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AS and A Level: Accounting & Financial Management
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- Marked by Teachers essays 4
Financial regulation protects investors, maintain orderly markets and promote financial stability. There are four main objectives of financial regulations. First is market confidence; this is to preserve confidence in the financial system in the UK. This is to guarantee that markets are fair, efficient and transparent and that individuals and companies have assurance in financial intermediaries and in the money supply. Another aim is financial stability. This is the contribution to the protection and improvement of the stability of the financial system. This is to maintain and raise understanding to the public of the financial system. They will be told of the benefits and risks of the different forms of financial transactions. Consumer protection is another financial regulation aim.
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5. Closing stock ? a business?s remaining stock at the end of the financial year. It includes finished products, raw materials or work in progress and is deducted from the period?s costs in the balance sheets. 6. Gross profit ? The difference between revenue and the cost of producing goods or services sold. It is sometimes expressed as a percentage. 7. Expenses ? money or costs incurred in a business?s efforts to generate revenue, representing the cost of doing business 8. Wages - a fixed regular payment earned for work or services, typically paid on a daily or weekly basis 9.
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However, budgets can also become a problem. Sometimes budgets can be inaccurate and unreasonable and can cause problems to a business. This is because if they are unrealistic the company are going to be over spending. In addition, if budgets are unrealistic it can unmotivated employees; this is because they will have to work hard to ensure they don?t go over the budgets, but this may be impossible and could lead to lots of stress. Nevertheless, if budgets are too high staff may spend up to budget.
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Furthermore, if they do not control their budget it will also lead to an adverse variance and a decrease in profits. This is because, when businesses overspend than they budgeted for, their costs will go up and the profit will fall; they may even make losses. This means they wouldn?t be able to pay their monthly bills or declare dividends to their shareholders. Additionally, not keeping to the budget will affect other departments in the business. This is because if they overspend in one department they will need extra funds and this money may come from other departments.
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There are many internal stakeholders who will be interested in Alpha Ltd ratio analysis.2) Internal Stakeholders are anyone within the business such as managers, employees and shareholders. Managers will be interested in Alpha Ltd ratios because they can make use of business ratio to see if they are meeting their business objectives and using their resources effectively ; this will then allow them to highlight where they may need improving. In addition, employees will make use of the ratio to see if the business is stable and their jobs are safe.
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