Owners put in their money to make a profit this is why it is important for them to track the sum of money they may have made in an accounting period. Usually a supervisor’s standing is related with the success of the company. When a business is making money the amount of money a manager makes will usually increase and they may also get a promotion. Income statements are also used to check the revenues and expenses of the company which allows managers to reduce their unnecessary expenses to make more profit. These income statements are also useful for outside users such as investors, creditors and the government.
The primary users are the 3 current owners including yourself who take an active role in managing the company. You would like the financial statements to be presented in such a manner as to indicate strong financial success and growth. You have plans to expand and possibly go public and having strong financial statements will enable you to attract the right investors and resources needed to make this happen. The more money the company makes the more you will benefit financially as the owners. It is important to remember that financial statements must be presented fairly and in accordance with accounting principles as it is evident here that there is a bias towards presenting statements in a financially strong way.
Scholars such as Friedman suggest that treating the economic responsibility as the most important responsibility of a business, is called a profit-maximising view, and “the social responsibility of a business is to increase its profits.” This kind of view states that a company should be operated on a profit-orientated basis, with its sole mission being to increase profits. This approach would seem to benefit stockholders, as well as stakeholders, as the stockholder is going to benefit from the profit made by the company and will gain something back from the company, however problems can occur when the businesses and companies do not balance their ethical responsibility, as they can therefore be perceived as greed and unable to balance their corporate social responsibility, and will cause a bad name for a business. So although the stockholder may also be gaining profit by doing this (what the company sees as doing the right thing) is not necessarily the right thing to do in terms of stakeholders. However, Friedman would argue that as long as the business is maximising its profit, that is the main point and so the loss of the stakeholders is less important. This argument can be deemed as weak as Friedman’s approach does not mean that stakeholders can be benefited alongside stockholders, and so disagrees with
This will assist the company in increasing their profits and it allows Brockley’s to invest more money if they need to. Budgets are important to any company, they help inform the business on whether or not they have enough money to raise the business and generate more profit. Budgets help businesses reach their goals and targets. Income increased to budget: A budget provides businesses with an outlook and structure for future plans. Income is an important area of budgeting, this because without income there is no money to work within.
Competitors – they will be only interested if the Business means “ASDA” is not doing so well as this will mean more business for them , because they are offering the same services within the same area. They can use the financial statement of “ASDA” as a “bench mark” for their own performance. Owners- they are the most important stakeholders, because they have established the business and they devoted a lot of their time for the company success. They are the stakeholders, who have the higher interest for the business to raise on profit and value. Employees and Managers- their interest is that the company provides them with decent live hood.
They work for the business directly and if something happens to the company their wages and job stability will be affected. This has created a vast interest by employees and their representative groups in information about the stability and profitability of their company. They are also interested in information which enables them to assess the ability of the enterprise to provide compensation, retirement benefits and employment opportunities. Additionally, managers may obtain bonuses when they exceed business standards, so they develop an interest in the successful advancement of the business. Investors, the providers of risk capital and their advisers are concerned with the risk inherent in, and return provided by, their investments.
We need to improve our company and make it better with the money we earned. The working capital flows into a cycle called cash flow. This is a cycle into, around and out of a business. This is the business’s life and the task is to help keep the cash flowing to use the cash flow to generate profits. If a business is operating correctly then it should generate cash surplus.
The reason organisation needs to control their costs properly would be that it would end up saving money on expenses and increase its revenue. This will help the company to increase its revenues and this would allow the company to invest more money if required. For example, the business should control its costs so that it saves money and by having the right amount of stock the business can then have the full benefits of selling those stocks and receiving cash which could be used for other areas of the business. In a business organisation, a budget represents an estimate of future costs and
It is important to remember that a loyal customer can be just as valuable than new one. This is because you do not have to spend as much time and money marketing to them because they already know what you offer them. And it goes beyond just having customers that are satisfied, you need to have customers that are loyal. Loyal customers tend to buy more and more importantly they talk more which means a whole load of free word of mouth advertising for your business or company. Therefore building a highly loyal customer base should be the foundation of your basic business strategy.
6 Social Responsibility within Company Q Social Responsibility within Company Q Daniel R. Beckerman Western Governors University WGU Student #000322976 For any given business, the greatest potential for revenue growth can be found through a mix of focusing on providing for the shareholders, as well as thinking of the stakeholders as a whole. This means focusing past short term profits and creating a plan that demonstrates a measure of social responsibility. Business reputation goes a long way towards creating how large a company’s customer base is going to be, and giving the appearance of not caring about the community can lead to a loss of customers and a loss of additional revenue in the long run.