Accounting and Finance Features for Limited Companies

(Warda, 2005) Explains the state of Wyoming invented in 1977 for how the new form of business can meet the investors’ expectations and needs. The previous business form was not clear at this time and was not able to separate the liability of the company, and the owners and that cause a risk to the investors and affect the organization’s depts. According to that, the limited liabilities companies’ become the solution to attract more investments by separate the company and their owners and consider them as a separate entity, and that helps to protect the investors to give the limited companies the power and features as the following:

• The limited company has their own legal entity with its own legal rights separated from the company members or directors and property also is own and not treated or belong to the shareholders and directors.
• The shareholder liability is limited to the agreed percentage of their shares and invests in the company.
• The limited company must be registered and must follow the country legal authority.
• The limited company has a continuity feature, and the business will continue even if of one or all the shareholders or partners dead and their share will be transferred to the inheritance.
• Have a comfortable facility to transfer the shareholders’ investment from investor to another without affecting the business

(Mohn, 2015) Explains the main advantage of the limited companies as it is providing protection for the members of the limited companies from debts or litigation as all the lawsuit against the company not to him and will be the defendant and the will attract the investors to own business. Moreover, it will help the shareholders if they are more than one to file taxes as the partner gain the benefits of using the tax-filing method. On the other hand, there is a disadvantage of the limited company is the variation in the country or place laws and the shareholders should understand it in each place, that can make confusion of opening and operate the limited company.

Moreover, they have a taxation disadvantage as they as charged taxes more than any other kind of business and they are avoiding that by filing taxes as cooperation.

(Atrill and McLaney, 2011) explains the features of the accounting and finance for the limited companies as the following:

• The limited companies have two sources as the following:
  1. Sharing the capital as the shareholders will share their own investment according to the two type of share the ordinary share and that will enforce the shareholder to wait until to meet all the company due to liabilities to know how will pay to the individuals. Preferences shares which the limited company will ensure the shareholder’s percentages without wait the dividends distribution
  2. The limited company can be financed through borrowing and the bank loans.
• Creating reserves as the following:
  1. Capital reserves which can be a share premium reserve by calculating the value of 1 USD in the share book value by 2 USD in the market value and the difference will be considered as premium reserves. The revaluation reserves by considering the increase as a fixed assets value and the company will move the reserve to a distribution reserve and will not go to the profit or loss accounts
  2. Considering the profit as a paying taxes and expenses and that named Revenue Reserves as the following:
     1. Dividends which is distributing the shareholder’s amount of the year profit.
     2. Named Reserve which is held the sum for any project.

• Accumulated profit and it also named retained earning which is the amount of additional benefit during the year.

• The limited companies request to make audit through authorized auditing company and publish their financial statements bylaws and prepare the following statements:
  1. Balance Sheet as they have to show the original capital and the retained earnings and dividends in a separate line
  2. Income Sheet as they have to prepare the income statement and that must be before and after the taxation.
  3. Cash Flow for the LLC
  4. Equity Changes Statement, it is a new statement and also should provide beside the other three statements

In Saudi Arabia, the accounting standards and reporting coordinate with Saudi Arabian Monetary Authority (SAMA, which is the Saudi Arabian central bank) through IFRS Foundation and accepted by Saudi Organization for Certified Public Accountants (SOCPA) in 1992 to have international audit firms and applied to all companies under Ministry of Commerce supervision. It requires all the banks and insurance companies listed or unlisted in Saudi Arabia Stock Exchange to preparing the financial statements according to IFRS standards. (IFRS.Org, 2015)

Regards,

 

Arqam S. Al Kendi

 

References:

Atrill, P. and McLaney, E. (2011). Accounting and finance for non-specialists. Harlow, England: Financial Times/Prentice Hall. P 123-141

IFRS.Org. (2015). IFRS APPLICATION AROUND THE WORLD – JURISDICTIONAL PROFILE: Saudi Arabia. [online] Available at: http://www.ifrs.org/use-around-the-world/Documents/Jurisdiction-profiles/Saudi-Arabia-IFRS-Profile.pdf [Accessed 25 Mar. 2017].

Mohn, E 2015, ‘Limited liability company (LLC)’, Salem Press Encyclopedia, Research Starters, EBSCOhost. [Accessed 25 Mar. 2017].

The limited benefits of limited companies’ 2007, Mortgage Strategy, p. 50, Business Source Complete, EBSCOhost. [Accessed 25 Mar. 2017].

Financial Ratio Analysis

The financial ratio identifies the relationship between the variables. For example, the operating expenses to the sales. Profitability ratio includes a gross profit margin calculated as gross profit divided by sales. There is two essentially financial ratio analysis, one to track the singular firm execution after some time and the second one is to make the same or similar judgment for consistent performance. The company can assess their results by assessed utilizing pattern examination computing unprecedented ratios and their qualities on for each period premise and after some time. We can use this investigation to spot slants that can be a reason for concern. For example, in the case of an expanding average accumulation period for outstanding receivables or a decrease in the association’s liquidity status, the ratios will serve the company as a warning for troublesome issues. Also, it will be as benchmarks for the execution estimation. (Weygandt, Kimmel and Kieso, 2009)

So, the trend analysis helps the organizations to make a direction for the financial statement elements and predict the occurrence of the future relative accuracy. Moreover, it contributes to evaluating the business performance and specify the potential problems. Moreover, every ratio guides the company about the factors such as the earning power, solvency, efficiency, and the corporate debt to work to measure the relation between the present components.

The small business using the income statement to spot trends as a start. Running any business need to have a plan for days, months and years ahead. If the sales increase to ten percent in the last month does not necessarily translate into ten percent this month as there are many factors must be considered. For example, hiring the new employees in the sales department may the cause of increasing the sales forecast. Moreover, viewing the trends according to the growth and ratios will not provide the accurate information and picture in the income statement and the company must take into their consideration the overall economy and business climate and customers needs. The rations also used to make relative execution correlations. For instance. Watch how the form stacks up versus in industry midpoints empowers the client to frame judgments concerning critical regions. For Example, (Salmi and Martikainen, 2005) explains that in the gainfulness or administration adequacy, the customers of the money related ratios incorporate gatherings both inner and outer to the firm. The external clients include the security experts, speculators, contenders, act. From inside, most of the business directors use the ration to screen the execution, qualities, shortcomings from which particular objectives, strategy, and activities might be shaped.

In this case, the managers and administrators should set up the liquidity ratio. From the exchange, the supervisors and lenders working to meet the short-term commitments by screen the association’s capacity. Using the liquidity ratios will help the company to measure and show the business ability to reimburse fleeting obligation as the current liability explain the business commitments are commonly due in one year or less. Moreover, the present and quick ratios are utilized to gage an association liquidity. (Brigham and Houston, 2009)

The liquidity ratios are the most useful for the company as it speaks about the enterprise resources that need by the organization to work on. A current ratio of less than 1 implies there are more outstanding current liabilities than there are available resources for paying them. For any case, the fewer resources fluid than others as the Quick Ratio considers the most liquid of the current resources and prohibits existing resources like the stock as it is hard to transfer it to money and the company must pay their commitments to have more money and to keep up wellbeing mone. (Salmi and Martikainen, 2005)

 The last ratio I say is days of money. That can measure in the showing the total number of the number of days of money a business needs to work given its present income rate. The organizations consider that as a benchmark and it is a phenomenal arranging reference for organizations. (Salmi and Martikainen, 2005)

At last, all the business and organizations need to settle on choices in regards to the liquidity that are customized to their particular groups. There are many measurements and benchmarks by which benefits and productivity of the organizations can be measured; it is vital for the organization’s investors and speculators to help to assess the organization from a different point of view to evaluate the current and future of the organization’s potential. (Weygandt, Kimmel and Kieso, 2009)

Regards,

 

Arqam S. Al Kendi

 

References:

Brigham, E. and Houston, J. (2009). Fundamentals of financial management. Mason, OH: South-Western Cengage Learning. p. 90

Salmi and, T. and Martikainen, T. (2005). Review of Financial Ratio Analysis. [online] Lipas.uwasa.fi. Available at: http://lipas.uwasa.fi/~ts/ejre/ejre.html [Accessed 24 Mar. 2016].

Weygandt, J., Kimmel, P. and Kieso, D. (2009). Accounting principles. New York: Wiley. p. 801-802.

Material Requirement Planning (MRP)

Heisig, G. (2002) Explains the importance of the material requirement planning process as it is used to control the inventory and production planning to manage the organization manufacturing process. In the time being, most of the organizations can find easily a software based on the system as a service (SaaS) on-premise or cloud able to manage all the material activities in an efficient way. Moreover, it can be handled manually in order to know what is the organization needs and how they can get it and when the organizations should have that needs. (Heizer and Render, 2014) consider the MRP as a technique help to identify the products demand by using the BOM, which is the material bill, schedule of master production, receipt expectation, and the organization inventory.

The role of MRP affects all the organization’s functions as it is related to all the information flow inside the organization and cannot be without involving all the organization functions in the business. (Rauch, 2012) Explains the core functions of the organization affected by MRP as the following:

• Manufacturing: As mentioned above the manufacturing is one of the main objective roles of MRP as it is managing the process of the organization manufacture and it is the core to develop the production
• Engineering: As implementing of MRP in the engineering fields will show the mismatch of the BOM like the manufacturer bills and will help to get the accurate information to the organization.
• Marketing: As it helps to know the main demand forecasts and outstanding order to contribute in the know the production plan and the needs produce the products.
• Finance: As the organization maintains their profitability the MRP will help to optimize the product needs and requirements for production.
• Personnel: As it is the essential part of the organization. The personnel must be educated and understand the critical of MRP and affects all the organization’s

(Gallego, 2016) explains the main purpose of implementing a successful MRP as the following:

• Ensure the material availabilities for the products produced according to the organization plan and customer delivery.
• Understand and maintain the way to manage the lowest level of the organization inventory to ensure the smooth production of the products.
• Help the organization to have a proper plan for the material availability through managing the purchase activities and arrange the material delivery schedule.

In conclusion, the evaluation and critical of MRP show how it helps the organizations to succeed and having a smooth functioning of the organizations. Moreover, it should involve and interact with all the organization functions and cannot be alone. Most of the organization function contact directly and indirectly to the MRP system and that show how the MRP is important in the firm.

MRP system has an excellent advantage as it is used for planning and schedule the material requirements to help in handling the organization capability. It gives some advantage to the organization by reducing the inventory level especially for in-process material and lowering the cost per unit of production. Moreover, it helps to have a better response to the market demand and enhance the customer’s service with improving the capacity allocation and planning. On the other hand, the MRP system also has a disadvantage as it as the following:

• High cost for most of the international MRP system and it is difficult in implement the system technically. In addition, the company will require to spend a lot of effort in installing the equipment necessary’s, train the staff, customize the software to fit the organization requirements, integrate it with the business ERP, and maintain the software.
• It requires a long time to plan and implement it.
• Data entry and file maintenance require considerable inputs in the form of training and education of the personnel.
• Dependence on forecast values and estimated lead-time can sometimes be misleading.

So, it will be a great tool in case of having a high degree of the accuracy of the organization’s operations and depend on the proper implementation.

Regards,

 

References:

Expertsmind.com. (2016). Advantages and Disadvantages of an MRP system, Assignment Help, Materials Requirement Planning . [online] Available at: http://www.expertsmind.com/learning/advantages-and-disadvantages-of-an-mrp-system-assignment-help-7342872741.aspx [Accessed 9 May 2018].

Gallego, G. (2016). Production Management. [online] http://www.columbia.edu/. Available at: http://www.columbia.edu/~gmg2/4000/pdf/lect_06.pdf [Accessed 6 May 2018].

Heisig, G. (2002). Planning Stability in Material Requirements Planning Systems, Springer – Verlag Berlin Heidelberg, New York [Accessed 6 May 2018]

Heizer, J. and Render, B. (2014). Operations Management. 11th Edition. Prentice Hall: New Jersey. [Accessed 6 May 2018]

Rauch, M. (2012). Material Requirements Planning (MRP), what is it and how do we perform it optimally?. [online] http://www.michaelrauch.net/. Available at: http://www.michaelrauch.net/2012/07/material-requirements-planning-mrp-what-is-it-and-how-do-we-perform-it-optimally/ [Accessed 6 May 2018].

Super Market Bakery System

Nowadays, the supermarket bakery places not become only the place to sell only the bread. It becomes the place to sell the bread beside the fresh and tasty snacks and not easy for most of the owners to manage the customer’s needs and optimize the performance to ensure the best selection and waiting for line model (icac.org.hk, 2007).

First-Come, First-Served (FCFS) is a useful waiting model for each organization using a waiting line length, arrival rate, waiting time, and understand the customers serviced based on who came first. Moreover, the customers will expect the delay when he sees the queue before take the buy decision and will wait to make his service (Mack, 2013).

(Blake, 2009) Explains some of the factors should consider when the company selects the waiting model as the following:

• The nature of the products as the bakery usually has different and varied products such as the fast food and fresh desserts and that takes a long time to prepare it.
• The arrival behaviors as there are some customers refuse the idea of waiting in the queues; that may lead to select a wrong product or leave the place without buying So, the company should understand their customer’s needs and choose the right model to increase and maximize their sales.
• Choose the right system design such as Multi-Phase, Single-Phase, or Multi-level. In such cases, the recommended is a single phase single level system to collect the order from the same counter after preparing the order.
• Using the correct pattern or the customer arrival time due to the bakery customers usually have a random rate, that also depends on the season, that will make an efficient model for the season but not applicable in another season.

(wps.prenhall.com, 2016) Explains the critical of choosing the waiting model on the organizations and considering the operational cost and customer satisfaction in order to increase their sales and achieve the optimal performance. Moreover, they mentioned the case study of L.L. Bean, which describes the bad management of the queue system inside the organizations can lead to lost $10 million on their profits and affect the company sales. In addition, the queuing model allows to attract the customers especially at the beginning of the company and give the company a better competition in the better services.

The recommended solution for the bakery system is the FCFS. However, the company should manage that queue to into two queues one for the fast order such the quick, ready bread, and fast food services as it does not take huge time to make the order. Another one is for the order need more time for preparing such the special order to desserts and cake. If the sales are big, the company can arrange to have two queues to who bears a waiting time to have two queues. One for the normal order and another one for the bulk order as it usually takes a long time due to the high quantity order.

The management should manage this queue based on the order time. For example, the management should have a different quest for the express orders which take a short period to finish it and make another one to the long one. On the other hand, they have to consider the bulk order queue as this will affect the customers with a small order and not take huge time. I found an excellent article explain some workaround and the best way to make the best queue as the following:

• The customer should take a queue have a lot of men as they are less patient more than women and more likely to give up.
• The customers should veer to the left as most of the people going to the right due to their nature; they have to do the opposite, that can cause an empty queue on the left.
• The customers should avoid the express supermarket as that indicate a high of purchase and attract the customers.
• They have to consider and monitor the buyer with the number of items more than the amount of the people in the queue. So, Don’t overthink it sometimes you are best off just joining the queue with the fewest people in it.
• Trying to select the cash only queue as it most of the time faster than other queue using the ATMs.

(Stanoeva, 2015) explains an excellent way to describe the customers perceived waiting time and divided it into three cycles as the following:

• Pre-process phase which shows the customer on the line and waits to make the order.
• In-Process phase which shows the customer on the counter to give the employee the order and pay it.
• Post-Process phase which shows the customer in waiting to make his order ready.

There are several things can help to keep the client happy during unexpected service delay as the following:

• Provide to the customers clear and conservative information to them to estimate their waiting time and that will help to reduce their level of anxiety due to the uncertainty of the situation
• The bakery can give the customer longer time for the long the order and more than the expected time. So, the client will be happier if he took the order early.
• Fill the empty time of the customers to make their time goes faster like provide the free internet access to the customer.
• Do not apologize to the customers two-time about the additional delay as that will make him more upset.

(Kuklin, 2013) explain how the technology helps to business operation as the following:

• It contributes to increasing the service efficiency as it can deliver an average increase of 35% in the service efficiency and enable the employees to hike the next customers quickly and easily and facilitate to direct the client to the right station based on their desired service.
• It helps to decrease the waiting time from 10% to 30% and have a better way to monitor the customer’s lines and reallocate the resources as per needs.
• It helps in a decrease in perceived wait time to let the customers know how long they are actually standing in line and perceived wait time can be decreased by as much as 40%.
• It helps to increase in impulse purchases and boost the impulse sales.

Regards,

Arqam S. Al Kendi

References:

Blake, H. (2009). Waiting Line Model. [online] http://www.csus.edu/. Available at: http://www.csus.edu/indiv/b/blakeh/mgmt/documents/opm101supplc.pdf [Accessed 30 Apr. 2018].

Icac.org.hk, (2007). http://www.icac.org.hk/filemanager/en/content_1031/supermarkete.pdf. [online] http://www.icac.org.hk/. Available at: http://www.icac.org.hk/filemanager/en/content_1031/supermarkete.pdf [Accessed 30 Apr. 2018].

Kuklin, P. (2013). 4 Business Benefits of Queue Management Technology. [online] The Public Guidance Blog. Available at: http://blog.lavi.com/2013/09/25/queue-management-technology/ [Accessed 4 May 2017].

Mack, M. (2013). Bake your store to the next level. [online] http://www.supermarket.co.za/. Available at: http://www.supermarket.co.za/SR_Downloads/S&R January 2013 Bakery.pdf [Accessed 30 Apr. 2018].

Stanoeva, S. (2015). Reduce wait times at queue lines to keep customers happy. [online] Solink. Available at: http://solinkcorp.com/reduce-wait-times-at-queue-lines-and-keep-customers-happy-during-service-delays/ [Accessed 3 May 2018].

Ward, V. (2015). Why do all the other supermarket checkout queues always move faster than yours?. [online] Telegraph.co.uk. Available at: http://www.telegraph.co.uk/news/newstopics/howaboutthat/11982373/Why-do-all-the-other-supermarket-checkout-queues-always-move-faster-than-yours.html [Accessed 2 May 2018].

wps.prenhall.com, (2016). Waiting-Line Models. [online] http://wps.prenhall.com/. Available at: http://wps.prenhall.com/wps/media/objects/2234/2288589/ModD.pdf [Accessed 30 Apr. 2018].

 

Patients Flow in Hospitals

(Taha, 2011) Argue the main issue for most of the hospitals and healthcare division and keep working to provide timely access to the patient’s beds. Usually, the patient’s flow shows the ability for the healthcare system and solution to handle the service provider quickly and efficiently. So, the excellent business solution inside the hospitals will help to make a smooth patient workflow inside the departments and make them like a river. However, the lousy system solution will lead to a delay in each step and accumulate the patients like a reservoir. Sometimes, especially in large cities, that patient flow become a significant challenge to the management even with having the right business application and excellent control.

In a different perspective, the patient’s flow can be classified as good in case of the reducing the patients waiting in the queue and can classify as a bad in case if there are a delay and a huge waiting interval time in the patient’s flow. The healthcare division keeps study by the time-series analysis the arrival process for their patients for all the level and departments such as emergency, outpatient, inpatients, booked, and walking patients.

(Traynor, 2013) Explains the smooth patient’s flow will help the hospitals and the healthcare division to reduce the patients overcrowding and avoid the delays. Moreover, it will contribute to give the full and the proper care of him and increase the patient’s services and increase receiving the patients even with the limitation of the resources.

The patients flow become also monitored by the government and using a strategy to improve the patient flow and distribute the patients to the hospitals to decrease the patients crowding.

(Fields, 2016) Explains some approach can be used in the busy hospitals to improve the busy hospitals as the following:

• The hospitals must involve all the departments to promote the patients flow efficiency as the departments must share their idea and share together to reduce the patient’s queues and flow. Moreover, they have to make a periodic meeting to discuss the possible ways to improve that and find the easiest way to generate the required reports to see the reasons for patient’s delay and produce a daily waiting time for the patients in the departments.
• Use the data and the system to track the patient’s flow and analyze the collected data to know the needs of the staff and patient volumes to expedite the process of patients flow between the departments. Moreover, they have to use simulation programs to see the actual time needed to finish the patient’s procedures and consider the history of patients flow between the departments.
• Focus on the required time for the medical specialty as there is some specialty need a specific time, and they have to arrange the beds and staff need to keep up and serve the patients at the right time.
• The hospitals should put productivity benchmarks based on the historical data to prepare the appropriate staff level.
• Study the most important and the biggest entry in the hospital to able to balance the placement of the patients.

The patient’s flow is critical in all the hospitals and must be monitored carefully due to the patient’s conditions even deteriorate as the massive queue will increase the capacity of the patients and the effects on the patient care.

From my experience, the main reasons causing a delay of the patient flow is using the paper medical files as it is consuming a considerable time to move the medical records between departments like radiology, lab, and investigation rooms. So, the hospital management must consider the electronic medical records solution to decrease the time of searching for the medical records and increase moving the file between the departments to get the required patients reports and results. Moreover, it helps to get all the patient data without waiting for the paper medical records to arrive and that contribute to increasing the patient’s flow and contribute to serve the patients faster to see and help other patients.

Regards,

Arqam S. Al Kendi

 

References:

Fields, R. (2016). 5 Strategies to Improve Patient Flow in a Busy Hospital. [online] Beckershospitalreview.com. Available at: http://www.beckershospitalreview.com/or-efficiencies/5-strategies-to-improve-patient-flow-in-a-busy-hospital.html [Accessed 29 Apr. 2017].

Taha, H. (2011). Operations research. Upper Saddle River, N.J.: Prentice Hall. [Accessed 29 Apr. 2017].

Tijms, H. (2003). A first course in stochastic models. New York: Wiley. [Accessed 29 Apr. 2017].