Understanding Investment Concepts and Financial Ratios
Understanding Investment
The term investment refers to the act of postponing the immediate benefit of an asset for the promise of a more or less probable future benefit. An investment is a limited amount of money placed at the disposal of third parties, with the purpose of increasing the profits generated by that business project.
Key Elements of Investment
An investment involves several elements:
- One subject (the investor)
- A financial asset
- The renunciation of immediate satisfaction
- An asset in which
Trade Policy, Protectionism, and Global Commerce
Trade Policy and Economic Protectionism
Arguments for Protectionism
Arguments for protectionism include:
- A consumption sacrifice is desirable to support other national objectives.
- Support is given to special interest groups, e.g., farmers.
- Firms and workers know certain sectors where a duty on a product helps, but this can impose costs on other members of society.
Trade Policy Measures
Trade policy is specified in the following measures:
- Tariffs: A tax the government requires on foreign products in order
Key Aspects of Spanish VAT
VAT Liability
VAT liability answers the question: Who is liable for the tax?
- As a general rule, the supplier making the delivery or billing for goods delivered is liable for the tax. The initial taxpayer bears the impact; the final consumer is never the taxable person. This rule applies to established suppliers.
- As a special rule for deliveries made by a person not established on Spanish territory, the taxpayer is the recipient business. This is known as the reverse charge mechanism, contrasting with
Market Structures and Labor Economics Explained
Market Structures
Competition: A rivalry between several companies that sell the same kind of goods or services in that market.
Perfect Competition
Perfect competition is a type of market in which there are many small firms that produce a single, undifferentiated product, so none of the producers can influence the price at which they sell their product.
Market Balance: Short & Long Term
Short Term: Market conditions in the short run determine the behavior of all producers and consumers of a product.
Read MoreInventory Control and Turnover
Stock Structure and Size
The total stock should consist of:
- Presentation Stock: Stock items on display in the aisle.
- Reserve Stock (Normal Cycle): Stock unlocked to meet normal customer demand between the receipt of two orders.
- Safety Stock: A protection stock that seeks to prevent the shelf from being empty because of unexpected changes in supplier supply and/or customer demand.
Inventory Management Costs
1. Acquisition Cost
The purchase price on the invoice plus all expenses paid by the buyer.
2. Storage
Read MoreUnderstanding the Circular Flow of Income
Meaning of Circular Flow of Income
The circular flow of money refers to the process whereby money payments and receipts of an economy flow in a circular manner continuously over a period of time. The various components of money payments and receipts are saving, investment, taxation, loans, government purchases, exports, imports, etc. These are shown in a diagram in the form of current and cross-current in such a manner that the total money payments equal the total money receipts in the economy.