Although the Sarbanes-Oxley Act was passed by Congress for positive reasons, there are many disadvantages that come along with it. A major issue is the cost of regulation, especially for smaller companies. Expanding internal controls delay the timeliness of financial statements by adding processing time to accounting functions. To follow the SOX, companies would need to separate duties, causing an increase in personnel. The SOX also calls for additional audits which increase business costs.
Economic costs of deflation- deflation has proved to have several economic costs, the main cost is that it encourages differed expenditure where people’s expectations change and they delay spending in the hope of getting a better deal. This then results in a decrease in AD causing business revenues to fall and confidence to decrease delaying business investment and cutting costs, i.e. increasing unemployment, all of which could slow economic growth and force a recession as evidenced in the 1930s depression. Additionally deflation increases the real value of debt leading to
This would increase the costs and result in the firms passing on the costs to the consumers, this would increase the prices of the goods causing negative externalities and discourage them from being bought. If there is an over production in the goods due to negative externalities, it means (s) has shifted to (s1). Which results in too many goods being supplied out to the public. The prices are also very low which makes it easier for them to buy goods, especially those with lower income. At the point the social cost [s1] is not taken into account only the private cost is.
Therefore, company A needs to stop making this product. Although we can argue that if company A could reduce the cost dramatically, it can become profitable. However, as the demand of its headphones is shrinking and there are so many suppliers (due to low barrier of entry), there will be great price pressure on the product, as explained by William F. Samuelson and Stephen G. Marks (2010). The price reduction may over shallow the possible cost reduction the firm could achieve. Susan Schreter’s second step is to target new customers from within groups.
This action allows success for both businesses and consumers alike. The opposite would increase the reserve requirements having a negative effect on consumers and businesses causing a downturn in the economy. Effective use of reserve requirements ensures that the correct amount of money is flowing through the economy at any given time. Scenario 2 In 150 to 200 words, explain your reasoning for the way you are planning on using the Discount Rate. Be sure to address the following: 1.
“For instance, the fall in the wage lowers people’s income and thereby reduces demand. That reduction may feed back to firms and reduce the demand for their goods, which might reduce the firms’ demand for workers” (Colander, The Limitation of Supply/Demand Analysis, 2010). “If these effects do occur, and are important enough to affect the result, they have to be added for the analysis to be complete. A complete analysis always includes the relevant feedback effects” (Colander, The Limitation of Supply/Demand Analysis,
At this time they would need to provide cheaper price to attract their consumers and to increase the demand. They would have to reduce the number of staffs as it may become difficult to pay wages. This leads to rise in unemployment. During recession businesses also tries to get loan from the bank and the bank wants to see their financial statements and if they find out that the business is not capable of paying the money back then they won’t lend any money therefore, the business may have to find new way of catching customers attention. For instance, they may be able to start up with a new idea.
Willow Company is must reduce its inventory levels and sell inventory at a faster rate to improve the inventory turnover closer to 30 days. Due to the negative cash flow, Willow must explore the opportunity to manage its inventory levels relative to sales. The greater the inventory levels, the higher sales must be, otherwise additional storage and other holding costs will be incurred to cause further deterioration in its cash position. Cash will be invested into unsold inventory that is generating no return while remaining unsold. In addition, there will be the opportunity cost of not having cash available for more useful requirements i.e.
Protectionism endanger a consumer’s right to choose from a wide variety of goods and services. The defense argument is that it protects higher prices, lower quality goods, economic stagnation and among other things. It is a form of purism when it comes to the trade barriers being in place. It is defended that is in place because consumers to purchasing foreign made products will cause unemployment here in America. The theory is that jobs are lost when we are tempted by cheap foreign goods.
Q2 What cost savings do you predict from the Charlotte Pilot? The centralization pilot program has advantages over the usual decentralized structure in terms of saving cost. In declining economic environment and increased competition, centralization has the potential to reduce the dormant staff especially the multiple credit managers who are allocated the same branch office. In addition, centralization will ensure that Ferguson rides on the informal performance ranking. Duplication of duties occasioned by decentralization consumes much of Ferguson revenue and thus the intended centralization will eliminate this weakness.