1.5: The Elements of Culture
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- Jennifer Hasty, David G. Lewis, & Marjorie M. Snipes
- OpenStax
Learning Objectives
By the end of this section, you will be able to:
- Define the concept of material culture and provide examples of material culture.
- Provide a detailed example of cultural practices.
- Explain how cultural frames orient our experiences and actions.
- Describe how norms and values are threaded through culture.
- Explain how ideologies and worldviews shape our perception of the world around us.
The complex whole of culture can be broken down into three categories: what we make, what we do, and what we think. The boundaries separating these categories are somewhat artificial because so much of cultural life involves all of these things at once. However, it’s useful to start with the basic building blocks of culture, then see how those blocks can be put together to produce more complex structures.
Culture Is What We Make
Museums are buildings where objects of historical, artistic, scientific, or cultural interest are displayed. The Smithsonian’s National Museum of the American Indian has one of the world’s largest collections of Native artifacts, including many two- and three-dimensional objects such as baskets, pottery, and preserved specimens representative of the lives of Native populations from all areas of the country.
People living in groups learn to craft the things they need in order to make a living in their environment. Early human ancestors learned how to make sharp blades useful for processing meat. They shared their knowledge of toolmaking in groups, passing those skills down to younger generations. Objects that are made and used by humans in group contexts are called material culture . All of the tools developed by early hominins (blades, arrows, axes, etc.) are examples of material culture. All of the artifacts discovered by archaeologists (buildings, pottery, beads, etc.) are examples of material culture. The specialized knowledge and skills used for making material culture are called technology . Today, the word technology is often used to refer to electronic devices such as smartphones and computers. For anthropologists, both smartphones and obsidian blades are forms of material culture produced through specialized technologies. That is, technology refers to the knowledge and skills required to make blades, phones, and other objects of material culture.
Material culture is not just found in museums, of course. Material culture is all around. All of the furniture, appliances, books, dishes, and pictures on the walls in a typical American home are elements of material culture, and they reveal a great deal about the whole way of life of a society.
Consider the toothbrush. It would be possible for people to clean their teeth with a found object such as a twig or leaf, or even with a finger. Ancient peoples often used a special chew stick, a twig with a frayed end. The bristled toothbrush was invented in 15th-century China and spread across Europe and into the United States, where it began to be mass produced in the late 19th century. Drugstores now feature many styles of toothbrush with an array of special features. Specialized teams design, manufacture, and market this wide variety of toothbrushes to consumers. Parents buy toothbrushes for their children and teach them the conventional techniques for brushing their teeth (little circles, two minutes, etc.). As adults, people often isolate themselves in a special room to brush their teeth in privacy. Even so, toothbrushing is a profoundly social act, relying on shared knowledge and observance of social norms for hygiene and health.
Trees, rocks, microbes, and planets are all material objects, but they are not material culture unless they are made and used by humans in group contexts. For instance, a tree growing in a natural forest is not an object of material culture. However, an apple tree can be material culture if it is planted by a farmer in an orchard designed to produce fruit for human consumption. A microbe can be material culture if it is manufactured to improve human digestion or genetically engineered to fight cancer.
On display in the Cleveland Museum of Natural History is a gray rock. This rock was simply found by humans and never shaped for any particular use. Sitting there in the museum, it has no specific purpose other than to serve as an object of popular contemplation. Though it is a fairly unremarkable lump of basalt, thousands of people stop to gaze at this rock, reading the sign that describes how it was obtained, marveling at its presence there in the museum. Why? What’s so interesting about a rock? This particular rock was collected by astronauts on the Apollo 12 mission to the moon. The rock serves as evidence of this magnificent feat of scientific engineering and a source of great pride to the culture that accomplished such a mission. We go to museums to view the items on display there, but clearly, the human activities surrounding those objects are what make them interesting to us. That is, culture is not just material objects—it’s also what we do and what we think.
Culture Is What We Do
Ahmed is a carpet seller in the Istanbul Grand Bazaar. Every day, people from all over the world come into his stall to examine, and sometimes buy, the carpets in his inventory. Anthropologist Patricia Scalco (2019) met Ahmed while she was conducting research on market exchange in Istanbul. She carefully observed the set of sales strategies he had crafted to respond to customer desires and knowledge. When anyone pauses at the entrance, Ahmed greets the potential customer and ushers the person into his stall. Bringing out a silver platter, Ahmed offers the customer a cup of tea, a welcoming gesture. As the customer browses, Ahmed initiates a carefully constructed conversation designed to determine what sort of person this customer is, what they are looking for, and what they really know (and do not know) about carpets. He pulls out various carpets from the stacks, unfurling them as he describes their distinctive qualities. Ahmed identifies this interaction as a sort of game he must play with his customers. European tourists in this Turkish marketplace are often inspired by the desire for handmade traditional crafts made by local rural ethnic groups such as the Kurds. These days, however, most carpets sold in the Istanbul market are industrially produced in Pakistan, India, and China. However, in his many years of selling carpets, Ahmed has learned that he must play to Western orientalist fantasies, weaving a distinctive story around the origins and manufacture of a carpet, in order to win a sale. Like other merchants in this market, Ahmed has a family to support, and he cannot afford to openly contradict the knowledge and desires of his customers.
Centered on the material culture of carpets, Ahmed’s work illustrates the importance of what people do and what they think in the making of cultural life. What people do and what they think are nonmaterial elements of culture. In his everyday interactions with customers, Ahmed has developed a set of habitual practices involving gesture and speech. Anthropologists use the term cultural practices to refer to this form of culture. Routine speech communicates meanings and values (such as the “authenticity” of a carpet), while routine action organizes social events (such as, hopefully, a sale). People from all walks of life develop similar combinations of habitual action and speech that constitute the everyday culture of people in those circumstances.
What do you do in the morning to get ready for the day? That is cultural practice. What do you do when someone comes over to your house? That is cultural practice. What do you do when you’re hungry? That is cultural practice. Some cultural anthropologists focus on these everyday practices as keys to understanding culture, while others are more interested in special events such as ceremonies and festivals.
For instance, Carnival in Brazil is an annual festival of music and dance held every year to mark the beginning of the Catholic season of Lent. Parades of costumed dancers throng the streets of many cities, interacting with the audience and attracting crowds of followers. Cultural anthropologist Kenneth Williamson (2012) studied Carnival in Salvador, Bahia, in the north of Brazil. While Brazilian Carnival is framed as a national celebration, Williamson found that Carnival in the poorer and largely Black city of Salvador is distinctively animated by the politics of race. Local Carnival dance groups incorporate Black forms of movement such as capoeira, a combination of dance and martial art techniques created by Brazilian enslaved peoples. Forms of music and religion originating in Africa also contribute to the distinctiveness of Salvadoran Carnival. Carnival has become increasingly commercialized as a tourist attraction in Salvador, bringing in Black and White tourists alike. Black Brazilian activists complain that forms of Black culture are being appropriated and exploited as forms of cultural leisure with little understanding of their deep cultural meanings as expressions of resistance and survival. Meanwhile, most Black Salvadorans enjoy little benefit from the burgeoning tourist economy.
The practices of Turkish carpet merchants and Brazilian Carnival participants are both ways of doing culture, every day and on special occasions. As we see in both examples, the materials and actions of culture are infused with patterns of thought, some shared and some controversial. These ways of thinking constitute a third element of culture.
Culture Is What We Think
Imagine that you are walking down the street and you see a building. You notice a mailbox next to a driveway.  Below your feet, you find a mat that says, “Welcome!” Peering through a window, you see a central room where two people are sitting on a couch, eating chips, and watching television. Off to the side, there’s a hallway. You can barely see the stockinged feet of a small person resting on a bed. A dog barks.
What kind of place is this? Are you sure? How do you know?
Now imagine you are walking down the street and see another building. There are neon lights in the front window and a large paved area to the side. As you enter the front door, a little bell jingles and young woman in a white blouse greets you from behind a long table. To one side of that table is a large black machine with buttons and numbers on it. The young woman carries a small leather folder in her hand and gives you an expectant smile. You look around to find a room full of people seated at tables of various sizes.  You hear music in the background.
What kind of place is this? How do you know?
In both scenarios, elements of material culture are combined with patterns of action and speech. In order to make sense of these two scenarios, we must use shared ways of thinking about them. What we know about the way of life in our society leads us to identify the first scenario as somebody’s home. What we know about the circumstances of eating in public leads us to identify the second scenario as a restaurant.
These patterned, shared ways of making sense of situations are called cultural frames . Cultural frames tell people where they are, what role they they play in that context, and what forms of behavior and speech are expected and appropriate. There are cultural frames for places, times, events, and relationships. If a couple have been dating for over a year, they probably use a cultural frame for romantic relationships to structure their actions and expectations in that relationship. And if one of the romantic partners invites the other to spend a holiday with their family, the invited person will probably summon a cultural frame for that holiday to tell them what to expect and how to behave.
Cultural frames are complex cognitive models that incorporate various roles and actions patterned in space and time. A cultural role is a conventionalized position held by a person or persons in a particular context or situation. Sociocultural roles are associated with certain behaviors and actions. For example, “mother” is a sociocultural role in the cultural frame of “family.” “Waiter” is a sociocultural role in the cultural frame of “restaurant.” While these roles are found in many cultures, the actions and behaviors associated with them vary significantly across cultural contexts.
In cultures that celebrate Mother’s Day, it is conventional to send one’s mother a card along with flowers and/or a gift. Anyone who has ever been shopping for a Mother’s Day card has been bombarded with images and text that convey the stereotypical behaviors and preferences associated with motherhood. Many Mother’s Day cards feature pastel flower arrangements with birds, butterflies, and delicate calligraphy. The text lionizes the emotional and material work of motherhood, praising the constant care and sacrifice of the good mother. In return, the card promises eternal gratitude.
The behaviors and actions associated with a sociocultural role are collectively called a norm . Norms are not necessarily “normal” in the sense that they represent the most common features and behaviors exhibited by people in a certain role. Do all mothers prefer pastel flower motifs over, say, images of books or sports? Rather, norms tend to be idealized, a fantasy about how people in a role behave—or how they should behave. Why do we associate flowers, pastels, cursive, and self-sacrifice with motherhood?
The answer lies in another thinking element of culture: values . Cultural values are notions about what is good, true, correct, appropriate, or beautiful. A certain mainstream way of thinking about motherhood indicates that mothers should be delicate and feminine, concerned with beauty and decorum. Moreover, mothers should nurture and sustain growth. What better way of conveying these notions than through the imagery of pastel flower arrangements? Messages of gratitude describe the sort of behavior considered appropriate to mothers.
In any culture, norms indicate how people should behave, and values explain why they should behave that way. For example, the norm for women in the 1950s was to get married and work in the home rather than have a job in the public workforce. Not that all women did this, or even most. Many mothers, particularly women of color, were obliged to work outside the home just to make a living for their families. Nonetheless, normative depictions of women as housewives dominated media and public discourse in mid-20th-century America, establishing this idealistic norm. Why were mothers supposed to stay at home? A set of “family values” appointed fathers as the breadwinning heads of household, while mothers were relegated to serving men by keeping house and caring for children. Thus, the values that came to be associated with motherhood were subservience, self-sacrifice, gentleness, and nurture—the very values we see celebrated on Mother’s Day cards.
Norms and values can combine in larger models that depict how various social realms operate, such as the family, the economy, the supernatural, and the political sphere. These models are known as ideologies . An ideology identifies the entities, roles, behaviors, relationships, and processes in a particular realm as well as the rationale behind the whole system. Take democracy, for instance. The political ideology of democracy envisions a society of equal individual citizens who each cast a vote on proposals for government action. The majority vote wins. The essential roles in this ideology are citizen voters and government. The essential actions are voting and government action. The rationale is that government should obey the wishes of the citizenry.
Is this how democracy really works, though? What about the influence of powerful organizations such as the media and large corporations? Moreover, in most democracies, people do not vote directly on government policies but rather elect representatives, who craft laws and then vote on those laws themselves. Those representatives are accountable to citizens through the process of voting, but they are also strongly influenced by lobbyists representing business interests and the campaign donations of wealthy individuals and groups. Obviously, this ideology is a simplification of the way any democratic system really works. Ideologies are always partial, foregrounding the perspectives of some people in society while obscuring the perspectives of others.
A worldview is a very broad ideology that shapes how the members of a culture generally view the world and their place in it. Worldviews tend to span several realms, including religion, economics, and politics. A worldview provides an overarching model for the purpose and process of social life, depicting “how the world works.” Many West African cultures, for instance, are shaped by a worldview that identifies the rationale of society in the accumulation and distribution of material goods in extended families, communities, and the nation as a whole. People rise to leadership through their ability to accumulate wealth, but they are strongly obligated to distribute that wealth through their extended families and communities by funding the education and business ventures of family members and helping those in need. Beyond the family, the actions of political and business leaders are shaped by this worldview as well. A political leader is expected to support the generation of wealth while also making sure that the benefits are spread through the community. Moreover, leaders are expected to maintain relationships with departed ancestors who watch over their descendants. Through periodic rituals and offerings, leaders petition ancestors to bless their families and communities with prosperity and good fortune.


12.3: Requesting Articulation - Best Practices
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Developing A New Course
Every course fulfills multiple objectives for students, instructors, departments, and institutions, and all those objectives must be taken into account as the course is being developed. Sometimes other objectives are more important than that of transferability. For example, if a college has determined that students have difficulty with certain content, it may develop a remedial course designed to bring them up to the standard of knowledge required for subsequent success in the discipline. This is sound pedagogical practice, even though the course may be denied transfer credit because it is viewed as preparatory. There are other reasons why a course may be difficult to articulate: it may be unique in the system, for example, or may be offered in response to localized social or economic conditions, or to take advantage of faculty specialization. At the same time, if a course is designed to transfer, it must be consistent with the norms, content and standards of the receiving institutions with which articulation is sought. It does not have to be identical to a course at a receiving institution—in fact, if it is to articulate widely, it must often integrate aspects of similar courses at several institutions.
The Course Outline
A detailed course outline is the starting point of any articulation process, since articulation demands a close examination of course elements in order to establish equivalence. While most institutions have developed satisfactory course outline templates for traditional courses, they do not always contain the level of detail necessary to establish equivalence. In the case of an outline for a new online course, besides ensuring it contains all the necessary information to ensure that an assessor can determine equivalence, special attention should be paid to the following course elements:
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Student evaluation, including how exams are safe-guarded, and authentication measures to identify students taking exams. The importance of providing this information can not be overstated. The CIHE Best Practices document states:
When examinations are employed (paper, online, demonstrations of competency, etc.), they take place in circumstances that include firm student identification. The institution otherwise seeks to assure the integrity of student work.
- If proctoring is used, what are the procedures for selecting proctors, establishing student identity, assuring security of test instruments, administering the examinations, and assuring secure and prompt evaluation?
- If other methods are used to identify those who take the examination, how is identification firmly established? How are the conditions of the examination (security, time limits, etc.) controlled?
- Does the institution have in place effective policies and procedures to assure the integrity of student work?
- How hours are assessed, and what is expected from the student for hours of learning versus hours of instruction.
- How labs, practica, field work, or other non-classroom requirements are supervised and assessed.
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Expectation regarding academic honesty. For example, the student Handbook for Charter Oak College in Connecticut (
http://www.charteroak.edu
) states:
For academic dishonesty, which shall in general mean conduct, which has as its intent or effect the false misrepresentation of a student’s academic performance including but not limited to:
- cheating on examination;
- plagiarizing, including submission of another’s ideas or papers as one’s own;
- stealing or having unauthorized access to examinations;
- falsifying records, transcripts, test scores or other data or (being represented by another individual for all or part of a distance learning course.
By registering for a Distance Learning course, a student attests that all assignments submitted and examinations completed are the work of the enrolled student. Dishonesty will result in an "F" in the course and may incur other disciplinary action for Charter Oak State College students including dismissal from the College.
- How student learning is supported in the online environment, including provision for collaboration between students and interaction with instructors.
- How library or other learning resources are accessed and used and the expectations for original research and use of such resources.
- Links to institutional and program URLs, and to any additional helpful information such as institutional policies regarding instructor credentials, lists of faculty associated with the program, or institutional or program accreditation or authorization.
- Whenever possible, a statement specifying what general or specific transfer credit the course should be awarded, including the year level credit. If the course has already been offered, existing articulations should be listed, along with a link to any online transfer guide containing that listing.
All course outlines should provide a detailed list of the topics covered, even if learning outcomes are also specified. Faculty members at institutions that do not design their courses from an outcomes perspective need detailed topic-based information to determine the best transfer equivalence.
Prior to Requesting Articulation
Check existing articulations. Search your state or provincial transfer guides, or those for nearby institutions, for similar courses. By this means it is possible to establish which other sending institutions have equivalent courses already receiving transfer credit. Those course outlines may be instructive, since they already receive the desired credit.
Consult colleagues. Once a draft course outline is ready, a developer can use the expertise of articulation committee members or willing colleagues for advice or feedback.
Reflect on, and balance advice received. Asking for advice and feedback on a course can be a sensitive area for faculty. Professional responsibility and autonomy include the freedom to develop and teach a course according to one’s professional judgment. Requesting advice from a faculty member at the receiving institution acknowledges that the receiving institution may exert some influence over the content or the structure of the course. Occasionally, a faculty member from a receiving institution responds by requesting modifications that may be unacceptable to the sending institution or that may compromise the transferability of the course at other institutions. In these instances, best practice involves communicating as diplomatically as possible and seeking a mutually acceptable solution.
Decide when “no credit” is acceptable. It is recognized that in some instances an award of “no credit” is appropriate, and is acceptable to the sending institution. For example, it may be important that students understand clearly that a course will not receive transfer credit at certain institutions, since they will then be in a better position to plan their transfer program. If an award of “no credit” is not acceptable, continued negotiation will be necessary.
Ensure that students are clear about transfer credit. Many student complaints about transfer credit occur because of a false expectation that a course will transfer, or will transfer as assigned credit rather than unassigned credit, or will satisfy a program requirement. Instructors should include information regarding course transferability in course syllabi, wherever possible.
Re-Articulating An Existing Course
Many online courses have already been delivered for years in traditional face-to-face mode. When a course has been redeveloped for online delivery, the question arises whether or not it should be re-articulated. However, once a course has been articulated and transfer credit established, it should be re-articulated only if the redevelopment results in substantive change.
- Substantive change to content or subject matter, or to objectives or outcomes. Course articulation is based on the principle of the equivalence of academic achievement and of knowledge and skills. Substantive changes, therefore, are changes to the content, subject matter, topics covered, or objectives/outcomes that will alter the equivalence of the course and therefore will likely the transfer credit which the course is awarded at other institutions. This is not intended to include relatively minor changes in topics, changes in texts, materials, or assignments, reasonable modifications to learning outcomes, or changes intended to update the course or keep it in line with the evolving norms of the discipline. Nor is it intended to include change in delivery mode, unless that change substantively affects the elements listed above.
- Substantive changes to assessment criteria or evaluation methods, only if certain assessment methods or weighting are integral to the articulation of a course. For example, some institutions require all courses, or certain courses, to have a final exam, and some require that a percentage of the final grade be based on a final exam. In the case of online courses, changes in evaluation methods may be considered substantive if, for example, they impact on the perceived integrity of the exams or assignments.
- Changes to the number of credits assigned to the course, or to the number of contact hours. Normally, a change to credit hours signals that content has been added or subtracted. Such changes affect equivalence and in turn the transfer credit assigned to the courses, including the number of credits awarded. Therefore re-articulation is appropriate.


36: Letters from an American Farmer (1767) Supplementary Readings Last updated Save as PDF Page ID 40691 Robin DeRosa, Abby Goode et al. Plymouth State University/ 36.1: An Unstable Identity- The White American Man 36.2: America- Utopia or Dystopia? 36.3: The Naive and Delusional Farmer 36.4: Men Are Like Plants; They’re Weak 36.5: Proud to be an American, Where at Least I Know I’m… Part of an Industry? 36.6: He Should Have Worked for Real Estate 36.7: J. Hector St. John de Crevecoeur- National Hero or Portrayal of White Guilt? 36.8: Live Long and Industrialize… Unless You’re a Slave, Then It’s Highly Improbable That Will Happen. 36.9: Who You Calling a Plant? 36.10: For Sale- America! Get It Now! 36.11: America the Great 36.12: Beautifulish Americans 36.13: Come To America! Wait, No! Not THAT Part! And… Ignore the European Qualities…


1.1: Unbranched Alkanes
- Naming Unbranched Alkanes (Organic Chemistry)
An alkane is a type of hydrocarbon (a compound consisting of only carbon and hydrogen atoms). When the carbon-carbon backbone consists only of single bonds, the hydrocarbon contains as many hydrogen atoms as possible, and is therefore saturated . Alkanes are saturated hydrocarbons.
Below is a table of the names of unbranched, saturated alkanes containing up to ten carbons, with their condensed structural formulas, molecular formulas, and boiling points.
| Alkane | Condensed Structural Formula | Molecular Formula | Boiling Point (degrees C) |
|---|---|---|---|
| Methane | CH 4 | CH 4 | -161 |
| Ethane | CH 3 CH 3 | C 2 H 6 | -89 |
| Propane | CH 3 CH 2 CH 3 | C 3 H 8 | -42 |
| Butane | CH 3 CH 2 CH 2 CH 3 | -0.5 | |
| Pentane | CH 3 (CH 2 ) 3 CH 3 | 36 | |
| Hexane | CH 3 (CH 2 ) 4 CH 3 | 69 | |
| Heptane | 98 | ||
| Octane | 126 | ||
| Nonane | 151 | ||
| Decane | 174 |
Table of names, condensed structural formulas, molecular formulas, and boiling points of unbranched saturated alkanes containing up to ten carbon atoms.
- Fill in the blank spaces in the table.
- Draw the structures of these ten unbranched alkanes, using Figure \(\PageIndex{1}\) (hexane) as a model.
- What do the names of these molecules have in common?
- What is the relationship between the number of carbon atoms and the number of hydrogen atoms in an unbranched alkane? Provide a general formula (use n for the number of carbon atoms).
- Draw a graph of boiling points versus number of carbon atoms in unbranched alkanes.
- How do the boiling points vary with the number of carbons? Propose an explanation for this observation.


7.1.2C: Informal Means of Control
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Informal social control refers to the reactions of individuals and groups that bring about conformity to norms and laws.
Learning Objectives
- Evaluate the mechanisms of informal social control
Key Points
- Informal sanctions may include shame, ridicule, sarcasm, criticism, and disapproval. In extreme cases sanctions may include social discrimination and exclusion.
- Socialization is a term used by sociologists to refer to the lifelong process of inheriting and disseminating norms, customs, and ideologies, which provide an individual with the skills and habits necessary for participating within his or her own society.
- The family is often the most important agent of socialization because it is the center of the child’s life.
- A peer group is a social group whose members have interests, social positions, and age in common. It can also be an important agent of socialization.
- A peer group is a social group whose members have interests, social positions and age in common.
Key Terms
- Informal sanctions : These are the reactions of individuals and groups that bring about conformity to norms and laws. These can include peer and community pressure, bystander intervention in a crime, and collective responses such as citizen patrol groups.
Informal social control —the reactions of individuals and groups that bring about conformity to norms and laws—includes peer and community pressure, bystander intervention in a crime, and collective responses such as citizen patrol groups. The social values that are present in individuals are products of informal social control. It is exercised by a society without explicitly stating these rules and is expressed through customs, norms, and mores.
Informal sanctions may include shame, ridicule, sarcasm, criticism, and disapproval. In extreme cases sanctions may include social discrimination and exclusion. An example of a negative sanction is seen in a scene from the Pink Floyd film The Wall , where the young protagonist is ridiculed and verbally abused by a high school teacher for writing poetry in a mathematics class. As with formal controls, informal controls reward or punish acceptable or unacceptable behavior. Informal controls differ from individual to individual, group to group, and society to society. For example, at a women’s institute meeting, a disapproving look might convey that it is inappropriate to flirt with the minister. In a criminal gang, a stronger sanction applies in the case of someone threatening to inform to the police.
Socialization
Socialization is a term used by sociologists to refer to the lifelong process of inheriting and disseminating norms, customs, and ideologies, which provide an individual with the skills and habits necessary for participating within his or her own society.  Secondary socialization takes place outside the home, where children and adults learn how to act in a way that is appropriate for the situations they are in. Finally, re-socialization refers to the process of discarding former behavior patterns and reflexes, accepting new ones as part of a transition in one’s life.
The family is often the most important agent of socialization because it is the center of the child’s life. Agents of socialization can differ in effects. A peer group is a social group whose members have interests, social positions, and age in common. It can also be an important influence on a child, as this is where children can escape supervision and learn to form relationships on their own. The influence of the peer group typically peaks during adolescence. However, peer groups generally only affect short-term interests, unlike the long-term influence exerted by the family.


4.6: Volunteer's Dilemma
In Section 4.5 we played a game called Volunteer's Dilemma.
One example of a Volunteer's Dilemma is the game where everyone chooses “\(1\) point” or “\(5\) points.” If at least one person writes down \(1\) point, then everyone gets the number of points they wrote down. If no one chooses \(1\) point, then everyone gets \(0\) points. Choosing “\(1\) point” is considered volunteering or cooperating. Choosing to not volunteer and take “\(5\) points” is defecting.
You should note that it is difficult to put this game into a matrix form since payoffs depend on whether there is at least one volunteer or cooperator.
In this section, we will compare Class-wide Prisoner's Dilemma with Volunteer's Dilemma. In particular, we want to think about the effect cooperating and defecting have on the group of players. How does one player's choice affect everyone else? What happens to the group if there is a single cooperator or a single defector? What happens if everyone cooperates or everyone defects? We will use the payoffs for Prisoner's Dilemma from Section 4.3 , given again in Table \(4.6.1\).
| Table \(4.6.1\): Class-wide Prisoner's Dilemma (again). | |||
|---|---|---|---|
| Player 2 | |||
| Cooperate | Defect | ||
| Driver 1 | Cooperate | \((3, 3)\) | \((0, 5)\) |
| Defect | \((5, 0)\) | \((1, 1)\) |
In Class-wide Prisoner's Dilemma what effect does one defector have on the group? In other words, if a single player defects, how many points does he cost each of the other players?
In Class-wide Prisoner's Dilemma what effect does everyone's defection have on the group? In other words, what is the most points lost by the group if everyone defects?
In Class-wide Prisoner's Dilemma what effect could your own defection have on the group? In other words, how many points does the group lose if you defect instead of cooperate? You may need to consider different cases depending on how many cooperators there are. For example what if there are no cooperators? What if there are no defectors? What if there are some of each?
In Volunteer's Dilemma , with the payoffs given in Example \(4.6.1\), what effect does one defector have on the group? In other words, if there is a single defector, how many points do each of the other players lose?
In Volunteer's Dilemma , with the payoffs given in Example \(4.6.1\), what effect does everyone's defection have on the group? In other words, if everyone defects, how many points does the group lose?
In Volunteer's Dilemma , with the payoffs given in Example \(4.6.1\), what effect could your own defection have on the group? In other words, how many points does the group lose if you defect instead of cooperate? You may need to consider different cases depending on how many cooperators there are. For example what if there are no cooperators? What if there are no defectors? What if there are some of each?
Now that we've considered how an individual decision can affect the group, we can think about what the most rational strategy is in a multiplayer Prisoner's Dilemma or a Volunteer's Dilemma.
Considering your answers above and to previous work with Prisoner's Dilemma, in Class-wide Prisoner's Dilemma , which is more rational to be a cooperator or a defector? Why?
Whichever strategy you chose in Exercise \(4.6.7\), explain what would happen if everyone was the most rational. Is it now more rational to do the opposite?
Considering your answers above, in Volunteer's Dilemma , which is more rational to be a cooperator (volunteer) or a defector? Why?
Whichever strategy you chose in Exercise \(4.6.9\), explain what would happen if everyone was the most rational. Is it now more rational to do the opposite?
Volunteer's Dilemma can also be called “Class-wide Chicken.” Try to describe this class-wide game in terms of “swerving” and “going straight.” How do the payoffs for Volunteer's Dilemma relate to the payoffs for Chicken?
Even though the Class-wide Prisoner's Dilemma and the Volunteer's Dilemma games were played with multiple players, each game was only played once. In the next section we look at what might happen if we repeatedly play Prisoner's Dilemma with the same opponent.


<IP_ADDRESS>: Unobtrusive Data Collected by You
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Learning Objectives
- Define content analysis.
- Describe the kinds of texts that content analysts analyze.
- Name at least two examples of content analysis research.
- Define primary and secondary sources, describe their differences, and provide an example of each.
- Define physical traces and compare them to material artifacts.
- Outline the differences between manifest content and latent content.
- Discuss the differences between qualitative and quantitative content analysis.
- Describe code sheets and their purpose.
This section focuses on how to gather data unobtrusively and what to do with those data once they have been collected. There are two main ways of gathering data unobtrusively: conducting a content analysis of existing texts and analyzing physical traces of human behavior. We’ll explore both approaches.
Content Analysis
One way of conducting unobtrusive research is to analyze texts. Texts come in all kinds of formats. At its core, content analysis addresses the questions of “Who says what, to whom, why, how, and with what effect?” (Babbie, 2010, pp. 328–329).Babbie, E. (2010). The practice of social research (12th ed.). Belmont, CA: Wadsworth. Content analysis is a type of unobtrusive research that involves the study of human communications. Another way to think of content analysis is as a way of studying texts and their meaning. Here we use a more liberal definition of text than you might find in your dictionary. The text that content analysts investigate includes such things as actual written copy (e.g., newspapers or letters) and content that we might see or hear (e.g., speeches or other performances). Content analysts might also investigate more visual representations of human communication such as television shows, advertisements, or movies. The following table provides a few specific examples of the kinds of data that content analysts have examined in prior studies. Which of these sources of data might be of interest to you?
| Data | Research question | Author(s) (year) |
|---|---|---|
| Spam e-mails | What is the form, content, and quantity of unsolicited e-mails? | Berzins (2009)Berzins, M. (2009). Spams, scams, and shams: Content analysis of unsolicited email. International Journal of Technology, Knowledge, and Society, 5, 143–154. |
| James Bond films | How are female characters portrayed in James Bond films, and what broader lessons can be drawn from these portrayals? | Neuendorf, Gore, Dalessandro, Janstova, and Snyder-Suhy (2010)Neuendorf, K. A., Gore, T. D., Dalessandro, A., Janstova, P., & Snyder-Suhy, S. (2010). Shaken and stirred: A content analysis of women’s portrayals in James Bond films. Sex Roles, 62, 747–761. |
| Console video games | How is male and female sexuality portrayed in the best-selling console video games? | Downs and Smith (2010)Downs, E., & Smith, S. L. (2010). Keeping abreast of hypersexuality: A video game character content analysis. Sex Roles, 62, 721–733. |
| Newspaper articles | How do newspapers cover closed-circuit television surveillance in Canada, and what are the implications of coverage for public opinion and policymaking? | Greenberg and Hier (2009)Greenberg, J., & Hier, S. (2009). CCTV surveillance and the poverty of media discourse: A content analysis of Canadian newspaper coverage. Canadian Journal of Communication, 34, 461–486. |
| Pro-eating disorder websites | What are the features of pro-eating disorder websites, and what are the messages to which users may be exposed? | Borzekowski, Schenk, Wilson, and Peebles (2010)Borzekowski, D. L. G., Schenk, S., Wilson, J. L., & Peebles, R. (2010). e-Ana and e-Mia: A content analysis of pro-eating disorder Web sites. American Journal of Public Health, 100, 1526–1534. |
One thing you might notice about Table 11.1 is that the data sources represent primary sources . That is, they are original. Secondary sources , on the other hand, are those that have already been analyzed. Shulamit Reinharz offers a helpful way of distinguishing between these two types of sources in her methods text. She explains that while primary sources represent the “‘raw’ materials of history,” secondary sources are the “‘cooked’ analyses of those materials” (1992, p. 155).Reinharz, S. (1992). Feminist methods in social research . New York, NY: Oxford University Press. The distinction between primary and secondary sources is important for many aspects of social science, but it is especially important to understand when conducting content analysis. While there are certainly instances of content analysis in which secondary sources are analyzed, I think it is safe to say that it is more common for content analysts to analyze primary sources.
In those instances where secondary sources are analyzed, the researcher’s focus is usually on the process by which the original analyst or presenter of data reached his conclusions or on the choices that were made in terms of how and in what ways to present the data. For example, Ferree and Hall (1990)Ferree, M. M., & Hall, E. J. (1990). Visual images of American society: Gender and race in introductory sociology textbooks. Gender & Society, 4 (4), 500–533. conducted a content analysis of introductory sociology textbooks, but their aim was not to learn about the content of sociology as a discipline. Instead, the researchers sought to learn how students are taught the subject of sociology and understand what images are presented to students as representative of sociology as a discipline.
Sometimes students new to research methods struggle to grasp the difference between a content analysis of secondary sources and a review of literature, which is discussed in Chapter 5. In a review of literature, researchers analyze secondary materials to try to understand what we know, and what we don’t know, about a particular topic. The sources used to conduct a scholarly review of the literature are typically peer-reviewed sources, written by trained scholars, published in some academic journal or press, and based on empirical research that has been conducted using accepted techniques of data collection for the discipline (scholarly theoretical pieces are included in literature reviews as well). These sources are culled in a review of literature in order to arrive at some conclusion about our overall knowledge about a topic. Findings are generally taken at face value.
Conversely, a content analysis of scholarly literature would raise questions not raised in a literature review. A content analyst might examine scholarly articles to learn something about the authors (e.g., Who publishes what, where?), publication outlets (e.g., How well do different journals represent the diversity of the discipline?), or topics (e.g., How has the popularity of topics shifted over time?). A content analysis of scholarly articles would be a “study of the studies” as opposed to a “review of studies.” Perhaps, for example, a researcher wishes to know whether more men than women authors are published in the top-ranking journals in the discipline. The researcher could conduct a content analysis of different journals and count authors by gender (though this may be a tricky prospect if relying only on names to indicate gender). Or perhaps a researcher would like to learn whether or how various topics of investigation go in and out of style. She could investigate changes over time in topical coverage in various journals. In these latter two instances, the researcher is not aiming to summarize the content of the articles but instead is looking to learn something about how, why, or by whom particular articles came to be published.
Content analysis can be qualitative or quantitative, and often researchers will use both strategies to strengthen their investigations. In qualitative content analysis the aim is to identify themes in the text being analyzed and to identify the underlying meaning of those themes. A graduate student colleague of mine once conducted qualitative content analysis in her study of national identity in the United States. To understand how the boundaries of citizenship were constructed in the United States, Alyssa Goolsby (2007)Goolsby, A. (2007). U.S. immigration policy in the regulatory era: Meaning and morality in state discourses of citizenship (Unpublished master’s thesis). Department of Sociology, University of Minnesota, Minneapolis, MN. conducted a qualitative content analysis of key historical congressional debates focused on immigration law. Quantitative content analysis, on the other hand, involves assigning numerical values to raw data so that it can be analyzed using various statistical procedures. One of my research collaborators, Jason Houle, conducted a quantitative content analysis of song lyrics. Inspired by an article on the connections between fame, chronic self-consciousness (as measured by frequent use of first-person pronouns), and self-destructive behavior (Schaller, 1997),Schaller, M. (1997). The psychological consequences of fame: Three tests of the self-consciousness hypothesis. Journal of Personality, 65, 291–309. Houle counted first-person pronouns in Elliott Smith song lyrics. Houle found that Smith’s use of self-referential pronouns increased steadily from the time of his first album release in 1994 until his suicide in 2003 (2008).Houle, J. (2008). Elliott Smith’s self referential pronouns by album/year. Prepared for teaching SOC 207, Research Methods, at Pennsylvania State University, Department of Sociology. We’ll elaborate on how qualitative and quantitative researchers collect, code, and analyze unobtrusive data in the final portion of this section.
Indirect Measures
Texts are not the only sort of data that researchers can collect unobtrusively. Unobtrusive researchers might also be interested in analyzing the evidence that humans leave behind that tells us something about who they are or what they do. This kind evidence includes the physical traces left by humans and the material artifacts that tell us something about their beliefs, values, or norms. Physical traces include such things as worn paths across campus, the materials in a landfill or in someone’s trash can (a data source William Rathje and colleagues [Rathje, 1992; Rathje & Murthy, 1992]Rathje, W. (1992). How much alcohol do we drink? It’s a question…so to speak. Garbage, 4, 18–19; Rathje, W., & Murthy, C. (1992). Garbage demographics. American Demographics, 14, 50–55. have used), indentations in furniture, or empty shelves in the grocery store. Examples of material artifacts include video games and video game equipment, sculptures, mementos left on gravestones, housing structures, or even kitchen utensils. What kinds of physical traces or material artifacts might be of interest to you?
I recently visited the National Museum of American History in Washington, DC. While there I saw an exhibit displaying chef Julia Child’s home kitchen, where she filmed many of her famous cooking shows. Seeing the kitchen made me wonder how cooking has changed over the past few decades since Child’s shows were on air. I wondered how the layout of our kitchens and the utensils and appliances they contain might influence how we entertain guests, how much time we spend preparing meals, and how much time we spend cleaning up afterward. Our use of particular kitchen gadgets and utensils might even indicate something about our social class identities.Watch the following clip, featuring satirist Joe Queenan, from the PBS documentary People Like Us on social class in the United States: http://www.youtube.com/watch?v=j_Rtl3Y4EuI . The clip aptly demonstrates the sociological relevance of kitchen gadgets. Answers to these questions have bearing on our norms and interactions as humans; thus they are just the sorts of questions sociologists using unobtrusive methods might be interested in answering. I snapped a few photos of the kitchen while at the museum. Though the glass surrounding the exhibit prevents ideal picture taking, I hope the photos in Figure 11.4 give you an idea of what I saw. Might the organizational scheme used in this kitchen, or the appliances that are either present or missing from it, shape the answers to the questions I pose above about human behaviors and interactions?
Figure 11.4
A visit to Chef Julia Child’s kitchen at the National Museum of American History inspired the author to think about how kitchens, kitchen utensils, and kitchen appliances have changed over time.
One challenge with analyzing physical traces and material artifacts is that you generally don’t have access to the people who left the traces or created the artifacts that you are analyzing. (And if you did find a way to contact them, then your research would no longer qualify as unobtrusive!) It can be especially tricky to analyze meanings of these materials if they come from some historical or cultural context other than your own. Situating the traces or artifacts you wish to analyze both in their original contexts and in your own is not always easy and can lead to problems related to validity and reliability. How do you know that you are viewing an object or physical trace in the way that it was intended to be viewed? Do you have the necessary understanding or knowledge about the background of its original creators or users to understand where they were coming from when they created it?
Imagine an alien trying to understand some aspect of Western human culture simply by examining our artifacts. Cartoonist Mark Parisi demonstrates the misunderstanding that could ensue in his drawing featuring three very small aliens standing atop a toilet. One alien says, “Since water is the life-blood on this planet, this must be a temple of some sort.…Let’s stick around and see how they show their respect” (1989).Parisi, M. (1989). Alien cartoon 6. Off the Mark . Retrieved from www.offthemark.com/aliens/aliens06.htm Without a contextual understanding of Western human culture, the aliens have misidentified the purpose of the toilet, and they will be in for quite a surprise when someone shows up to use it!
The point is that while physical traces and material artifacts make excellent sources of data, analyzing their meaning takes more than simply trying to understand them from your own contextual position. You must also be aware of who caused the physical trace or created the artifact, when they created it, why they created, and for whom they created it. Answering these questions will require accessing materials in addition to the traces or artifacts themselves. It may require accessing historical documents or, if a contemporary trace or artifact, perhaps another method of data collection such as interviews with its creators.
Analysis of Unobtrusive Data Collected by You
Once you have identified the set of texts, physical traces, or artifacts that you would like to analyze, the next step is to figure out how you’ll analyze them. This step requires that you determine your procedures for coding, understand the difference between manifest and latent content, and understand how to identify patterns across your coded data. We’ll begin by discussing procedures for coding.
You might recall being introduced to coding procedures in Chapter 9, where we discussed the coding of qualitative interview data. While the coding procedures used for written documents obtained unobtrusively may resemble those used to code interview data, many sources of unobtrusive data differ dramatically from written documents or transcripts. What if your data are sculptures or worn paths, or perhaps kitchen utensils, as in the previously discussed example? The idea of conducting open coding and focused coding on these sources as you would for a written document sounds a little silly, not to mention impossible. So how do we begin to identify patterns across the sculptures or worn paths or utensils we wish to analyze? One option is to take field notes as we observe our data and then code patterns in those notes. Let’s say, for example, that we’d like to analyze kitchen utensils. Taking field notes might be a useful approach were we conducting observations of people actually using utensils in a documentary or on a television program. (Remember, if we’re observing people in person then our method is no longer unobtrusive.)
If rather than observing people in documentaries or television shows our data include a collection of actual utensils, note taking may not be the most effective way to record our observations. Instead, we could create a code sheet to record details about the utensils in our sample. A code sheet, sometimes referred to as a tally sheet in quantitative coding, is the instrument an unobtrusive researcher uses to record observations.
In the example of kitchen utensils, perhaps we’re interested in how utensils have changed over time. If we had access to sales records for utensils over the past 50 years, we could analyze the top-selling utensil for each year. To do so, we’d want to make some notes about each of the 50 utensils included in our sample. For each top-rated utensil, we might note its name, its purpose, and perhaps its price in current dollar amounts. We might also want to make some assessment about how easy or difficult it is to use or some other qualitative assessment about the utensil and its use or purpose. To rate the difficulty of use we could use a 5-point scale, with 1 being very easy to use and 5 being very difficult to use. We could even record other notes or observations about the utensils that may not occur to us until we actually see the utensils. Our code sheet might look something like the sample shown in Table 11.2. Note that the sample sheet contains columns only for 10 years’ worth of utensils. If you were to conduct this project, obviously you’d need to create a code sheet that allows you to record observations for each of the 50 items in your sample.
| 1961 | 1962 | 1963 | 1964 | 1965 | 1966 | 1967 | 1968 | 1969 | 1970 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Utensil name | ||||||||||
| Utensil purpose | ||||||||||
| Price (in 2011 $) | ||||||||||
| Ease of use (1–5 scale) | ||||||||||
| Other notes |
As you can see, our code sheet will contain both qualitative and quantitative data. Our “ease of use” rating is a quantitative assessment; we can therefore conduct some statistical analysis of the patterns here, perhaps noting the mean value on ease of use for each decade we’ve observed. We could do the same thing with the data collected in the row labeled Price , which is also quantitative. The final row of our sample code sheet, containing notes about our impressions of the utensils we observe, will contain qualitative data. We may conduct open and focused coding on these notes to identify patterns across those notes. In both cases, whether the data being coded are quantitative or qualitative, the aim is to identify patterns across the coded data.
The Purpose row in our sample code sheet provides an opportunity for assessing both manifest and latent content. Manifest content is the content we observe that is most apparent; it is the surface content. This is in contrast to latent content , which is less obvious. Latent content refers to the underlying meaning of the surface content we observe. In the example of utensil purpose, we might say a utensil’s manifest content is the stated purpose of the utensil. The latent content would be our assessment of what it means that a utensil with a particular purpose is top rated. Perhaps after coding the manifest content in this category we see some patterns that tell us something about the meanings of utensil purpose. Perhaps we conclude, based on the meanings of top-rated utensils across five decades, that the shift from an emphasis on utensils designed to facilitate entertaining in the 1960s to those designed to maximize efficiency and minimize time spent in the kitchen in the 1980s reflects a shift in how (and how much) people spend time in their homes.
Kathleen Denny’s (2011)Denny, K. (2011). Gender in context, content, and approach: Comparing gender messages in Girl Scout and Boy Scout handbooks. Gender & Society, 25, 27–47. recent study of scouting manuals offers another excellent example of the differences between manifest and latent content. Denny compared Boy Scout and Girl Scout handbooks to understand gender socializing among scouts. By counting activity types described in the manuals, Denny learned from this manifest content that boys are offered more individual-based and more scientific activities while girls are offered more group-based and more artistic activities. Denny also analyzed the latent meaning of the messages that scouting handbooks portray about gender; she found that girls were encouraged to become “up-to-date traditional women” while boys were urged to adopt “an assertive heteronormative masculinity” (p. 27).
KEY TAKEAWAYS
- Content analysts study human communications.
- The texts that content analysts analyze include actual written texts such as newspapers or journal entries as well as visual and auditory sources such as television shows, advertisements, or movies.
- Content analysts most typically analyze primary sources, though in some instances they may analyze secondary sources.
- Indirect measures that content analysts examine include physical traces and material artifacts.
- Manifest content is apparent; latent content is underlying.
- Content analysts use code sheets to collect data.
ExerciseS
- Identify a research question you could answer using unobtrusive research. Now state a testable hypothesis having to do with your research question. Next identify at least two potential sources of data you might analyze to answer your research question and test your hypothesis.
- Create a code sheet for each of the two potential sources of data that you identified in the preceding exercise.


2.5: Lemma - Spacetime area is invariant
Learning Objectives
- To prove from axioms P1 - P6 that area in the \(x - t\) plane is invariant
In this section we prove from axioms P1-P6 that area in the \(x - t\) plane is invariant, i.e., it does not change between frames of reference. This result was used in Section 1.3 to find the form of the spacetime metric. Consider figure \(\PageIndex{1}\).
Vectors \(\overrightarrow{o_1}\) and \(\overrightarrow{s_1}\) are orthogonal and have equal lengths as measured by a clock and a ruler (which are calibrated in units such that \(c = 1\), e.g., seconds and light-seconds). The square lattice of white polka-dots is obtained from them by repeated addition. By assuming that this lattice construction is possible, we are implicitly assuming postulate P2, flatness of spacetime.
The same properties hold for vectors \(\overrightarrow{o_2}\) and \(\overrightarrow{s_2}\), which give the lattice of black dots. As required, the two lattices agree on their \(45\)-degree diagonals. Now within the \(10 × 10\) portion of the white lattice shown with gray shading, we have an area of \(100\). In the same region we count about \(100\) or \(101\) black dots — there is some ambiguity because of the dots that lie on the boundary. The density of white and black dots is in fact exactly equal, as can be verified to any desired precision by making the region big enough. In other words, the diagram is drawn so that area is preserved, which is what we are going to show is required. If it was observer \(2\) rather than \(1\) who was drawing the diagram, presumably she would choose to draw the black dots in a square lattice and vectors \(\overrightarrow{o_2}\) and \(\overrightarrow{s_2}\) at right angles. This would require vectors \(\overrightarrow{o_2}\) and \(\overrightarrow{s_2}\) to be opened up at an oblique angle and the white lattice to be non-square.
Now suppose we had not made area conserved. What if a region containing \(100\) white dots had held \(200\) black ones? Dot-counting is how the observers define area, so if this happened, they would have to agree that a boost by \(v\), from frame \(1\) to frame \(2\), doubled the area of the gray region. Because spacetime is flat (P2) and homogeneous (P3), it is possible to take a geometrical shape inscribed in a certain region of spacetime and move, rotate, or flip it. And by isotropy of space (P3), a boost of velocity \(v\) is the same as a flip of the spatial dimension followed by a \(-v\) boost and another flip. Area is conserved by a flip, so we find that a boost by \(-v\), from frame \(2\) to frame \(1\), also doubles area. Thus a \(+v\) boost followed by a \(-v\) boost would cause a quadrupling of area. But a pair of equal and opposite boosts cancels out, so this is a contradiction. We conclude that if these symmetry principles hold, then spacetime area is the same for any two observers, so it is an invariant.
It may seem unnecessarily clumsy that we’ve used the idea of counting dots in the above argument, but remember that our main use of this result is to derive the form of the metric, and before the metric had been found, we had no system of measurement for relativity, so we had only very primitive techniques at our disposal.


4.16: Calculating Return on Equity
Learning Outcomes
Calculate return on equity
Financial leverage refers to the use of debt to acquire additional assets. Although most companies require some type of financing to start, expand or continue their operations, these leverage ratios inform potential creditors of the potential risk associated with extending credit to the business. Business’s that carry a heavy debt load run the risk of over-extending themselves to the point that funds are not available for the key functions of the business.
- Debt Ratio. The debt ratio measures the percentage of the company’s total assets that are financed by creditors and lenders as opposed to the owners. The debt ratio is calculated as follows:
Debt Ratio= (Total Debt or Liabilities)/(Total Assets)
Total debt includes all current liabilities and any outstanding long-term debt such as loans, notes or bonds. The total assets include all of the company’s current assets, fixed assets and any intangible assets such as goodwill. Business owners prefer a higher debt ratio than lenders because the higher debt ratio reflects that the owner has less invested in the business and consequently has less to lose.
- Debt-to-Net-Worth Ratio. This ratio also expresses the relationship between the capital contributions of the owners and the capital contributed by lenders. It is fundamentally the ratio of what the business is worth compared to what the business owes.
Debt-to-Net-Worth Ratio= (Total Debt or Liabilities)/(Tangible Net Worth)
In this ratio total debt includes both current and long-term liabilities as was the case with the Debt Ratio. However, in order to calculate the Debt-to-Net-Worth ratio we must derive the tangible net worth of the business. The tangible net worth of the business represents the owner’s investment in the business less any intangible assets. We find tangible net worth as follows: Owners Capital + Capital Stock + Earned Surplus + Retained Earnings – Intangible Assets (such as goodwill). A high Debt-to-Net-Worth ratio indicates that the company is highly leveraged and will make it difficult for a business to borrow funds since lenders will consider them “maxed out” when it comes to borrowing.
- Times-Interest-Earned Ratio. This ratio is the measure of a business’s ability to make its interest payments on borrowed capital. In literally tells the business how many times their earnings will cover the interest payments on the loans it is carrying. It is calculated as follows:
Times Interest Earned Ratio= (EBIT (Earnings Before Interest & Taxes))/(Total Interest Expense)
EBIT is the company’s profit after deducting all expenses but before deducting interest expense and income tax. A high Times-Interest-Earned Ratio indicates that the company has little trouble making its interest payments and generally lender prefer a ratio of at least 2:1. It is not unusual for lenders to require this ratio to be as high as 6:1 if the business is a start-up or very young.
Return on Equity is the measure of both profit and efficiency. An increase in ROE over time is a good thing for a business. However, some industries tend to ROEs in a specific range so it’s important to compare companies from the same industry.
ROE= (Net Income)/(Shareholder’s Equity)
practice questions