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Brazilian fiscal policy
Fiscal policy refers to use of government revenue collection and expenditure to influence its economy. Fiscal policy targets a country’s budget of its economic activities. Government can adjust its spending and taxation levels through changing the income distribution, resource allocation or level of aggregate demand and economic activity. In the context of Brazil, in 1970s, the government put some stringent penalties to regulate its imports. The government kept the import tax and penalties high. To implement the policies, the government applied tax deduction on imports, for instance, a Brazilian resident who imported intangibles like knowhow, software and royalties would be
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The pressure of trade imbalance and oil shock sharply increased the import bill (Pessoa, 2004).
The stringent policy of imports tax and duties was seen as a high growth policy. The strategy can be effective in enhancing growth but the main components considered should be basic industrial inputs like fertilizers, steel, petrochemicals etc. However, import substitution and restrictions policies do not favor intangible good especially technology software and knowhow which are often bound to importation. Concerning the companies that require inputs like software, the policy is likely to result in reduced public investment. For instance, the inflation and crisis that followed in 1981 to 1983 so a reduction Brazils gross investment from 21% to 16%. Some of the things that have been quoted as the reasons for the declines was increased uncertainties in the future of the economy. Such uncertainties are posed by unfavorable fiscal policies. In the case of Commutronics, the company fought to invest in the country in amidst of unfavorable policies, however, few companies would stand such policies such policies particularly where the deductions were affecting shareholders capital as was the case for Commutronics (Poterba, 1999).
Q3 Commutronics argument for and against market solution
Commutronics had not accumulated enough profits and had no sufficient capital reserves. The company’s registered capital was therefore very low. The withholding tax rate of
The income over the last three years has been fluctuating.. This tells us the company has an initial growth period. Sales also drop between years 7 and 8 and the gross profit margin decreased as well. This may be due to operating expenses. This leads to the prospect of stable future sales. The stakeholders are continuing to back the company and the company does predict sales will remain stable. The modest increase in sales does not show enough to recover without making adjustments to free capital.
An important part of managing the economic status of a nation is to manage the methods in which goods and services are imported and exported into and out of the country. Because of differing resources, labor costs, and government support of industry, fiscal policy sometimes includes placing a tariff on imported goods in an attempt to level the economic playing field.
Since 1975, Patton Fuller Community Hospital (PFCH) has been serving the people of the Kelsey and the surrounding communities. PFCH is a for-profit organization and is owned by physician active within the facility. Owned by the physicians active at the hospital, the organization is governed by a 14 member board of directors, which consist of 12 physician-owners, with the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) as non-voting members. The facility is dedicated to providing cutting-edge medical services. PFCH
A1. Concerns in Budget Planning: Budgetary Items. Depreciation: Depreciation is “the method that the accountants use to allocate the cost of equipment and other assets to the total cost of products and services as shown on the income statement” (Berman, Knight, & Case, 2013). Depreciation is said to be based on the same fundamentals as accruals in that a company “wants to match as closely as possible the costs of products and services with what was sold” (Berman et al., 2013). The idea is to spread the cost of the expenditure over the useful life of the item over the course of time (Berman et al., 2013). Depreciation carries too much of an increase in year 9. Year 8 totals for accumulated depreciation is at
Fiscal Policy involves the Government changing the levels of Taxation and Government Spending in order to influence AD (Aggregate Demand) and therefore the level of economic activity.
A fiscal document used to plan future revenue and expenditures is a called a budget (Murray, n.d.). The overall process of whether or not the company can continue to run with the projected revenue and expenditures is called budgeting (Murray, n.d.). It is valuable because it helps an organization consume the inadequate financials and human capital for which is best to achieve current business opportunities. A company is also capable of formulating both long-term and short-term strategies for help in implementation and constant assessment of its performance.
A closed economy was once favored as the idea of import substitution industrialization was believed to be beneficial for the growth of Brazil’s state influenced economy. These methods were discarded in support for an open economy and the involvement of the state was diminished through dominating market forces and large scale privatization. The use of neoliberal thinking grew after many people began to realize that import substitution industrialization was not as efficient as once believed. Due to the debt crisis in the 1980’s in Latin America, economies such as Brazil’ struggled to keep a positive capital account so the introduction of multilateral international financial institutions was necessary to deal with the inordinate amounts of pressure Amann and Baer,
Brazil's economy is very diverse with considerable variation between regions. The most developed industry is concentrated in the south and southeast of the country. North-east – the poorest region of Brazil, but now he is beginning
Fiscal Policy is when a government fixes its spending levels and tax rates to guide and influence a nation's economy. (Heakal, 2015)
Brazil ranks first in the world in arable land and fifth in the world in territory and population. They have a “soils sustain a bountiful agricultural which they produce the world’s leading exporter of coffee, orange juice, sugar, tobacco, ethanol, beef, and chicken.”(pg.273) Deforestation became a major issue in Brazil. Due to the fact of “removing the rainforest results directly from logging operations, but more of it is now a matter of clearing space for land occupation by settlers as well as the expansion of large-scale agribusiness.” (pg.278) Brazil economy have grown over the years after the new policies that was passed made a sufficient in the manufacturing in Brazil.
Brazil is known to have gone through quite a rollercoaster in its political history. From 1937-1945, it was under dictatorship. It maintained as a democracy up until a military coup d’etat in 1964. The coup led the country back to dictatorship which lasted until 1984 (Reis, 2009). Even under the military, Brazil’s economy was seen to sprout out. Economy grew at a rate of 10% yearly. (Reis, 2009) Despite this, due to public dissatisfaction the regime needed to change. Even so, the country continued to thrive (Reis, 2009). By the 21st Century, annual growth was low (Amann and Baer, 2012). In 2009, due to the world crises its growth dropped to a staggering -0.6%. Though, it quickly recovered in 2010 to 7.5%, leading to an encouraging drop
Internationally, the company operates toy stores under the name Toys R Us. It also sells merchandise through its Internet sites and through mail order catalogues. Its products include:
The costs of the start stage are training costs, rental costs, interest costs, supplies costs (such as papers, powdered ink, stationery… ), utilities cost (such as electronic cost, water cost, cleaning cost, property costs…), depreciation cost, wage cost, facilities cost.
High tariff duty can be a challenge to maintain the pricing strategy competitive as a new venture. Brazil’s average tariff is three times of US tariff.
The purpose of this report is concerned with comparative analysis of the ALPACA PRODUCTS LIMITED’s (ALPACA) financial performance in terms of its key performance indicators (KPI’s) like various financial ratios of profitability, liquidity, and gearing etc. over the latest financial year ended 2014-2016.