Finance

by admin on March 12th, 2013

filed under essay examples

In any financial set up, the flow of capital should be closely checked and this will ensure proper tracking of the assets. A business is recognized by three main things and these are the assets, liabilities and the capital. If the assets are more than the liabilities, the firm is said to be stable unlike when the liabilities exceed the assets. Certain measures have to be taken in order to maintain a good state of any business and this is mostly brought be having a good management.
In an economy, there are different kinds and levels of earnings ranging from the directly employed to the self employed. All these are important in doing the analysis and determining the performance of a certain region. In most countries, the self employed are the biggest in number making an average of 65%. This implies that the self employed are of most vital when doing the analysis in any given economy.
To be able to measure the performance of any firm, the following things are most considered and they directly influence the performance of the firm. The first thing and most important is the capital owned by the firm. In this case, the capital should be taken separately with the assets because assets are in two levels. These are the fixed and the current assets. The fixed assets are the premises and vehicles owned by the firm while the current are the things that the firm is able to sell directly. The other major thing is the liabilities in the firm and this should be the least for the stability of the organization. If the liabilities of affirm exceed the capital, then the firm is said to be operating at a loss. If this is not rectified the firm may be forced to close so as to meet the liabilities and pay its creditors.

In most of the developed nations, the firms are able to operate and make huge profits compared to less developed firms. The government also has a role to play in ensuring that the firms maintain their good standards so as to maintain and keep the economy running. The government can put up some legal requirements so as to regulate the firms within its economy. This should be done through issuing of licenses only to those firms that meet the standards put by the government.
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This will ensure that the firms operate within the required standards giving the best to the growth of the economy.
The other major factor in a business is the level of expenses and the liabilities. Through proper management, such cases of increase in liabilities can be avoided and this will help to keep the good image of the firm. In cases where the firm is not able to make profits, the firm can sell some of its fixed assets so as to make funds to keep it running. The firm can also invest to the public through selling its shares to the people. Through this move, the organization will be able to get funds to run its operations. The funds can also be used to expand then firm by increasing its operations.
If a firm succeeds in its operations, it becomes a benefit not only to the shareholders but also to the government. The firm will also benefit from the funds if its shares are bought in large amounts and such funds can be used to expand the operations in the firm.
In conclusion, the stability of any economy is determined by the cash flow in and out of the country. The firms in the economy of a country play a major role in maintaining the standards of their economy.

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