Beware of Gratutity Reductions on Visa Gift Cards

One might think a Visa Gift Card could pay for a restaurant meal without any complication, but there is one little technicality involved with the process. According to Visa, restaurant order terminals deduct gratuity off the total balance of Visa Gift Cards. This means the card will be declined if the check balance is higher than the card's balance after the reduction.

Perhaps restaurants did this because clientele were putting tips on cards with no balance in an attempt to mess around with the debit card system. To get around this card limitation the card either has to have a high enough balance to include gratuity or the remainder of the check with gratuity can be paid with the rest of the gift card's balance plus cash or with another payment card.

The restaurant will not actually deduct the tip from the Visa Gift Card's balance until the client Visa receipt is signed according to Visa. If the restaurant is able to close the check at the terminal before reconciling the tips via the Visa payment system the card may still be able to be used to pay the check in full using the gift card. However, this would require shrinking or transferring the tip by enough to allow the balance of the card to pay the check amount.

Why Stock Dilution can Boost Market Capitalization

Since P/E divides share price by EPS, the P/E ratio stays the same at the time of a stock split. However, if the share price after the stock split rises from $5 per share to $7.5 per share, the P/E ratio rises. If the market psychology favors the dilution, the effect is higher market capitalization and a higher P/E ratio than may have been the case without dilution. This stresses the importance of investor perception.

Complete article link: http://www.helium.com/items/2185674-what-is-stock-dilution

Tips for Selling Recycled Steel

Recycled steel is a well entrenched market with numerous venues and networks. Recycled steel goes through a process starting with the collection of scrap metal and products reaching the end of their consumption cycle. Depending on whether or not the recycled steel is a finished alloy or bundled scrap, the cost of recycled steel can vary. 

Complete article link: http://www.ehow.com/how_8640676_sell-recycled-steel.html

Could the Deepwater Horizon have caused a British Petroleum bankruptcy?

British Petroleum (BP), certainly lost money after the "Deepwater Horizon" oil rig literally saw a deepwater horizon after exploding in April, 2010. However, the loss of money doesn't necessarily put BP into the red, or so far in to the red that the company will become insolvent. This is especially so after a $7.8 billion shareholder dividend cut over 3 quarters.(1)

To ascertain whether British Petroleum PLC, is likely to go bankrupt or not is a matter of weighing losses against revenues and liabilities arising out of the Deepwater Horizon calamity. Some of the financial damages BP will have to absorb include a very large loss in equity capitalization in addition to liability claims and earnings losses.
 

• BP's debt rating downgraded by Fitch and Moody's• Over $90 billion loss of market capitalization
• $20 Billion set aside for gulf relief
• Estimated $3.3 million 3 month revenue loss
• Potential uninsured losses costing billions more

With assets over $235 billion, and an average annual revenue over $66 billion the over $110 billion losses relating to declines in equity, increased liabilities, relief funds and revenue loss could be sustained without a bankruptcy.(3) However, with a lower debt rating and market capitalization, the company is not as leveraged as it once was which could impact future business operations and income.

In the best-case scenario, BP will be a bad year for shareholders with a public relations and financial scar that will impact share prices, potential insurance costs and to an extent revenue without a bankruptcy. Even with $40 billion in liability payments, BP could still continue its operations due to a high demand and relatively stable price for its oil products in addition to ample assets to cover losses costing billions of dollars while still potentially remaining profitable.

With approximate Q2, 2010 liabilities amounting to only 57 percent of total asset value, British Petroleum, PLC does have some financial leeway even with downgraded and potentially more expensive debt. British Petroleum PLC could quite possibly end the 2010 fiscal year with its first net loss in a while, but it is not unusual for large companies to stay operational with several years of tax-deductible losses on future profits either.

In a June 18, 2010 report by Laurel Brubaker Calkins and Margaret Cronin Fisk, in Bloomberg Business Week, a district judge is cited as stating the many class action lawsuits held against BP could indeed cost more than BP has accounted for.(4) This is further confirmed by Calkins and Fisk's reference of a more than $37 billion liability damage estimate from Credit Suisse.

If the oil spill continues to be a problem and the impending lawsuits and settlements that arise out of the Deepwater Horizon oil rig explosion continue to mount, the costs could far exceed $20 billion and potentially reach or surpass the widely publicized $75 billion liability cap set forth by the Oil Pollution Act of 1990. If BP's uninsured losses exceed the solvency threshold for the company to continue, then bankruptcy becomes a more real possibility. Until the actual damage costs are determined in their full scope, such a scenario can only be estimated as probable if damages significantly beyond $20 billion occur.

Sources: 

1. http://bit.ly/amW76p (Reuters)
2. http://bit.ly/afuHIx (Securities and Exchange Commission)
3. http://yhoo.it/afcGiJ (Yahoo Finance)
4. http://bit.ly/a4ZwIU (Bloomberg Business week)
5. http://bit.ly/bWr2tS (International Business Times)

Overview of Small-Cap Stocks

Small Capitalization Stocks are stocks that contribute to no more than $1 billion dollars of a company's equity. The value of a company's capitalization is commonly calculated by multiplying the number of a company's outstanding shares by it's share price or average share price. There are also micro-capitalization stocks that have even lower amounts of equity capitalization, but this article will focus on Small cap stocks. A few of the general features of small cap companies are as follows:

• Smaller share prices on market exchanges
• Subject to higher risk from larger competitors
• Greater growth potential
• Potential stock price volatility

Benefits and risks

Each capitalization class of stocks have certain advantages and disadvantages associated with them. Some tend to be higher risk whereas others tend to be lower risk. These benefits and risk also vary depending on the economic sector in which stock trading occurs. An overview of the benefits and risks associated with small cap stocks is provided below:

• Benefits of Investing in Small Cap Stocks:

 Small cap stocks are cheaper to buy than mid cap and large cap stocks. What's more, small cap stocks under $5.00 per share are not as well studied by financial analysts. This can be an advantage as a company may be undervalued due to this media deficit. Also, since these stocks represent smaller companies, there is more potential for earnings to grow at a larger percent than a well established company with strong market positioning. Since these companies are smaller, they may also be acquisition targets for larger companies which is often good for a stock price.

• Risks

Since small cap stocks are cheaper to buy, one can buy more of them. What's more at a lower cost per share, any decline in value is a proportionally greater percentage loss of invested capital than with a higher priced stock. For example, if person A owns 100 shares of Berkshire Hathaway Class A shares and Person B owns 1000 shares of Little Cap's Are Us Corp. and Person A's shares cost $100K per share and Person B's shares cost $10 per share, person B is going to experience a far greater investment loss if his or her shares decline $1 than if Person A's shares decline $1.

Risk avoidance techniques

The risks associated with Small Cap stocks can be mitigated through investment strategies or trading tactics. In an investment strategy an investor may choose to diversify one's small cap investments by purchasing several small cap companies across several industries and/or purchasing a large cap competitor in the same industry. This reduces the risk of investment loss should one company go belly up in competition.

In terms of trading, long positions can be hedged with short positions and short positions can be hedged with put options. While risk mitigation reduces the potential for loss it may also inhibit potential gains. A few of the risk mitigation methods one may utilize when investing in small cap stocks are as follows:

• Diversify across multiple industries
• Select only small cap companies with proved financial strength
• Purchase mutual funds that specialize in small cap companies
• Avoid small caps altogether

Tips for investing in small cap stocks

Investing in Small Capitalization stocks is generally for investors and traders with at least some taste for risk. For this reason it is important to utilize a well thought out entry and possibly exit strategy. Below are some techniques to stabilizing an investment strategy:

Stop loss orders:

By not allowing stocks to decline by more than 10% investors are in effect risking no more than 10% of their capital per investment.

Emotional control:

Emotional investing is shunned by some professional investors. Emotions can cause one to sell a stock that is about to rocket or buy a stock that is about to tank. Using logic and exercising fiscal discipline helps one manage money unemotionally and can reduce risks associated with emotional investing.

Research:

Due diligence is a hallmark of fundamental stock analysis. If it's done right, it can probably reduce risk if accompanied by good decision making.

As with most investments, risk is always a factor that can only be minimized but not always eliminated. Many investors have experienced loss at one time or another. Even large brokerage firms, high powered investors and sophisticated investment computing algorithms are not completely immune to unexpected events in the World and economic markets. Nevertheless, investment in small capitalization stocks can be profitable and the potential for profitability may increase by utilizing the information in this article.

Import Licenses Explained

An import license is not always required to import goods into the United States or the European Union. Outside of U.S. "free zones", imported goods are subject to both customs and restrictions, some of which require certain goods to be imported only with a license. Similar tariff structure and restrictions also exist within the European Union.

In the instance of the United States, licenses are sometimes required to "protect the economy and security of the United States, and to safeguard consumer health and well being, and to preserve domestic plant and animal life." (www.cpb.gov) The motives for import licensure are similar within the European Union.

The import license is a document issued by a regulatory branch of a Government allowing the import of certain goods. The licenses legalize importation but do not necessarily exempt imported goods from trade taxes such as tariffs or customs tax. In certain cases import limitations may also be imposed on certain goods as determined by the import legislation.

How to obtain an import license

The rules for obtaining an import license are different within the United States and the European Union. Generally specific Government departments issue import licenses/permits within the United States and the European Commission issues import licenses through member state organizations in the European Union. A brief overview of some of the different import requirements within the U.S. and the E.U. are provided below.

1. United States import licensure

The United States may require an import license via a specific Federal agency in addition to completion of customs entry forms. Customs entry forms can be completed online using the "Customs Automated Commercial System" (www.americanimporters.org). A few of the requirements that may be necessary are listed below:

•Import licenses/permits obtained through specific Government Departments Ex. USDA

•Customs entry form must be completed to expedite import

•Import Bonds allow possession prior to payment of tariffs for "formal" commercial importation.

2. European Union import licensure

Within the European Union a specific process is involved to acquire an import license. Additionally, issuance of import licenses do not necessarily allow for unrestricted quantities of imports in certain cases. The import license procedure and rules are governed by the European Commission through import legislation.

• An export document may be required to obtain an import license

• Applied for through member states and approved by the European Commission

• Expire after 6 months 

• Genetically modified organisms are restricted

• Import bans are in place for goods deemed hazardous

License costs

License costs are separate from tariff duties if such taxes are applicable. Within The United States , "customs brokers" and/or the Customs Border Protection Agency facilitate the application of the "Harmonized Tariff Schedule" which is a set of costs for particular goods as determined by agreements such as the North American Free Trade Agreement (NAFTA).

The cost of import licenses and permits will vary depending on the issuing agency's processing fees and the specific trading territory in which goods will be imported. These costs will be assessed in the currency of the final destination of the imported goods. An example license fee is the U.S. Department of Agriculture dairy import license, which at the time of this articles compilation was $150.00 per license within the tariff quota range i.e. within the allowable volume of imported goods.

Items requiring an import license

Both in the United States and the European Union, similar items are subject to import licensure requirements. An exception being genetically modified products and various hazardous materials within the European Union. Within the United States the U.S. Customs Border Protection Agency oversee the import of goods. Some of the goods more typically requiring licenses in both trading territories are as listed:

• Organic products such as food, milk and plants

• Animals

• Alcohol, tobacco, and in some cases medicine

• Culture specific artwork and crafts

• Books, published information and written material

• Hunting rifles and similar products

Summary

In summary, import licenses may or may not be a requirement for import of goods, however a customs entry form and import taxes may have to be paid if the imports enter a trading territory from a tariff free zone. Business identification numbers are not always required on customs entry forms and social security numbers may be used in lieu of such identification. Moreover, in the case of informal and formal import, a customs broker may complete the necessary documentation requirements. An examples of customs entry form includes the customs forms handed out on planes during international travel.

The licensure requirements and costs vary from state to state and trading territory to trading territory. Moreover, before importing goods, it may be advisable to contact the relevant Government agency and/or department to assess whether or not a license will be required in addition to contacting the applicable customs agent to assess any import holding periods, costs and paperwork requirements.

Sources:

1. http://www.americanimporters.org/pages/marketing/USimportrequirements.html
2. http://www.cbp.gov/linkhandler/cgov/newsroom/publications/trade/iius.ctt/iius.pdf
3. http://info.hktdc.com/euguide/2-9.htm
4. http://library.findlaw.com/2000/Jul/1/130645.html
5. http://www.itintl.com/how-to-get-an-import-license.html
6. http://www.fas.usda.gov/info/fr/2007/081407dairyimport.asp

A return to the "Gold Standard" makes no sense

At best returning to the gold standard is like putting a size 6 shoe on a basketball player with a  size 13 foot. If the IMF's valuation of U.S. Gold reserves is accurate, they amount to approximately $390 billion dollars (8,133 tons at $1,500 per ounce) per the June 13, 2011 Moneycation post citing the World Gold Council data. There simply isn't enough gold to have a gold standard because global economies would be forced to stay unnaturally small due to the restriction of the natural resource's availability.

As Bloomberg-BusinessWeek points out in 'Ron Paul's Fort Knox Fever', alleged U.S. gold reserves are only a fraction of national debt; about 2.7 percent not including silver and other metals. If the gold price bubble is in fact a bubble and it bursts a decline in gold price would cause U.S. gold reserves could be worth as low as $78 billion at $300 per ounce. Even including the remaining 25 percent of non-gold U.S. reserves, $520 billion or so at current prices would only allow a fiat currency to be fractional  to about 3 percent. This is much lower than it was before President Nixon let any use of gold standard go altogether.

If an economy is to be accountable to itself, which appears to be the theme of Congressman Paul's view,  a different kind of standard seems to make more sense. These days, national Gross Domestic Product as a percentage of national debt is often used as a general metric. If that ratio were to be limited to 1 or higher, then national debt would not be allowed to exceed 100 percent of GDP ever. Pegging a standard in such a way does little to facilitate the ebb and flow of economic contractions and expansions however, and limits fiscal policy's ability to influence, hopefully in a good way, economic growth.