Methods of renumeration Remuneration consists of the rewards that employees receive from their work.

Employees that work for modern companies and other major UK companies will receive a range of money based and other rewards ranging from discounts on company products, to subsidised company pension schemes. There are various ways of rewarding employees, including the following. 1. Basic pay for standard hours. An employee works to a set contract e.g. x per hour for a 30 hour week, of a salary of y per month. This scheme alone does not provide an incentive to work harder, but if the rewards are good relative to those offered for similar work then this will act as a motivating factor in itself. 2. Additional hours rewards. Employees are usually paid extra for working unsocial hours (e.g. a night shift) or for working longer hours (overtime rates). 3. Commission. Sales staff are typically paid on a commission basis. The commission rate depends on their success rate so acts as an incentive to employ effective selling techniques. 4. Bonuses are another form of incentive to meet particular targets. Typically these will be used to encourage and motivate employees to work harder when required, e.g; offering football players an incentive bonus to win an important game. 5. Performance related pay. Many companies operate some form of performance related pay scheme. Pay is then related to the achievement of objectives and targets. The performance that is measured may be at company wide level, plant level, team level or individual level. 6. Profits related pay. Employees pay and bonuses may be related directly to the profits that a company makes. 7. Payment by results. This is a similar form of incentive scheme to profit related pay. The results measured will be key results areas for a company such as sales. 8. Piece rate reward systems relate to paying employees according to their level of output. Where such a scheme operates it is essential that there is a good quality checking procedure to make sure that the 'pieces' are of the required standard.

Programmed learning educational technique characterized by self-paced, selfadministered instruction presented in logical sequence and with much repetition of concepts.

Ebit eps approach

Effective business management requires careful planning and decision-making about the balance of debt and equity used in financing the business. The EBIT-EPS approach is one method available to managers to guide them in making decisions about capital structure. To benefit from the EBIT-EPS approach, it helps to understand the basics of how it works, as well as its advantages and drawbacks.

Capital Structure
Capital structure refers to a business's balance of debt and equity financing. Businesses have two options for financing the purchases of equipment, expenses and materials necessary for their operations. They can raise money from investors, which is equity financing, or they can borrow from banks and creditors -- leverage or debt financing. Most businesses engage in a degree of both, paying careful attention to the costs associated with either source. Relying too heavily on equity increases the cost to investors and cuts into return. But relying too much on debt puts the business in a more precarious position and comes with the substantial costs of interest.

EBIT-EPS Approach
The EBIT-EPS approach is one tool managers use to decide on the right mix of debt and equity financing in a business's capital structure. In the EBIT-EPS approach, the business plots graphs of its performance at different possible debt-to-equity ratios, such as 40 percent debt to 60 percent equity. In a basic graph, the earnings per share as a data point is plotted for each level of earnings before interest and taxes at different debt-to-equity ratios. The graph is then analyzed to determine the ideal level of debt-to-equity for the business.

Analysis for Risk and Return

Once the relationship between EBIT and EPS is plotted for different capital structures, the investor can analyze the graph, focusing on two key challenges. The level of EBIT where EPS is zero, called the break-even point, and the graph's slope, which visually represents the company's risk. A steeper slope conveys a higher risk -- greater loss per share at at lower EBIT level. A steeper slope also means a higher return, and that the company needs to earn less EBIT to produce greater EPS. The breakeven point is also important because it tells the business how much EBIT there must be to avoid losses, and varies at different proportions of debt to equity.

Drawbacks

The EBIT-EPS approach is not always the best tool for making decisions about capital structuring. The EBIT-EPS approach places heavy emphasis on maximizing earnings per share rather than controlling costs and limiting risk. It's important to keep in mind that as debt financing increases, investors should expect a higher return to account for the greater risk; this is known as a risk premium. The EBIT-EPS approach does not factor this risk premium into the cost of financing, which can have the effect of making a higher level of debt seem more advantageous for investors than it actually is. Modigliani Millar approach, popularly known as the MM approach is similar to the Net operating income approach. The MM approach favors the Net operating income approach and agrees with the fact that the cost of capital is independent of the degree of leverage and at any mix of debt-equity proportions. The significance of this MM approach is that it provides operational or behavioral justification for constant cost of capital at any degree of leverage. Whereas, the net operating income approach does not provide operational justification for independence of the company's cost of capital. Basic Propositions of MM approach: 1. At any degree of leverage, the company's overall cost of capital (ko) and the Value of the firm (V) remains constant. This means that it is independent of the capital structure. The total value can be obtained by capitalizing the operating earnings stream that is expected in future, discounted at an appropriate discount rate suitable for the risk undertaken. 2. The cost of capital (ke) equals the capitalization rate of a pure equity stream and a premium for financial risk. This is equal to the difference between the pure equity capitalization rate and ki times the debt-equity ratio. 3. The minimum cut-off rate for the purpose of capital investments is fully independent of the way in which a project is financed. Assumptions of MM approach: 1. Capital markets are perfect. 2. All investors have the same expectation of the company's net operating income for the purpose of evaluating the value of the firm. 3. Within similar operating environments, the business risk is equal among all firms. 4. 100% dividend payout ratio.

5. An assumption of "no taxes" was there earlier, which has been removed.