Questions on Economics Essay Example | Topics and Well Written Essays - 1250 words

Questions on Economics - Essay Example The prevailing trend, however, is that the traditional or mainstream approach in economics could be considered outdated. Though it still should remain in the toolset of an economist, the emphasis on rationality as a means to solve modern market debacles may produce variable results. Herein, some of the strengths and weaknesses of the mainstream approach will be suggested. Likewise, the origin of the mainstream approach, and the knowledge that could be reaped from the utilization of some alternative approaches will also be pondered. If we are to offer a definition for what is meant by the mainstream approach in â€Å"economics [we mean] microeconomics† (Coase, 1998, 72). In other words, the mainstream approach is that ideology that was derived from the teachings of Adam Smith. In general, it is a viewpoint that favours limited government involvement, and the notion that market conditions fluctuate naturally and that rationality will balance the said. A few weaknesses of the lai ssez-faire view though include the fact that an extreme condition of â€Å"decentralization† would be required in its pure form, and also that it simply analyzes the price points of supply and demand, as opposed to evaluating the â€Å"factors† which influence these (Coase, 1998, 72). ... A more proper manner of discerning the status of microeconomics is that the â€Å"evidence/theory ratio†¦ is currently very low in this field† (Holmstrom & Tirole, 1989, 126). Thus, the ideal world is in discord with how real world reactions unfold, according to measurable economic aspects. Williamson (1994) calls out some additional weaknesses of the mainstream approach as he condemns â€Å"exclusive reliance on local or specific knowledge† (Williamson, 1994, 324). Rather than calling for an abolition of the limited micro-focus and following a broader approach, he recommends â€Å"appealing to both invisible- and visible-hand explanations,† thus this scholar could be classified as a moderate economist (Williamson, 1994, 323). Henry & Miller (2009) conducted an interesting analysis, wherein they present the platform that the â€Å"rich countries† are home to more stable economics since they â€Å"have incentives to engaged in productive economic acti vity† (Henry & Miller, 2009, 261). Easterly (2008) likewise supports the notion that rich countries will tend to outperform the poor who lack much of the foundational structure needed for economic success. Some of these so-called â€Å"incentives† refer to the heightened protection offered to would-be investors from the framework of â€Å"English common-law,† not to mention that such economies are â€Å"less prone to government ownership† (Henry & Miller, 2009, 261). As compared to the mainstream economic view, of Adam Smiths’ ideals, these pair would be quite opposite and perhaps in possession of a radical view that â€Å"macroeconomic policies† can exert a massive influence on the economy, especially when carried out at the institution level (Henry & Miller,

Ipplepen Plc Essay Example | Topics and Well Written Essays - 1500 words

Ipplepen Plc - Essay Example The current ratio is a very good 1.82. It shows that the company’s current assets are nearly two times its current liabilities. This is a good solvency position for any company. The acid test ratio also shows a healthy liquidity position of the company, where its current assets over its stock assets are about 1.19 times its current liabilities. The figures for acid test ratio are not available for 2005. The liquidity position of the company is good, and it reflects good working capital utilization by the company. Apart from the revenue generated from operations, the company indulges in investing and financing activities. In the year 2006, the company invested to the tune of  £636,000 in Internet development, and trademarks to the value of  £30,000. The corresponding investments for 2005 were nil. Ipplepen invests its cash, at bank and in hand, under the bank deposit rates. Short term deposits are also being made at floating rates, after taking into account the meeting of t he cash requirement. The company has a good amount of undrawn committed borrowing facilities also. The bank overdrafts are charged at 5.46% per annum in 2006, which was 5.38% per annum in 2005. A slight increase in average effective interest rate is seen. Overall, the liquidity position of the company is good and the company is solvent.... The company is showing a consistent growth in all profitability measures. It is a profit making company, and there are reasons that it is worth investing in the company. Liquidity assessment The liquidity position of the company in 2006 is strong, as can be seen from the liquidity measures of working capital, current ratio, and acid test ratio. The working capital is positive and has increased from around 29,886,000 to 38,924,000 in 2006. The company has performed well in managing its capital in the previous year and this year it sees an increase in its working capital. The current ratio is a very good 1.82. It shows that the company's current assets are nearly two times its current liabilities. This is a good solvency position for any company. The acid test ratio also shows a healthy liquidity position of the company, where its current assets over its stock assets are about 1.19 times its current liabilities. The figures for acid test ratio are not available for 2005. The liquidity position of the company is good, and it reflects good working capital utilization by the company. Apart from the revenue generated from operations, the company indulges in investing and fina ncing activities. In the year 2006, the company invested to the tune of 636,000 in Internet development, and trademarks to the value of 30,000. The corresponding investments for 2005 were nil. Ipplepen invests its cash, at bank and in hand, under the bank deposit rates. Short term deposits are also being made at floating rates, after taking into account the meeting of the cash requirement. The company has a good amount of undrawn committed borrowing facilities also. The bank overdrafts are charged at 5.46% per annum in 2006, which was 5.38% per annum in 2005. A