Cash Flow Management and Financial Ratios
Cash Flow Management: Shortfalls and Surpluses
When There is a Shortfall:
- Negotiate with suppliers to delay payments.
- Accelerate the recovery of receivables.
- Conduct special promotional spot sales.
- Solicit bank loans or credit.
- Sell fixed assets that are not essential for the development of activities.
When There is a Surplus:
- Prepay bank debt to save on interest.
- Take advantage of treasury cash to buy, obtaining better prices and discounts.
- Delay customer charges to increase sales and future profits.
- Make
Understanding Trade Policy: Tariffs, Effects, and Implications
Understanding Trade Policy: Tariffs and Their Effects
While free trade generally benefits all participating countries, trade policies are often used to influence trade relations. Common trade policy instruments include tariffs, fees, regulations, technical or administrative procedures, and controls.
What are Tariffs?
A tariff is a tax or levy imposed on goods crossing a national border. The most common type is the import tariff, while export tariffs are less frequent.
- Ad Valorem Tariff: A tax specified
Demand, Supply, and Cost Concepts in Economics
Demand and Its Determinants
1. Shortage in the future = increased consumption.
2. Veblen effect: Status symbols (e.g., diamonds) = high price = high consumption & vice versa.
3. Ignorance = more consumed even if prices are high.
4. Perceptions about quality = better quality = higher price.
5. Necessary items: Irrespective of price rise = consumption remains the same (e.g., life-saving medicines).
6. Inferior goods: (Public perceptions of goods – assume it is inferior) – when prices of such goods
Read MoreEstimating Construction Resource Requirements and Costs
Physical Resource Requirements
Question 1: Identifying Resources for a Timber Roof Frame
List and describe the physical resources (direct labor, subcontractors, and plant) you would select for constructing a timber-framed, two-story house roof frame.
Physical resources include:
- Material: From the Bill of Quantities
- Waste: Based on published rates of experience
- Direct Labor: From published output rates (labor hours per unit), net unit rates, and Safe Work Method Statements
- On-costs: The costs of employment,
Understanding Balance Sheets, P&L, and Financial Ratios
Balance Sheet
Assets
Non-Current Assets
- Tangible Assets:
- Land and Natural Resources
- Buildings
- Plant
- Machinery
- Furniture
- Computer Equipment
- Transportation Elements
- Intangible Assets:
- Patents
- Software Applications
Amortization: Represents the decrease in value of fixed assets due to use, aging, etc. There are two types: Amortization of Tangible Assets and Amortization of Intangible Assets. The purpose of depreciation is to recover the invested money.
Current Assets
- Inventory: Raw materials, finished goods, merchandise.
Understanding Commercial and Tax Law in Spain
Commercial law is a collection of laws that regulates a company’s economic activity. It handles issues such as enterprise, entrepreneurship, business legal entities, accounting, and advertising.
Obligations Under Spanish Commercial Law
Spanish Accounting Law
Any entrepreneur should register all financial movements chronologically, create balance sheets and warehouse inventories, and maintain proper accounting. Commercial societies should have a minute book that records agreements made at annual general