Week 7 Assignment 2.3: Justification Report - Part 3 (Final) Students, please view the "Submit a Clickable Rubric Assignment" video in the Student Center. Instructors, training on how to grade is within the Instructor Center. Assignment 2.3: Justificatio

Strayer University

English Composition

Week 3 Assignment 2.1

ENG 315

Prof. Michael Hunter

Selim Sel

1/13/2015

Merchant trader’s policies in business

Introduction

Merchant trader is a medium sized company that deals with imports and exports business. It is based USA and it has been in existence for the last fifteen years in the market. The company does import and export on behalf of a multiplicity of clients all over the world. The range of goods that the company deals with ranges from motor vehicles, spare parts and other sort of heavy and light duty machinery. Since are involved in what may be called contraction, we have a relatively steady client line whom we do business with and contract with them.

Problem scenario

The nature of doing business in this company is that it takes several loops. This is because; we have arrangements to be made, shipping, payment and other sorts of engagements. Following these engagements, the company has been having deep financial complications during some days while in some other days, the company has flourished. On the days that business has been tough for our company, we have ended up with the company being insolvent in the market and last year, we nearly closed as we had staggering debts that were long overdue. Following the insolvency, we have several court cases with fellow contractors who are seeking compensation following our bleach of contracts. There are massive irregular patterns in our finances and the company needs to put to order our financial docket. If we do not fix the problem, we may end up in even deeper financial crises.

Possible alternatives

This company needs to have a persistent monetary policy. The company is currently using a multiplicity of monetary policies. We have no fixed monetary policy and what we do is that we try to work with whatever policy fits the clients whom we serve in the company. (Siegel, 1981) Among the policies that we use includes; Stock holding payments, build up, bonds, credit transfer and check out. Of all these four alternatives that have been used, the most dominant ones have been build up and check out. These two are the most widely used in the company and I have no doubt that they offer the best policies that could be used in the company. In the last one year, build up has been used at about 36% while check out has been used at 37%. 13% went to bonds and 12% went to stock holding payments. Given the confusion that we have faced that is threatening the company, we need to operate on a single monetary policy. 36% and 37% percent is quite a close tie and we need to make the better of the two choices.

Criterion to measure the strategies worthiness

Cash availability

One of the criteria that will be appropriate to use is in response to the immediate dilemma that the company has been facing; lack of liquid money in the company to pay the bills and the business partners. The most liquid form of money is the cash in hand followed by the cash that is in the bank. (Gerald, 2000) One of the two methods should yield enough operational capital to drive the company without debts.

Accounting simplicity

The two methods definitely yield paperwork, clearance and transfer payments. The current accounting department has a staggering workforce of thirty seven accountants. Our firm is not all that large to demand such a big workforce but the nature of the transactions and their complexity calls for a large workforce to be able to deal with the accounting. The two methods should also try to ease this burden and they should be comparatively evaluated.

Tax benefit

In USA, we pay the tax at the end of the year. In the maze of the transactions and multitude of financial policies, we have to pay the tax at the end of the year. In some instances, we find that we have to pay tax later since we have no enough cash at the end of the year. This definitely attracts penalties and this is a loss to the company.

Business solvency

In the last three years we have shuffling in financial crises. This is despite the large volume of business that we have. There is need to have a ground business rating at any time so that we can deal with market shake up.

Stock indexing

Five years ago, our stock was listed in the stock exchange market. Following the volatility of our financial world, our stock index has been so unsteady. We need to have a method that can assure investors that they can trust our stock not to burn their cash down the road.

Research conducting

Our company has three branches in USA. They all have been operating under the confused accounting systems. What we need to do is to study the application of the two accounting methods that are being debated on the usage that would be most appropriate. The best way to study the two is to allocate one branch should use build up method, and the other branch should use check out method while the third should use the ordinals one. Given that we have three branches, the other branch should be allowed to use the traditional multitude of financial policies. The three study cases should be allowed to run for two years so that they can have time to take root in the application. At the end of this time, evaluations should be made and decisions made.

References

Siegel, Joel G. 1981, "Warning Signs of Impending Business Failure and Means to Counteract

Such Prospective Failure," The National Public Accountant, pp 9-13

Mather’s, D. (2006) Business Predictability and running manual , second edition, GHT publishers, 2002 to 2030, PLoS medicine, 3(11), e442

Gerald, H, 2000, running a Successful Business: also in business insights: essentials, Compiled

By the Business Library Staff of the Brooklyn Public Library