Financial decisions are extremely critical to social welfare. Many individuals have the state of mind that emphasizes the belief of how social welfare can be pursued through exercising one’s choice and making provisions to obtain the means to be financially stable. The world is increasingly becoming more financially integrated and complex, pushing average individuals and their families to make highly difficult, often irreversible financial decisions. Decision making in regards to every day financial decisions is just as important as deciding what retirement plans will be necessary, considering there might not be social security by the time some of us get of age. With the recession that the economy has endured in the last few years, the global financial crisis has displayed that poor financial decision-making can have significant costs for both individuals but also the overall society. The state of someone’s financial welfare ultimately determines their socioeconomic status in this world; therefore people should strive to be successful to reach their ultimate goals and learn to responsibly manage their finances.
The oil spill disaster in the gulf took a huge toll on the price of fuel in the United States. Most people felt that seeing gas prices steadily increase was a way for oil companies to make huge profits, and though gas companies did make large profits, the situation at hand was more serious than ever imagined. Initially, no one truly understood the significance of the spill and how much oil was actually leaking into the gulf; however finding out the large amount of oil being lost made me realize the severity of the situation. I don’t think it was all about making money, but rather BP not being proactive to handle a situation that they knew had the
References: Ehrhardt, M.C., & Brigham, E.F. (2011). Financial management: theory and practice (13th ed.) Mason OH: South-Western Cengage Learning. Chapter 2 discusses financial statements. How important are these financial statements. How accurate are they? Do we deliberately use them to lie just to ensure bonuses? Find examples and discuss. Financial statements are extremely important, as they “report what has actually happened to assets, earnings, dividends, and cash flows during the past few years, whereas the written materials attempt to explain why things turned out the way they did” (Ehrhardt & Brigham, pg. 49). In order to know the success or identify areas of improvement for a company, it is imperative to evaluate and/or scrutinize their annual reports. Another reason financial statements are imperative is because it helps people determine whether or not they want to invest or purchase a particular company. Not all of the statements are accurate to the tee. “The way for managers to make their companies more valuable is to increase free cash flow now and in the future” (Ehrhardt & Brigham, pg. 59) and sometimes numbers on various statements can be inflated. Though inflating financial statements may appear to help the company for the short term to elevate investors from knowing the financial woes, once the truth is revealed it prove to be detrimental to an organization.