My second TEDxPeachtree blogpost

A Month of Unconditional Dedication to Safety

Link to the original article: http://tedxpeachtree.com/a-month-of-unconditional-dedication-to-safety/

June is National Safety Month. Each June, the National Safety Council (NSC) organizes this annual observance to educate the public and raise awareness in the leading causes of injuries and deaths. In honor of the NSC celebrating its 100th anniversary of safety awareness this year, I would like to showcase breakthroughs in safety improvement history via TED, in the order of topics the NSC is featuring each week of this month.

Week one is on Slips, Trips and Falls, with particular emphasis on falls from heights. Falling is one of the major causes of injuries and fatalities in our work places. Although he might not help you much in preventing injuries in the office, Steve Truglia has stories to share. As a stuntman, the number of times Truglia has fallen out of buildings is most likely more than I have cut my own fingers in the kitchen. See how technology has made stunts safer, and Truglia’s incredible planning for a breathtaking jump from 120,000 feet high.

The second week focuses on Employee Wellness, with an emphasis on the overdose of prescription painkillers. Deaths from overdose of prescription painkillers have skyrocketed in the past decade, but how severe is it exactly? Chris Jordan transformed a simple image of a pill by multiplying the imagery using the astonishing number of emergency room visits attributable to abuse and misuse of prescription painkillers, and anti-anxiety medications to an oversized wall image. Other imagery that raises awareness includes the destructive power of cigarettes, and various social issue images with high statistics in the United States.

The third week is Emergency Preparedness. As millions of people are displaced by natural disasters every single year, organizations are increasingly aware of the importance of emergency plans. I still remember when the HR department at my company handed me an emergency survival kit backpack during my new hire orientation, even before I had a chance to introduce myself to everyone in the room! Dedicated to solving the massive housing gap after devastating disasters, Michael McDaniel spent his own personal savings and free time to design and build a low-cost shelter that is easily transportable and post-disaster efficient.

The fourth week is on the issue of Ergonomics. The International Ergonomics Association defines ergonomics as “the scientific discipline concerned with the understanding of interactions among humans and other elements of a system, and the profession that applies theory, principles, data and methods to design in order to optimize human well-being and overall system performance.” In essence, it is the study of designing equipment and devices that fit the human body and its cognitive abilities. If you are suffering from back or neck pain while sitting at the desk reading this article, you might want to check out Niels Diffrient’s talk on important design elements of an ergonomic chair.

Every time I watch TED talks, I am fascinated by the arresting ideas, dedication and passion of  human beings. Have a safe summer with greater awareness from the NSC and I hope you enjoyed watching the great inventions and wisdom on safety in these TEDx stories.

Corporate Finance Three Principles

Back in 2009 when I was preparing for the Chartered Financial Analyst (CFA) exam Level II, one of my studymates introduced me to the website of Aswath Damodaran. Damodaran is a Finance professor at Stern School of Business at New York University, who teaches Corporate Finance, Valuation, and Portfolio Management. This website was very resourceful when I was learning financial modeling.

Recently I revisited the website and learned that the website not only offered financial modeling tutorial, but also concepts for Corporate Finance. I like Professor Damodaran's perspective of Corporate Finance principles in this audio, and I summarized the content as below:

In order to maximize the value of the business, all of Corporate Finance is built on three principles:

1. The Investment Principle: determines where businesses invest their resources - invest in assets and projects that yield a return greater than the minimum acceptable hurdle rate. The hurdle rate should be higher for risky project. This includes assets or projects that will either generate more revenue, or cut down costs. This basically covers the whole "Assets" section on the balance sheet, such as decisions about how much and what inventory to maintain and whether and how much credit to grant to customers. This also includes which markets to enter and acquisitions of other companies. There might be regulatory and other real-world constraints on the financing mix that a business can use.

2. The Financing Principle: Choose a financing mix (debt and equity) that maximizes the value of the investments made and match the financing to nature of the assets being financed. That is, we want to pick a financing mix that minimize the hurdle rate. With a public-traded company, debt may take the form of bonds and equity is usually common stock. In a private business, debt is more likely to be bank loans and an owner's savings represents equity. Have outlined the optimal financing mix, we turn our attention to the type of financing a business should use, such as whether it should be long-term or short-term, whether the payments on the financing should be fixed or variable, and if variable, what it should be a function of. Using a basic proposition that a firm will minimize its risk from financing and maximize its capacity to use borrowed funds if it can match up the cash flows on the debt to the cash flows on the assets being finance, we design the perfect financing instrument for a company. We then add additional considerations relating to taxes and external monitors (equity research analysts and rating agencies) and arrive at strong conclusions about the design of the financing.

3. The Dividend Principle: How much earnings should be reinvested back into the business and how much should be returned to the owners of the business -If there are not enough investments that earn the hurdle rate, return the cash to the owners of the business.

Ultimate Objective: Maximize the value of the business. Consequently, any decision (investment, financing, or dividend) that increases the value of a business is considered a good one, and vice versa. The value of a company is the present value of its expected cash flows, discounted back at a rate that reflects both the riskiness of the projects of the company and the financing mix used to finance them.