Valuations On Distressed Firms And Assets Finance Essay - Free Essay Example

Sample details Pages: 14 Words: 4251 Downloads: 9 Date added: 2017/06/26 Category Finance Essay Type Research paper Did you like this example? What is valuation? From the first days on this planet humanity evaluates. Ancient people thought about: how many fruits and vegetables they should take in exchange for a meat and not take too few. With currency system development, everything has been evaluated in money. Don’t waste time! Our writers will create an original "Valuations On Distressed Firms And Assets Finance Essay" essay for you Create order But the same problem stayed: how to find fair value and not to make yourself a fool. Thousand years passed, many concepts, price theories were devised, but there is still no unique approach. And probably as physics goes more and more deeply into substance, failing to find ultimate particle, economists face or do the same. Often during the course of business many companies are in a situation wherein they find it difficult to maintain their normal course of business. In such cases they are termed as distressed firms. However, show must go on. Either someone with financial power buys them out or the firm will be liquidated. It is an interesting and sophisticated work. Ascertaining the value of a distressed company is very crucial for those who are interested in the company. Interested parties require this information to determine what the actual underlying value of the business is and what discounts are to be made over this value to get an accurate picture of the business value of the firm. First of all, in this article we will pay attention for distressed company valuation as special case, which required its own approach. Of course, usual valuation techniques can be used for distressed companies, but these results are very unstable. Various studies have shown that using valuation techniques for the valuation of distressed firms have produced results which are in the range of 20% to 300% of the actual value. This is a large difference and is not acceptable in any business transaction. For example in the case of Sahara Airlines there was a large difference in the bids of Jet Airways and Kingfisher Airlines. This emphasizes the underlying difficulty in estimating the value of distressed firms. Valuation technique may result in 300% of the true value of the distressed firm True Value of the Firm 20% Estimate of the firms value through valuation techniques. VALUATIONS In finance, valuation is the process of estimating the potential market va lue of a financial asset or liability. Valuations can be done on assets (for example, investments in marketable securities such as stocks, options, business enterprises, or intangible assets such as patents and trademarks) or on liabilities (e.g., Bonds issued by a company). Valuations are required in many contexts including investment analysis, capital budgeting, merger and acquisition transactions, financial reporting, taxable events to determine the proper tax liability, and in litigation. Methods of Corporate Valuation There are several methods which are widely used in the industry for analysing the value of any firm. Many-a-times several methods are used to get a better idea of the underlying value of the firm. The focus of this paper is valuation of distressed assets, so we will not go into details of the traditional approaches DISTRESSED FIRMS One of the simplest definitions for a distressed firm is any firm that in near future wont be able to fulfil its obligations. Firm in this case may either go bankrupt and consequently liquidate its asset or it may undergo restructuring. In any case it is important to identify the true value of the firm. Other definition of a Distressed Asset is as follows. Assets are usually considered distressed when their value is severely depressed for a reason particular to the issuer and not because of general market conditions. CHARACTERISTICS OF A POSSIBLE DISTRESSED FIRM Financial distress is typically an unanticipated event. It is really difficult to identify the potential firms which are on the verge of default. But there are peculiar indicators which can give an idea about the health of the firm. Businesses transitioning along a continuum of financial health from going concern to distressed, often exhibits one or more of the following characteristics: Over-leveraged balance sheet A high debt to Equity Ratio and debt to Asset ratio is a first signal of the upcoming problem. Sometimes it may be due to bad management or it may be due to aggressive Merger and Acquisition strategy. For example after the acquisition of the Tata Steel, its balance sheet is over leveraged. Covenant and/or payment defaults If a firm fails to meet its debt or other obligations on time then it is an indication of poor health of the firm or poor management of resources. Lack of internal controls Many a times due to lack of systems and procedures there is a lack of internal control in the firm. Loss of a major customer, supplier, or key employee Sometimes a company gets a major chunk of its business from one key customer. Similarly there is one key supplier who supplies a raw material critical for the production. In such cases if there is a loss of such customer or supplier then entire operations of the company are in jeopardy. This is what Reliance did when it was the single supplier of one of the critical raw materials for plastic industry. Management seeking bridge financing for quick fixes If the management of the company is having a short term approach and is looking for quick fix solutions instead of long term solutions. Discovery of fraud Discovery of fraud is a very good indication of an unhealthy firm. For example in the case of Satyam, when its erstwhile promoter Ramalinga Raju tried to get Maytas Infra under Satyam, many analysts were sceptical about the companys health. Product failure Sometimes companies get most of their revenue from one single product. Also many companies tend to invest all their resources in a single product. In such cases if the product fails then the entire firm is doomed to fail. Obsolete business model If a firm fails to innovate and continues its business with same model then after sometime its business model will become redundant and obsolete. Firms with obsolete business models are always next in line to fail. Cyclical downturn Many industry sectors have a common phenomenon of cyclical downturn. There is a recession in the industry after every cycle of say 10 or 15 years. Strong companies are able to overcome such scenarios but the weaker players succumb to it. Volatility in raw material and energy costs In some sectors proportion of raw material cost is a very high. In such cases if the prices of raw materials jump steeply then the business becomes unviable. An example of such sector is Airlines industry which is highly dependent on the prices of the OIL. External shock to economy External factors may also influence the health of the company. These may be macro level factors like government policies or it can be events like terrorist activities. For example health of the hospitality industry is directly related to influx of tourists which in turn is related to peace in the country. After every major terrorist activity, Indian Hotel companies see a steep decline in their Occupancies. Although these characteristics are true for any distressed firm, but it doesnt means that if any firm shows any of these characteristics then it is going to bankrupt. For example a firm may make payment defaults but it doesnt means that the firm will have to be liquidated now. In fact in such cases the above characteristics just give a preliminary indication that finances of a particular firm are not in place. In such cases a deeper analysis of the firms financials is required. ADJUSTMENTS in DISTRESSED ASSET VALUATIONS Additional adjustments to a valuation approach, whether it is market-, income- or asset-based, are necessary in almost all the instances. These adjustments help in gauging a more accurate valuation for a distressed Asset. These involve: Excess or restricted cash Other non-operating assets and liabilities Lack of marketability discount Control premium or lack of control discount Above or below market leases Excess salaries in the case of private companies. There are other adjustments to the financial statements that have to be made when valuing a distressed company. Typical adjustments used to recast the financial statements for a distressed company include: Working capital adjustment Deferred capital expenditures Cost of goods sold adjustment Non-recurring professional fees and costs Certain non-operating income/expense items ADAPTING DISCOUNTED CASH FLOW VALUATION TO DISTRESS SITUATIONS When will the failure to consider distress in discoun ted cash flow valuation have a material impact on value? If the likelihood of distress is high, access to capital is constrained (by internal or external factors) and distress sale proceeds are significantly lower than going concern values, discounted cash flow valuations will overstate firm and equity value for distressed firms, even if the cash flows and the discount rates are correctly estimated. In this section, we will consider several ways of incorporating the effects of distress into the estimated value. Simulations In traditional valuation, we estimate expected values for each of the input variables. For instance, in valuing a firm, we may assume an expected growth rate in revenues of 30% a year and that the expected operating margin will be 10%. In reality, each of these variables has a distribution of values, which we condense into an expected value. Simulations attempt to utilize the information in the entire distribution, rather than just the expected value, to arrive at a value. By looking at the entire distribution, simulations provide us with an opportunity to deal explicitly with distress. Before we begin running the simulations, we will have to decide the circumstances which will constitute distress and what will happen in the event of distress. For example, we may determine that cumulative operating losses of more than $ 1 billion over three years will push the firm into distress and that it will sell its assets for 25% of book value in that event. The parameters for distress will vary not only across firms, based upon their size and asset characteristics, but also on the state of financial markets and the overall economy. A firm that has three bad years in a row in a healthy economy with rising equity markets may be less exposed to default than a similar firm in the middle of a recession. The steps in the simulation are as follows: Step 1: The first step involves choosing those variables whose expected values will be replaced by distributions. While there may be uncertainty associated with every variable in valuation, only the most critical variables might be chosen at this stage. For instance, revenue growth and operating margins may be the key variables that we choose to build distributions for. Step 2: We choose a probability distribution for each of the variables. There are a number of choices here, ranging from discrete probability distributions (probabilities are assigned to specific outcomes) to continuous distributions (the normal, lognorm al or exponential distribution). In making this choice, the following factors should be considered: The range of feasible outcomes for the variable; (e.g., the revenues cannot be less than zero, ruling out any distribution that requires the variable to take on large negative values, such as the normal distribution). The experience of the company on this variable. Data on a variable, such as operating margins historically, may help us determine the type of distribution that best describes it. While no distribution will provide a perfect fit, the distribution that best fits the data should be used. Step 3: Next, the parameters of the distribution chosen for each variable are estimated. The number of parameters will vary from distribution to distribution; for instance, the mean and the variance have to be estimated for the normal distribution, while the uniform distribution requires estimates of the minimum and maximum values for the variable. Step 4: One outcome is draw n from each distribution; the variable is assumed to take on that value for that particular simulation. To make the analysis richer, we can repeat this process each year and allow for correlation across variables and across time. Step 5: The expected cash flows are estimated based upon the outcomes drawn in step 4. If the firm meets the criteria for a going concern, defined before the simulation, we will then discount the cash flows to arrive at a conventional estimate of discounted cash flow value. If it fails to meet the criteria, we will value it as a distressed firm. Step 6: Steps 4 and 5 are repeated until a sufficient number of simulations have been conducted. In general, the more complex the distribution (in terms of the number of values the variable can take on and the number of parameters needed to define the distribution) and the greater the number of variables, the larger this number will be. Step 7: After every simulation, a value will be generated depending upo n whether it is a going concern or a distressed firm as the case may be. To calculate the value of the firm, take the average of all the simulated values. From simulation, probability of default can also be assessed along with the effects of distress on the underlying value of the firm. But there are some limitations to this approach. The most basic limitation is the identification of the inputs which are required for the analysis. In practice, it is difficult to choose both the right distribution to describe a variable and the parameters of that distribution. If the assumptions are not proper then although the outcome may look impressive but it will be of no value. Therefore, complete care should be taken to extract the maximum results. MODIFIED DISCOUNTED CASH FLOW VALUATION Discounted Cash Flow valuation can be adjusted to reflect the effects of firms distress on the valuations of the firm. We will use both Expected cash flows as well as discount rates to get an accurate valuation of the distressed firm. Estimating Expected Cash flows To consider the effects of distress into a discounted cash flow valuation, we have to incorporate the probability that a firm will not survive into the expected cash flows. In its most complete form, this would require that we consider all possible scenarios, ranging from the most optimistic to the most pessimistic, assign probabilities to each scenario and cash flows under each scenario, and estimate the expected cash flows each year. Where ÃÆ' Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬jt is the probability of scenario j in period t and Cashflowjt is the cashflow under that scenario and in that period. These inputs have to be estimated each year, since the probabilities and the cash flows are likely to change from year to year. A shortcut, albeit an approximate one, would require estimates for only two scenarios the going concern scenario and the distress scenario. For the going concern scenario, we could use the expected growth rates and cash flows estimated under the assumption that the firm will be nursed back to health. Under the distress scenario, we would assume that the firm will be liquidated for its distress sale proceeds. Our expected cash flow for each year then would be: Where ÃÆ' Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Going concern, t is the cumulative probability that the firm will continue as a going concern through period t. The probabilities of distress will have to be estimated for each year and the cumulative probability of surviving as a going concern can then be written as follows: Where ÃÆ' Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬distress, t is the probability that the firm will become distressed in period t. For example, if a firm has 20% chance of distress in year 1 and a 10% chance of distress in year 2, the cumulati ve probability of surviving as a going concern over two years can be written as: Cumulative probability of survival over 2 years = (1- .20) (1 .10) = .72 or 72% Estimating Discount Rates: In conventional valuation, we often estimate the cost of equity using a regression beta and the cost of debt by looking at the market interest rates on publicly traded bonds issued by the firm. For firms with a significant probability of distress, these approaches can lead to inconsistent estimates. Consider first the use of regression betas. Since regression betas are based upon past prices over long periods (two to five years, for instance), and distress occurs over shorter periods, we will find that these betas will understate the true risk in the distressed firm. With the interest rates on corporate bonds, we run into a different problem. The yields to maturity on the corporate bonds of firms that are viewed as distressed reach extremely high levels, largely because the interest rates are computed based upon promised cash flows (coupons and face value) rather than expected cash flows. The presumption in a going concern valuation is that the promised cash flows have to be mad e for the firm to remain a going concern, and it is thus appropriate to base the cost of debt on promised rather than expected cash flows. For a firm with a significant likelihood of distress, this presumption is clearly unfounded. As an extreme example, consider estimating a beta for Enron at the end of 2001. The beta estimate from Bloomberg, using 2 years of data, was 1.45. Over three-quarters of this period, Enron was viewed (rightly or wrongly) as a healthy firm with positive earnings. It is only in the last part of the regression period that you see the effects of distress on stock prices and the debt to equity ratio of the firm. What are the estimation choices for distressed firms? To estimate the cost of equity, we have two options that provide more reasonable estimates than regression betas: CAPM Betas adjusted for distress Instead of using regression betas, we could use the bottom-up unlevered beta (the weighted average of unlevered betas of the businesses that the firm operates in) and the current market debt to equity ratio of the firm. Since distressed firms often have high debt to equity ratios, brought about largely as a consequence of dropping stock prices, this will lead to levered betas that are significantly higher than regression betas. If we couple this with the reality that most distressed firms are in no position to get any tax advantages from debt, the levered beta will become even higher. Levered beta = Bottom-up Unlevered beta (1 + (1- tax rate) (Debt to Equity ratio)) Note, though, that it is reasonable to re-estimate debt to equity ratios and tax rates for future years based upon our expectations for the firm and adjust the beta to reflect these changes. Distress factor Models In addition to the standard factor for market risk, we could add a separate distress factor to the cost of equity. In effect, this would make the cost of equity for distressed firms much higher than healthy firms in the same business. In fact, some have attributed the higher returns earned by firms with low price to book ratios to distress; low price to book stocks, they argue, are more likely to be distressed. Other studies, however, contest this notion by noting that portfolios of distressed firms have earned lower returns than portfolios of healthy firms historically. To estimate the cost of debt for a distressed firm, we would recommend using the interest rate based upon the firms bond rating. While this will still yield a high cost of debt, it will be more reasonable than the yield to maturity when default is viewed as imminent. To compute the cost of capital, we need to estimate the weights on debt on equity. In the initial year, we should use the current market debt to capital ratio (which may be very high for a distressed firm). As we make our forecasts for future years and build in our expectations of improvements in profitability, we should adjust the debt ratio towards more reasonable levels. The conventional practice of using target debt ratios for the entire valuation period (which reflect industry averages or the optimal mix) can lead to misleading estimates of value for firms that are significantly over levered. Limitations of Approach The biggest roadblock to using this approach is that even in its limited form, it is difficult to estimate the cumulative probabilities of distress (and survival) each year for the forecast period. Consequently, the expected cash flows may not incorporate the effects of distress completely. In addition, it is difficult to bring both the going concern and the distressed firm assumptions into the same model. We attempt to do so using probabilities, but the two approaches make different and sometimes contradictory assumptions about how markets operate and how distressed firms evolve over time. INVESTING IN DISTRESSED ASSETS The most common situation of a distressed asset is a commercial loan on which the issuer has defaulted on payments of principal or interest. Distressed asset investing generally, and emerging markets distressed investing in particular, are undertaken by a small number of firms. Implementing the strategies successfully requires specific skills and particular e conomic structures. For those firms with the appropriate professional skills and capital base, however, the strategies can be extremely profitable. Investing in such assets has become particularly more popular after the recession wherein many firms are in distressed state. There is still huge underlying value in assets of many such companies and proper valuation of these dark horses can lead to windfall gains for investors. Different types of Distressed Asset Investing Distressed investments can be categorised by the type of exit foreseen. In other words, what is the strategy for cashing out? Event-driven distressed investments. These are directional investments in distressed and special event situations in sovereign and corporate securities, for which some event is on the horizon which will transform the nature of and increase the value of the assets. The event can be a restructuring of a companys or countrys debt, a liquidation of a companys assets, or a buyback of outstanding debt by an issuer or by individuals. Capital gain from the investment is provided either through re-pricing upon occurrence of the event, or through the proceeds of a restructuring. Valuation-driven distressed investments. These are directional investments made in distressed situations where a transformative event is not at sight. The exit may be either through the market (re-pricing due to credit strengthening), cash flow, or an event (re-pricing upon an event or t hrough the proceeds of a restructuring). Some investors may buy distressed assets simply because the price seems too good to pass up, but this can be dangerous: what is cheap today may be cheap tomorrow, unless there is a reason for the value to rise. Valuation-driven investments should therefore be made only when a clear reason for triggering an increase in value can be ascertained, even if the timing of the increase is uncertain. Distressed investing usually involves the purchase of debt, but equity analysis is relevant for two reasons. First, the assets are usually non-performing, and therefore the theoretical yield is less important than the potential for capital gains; successful distressed debt investments will produce equity-like returns. Second, equities are increasingly being distributed to creditors as part of the package of assets coming out of debt restructurings; in this way, control of a companys debt pre-restructuring may later lead to equity control. Distres sed investing strategies may be combined with other complementary but uncorrelated investment strategies in liquid instruments. This can diversify portfolio risk, create hedging opportunities, and provide useful liquidity. Distressed investments are rarely possible to sell short, so any hedges for long positions or outright short positions must be undertaken in the context of a different, liquid investment strategy. Example of a Successful Distressed Investment A very famous Thai Oil Company at one point of time in the late 1990s had over $2 billion of debt outstanding. Company was not able to meet the obligations and had defaulted. After the default the market price of the debt fell and it was being traded at 30% of the actual face value. But here the company reorganized its finance and made a smart move. The company itself bought almost 50% of its outstanding debt at a price between 50-90% of the original face value. Company also agreed on a debt restructuring, in which it issued clean debt and gave  ½ of its equity to creditors. Thus improvements in the business and decrease in the outstanding debt led to rerating of its debt ratings. Now the debt was rating at par and thus made its once worth less equity very valuable. CONCLUSION Distressed firms, i.e., firms with negative earnings have a strong likelihood of failure; present a challenge to analysts valuing them because so much of conventional valuation is built on the pr esumption that firms are going concerns. But in the case of distressed firms this very assumption doesnt holds true. In this paper, we have examined how discounted cash flow has to be adjusted with respect to the valuation of distressed assets. With discounted cash flow valuation, we suggested two ways in which we can incorporate distress into value simulations that allow for the possibility that a firm will have to be liquidated and modified discounted cash flow models, where the expected cash flows and discount rates are adjusted to reflect the likelihood of default With relative valuation, we can adjust the multiples for distress or use other distressed firms as the comparable firms. In addition to this in the last section we talked about investing in such assets. From this we can say that trading in distressed assets that too particularly in emerging markets can be highly profitable, given the growth prospects naturally existing in such regions. But before dealing with di stressed firms it is very important to understand how to evaluate such firms. If the valuations can be done accurately then it can lead to windfall gains.

A Day Away From Her Final Exam - 1489 Words

Team Lyle – Elizabeth Scalco, Tyler Kerr, James Sylvia, Cory Casal Extenuating Circumstances Jessica is college student, who is a day away from her final exam in a very critical class. In the class, she is on the borderline of an A or B, but she needs to get an A in order to look like a solid prospect for medical school. Unfortunately, Jessica just had a devastating death in the family the week of the final, which has caused her to lose complete focus on her schoolwork. With her critical final exam the next day, she realized she is not prepared. With that in mind, Jessica comes up with a plan to cheat during the final. She recruits the help of her friend Candi to cheat on the final exam with her. They decide to communicate the answers to†¦show more content†¦Jessica explains that she just had a death in the family that has affected her a lot. She continues to say that she has not been able to study due to the death. Jessica also tells Dr. Lopez that she had asked Candi to help her out. Candi adds that she felt so bad for Jessica and all tha t she had to go through, so she felt obligated to help her friend out. Dr. Lopez knows Jessica and Candi pretty well and they have become fairly close over the semester. She would not have expected two of her brightest students to commit such an act of dishonesty. As Dr. Lopez continues to ponder the circumstances, she recalls that there were signs of Jessica slipping into depression. As a young adult, Dr. Lopez struggled with depression, so she knows the signs and what Jessica is going through. Dr. Lopez knows the impact of failing Jessica will have on her future. However, she is very concerned about the spiraling downfall of Jessica’s mental health. As a new professor at the university, Dr. Lopez does not want to get caught in a cheating scandal if she lets the two girls go. She has just 24 hours to turn in her final grades. How should Dr. Lopez handle the situation? Discussion Questions 1.) In your opinion, what should Dr. Lopez do? 2.) Based on Jessica’s circumstances, should the incident be looked at with further consideration by Dr. Lopez? 3.) It is clearly stated in The Honor Code of Institutions of Higher Education that cheating is wrong. Using a

Midsummer Night’s Dream Free Essays

Midsummer Night’s Dream was written by William Shakespeare in the mid 1590s and probably before Romeo and Juliet. It is a hilarious comedy and the plot conveys the creative genius of the great playwright. It is indeed a ‘comedy of errors’ where the mistakes of a well-meaning immortal being have the most unexpected and extremely captivating and enchanting effects. We will write a custom essay sample on Midsummer Night’s Dream or any similar topic only for you Order Now The characters are inspired from many sources such as Greek mythology, English country folklore and rich and diverse texts. However the plot, unlike many other Shakespearean plays which are inspired from older plays, is very original. The comedy is entirely Shakespearean and the signature style of the Bard is evident. The plot is made more interesting and the comedy is made more pronounced by the many literary devices and symbols used by Shakespeare. The most interesting of these is the effect created by the existence of another play within the play. One set of characters in Midsummer Night’s Dream – a band of Athenian craftsmen, is rehearsing a play they wish to perform at the wedding of the Theseus (the Duke of Athens) to Hippolyta, his beloved. The play that these craftsmen wish to perform is the most lamentable comedy and most cruel death of Pyramus and Thisbe. This paper attempts to explore the way this inner play mirrors the actions of Midsummer Night’s Dream. The story of Pyramus and Thisbe has been taken from tragic poetry by Ovid. Pyramus and Thisbe were young lovers whose liaison was not acceptable to their parents as they belonged to feuding families. They spoke to each other through a hole in the wall that separated them. One night, a lion happens to attack Thisbe. While she manages to escape, the lion tatters her mantle to shreds. Pyramus sees her tattered mantle and thinks that his lover is dead. In anguish, he commits suicide without waiting to verify his troubled assumptions. Later, when Thisbe finds his corpse, she also commits suicide. The concept of the ‘double suicide’ and the extreme tragedy that it creates has been used in Midsummer Night’s Dream to create an altogether different and an almost contrasting effect. Shakespeare has used the tragedy of Pyramus and Thisbe in a most unconventional manner so that it has the most interesting consequences upon the analysis of the play Midsummer Night’s Dream. We examine these consequences in the following parts of the paper. The most important effect that the concept of ‘play within a play’ creates is that it highlights the outer plot of the unfortunate events in the life of the young Athenian lovers. The story of Pyramus and Thisbe is a very tragic tale and would bring tears to the eyes of most audience. But the unintentionally hilarious portrayal of this tragic story by a group of inexperienced craftsmen, ill-suited as actors, makes a tragedy seem funny. Similarly, the untoward incidents that happen to the fours lovers are horrible and almost terrifying if seen out of context of the play. But by sheer genius of the playwright and antics of certain characters like Puck and Bottom, the tale is converted into something the audience can laugh at. Thus the inner plot (i.e. the performance of the tragic play in a comic manner) mirrors the outer plot (i.e. the almost tragic incidents in the forest presented in a funny manner). The Athenian craftsmen have decided to enact the tragedy of Pyramus and Thisbe for the Duke’s wedding. This fact heightens the comedy in a very endearing way. The craftsmen are not suited to the enactment of such a refined play. They are poor actors; they have bumbling speech; they have such ludicrous concerns about the performance that they create a very funny prologue for their play. They are concerned that the lion might frighten the ladies in the audience; the suicide of Pyramus might not be taken well and are also concerned about how they will create the effect of moonlight and the wall that separates the lovers. To take care of these concerns, they insert an explanation in the prologue of the play insisting that the lion is not real and the actor playing Pyramus is not indeed dead. It creates an uproarious effect. However, they mean well, a fact acknowledged even by the Duke at the end of their performance. Another effect of the inner plot is that it underlines the creative brilliance of Shakespeare. He uses the inner plot perfectly to mirror the outer plot, even as we find that the inner plot does not have any effect on the outer plot. The parallel inner plot just creates a comical side track even as unwittingly it mirrors the main plot. The play about Pyramus and Thisbe is performed on stage after all the issues and problems have been successfully resolved the main play is nearing a happy ending. The performance thus has no impact on the actual plot of the play. But the funny performance heightens the feeling of well- being created by the resolution of all the problems that the main characters encountered. Midsummer Night’s Dream is a brilliant comedy. The effect of the inner plot contributes a lot to the play. This complex literary device used by Shakespeare creates a riotous effect. Perhaps the brilliance of the play is accorded more luster due to this clever ‘play within a play’ ploy used by the playwright. The analysis of this device makes the play even more endearing as each reading reveals more subtle ways in which the inner plot mirrors the out one. That is why, perhaps, this play remains one of the most famous of Shakespearean comedies. REFERANCES (1)  Ã‚   David Garrison, Chapter 10 – Shakespeare’s Pyramus and Thisbe in Midsummer Night’s Dream, â€Å"Gongora and the â€Å"Pyramus and Thisbe† Myth from Ovid to Shakespeare†, Publisher: Juan de la Cuesta, Newark, DE, 1994, pg143 (2)  Ã‚   Jonathan Bate, â€Å"Shakespeare and Ovid†, Oxford University Press, 1994                         How to cite Midsummer Night’s Dream, Essay examples

Codification in English for Origins and Development- myassignmenthelp

Question: Discuss about theCodification in English for Origins and Development. Answer: Introduction Codification is an essential process through which a language is standardized. It helps the language to gain a form that is easily understandable by everyone. Even the people who do not use that specific language as their mother tongue can use it with ease if a specific structure is clearly defined. Grammar is the tool that is used to standardize a language and further modifications are done by reshaping words and phonetics. Two of the most important tools to facilitate in the codification process are grammar and the making of dictionaries (Braine 2014). Grammar helps to give a formidable structure to the language which makes it easy to understand and fathom how the language operates; while dictionaries help to give an idea as to which are the accepted words in the language and helps to create the vocabulary of the language. Dictionaries also help to make the user know the meaning of the words of the language, which helps to understand which words are best suited for a purpose and ac cordingly employ those words to deliver the opinions and facts in the best possible way (Sung 2016). The paper seeks to give answers as to these aspects regarding how the English language was codified and how and why were grammar standardized and dictionary books were created. History of English language codification The linguistic term codification normally refers to the different methods that are used to standardize a language, English for the case of the current paper, which was coined by Einar Haugen, a popular linguist. It was defined as the process leading to minimal variation in form. This means that the language is more or less of the same form across the places where it is spoken. Creating dictionaries, guides about how to use different styles and guidelines of using the language, a structure put forth by grammar books are all tools that are used to standardize a language (Brems 2015). Codification is a continuous and ongoing process; but the most important period was during the 18th century, where a huge number of grammar books and dictionaries were being published, all trying to give the language a proper structure. Among these, the most notable were Samuel Johnsons Dictionary of the English Language, published in the Great Britain in 1755, and Noah Websters The American Spelling Book, published in 1783 in the United States. Codification is often seen as the final process in the standardization of a language. During the 16th and 17th centuries, the English language was given a lot of attention in the attempt to standardize it. The victory of Henry the 8th over the Catholic church led to a fall in its control over education and that made the importance of Latin to fall in terms of use (Kroskrity 2015). The language of the emerging nation of England as a state required it to be standardized in order to be used widely. In 1523, one of the first grammar books, A Shorte Introduction of Grammar was published by William Lily, that took an attempt to give a standard idea of language. The stark disparity in the number of grammar books that were published before and after 1600 is huge and is one of the best evidences that more people were trying to standardize the language (Mosel 2014). The first grammar book that tied to give a logical explanation regarding how does English work as a language or tried to give a p roper idea about the spelling and syntax of the language was Bullokars Bref Grammar for English. This was the first book that described how English should be and not just how it was. Ways to standardize There are a few ways and methods that are put into action to standardize languages. Some being: Dialect leveling: This refers to the process of lingual standardization by reducing, or even eliminating, the differences that a language has in different regions. This happens over a period of time and several generations. English across the countries are increasingly becoming generic and loosing local characters. This may be attributed to the advent of the internet. Linguistic imperialism: This is when one language is imposed on the speakers of another language and subjugate them to use this new language instead their native one. The primary example of this would the expansion of English language. Purism: This means holding a very conservative perspective regarding the use and development of a language. The problem with English in this aspect is, despite some vehement defenders, it is not at all pure and has inputs from numerous other languages, words it has molded and incorporated as its own. Linguistic insecurity: This happens when the users of a certain language are not confident enough to think that their use of the language is not up to the mark of the standard form of the language. This feeling of insecurity prompts them to alter their unique way of using the language and bring it in accordance to how other people use it (Weber 2015). This makes everyone trying to speak or use the language in the same way, making the language standardized. Prescriptivism: This notion refers to the belief that one language, or dialect of the same language, is superior to the others and ought to be promoted more. This is another form of purism, that hails a particular dialect and form an d dismisses another. This makes some users of a language to be more controlling and tend to try and make others speak and use the language as they see fit and the only proper way. Necessities for dictionaries Dictionaries are one of the two pillars that uphold the basic tenets of any language. A dictionary helps an individual to be autonomous, who does not need to be reliant on others in order to properly use the language. Dictionaries help to shape a language in many ways. Dictionaries are essentially the compilation of words that are accepted in a language and can best explain what one wants to mean. A proper notion and knowledge about these words can help to translate better: without the knowledge on words, it is tricky to communicate with people who speak another language, simply because translations are rendered useless. Dictionaries help an individual to use proper grammar as well as giving ideas and knowledge about the background of a word and also how it should be pronounced and the word family it belongs to, the properties of that segment of words and also the best ways and situations to use them (Algeo and Butcher 2013). Dictionaries also help to give the knowledge regarding the different forms of the same word: how it is spoken as a verb or as a noun or as an adverb. Dictionaries were being commissioned more and more in numbers during the period of the industrial revolution in Europe. In that time, there was a great need to educate the people because the lifestyle was changing fast and with that the outlook and views on different things were quickly changing. Every country had people who were writing their own and selling dictionaries. With the industrial revolution came the advent of scientific research and new discoveries, inventions, innovations were being done every day. This was one of the most important reasons to develop and standardize English as a language (Pennycook 2017). The need to communicate about the new scientific discoveries and to expand the knowledge. English helped in this aspect and it was necessary to give a proper form that would enable the scientists to discuss about the new researches that were going on around the world. Books being expensive during that time, dictionaries were the only option through which the idea and the knowledge about the language could be spread. This had another political aspect to it: the rise of English as a language resulted in the reduction of Latin as in popularity. This was used by the royal families and churches to write books and scrolls. English suddenly made everyone able to read and knowledge was rendered to be free. This simultaneously paved the path for the monarchy to fall and the rise of the educated middle class was initiated. There are many criteria for a word to be included in a dictionary. The process is lengthy and requires a lot of requirements to be fulfilled. At the very beginning, it must be observed very carefully which words are used the most and how are they being used (Aarts, Chalker and Weiner 2014). This gives important insight regarding how important is a particular word. One good way to achieve this is by reading daily publications in every possible way. Online or digital publications are also given a lot of emphasis in todays world as the internet has been seen to be the reason for the establishment of many words in popular culture. If any of these new words are found to be in use for a long period of time and if they are even started to be used in official work as well, albeit not being included in the dictionary even then, then these words are tried to be given a proper definition (Knowles 2014). To observe and understand the trends and situations where these words are used can help to u nderstand what purpose do these words serve and may they be used. The definitions are established on this and any further use of the words are kept in accordance with the explanations of the words (Kubota 2014). The sources of these words are of paramount importance as they hold the key to understand the use of the words. Noting down the sources of these words is called citations and gives important understanding regarding just how much used is the word. These citations are then compiled and alphabetic segments are divided into according to alphabets. While new words are being incorporated into the dictionary, already existing words are also examined to see whether there have been any changes in their definition or what they represent. Throughout the history of language, numerous words have gone through a drastic change in terms of what they define or refer to. The words are then included into the dictionary with a clear description, how should it be pronounced and what is the best situation to use it. Prescriptivism and descriptivism of the dictionary This term, as defined earlier, refers to the notion that one language or dialect is better than another and leads to subjugation of one of them. But in a broad and general sense, most of the words that are used today or are part of the dictionaries, are descriptive. The only words that come across as prescriptive are mostly slangs or are non-standard. Prescriptive words are used these days only in cases of being misused. Descriptivism means taking an objective approach towards the language, while prescriptivism is more like a set of rules that dictate what should be the structure of the language (Gray 2014). In the modern world, it is hard for anything to have such a hard and fast rule. This makes almost all the modern day dictionaries to be descriptive rather than prescriptive. 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