Importance of Financial Management - Free Essay Example

INTRODUCTION The modern thinking in financial management accords a far greater importances to the management decisions and making policy. Today financial managers occupy key positions in top management areas and play dynamic role in solving complex management problems. The main object ive of accounting is to provide the necessary information, which is useful for the person within the organization i.e.; owners, management, employees and also outside the organization i.e.; investors, creditors, government, consumers, etc. Financial accounting is concerned with record keeping directed towards the preparation of income statement and financial position statement. It provides information regarding profit and loss of the enterprise and also its financial position as on that particular date. This information is helpful to management to control the major functions of the business i.e.; finance, administration, production and marketing, but details regarding operating efficiency to their lacking financial statements are mainly concerned with the managements interest in future of the organization. Thus the financial performance valuation involves the determination of the companys ability In mobilizing the funds required for the business and utilizing the funds in the business. Therefore, the financial performance is concerned with the appraisal of the following: Capital formation Capital structure Profitability and profit allocation Working capital and liquidity management FINANCIAL ANALYS Financial analysis is the process of determining the significant operating and financial characteristics of a firm from its accounting and its financial statements. The goal of such analysis is to determine the efficiency and performance of the firms management, reflected in the financial records and reports. This analysis will help us to measure firms liquidity, profitability and other indications that determine whether the business is conducted in a rational way or not. METHODS OF FINANCIAL ANALYSIS: There are 7 methods of financial analysis. Such are: Comparative statement Comparative income statement Comparative balance sheet Common-size statement Trend analysis Fund-flow analysis Cash-flow analysis Ratio analysis Cost-volume profit analysis RATIO ANALYSIS: Financial statement plays a decisive role in setting the frame work of managerial decisions for the financial statements viz; income statement and balance statement are prepared to help the management in taking decisions. The Ratio analysis is the most power tool of financial analysis. Meaning: A ratio is simple arithmetical expression of the relationship of one member to another. Accounting ratios are relationships expressed in mathematical terms between figures which are connected with each other in some manner. Ratio analysis shows inter-relationship between the different items in the data. Current ratio: Current ratio = Current assets / Current liabilities The current ratio is calculated by dividing the current assets by the current liabilities. Current assets include cash and those assets which can be converted into cash within year such as inventories, sundry debtors, marketable securities, loans and advances and prepaid expenses. Current liabilities are obligations maturing within a year, including creditors, bills payable, accrued expenses, bank overdraft, income tax liability, loans and advances and provisions. The companys liquidity position was very low in the initial years where as it is very high in the later years. Quick (or) Acid test ratio: Quick ratio = (Current assets Inventory) / Current liabilities The ratio is really at the rate of current ratio and is found out by dividing the total current liabilities. From the analysis, it can be interpreted that the companys liquidity position to pay for current liability is high. This result is higher interest cost on networking capital which affects the profitability of the firm. Debtors days: Debtors days = (Debtors / sales) * 365 The liquidity position of the firm depends on the quality of the debtors to the great extent. This resulted in higher balance in debtors for which company had to pay more interest charges which affected profitability of the company. This can be improved 3 times better as observed in the ratios of well doing firms. This will result in big reduction in interest charges as well as increase in profits. This possible only through better debtors management and optimum credit policy of the firm. Creditor days: Creditor days = (Creditor / Cost of goods sold ) * 365 This ratio is a variation of the credit ratio and gives similar indications. It measures the portion of the firms assets that are financed by creditors. A very high ratio indicates a greater risk to creditors as also to the share holders under adverse business conditions. On the other hand , a low ratio is for the creditors in extending credit. Net income ratio: Net income ratio = (Net profit / sales) *100 This ratio measures the rate of the net profit earned on sales. It establishes a relationship between net profit and sales in overall measure of the firms ability to turn pound of sales into net profit, this ratio also indicate the firms capacity to withstand adverse economic conditions. Gross income ratio: Gross income ratio = (Gross profit / Sales) *100 The gross profit has been arrived by adding the closing stock and subtracting the materials, excise duty, wages and other manufacturing expenses to sales. This ratio reflects the efficiency with which management produces each unit of the product. When the gross margin in subtracted from 100% we get the ratio of cost of goods to sale. Return on equity: Return on equity = Net income / Share holders equity The amount of net incomereturnedas a percentageof shareholders equity.Return on equitymeasures a corporations profitabilityby revealing how muchprofit acompany generateswith the money shareholders have invested. Net income is for the full fiscal year (before dividends paid to common stock holders but after dividends to preferred stock.) Shareholders equity does not include preferredshares. Cost of sales to sales ratio: Cost of sales to sales ratio = Cost of sales / Total sales Through the manufacturing expenses percentage of company is less than the industry average the Cost of sales is slightly more than the industry. This can be, because of more depreciation charges or difference in excise duty. Therefore company has to produce goods by effective utilization of foxed assets to bring down the depreciation cost of sales. Stock turnover days: Stock turnover days = sales / inventory The higher the stock turnover the better, because money is then tied up for less time in stocks. A quicker stock turnover also means that the firm gets to make its profit on the stock quicker, and so the firm should be more competitive. However, it will vary between industries and so it is important to compare within an industry. Return on net assets: RONA = net income / (Fixed assets + Networking capital) Here, Networking capital = Current assets Current liabilities. It is the useful measure the profitability of all financial resources invested in the firms assets. It evaluated the use of total funds without any regard to the sources of funds. Higher the ratio more effective is the firm is using the pool of funds. Sales to net assets employed: Sales to net assets employed = sales / net assets Here, Net assets = Fixed assets + Current assets Current liabilities. This ratio is also called the earning power of the firm and represents the return of the funds. It indicates how well management has used funds supplied by the creditors and owners. Higher the ratio better is the position of the firm and more efficient of the management in utilizing funds, entrusted to it. CONCLUSIONS In the overall of a business is to earn a satisfactory return on funds invested in it, consistent with maintaining a sound financial position. The position of the company according to ratio is satisfactory in the year 2008 2010. That means each year profit had been increased. BIBLIOGRAPHY Financial management M Y Khan P K Jain https://www.investopedia.com

How The Environment Influences Schizophrenia and Possible Prevention - Free Essay Example

Abstract: Schizophrenia is a complex and heterogeneous disease that affects over 1.5 million people in the United States alone. It causes structural abnormalities in multiple brain regions as well as alters neuronal signaling causing a plethora of symptoms that affect an individuals day-to-day life. Globally it accounts for almost 1% of disability adjusted life years (DALYs), yet there is no known cure (Samele, 2007). However, for the disease to manifest it is currently thought that there must be both a genetic vulnerability, as well as environmental factors that result in a disease state. There is significant evidence showing that prenatal malnutrition (in specific regards to folate and vitamin D), childhood trauma, IQ and social cognition, social stressors, adolescent cannabis use, and expression of endogenous retroviruses all contribute to the development of schizophrenia (Davis, 2015). The large role epigenetics plays in the development schizophrenia presents an untapped potential to decrease rates of the disease through preventative treatment. Introduction: Schizophrenia is a form of psychosis that manifests in the early 20s for males and late 20s for females. While the exact mechanisms of the disease are unknown it is hypothesized that it results from improper neural development leads to the widespread dysfunction of multiple pathways in the brain. Functional scans show abnormal activity in both the frontal and temporal lobes as well as a reduction of tissue volume in these regions. This decrease in volume is thought to be a result of thinning of the cerebral cortex in the frontal and temporal lobes. Schizophrenic patients also typically have larger ventricles that control subjects. This is hypothesized to be the result of decreased tissue volume (Aleman, 2014). Increased dopamine secretion by the ventral tegmental area (VTA) is also commonly seen in schizophrenia; this causes abnormalities in the mesocorticolimbic pathway. This pathway is thought to be the main contributor to positive symptoms and the target for most anti-psychotic me dications used to manage symptoms (Aleman, 2014). The disease is characterized by 3 different subsets of symptoms: positive, negative, and cognitive. Positive symptoms are the most distinct symptoms of the disease and are categorized by an additional feature in which there is no corresponding normal phenotype. These symptoms include hallucinations, delusions, and catatonic behavior. Negative symptoms are the loss of normal function including the lost ability to express and distinguish emotions as well as loss of motivation. This is usually seen in the form of avolition (loss of interest/motivation), alogia (poverty of speech), and flat affect (inappropriate response). The third and final subset of symptoms are classified as cognitive and are generally more subtle. When tested schizophrenic patients often show decreased cognitive functioning, memory consolidation, and learning abilities- this relationship is linear, with more severe cases showing greater cognitive declines (Vacic, 2013). The diagnosis of this disease requires at leas t one positive symptom accompanied with either or both negative symptoms or cognitive symptoms as well (Vacic, 2013). Research shows that schizophrenia is largely a genetic disease†having a diagnosed parent has a conference of 10% while having a monozygotic twin with the disease infers a 50% probability of the other twin also having the disease. Over one-hundred genes have been linked to schizophrenia; however, the underlying mechanisms and effects of different genes are yet to be known (Ripke, 2014). Currently the development of schizophrenia is a two-hit hypothesis, meaning that without environmental influence, individuals with a genetic vulnerability will never develop schizophrenia (Davis, 2015). Malnutrition: Malnutrition is perhaps the most apparent and notable influencer. Prenatally malnourished rats were found to have decreased neural aborization in the prefrontal cortex and hippocampus for both dopaminergic and seratonogic neurons (Davis, 2015). After the Dutch Hunger Winter of 1944 and 1945 as well as the famine in China during the 1960s, schizophrenia rates in the offspring of mothers who lived through the famines doubled (Davis, 2015). Folate, iron, and vitamin D deficiencies are all micronutrients associated with later onset of schizophrenia. An increase in homocysteine plasma levels in the third trimester of pregnancy (a marker for low folate levels) is associated with a two-fold increase in risk for schizophrenia (study controlled for both ethnicity and education) (McGrath, 2011). It is hypothesized that a deficiency in folate induces changes in methylation causing epigenetic changes in the expression of maternally imprinted genes (Kirkbride, 2012). Plasma levels of anemia in th e third trimester (marker for iron deficiency) were shown to confer a four-fold increase (Kirkbride, 2012). Lastly, vitamin D, which is perhaps the most studied with regard to schizophrenic onset, when supplemented is associated with a 77% risk reduction in subsequent schizophrenia (McGrath, 2004). The role of vitamin D deficiency is the proposed explanation for the increased rates of schizophrenia in offspring born in the winter-spring, migrant populations, and populations that live far from the equator (Graham, 2015). Childhood Trauma: Meta-analyses suggest that people with a history a trauma are 3x more likely to develop psychosis later in life (Davis, 2015). Those who underwent past traumatic experience also reported worse positive symptoms than other patients with the disease. This is thought to be the result of increased cortisol secretion hypothalamic pituitary adrenal (HPA) axis activity that is commonly seen in trauma survivors (Laurens, 2016). Brain Derived Neurotropic Factor (BDNF) has shown to have decreased mRNA levels in the hippocampus of those exposed to trauma which have been shown to cause volume reductions. This supports evidence for the widely held hypothesis that the hippocampal decreases seen in schizophrenia are a ramification of decreased expression in BDNF (Bennett Lagopoulos, 2014). Social Stressors: Marginalized, alienated, and/or migrant groups of a population are shown to have over 2 times greater of a risk for development of schizophrenia. Poverty, social uprooting, and discrimination are more prevalent in these populations suggesting that social stress contributes to the difference in rate between native and marginalized populations (Susser Patel, 2014). This may have major global health implications as the people most likely to need resources and support for schizophrenia dont have access to these types of services, exacerbating the problem (Susser Patel, 2014). IQ: Lower IQs have been connected with a higher risk of schizophrenia. Children with an IQ more than 2 SD below the average have an 8x greater risk of developing schizophrenia (Leeson, 2009). Some studies have shown that an above average IQ may decrease the risk of developing the disease; however other studies suggest that a higher IQ may confer an increased risk for a subtype of the disease (Davis, 2015). HERV activation: Several studies indicate that the genetic modulation of human endogenous retrovirus (HERV) elements can alter neuronal development when modulated at vulnerable stages of development. HERVs constitute 8% of the human genome; however they usually remain unexpressed (dormant) unless stressors, parasites, or other factors that upregulate expression of harmful viral transposed DNA (Davis, 2015). There has been extensive research connecting the parasite Taxmoplasma Gondii to HERV expression and later onset of schizophrenia (Torrey, 2006). Knowing some of the epigenetic factors gives society the opportunity to mitigate these risks and combat schizophrenia through preventative measures. While there is no known cure, if this debilitating disease can be tackled from the other side it may be possible to prevent schizophrenic onset and limit the people that have to live with the side effects of anti-psychotic medications. Methods: A population based control study was done to assess neonatal vitamin D deficiency and its effects on the risk of schizophrenia. It was hypothesized that lower concentrations of vitamin D would confer a greater risk of schizophrenia. To do this an individually match case-control study was conducted from a population-based cohort. This included 424 healthy individuals as well as 242 individuals with schizophrenia. Using liquid chomotogrophy tandem mass spectroscopy, the concentration of 25-hydroxyvitamin D3(25[OH]D3) was measured. The concentration of 25- hydroxyvitamin D3(25[OH]D3) was obtained from neonatal dried blood spots that are stored for all individuals born in Denmark since May 1, 1981. By identifying people with schizophrenia that who were born later than May 1 of 1981, they were able to find a control that was born the exact same dya, was the same sex, and had no history of schizophrenia and compare neonatal vitamin D levels. Those in the lower 3 quintiles for of 25- hydrox yvitamin D3(25[OH]D3) concentration (lower than 40 nmol/L) were linked to a 2-fold increased risk for schizophrenia. This supported the hypothesis that low concentrations of neonatal vitamin D are associated with an elevated risk for schizophrenia later in life (McGrath, 2010). An epidemiological study based in Finland looked at trends in seasonal birth, and migrant populations in relation to rates of schizophrenia. Using information regarding schizophrenic diagnosis from the Finish Civil Registration system, they found over 5x greater rates of schizophrenia in dark-skinned migrant populations and a 3x greater rate in individuals born in winter or spring months. These two different cohorts of people are statistically known to have profoundly higher rates of vitamin D deficiency, suggesting that vitamin D deficiency is linked to the development of schizophrenia; however, the authors of this study emphasize that this is mearly an association and there are likely numerous variables that may have influenced the results of the study (McGrath, 2011). As mentioned previously, another risk factor thought to contribute to the onset of schizophrenia is infections that lead to variations in genetic expression. One of the most prominent infections associated with schizophrenia is a parasite known as Toxoplasma Gondii. Research from the Center For Disease Control (CDC) measured the number of antibodies against T. Gondii in groups of people with and without schizophrenia. Controls were randomly selected and schizophrenic individuals had been diagnosed using current diagnostic criteria there were two different groups of schizophrenic individuals in the study: medicated and unmediated. Antibodies were measured using enzyme immunoassays. As predicted, in this study, as well as many others, the schizophrenic patients had significantly more antibodies to T. Gondii than controls. There was also a statistical difference in the number of antibodies between medicated and non-medicated patients, with medicated patients having fewer antibodies. Thi s suggests anti-psychotics may cause a decrease in antibody levels (Torrey, 2006). In a study aimed towards prevention of schizophrenia, emotional recognition was analyzed to determine if schizophrenia could be predicted by testing emotional recognition. Tree different groups were compared: (1) First-episode schizophrenic patients, (2) individuals with high risk of schizophrenia, (3) control. High risk individuals were identified using genetic factors. This was defined as those who had a first-degree relative with schizophrenia (this was assessed using the Family History Research Diagnostic Criteria). The PANSS test is the best test to acess psychiatric symtoms; this test was used to control for degree of symptoms. The experiment consisted of over 110 slides of faces representing fundamental emotions- sadness, anger, happiness, disgust, surprise, fear, and neutral. These were shown for 0.5 seconds 4 slides consisting of a number between 1 and 10 were randomly integrated to control for attention. Using a Prosody was also assessed using 4 different phrases: They must stay here.; He will come soon.; She will drive fast.; and We must go there. These 4 sentences were spoken with with different moods by actors. Subjects listened to 60 total sentences with a total of 5 different emotions. It was hypothesized that there would be a significant difference between controls and the other 2 groups in the interpretation of both sadness and fear. The statistical test utilized were a one-way ANOVA and an ANCOVA which was adjusted for sex, age, and current IQ. Significant differences were seen between control groups and both high risk individuals as well as the first-episode schizophrenics with regards to sadness and fear when evaluating emotional recognition in facial expressions; however, there wasnt significant variance between the other emotions. For Prosody, the only emotion with a statistical difference between controls and both high-risk and first-episode schizophrenics was anger. While the results of facial recognition supported the hypothesis the res ults with regards to prosody did not, suggesting that it is schizophrenia cannot be identified simply by the inability to interpret fear and sadness (Amminger, 2012). Discussion: With more and more research providing evidence of environmental factors that contribute to schizophrenic onset, preventative measures have become easier to implement and there is a greater understanding of the tests needed to determine high-risk individuals (Brown, 2011). Malnutrition: The results from studies aimed at vitamin D show that vitamin D levels of less than 40 nmol/L in utero greatly increase the risk for schizophrenia. It also explains why offspring born in certain seasons as well as migrant populations have dramatically higher rates of schizophrenia. This allows us to implement prevention initiatives in this regard. Education programs aimed to inform future mothers, high-risk populations as well as the general public about vitamin D deficiency in utero and the consequences associated with the deficiency would likely decrease rates of schizophrenia and minimize other consequences that result from vitamin D deficiency, such as rickets. In the majority of the Scandinavian countries programs targeting the high-risk populations such as dark skinned migrant populations provide vitamin D supplementation for these individuals. Dark-skinned migrants are on of the groups with the highest rates of schizophrenia as they have the greatest rates of vitamin D deficie ncy (McRaith, 2011). Their ancestors lived closer to the equator where there was plenty of sunlight; therefore, having the enzyme needed to synthesize vitamin D was evolutionarily unfavorable. Most prenatal vitamins contain 400 IU/day of vitamin D; however the State of Alaska Epidemiology released a report this year stating that 400 UI is not nearly enough. The study recommends pregnant women taking over twice that amount, 1,000 IU/day (McGraith, 2011). It is likely that with this newfound information companies will start changing the concentration of vitamin D in prenatal vitamins; however, women should be informed with regard to the amount of vitamin D they should be supplementing and may need to supplement vitamin D in addition to using a prenatal vitamin. While vitamin D is the most studied micronutrient linked to schizophrenia, supplementation of iron and folate (mentioned above) should parallel these preventative measures to mitigate risk further. Childhood Trauma: Limiting the risk due to trauma is not as straight-forward as vitamin D which can be solved by taking a pill. Childhood trauma is an issue in itself and there are many groups that strive to limit this such as Blue Knot in the United States that provides resources to children that are in traumatic situations or survivors of traumatic situation (Supporting adult survivors of childhood trauma abuse, 2018). Social services also serves to help limit the amount of children in abusive or neglecting homes, and most school systems require teachers to report signs or indications of possible abuse. Luckily the majority of children in the United States are well-cared for and protected from this risk factor, and hopefully that percentage will grow as more resources are put in place. Social Stressors: Populations accustomed to chronic social stress are known to have a 2x greater likelihood of developing schizophrenia. This may have major global health implications as the people most likely to need resources and support for schizophrenia dont have access to these types of services, exacerbating the problem (Susser Patel, 2014). Resources for low SES families exist; however, the resources available fall short of the need. Inclusive societies and distribution of financial opportunities are needed to help mitigate this risk factor. HERV activation and T. Gondii 12 out of 13 articles show that antibodies for T. Gondii are significantly higher in schizophrenic individuals than controls (Davis, 2015). Currently 1/3 of the population is infected with T. Gondii (Torrey, 2006). In many European states prenatal T. Gondii testing is required, yet it is rarely done in the United States. Testing, particularly for individuals with a family history (and thus a genetic predisposition to schizophrenia) could provide important information and instigate additional testing to determine if the baby has also been infected. Also as mentioned in the study outlined above, antipsychotics are linked to lower levels of antibodies against T. Gondii. When researched further it was found that some antipsychotic medications inhibit the growth of T. Gondii in cell-cultures (Torrey, 2006). This shows another potential way antipsychotics suppress the symptoms of schizophrenia and while it currently provides most insight into treatment, it is likely this information may contribute to preventative outlooks down the road. Emotional Recognition: While many studies suggest it may be possible to identify the future onset of schizophrenia by testing emotional recognition, results from the study outlined in the methods portion suggest that this is not a liable way to do so. While they did note some statistically significant findings these varied greatly based on the method in which the emotion was expressed- facial expressions and prosody (Amminger, 2012). While it may be possible in the future to identify high risk individuals by testing emotional recognition current studies havent produced a way in which to do this or the potential mechanisms behind it.