Business and Finance System

Ethics defines a large part of our personality, is what determines our behavior, moral values and principles. However, this word is extremely complex, since what may be “good or bad” for one person, it is so different for another. We were educated and trained differently, grew up in an environment and a different family environment, from small grasp the rules according to the way we are taught.

However, how do we relate to business ethics? Every day we go out and face a world different from ours. We believe that doing our job well, that we are honest with others and in our work environment “never” have been the subject of some scandal (fraud, manipulation, espionage, conspiracy, misappropriation of funds).

The problem is when we found partners, clients or colleagues that differ from our ethical behavior. In this case, we get carried away by the attitude malicious or decided to retain our position?

As well as King Solomon said, “we must realize that morality is the single most important guiding principle behind everything we do or say, including our work. We are ethical in our side not only staff, and student union, but in our professional dimension. Today many large organizations have a code of ethics.

Ray Cotton said that there are companies that work hard to communicate to their employees, “biblical values” such as: to honor God in everything we do, help people develop, to continue the excellence and grow profitably. Just as journalists should be ethical in reporting, avoiding put into the mouth of a spokesman for anything not said or isolating of objectivity, the entrepreneur, manager and employee must also demonstrate a commitment not only to themselves but also with peers and with the company.

Among some ethical recommendations, Jerry White says in the book “Honesty, morality and conscience,” we must be fair in everything we do. In the case of employees, should ask themselves whether they really work the whole time and hours to receive the same way the monthly salary. For those who are owners of a company, would offer consumers what they promised in the ad? Does the customer is paying a fair for the quality you get?
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It’s time to take advantage of these tools, focusing on the evaluation of user habits, with doses ingenious and creative work.

The domestic majors occupy almost all the salmon pages of traditional newspapers. Mergers, divestment of property assets, capital or serious rumors of large business operations, are the daily content that readers flicking between disbelief of information and speed due to the limited impact on their daily lives.

The limited impact of current SME

The context is totally different from the national business community and therefore of reality that is tangible in the streets. 99% of companies in this country are in the group of SMEs, which collides with the reality of information. This aspect underlies the existing ballast in the field of productivity in the work cycle.

The short-term approach is the protagonist of the business world, so almost all small and medium entrepreneurs to invest for the sole purpose of selling, pushing other issues to the shelf of things to do.

Among the tasks forgotten, is the innovations and new trends in marketing and sales strategies. Unfortunately, the bet, translated into investments in these areas, are negligible. In many parts of Spain, working with a marketing around the house, while in the business world powers continually reinvent themselves, with an astonishing speed and efficiency.

The financial analysis also uses the method of ratios. Ratio is a Saxon word derived from the Latin word ratio, reason and relationship. The ratio allows to know the solvency ratio, which indicates whether a company is solvent or not. The most important ratios used for financial analysis are:

1. Liquidity ratio, also called short-term solvency. Represents the relationship between the company’s assets and liabilities.
2. Acid ratio (acid test), represents a financial position in the very short term.
3. Defensive position, a ratio that indicates the time (in days) that the company would have to survive solely by applying the assets that the company has in the time when this ratio is calculated without taking into account funds from present or future sales.
4. Capital adequacy ratio or distance out of business, reflect the totality of the real assets owned by the company to meet the total debt you have.
5. EPS (Earning per share), shows the benefit for each action.
6. Policy Pay dividends or out, measures the percentage of profit that is distributed to shareholders.
7. PER (Price Earning Ratio) represents the number of times the benefit of an action is contained within your price.

When the analysis reflects economic and technical insolvency insolvency. If there are two enemies which by nature must be avoided at all costs a company are economic hardship and technical insolvency. The economic insolvency (bankruptcy) occurs when the liabilities of the company is greater than the assets. The technical insolvency (bankruptcy) occurs when even though the assets exceeds the liabilities, the company lacks sufficient resources to cope with the payment of its obligations, and that there is no correspondence between the cash flows of entry and monetary flows out. In both cases the first symptom of insolvency is beginning to be the layoffs of employees of the company.

Importance of financial analysis in business
The financial analysis is one of its main functions to anticipate and prevent conditions of insolvency, which otherwise, in addition to damaging the image of the company would bankrupt, which undoubtedly marked the beginning of the end of the company or talking in terms of employment contracts would be to sign the settlement of the same and to feed even with small doses on a company’s current economic crisis.

The study of economic and financial situation of the company is done through financial analysis. It reflects the economy and corporate profitability.

The economic-financial analysis of the company, or simply called financial analysis has as its main objective to carry out the analysis of the economic situation of the company and the measurement of return on investments.

And it is not enough that the company either from the standpoint of economic cost, but also need your financial structure is commensurate with its economic structure, not only in the present moment, in the future.

Records of financial analysis for the study of business
The financial analysis used, to carry out the study of economic and financial situation of enterprises, the following documents:

1. Balance sheet and profit and loss account. The balance sheet is a summary of the equity accounts of a company, which reflects the stance of an estate must include the proper separation of the company assets, which consists of the assets and rights and obligations, that make up person, with specific reference in it own funds or resources are there in the company.
2. Ratios method. The profit and loss account income quantifies and describes the company’s formation. In each of the items in the profit and loss account, in addition to being the figures for closing, should also include figures for the preceding year. The annual accounts for the year as close as the previous year. The fundamental concepts that make up the account are:

* To: All business expenses are recorded on the debit.
* Haber: All business income are recorded on the credit.
* Benefits: We reflect on the debit and the credit losses.
* Seat: Write a number in the account items.
* Results: The cash flow from management of the company.

Talking about Business Ethics is immersed in a subject that some believe should be in the attic of ideas or in the basement of the talks without practicality. It is easy to see in any library that the emphasis is not just to combine business and enterprise development and ethics. In fact to go a library is difficult to find publications that discuss the issue, although the amount does not necessarily indicate anything definitive, at least mark a trend.

To win it and make a profit rather than short or medium term, but in a project that lasts over time, ethics is undoubtedly one of the fundamental ways.

Effects of ethics and business associate
1. Build trust. When Ford, in 2000, decided to recall 1.4 million cars from defective seatbelts installed in the driver’s seat and front passenger, not only did it not to be exposed to a flood of lawsuits but to avoid creating an image that was finally risky business for the company. Acting on solid ethical principles and non-utilitarian or Machiavellian, builds trust among consumers.
2. Produce profits. The companies want to sell their products, however, when you want it at all costs, without regard to ethical principles, which ultimately produces a decrease in consumption. Consumers eventually will understand that act under a certain pattern unethical is not a good business.
3. Creates a pleasant working environment. When workers feel shame or rejection by the work you do and what the company makes for a business, then it creates a situation of bad atmosphere at work where there is absenteeism, refusal to compromise with the company, socabar successful efforts, including sabotage. An employee pays more when is proud of his company. It is a constant psychological motivation pride.

Ethics, good business
Acting with universal ethical principles based, is ultimately a good deal. Generate positive attitudes in people to know that companies act according to ethical standards clear and transparent.

It is necessary to deep reflection about the problem. It is also important to encourage more strategies to educate new generations in different ways to address the business and development without neglecting the ethical sense.

When honesty is the best investment
Business Ethics and appear to be diametrically opposed to a fruitful dialogue. However, each day becomes more aware that integrity and profit can go hand in hand.

Often common belief that ethics and business do not go together. Even some often say, half jokingly half seriously that “if we do business, then forget the ethical principles.”

Other, less drastic, talk about a particular ethic to the business world with its own rules and principles do not apply in the everyday world. To what extent is this true? What can you say about the relationship between ethics and corporate business world?

Awareness of a problem
It is known what happened to Enron in the U.S., that the November 8, 2001 acknowledged having used inappropriate practices for more profit. Some of its executives were indicted for participating in maneuvers of fraud, money laundering, misuse of confidential data and conspiracy.

In March 2002 the company Adelphia Communications, the fifth largest cable company in the U.S., announced its bankruptcy and its top executives were accused of using company assets as collateral for personal loans. Several former executives were arrested on charges of plunder and fraud of more than 1,000 million dollars and lead to the bankruptcy of the cable TV network. The directors of the company through partnerships ghosts, emptied financial assets of the firm, to the detriment of shareholders, investors, suppliers, tax authorities and the public.

With bad practices, pay for the sins
These and other recent incidents have put the issue of ethics in the table. As Lerner notes, the reality is that “the problems of values and moral attitudes are occupying an ever greater reflection and corporate power.”

What is striking is that criminal activity has reached the highest levels of several companies, securities firms, accounting firms and auditors and other major firms. This has led to only a few dishonest people have damaged the reputation of many honest companies and executives.

The expansion of the audits has led to a diversification of concepts or types of audit:

* External or independent Audit:
Also known as auditing of financial statements. It is performed by competent and independent through the implementation of procedures subject to generally accepted standards, in order to express an opinion on the fairness with which these financial statements present the financial situation.

* Internal audit:
An activity is complete, continuous and independent. It is made in an organization, personnel of the same, consisting in verifying the existence, performance, effectiveness and optimization of internal controls of the organization.

* Operational Audit:
A review of the operating procedures of any part of an organization (department, division, section) in order to evaluate the effectiveness and efficiency of it. Can be performed by internal or external auditor.

* Administrative Audit:
It is done when it comes to evaluating a specific role within the organization, in order to determine if you get maximum efficiency in this role in particular.

* Management Audit:
The objective is to evaluate the management, analysis and diagnosis of the performance of leaders and business leaders regarding objectives, policies and control systems. So they can determine existing weaknesses in terms of criteria of economy, efficiency and effectiveness.

Sine qua non is to be the total independence of the auditor, and that is that otherwise all would be completely nullified his opinion, lacking in credibility and validity to those who had placed their trust in him.

Would be those connected with the company for any reason, and they need to be informed in a clear on it. The recipients are:

* Managers and administrators:
The audit provides them with a means to have a reasonable margin that both the management and control of the business were conducted efficiently and in accordance with the policies and procedures designed from top management.

* Owners:
The majority of the shareholders and owners delegate the power to administer third party. The audit must show the yield and the way in which heritage is managed. The auditor’s report serves as an element of the first trial to assess the ability of management.

* Investors:
To invest in the company must have information enabling them to ascertain the income, financial situation, therefore financial analysis by passing the entity.

* Banks and other credit institutions:
When loan applications are of great importance should be aware of reliable data on the creditworthiness of the applicant’s ability as well as the chances of returning the requested credit.

* The Public Finance:
The auditor’s involves the expression of good faith of the taxpayer, in that the audited financial statements that are reasonably reflect compliance with tax obligations.

* Financial analysts:
They are provided with the possibility of having uniform and reliable data for their studies.

* The creditors, suppliers and third parties in general:
For the guidance we provided them and gives them confidence as they try to enter into transactions, such as the sale of goods, services …

* Loa workers:
The company’s situation affects them face negotiations, profit share …

* Public authorities:
Any program of economic and social policy must be based on real data and true, so obtaining reliable macroeconomic variables.

The audits should reflect the companies’ financial statements. The auditor and benefit functions that relate to the company.

The corporate action affects not only those linked to them on grounds of capital and labor, its scope is broader, and is also of concern to consumers, investors and future or the Public Administration.

The business generates a large amount of information that needs to be known. The companies are a wealth of financial information to be responding to that demand information they create. To produce with a range of quality and quantity information each day more is necessary to have guarantees that underpin and confirm its credibility. It is here that does appear the word audit.

The concept of audit

The American Institute of Certified Public Accountants (AICPA) defines audit as follows: “The independent review of the financial statements of an enterprise, carried out by the auditor (independent qualified professional), in accordance with Generally Accepted Auditing Standards in order to express an opinion on the fairness with which such financial statements present the information contained therein, in accordance with Principles and Generally Accepted Accounting Criteria, which are consistent with those applied in the previous year. ”

The auditor when the field acts sole responsibility is to examine and report on financial statements that are made by the company, expressing his opinion if presented in an appropriate manner the financial situation assets of the entity, the results of its operations and changes in their financial situation.

Beyond their reach and their responsibility is the preparation of financial statements of the entity, nor carry out its accounting admininistración. These tasks are to be made by management of the company.