Business Finance Assignment 1

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1(a)
In this case, the front desk receptionist that overtaking of lunch time to run personal errands is being compensated for unproductive time and will cause the company faces losses. The overtime of the receptionist will cause work schedule of colleagues been confounded and will lead to the problem of no enough manpower in front desk and the company has to pay someone to take her place during her absence. This will make the customers waiting for a long time and not satisfied with the services provided. By short of firing the receptionist can dealt this problem. To make sure the company act and rules will be comply fully by all staff, the laid off of the receptionist or reducing the cost to the firm by reducing her pay for the lost work by the company can as an example to other staff by execute one as a warning to other. Hence, no staff will make this mistake again and company can avoid from unnecessary losses.

1(b)
In this case, the action of managers will make the incorrect information to be used by others and the company’s profits reflect the error. The costs to the firm are in the form of opportunity costs. Money that padding to cover the imbalance costs of this project are not available to fund other projects which may help to increase shareholder wealth only. In the long-run period, this will cause other managers or company makes a wrong decision on planning and launching project that will cause a loss. The company also will be charged by tax inspection officer on reporting incorrect financial statements. The company should deal this problem by short of firing those division managers. This can make an example for the whole company staff about the important of has a high integrity and noble moral characteristic in doing their job. In the other way, a management reward system based on how close and adequate of the manager’s estimates comes to the actual cost also a better solution.

1(c)
The chief executive officer of the firm that told the competitor about the plan of merger was leaked the top secret of the firm. The competitor will request for a better conditions to the firm to lure them to give up previously planned and merger with them. Besides, the manager also may negotiate a better deal with the merging competitor which is beneficial to the chief executive officer himself and then sell the firm for less than its fair market value. Hence, the overall plan will be wreck and the firm will waste and loses in both finance and human power resources. To solve this problem, the firm may short of firing the CEO to make sure the company won’t face losses. Besides, open the firm up for purchase bids from other firm is a good way to reduce the loss of shareholder wealth.

1(d)
In this case, the branch manager which the bonus is based on profitability used the part-time or temporary workers to replace the experienced full-time employees and staffs customer service positions to lower employment costs and raise this year’s branch profit. Mostly, part time or temporary workers are not as productive as full-time and experienced employees. They have not been on the job as long to increase their work efficiency and normally better employees need to be highly compensated for their skills. This manager is getting rid of the highest cost employees to increase the profits. Besides short of firing the branch manager, other way to reducing this problem is give the manager performance shares to those that meet certain stated goals and set management compensation to share price would also encourage the manager to retain quality of employees.

2.
A financial institution is an institution that provides financial services for its clients or members. Mostly the most important financial service provided by financial institutions is acting as financial intermediaries in financial market. They are responsible for transferring funds from investors to companies that need of those funds and facilitate the flow of money...
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