Financial Structure, Profitability, and Solvency Analysis
Item 8: Financial Structure and Analysis of Balances
Profitability Analysis
The profitability of an investment measures the relationship between the benefit and the resources used to obtain such a benefit. There are two types of profitability: economic and financial.
RE = Return on Equity
RF = Return on Assets
RE = Profit / Assets
RF = (Profit – Interest on Debts) / Equity
The company’s goal is to maximize performance for its owners. The most attractive profitability for investors is the financial return,
Read MoreEconomic Growth and Development: Impact on Society and Environment
Economic Growth and Development
Unit 12: Economic Growth and Development
Economic growth refers to the continued increase in a country’s real output. When a country’s actual production increases, it raises the level of employment and income of its citizens, therefore increasing consumption. The state collects more taxes, which will raise revenue and increase public spending. The variables used to measure economic growth are real GDP and real GDP per capita.
Development occurs when there are a number
Read MoreBusiness Operations: Departments, Functions, and Processes
**Integration**
Integration is a business meeting in the human and material elements necessary to achieve the objectives of the company, within the framework of its organizational structure.
In selecting the principles to integrate staff, one must:
- Find items that fit the job, i.e., the right man for the right job.
- A post cannot cover two functions. In small enterprises, it is difficult to apply, and it goes on to be an ideal to be applied as soon as permitted by the material elements.
- Place each post
International Market Entry and Strategic Business Development
Unit 7: Strategies for Penetrating Foreign Markets
Selecting the Target Country
- Growth Forecast
- Economic Risk
- Political Risk
- Difficulties Operating in the Local Market
Entry Mode Strategies
- A- Exporting
- B- Contractual
- C- Direct Investment Abroad
A- Exporting
Exporting is the most traditional and simplest way to enter a foreign market. Production remains in the country of origin, from where different countries are supplied, and the product or service is modified if required by the foreign market. There are
Read MoreAccounting Transactions: A Comprehensive Case Study
1. Distribution of Profits After Taxes
If there are profits of €129,000 after taxes, they are distributed as follows:
- 10% to legal reserves
- 65% to voluntary reserves
- 15% to pay dividends to shareholders on January 1st
- 10% remaining
Journal Entry:
€28,000 (129) Retained Earnings to:
- Legal Reserve (112) €2,800
- Voluntary Reserve (113) €18,200
- Dividends Payable (526) €4,200
- Retained Earnings (120) €2,800
2. Payment of Dividends
Journal Entry:
€4,200 (526) Dividends Payable to Banks (572) €4,200
3.
Read MoreFinance Fundamentals: Impact on Individuals and Organizations
1.1 – What is Finance?
Finance affects the lives of all people and organizations.
- At the macro level, it is the study of financial markets and the financial system, nationally and internationally.
- At the micro level, studies are the financial planning of your organization, such as making decisions based on its balance sheet, evaluating and recommending the acquisition of assets, and profit maximization.
Finance, as the art and science of money management, involves virtually all individuals and organizations
Read More