Shareholders Value Essay Example | Topics and Well Written Essays - 1500 words

Shareholders Value - Essay ExampleThe entries are counterbalanced so that the assets always equal the liabilities and owners equity. The balance sheets of the company are examined by shareholders.The fundamental conventions of economics are optimization and market equilibrium. The optimization principle says that people choose the best consumption patterns that they can afford. The market equilibrium principle states that prices adjust till demand equals supply. A supply curve measures how much of a good will be supplied at a given price. remember we reach a price p for the supply of a quantity x. The producer would be willing to supply a smaller amount at a lower price. However the entire quantity is sold at the price p. The producers surplus measures the gains to the firm by selling all the goods at the higher(prenominal) price p. The concept of surplus enables us to determine the gains and losses for the firm. The consumers surplus is the difference between the gross benefit of consuming the good and the price paid for that good. This perspective lets us understand the firm from economics theory. The concept of producers surplus is closely linked to the concept of profit.9. The accounting system approach does non measure the adult gaps between the true value of the firm and the observed market value. The economics perspective considers all the variables that influence the market till we find a couple on between the actual and the calculated market values of a firm.10. Shareholders in a firm rely on accounting practices more that economic calculations because accounting numbers are easily available for analysis.11. Every accounting decision has an economic consequence while the changes in the economic picture are non necessarily reflected in accounting.12. While accounting is a simple process based on conventions and numbers available with the firm, economic considerations are very heterogeneous and involve many variables. The values of economic vari ables are not readily available and are many times external to the firm.13. While accounting is by nature a short term activity, economic analysis is a long term activity.14. Accounting has methods in place for auditing the firm. Economic methods do not have established audit procedures in place.15. While accounting