Notes, summaries, assignments, exams, and problems for Economy

What is Recommended for the Company's Shareholders?

A negative yield indicates that the financial returns from our assets are less than the cost of capital. Therefore, considering the company's viability, it is crucial to increase profitability, especially via the sales margin, which has deteriorated remarkably in recent exercises. Another solution, facing third parties like financial institutions, could be to increase the level of equity, thus reducing the company's indebtedness. By having less debt (and having profitability below the cost of capital), the financial profitability would automatically improve. However, this would be a fictitious improvement. It would improve the financial profitability of the company, but not that of the shareholders.... Continue reading "Improving Company Profitability and Shareholder Value" »

Classification of the Sources of Financing

Funding is used to obtain financial resources (money) to cope with the expenses and investments that the company needs to develop its activity. While selecting the most appropriate financing instruments, the cost, time, and purpose will be taken into account.

Two Types of Financing

Own Funding (Net)

Own funding sources belong to the company or its owners.

Advantages: No cost to the company.

Disadvantages: No sharing of profits or dividends, or reservations.

• Resources obtained: Profits.
• Grants: Funds received from public agencies and private losses.
• Enrichment of self: The distribution of reserves.
• Autofinancing maintenance: The funding is aimed at maintaining domestic production capacity.

External Funding (Liabilities)

Key Economic Concepts and Systems

Technology: Refers to the methods used to combine various factors of production to create a good or service.

Production Possibilities Frontier (PPF)

The PPF illustrates the maximum quantities of goods and services that a society can produce within a given time period, considering its available factors of production and technological knowledge.

Economic Growth

Economic Growth is the increased value of the production of goods and services by a company or economy over a period of time.

Productivity

Productivity is the relationship between the quantity of goods and services produced and the factors used in their production.

Concepts Illustrated by the PPF:

• Scarcity of Resources: Limited resources determine the number of

Job Offer

Understanding the aggregate job offer involves analyzing different curves that indicate the quantities of labor individuals are willing to exchange for a determined wage. This is closely related to the population. If there are many births, this causes an increase in the job offer. Conversely, if births decline, the population stagnates or falls, leading to a decrease in future labor supply.

• Migration will cause a drop in the labor supply in the country of origin and an increased supply of labor in the destination country.
• Societal values play a significant role in labor. One consequence of the equality of women and their changing roles is the incorporation of female social work outside the home. This causes an increase in labor supply.

Key Economic Concepts

Assumptions: Scenarios are taken as certain without testing them. Model: Partner assumptions and develop theories. Microeconomics: This branch of economics studies the behavior of individual entities (market, household). Macroeconomics: This is the behavior of the economy in general (unemployment, inflation). Positive Economics: Explains and analyzes the causes of economic behavior. Normative Economics: What should be. Factors of Production: Factors of production (goods or services) and primary products that are consumed. FP: Land, Labor, Capital and raw materials.Shortage: Limitation of resources. Economic good: A limited range.

Opportunity Cost: When we decide to use a resource in one way and not another. PPF: Maximum

1. MINIMUM STANDARDS

Rule 102 of the ILO: 100% of the workforce should be protected for at least 20% of the economically active population (PEA). 50% of the total population protected (PTA). 100% of the polar groups (risk groups), the very old or very minor (GP). 100% of excluded groups.

1. Describe the characteristics that motivate the German model and the English model.

   German model:

   The industrial revolution - Public assistance by Asin - there was not a labor law - the concentration of labor - Accidents at work.

   English model:

   - Unemployment - housing - death - the German model is limited to persons who had an employment relationship.

   Bismarck Model: Characteristics

   1. Tripartite
   2. Governance
   3. Specialized
   4. Compulsory employer and employee contributions

2. English Model:

Product Cost

Acquisition

Purchase of primary materials and other resources + cost of the procurement function - Discounts, commissions, and development shopping.

Storage

Costs originating from holding stock in the warehouse.

Manufacturing

Costs generated at different levels of the manufacturing cycle (transforming primary materials into completed products).

Cost Imputation to Product

Direct Costs

Costs that can be identified with the specific product that caused them.

Indirect Costs

Common costs that are not attributed to any particular department or product.

Semidirect Costs

Costs that cannot be applied directly to a product but can be allocated to a shop, section, or department.

Cost by Level of Activity

Fixed Costs

Costs incurred to make the company operational.... Continue reading "Product Cost, Imputation, Activity Levels, and Order Points" »

NIC / State Cash Flow: Objective

This Standard requires companies to provide information about historical movements in cash and cash equivalents through a cash flow statement classified into operating, investing, and financing activities.

Scope

Companies must prepare a cash flow statement following this Standard's requirements, including it as part of their annual financial statements.

Benefits of Cash Flow Information

The cash flow statement, used with other financial statements, helps users evaluate changes in a company's net assets, financial structure (liquidity and solvency), and ability to adapt to changing circumstances by modifying receipts and payments. It is useful in assessing the company's overall financial health.

Definitions

• Cash comprises

Economic Activity: Production, Distribution, and Consumption

Economic activity is the process by which we obtain products and services that cover human needs. It has three phases: production, distribution, and consumption. The economy is the science that studies the goods and services to be produced, the amount, and investment.

Economic Sectors

• Primary sector: Designed to obtain food and raw materials.
• Secondary sector: Transforms raw materials into processed products.
• Tertiary sector: Services.
• Quaternary sector: Includes research, management, and information processing.

Economic Concepts

• Profit: The difference between expenses and income.
• Good: An object that satisfies a need and has a value.
• Service: A provision intended to satisfy a need.
• Cost of

Market Exchange Mechanisms: Market and Money

Marketplace: A set of allowed activities for the sale and purchase of a product made to put the reach of a buyer. Money: Allows every person to specialize in specific tasks because a wage will allow them to buy other goods. Demand: Many defendants are willing to buy at a certain price.

Factors Conditioning Demand

• Price: The lower the price, the greater the product demand.
• Prices of related goods:
  • Complementary goods: Goods that are consumed jointly. An increase or decrease in price implies a variation in demand.
  • Substitute goods: Using one means leaving others that fulfill the same need.
• Disposable income or purchasing power: Determines the product quality and quantity that a consumer will demand.
• Types