan. Below are answers to minority

shareholders‟ questions raised by:

  Question: Why should the company invest 2 million yuan to Wuhan

Song and Dance Troupe? This large expenditure would reduce the

company's cash and assets to some extent. We thought it was a frivolous

spending to company, which would ultimately affect the interests of

shareholders.

  Answer: The reason why company donated 2 million yuan to Wuhan

Song and Dance Troupe, was for the development of long-term interests of

the company. Wuhan was the company's headquarters‟ city, and this

donation would no doubt enhance the visibility of our company as well as

good social image. The company had sufficient 10 million yuan cash, 2

million donation would not affect cash to a large extent, the company still

had sufficient cash ability to pay. Therefore, minority shareholders need not

worry about this decision, and in fact, it would bring more benefits to our

company.

  Question: How the firm raised 600 million yuan of funds to build plant

in Huangshi? No revenues would be produced in four years, how the

company avoid risks? Four-years was a long time for our minority

shareholders, the company would pay less dividend for a long time, this

was very risky. We might consider selling shares.

  Answer: As for raising fund to build plant in Huangshi, minority


                                     16
shareholders need not worry too much. Because the company had been

active with the exchange of some banks, banks had agreed to give us loans,

then the company had sufficient funds to invest. Although revenue would

not be produced by the plant for four years, but an investment in the early

stages of any enterprise would not get quickly return, and this required a

process. After four years, the proceeds of the investment would be more

than a little bit, but significantly more than four years losses. Moreover, in

these four years, although the investment without any revenues, but the

company there would be many other sources of earning to ensure that

enterprises continued normal operations. Enterprise development goal was

the ultimate long-term developing, we hoped that the minority shareholders

could consider the problem from the viewpoint of company owners.

  Question: Why would dividend payout rate be reduced from 50 percent

to 40 percent? As minority shareholders, the concern was more immediate

interests, namely, the dividend payout rate. In the coming year, and

management would reduce dividend payout rate, for our minority

shareholders, it means that we could greatly get less dividend, so we would

not agree with the decision that would affect our interest.

  Answer: The reason why the dividend payout rate would be reduced

from 50 percent to 40 percent was to retain more for the enterprise to carry

out other investments. Because we need to build plant in Huangshi, in

addition to spending on the other, these decisions would, of course, affect


                                      17
all aspects of business. To long-term interests, the company need to a

certain extent reduce the dividend payout rate to help business tide over the

crucial moment. But this did not mean that in the future the company

would not change the dividend policy. With the good performance the

company would raise the dividend payout rate. In addition, from the

financial statement provided, you could see that stock price ,EPS,DPS in

2006 were all higher than those in 2005. They were good signals. All

financial ratios indicated that the prospect and development of our company.

We believed that the minority shareholders would not lose confidence in

our business. We also believed that you would not make decision to

damage the relationship between you and our firm with these good

developing background.

  Question: We hoped that the management would stand our minority

shareholders to consider the perspective of the issue. We had no

decision-making right, but we were also the owners of the company, and

we hoped our interests to be protected, and hoped to gain a return of

investment in a short time. Otherwise, we might consider abandoning the

investment to your company and shifting to other enterprises to gain

investment return.

  Answer: Minority shareholders, please understood that you were

important components of the enterprise. Your investment were important

sources of our business. Without your trust and support, the business can


                                     18
not develop well. Therefore, we would maximize your interests to consider

maintenance issues. Although the dividend payout rate would be reduced,

but it was the decision made by our company after weighing the advantages

and disadvantages. It had grounds and reasons. Our company had not

wounded your interests with intent. Our company need long-term

development, and need the cooperation of stakeholders. The development

of our enterprise was long-term. Your confidence of our enterprise was

the basis of long-term development.

3) Banks(did not attend the meeting)

  For companies to invest 600 million yuan in Huangshi to build new plant,

the company need to apply for bank loans 545 million yuan. Whether

Bank‟s willingness to loan to our Company or not would directly determine

the company's ability to win the support of other shareholders. Banks, as

creditors, the main consideration was whether our company could repay

debt. Finally, our company reached an agreement with the banks. Four

banks, including Bank of China, Chinese Construction Bank, HSBC, The

Standard &Chartered Bank had agreed to grant the loan about 545 million

yuan, seven-years term, 8.5 percent interest rate, among which Bank of

China lent 245 million yuan, the other three banks lent 100 million yuan

each.

  Initially, the banks held that data and information statements provided

were inadequate, hoped the company to give expected cash flows. After


                                      19
analysis and discussion, we “managers” replied that although no revenues

would be produced by the Huangshi plant for 4 years, but in the following

three years, net income would be very substantial, net income in the fifth to

seventh year were 300 million yuan, 240 million yuan, 180 million yuan.

  At the same time, the company did not bear any long-term debt, but the

company's notes payable would expire. After the completion of this 545

million yuan loan, debt ratio of the company would increase from 30

percent to 45 percent, therefore, banks hoped the company to promise its

debt ratio not exceeded 5%. Otherwise, the required rate of return by

investors would increase to affect stock prices.

  Given the current 7-year bank loan interest rates being 7.9%, and

inflation in the period, banks would bear almost all the risk, so banks only

agreed to offer loan at 8.5% rate of interest.

  About paying debt, the company‟s free cash flow (FCF) in 2007 would

be¥ 105 million, after deducting the interest payable (¥ 545 million ×

8.5%) still had sufficient funds to pay the dividend. At the same time, the

company proposed to decrease dividend payout rate from 50 percent to 40

percent, the increase in retained earnings and earnings in the next 7 years

could guarantee the good solvency of the company.

4) Labor Union

  Managers and employees owned 5 percent shares. The representatives of

workers put forward problem of wages payable, and this was out of our


                                       20
management‟s account before. So we could not give reasonable explanation

to them immediately. We “managers” failed to reply to this wages problems

at last.

   Question: From 2006 balance sheet, we could see that your wages

payable close to a hundred million yuan, but the cash flow was very limited,

How can the company solve this problem in 2007? If the company had so

much wages payable, how could we believe that you put the interests of

workers first. If this problem could not be resolved in a reasonable manner,

we Labor Union would consider organizing a strike.

   In this regard, we “manager” discussed after the meeting. The result was:

   First, the balance sheet was the data at a point of time, such as the data

on December 31, 2006. We always paid wages during the first half of the

month. After wages-paid day, wages payable would be substantially

reduced. Secondly, our company produce singlechip and simulate

semiconductor. We had large numbers of orders for goods. Inventory

turnover ratio was high. Although we had 650 million yuan inventories on

the 2006 balance sheet, but large amount of inventories would be converted

to cash after the date of balance sheet. There was no problem with cash

flow. So you need not worry about lower cash flow not enough to pay

wages.

   The plan of utilizing nuclear fuel to produce electricity in the future, was

not resolved at the meeting. Labor Union raised many queries about this


                                      21
problem.

  Question: Would utilizing nuclear fuel affect our workers‟ health, or

pollute the environment? You were now owing us so much wages, how

could you pay so much to replace the new fuel equipment!

  Answer: Utilizing nuclear fuel would not affect workers‟ health. This

was because, for the using of nuclear fuel, control was very strict, qualified

inspection of the equipments was also very harsh. The safety of equipment

need not be worried about by the vast majority of workers. Nuclear fuel

was currently one of the relatively clean energy worldwide. China for

nuclear waste disposal was in very strict control. As long as it is in

accordance with the normal procedures and methods, dealing with the

waste would not cause any pollution to the environment. And we would

also post in the special needs of workers with the corresponding protective

clothes.

  Since we could not provide convincing evidence about this plan, workers

were still very worried about their own bodies, and took a skeptical attitude.

This plan was denied by Labor Union.

  The second problem was the same as the wages payable problem. We

“managers” did not find reasonable explanation at the meeting. After the

meeting, we “managers” thought that if replacing old coal fuel equipments,

our company would greatly enhance the efficiency, we could increase the

productive abilities and productions. Earnings would also increase to a


                                      22
certain extent. Increasing earnings would improve staffs‟ wages level.

(3) Changes of the stock price during the meeting

  Current stock price was¥ 18 per share. During the meeting, due to

managers‟ lack of timely answering all questions raised by stakeholders,

and failing to provide forecasted financial statements for 2007, stock price

dropped from ¥18 per share to ¥15 per share.

  In view of the Huangshi plan, no revenues would be produced by the

plant for 4 years, but the normal operating profit could still be realized, part

of minority shareholders abandoned their shares, and other minority

shareholders acquired those shares.

  Managers, negotiating with banks got long-term loan, annual rate of

interest rate would be 8.5%. Hearing the good news, stock price rose 1

yuan, from ¥15 to ¥16 per share.

  Among these five plans, majority stockholders thought that Huangshi

plan would increase debt ratio and had more riskiness caused by with no

revenues produced for 4 years and thus affecting cash flow of the firm.

They decided to sell 5% shares at ¥16 per share. This dumping made

stock price declining to ¥14 per share.

  The fifth plan was to decrease dividend payout rate from 50 percent to

40 percent. Although the rate of dividend payout was not the reduction of

absolute dividend paid, but those minority shareholders focusing on

short-term gains could not accept. Three minority stockholders each held


                                       23
1% shares sold their shares at ¥14 per share. Company decided to buy

back those 3% shares. This signal enhanced investors‟ confidence, stock

prices rose from ¥14 per share to ¥14.5 per share.

  Accounting to voting in the general meeting, only the first plan and the

third plan were adopted. The meeting did not meet the goals set before.

After the meeting, stock price fell 1 yuan, final stock price was ¥13.5 per

share.

(4) Summary by “managers” students

  In "Modern Financial Management" course, Teacher Peng guided us to

hold a discussing meeting. This discussion class had left us with a deep

impression and feelings.

  We had never experienced this form of teaching since our entering

university. The form was very innovative. A lot of students fully anticipated

for this class. As “managers”, we were also excited. In order to be

successfully holding this meeting, we had done a lot of preparative work.

From statements made, role assignment of the management, whole

classmates role assignment and response preparations, we had thought

comprehensively. As “managers”, we had come to realize the hardship of

managing a company.

  First, management need collect data, prepare financial statements. By

personal experience, we gained a deeper understanding of the form and

drafting of financial reports. Complicated data, articulation among


                                     24
statements, relationship between the data, were the focus to which each

enterprise when preparing financial statements should pay attention. We

were personally involved in the company of this and found out a lot of

financial statement problems not clear before. It was a considerable gain

experience to us.

  Secondly, management was the core of company, our decisions would

affect the future development of enterprises. Through this meeting, we

understood that the managers had many responsibilities. Managers must

have profound understanding of all sides of the firm. Decisions should be

made in view of the past and current situation of the firm. Then those

decisions could bring about more earnings and make firm develop much

better. At the same time, managers must take account of stakeholders,

including   majority   shareholders,        minority   shareholders,   creditors,

employees and government. The task of managers was to unite all forces, in

order to help achieve the ultimate goal of development. Meanwhile,

managers must also be good at handling the relationships among different

parties, minimizing the conflicts. This was a rather difficult work,

managers need high abilities.

  Thirdly, the general meeting by shareholders, let us understand how

general meeting was carried out. General meeting was very important.

Managers, shareholders and staff representatives who held shares would sit

down to discuss face-to-face, then would listen to plans made by the


                                       25
managers and eventually adopt by voting. Managers, majority shareholders,

minority shareholders, labor unions who held companies‟ shares all

attended this meeting. Managers had interchanged opinions with as many

as possible questions raised by different stakeholders.

  Fourth, the problem of minority shareholders. We could see that the

minority shareholders was mainly due to the queries that management ‟s

decision to reduce dividend payout rate. As they mentioned, minority

shareholders did not have decision-making right, their interests often could

not be protected. When company suffered some adverse impact, majority

shareholders often protected themselves , and then damaged the interests of

minority shareholders. In addition, minority shareholders would not

consider long-term decision by managers. They focused on stable return in

short term, and most of this issue was dividend payout rate. High dividend

payout rate made more proceeds for minority shareholders, then they would

continue investing to this firm. Low dividend payout rate meant lower

return, then they might immediately sell shares, and shifted to other

investments which can bring realizable possible proceeds. We “managers”

knew the role of majority shareholders in a business, but minority

shareholders of a company were also important, even though they had a

minority stake, but, after all, were the company's owners. The investments

from minority shareholders were parts of company‟s capital sources.

Therefore, in investment decision-making, we must give consideration to


                                      26
the interests of both majority and minority shareholders. We should

enhance the confidence of minority shareholders, and made them

ultimately agree to all plans proposed by the managers.

  Although the general meeting finally ended, but from the entire process,

what we “managers” had done was far from enough, there were a lot of

negligence and errors. Now we summarized those faults as follows:

  Although we understood the procedures of the general meeting, but not

particularly clear, failed to know them as the palm of our hands. Therefore,

during the process, knowledge failed to be linked up. We failed to provide

forecasted financial statements, to give forecasted cash flows. We also

could not timely answer all of the questions raised by members. That was

the problem of data separating from reality. Sometimes we had no data to

illustrate and solve problems. Our answers failed to make especially

majority shareholders satisfied with all questions they asked. These were

detrimental to the adoption of the five plans we proposed.

  In the course we fully exercised our organizational abilities,

problem-solving    abilities,   communication    skills,   on-site   response

capabilities. More importantly, we learned a lot of knowledge, such as:

What steps should be adopted to draw out financial statements? What was

inherent logic among balance sheet, income statement and cash flow

statement? What the general meeting procedures were, scope of

participants as well as our proportion…… We need fully digest these over


                                     27
the class. We also need in-depth study and research. Then we could prepare

psychology and knowledge for our future practical work.

  According to materials given by teachers, another number of students

designed following three different schemes about company background and

investment plans in 2007:

   The first designed scheme: Debt ratio would increase from 30% to

45%. Assuming assets in 2007 and 2006 unchanged.

  Capital Structure in 2006:

  Assets¥6 billion=Liabilities¥1.8 billion +Equity¥4.2 billion

  Liabilities 2006 consist of: ¥300 million short-term debt; ¥1 billion

long-term debt (mature in 5-10 years); ¥500 million corporate bonds

(mature in 5-8 years).

  Equity 2006 consist of : ¥200 million retained earnings; 1 billion

non-cumulative preferred stock; 3 billion common stock.

  Net income 2006 before common dividends ¥400 million, dividend

payout rate 50%, that is, 2006 dividend payment ¥200 million, 2006

retained earnings ¥200 million.

  2007 plans:

  ⑴2 million donation to Wuhan Song and Dance Troupe, decreasing rigid

advertising spending ¥500,000.

  ⑵Spending ¥600 million to open a new plant in Huangshi. How can

the company raise this ¥600 million? As the company introduced new


                                    28
lines, old equipments were in the idle, the market assessing price of the old

equipments would be ¥400 million, all for investment to Huangshi

project. Meanwhile, trademarks with assessing price of ¥150 million,

inventories with value of ¥30 million, and ¥20 million cash.

  ⑶Compared with 2006, total assets would remain unchanged, capital

debt ratio would increase from 30% to 45%, capital structure in 2007

would be:

  Assets¥6 billion =Liabilities¥2.7 billion + Equity¥3.3 billion

  Adjustment method would be: borrowing ¥8 million from Minsheng

Bank, ¥892 million common stock converted to bonds, buying back

¥200 million outstanding shares by retained earnings.

   Compared with 2006, through capital operating, liabilities would

increase ¥900 million, equity would decrease ¥900 million. Debt ratio

would increase from 30 percent to 45 percent.

  ⑷ Coal power plants would be sold as a whole (including coal

inventories, equipments, land using rights)at assessing price ¥400 million,

to Huangshi Nuclear Power Corporation. Huangshi Nuclear Power

Corporation would exchange by 10% of its total shares of nuclear station.

Therefore, WJMI would use electricity by nuclear fuel. Huangshi nuclear

station would supply the electricity to WJMI through related parties‟

transactions.

  ⑸Net income before common dividend in 2007 would be ¥320 million,


                                     29
due to dividend payout rate decreasing from 50 percent to 40 percent,

therefore, common dividends in 2007 would be ¥128 million. Additions

to retained earnings 2007 would be ¥192 million.

  The second designed scheme: Debt ratio would increase from 30% to

45%, assuming equity in 2007 and 2006 unchanged.

  Capital Structure in 2006:

  assets¥6 billion = Liabilities¥1.8 billion + Equity¥4.2 billion

  Liabilities 2006 consist of: ¥1.1 billion long-term debt(mature 5-10

years); ¥200 million short-term debt; ¥500 million corporate bonds.

  Equity 2006 consist of: ¥1.65 billion preferred stock; ¥2.4 billion

common stock; ¥150 million retained earnings.

  2006 retained earning ¥300 million, dividend payout rate 50%, ¥1.5

billion yuan dividends payout in 2006, retained ¥150 million.

  2007 plan:

  ⑴2 million donation to Wuhan Song and Dance Troupe, increasing

¥300 million new sales for firm.

  ⑵Planning to invest¥600 million to Huangshi plant. How can the

company raise this ¥600 million? Investment consist of ¥300 million

(contract period of 15 years) finance lease, ¥260 million cash, bank

deposits and other monetary funds, ¥ 40 million fixed assets and

intangibles.

  ⑶Compared with 2006, equity would remained unchanged. Debt ratio


                                   30
would increase from 30% to 45%, then the capital structure in 2007:

  Assets¥7.6 billion = Liabilities¥3.4 billion + Equity¥4.2 billion

  The firm need increase ¥1.6 billion debt. The firm could finance as

following: ¥ 300 million finance leases; issuing ¥ 800 million

convertible bonds, borrowing ¥500 million long-term loans.

  ⑷The new plant in Huangshi would use electricity by nuclear fuel. The

original coal fuel plant would be disposed of. All plants and equipments

(land-using right, equipment production lines etc.)with a assessing price to

make a finance lease. The assessing price of assets is ¥1.8 billion, with

the partners signing finance leasing agreement, with a leasing term of 15

years, rental payment at the end of the year. The discount rate during lease

period is 12%. Company could receive annual fixed rental earnings:

  1800/PVIFA (12%, 15) = 1800/6.8109= ¥264.3 million

  ⑸At the end of 2007,Net income before common dividends would be

¥0 , dividend payout rate 40%, dividend payment ¥0 , ¥0 addition to

retained earnings.

  The third designed scheme :Debt ratio would increase from 30% to

45%, assuming liabilities in 2007 and 2006 unchanged.

  Capital Structure in 2006:

  Assets¥6 billion = Liabilities¥1.8 billion +Equity¥4.2 billion

  Liabilities consist of: ¥1.6 billion long-term debt(7-12 years maturity),

¥200 million short-term debt.


                                     31
  Equity consist of: ¥2.8 billion common stock, ¥1 billion preferred

stock, ¥400 million retained earning.

  In 2006, net income before common dividends was ¥800 million,

dividend payout rate 50 percent, dividend payment in 2006 was ¥400

million, ¥400 million addition to retained earnings.

  2007 plans:

  ⑴Donated ¥2 million to Wuhan Song and Dance Troupe, as the

company made its donation to perform the title, thus improved the

company's image and reputation of the community, bringing expected

earnings ¥200-300 million.

  ⑵Invested ¥600 million to Huangshi, the source of funding was

¥600 million investment using equity exchanged.

  ⑶Compared with 2006,liabilities would remain unchanged, debt ratio

would increase from 30% to 45%, capital structure in 2007 would be:

  Assets¥4 billion=Liabilities¥1.8 billion +Equity¥2.2 billion

  ⑷Using ¥1.58 billion common equity to exchange common equity of

nuclear station, the use of electricity by nuclear fuel would become

transactions between parent company and subsidiary company.

  ⑸There would be ¥300 million net income before common dividends

in 2007, dividend payout rate 40%, therefore, the dividend paid in 2007

would be ¥120 million, ¥180 million additions to retained earning.

  The designers of the later three schemes are not the traditional "good"


                                    32
students. Through this practice, I gave some so-called "poor" health

students flash opportunities. Therefore, teachers in the teaching process

should allow those who have unusual talents peculiar talents, partial talents

or mad talents to exist. So social demand for qualified personnel with

diversified, multi-level characteristics can be satisfied.. Teachers should

have a high degree of wisdom and sensitivity, individualize, scientificly

instruct, properly guide in order that different levels of students

comprehensively develop. Their personality, potentiality and creativity can

also be into full play.

3.Training teachers’ innovative teaching abilities

  Incenting and training teachers‟ abilities of innovative teaching are

involving in many factors, such as social environments, education system,

department management, training and education, material conditions and

practical opportunities. They will have a direct and important effect on the

formation and development of teachers‟ innovative teaching abilities.

Following we will discuss this problem from three aspects as department

and    office    environments,   continuing    education     and    teachers‟

self-questioning.

3.1 optimize the environments

  In Zhongnan University of Economics and Law, Financial Management

department and Teaching &Research office will have an impact on

teachers‟ innovative teaching abilities‟ formation and development. Various


                                     33
factors include directors of Financial Management Department and heads

of Teaching &Research office, "Financial Management courses" teaching

evaluation systems etc. Appropriate and reasonable environment of the

department and office is necessary for teachers‟ creativity smoothly by

developing.

(1) Key elements of optimizing department and office environment

  Directors and heads will determine whether the Financial Management

Department and Financial Management Teaching &Research office have

good environments. Directors and heads with spirits of innovation, can

supply guidance and support for creative teaching given by "Financial

Management courses" teachers.

  What are the creative department and office leadership? The most

important characteristic of them is to work in a creative, enthusiastical,

initiative way, depart from conventional restrictions, be good at discovering

and resolving main problem in the management of department and office,

in the teaching of financial management courses. They should strengthen

scientific management of Financial Management Department, and Teaching

&Research office, build systems to promote and encourage teachers‟

creative teaching. They should also take the lead in studying and solving

creative topics of departments and offices. They are good at listening to

teachers‟ new ideas and constructive suggestions, and strive to provide

teachers with opportunities and condition for creative work and research.


                                     34
(2) Department and office management

  Core of department and office management is the management of

teachers. It means that directors and heads should allow , encourage and

assist teachers to make creatively teaching. Allowance is that supplying a

relatively liberal free environment for teachers. Encouragement is that

giving moral and materials rewards for teachers‟ creative conduct.

Assistance is that using all conditions to supply information about creation

new theory, achievements, technologies and methods. They should

frequently organize study, discussion and expert guidance, so that the

"Financial Management courses" teachers can expand their horizons,

broaden their thinking.

(3) Improving the evaluation system

  Education evaluation system of Financial Management Department and

Teaching &Research Office is the examination of teachers‟ teaching

achievements. At the same time, choices of standards for evaluating

department and offices are the affirm of some educational thinking and

methods. They will play an important role in the inducting and enhancing

teaching. Among evaluation system, it should be paid attention to weights,

guidance, incentives of teachers‟ creative teaching achievements. Then an

innovative atmosphere will be formed. For example, education assessing

systems examining teachers‟ innovative teaching abilities can be improved


                                     35
from two aspects: First, improving basic "Financial Management course"

teaching examination form and contents, such as objective examination and

scene examination; second, paying special attention to activities during

financial management courses.

  If breaking through traditional rewarding and punishing evaluation way,

resulting in the developing innovative evaluation systems can be formed

incentive. Improve functions can also be developed. It will help teachers to

rectify shortcomings and bring their advantages into play. Directors and

heads of department and offices should focus on future development for

teachers‟ innovative teaching capability. Teachers themselves choose

evaluators, evaluators and teachers make pairs, developing evaluation plans

approved both by evaluators and teachers. The two sides should share the

responsibilities for achieving the developing goals, thus contributing to the

future development of teachers, playing the enthusiasm of all teachers,

raising awareness of the participation of all teachers. At the same time,

Propaganda innovative slogans should be written at the office room.

People's deeds with innovative spirits should be introduced. When

developing innovative teaching ability evaluation system has been set up,

encouraging innovative environment will be formed. Directors and heads

will not only pay attention to teachers‟ actual performance, but also to the

future development of teachers, focusing on teachers‟ "growth" themselves

so that teachers can realize individual development goals and their own


                                     36
value in a relaxed environment.

3.2 Principles and curriculums design

  The formation and development of teachers‟ innovative teaching abilities

for "Financial Management courses" is a life-long process. Principles and

curriculums design of training teachers are as follows:

(1) Principles of training

  a. Entirety. Innovative teaching ability is a whole structure. The more

integrative is the structure, the more perfect is function. Training innovative

teaching ability, should make cooperative department, innovative education

consciousness and innovation capabilities. Innovative attitudes, innovative

thoughts and creative skills should harmonize. General abilities and special

abilities should also coordinate growing.

  b. Development. Innovative teaching ability is one of the most advanced

teaching ability, education arts. Its formation is the process of one from

scratch, high from low, complex from simple, and it is endless. It is a

lifelong learning and developing process.

  c. Practicality. Formation and development of innovative teaching ability

can not be separated from innovative teaching practice. Department and

office management, teaching process must make efforts to create conditions

for innovation activities, such as allowing teachers to innovate in the

teaching contents, teaching methods. Teachers in the teaching activities can

foster and form students‟ and teachers‟ own qualities of innovation.


                                      37
(2) Curriculums design for training

  At present, "Financial Management courses" teachers‟ continuing

education curriculums should be based on three parts, including training

contents in special knowledge, education basic theories and education

sublimation. These knowledge are respectively called principal knowledge,

conditional knowledge, and practical knowledge.

  In principle training curriculums, we should create financial management

subject forefront profiles, formation process of financial management

scientific concepts, broadening and applying financial management

knowledge, contacting and integrating basic knowledge of financial

management disciplines      with other subjects. Thus           teachers   can

continuously enrich and adjust their knowledge structure adjustment,

maintain concepts of lifelong learning continuous innovation.

  In conditional training curriculum, we should offer teachers creative

thinking psychology, human resources, education ideas and measurement,

introduction of reform in homeland and abroad teaching practice. These

curriculums can make teachers examine and generalize their own education

experiences through theoretical analysis. Thus, teachers consciously guide

their own "Financial Management courses" teaching practice by education

concepts, theories and methods.

  In practical training curriculum, we should set up thinking training,

creative techniques training, textbooks and teaching methods, modern


                                    38
educational technology, education and scientific research, elective courses

offering, and guidance courses, so that the "Financial Management

courses" teachers not only have a solid financial management knowledge

base and creative thinking capability, but also know creative law. Teachers

can develop their own innovative teaching abilities in financial

management education and teaching practice.

  Through training, teachers will be good at guiding students properly to

seek unconventional thinking, encouraging students to deeply think

problems, broken with convention, and to solve the problem from the other

perspective. Teachers will also be good at inspiring students thinking

backward, so that students can find a solution to the problem from the

negative side. Finally, teachers will be expert at encouraging students to use

common thinking, inspiring students to use various methods to solve the

same problem. Students can seek for more space and various way to solve

one problem.

(3)Develop training models

  Social progress and education development has standardized, requested

and expected for improving teachers‟ role and behavior. All can be realized

through a planned training and improving. The revolutionary changes in

learning and curriculum contents of innovation teaching abilities determine

various models of innovative teaching abilities.

  In the knowledge economy, teachers‟ study should have the following


                                      39
characteristics:

  ①Study and work will be gradually integrated, the work of the teachers

is learning new knowledge.

  ② Knowledge growth rate accelerates. Aging cycles of knowledge

shortens. Speed of transformation of knowledge increases. Learning must

be continuous and lifelong.

  ③Because of the extensive use of information technology, learning

should be out of the classroom and into social life. Teachers should take

full advantage of Internet to learn, grip the latest developments of the

times.

  ④ Teachers should be good at selecting, integrating, conversing,

operating and effective using of information.

  ⑤Teachers should pay attention to the importance of silent knowledge,

strengthening learning and training under non-formal environment.

  "Financial Management courses" teachers‟ training of innovative

teaching abilities should adapt to the revolutionary changes of study.

Financial Management Department and Teaching &Research Offices can

take financial management thematic teaching, network menu-teaching,

teachers mentoring, organizing teachers to listen to observing lessons and

discussion, leading teachers setting an example on the spot, reading and

discussing. Thus a variety of different styles of training models will form.




                                      40
3.3 Teachers’ Self-questioning

  Teacher's innovative teaching abilities can not be separated from intrinsic

factors. Teachers‟ self-improvement come from teachers‟ self-role desire,

need, practice and pursuit. We should focus on teachers‟ self-questioning

development. On the other hand, teachers should emphasize on their own

“Financial Management courses” teaching practice evaluation, based on

their review, diagnosis, self-monitoring and self-adjustment of teaching

behavior, so as to achieve the optimization and improvement teaching

behavior, methods and strategies. Thus, teachers can raise levels of

innovation teaching abilities, deepen their understanding of the financial

management teaching activities. At last, teachers can adapt to the changing

educational requirements. On the one hand, professional teachers can be

given a new role——researcher. When teachers become researchers,

teachers will receive the dignity and vitality. They will show their

considerable academic status. Teacher groups will raise from those past

unprofessional “knowledge transfers” to the role with professions who own

a certain academic knowledge. Thereby, teachers will improve their social

image and status.

  The significance of teachers‟ self-questioning lies in its focus on

acquisition, possession and improvement of practical knowledge in the

knowledge structures of teachers. So general emphasis on the passing on


                                     41
knowledge in traditional teachers‟ training models will be inherited and

carried forward. On the other hand, conditional knowledge will play better

effect in the specific context of practice. If “ Financial Management

courses”teachers‟ want to improve their teaching effectiveness, what‟s

more important is practical knowledge of financial management. These

practical knowledge is a teacher‟s owning of scenario knowledge and the

associated knowledge when aiming to achieve the goal of teaching

behaviors. Because of practical knowledge‟s unique individuality, scenarios,

openness and exploration, teachers will need self-questioning and

self-training throughout their teaching practice. “Financial Management

courses ” teachers‟ self-questioning will determine their training and

improving their own innovation teaching abilities. If those teachers are just

satisfied with experience, but without in-depth thinking about learning

from experience, there would never be improvements.

  Teachers‟ self-questioning refers to the process that teachers‟ ectopically

analyze and amend their own innovation teaching behaviors and basis

during teachers‟ practice, further constantly improve their own innovation

efficiency and quality.

  Main features of teachers‟ self-questioning include:

  ①practicality, it means the teaching efficiency improvement must be

operated in specific "Financial Management courses" teaching practice. If

separated from the teaching practice, it will be impossible to self-question


                                     42
completely.

  ② targeted , it is a teacher‟s anatomical analysis of self-existing

"Financial Management courses" innovative teaching behaviors.

  ③introspection, it is for "Financial Management courses" teachers‟

innovative teaching methods and practice scenarios, they should consider

from outsiders‟ perspective and the perspective of many more levels. It

reflect teachers‟ self consciousness and abilities.

  ④timeliness, it refers to teachers‟ timely awareness, correction and

improvement of non-rational behaviors and concepts during the teaching

process of "Financial Management courses". Thus, the cycle of

innovation teaching abilities formation can be shortened.

  ⑤process, it reflects that specific teachers‟ self-questioning would go

through consciousness period, thinking period and amendment period. At

the meantime, teachers should cultivate themselves over their life-long

career growth. At last, teachers can become expert innovative teachers.

  “Financial Management courses” teaching activities are involved with

broader complex social practice activities. It is not only closely related to

the implementation of varied responsibilities and completion of multiple

tasks, but also closely connected with self knowledge, abilities, attitudes

and concrete actions, strategies, methods. The subjective and objective

factors are interwove and impacted. The self-questioning education practice

is based on self-questioning teaching. Teachers should self-question


                                       43
reasonableness and innovation of teaching main parts, teaching targets and

teaching tools. Certainly, teachers should also self-question from

concept(or knowledge) areas and acts(or operations) areas. Teachers should

break through the “self-righteous” and “stubborn” situation, and make their

innovation teaching be improved.
References:
[1] DaYun Chen .2004. Grasp Several issues about the innovation of the national higher
education, China's Higher Education,7:26-27
[2] MingYuan Gu .2004. The ten-points proposals about teacher‟s education reform,
China's Higher Education,9:22-23
[3] MaoDe Lai,etc.2004. Create personalized development environment training
students to obtain innovation awareness and ability. China's Higher Education,6:30-31
[4] YunXia Shi .2004. How to make efforts about the innovation in teaching, China's
Higher Education,5:38-40
[5] BoDuan Xie.2002. The conflicts between Mode of talent cultivation unity and
diversity of the student's personality development, "Economic globalization and Higher
Education - 2001 International Forum on Higher Education Collection", Hunan Normal
University Publishing House
[6]Guang Yang,etc.1997. College teachers„ quality in the 21st century, "Hubei Higher
Education Reform and Development Research - new ideas enhance the quality of the
training," Wuhan Industry University Press.




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