Briefly explain how to assess the financial condition of an organization

  1. Briefly explain how to assess the financial condition of an organization. (Finance)

n order to assess the financial condition of an organization a minimum of three most commonly known financial monitoring reports need to be evaluated and these are:

1)      Assets and Liabilities in which an all-inclusive balance sheet bearing all the assets, liabilities as well as the net worth of the organization is made as this provides an almost near perfect view of the company’s financial status.

2)      Operating Budgets: For a detailed study of the company’s finance, the finance and accounting segment of the company must come up with a complete gist of the operating budgets of the company for the present as well as for a minimum of the last three years as this allows for the comparison of the budgeted performance against the performance in real as well as the identification of the trends indicating negative outlines.

3)      Profit Analysis: The finance and accounting segment of the company also needs to look at the profit analysis statements which can give solutions to a number of questions which crop up regarding the profits or losses the company is likely to bear.

If the above three fetch all the important fiscal information the financial condition of the company can then be assessed to a great extent.


Objectives of the Firm A Comparative Estimate

Objectives of the Firm: A Comparative ‘Estimate

From a comparison of various theories and real world examples, it appears that earning of profit -is an objective pursued by all firms, whether directly or indirectly, as it is necessary for long run survival of the firm.

  • Traditional theory of firm considers maximisation of profit levels as the sole objective of the firm,
  • Managerial theories aim at maximisation of managers, and owners, utility functions subject to a minimum profit constraint, and
  • Behavioural theories regard satisfactory level of profits as one of the many goals of the firm.

It can be observed that, though the models of managerialism differ in the factors included in the managerial utility functions, the deciding variables, and their predictions, they have the same basic assumption of maximisation of utility subject to minimum profit constraint. Baumol specifies that maximisation of sales is subject to minimum level of profit. Similarly, the objective of size maximisation put forward by Marris ensures a fair return on owners’ capital that generates a minimum profit level for the firm Williamsons model also considers a satisfactory profit level necessary for job security so as to maximise managerial utility function. Behavioural theories also state ‘satisfactory’ level of profits as an objective of the firm. The firm may attempt to obtain satisfactory profits because different aspiration levels and numerous goals of the firm rule out profit maximisation. Thus, the alternative theories of firm can be regarded as consistent with the objective of profit maximisation.

Since there are numerous goals that a firm can pursue in the short run, relating to sales maximisation size maximisation, stockholder value, stable market share, revenue growth, technology and customer satisfaction, it is necessary to precisely state a firm’s goal. Different goals can lead to different ‘managerial decisions given the limited amount of resources. For example, if the primary goal of the firm is maximisation of market share rather than profit, the firm might decide to reduce prices. If the main goal is to provide technologically advanced products, the firm might decide to allocate more resources to research and development. This would reduce profits of the firm in the short run but may result in increased profits overtime. Similarly, if the goal of the firm is to carry a complete line of product and services, it may choose to sell certain products in the short run, even though they may not be earning profits,

In real world, many firms have different short-term and long-term goals. For example, many Japanese firms pursued the short run goal of maximisation of market share (with an expectation of lower profits) to enter US market in 1970s while anticipating that in the long run, profits will increase. Case 2.2 shows that, though the short term goal of Cadbury India is maintenance of stable market shares, it is equally concerned on the margin front. Similarly profit after tax of HLL jumped in 1998-1999 due to short-term goal of growth pursued by the firm in 1990s. Both Harley­Davidson and Thomson are concerned about volume growth to reposition themselves with an eye on the profits.

Managerial Economics Theory, Economics Help, Macroeconomics Theory

Accounting for Fixed Assets

Accounting for fixed assets

Explain how should the changing value of a fixed asset be reflected in a company accounts?

The benefits which a business obtains with a fixed asset extend over many years. Like an example, a company must use the same piece of production machinery for several years, while a company owned motor car used by salesman probably has a shorter useful life.

By accepting that the life of a fixed asset is limited and the accounts of a business need to recognize the benefits of the fixed asset as it is consumed over several years and consumption of a fixed asset is known to as depreciation.

Concave Curve Concavity Test

Math Assignment Help

(i) If ƒ”(x) > 0 V x ϵ [a, b], then the curve y = ƒ(x) is concave upward on [a, b].

(ii) If ƒ”(x) < 0 V x ϵ [a, b], then the curve y = ƒ(x) is concave downward on [a, b].

Proof: (i) Let ƒ”(x) > 0 V x ϵ [a, b].

Let P (x0, ƒ(x0)) be any point on the curve y = ƒ(x). The equation of the tangent to the curve at P is

y – ƒ(x0) = ƒ(x0) (x – x0)

i.e. y = ƒ(x0) + ƒ’(x0) (x – x0)

is the ordinate of any point on the tangent line. Let A (x, ƒ(x)) be a variable point on the given curve. Let the ordinate at A cut the tangent line at A’.

If AA’ = Ø (x), then

Ø (x) = ƒ(x) – [ƒ(x0) + ƒ’(x0) (x – x0)]

 Ø’ (x) = ƒ’(x) – ƒ(x0

And, Ø” (x) = ƒ”(x)

It follows from these relations that

Ø (x0) = 0, Ø’ (x0) = 0

And Ø” (x0) = ƒ”(x0)

Since Ø (x0) = 0 and Ø” (x0) > 0 (∵ ƒ”(x0), Ø (x) has a minimum at x = x0)

Thus ∃ a δ > 0 such that Ø (x) > Ø (x0in ]x0 – δ, x0 + δ[, x ≠ x0

i.e. Ø (x) > 0, which means that A lies above the tangent at P.

Hence the curve y = ƒ(x) is concave upward on [a, b].

Similarly we can prove the second part of the theorem.

Damped Harmonic Mean

Damped Harmonic Mean, Physics Help

md2x /dt2 + r dx / dt + Kx = 0 

Or d2 x / dt2 + r/m dx / dt + k / m x = 0

Or d2 x / dt2 + 2b dx / dt + ωx = 0

B = r / 2m is called damping coefficient

Solution to the equation is

X = x0 / 2 e –bt [(1 + b / b2 –ω2e +1 √(b2– ω)2 + ( 1 – b / b– ω2) e –t √(b2-w2) ]

Note that x0 = x0e –bt is the amplitude at any time t.

If r/2m > √(K/m) motion is non-oscillatory and over damped

If r / 2m = √(K/m) motion is critically damped.

If r/2m =< √(K/m) damped oscillatory motion results.

If r = 0 undamped oscillations result.

Free or natural or fundamental frequency

Forced  (c) resonant (d) damped

Free or natural vibrations depend upon dimensions and nature of the material (elastic constants).

If a periodic force of frequency other than the material’s natural frequency is applied then forced vibrations result. For example, if y = y0 sin ωt was the equation of SHM of a particle and a periodic force p sin ω1t if applied then ω ≠ ω1 then, y = y0 sin ωt + p sin ω1t.

The resultant frequency is different from the natural frequenc of oscillation.

Resonant oscillations are a certain type of forced vibrations. If frequency of applied force is equal to the natural frequency of the source

That is y = y0 sin ωt + p sin ωt = (y0 + p) sin ωt

That is amplitude increases or intensity increases with resonance.

In damped oscillations amplitude of the vibration falls with time as shown.

Amplitude at any instant is given by

Y = y0 e – bt

Where y0 amplitude of first vibrations and y is is amplitude at time t and b is damping coefficient.