Exposure of the Accounting Profession to Increasing Liability

|Francis Marion University | |Exposure of the Accounting Profession To Increasing Liability | |Response of the Profession | | | | Kim Taylor | |4/30/2010†¦show more content†¦The purpose of this endeavor was to examine the current status of the accounting profession, envision a more favorable future situation, and then determine the necessary strategy to follow in attaining this. The consensus of the committee was that the expectations from audits were too high. They went on to elaborate on the lack of precision and exactness of financial statements and that the public was demanding a degree of certainty in their audits that could not be achieved. This has historically been labeled the â€Å"expectations gap† They concluded that although auditors were not totally responsible for the scandals in 2000 and beyond, â€Å"all too many independent auditors lost their autonomy and judgment- and ended by blurring the line between right and wrong.† They described the audit as becoming a â€Å"commodity with little intrinsic value,† used to facilitate management’s objective of releasing misleading financial statements. , and concluded that accounting self-regulation had failed in these instances. They also expressed concern about auditing practices of the Big Four. They said that firms such as these fail to effectively use their resources since experienced auditors often are not on the job site where they are most needed to detectShow MoreRelatedHistorical Development Of Fair Value Measurement1400 Words   |  6 Pagesentities should determine the fair value of financial instruments for reporting purposes. 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Tackett Professor, Youngstown State University, Department of Accounting and Finance, Youngstown, Ohio, USA Gregory A. Claypool Associate Professor, Youngstown State University, Department of Accounting and Finance, Youngstown, Ohio, USA Keywords Expectation gap, Audit failure, Audit futures, Market-based measures Introduction Read MoreRatio Analysis Financial Accounting3622 Words   |  15 PagesFinancial Accounting and Reporting – Ratio Analysis The following five-year summary relates to VKM Ltd, and is based on financial statements prepared under the historical cost convention. Financial Ratios 2006 2005 2004 2003 2002 Profitability Margin Trading Profit Revenue % 7.8 7.5 7.0 7.2 7.3 Return on Assets Trading Profit Net Operating Assets % 16.3 17.6 16.2 18.2 18.3 Interest Dividend Cover Interest cover Trading Profit Net Finance Charges times 2.9 4.8 5.1 6.5 3.6 DividendRead MoreFred Stern Company, Inc.2290 Words   |  10 Pagesoperations. In 1924, Fred Stern Co. approached a finance company named Ultramares Corporation for a loan of $100,000. Before accepting the terms, Ultramares Corp. requested an audited balance sheet to serve as support for the loan. A well-respected accounting firm named Touche, Niven Co. had provided assurance for their statement a few months earlier, which allowed the deal to go through. The following year, in January 1925, Fred Stern Co. filed for bankruptcy and Ultramares Corporation found itselfRead MoreDhjsj14297 Words   |  58 Pagesis unclear, however, is whether auditing was sufficiently â€Å"broken† in the first place to warrant the radical reforms and changes effected by the Sarbanes-Oxley Act (SOX). Despite a relatively small number of high profile corporate failures and accounting scandals such as Enron and WorldCom, the number of demonstrated audit failures as evidenced by successful li tigation or SEC sanctions approaches an annual failure rate of close to zero. 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William Blake was born in London on November 28, 1757 to...

William Blake was born in London on November 28, 1757 to James and Catherine Blake. His father, James was a hosier (seller of legwear) in London. Blake had four brothers, James, John, Richard and Robert; and a sister named Catherine (Harris 5). Blake got along best with his younger brother, Robert as they shared an interest in art (Clarke 1). As a young boy, Blake claimed to have had visions of God, spirits, prophets and angels. When he was four he is claimed to have seen God’s head in his window. In his most famous vision, he saw the prophet Ezekiel under a tree and a tree of angels when he was nine (â€Å"Early Years†). Though his parents believed he was lying, they took into consideration that their son was â€Å"different† and did not believe he†¦show more content†¦In 1778 Blake attended the Royal Academy, but soon left after having disagreements about art with the school’s president Sir Joshua Reynolds (Merriman 2). In 1780 he was hired by J oseph Johnson. Johnson, a seller of â€Å"radical† texts, introduced Blake to such writers such as Joseph Priestley, William Godwin, Mary Wollstonecraft and Thomas Paine (Simkin 1). He illustrated Paines The Rights of Man and Wollstonecrafts The Vindication of the Rights of Women. He also illustrated Mary Shelley’s Original Stories from Real Life in 1788 (â€Å"Marriage and early career†). In 1782 he met Catherine Boucher, the illiterate daughter of a market-gardener. Blake taught her how to read, write, engrave, and draw. Catherine ended up helping Blake with coloring, illustrations, engravings, and book binding (â€Å"Later Life and Career†). They had a very successful marriage where Catherine supported Blake in his work and believed in his genius. She also believed his visions of spirits and Blake even â€Å"helped her to experience visions, as he did† (â€Å"The Maturing Artist†). Blake would refer to her as his â€Å"sweet shadow of de light† (â€Å"Youth†). Blake’s first book of poetry was Poetical Sketches published in 1783 and paid for by a few of his friends (â€Å"Artist and Engraver†). In 1787 Blake’s brother Robert died, Blake claiming to recall his spirit â€Å"clapping its hands for joy†(â€Å"Poets†) . A year later Blake claimed that Robert appeared to him, teaching him a process ofShow MoreRelatedIn Many Ways, Poetry Has The Ability To Shape The Minds1226 Words   |  5 Pagesand writers have been a part of social and political change due to the written works presented to the public. One such poet was William Blake. His poetry has inspired much change in both the past and the present. An analysis of â€Å"The Chimney Sweeper,† one of Blake’s most popular works, can help many to understand the significance of his work in a time period when social riot was visible in the public’s eyes. By exploring the writing style, structure and image ry in this poem, as well as identifying the

Exploring Air Pollution Problems for a Focus - myassignmenthelp

Question: Discuss about theExploring Air Pollution Problems for a Focus on Brisbane. Answer: Introduction Air pollution is explicitly acknowledged to be a substantial public health issue, responsible for an increasing range of environmental and health consequences. The health effects of air pollution are becoming a burden to healthcare systems. Air pollution is the presence of harmful substances in the air at concentrations that present a health threat. Common air pollutants are CO, SO2, PAHs and particulate matter, which may originate from different sources such as vehicle emissions, fossil fuel combustion, and biomass burning. (3, 18, 19)The smoke produced in closed spaces from cooking may also cause air pollution. Rapid urbanisation further increases the risk of exposure to ambient air pollutants. The rationale of this paper is to investigate how air pollution affects public health. In this scholarly paper, a literature review was performed into the concept of air pollution, its causes, and impact on public health with a focus on Brisbane, Australia, which is the selected community. Recent peer-reviewed articles published between 2012 and 2017 were retrieved from MEDLINE and CINAHL Plus. The research questions are; what are the main air pollution problems in Brisbane, Australia? What are the key sources? Are they associated with other environmental issues? How does the air pollution affect public health? Search terms and criteria A literature search was conducted using CINAHL Plus and MEDLINE as the two primary academic databases to investigate current knowledge on air pollution and public health. The search terms were air, pollution, problems, sources, environmental, issues, Brisbane and Australia. Boolean operators that were used to facilitate the literature search were AND and OR. The search mode was find all my search while the expander was apply all related words. Year of publication was used as a limiter in the literature search. It was performed for the years between 2012 and 2017. Source type was all results, and the language was English. The search criteria yielded several meta-analyses and systemic reviews, and many recent studies on the association between air pollution and public health. For instance, the search air AND pollution AND Brisbane yielded 124 results in MEDLINE and 723 results in CINAHL Plus. 20 articles were found to be relevant and included in this study. Critical appraisal of the articles The primary themes that were discerned from the pertinent articles were categorised into three, major air pollution sources, environmental issues and public health problems. These themes were appraised using the apposite literature. Major air pollutants Alharbi et al. (1) conduct a study to determine the concentration of thoron and radon in workplaces in Brisbane. Several workplaces were selected randomly around Brisbane, and active method was used to measure the level of radon and thoron concentration. Closed areas were found to have the highest concentrations of radon, 86.6 6.0 Bq m3. On the other hand, maximal thoron concentration was discovered in stores, 78.1 14.0 Bq m3. The researchers found that the concentration of these gases was low during working hours and high after working hours due to the difference in ventilation. Besides, they unravelled that concrete flooring was a significant contributor of the radon and thoron in the environment. Thai et al. (2) conducted a study to evaluate the level of exposure to polycyclic aromatic hydrocarbons (PAHs) in Brisbane and Hanoi. During the study, urine samples were tested from 16 candidates for ten weeks. The findings indicate that residents of Hanoi had higher exposure to PAHS than residents of Brisbane. However, the researchers concluded that air pollution was a major concern in the two settings. In their study, Crilley et al. (3) aimed to identify the source of organic carbon (OC) as well as elemental carbon (EC) concentration in ambient PM 2.5 across urban learning institutions in Brisbane. Sampling was performed at 25 schools. The EC tracer method was applied to quantify the primary and secondary concentrations of OC. This study found that secondary organic aerosols (SOA), local weather conditions as well as vehicle emissions were the primary contributors of a carbonaceous component of PM 2.5 across urban learning institutions. Friend et al. (4) conducted a study to identify the significant sources of air pollution. They performed sampling in two different places in Brisbane. Ultrafine and fine particles were found in several locations, which are traffic sources and biomass burning. Their conclusion notes that traffic was the major source of air pollution. Public health problems Ezz et al. (5) did a study to determine the implications of both indoor and outdoor ultrafine particles on children health in Brisbane. Their main aim was to establish the link between respiratory diseases and ultrafine particles. 25 school campuses were randomly recruited to participate in this study. The respiratory health consequences were analysed through different tests such as spirometry, a fraction of exhaled nitric oxide (FOT) and multiple breath nitrogen washout test (MBNW). The author concluded that ultrafine particles are a leading cause of respiratory illnesses. In his Meta-analysis study, Roberts (6) aimed to determine the mortality trends linked to air pollution (PM10) in Brisbane and Sydney, Australia. The author focused on the period between 1993 and 2007. In the findings, the author asserts that mortality has declined, PM10 is still a problem, and it is associated with cardiovascular deaths. Bowatte et al. (7) used a longitudinal study to investigate whether subjection to traffic-related air pollution (TRAP) is linked to asthma, allergies and impaired lung function. Regression models were used to quantify the level of exposure to nitrogen dioxide (NO2). The results insinuate that living close to major roads exposes individuals to TRAP, which increases the risk of current wheeze, atopy, asthma, allergic outcomes and other lung complications. Barnett et al. (8) performed a study using a Bayesian hierarchical model to establish the link between exposure to air pollutants and health outcomes in Brisbane, Australia. Subjection to air pollution was linked to negative health effects including hospitalisation and deaths. This finding indicates that people who are exposed to air pollutants to a certain level are likely to experience poor health outcomes. A similar study was done by Cohen et al. (9); however, their study focused on a global landscape. Their study was based on the foundation that subjection to ambient air pollution results in high morbidity and mortality. They discovered that exposure to ambient PM2-5 was a leading cause of deaths because it increased the risk of (COPD). Berends (10) study on the health impacts of air pollution also concluded that COPD is a serious problem. In a related study, Brauer et al. (11) used ground measurement, satellite-based estimate and chemical transport model simulation to evaluate t he extent to which ambient air pollution increases global disease burden. Over five years, they found that ambient air pollution increases the global disease burden. Narasimhan et al. (12) evaluated the available literature to determine the risk factors for tuberculosis. The analysis revealed that there are numerous risk factors for tuberculosis. Among the most important risk factors was indoor air pollution. Another primary study was designed to analyse the impact of temperature and air pollution on the prevalence of pediatric influenza. In this study, four Poisson log-linear regression model and the number of influenza cases were applied to investigate the impact of PM10, N02 and O3 as well as temperature on pediatric influenza. The study found that high levels of 03, NO2 and PM10 resulted in high prevalence of pediatric influenza in Brisbane. (13) The authors conclude that air pollution is a key predictor of pediatric influenza. Wang et al. (14) did a study to appraise the relationship between air pollution, temperature and mortality in Brisbane. Scanning Mobility Particle Sizer was utilised to measure particle size while the other data on air pollution was obtained from government agencies. They unravelled that the air temperature tends to increase mortality for those with respiratory infections. Their findings insinuate that air temperature enhances the negative impacts of air pollut ion. Straney et al. (15) did a study to explore the link between air pollution and the prevalence of Out-of-hospital cardiac arrest (OHCA). In their research, the authors used St Johns Ambulance data. They focused on these air pollutants O3, NO2, SO2 and CO. The relationship between the pollutants and OHCA was determined based on the number of reported cases. They found that carbon monoxide and PM2.5 were linked to the high prevalence of OHCA. Evidence suggests that the ambient air pollution is major disease burden. Nevertheless, one longitudinal study on female health found that ambient air pollution was not related to self-reported disease in Australia. 26,991 females were recruited in this study. The researchers recorded the self-reported cases of cardiovascular diseases, high blood pressure, diabetes and respiratory illnesses. (16) Kelly et al. (17) analysed available literature to establish the link between air pollution and health. They discovered that most people mainly in urban centres breathe air that does not meet World Health Organisation (WHO) standards, which is a threat to public health. Environmental issues In a second study Crilley et al. (18) implanted Aerodyne compact time-of-flight aerosol mass spectrometer (TOF-AMS) to measure the level of organic aerosol (OA), specifically vehicle emissions and human activity in 5 urban schools across Brisbane. They found a varying concentration of OA in the selected schools. The sources of OA were mainly vehicle emissions, gardening equipment and biomass burning. In conclusion, the authors noted that children are exposed to more OA during drop-off and pick-up times. Johnston et al. (19) investigated the impact of combustion emission on human health over time. Their study focuses on environmental issues such as fossil fuel combustion, domestic fires and landscape fires. Global Burden of Disease (GBD) data was used to facilitate the study. The findings show that air pollution associated with human actions has a fundamental effect on health. One recent study assessed the impact of reducing air pollution associated with biomass smoke on mortality. Th e study included about 215,000 Australians. The randomised controlled trial offered education on the reduction of ambient pollution. Outcomes were measured as changes in cause of respiratory and cardiovascular mortality for 6.5 years. (20) There was a decline in the number of deaths linked to ambient air pollution, which indicates that environmental issues are important in predicting the relationship between air pollution and public health. Critical analysis to answer the questions Primary air pollution problems in Brisbane Air pollution is a significant problem in Brisbane, Australia. The primary issues of air pollution in this community can be classified into health effects, learning effects and urban living effects. Evidently, air pollution affects the health the people in this community adversely since they are at the risk of developing chronic and non-chronic diseases such as respiratory diseases and lung cancer. Empirical evidence suggests that residents who are located in proximity to roads in Brisbane are exposed to ambient air pollution (16), and organic aerosol (OA). (18) These people are likely to be exposed to harmful gasses such as NO2 and CO, which further affects their health. In construction works, workers may be exposed to radon and thoron. (1) It has been found that living about 200 metres from major roads is linked to current wheeze. (7) Air pollution further causes a problem in learning. At school, children are exposed to ultrafine particles (5), organic carbon (OC), and elemental ca rbon (EC) (3), which tend to affect learning activities. This evidence insinuates that air pollution is a serious ongoing issue in Brisbane. Major sources of pollution Various sources of air pollution have been characterised in the selected community. Most of the studies in this field tend to agree that human actions are the major causes of air pollution in Brisbane, Australia. The main air pollutants in Brisbane are O3, CO, NO2, SO2, and particulate matter (PM). Vehicle emission is the most important source of air pollution.(18) Other studies use the term traffic to refer to vehicle emissions. (10) School going children and adults are exposed to vehicle emissions, which makes it a significant source of air pollution. Biomass burning is also a major contributor of air pollutants in Brisbane. A vast literature exists on the contribution of biomass burning to air pollution. (20) Gardening activities are also key sources of air pollution, especially when farm machinery is used. This aspect points to the use of fossil fuels for enabling the economies. Some of these sources tend to have a marginal contribution to the gross pollution in the air. However, the aggregate consequence of different sources is disastrous. Whether they are related to other environmental issues As evident in the literature review, air pollution in Brisbane is related to other environmental issues. The ambient air pollutants figure into several other environmental issues. It is notable that fossil fuel combustion generates ambient air pollutants as well as greenhouse gases. (19) Greenhouse gases including CO2 and CH4 contribute to global warming. In fact, researchers tend to study the effect of both temperature and air pollution on the environment. Particulate matter concentration has been found to have profound effects on temperature. (14) Some air pollutants tend to co-occur, and this aspect buttresses the relationship. Impacts of air pollution on public health The ultimate effect of air pollution on public health is to causes diseases and mortality. There is strong evidence that air pollution is a leading cause of diseases as well as mortality in Brisbane. Air pollution is linked to several harmful cardiovascular as well as respiratory effects. Airborne particulates are responsible for cardiovascular and respiratory conditions. (10) Ultrafine particles cause health effects because they can penetrate into the lungs and result in damages. (5) Air pollution further presents the risks of atopy, asthma, allergic outcomes and atopic asthma. (7) Research has also found that air pollution leads to heart diseases, cerebrovascular disease and chronic obstructive pulmonary disease (COPD). (9) O3 impacts the lungs by leading to the inflammation of the airways as well as reducing lung function. Additionally, breathing O3 can cause different health problems such as congestion, throat irritation and chest pain. Although some of these illnesses are primar ily caused by air pollution, others are secondary illnesses. The health conditions caused or exacerbated by air pollution might also be caused by other risk factors. As such, some health conditions prompted by air pollution may not be discerned directly as having been caused by air pollution. Mortality is another public health problem that is linked to air pollution. Most deaths are associated with respiratory and cardiovascular diseases. (20) Morbidity is a public health issue linked to air pollution. Conclusion This study made it possible to deduce denouements from independent outcomes of each study appraised, establishing coherent data that can be utilized for designing public guidelines. In addition, the findings of this study can be used to inform policies on air pollution control in urban schools. The paper showed that air pollution presents a significant problem to the public health in Brisbane, Australia. Air pollutants across this community tend to occur in levels that result in harm to the residents. In this case, harm refers to morbidity and mortality. Cardiovascular and respiratory are the most common illnesses related to air pollution, and they are the leading causes of deaths. Conclusively, a holistic approach is required to address the problems of air pollution in Brisbane, Australia. Statements of competing interests The author certifies that they have NO affiliation with any organization or entity with any financial interest or non-financial interest in the topic explored in this manuscript. References List Alharbi S, Akber R. Radon and thoron concentrations in public workplaces in Brisbane, Australia. Journal of environmental radioactivity. 2015; 144: p. 69-76.Thai P, Li Z, Sjdin A, Fox A, Diep N, Binh T, et al. Biomonitoring of polycyclic aromatic hydrocarbons exposure in small groups of residents in Brisbane, Australia and Hanoi, Vietnam, and those travelling between the two cities. Chermosphere. 2015; 139: p. 358-364.Crilley L, Ayoko G, Mazaheri M, Morawska L. Factors influencing the outdoor concentration of carbonaceous aerosols at urban schools in Brisbane, Australia: Implications for children's exposure. Environmental Pollution. 2016;(208): p. 249-255.Friend A, Ayoko G, Jayaratne E, Jamriska M, Hopke P, Morawska L. Source apportionment of ultrafine and fine particle concentrations in Brisbane, Australia. Environmental Science And Pollution Research International. 2011; 19(7): p. 2942-2950.Ezz W, Mazaheri M, Robinson P, Johnson G, Clifford S, He C, et al. Ultrafine particles from traffic emissions and childrens health (Uptech) in Brisbane, Queensland (Australia): Study design and implementation. International Journal of Environmental Research and Public Health. 2015; 12(2): p. 1687-1702.Rberts S. Have the short-term mortality effects of particulate matter air pollution changed in Australia over the period 1993-2007. Environmental Pollution (Barking, Essex: 1987). 2013; 182: p. 9-14.Bowatte G, Lodge C, Knibbs L, Lowe A, Erbas B, Dennekamp M, et al. Traffic-related air pollution exposure is associated with allergic sensitization, asthma, and poor lung function in middle age. The journal of Allergy and Clinical Immunology. 2017; 139(1): p. 122-129.Barnett A, Clements A, Vaneckova P. Estimating the effects of environmental exposures using a weighted mean of monitoring stations. Spatial And Spatio-Temporal Epidemiology. 2012; 3(3): p. 225-234.Cohen A, Brauer M, Burnett R, Anderson H, Frostad J, Estep K, et al. Estimates and 25-year trends of the global burden of disease attributes to ambient air pollution: an analysis of data from the global burden of disease study 2015. Lancet (London, England). 2015; 389(10082): p. 1907-1918.Berend N. Contribution of air pollution to COPD and small airway dysfunction. Respirology. 2016; 21(2): p. 237-244.Brauer M, Freedman G, Frostad J, van Donkelaar A, Martin R, Dentener F, et al. Ambient Air Pollution Exposure Estimation for Global Burden of Disease. Environmental Science Technology. 2013; 50(1): p. 79-88. Narasimhan P, Wood J, Macintyre C, Mathai D. Risk factors for tuberculosis. Pulmonary Medicine. 2013;: p. 828939.Xu Z, Hu W, Williams G, Clements A, Kan H, Tong S. Air pollution, temperature and pediatric influenza in Brisbane, Australia. Environment International. 2013; 59: p. 384-388.Wang L, Tong S, Toloo G, Yu W. Submicrometer particles and their effects on the association between air temperature and mortality in Brisbane, Australia. Environmental Research. 2014; 128: p. 70-77.Straney L, Finn J, Dennekamp M, Bremner A, Tonkin A, Jacobs I. Evaluating the impact of air pollution on the incidence of out-of-hospital cardiac arrest in the Perth Metropolitan Region: 2000-2010. Journal Of Epidemiology And Community Health. 2014; 68(1): p. 6-12.Lazarevic N, Dobson A, Barnett A, Knibbs L. Long-term ambient air pollution exposure and self-reported morbidity in the Australian Longitudinal Study on Women's Health: a cross-sectional study. BMJ Open. 2015; 5(10): p. e008714.Kelly F, Fussell J. Air pollution and public health: emerging hazards and improved understanding of risk. Environmental Geochemistry And Health. 2015; 37(4): p. 631-649.Crilley L, Ayoko G, Jayaratne E, Salimi F, Morawska L. Aerosol mass spectrometric analysis of the chemical composition of non-refractory PM(1) samples from school environments in Brisbane, Australia. The Science Of The Total Environment. 2013; 458-460: p. 81-89.Johnston F, Melody S, Bowman D. The pyrohealth transition: how combustion emissions have shaped health through human history. Philosophical Transactions Of The Royal Society Of London. Series B, Biologica2l Sciences. 2016; 371(1696).Johnston F, Hanigan I, Henderson S, Morgan G. Evaluation of interventions to reduce air pollution from biomass smoke on mortality in Launceston, Australia: retrospective analysis of daily mortality, 1994-2007. BMJ. 2013; 346: p. e8446.

Business Finance Measuring Cashflow at Risk

Question: Describe about the Business Finance for Measuring Cashflow at Risk? Answer: Introduction Event Planners Ltd. carry on the business of planning the events for the clients such as weddings, birthdays, etc. It is a newly established business with only two shareholders. In the first year of the business, the company is in loss with major liquidity issues as the bank account has an overdraft balance and the company is unable to pay creditors on time. The company has appointed a manager to carry on the business of the company. But the directors feels that he is using funds of the company recklessly and his acts are not in the interest of the company. Difference between Cashflow Profits for the business Cashflow is the difference between the cash received during the year and the cash used during the year. Profit is the revenue from the sale of goods services, whether received in cash or yet to be received less all the expenses made during the year whether actually paid or yet to be paid. Profit is not equal to the Cashflow during the year. Business can be in loss and at the same time positive Cashflow. Similarly, there may be negative Cashflow and business is still making good profit. (Bizfilings, 2012) For a successful business, there must be a balance between both the Cashflow profit. (Sharma, 1996) Importance of Cash Profits for the business survival Profit making is the primary purpose of the business. It is a vital part of business, but profit is not the only purpose for the existence of the business. For the survival of business profit is essential, as profit has its own function in the business survival. Profit is required to pay the investors and stakeholders as return for the investment of money or time they invested in the business. Profit is needed for the running, expansion, growth and development of business. Profit also act as a financial indicator of how well business is working. Cash plays a major role in the survival of the business. A business in loss can survive for short to medium duration if it is generating enough cash. As cash is needed for paying of any stuff. And no business can survive without enough cash to meet its immediate needs. At the same time holding excess cash is also of no use. It will be a loss of potential earnings. So, the liquidity should be maintained in any business to manage the balance of cash in the business as per the business requirement. Identify and explain why business can report a profit, but be short of cash. Profits and cashflows are related to each other. They are the financial measurement of the business. They are not directly related to each other, both depict different thing about the business. Cashflow measures the business ability to pay its expenses while profit measures the sustainability of the business. Cashflow is the cash balance after considering all the cash receipts and deducting cash payme/nts for the period. Whereas, profit is the result of deduction of expense for earning the revenue from the revenue. For the accounting purpose, an income expense is recognized only in that period for which it actually takes place, whether received or paid in cash or not. (Vranceanu, 2014) For example, a company sold the goods worth 100$, partially on credit, i.e. 50 $ will be received after 1 month and 50$ now at the time of sale. Expenses are payed off $ 45 and outstanding expenses are for 15$. For calculating profit for the period= Revenue less Expenses = 100$ (Total Sales) 60$ (Total Expenses) = 40$ For calculating Cashflow for the period = Cash inflow less Cash outflow = 50 $ (Cash receipt) 45$ (Cash payment) = 5$ In this case, the company has an adequate profit, but short cash. This difference in the profit and cash is mainly due to timing differences. For calculating profit, the company focuses on when the profit is earned and expenses incurred legally, without considering the cash position. They follow accrual basis of accounting. For calculating cash, the company only focuses on when cash is actually received and paid, without considering when it is actually earned or incurred. Consequences to a business of being short of cash Cash is the blood of the business. It acts as lifeline to the business. Shortage of cash in a business can harm it many ways. Such as: Late payment to creditors, which lead to wrong image in the market and reduce the flow of material or goods. Short cash will create liquidity problem in the business. If the business is short of cash, then it will create crisis kind situation like how to pay for expenses, how to purchase raw material, how to develop the business etc. Cash shortage will lead to poor market image and also affect the goodwill of the business. A balance of cash is required in the business. Because cash is needed to earn profit for the business. Adequate cash is required to pay to employees and suppliers and other expenses. So that goods can be produced and profit can be generated by selling those goods. If business is short of cash than it will be unable to generate profit. So, business is to be managed in such a way to have positive cash flow for the growth and development of the business. Liquidity and profitability characteristics of new business as opposed to long standing business. Business have different requirement in its different phases. A new business will have more liquidity as compared to long standing business. As for new business more cash is required for initial setup and for the purchase of resources to run the business. As this is the growing phase of the business, it will require more liquidity for the growth and development of the business. For the long standing business, an adequate liquidity is required, but not high as the business is already set up and running. So, it need liquidity only for smooth running of the business. At the initial stage of business, it will have low profitability. As the business is trying to set up, building customers and goodwill in the market. In case of long standing business, there will be higher profitability. As the business has grown upto a level to give good returns and have high profitability. (Sasaki, 2015) How Cashflow problems can arise Cashflow problem arises due to following reasons: Low Profits Lower profit generally lead to cashflow problems for the business. Over Investment When more cash is invested in the machinery or equipment that required. This excess capacity will not generate revenue, so it is a waste of cash. Excess stock- Holding of excess stock than the required quantity for smooth working of business is just a waste of cash and also lead to the risk of stock become obsoltee. Higher credit period- Selling goods on credit is a good way of sales promotion. But providing very high credit period will lead to shortage of cash in the business. Expanding fastly Business in expanding very fast, so it will need more resources for the business. It will create a shortage of cash in the business. Declining sales - Reduction in the turnover of the business lead to a reduction in the cash receipt. So shortage in cash arise. Excessive debt Excess of debt lead to the use of major cash in the payment of debt and shortage in cash arise. High capital Expenditure - Higher capital expenditure will lead to higher cash flow and case cash reduction. Methods for dealing with cash flow problems Following are the methods for dealing with the cashflow problems: Cost cutting This is the best method for dealing with a cash flow problem by reducing the non essential costs of the business. This will help in reducing cash outflows for the business. Reduction in stocks Reduction in the cash tied up in the raw material and goods by ordering only minimum goods or raw material required for running the business. This will reduce the cash utilization in the stock. Late payments to suppliers - Try to increase the credit period for making payment to the suppliers. This will reduce the cash engaged in the business. Reduction in the credit period offered to the customer - Selling goods on credit is a good way of sales promotion. But providing high credit period will lead to shortage of cash in the business. So by reducing the credit period will allow more cash inflow in the business. Delay in the growth and expansion plans - Delay of the expansion plan of the business for the future. This will deffer the cash outflow from now and reduce cash crisis. Increasing the selling price Increase in selling price will increase the cash inflow in the business and reduce cash crisis. Cash Flow Management A proper management of the cash outflow and inflows will help in maintaining required cash in the business by proper planning the cash inflows and outflows. By keeping the cash flow forecast to remain prepared for future outflows in advance and manage cash flow problems. (Stein, 2001) References 1. Stein, J, C, Usher, S, E, LaGattuta, D Youngen, J 2001, A comparables approach to measuring cashflow at risk for non financial firms, Journal of Applied Corporate Finance, vol. 13 , no. 4 , pp. 100-09. 2. Sharma, D 1996, Analysing the Statement of Cashflows, Australian Accounting Review, vol. 6 , no. 12 , pp. 37-44. 3. 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