Answer:
Ethics in Business
Ethical behavior requires an individual to do the things which are morally correct. In business sense ethical behavior on part of the owners and managers require them to act and take decisions which are beneficial for the business as a whole. It requires the personal interest to be ignored and decisions which are best for the business should be taken.
1.M in the present case is not behaving ethically as he was using the car for the transportation to go and from work every day and it was his personal responsibility to maintain the same in the proper condition.
As M did not have the sufficient money to pay for the damage, he can take a short term loan from the business and can repay it later on. But, asking for the damage expense to be recovered from the business is not the correct step.
2.M's decision regarding claiming the damage amount of $2000 from business, affects remaining partners of the firm. As in the business all the profits and losses are shared among the partners, the share of expense will increase for the remaining partners.
3.Macro may consider another alternative as of getting the loan from the company for damage expenses, and later on repaying the same. He can also demand for interest free loan and repayment in installments. M can also describe the entire situation to other partners, and if they agree that Macro can claim $2000 from the business, then he can surely recover the same.
Answer:
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Most large companies are organized as corporations for numerous reasons. The most important reason is that a large company requires a lot of capital and other resources that may not be attainable if it were structured as a proprietorship or partnership. Corporations are able to obtain the necessary capital and resources by issuing ownership of the company known as stock.
Answer:
Liability to Stockholder's equity Ratio
This ratio depicts the link between the liabilities of a corporation and the equity of the owners of the corporation. This ratio is used by bankers, stockholders and creditors for analyzing the performance of the corporation financially. This ratio is calculated by using the below mentioned equation.
a.Accounting equation shows the relationship between the assets of an entity with the liabilities and owner's equity. This equation can be used to calculate the value of liabilities when the value of assets and stockholder's equity is given. The accounting equation is presented as shown below.
Year 1
The Net liability for the Year 1 is
Year 2
The Net liability for the Year 2 is
.
Year 3
The Net liability for the Year 3 is
b.Year 1
In the year 1 total net liability is $22,620 and the value of stockholder's equity is $17,898. The ratio is computed using the below mentioned formula. The ratio of liability to equity in the year 1 is
.
Year 2
In the year 2 total net liabilities is $24,027 and the value of stockholder's equity is $17,777. The ratio is computed using the below mentioned formula. The ratio of liability to equity in the year 2 is
.
Year 3
In the year 3 total net liabilities is $27,996 and the value of stockholder's equity is $12,522. The ratio is computed using the below mentioned formula. The ratio of liability to equity in the year 3 is
.
c.It can concluded that as there is an increasing trend of ratio of liabilities to stockholders respectively from 1.26 to 1.35 to 2.23, it can be said that in the business the owners funds are decreasing and creditors amount is increasing.