Discussion question <\/p>\n
1. \u00a0One of the key reasons that businesses fail is due to improper capital \u00a0planning and a general lack of working capital (aka liquidity).\u00a0 It also \u00a0happens to be one of the key reasons why people fail too.\u00a0 In personal \u00a0finance, we know that you should have 3 to 6 months\u2019 worth of money set \u00a0aside for emergencies, but what does it take to make sure that a \u00a0business is properly liquid? <\/p>\n
\u00a02.\u00a0 As a society the US has one of the lowest savings rates in all \u00a0of the developed countries.\u00a0 Why do we have such a hard time saving \u00a0money? <\/p>\n
Post by Classmate <\/p>\n
\u00a0 <\/p>\n
It can be difficult for businesses to maintain the proper amount of \u00a0liquidity. Many factors affect a business\u2019s ability to gain, retain, and \u00a0maintain the proper amount of liquidity to meet its goals. There are \u00a0many outside entities such as investors, stockholders, and creditors \u00a0which are applicable factors as well. Liquidity is understood in terms \u00a0of the amount of difficulty required, or the lack thereof, to convert an \u00a0asset or security into cash without altering its market price. The core \u00a0of liquidity is cash and the rest of liquidity is that which can be \u00a0converted into cash. It takes money to make money so if a business was \u00a0prioritizing maintaining the proper amount of liquidity then it would \u00a0probably be important to not overextend its short-term obligations since \u00a0liquidity is measured in terms of a company\u2019s ability to cover its \u00a0short-term obligations. This is related to the use of the Current Ratio \u00a0to show how much ability that company has to turn its assets into cash \u00a0within one year. I understand that as the process of a company needing \u00a0startup cash, then a need to produce income while minimizing expenses, \u00a0and additionally being cautious not to over-commit so as not to \u00a0overburden the liquidity of the company. If a company does not have \u00a0strong enough liquidity, then it is not viable and could be unstable if \u00a0unforeseen burdens occur. (Hayes, 2021) <\/p>\n
Some would say too many Americans live lives of gluttony and excess \u00a0with more money going out than money coming in. Historically America is \u00a0post-agricultural and post-industrial. If there\u2019s less money in the \u00a0corporate account, Industry is shrinking, Government is growing, taxes \u00a0go up every year, and the dollar is worth less every year, then that is \u00a0all going to trickle down too many people having less income. \u00a0Progressive liberal socialist would say that the citizen is not \u00a0responsible for their lack of income and excess of debt but rather that \u00a0they are victims of their environment and they simply need the alleged \u00a0magical working wage. Remember when parents used to say money doesn\u2019t \u00a0grow on trees? It seems like we\u2019re talking about the same thing. (Meyer, \u00a02000) <\/p>\n
Why does the society of the US have one of the lowest savings rates \u00a0in all of the developed countries? This seems more like a \u00a0psychology\/lifestyle choice question. Why do people buy clothes that are \u00a0unnecessary and that they cannot afford?\u00a0 The answer, because they want \u00a0to. Why do people buy homes, cars, and boats that they can\u2019t afford?\u00a0 \u00a0Why don\u2019t they spend that money on their children\u2019s education? The \u00a0answer, because they want to. According to C <\/p>\n
hris \u00a0Carroll, from MIT, and Lawrence Summers, from Harvard, a majority of \u00a0the decline in money being put into savings accounts can be traced back \u00a0to a decline in the personal savings rate. Using that logic, the reason \u00a0would be that Americans lost motivation to put money in their savings \u00a0account because of the lack of return. But there are many ways to save. \u00a0Money saved in a mattress is still more money than none saved at all, or \u00a0better yet, more money saved than money over-committed to debt. \u00a0(Carroll, 1987) <\/p>\n
References <\/p>\n
Carroll, C., Summers, L. (1987). Why is U.S. National Saving so Low? \u00a0Brookings. Retrieved from \u00a0https:\/\/www.brookings.edu\/bpea-articles\/why-is-u-s-national-saving-so-low\/ <\/p>\n
Hayes, A. (2021). Investopedia. Liquidity. Retrieved from https:\/\/www.investopedia.com\/terms\/l\/liquidity.asp\u00a0(Links to an external site.) <\/p>\n
Meyer, J. (2000). The Role Of Industrial And Post-Industrial Cities \u00a0In Economic Development. Joint Center for Housing Studies of Harvard \u00a0University. Retrieved from \u00a0https:\/\/www.jchs.harvard.edu\/research-areas\/working-papers\/role-industrial-and-post-industrial-cities-economic-development <\/p>\n","protected":false},"excerpt":{"rendered":"
Discussion question 1. \u00a0One of the key reasons that businesses fail is due to improper capital \u00a0planning and a general lack of working capital (aka liquidity).\u00a0 It also \u00a0happens to be one of the key reasons why people fail too.\u00a0 In personal \u00a0finance, we know that you should have 3 to 6 months\u2019 worth of […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[15],"class_list":["post-18464","post","type-post","status-publish","format-standard","hentry","category-research-paper-writing","tag-business"],"_links":{"self":[{"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/posts\/18464","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/comments?post=18464"}],"version-history":[{"count":0,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/posts\/18464\/revisions"}],"wp:attachment":[{"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/media?parent=18464"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/categories?post=18464"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/tags?post=18464"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}