What Watts is essentially trying to say is that, if a firm overstates net assets they will increase litigation costs than if they understate their net assets. So conservatism decrease litigation cost to the firm and limits management’s opportunistic behaviour. If a firm is reporting continuous profits and then goes bankrupt a shareholder is likely to sue but if a firm is reporting losses and then goes bankrupt shareholders will sell their shares eventually. Basically, firms are more likely to be used if they are being less conservative and less likely to be used if they are being more conservative. Watts’ accounting regulation explanations and evidence have important implications for accounting regulators (Watts 2003).
Question 1. What is the purpose and intended contribution of the paper? Ray Ball and Phillip Brown conducted a research in accounting to identify the usefulness of accounting numbers and the impact that they had on share prices. Before the research was done, the accounting profession was unaware of the impact that income statements and balance sheet figures, which were reported to the public had on the share prices. Also the accounting research was based solely on a few assertions and developed arguments.
It will reduce the bargaining power of the buyers plus it will provide an opportunity to the firm to streamline its sales and production process. • By rapidly innovating new products. Customers often seek discounts and offerings on established products so if Twitter, Inc. keep on coming up with new products then it can limit the bargaining power of
Week 8 June 1 – Accounting Statements and Cash Flow The topic that I have learnt today is on accounting statements and cash flow. The statement of cash flows contains the operating, investing and financing which are primary in business activity. Inflow is when the money are received and not necessarily earned. Whereas, outflow is when the cash is paid and not necessarily incurred. The information you get from the cash flow statement can help evaluate the company’s ability to meet its obligations.
As for the both initiatives the company is behind the schedule, offering recycling bins in only 47% of promised stores, and serving just 1.8% of beverages in reusable cups (Lubin). Goals concerning reduction of energy consumption were also not fulfilled. Still, reports prove that compared to other big retailer companies, Starbucks at least make some efforts to improve the situation. Though, the set goals were not reached, the overall fact that they were listed in the Global Responsibility Report is exemplary. The citizenship principle is much more violated by Starbucks tax avoidance in UK.
Financial management helps to determine the financial requirements of the organization and leads to take financial planning to the organization. • Accomplishment of funds Financial management involves the accomplishment of required fund to the business organization. Accomplishing needed funds play a major part of the financial management in an organization which involve possible source of finance at minimum cost. • Proper Use of Funds Financial management systems help to proper use and allocation of funds which leads to improve the operational activity of the business organization. If the funds use properly, so it helps to reduce the cost of capital and maximizing the value of the firm.
A corporation could not continue a policy that constantly generates negative cash flows. The shareholders invest their money in a corporation, expecting the highest possible risk adjusted return. Therefore, being socially responsible should have bottom-line benefits in order to be sustainable. In many cases, it seems that the time frame
Being an investment manager for a company is not easy though. They would have to consider many aspects before investments and understand the risk involved in order to help their company gain profits. I would like to offer some suggestions in H&R Century Pictures’ investment strategy. Like all investors know, it’s wise for diversification in portfolios. It’s a lot less riskier than concentrated portfolios because in a concentrated portfolio, if the stock you invest in fails, all money will be lost, where in a diversified portfolio if one of the sectors you invested in fails, lost will be minimized by the gains of other sectors investments.
Luxury tax is not a solution to inequality within society. Introduction A real challenge for many economists is to find a way to decrease the financial inequality within society. Several economic and political possibilities exist to decrease the big differences between the rich and the non-rich. On the one hand, providing state subsidy might be a good tool for this challenge. In this way relatively poor people in society are helped to increase their welfare and to limit inequality.
Consumers are very greedy, they will normally prefer the discount items which is cheaper than normal price. Marketing use this techniques to lower the selling price and indirectly increasing the sales of consumer purchasing. Moreover, sales promotion techniques include merchandising allowance. It means that the more of the product that the retailer purchases, the lower the price they can get it. The manufacturer reduces the cost for larger orders that ordered by the retailers.