Inventory Management and Environmental Responsibility in Business
Optimal Order Model: Wilson’s Model
Wilson’s model helps determine the optimal volume or quantity of an order to optimize the inventory management system.
This model is applicable provided that:
- The company provisions batches of product (purchased from suppliers or made by the production department) of constant amounts, to be determined.
- The demand for the product (total amount purchased from the supplier or manufactured in production) is constant and known throughout the entire management period.
- The
Financial Ratios and Analysis for Businesses
**Rotation of Total Assets**
RAT = VTAS / TOTAL ASSETS
= 3000/2000 = 1.5 times
Measures the ability to generate transactions (sales), given the total assets. A comparison between companies in the same sector may suggest an insufficient number of operations that should lead the company to increase its level of sales, dispose of some assets, or perform a combination of both.
**Reasons for Debt Management (Leverage)**
The extent to which a company uses debt financing, or its financial leverage, has three
Read MoreFinancial Terms and Ratios: Definitions and Applications
Liquidity Definition
Liquidity refers to the immediate provision of financial and monetary funds to deal with all types of commitments. In credits, securities, or banking, liquidity means the property of being readily convertible into cash.
Profitability
A more precise definition of profitability is that it is an index that measures the relationship between earnings or profits and the investment or resources that were used to obtain them.
1. What is a Budget?
It is a plan to meet a target, expressed
Read MoreUnderstanding Annual Accounts: Balance Sheet, Profit & Loss
Understanding Annual Accounts
Accounting documents are mandatory for enterprises (except the cash flow statement in the case of SMEs). The documents that comprise the annual accounts are:
- A. The balance sheet
- B. The profit and loss account
- C. The statement of changes in equity
- D. The cash flow statement
- E. Notes
These documents form a unit and should be drafted in accordance with the law. Their purpose is to present fairly the assets, financial condition, and results of the company.
Formulation of Annual
Read MoreMarket Dynamics, Labor, Macroeconomics, and Public Sector
Market Rates and Competition Levels
Perfect competition: A large number of suppliers and demand, no company influences the price, the consumer benefits more.
Imperfect competition: Bidders have some pricing power.
- Oligopoly: The number of bidders is small for a large number of applicants.
- Monopoly: There is only one bidder and it has control over prices. It’s worse for consumers.
Features
Perfect competition: There are very few barriers to entry and exit. Each producer has a negligible portion of the
Read MoreInternational Trade: Advantages, Barriers, and Policies
International Commerce
International commerce fundamentally rests on the fact that nations have very different resources and diverse technological capabilities.
Advantages
Free trade is associated with the following points:
- Fostering competition
- Promoting specialization and technological advancements
- Increasing productivity and well-being
- Favoring quality improvement and cost reduction
Trade Policy
Barriers
- Duties: Taxes on imports.
- Quotas or import limits
- Export subsidies
- Dumping: When the national industry