On the other hand, the fall in consumption does heavily depend on where the fall is. If the fall in consumption is for domestic goods than this will have the reverse effect. The deficit will get worse as more money is being spent on imports in comparison to exports and so the the value of exports - imports will be much lower or a negative number. A fall in investment abroad will decrease the current account deficit because the difference between what you are spending money abroad on and what you are saving is not so far apart. Less investment abroad means that more money can be spent in the UK economy which greatly effects the current account.
This would increase the costs of goods sold and lower the net income for the company for that accounting period. The company would have to pay less tax on the lower net income. If the FMCG decided to use the FIFO method, the costs of goods sold would be lower and the net income would be higher. Thus, the company would have to pay more tax at the end of the accounting period. Low income tax payments are why one-third of U.S. companies use LIFO (Harrison, Horgren, & Thomas, 2010).
This is obviously beneficial if the business’ are making profit, but it could be argued that a business should not be making profit, but instead charging lower prices to consumers initially. This is also an issue if the business’ are underperforming, then the taxpayer would essentially be paying for money to go into the business’ to get them back on track. In the example of railways, public ownership could lead to lower prices to consumers and a smaller amount of negative
To begin with, raising the tax will bring in more money to the government from since demand is inelastic for cigarettes and people will keep on buying them. The extra amount of income could be used to help the well being of the country and to provide more public goods. Also, cigarettes are a demerit good, a good which is considered unhealthy or damaging in some and can be physically harmful to the consumer and other surrounding, so when price increases, demand will fall. Even if it is a small fall in demand, it is most likely to be for the young smokers to demand since they have less income than adults. If more young smokers quit, the healthier the next generations will be since smoking is a main reason behind a lot of health issues including lung
This is because when taxes are increased a smaller amount of income is retained giving people the incentive to declare lower incomes to the HMRC so that they fall into a lower tax bracket. Moreover people may take incomes as a share option. This is because capital gains tax is at a flat rate of 18% therefore much lower that income tax allowing people to retain more of their incomes and enjoy better living standards. This will result in a reduction in the government’s tax revenue as people are paying less tax, which will lead to further increases in the deficits. Secondly high taxes create disincentives to work and this can be analysed through income and substitution effects.
However, the company must be careful because a too big of a ratio can eventually lead to bankruptcy (Investopedia). The inventory turnover ratio for Nestlé is lower than Hershey’s because Nestlé either has lower sales or excess inventory. The total asset turnover for Hershey’s is also higher; this means that it is more efficient in using its assets in generating sales. As a result of a higher total asset turnover, the gross profit margin is lower than Nestlé’s (Investopedia). The return on assets and return on equity ratios are also better for Hershey’s because the company is making more money on less investment then Nestlé.
Alternatively, the Government could introduce a free market supply side policy such as reducing the power of trades unions. If unions are powerful, productivity may be lower due to frequent strikes and disruptive working practises such as working to rule. If union power is reduced it helps reduce time lost to strikes, increases labour market flexibility and therefore should help increase UK exports. A third supply side policy could be increasing labour mobility. The nature of the UK housing market means that it is often difficult for workers to move to areas where jobs are available.
Walgreen’s operates their inventory on a last- in, first- out method to measure their inventory and costs of goods sold. This is a conservative accounting choice for management during the current period of rising prices. Even though we are not experiencing as drastic of price increases as in the past because of the economic environment, LIFO will portray a more conservative gross income and balance sheet. It is also beneficial for tax purposes because of the increase of cost of goods sold. As a result of the increase of cost of goods sold, income before taxes declines and Walgreen’s pays less income tax than if they were to use the first-in, first-out method.
The reason being as more of a certain good is consumed, it will begin to provide less utility to the consumer. This means that and extra $1 income would be of more worth to a low income earner than to a high income earner. This suggests that a more equal distribution of income will be beneficial to the total utility. Unfortunately, it is extremely to gain an accurate assessment of relative
A large factor of how income is distributed is based on luck. This tax also benefits the lower class tremendously since if the tax would be distributed evenly the lower class wouldn’t be able to pay taxes and would have a greater load on their hands. Payment of taxes is based on the opportunity to pay a certain amount of taxes if the lower classes had the opportunity to pay heavy taxes they would have to, but they can barely afford to pay bills let alone taxes and the wealthy want to take away money that people don’t even have. It many seem unfair to the upper class, but this system actually benefits them.