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Accounts Payable Management and its Impact on Profitability
Accounts Payable Management and its Impact on Profitability
The golden rule of balance sheet demands that the sum total of liabilities and shareholder’s equity of a company must be equal to the assets of that company. Despite this statement appearing to be obvious, most firms make very big errors whenever their balance sheet doesn’t balance properly. This leads to serious problems with financial projections. Accounts payable are what a company usually owes its vendors or suppliers from which it purchases its supplies and inventory. Accounts payable is often located on a company’s balance sheet. They are the current liability of any company and are clearly outlined on the right hands side of the company’s balance sheet. They are usually paid to the supplier within a maximum duration of one year.
Just like any liability or asset, a company’s unpaid bills can have a very significant impact on the overall profitability either negatively or positively. Accounts payable affect the profitability of a company through two major ways: company’s cash flow and the company’s relationship with its vendors or suppliers. Accounts payable can impact quite positively on a company’s profitability if one has the best practice in managing accounts payables. First, the company will be able to settle its bills on time. This appears to be a rather simple practice though a company that seldom practices it, never has anything going on well with it.
Secondly, if a company pays its bills on time, it is able to elicit trust between itself and its suppliers, irrespective of the number of suppliers it has. By building on the trust between the two parties, the suppliers will be able to provide it with inventory, other suppliers and even offer it better discount rates that will impact significantly on the overall profits of the company. Lastly, best practice in accounts payable management is to strive to facilitate processing of the accounts that should be payable with the least number of staff and amount of paper work. Smoothing out the company’s accounts personnel on payroll increases the profits of the company by a large margin by simply decreasing time spent on paper work and personnel. I strongly hold the view that slowing down payments of suppliers in order to increase the company’s bank balance is unethical and unprofessional. It can lead to deterioration of the existing cordial relationship and trust between the company and its suppliers and this may adversely affect the company future.
References:
Gill, A., Biger, N., & Mathur, N. (2010). The relationship between working capital management and profitability: evidence from The United States. Business and Economics Journal, 10, 1-9.
Capone during the
Al Capone during the Great Depression
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Al Capone during the Great Depression
Al Capone was one of the most notorious individuals within the United States who was a master of playing around the law and not getting caught. His criminal activities are recorded from 1919 to 1931, and this was the period of the great depression. Therefore, to some extent, he took advantage of this period to engage in criminal activities and earn a lot of money and other benefits he never deserved. Al Capone’s nickname was Scarface, a name he got at the Harvard Inn and later made valid by his brother, who slashed him across the face, making a permanent mark; thus, he was referred to as Scarface. Even though he was involved in many criminal activities, people loved him, which was contrary to the usual social behavior towards a criminal. This paper discusses the life of al Capone concerning crime, the great depression, and the love he got from the public, which is often deemed inappropriate.
Firstly the great depression affected the United States of America in considerable ways. It is referred to as the great depression since that was the only time the global GDP fell by 15%. It began on October 29, 1999, with the black Tuesday whereby the United States stock markets crashed, and this became world news. The great depression had devastating effects on both individuals and the government. Therefore, it can be deduced that the effects the great depression had on individuals and the general society provided an excellent opportunity for people like al Capone to come up and go on with their activities in an almost unnoticeable manner. This was because the government was fully occupied trying to find ways to bring up the sinking economy. It can also be attributed to the financial systems damage that al Capone never used a bank but used cash to avoid being tracked down in all his dealings.
Al Capone was born in 1899 in Brooklyn by his parents, who were both immigrants in the search for a better life. From the background of Capone, there was not a single indication that he could become a criminal since his background was impoverished and his parents lived a simple immigrant’s life. He studied at Brooklyn elementary school, and when a teacher disciplined him, he hit back then the principal caned him, and from that time on, he never went back to school. He met Johnny Torrio in Brooklyn, and they developed a relationship such that even after Torrio left Brooklyn, they still communicated. Torrio had been running a gambling operation, and he introduced Capone to a gangster named Frankie Yale. This was the beginning of Capone’s illegal business and criminal activities.
Capone married at the age of 19, and in the desire to be better, he moved t Baltimore with his wife and kid, where he was involved in the gambling and prostitution business. During this time, he was arrested. However, Torrio helped him to get out. He was also involved in political victimization since the person who wanted to be elected was to develop strict laws against them, and he wanted a person who would favor them. In 1924, even some people were shot and killed in the process of trying to convince them to vote for a specific person.
Even though Capone was doing illegal business, he was very generous, and the public liked him, primarily because of this. He was considered to work on the side of the people, and therefore he was loved, and the government could not easily convict him of a crime due to his lack of a trial in terms of financial expenditure.
In conclusion, even though Capone was doing illegal and unlawful, he was loved due to his relations with the public, which included generosity and the art of being charming. However, later he was convicted for 11 years because of tax evasion; he remains a very significant and complex figure among the Americans.
Bibliography
“Al Capone.” n.d. Federal Bureau of Investigation. Accessed October 15, 2021. https://www.fbi.gov/history/famous-cases//al-capone.
“The 1920s.” n.d. Web.archive.org. Accessed October 15, 2021. https://web.archive.org/web/20111004184642/htp://www.irclibrary.org/sebastianlibrary/george/1920.html.
Accounting, The balance sheet and income statements
Accounting, The balance sheet and income statementsStudent’s Name
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The balance sheet and income statements are used in financial accounting because they are regarded as the most important financial statements. The Balance sheet lists assets and liabilities of the organization in a given financial period or fiscal year. An income statement was also known as Profit and loss statement and it’s a report for income and expenses over a specific period of time maybe quartile year.
In regard to performance an income statement shows how a company has performed by listing sales and expenses and the resulting profit or loss. A balance sheet summarizes the company’s assets liabilities and shareholders’ equity at a specific point in time to analyze how a company pays for things (Weygandt, Kieso, 2008). Income statements report operating results such as, sales and expenses. This allows investors to evaluate company’s performance and gives a prospect on the way forward. The balance sheet on the other hand presents the strengths of a company which enables investors to factually calculate days of working capital. Balance sheets can also identify trends of how net profit is used, receivables and the payables.
A marketing manager should incorporate both the income statement and the balance sheet as they correlate. An income statement can be used for a specific time period to account for the debit and credit between balance sheet at the beginning and end of period as accounting is a double entry system. Although it would be better to use a balance sheet as an income report may be subject to biasness as per the income received .The balance sheet is efficient because it accounts for cash inventory and property on the asset side while accounts payable or long-term debt is accounted on the liability side. (Eisen, 2007).The main difference is that income statements describe the current year’s performance while balance sheet describes the overall position of the company right from the starting year of business to current year and provides information about all assets and liabilities applied in the business.
Reference
Eisen, P. J. (2007). Accounting barron’s accounting barron’s business review series business
Review books. (5 ed., pp. 177-200). New York: Barron’s Educational Series
Weygandt, Kieso, P. D. K. A. L. D. (2008). Hospitality financial accounting (2 ed., pp. 110-145).New Jersey: John Wiley and Sons.