Finance Essays - Management Company Stockholders - Free Essay Example

Sample details Pages: 8 Words: 2354 Downloads: 4 Date added: 2017/06/26 Category Finance Essay Type Cause and effect essay Level High school Did you like this example? Management Company Stockholders 1.1 Introduction In business finance management, the main objective of a public-listed company is to maximise the market value of the company and the wealth of the stockholders. Traditionally, stockholders yield the power and authority to hire and fire management should the latter fail to produce high returns with calculated risks for the company. Theoretically, the Finance Manager should act in the best interest of the stockholders by taking appropriate actions that will maximise the stock prices, which is a conservation concept that differs in reality. Don’t waste time! Our writers will create an original "Finance Essays Management Company Stockholders" essay for you Create order This will be discussed in depth in this paper. 1.2 Agency Relationship Problems In a public-listed company, there is a demarcation between the ownership and management due to differing interests, resulting in the possibility of conflicts of interests between the stockholders and the management, usually termed as an agency problem. The stockholders or Principals will appoint the managers or Agents to run the business. This relationship is also known as the Agency Relationship, which give rise to the following problems: When a company becomes public listed, the owner is appointed as the Agent by the Stockholders. The separation of management and ownership of the company results in managers making decisions that are not in-sync with the stockholders objective of maximising their wealth. Managers incurring high expenses by exploiting the perquisites such as expensive office decoration, high remuneration, travelling in business class flights or usage of private jets, claiming high transportation and entertainment costs at the companys expense. This is clearly depicted by the ex-CEO, TT Durai of the National Kidney Foundation (NKF) where it was reported that his annual salary was $600,000 and had lavish personal spending using the monies that were donated to NKF. Managers may adopt an extreme risk aversion attitude and refrain from investing in high risks investments with high returns for fear of losing their job should the investment fail. On the other hand, if they make money, the money will not go into their pockets, instead it will be the stockholders that stand to gain. The managers may act in their own interests rather than those of the stockholders. With no turnover or re-appointment of the managers and executives over the years, powers have been monopolised and resulted in vested personal interest of their own. Hence, this will lead to the employment of friends into the management and employing personal audit teams. Using the example of NKF, TT Durai has held the appointment as CEO for a period, resulting in his over-usage of companys funds for his own personal usage, and collaborated with his friends in fake business deals. Lack of proper governance in the company, which results in manipulation of accounting documents and false reporting of financial issues. An example is another charity saga after the NKF scandal of Ren Ci Hospital and Medicare Centre, which involved the Chairman, a Buddhist monk, Ming Yi. Ming Yi had doctored the accounts books and provided false information to the auditors and the Commissioner of Charities. He was also found guilty in lending the hospitals monies to the Mandala Buddhist Cultural Centre whereby he has a share in it. Poor risk management practice. With the increased complexity of investment options, companies failed to identify and thus implement the appropriate risk management policies should any of their investment options fails. The recent bankruptcy of the Lehman Brothers and the near-bankruptcy of the American International Group (AIG) were good examples of poor risk management practice. If theses agency problems are not properly resolved, in time to come, dire consequences may follow that could lead to the bankruptcy of the company, as illustrated in the agency problems in China Aviation Oil Company (Singapore). 1.3 Agency Problems of China Aviation Oil 1.3.1 Brief Background China Aviation Oil (Singapore) Corporation Ltd (CAO) shocked the stock market with the losses amounting to US$550 million on 30th November 2004 from oil option trading. CAO is a China company that is based in Singapore with its core business in jet fuel. Agency Problems It was revealed during the investigation that CAO has several agency problems, which led to the downfall of the Company. The major problems are as listed as follows: Loss arose after CAO had placed wrong bets on oil price movements. Instead of recuperating from the losses, CAO aggravated the matter by doubling its bets and selling larger put options with longer expirations. CAOs former CEO and Chairman of the parent Company in China made their own decisions instead of adhering to the Companys rules in decision-making process. They collaborated and transferred funds from the parent company to salvage CAO when the put options were rendered worthless. Lack of transparency and proper accounting in that the stockholders were unaware of the situation. Lack of corporate governance and monitoring in the management level by the stockholders. 1.4 Counter-Measures The agency problems faced by CAO could have been avoided if the following counter-measures were adopted; Proper system of corporate governance authorised by the stockholders. From the on-start, the proper procedures prior to the trading of derivations of oil prices should be to seek approval from the stockholders. However, CAOs ex-CEO made his own decision to venture further, after making some profits by purchasing the put options that eventually led to the loss of US$550 millions. This is an obvious personal decision of the ex-CEO. To aggravate the grim situation, he collaborated with the Chairman of the parent company in China to purchase all the worthless put options in order to salvage CAO from collapsing. If proper governance system has been implemented such as imposing restrictions on the authority of the CEO, the situation would have been salvaged. The stockholders were unaware of the situation as there was a lack of transparency in the accounting reporting. The app ointment of a team of external auditors by the stockholders would have put this situation in place with frequent annual or impromptu accounts audits on the management. This would have prevented the forgery of account documents to cover the losses faced by the company. The ex-CEO, CAO was left to run the business without any interference or check-back systems initiated by the stockholders to safeguard their interest. A board of directors can be appointed to supervise the management performance and to ensure that any decisions made are in the best interest of the stockholders. This enables the stockholders to have a hold over the management to ensure that business is profitable and safe. A possible deterrence is to implement a reward and punishment system such as increasing the salaries, bonuses and providing stock options for performance and dismissal for non-performance. An annual review on the re-appointment of the CEO and the executives to prevent possible monopolisation of authority and forming of cliques within the management level. 1.5 Conclusion As clearly illustrated by the CAOs issue, agency problems have to be identified and resolved at the earliest time, if not, the companys stocks will fall and the stockholders will suffer a loss. Relevant counter-measures have to be implemented at all levels to prevent any abuse of authority, fraud and insider trading. 2.1 Introduction In business finance, there are several investment appraisal methods to assist in the determination whether an investment is profitable to partake. These methods include calculation of the Net Present Value (NPV), Average Accounting Return (AAR) and Internal Rate of Return (IRR) to assess the profitability returns of an investment and assessing the Discounted Payback Period to determine the shortest repayment period. Theses individual investment appraisal methods will be further elaborated in the following paragraphs. 2.2 Net Present Value Net Present Value (NPV) is the measure of how much value is added today by undertaking an investment. In simple terms, NPV of an investment is the difference between an investments market value and its cost as shown in the below example: Example 1: Adeline intends to invest in a new project with a start-up cost of $50, 000. The table below shows the cash flows for the new project. The desired rate of return for the investment is at 10% per annum. What is the NPV and advice for Adeline whether she should proceed to invest in the project? Year Project A Cash Flow ($) 1 10, 000 2 30, 000 3 40, 000 NPV for Project: n Cash Flow ($) Disc. F. = 1 / (1 + 0.1)n PV ($) 0 50, 000 1 50, 000 1 10, 000 0.909 9, 090 2 30, 000 0.826 24, 780 3 40, 000 0.751 30, 040 NPV at 10% = $13, 910 The project has a positive NPV, which is $13, 910. This means that the investment is returning more than the desired rate of return of 10% per annum. As such, Adeline should invest in the project. In the calculation of NPV, there are certain advantages and disadvantages as follows: Advantages: It provides a correct advice based on a perfect capital market situation and provides correct ranking for mutually exclusive projects. It gives an absolute value. It allows for time value of the cash flows. Disadvantages: It is very difficult in identifying the correct discount rate. NPV appraisal method requires the decision criteria to be specified before appraisal can be undertaken. In other words, if it is a positive NPV, the project will be accepted, whereas if it is a negative NPV, the project will be rejected. 2.3 Discounted Payback Method Discounted Payback Method determines the period in which initial investment is equal to the sum of the discounted cash flows. The rule states that an investment is acceptable if its discounted payback time is less than some pre-specified number of years as explained by using the same scenario in Example 1: n Cash Flow ($) Disc. F. = 1 / (1 + 0.1)n PV ($) Cumulative PV($) 1 10, 000 0.909 9, 090 9, 090 2 30, 000 0.826 24, 780 33, 870 3 40, 000 0.751 30, 040 63, 910 Initial investment cost is $50, 000. Amount remaining after 2 years = $50, 000 $33, 870 = $16, 130 Remaining year = $16, 130 / $30, 040 x 12 months = 6.4 months Therefore, the discounted payback time = 2 years 6.4 months The advantages and disadvantages in the Discounted Payback Method are as follows: Advantages It takes into account the time value of money. It is easy to understand. It does not accept negative NPV value. Disadvantages It may reject positive NPV investment. It requires an arbitrary cut-off point. It ignores cash flows beyond the cut-off date. It is biased against long-term projects or investment such as Research and Development projects or land-banking investment. 2.4 Average Accounting Return Average Accounting Return (AAR) is similar to NPV, in making capital budgeting decisions. AAR is based on the average accounting return; a project is acceptable if its AAR exceeds a target average accounting return as illustrated: Example 2: Zak set up a car grooming shop with the required investment of $300, 000. The shops lease will expire in 5 years time; the depreciation will be a straight line over the 5 years. Profit is taxed at 20%. The table below shows the revenue and expenses for the 5 years. An average accounting return of 15% per annum is intended. Should this project be accepted? 1st year 2nd year 3rd year 4th year 5th year Revenue($) 150, 000 200, 000 250, 000 180, 000 270, 000 Expenses($) 50, 000 100, 000 110, 000 70, 000 110, 000 Annual Depreciation = $300, 000 / 5 = $60, 000 1st year 2nd year 3rd year 4th year 5th year Revenue($) 150, 000 200, 000 250, 000 180, 000 270, 000 Expenses($) 50, 000 100, 000 110, 000 70, 000 110, 000 Earning before depreciation($) 100, 000 100, 000 140, 000 110, 000 160, 000 Depreciation($) 60, 000 60, 000 60, 000 60, 000 60, 000 Earning before tax($) 40, 000 40, 000 80, 000 50, 000 100, 000 Tax @ 20%($) 8, 000 8, 000 16, 000 10, 000 20, 000 Net Income($) 32, 000 32, 000 64, 000 40, 000 80, 000 Average Net Income = $(32, 000 + 32, 000 + 64, 000 + 40, 000 + 80, 000) / 5 = $248, 000 / 5 = $49, 600 Average book value of investment = $300, 000 / 2 = $150, 000 AAR = $49, 600 / $150, 000 x 100% = 33.07% Since the intended average accounting return is 15% per annum, this investment is considered more than acceptable. However, there are certain advantages and disadvantages whilst using the AAR as follows: Advantages: It is easy to understand and compute. The accounting information is easily available and hence, it is always possible to calculate AAR. Disadvantages AAR is not a true representation of investment as it failed to take into account the time value of money. It uses an arbitrary cut-off point and a benchmark to consider whether an investment is acceptable. It is based on the book value of the investment and not the cash flows and the market value of investment. 2.5 The Internal Rate of Return Internal Rate of Return or IRR is an important alternative to NPV in which a single rate of return for the investment is identified to summarise the merits of a project. IRR only depends on the cash flows and not the rate of interest offered by banks. Based on IRR rule, an investment is acceptable if the IRR exceeds the desired return, if not, it will be rejected. This is shown as follows: Example 3: The initial cost of investment of Project Runway is $10, 000. The cash flows are $3,500 in the first year, $5,000 in the second year and $4000 in the third year. Calculate the NPV at 10% and 20% and the IRR if a 15% return of investment is require. Should this project be taken up? n Cash Flows($) Disc. F. = 1 / (1 + 0.1)n PV($) Disc. F. = 1 / (1 + 0.15)n PV($) 0 10, 000 1 10, 000 1 10, 000 1 3500 0.909 3, 181.50 0.870 3, 045 2 5, 000 0.826 4, 130 0.756 3, 780 3 4, 000 0.751 3, 004 0.658 2, 632 315.50 543 IRR = 10 + (315.50) x (15 10) / 315.50 + 543 = 10 + (1577.5 / 858.5) = 10 + 1.838 = 11.84% Since the expected rate of return is 15%, the above project should not be undertaken. The following are the advantages and disadvantages of IRR: Advantages: It gives the results in terms of percentage in which management is familiar. It takes into account the cash flows and the time value of money. Disadvantages: Since the results are in percentage, it ignores the difference in project magnitude and hence, is unreliable when evaluating projects of great difference in size. IRR decision rule will break down for multiple IRR calculations. IRR cannot be depended on to provide correct advice for mutually exclusive investment decisions. References 1. Commercial Affairs Department 2007, Singapore, Case of China Aviation Oil, viewed on 10 Sep 08, lt;https://www.cad.gov.sg/serv/pro/cas/Case+of+China+Aviation+Oil.htmgt; 2. China Aviation Oil (Singapore) Corporation Ltd, 2005, China Aviation Oil (Singapore) Corporation Ltd announces findings of PricewaterhouseCoopers pursuant of its investigations, viewed on 10 Sep 08, lt;bankrupt.com/misc/ChinaAviationPWCReportAnnouncement.pdfgt; 3. Chong Chee Kean 2008, Ren Ci Probe Ten Charges Against Ming Yi, The Straits Times, viewed on 17 Sep 08, lt;https://www.straitstimes.com/Free/Story/STIStory_258042.htmlgt; 4. Kent, Bakar H, Powell, Gary E (2005), Understanding Financial Management A Practical Guide, Blackwell Publishing. 5. Malcolm Borthwick, 2005, Investors throw China Aviation a lifeline, BBC News viewed on 10 Sep 08, lt;https://news.bbc.co.uk/go/pr/fr/-/2/hi/business/4074404.stmgt; 6. Seah Chiang Nee 2007, NKF Scandal Ripples widely felt, The Star viewed on 17 Sep 08, lt;https://www.littlespeck.com/content/politics/CTrendsPolitics-070113.htmgt; 7. Wayne Arnold, 2005, After crash, China Aviation Oil offers creditors sweeter repayment deal, International Herald Tribute, The Global Edition of the New York Times viewed on 10 Sep 08, lt; https://www.iht.com/articles/2005/05/12/business/chiav.phpgt;

Assisted Suicide And The Medical Field Essay - 2632 Words

When it comes to the topic of people dying, it is generally a hard to get people to discuss. It is something that does not come easy for people to talk about. No one wants to talk about a life after they die. Assisted suicide or Physicians aid-in dying (PAD) use to be something that you hear about every now and then but is starting to become more commonly discussed not only in the medical field but in general. It is starting to come to people s attention because to some it is viewed as immoral while to other people see it fit for people who are suffering from horrible diseases who are dying. Physician aid-in-dying (PAD) refers to a practice in which a physician provides a competent, terminally ill patient with a prescription for a lethal dose of medication, upon the patient s request, which the patient intends to use to end his or her own life (Braddock). Assisted suicide has been outlawed in a most states through popular vote. It is only legal in a few states though. When a patient has been in the hospital and there is no way for them to possibly be cured they sometimes begin to become depressed and its not hard for doctors to notice a change in their patients. Some people refer to these individuals as terminally ill and not able to make decisions on their own. When some patients are sick they truly believe that ending their own life would make things so much simpler for everyone around them. Of course their family does not want them to die, but it can be a lot of hardShow MoreRelatedThe Medical And Legal Fields About Assisted Suicide1667 Words   |  7 PagesComp. 1 10 November 2015 Life, Liberty, and the Pursuit of a Means to an End There are a multitude of interpretations within both the medical and legal fields about assisted suicide. The benefits of assisted suicide for a terminally ill individual are notably momentous. However, the argument is not extricated from opposition concerned with the obligations of the medical community. 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Quiz econ Free Essays

When costs fall, the supply curve increases or shifts to the right. Since changes in producer costs is not a demand factor, there would be no impact on demand. Points Received: 10 of 10 Comments: Question 2. We will write a custom essay sample on Quiz econ or any similar topic only for you Order Now Question : (TCO A) Ceteris paribus, Brand A Plain potato chips and Brand B Plain potato chips are substitutes in consumption. The price of Brand A Plain potato chips increases. (4 pts. ) a. What happens to the demand for Brand B Plain potato chips? (6 pts. ) b. What happens to the demand for Brand A Plain potato chips? a) As price of A rises demand for A falls so that demand for B rises. The demand curve for B shifts to the right b)As price of A rises, demand for A falls due to law of demand. The demand curve moves along the upward direction. Instructor Explanation: a. When the price of a substitute good rises, the demand for the other good increases. Price of Brand A rises demand for Brand B increases. b. This tests your ability to distinguish between a change in demand and a change in quantity demanded. When the price of Brand A rises THERE IS NO EFFECT ON THE DEMAND for Brand A potato chips. Remember that the Price of the good itself is NOT a Determinant of Demand for that good. Points Received: 6 of 10 Comments: In (b) when the price ofa good changes that only affects quantity demanded. The demand for Brand A remains unchanged (no shift of the demand curve). See instructor explanation, Chapter 3, and the tutorial in week 1 on the difference between a change in demand and a change in quantity demanded. When you say there is a change in demand you are saying that something other than price has SHIFTED the demand curve. Question 3. Question : SA 3. (TCO A) The number of wheat producers decreases. (4 pts. ) What happens to the supply of wheat? 6 pts. ) What happens to the demand for wheat? 100 20†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 300 ) It the number ot wheat producers decrease supply tor wheat will decrease and prices might go up. b) The demand for wheat will stay the same. Instructor Explanation: Instructor Explanation: The supply of wheat would decrease, or shift to the left. The number of suppliers is obviously a supply factor, so the less suppliers thare are, the smaller would be the supply. The demand for wheat remains the same as before because the number of suppliers is a supply factor, not a demand factor. Points Received: 10 of 10 Question 4. Question : (TCO A) A market is in equilibrium with equilibrium Quantity of MEQ and equilibrium nce of MEP. (2 pts. ) a. What happens to Market Equilibrium Quantity (MEQ) if there is an increase in Demand? (4 pts. ) b. What happens to Market Equilibrium Price (MEP) if Supply decreases as Demand increases? (4 pts. ) c. What happens to Market Equilibrium Quantity (MEQ) after there has been an increase in Supply followed by a decrease in Demand which is followed by another increase in Supply? ) If their is an increase in demand then the price will rise because their is a move from Dl to D2 b)When supply decreases prices go down and demand increases until their is a new equilibrium. c)an increase in supply will lower rices and move sl tos2, a decrease in demand will lower prices, following an increase in supply will lower prices, overall the price will go down. Instructor Explanation: a. MEQ increases b. MEP increases c. MEQ is indeterminate as the sh ifts force Quantity in different directions and the sizes of the shifts are not given. Points Received: O of 10 Comments: Please see instructor explanations for all 3 parts here. You have not answered the questions asked. Question 5. Question : The following table shows part of the demand function for tickets to an outdoor summer concert by a popular singing group: pnce (P)†¦ quantity (Q) 5†¦. 180 (2 pts. ) What is demand elasticity in the $10- $20 price range? Is demand elastic, inelastic, or of unitary elasticity? Calculate the value and show all of your work. Be sure to use the midpoint equation used to determine elasticity. b. (4 pts. Assume demand elasticity is 1. 3 in the $35 – $50 price range. In this range of demand, by what percentage would quantity demanded change if price increases by 9 percent? Show your detailed calculations. (4 pts. ) What is the effect of a price decline from $35 to $20 on total revenue for the event? Does total revenue (TR) increase, decrease, or remain the same? By how much? Show your detailed calculations. a) 200/300 = . 6667 10-20/20=. 5, . 6667/-. 5=1. 3334, demand elastic b)38. 1 20*300 =6000 Total revenue decreases by 300 Instructor Explanation: a. Using the recommended mid-point formula for calculating elasticity one can see that demand is slightly inelastic in this range since the calculated elasticity value equals 0. 746 which is slightly less than 1. 0. Ed † [change in Q / (sum of Q/2)] / [change P/ (sum ofP/2] = [(500- 300)/800/2] / [(20 -10)30/2] = . 50/-. 67 = 1. 7461, rounding.. b. For this question the point elasticity formula is best since it contains all of the mportant elements in the one formula. Since Ed = %change Q / %change P, according to the point elasticity formula rearranging the equation and solving for %change Q, gives us %change Q = (%change P)(Ed). Thus, in this case, %change Q (9) (1. 3) = a decline of 11. 7 percent. c. This question can be answered in 2 ways: (1) You could calculate the elasticity in the $35 – $20 range. This is [(300- 180) / 480/2] / [(20- 35) / 85/2] = [120 / 240] / [15 / 43] = 0. 50 / 0. 55 = -0. 909, rounding. Since we have slightly inelastic demand in this range we know that lowering price will esult in an DECREASE in total revenue; or (2), Simply calculate the total revenue at the two prices at $20 total revenue is $20 x 300 = $6,000, and at $35, total revenue $35 x 180 = $6?00. o total revenue DECREASES when the pnce lowered to $20 from $35. Points Received: 6 of 10 Comments: Please see instructor explanations for the 1st and 2nd parts here. Question 6. Question : (TCO B) Use a hypothetical example to illustrate whether you agree or disagree with the following statement: â€Å"Unemployment will go up more if the demand for labor is inelastic because the demand tor labor will decrease more when you nave inelastic emand than if demand were elastic. † Explain why, using hypothetical numbers to illustrate your case. Disagree, Unemployment will not go up if the demand for labor is inelastic. demand for labor would be inelastic when the change in demand for labor is less than or equal to 1, and it will not have an impact on unemployment when the change in labor is elastic it is greater than or equal to 1 so it will have an impact on unemployment. Instructor Explanation: The unemployment impact would be greater in the case of elastic demand. Starting with an equilibrium quantity f labor equal to, say, 100 units, an increase in the minimum wage would reduce the quantity of labor demanded. Let us say that demand is inelastic and that Ed = 0. 5. Suppose the minimum wage increases by 10 percent. The quantity of labor demanded would fall by = 5 percent. Alternatively if demand was elastic such that Ed= 2 (say), then the quantity of labor demanded would fall by = 20 percent. Clearly, unemployment is impacted far more in the latter case (elastic demand) than it is in the former (inelastic demand). Points Received: 5 of 10 Comments: Please see instructor explanation regarding the reason why the tatement is false, and the hypothetical example. Question How to cite Quiz econ, Papers

Sustaining Relationship with Young People- myassignmenthelp.com

Question: Discuss about theSustaining Relationship with Young People for Growth. Answer: Introduction Sustaining a relationship with that of a young person is crucial for his healthy growth and development. The teenagers are unique and they often prove to be a self-contradictory group. The young people look for peer acceptance and at the same time strive for the element of individuality. The young people feel invincible but at the same time they are insecure. There are some young people who want to challenge the authority. The young people want to experience independence along with that of selfhood (Arbeit et al. 2016). They like to challenge the power of other people and the boundaries should be articulated very carefully when dealing with them. This essay throws light on the elements that can help in establishing a relationship with that of a young person. It discusses regarding the pitfalls that one should avoid and the significance of closure. This essay also elaborates regarding how one can build a relationship with a young person who is addicted to drug and alcohol. Discussion A key element in establishing a positive relationship with a young person is that they should be paid proper attention that can help in the fostering of a high quality relationship. An important aspect that can help in developing a healthy relationship with a young person is by accepting and celebrating the difference. The world can be perceived in different manner. It is important to know the view point of the young people that can help them in maintaining their self-esteem. It is important that a young person should be listened to that can help in boosting the self-esteem of a person. Understanding the view point of the young people is an important element pertaining to successful interaction with that of a young person. Active listening is the right method that can enable us to understand the thought process and want of the young person (Shepherd, Luebbers and Ogloff 2016). The restatement of their message and the feedback process helps in setting apart active listening. Technolog y has destroyed the ability of building real rapport and providing time to the young people can help in building a good relationship with the young people. It is important to be attentive and being present in time so that we can understand the problems of other people. Good communication skills are integral for developing a positive relationship and it can prove to be of great benefit for a young person. Empathizing with the problems of the young people can help in building a strong bong with them (Howe et al. 2018). Hormonal changes take place in the young person that leads to behavioural changes in them. The young people are subject to increased aggression along with that of mood swing. The massive changes that take place at the hormonal level at the stage of puberty lead to erratic behaviour on the part of the young person. It is important to understand things from their viewpoint at this stage so that they can adjust properly within the environment. The teenagers have the tendency of feeling things at a more extreme level and they are more prone to becoming sad, excited or happy (Bennett et al. 2016). The young people struggle in recognising the emotions of other people and they become extremely self-centred at this stage. They cannot understand the effect of their action on that of other people. An important element that can help in sustaining relationship with a young person is that they should be left to themselves and should not be disturbed by the family. The pitfalls that should be avoided when dealing with a young person is that of boundary crossing. The parent-child relationship can be said to be an emotionally intense social tie. The relationship can be said to be supportive but it can also give rise to feelings pertaining to irritation along with tension. Boundary crossing when dealing with a young person can set forth interpersonal tension (Hartas 2016). Parents want to know what their children is doing all the time that can give rise to friction within the relationship. The young people often feel intruded upon and the parents have a tendency of being more invested with the relationship as compared to that of the children. It is important to maintain a distance when dealing with a young person and disclosing too much of oneself can prove to be detrimental in relation to establishing a sound relationship. Personality differences along with that of parents who provide advice can cause more problems within that of the relationship . The basic differences in personality can give rise to conflict and the young people should be given proper room so that they do not feel stifled (Aked 2015). Change along with transition is an inevitable part of life. It is important that one properly terminates with any kind of population with whom they are working. In the event of dealing with a young person, conflicts and disagreements may occur at some point. It is important to forget the conflict so that it does not dampen the relationship. Closure refers to the ending of something. Emotional closure is important when dealing with a young person because the young person often exhibits rough and aggressive behaviour (Kelly et al. 2017). It is important to forget certain things so that the relationship with the young person is sustainable. Closure refers to an acceptance regarding what has happened and it means honouring the change. There are disagreements that are sure to occur when dealing with a young person and there are certain things that should be forgiven in the young person (Giordano, Stare and Clarke 2015). The young people turn to alcohol and drugs so that they can cope with stress and relate with the peers. They also get drawn into these kind on intoxications so that they can rebel against that of the authority. Curiosity also drives them to take recourse to drugs along with that of alcohol. They want to be accepted by that of the friends that compels to take up these regressive habits. In order to sustain relationship with a young person who takes drugs along with alcohol I would try to build rapport along with trust with them. The benefits of volunteering are of immense nature and it can help an individual in dealing with depression and loneliness. I would take the young children who is addicted to drugs along with alcohol to an animal rescue shelter. I would take him to Australian Animal Rescue who are always in need of volunteers. There are many stray dogs and cats who are left in a bad condition on that of the streets and we would together offer our services to help these helples s animals. The rescued animals are well cared for in the Animal Rescue Centre and we could offer our valuable services to offer help to these animals (Rise et al. 2014). It will provide him with fulfilment and help him in overcoming his hunger for alcohol and the drugs. We can together take steps to cure the animals out of their miserable condition that can help in soothing the emotional distress of the young person addicted to that of drug along with alcohol (Wnuk 2015). We shall go for camping in the Mitchell Falls, Mitchell River National Park and the spectacular sight of the unique Mitchell Falls can soothe the soul of an anguished person. This remote terrain in Australia will provide us with enough opportunity to engage in deep conversation. We can discuss regarding the things that have troubled him that have caused him to get addicted to the different kinds of malpractices. Talking freely with the person can help him in revealing his innermost feelings and he would feel free to confide in his secret fears. The desire to help should come from the right place and wrong attitude can lead to more harm than that of good. They should always feel well-supported that can make them forget the inner worries. Addiction can leave the victims completely separated from that of the family and friends so such a person will need emotional support (Lehman and Dixon 2016). I will express sincere concern and making them know that they are important can make them fe el wanted and safe. I shall not be judgemental when dealing with them that can help them in clearly expressing the way they feel. There are certain scenarios that should be discussed with him like what were the incidents that propelled him to take up such an addiction (Petrova et al. 2015). I shall communicate to him regarding the negative impact pertaining to the addiction that can help him in understanding the severity of the situation and what this path may eventually lead him to. Sharing feelings with the other people in the camp can help him in relieving him of stress and help him in regaining his mental composure. We shall together attend the Melbourne International Arts Festival that is held in the month of October. The international arts event is a thriving event in which different kinds of cultural festivals are held like that of dance, music along with that of art. The Melbourne Festival is a significant event within that of the Australian Cultural Calendar. The festival is renowned for offering family-friendly event that can help the young person in getting rid of the intoxication related problems. The Melbourne Festival hosts performance by that of renowned artistic companies that can help him in rising above the problems of his life. The festival helps in the connection of different kinds of art forms and presents unique events. The event will prove to be of great help for my intoxicated companion and the different performances will make him feel that there is a lot more to achieve in life (Earp et al. 2017). The dramas held will reveal incidents inspired by that of real life and he wil l be able to look at life from a different perspective. He will come to know about the problems that cripple the human mind and how one can be of help for another human being. This will help him in rising above the difficulties and successfully assimilate within the society. The festival celebrations can help in relieving stress of the person and make him feel to be an important part of the society. Conclusion: The young people are unique and they often act in a contradictory manner. Paying proper attention to that of the young person can help in building a relationship of high quality. The differences of the young person should be celebrated and accepted so that they can assimilate perfectly within the society. The hormonal changes taking place in the young person often lead the adolescent to behave in a strange manner. Viewpoint pertaining to the young people should be understood that can help then in preserving their self-esteem. The opinions of the young person should be heard so that they feel themselves to be an integral part of society. Coping with stress becomes easier for the young person if they start consuming drugs and alcohol. Rapport along with trust should be built with a person who is addicted to drugs and alcohol. The young people want to rebel against the forces of authority which is why they take up the bad habits. Volunteering in an Animal Rescue Centre can help in keepi ng the addicted person engaged and it can help them to deal with loneliness. It will help the young person to forget the worries in his life and keep him mentally healthy. Camping in the Mitchell falls can help in soothing the soul of a troubled person. Camping will be able to provide great amount of opportunity that will enable us to converse about different kinds of topics. Attending the Melbourne International Arts Festival in October can provide abundant opportunity for relieving the mind of the young person addicted to drugs and alcohol. This thriving event can provide opportunities for different kinds of activities like that of dance, music and art. References: Aked, J., 2015. What's different about how volunteers work? Relationship building for wellbeing and change.IDS Bulletin,46(5), pp.29-42. Arbeit, M.R., Hershberg, R.M., Rubin, R.O., DeSouza, L.M. and Lerner, J.V., 2016. 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