Notes, summaries, assignments, exams, and exercises for Economics for Primary education

Advantages and Disadvantages of Self-Financing

Self-financing allows a company greater autonomy and financial independence, improving its solvency by raising its own funds. It is the main source of financial resources for SMEs, as they do not need to compensate explicitly for these funds. However, this can become a drawback because these resources cannot be used to pay interest on profitable investments. Another minor inconvenience is the conflict of interest between shareholders and executives. The lower the profit to be shared, the greater the self-financing for new investments, but the lower the profitability for shareholders; therefore, a balance must be struck between both interests.

Short-Term Foreign Finance

Short-term foreign finance is...

Labor Law Reforms: Flexibility and Employment Security

Diversifying Subordinate Worker Contracts (JCO Statute)

1. 1. Diversification and atypical contracts

   Diversifying the subordinate worker (JCO) statute: there has been a move toward the legalization of a range of atypical contracts — temporary, part‑time, training, etc. This diversification of employment contracts altered the traditional stability principle and ended up affecting the industrial relations system as a whole. It is therefore unsurprising that legislators subsequently partially rectified this course. The reforms, timid at first, became a turning point that introduced restrictions on hiring aimed at promoting stability and fighting job insecurity.

2. 2. Relaxation of labor institutions

Abridged Balance at End of Year 200X

A) Non-current assets

200, (280), (290)

I. Intangible assets

21, (281), (291), 23

II. Tangible assets

22, (282), (292)

III. Investment property

2403, 2404, 2413, 2414, 2423, 2424, 2433, 2434, (2983), (2484), (2933), (2934), (2943), (2944), (2953), (2954)

IV. Investments in group companies and associates

2405, 2415, 2425, 2435, (2485), 250, 251, 252, 253, 254, 2553, 256, 257, 258, (259), 26, (2935), (2945), (2955), (296), (297), (298)

V. Long-term financial investments

474

VI. Deferred tax assets

B) Current assets

580, 581, 582, 583, 584, (599)

I. Non-current assets held for sale

30, 31, 32, 33, 34, 35, 36, (39), 407

II. Stocks

III. Trade receivables and other receivables

430, 431, 433, 434, 435, 436, (437), (490)

1. For sales and

Introduction to Business Entities

If we classify companies as independent legal entities according to the individual, these are divided into societies. Societies are formed when different people put in common work. The individual can be an individual entrepreneur, which includes anyone emancipated over 18 years old.

Specific Environment: The Industry

It consists of the field closest to the business that owns the company. Although it is difficult to define, it can be composed of:

• 1. Customers: People who buy products or services.
• 2. Financial institutions: Entities providing financial services that can facilitate loans.
• 3. Labor market: The company needs to have employees.
• 4. Infrastructure: Roads, highways, or airports.
• 5. Administration: Government

The Current Account Balance

The current account balance is divided into four basic components: goods, services, income, and transfers. The balance of goods, also called freight, uses basic statistical data collected and processed by the Customs Department of the State Tax Administration Agency, although it reworks them with appropriate adjustments.

The Services Balance

The services balance involves the following concepts:

• Tourism and travel
• Transport and communications
• Construction and insurance
• Financial and information services
• Cultural and recreational services
• Business, personal, and governmental services
• Royalties and intangible property income

In fact, in Spain, almost the entire amount of the services account is based on tourism.

The Income Account

In...

English Grammar: Conditionals

• Zero Conditional: Used for general truths and real situations. Structure: If/When + Present Simple, Present Simple. (Example: If you press this switch, the computer comes on).
• First Conditional: Used for likely situations. Structure: If + Present Simple, Will + Verb Infinitive. (Example: If I don’t get the job, I won’t move house).
• Second Conditional: Used for imaginary or unreal situations. Structure: If + Past Simple, Would/Could/Might + Verb Infinitive. (Example: If I were you, I wouldn’t apply for that job).

Essential Business and Financial Vocabulary

• Banking Operations: Set up a standing order, pay by card, deposit 100 in your account, enter your PIN, transfer money to another account, or withdraw 110 from

Return on Assets (ROA) Measurement Models

AECA Model

AECA considers the employed as the base for the measurement of Return on Assets (ROA). When an entity manages its trade payables as part of its trade policy, AECA is useful for estimating the investment requirements for the business. The AECA model reveals the effect of the cash policy on the net cost of finance (high liquidity negatively impacts the cost of finance).

DuPont Model

The DuPont model is very intuitive and useful for entities with a low level of liabilities and low financial expenses. Economic profitability here is meaningless because financial results distort the ROA.

PARES Model

PARES is more precise in measuring ROA because it avoids the disadvantage of DuPont by considering operating...

Joint Exercise: Engineering Economics

1. Rate of Return Analysis

Swagelok or Claimtech Enterprises manufactures miniature devices and valves. Over a five-year period, the product line costs were as follows: an initial cost of $25,000 and annual costs of $18,000. The annual income was $27,000. Calculate the rate of return for this product.

2. Equipment Selection and Investment

A company is adding a new operation and must acquire the necessary equipment. Two market alternatives meet the capacity requirements. The annual costs and initial investments are shown below:

The company's discount rate is 12% per year.

• a) Which option is best? Solve using CAN (Net Annual Cost) and CAE (Equivalent Annual Cost).
• b) What assumption is implicit in this resolution?