Value Added

Introduction Conventional financial reporting shows the firm’s disclose of the financial position of a firm (balance sheet), the financial performance of the firm (income statement), and the movement of cash flow (cash flow statement) (Riahi-Belkaoui, 2004).Advertising We will write a custom essay sample on Value Added specifically for you for only $16.05 $11/page Learn More Although these statements are very useful over time, they fail to give important information about the total productivity of the firm and the share of each team involved in the management of resources: shareholders, workers, government, suppliers, customers, and other stakeholders (Riahi-Belkaoui, 2004). Therefore, this paper will attempt to show firm’s value addition and how it is distributed to the stakeholders. Value Added According to Haslam and Neale (2000) value added is the accumulation of the wealth earned through productive utilization of the company’s r esources such as assets before it is distributed to the owners, government, customers, creditors, employees, suppliers and the public in general. Value added as defined by Riahi-Belkaoui (1992) is the return generated by the firm to its owners, government, workers, and capital providers such as creditors, supplier and bondholders and it can be calculated by adding earnings before tax to the financing costs (interest) and payroll costs. Similarly, value added may be calculated by subtracting costs incurred during purchasing of the services or goods from the sales revenue. Additionally, the difference between output and input explains effectively the concept of value added, and in reality this is what is used by the government in calculating value added tax. Wood (1978) defines value added as a measure of the wealth added or created and distributed by the company through an activity like Corporate Social Responsibility (CSR) to various firm’s stakeholders such as shareholders, government, creditors, suppliers, customers among others. Thus, it measures net instead of firm’s gross output. In addition, International Labour Organisation, IMF, OECD, UN, Economic Commission for Europe and World Bank (2004) defines value added as the variance between firm’s output value created in a certain period and the firm’s input value acquired or purchased from various companies in order to produce the output. In the form of an equation, value added can be illustrated as shown below; Value Added = Value of the Outputs – Value of the InputsAdvertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More There are two ways in which value added can be classified; Gross Value Added (GVA) and Net Value Added (NVA). GVA is determined by adding up sales revenue to any other income generated from various sources or services less purchased services or raw materials from other c ompanies (Mandal and Goswami, 2008). GVA can be used to gauge contribution towards the Gross Domestic Product (GDP) made by the industry or sector or individual producer (OECD, 2001). On the other hand, NVA is the variance between depreciation and the GVA. NVA may also be determined through the producer or manufacturer prices or factor prices or basic prices (Eurostat, 2010). To begin with Cox (1979) proposed two methods that can be used to calculate value added; additive method and subtractive method. Under the additive method, value added is determined as follows; Value Added = Profit/Earnings before taxes + Employees’ cost + Depreciation + Taxation + Interest charges The additive method equation illustrates how wealth can be distributed to the creditors, employees, and government among other stakeholders. On the other hand, subtractive method describes how wealth is earned or created and the following formula can be used to determine the value added; Value Added = Sales + Services’ income – Cost of sales/ Services purchased This means that, in order to determine the value added one must use income statement, which indicates the loss or profit made by the company over a certain period like one year or quarter of semi-annual, and how it is calculated as well as appropriated. And just like income statement, value-added statement indicates value added by the firm over a period of time as well as how it is determined and appropriated to the stakeholders.Advertising We will write a custom essay sample on Value Added specifically for you for only $16.05 $11/page Learn More For instance, returns allocated to employees include salaries, wages and the staff expenses; to government include corporation tax and income tax; to shareholders is dividends; to business is retained profits; and financiers is the share capital’s dividends and interest on the loan. In simple terms, profit is determined by subtracting all business costs from sales. While value added is variance between revenue obtained after selling the company’s product and services and raw materials costs purchased to manufacture these services or goods. Indeed, profit is the value added less the costs of value addition by the firm. An Example To show the Value-Added Statement Analysis, BT Plc is used as an example. The following table show the value added that is computed from the BT Plc financial statements for the period ended March 31, 2011. From the statement, the BT Plc’s value added is  £10,355 million, which also applies to various stakeholders.  £ â€Å"million† Sales Revenue/Turnover 20,449 Less: Cost of materials/ services bought 10,094 Value Added 10,355 Applied To Employees (Wages Salaries) 4,798 To Providers of Finance (Lenders – Interest) 861 To Providers of Capital (Shareholders – Dividend) 543 To Government (Payment of Corporation Tax, Income Tax) 21 3 To Maintenance and Expansion of Assets (Depreciation Retained Profits) 3,940 10,355 Table 1: BT Plc Value-Added Statement The value-added concept is an important tool for appraising the firm’s performance whose operations have an effect on the economic and social well-being of the society. It recognises various contributors who have made contributions to the process of generating the value like the government, shareholders, financiers and employees. Relationship between value added, cash flow and profit and firm’s sales performance A strong relationship exists between the firm’s financial statements, in that the value added, profit and cash flow are strongly related to the firm’s sales performance. First, the firm’s profit depends strongly on the firm’s sales performance as well as its target. This means that if the BT is not making any profit one would easily look at the firm’s sales budget and performance. And if sales pe rformance is poor, this implies that the firm is making losses. Conversely, in case the firm is more profitable this means that the firm sold more units and exceeded its budget. But at times high profit does not imply high sales. For instance, the firm may purchase products from the supplier at a lower price, with an expectation that it will sell the same to consumers in huge volumes at a higher price, thus expecting high profit. If the firm does not sell the expected volume, this means that the firm may end up with obsolete stock and losses (Heshmati and Loof, 2006).Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More BT Plc requires capital in order for it to survive as well as for it to undertake future investment in new assets. The cash is used to purchase resources used to manufacture services or goods, which are then sold. This process is known as cash-flow cycle, which involves the movement of firm’s incomes and expenditures for a period of time. Cash flow as a vital part of the firm is linked with firm’s sales performance. In case the firm sells services or goods, the volume of sales determines how much is earned by the firm. Thus, if the firm is profitable, the firm’s sales performance is excellent resulting to extra addition of cash to cycle of the cash flow. On the contrary, if firm’s sales performance is poor, the firm may be unable to put more cash to the cycle of cash flow as it had anticipated. Therefore, most businesses fail as a result of inadequate cash flow instead of profitability (Heshmati and Loof, 2006). The value-added statement mirrors how BT Pl c creates wealth and how wealth is distributed to the stakeholders. Revenue is generated when services or goods are sold, not when the cash is paid. Hence, for credit sales, the time of sales is before the cash is required. The revenue can also be considered as the starting point for profit. However, the precise relationship is not necessarily linear that is every dollar of extra revenue does not necessarily translate to an extra dollar of profit for two main reasons: (1), the presence of indirect variable and fixed costs and taxes. Different firms have different levels of gearing indirectly variable costs that normally vary non-linearly with the output, while the fixed costs, which are measured as a percentage of total costs are operating costs like rent, will be constant. Thus when sales increase, the profit will as well increase (Heshmati and Loof, 2006). (2), as a business grows and increases its profit, it requires more capital. However, the cost of capital does not stay the sa me because of the amount of risk that capital providers perceive in investing in the company. This means that larger firms represent lower risk. Therefore, it can be seen that there is a non-linearity between profit and EVA and, hence, a non-linearity between sales and EVA (Referenceforbusiness, 2010). Finally, net profit will turn into net cash flow, but over any time period there is a fluctuating relationship, which is largely influenced by economic circumstances. For example, during economic downturns, demand decreases and BT may be forced to delay payments to their suppliers as a result of decreased purchasing power. References Cox, B. 1979. Value added: An appreciation for the accountant concerned with  industry. London: Heinemann. Print. Eurostat. 2010. Glossary: Gross Value Added at market prices. Web. Haslam, C. and Neale, A. 2000. Economic in a Business Context. London: Business press. Heshmati, A. and Loof, H. 2006. Investment and performance of firms: Correlation or   Casuality? CESIS Electronic Working Paper Series, Paper No.72. Web. International Labour Organisation, IMF, OECD, UN, Economic Commission for Europe and World Bank. 2004. Producer price index manual: theory and practice. Washington DC: IMF. Mandal, N. and Goswami, S. 2008. Value Added Statement (VAS) – A Critical Analysis: A case study of Bharat Heavy Electricals Limited. Great Lakes Herald, 2(2):98-120. OECD. 2001. Gross Value Added. Web. Referenceforbusiness. 2010. Economic Profit. Web. Riahi-Belkaoui, A. 1992. Value added reporting: Lessons for the United States. New York: Greenwood Publishing Group. Print. Riahi-Belkaoui, A. 2004. Accounting Theory, 5th edition. London: Cengage Learning EMEA. Reprint. Wood, E. 1978. Added value: The key to prosperity. London: Business Books. This essay on Value Added was written and submitted by user Justus Rowland to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.

Food Security †Living in Hunger

Food Security – Living in Hunger Free Online Research Papers Food security describes a situation in which a human being does not have to live in hunger or fear starvation. According to the (1996 World Food Summit) food security exists when every person has physical and economic access at all times to healthy and nutritious food in sufficient quantity to cover the needs of their daily ration and food preferences in order to live a healthy and active life. As a concept it can be applied at many levels: global, national, household and individual. World-wide around 852 million men, women and children are frequently hungry due to extreme poverty; while up to 2 billion people lack food security due to varying degrees of poverty.(FAO2003). Food consumption levels reflect on poverty, families that don’t suffer from chronic hunger are the ones with financial resources, while the ones that suffer most are the ones without any financial resources and are also that part of the population that will be affected most in case of food shortages or famine. Food insecurity can be categorized either as chronic or transitory. Chronic food insecurity translates into a high degree of vulnerability to famine and hunger, ensuring food security presupposes elimination of that vulnerability. Chronic hunger is not famine, it is similar to under nourishment and is related to poverty, it exists mainly in poor countries. Food security as an issue became prominent in the 1970s and has been a topic of considerable attention since then, thirty definitions of it have been identified by Maxwell and Frankenberger (1992). Originally there was a tendency to understand the issue of food security only from a supply point of view. In 1979 the World Food Programme Report conceptualized food security, equating it with an assurance of supplies and a balanced supply-demand situation of stable foods in the international market. The report also emphasized that increasing food production in the developing countries would be the basis on which to build their food security. This would mean that the monitoring by famine early warning systems for food insecurity should focus on the availability of food in the world marketplace and on the food production systems of developing countries. However, global food availability does not ensure food security to any particular country because what is available in the world market (o r the surplus in the US or Canada) cannot be accessed by famine-affected people in African countries, as the economies of these countries, in general, cannot generate the foreign currency needed to purchase food from the world market. Three-quarters of the world’s poor and hungry are located in rural areas. These people depend directly and indirectly on agriculture and agriculture-related activities for their food and income. USAID proposed several key steps to increasing agricultural productivity which is in turn key to increasing rural income and reducing food insecurity. These key steps include: Boosting agricultural science and technology. Rising agricultural productivity drives economic growth. Improved agricultural technology is a key component for boosting productivity. This includes support to agricultural research and support to the application of improved technologies and practices. Developing domestic market and international trade opportunities. Expanding farmers’ commercial opportunities is critical for ensuring adequate returns. This includes improving domestic markets and international trade opportunities. Improving policy frameworks. Only with sound policies in place can domestic and foreign private investment and development assistance catalyze growth by helping people solve the problems that all too often keep them poor and food insecure. Securing property rights and access to finance. Asset distribution shapes broad-based progress because it determines the impact of the economic benefits. Asset distribution also contributes to empowerment, hence participation and ownership, by the larger proportion of the rural population. Protecting the vulnerable. Conflict prevention and resolution mechanisms and democracy and governance based on principles of accountability and transparency in public institutions and the rule of law are basic to reducing vulnerability in the short term and eliminate conditions that create vulnerability over the long term. Enhancing human capital. Better education and improved health contribute to greater scientific capacity, more productive farmers, and better decision-makers over a range of economic and non-economic activities. The agriculture, hunger, poverty nexus is also a very important link involved into ensuring food security, utterly removing hunger and poverty requires an understanding of the ways in which these two injustices interconnect. Hunger, and the malnourishment that accompanies it, prevents poor people from escaping poverty because it reduces their ability to learn, work, and care for themselves and their family members. If left unaddressed, hunger sets in motion an array of outcomes that prolongs malnutrition, reduces the ability of adults to work and to give birth to healthy children, and erodes childrens ability to learn and lead productive, healthy, and happy lives. This shortage of human development undermines a countrys potential for economic development for generations to come. Of the eight Millennium Development Goals, eradicating extreme hunger and poverty depends on agriculture the most. Millennium development goal’s one calls for halving hunger and poverty by 2015 in relation to 1990 and also halve the proportion of people whose income is less than $1 a day between this same period. Another method of achieving food security is the ‘‘Special Programme for Food Security.’’(SPFS) This is Food and Agricultures Organization’s flagship into achieving the above goals which is adopted by 105 countries today with donations of up to $800 million dollars. It assists countries, particularly but not exclusively Low-Income Food-Deficit Countries (LIFDCs), to improve food security within poor households through National Food Security Programmes (NFSPs) and Regional Programmes for Food Security (RFSPs). Their most current goal after an independent evaluation in 2002 is to move away from their exclusive focus on raising agricultural output, to finding ways to improve poor peoples access to food. New directions include locally supplied school meals, food for work schemes and capacity-building activities to improve agriculture, aquaculture, agroprocessing, animal health and irrigation techniques. It is also replacing the earlier trend for smal l-scale pilot projects with National Food Security Programmes which address the needs of a country as a whole in a more holistic and comprehensive way. Bibliography A global view of food security. Agriculture + Rural Development Singer, H. W. (1997). Agriculture, food security, nutrition and the Millennium Development Goals Von Braun, Joachim; Swami Nathan, M. S.; Rosegrant, Mark W. World Bank. World Development Report 2000/2001: AttackingPoverty. Oxford University Press, 2000. worldbank.org/ Food and Agriculture Organization of the United Nations fao.org An Active Learning Approach to Teaching About World Hunger MATTHEW KRAIN and CHRISTINA J. SHADLE. (2006) US AID usaid.gov/index.html World Food Summit fao.org/wfs/index_en.htm Household food security: concepts, indicators, and measurements: a technical review. New York, NY, USA and Rome, UNICEF and IFAD. Maxwell, S. Frankenberger,1992. Research Papers on Food Security - Living in HungerGenetic EngineeringAssess the importance of Nationalism 1815-1850 EuropePETSTEL analysis of IndiaMarketing of Lifeboy Soap A Unilever ProductDefinition of Export QuotasLifes What IfsThe Effects of Illegal ImmigrationRelationship between Media Coverage and Social andInfluences of Socio-Economic Status of Married Males19 Century Society: A Deeply Divided Era

Windshield survey of Los Angeles California Assignment

Windshield survey of Los Angeles California - Assignment Example In reference to public health, the community is usually viewed as the client. It is imperative that proper planning is done in addressing the welfare of a community. One way of planning is through surveys. This paper is a Windshield Survey of Los Angeles, California. Housing and zoning The policy of land use is how land is used by communities within their boundaries. This policy establishes density for zonal development and development intensity for industrial and commercial uses. The overall plan is to manage all uses of land occurring in Los Angeles County by providing the scheme on how the to plan and address challenges of land use that may be faced. The element of land use uses short-term programs and strategies of providing comprehensive and flexible guidelines for the decisions on county land use and future development. This element also identifies the policies and goals that guide the extent of land housing, general location of housing, and other land uses in the county (Todd, 2007). Transport One of the major means of transport are, air transportation as evidenced by the presence of airports such as Lax (Los Angeles international Airport) and Ontario international airport. Other means of transport are train and bus services between cities, ferry services for water transport, bus services within the city and walking on foot. Race and ethnicity The downtown consists of Asians, African Americans, white non-Hispanic, Chinese, Filipino, Mexican, Korean, and Indian among others. These groups are said to outnumber whites. Open space The open space has Los Angeles union station which is the major transportation Hub that converge railways and bus services. It also has a collection of shops, a museum, and eateries police departments, with their buildings, shopping malls, city hall and commercial banks. Service centers There are various service centers which look into the welfare of the parties involved. These include; AIDS Service Center, Korean American Family S ervice Center, Ori's Automotive Service Center, Chinatown service center, L.A. Gay & Lesbian Center. Religion and politics The main religious bodies include; Catholics, Pentecostals, Baptists, Lutherans, Jewish, Islam, Eastern, Presbyterian, Methodist, Episcopalian, and other Christians. The county has different political parties. (Brint, 2009) American independent party pledges to stop wars which are claiming lives of more Americans, stop impulse spending on foreign aid, do away with federal income tax, slow down immigration, stop illegal alien entering the country, defend national moral values, stop abortion, raise the standards of education, among other pledges. Communist party pledges to defeat the Bush administration agenda, ensure people’s wellbeing, and replace large business with labor to ensure that rights, expanding needs of the people and economic security are put on the forefront. Republican Party has a mission of winning elections. Reform party promotes job openi ngs, budget balance, alternative energy sources, debt repayment, military families’ fairness, and reform in healthcare, government waste elimination, finance reform campaigns and many others. Other parties include; Constitution Party, Democratic Party, Democratic Socialists , Green Party, Libertarian Party, Natural Law Party, Socialist Party (Peterson, 1994). Official Boundaries of the County The county boundary starts from the southwesterly of California to northeasterly of rancho Simi then to southeast of the township line. Stores and street people The county contains the largest number of homeless people in the whole nation. This is approximated to be