Uncertainty concerning the business, Financial Accounting

Assignment Help:

Uncertainty concerning the business

It has been recognised in a variety of studies that the problem of adequately financing SMEs is a problem of uncertainty. A defining feature of SMEs is the uncertainty surrounding their activities. But much owners or managers inform their banks of what they are doing there is always an element of uncertainty remaining that is not a feature of larger businesses. Larger businesses have grown from smaller businesses as well as have a track record - especially in terms of a long-term relationship with their bankers. Bankers can examine over a period of time that the business is well-run, that managers can manage its affairs and can therefore be trusted with handling bank loans in a proper way. New businesses, in general SMEs, obviously don't have this track record. The problem is still yet broader.

Larger businesses conduct more of their activities in public for example subject to more external scrutiny than do SMEs. Therefore if information is public, there is less uncertainty. For instance a larger business might be quoted on an exchange and therefore be subject to press scrutiny exchange rules regarding the provision of certain of its activities and has to publish accounts that have been audited. Many SMEs don't have to have audits certainly don't publish their accounts to a wide audience and the press are not really interested in them.


Related Discussions:- Uncertainty concerning the business

expected quarterly return, Common stocks A, B, C, and D had the following ...

Common stocks A, B, C, and D had the following quarterly returns. A B C D 0.07 0.05 0.07 0.12

Concepts in accounting, Mr. Inherits 30000. Decides to open a salon jj salo...

Mr. Inherits 30000. Decides to open a salon jj salon. On 1/4/2016 commits 10000 to the business Opens an a/c in the bank What will be the money under capital in his books on 1/4/10

Activity-based costing (abc), Activity-Based Costing (ABC) An accounti...

Activity-Based Costing (ABC) An accounting method that assigns identifiable costs and allocates common costs to definite product lines or business fragments Also known as pro

Economic order quantity formula, For getting the EOQ formula we shall use t...

For getting the EOQ formula we shall use the subsequent symbols: U = annual usage/demand Q = quantity ordered F = cost per order C = per cent carrying cost P  = pric

Example on financial and managerial accounting, Mr N. M. is lucky to have a...

Mr N. M. is lucky to have a lottery prize of Rs 20 million. He does not have any liability and does not have any claimant over this money. He has the following alternatives: (i)

The trustee in bankruptcy, THE TRUSTEE IN BANKRUPTCY 1) Appointment o...

THE TRUSTEE IN BANKRUPTCY 1) Appointment of trustee The trustee is appointed: By the creditors by ordinary resolution, or By the committee of inspection, if so

What two components are used to compute the return on assets, What two comp...

What two components are used to compute the return on assets ?

Inventory, HOW TO RECORD INVENTORY AT NET REALISABLE VALUE ON JOURNAL

HOW TO RECORD INVENTORY AT NET REALISABLE VALUE ON JOURNAL

Trade sources of information, Trade Sources of Information Within for i...

Trade Sources of Information Within for instance the credit card industry it isn't uncommon for information on an individual's credit rating to be shared. In a alike vein withi

Wilson wonders''s bonds, Wilson Wonders's bonds have 15 years remaining to ...

Wilson Wonders's bonds have 15 years remaining to maturity. Interest is paid yearly, the bonds have a $1,000 par value, and the coupon interest rate is 12%. The bonds sell at a pri

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd