This website uses cookies to ensure you have the best experience. Learn more

Finance Statement Essay

1814 words - 8 pages

The relationship between management and shareholders is sometimes referred to as an Agency Relationship, in which managers act as agents for the shareholders, using delegation powers to run the affairs of the company in the best interest of the shareholders. Since the agent and the manager may have different value of the company to perform agency relationship share prices.When a manager hires an agent to carry out specific tasks, the hiring is be called principal agent relationship, or simply an agency relationship. When a conflict of interest between the needs of the principal and those of the agent arises, the conflict is called an agency problem.In financial markets, agency problems ...view middle of the document...

But management may wish to grow the company in ways that maximize their personal power and wealth that may not be in the best interests of shareholders.Agency costs are inevitable within an organization whenever the principals are not completely in charge; the costs can usually be best spent on providing proper material incentives such as performance bonuses and stock options and moral incentives for agents to properly execute their duties, thereby aligning the interests of principals owners and agents

Agency Theory

Bases on this proposes that, although the individual members of the business team act in their own self interest, the well being of each individual depends on the well being of other team members and on the performance of the team in competition with other teams.Another reason why managers might do their best to improve the financial performance of their company is that managers pay is often related to the size or profitability of the company. Managers in very big companies, or in very profitable companies, increase the current share price of £25 per share to a valve higher than the current bidders price of £35 will normally expect to earn higher salaries than managers in smaller or less successful companies.Agency theory suggests that audited accounts of a limited company are an important source of post decision information minimizing investors’ agency costs, in contrast to the alternative approaches which see financial reports as primarily a source of pre decision information for the equity investors.

Part 2 (II)

Working capital policies refer to decisions relating to the level of current assets and the way they are financed . the dual goals of working capital management are liquidity and
profitability. Managing liquidity, costs related to excesses and shortages of working capital, can increase firms‟ profitability.These policies have been divided into one company to another company. working capital financing policies asset management
policy with relative proportions long term and short term finance used by company,when the working capital financing policy uses high level of current liabilities as percentage of total liabilities. It is useful to divide currents assets into permanent current asset fluctuating current assets.
Permanent levels of current assets may have a increase effect on the firm profitability whereas working capital needed to supports the level of sales
The fluctuating component of working capital is used for daily cash flow fluctuations. This short-term requirement is typically financed from a short-term source such as an overdraft facility, which can be drawn on and repaid easily and at short notice.

There are some risk that will come the Short-term debt financing are a type of debt that borrowers must usually pay back within a year or less, which can provide quick access to cash. While short-term payable can help borrowers through periods of low cash...

Other Papers Like Finance Statement

Acc 561 Financial Statements Differential Essay

937 words - 4 pages to the business practices. The balance sheet simply shows the difference between the company’s assets and liabilities, which equals the net worth of the business. Managers must review the balance sheet to determine how the company can repay creditors, finance operations, and if purchases can be made at that time. Conclusion The four financial statements used by accountants are the balance sheet, income statement, retained earnings statement

Finance Essay

427 words - 2 pages Steven W. Simmons Sr. University of Phoenix Business Structures Fin/571 – Corporate Finance Oscar Lewis August 16, 2014 Business Startup When making important business decisions, the concepts of corporate finance tend to be the best model to use. These concepts offer proven methods, which improve the financial success. Discussed below are basic corporate financial

2401 Exam 07

1340 words - 6 pages COMPLETION OF THE PAPER. NO EXAMINATION PAPERS SHOULD BE REMOVED FROM THE EXAMINATION ROOM OFFICE USE ONLY AFF/AFW2401 COMMERCIAL BANKING AND FINANCE AFF/AFW2401 Replacement Paper 24.5.07 Page 2 of 18 Question One “An Australian bank’s securities portfolio typically comprises securities with low credit risk and high marketability.” (a) Outline the main objectives of a bank’s securities portfolio and then explain the statement above making

Finanical Essay

906 words - 4 pages Accounting study resources. Retrieved June 27, 2013, from http://accounting-simplified.com/financial/users-of-accounting-information.html Users of Financial Statements. (n.d.). World Finance, World Economy . Retrieved June 27, 2013, from http://finance.mapsofworld.com/financial-report/statement/users.html

Boeing and Aircraft Management

912 words - 4 pages |   Elective Courses Course Code | Course Name | FIN 6263 | International Finance | FIN 6265 | Financial Statement Analysis | ACC 6110 | Financial and Managerial Accounting | ACC 6610 | Financial Accounting and Reporting | ACC 6810 | Islamic Accounting and Finance | INFO 6240 | Management Information Systems | ECON 6210* | Macroeconomics | ECON 6610* | Islamic Economic Thought  | ECON 6740* | International  Trade | ECON 6810

Week One Assignment

751 words - 4 pages decision model and decide on whether to go Hi-tech with his business -or- become a distribute for a Norway furniture company looking to outsource. The main finance information he must asses is the A=L+OE and R-E = income or loss The balance sheet includes a statement of the number of shares outstanding. Now a change in the shares outstanding in a company can change the earnings per share on the income statement. “This is how it works: given the

Export Finance

1977 words - 8 pages No., marks on packages, quantity, etc.Shut Out Advice - It is a statement of packages which are shut out by a ship and is prepared by the concerned shed and is sent to the exporter. Short Shipment Form - It is an application to the customs authorities at port which advises short shipment of goods and required for claiming the return.Export FinanceINTRODUCTIONCredit and finance is the life and blood of any business whether domestic or

Riordan Manufacturing Profit and Loss Statement

681 words - 3 pages . This is a large boost in the company’s value for shareholders. The increases of book value will stimulate market value of Riordan. Reference Khan, S. (Performer) (2009). Introduction to the income statement [Web]. Retrieved formhttp://www.khanacademy.org/finance-economics/valuation-and-investing/v/introduction-to-the-income-statement?v=Z7C4cz2HkeY Raiborn, C.A. (2010). Core Concepts of Accounting (2nd ed.). Hoboken, NJ: John Wiley &Sons Inc..

Basic Finance

877 words - 4 pages Statement of Financial Accounting Standards, (SFAS), (Block, 2005). This standard includes the income statement, the balance sheet and the statement of cash flows. With an understanding of the basic financial reporting elements and who is affected by finance, it is time to consider how financial information can be used to make decisions. As mentioned above, more detailed financial analysis yields information on performance. Companies may

Project Proposal

333 words - 2 pages 1. Introduction 2.1. Background of the study 1.2. Statement of the problem 1.3. Objective of the study This research study has general and specific objectives. 1.3.1. General objective of the study The general objective of the study is to assess the classroom management in higher education the case with the teaching-learning of psychology of the Addis Ababa university. 1.3.2. Specific Objectives The specific

ACCT 504 Accounting and Finance Managerial Use and Analysis

1091 words - 5 pages ACCT 504 Accounting and Finance Managerial Use and Analysis Follow Link Below To Get Tutorial homeworklance.us/downloads/acct-504-accounting-finance-managerial-use-analysis/ Description: ACCT 504 Week 1 , An Overview of Financial Statements and the Environment of Financial Reporting What is GAAP? What is the purpose of GAAP? What is the purpose of a Balance Sheet? What information does it provide? ACCT 504 Week 2, The

Related Essays

Health Care Finance: Financial Statement Analysis

729 words - 3 pages The Northeast Health Council, INC was established in 1993 to meet the primary healthcare needs of the residents of the Northeast through a not-for-profit community-responsible approach. A nonprofit analysis helps nonprofit executives and board members understand their organization’s underlying fiscal health and readiness for change and growth. The analysis is a critical tool for Northeast Health Council planning for program expansion

Marriott Case Study

759 words - 4 pages NPV communication skills IRR income statement Brand Management cash and fluid analysis brand manager variance analysis product manager consumer goods Accounting packaged goods accounting sales promotion audit marketing tax advertising finance type of industry (i.e. placement) accounting software multi-tasking CPA General Management Skills Strategic Planning leadership strategic planning

Defining Financial Terms Essay

666 words - 3 pages Defining Financial Terms 1. Finance: Finance is the science of the management of money and other assets. This is essential for businesses with importance to capital and holdings. (Titman, Keown, & Martin, 2011) 2. Efficient Market: Efficient market is defined as a price where the holdings show both current as well as relevant figures; the assets fundamentally have their actual prices. The affiliation to finance is that the statement of

Principles Of Accounting Essay

1094 words - 5 pages FINANCE, AN EXCITING CAREER School of Business, LeTourneau University Dr. Castro I have been asked by potential finance students some questions about finance such as what finance is and the difference between finance and accounting. Accounting: Accountant’s (sometimes called: Controller) primary function is to develop and provide data measuring the performance of the firm, assessing its financial position, and paying taxes. The