Large and Small Venture Financial Characteristics

Question: Discuss about the Large and Small Venture Financial Characteristics. Answer: Introdution: The field of accounting profession has been continuously expanding their path and a series of responsibilities are incorporated for keeping record valuables in the most systematic and quantitative manner. The context of choosing the accounting as the best root to be successful business career is because the profession of accounting has now become considered as the language and basic tool of business. However, the matter of success or failure in the judgment of accounting is indeed variable because accounting demands integrity, analytical capabilities and clear vision while recording financial information of business in the most perfect manner. In spite of facilitating the traditional accounting functions, such as cost accounting, payroll and general book-keeping, this profession demands analytical abilities such as cost benefit analysis. The accounting bodies and professionals are already aware about their financial responsibilities and this can be said positively that demand of acco unting professionals are evolving in the business field. Accountant has an important role in the evaluation of financial characteristics. Accountant can easily obtain the financial position of companies by analyzing the financial ratios (Brewer Genay, 2015). In other words, financial characteristics help professionals to observe the financial conditions of the business. This will help to take decision regarding capital gearing, assets acquisition, and operational expenses and so on. However, the success and failure of the business operation is completely depends on well established business structure and an effective and potential execution of the business operations. Furthermore, the ability of the accountant has been tested in everyday while taking decision of investment. A perfect debt and equity needs to be required for developing an effective operating structure of the business. This indicates that accountant is responsible for building capital structure which is all about how a business entity finances its considerable operations and growth by applying different sources of funds. The smooth business operation is completely depends on the adequate availability of funds which is the prime responsibility of an accountant. The financia l professionals like accountant often use debt equity ratio to analyze for providing insight into how risky a firm is. In this context, the accountant helps investors to give an idea about what kind of capital structure is required to be maintained for success or failure of the business. For instance, an aggressive capital structure indicates a greater risk to investors. However, it is the ability of the accountant to handle such risk with proper financial executions because it is the primary source of the firms growth The size of the business venture indicates several variables: the capital exposure in the market, number of employees in the organizations, operational abilities in terms of strength and opportunities, shareholders liability and so on. Interest in developing small and large ventures continues to be in the forefront of policy debates in the developing nations (Kiyotaki Moore, 2012). It is indeed a challenging part of the small venture to make thoughtful investment decisions in terms of choosing ideal financial options and many others. By treating investment as an ongoing strategy and consider several things like limiting current debts, creation of provisional fund or invest in labor to grow would some of the significant business consideration for the small businesses. On the other hand, sound capital investment decisions or engage in RD, innovation to make expanded operational and financial exposure are indeed necessary considerations for the success of the large ventures. Throughout this research work, the study will identify how financial characteristics of a company play an important role in the success or failure of a company. Here the decision making ability of accountant and investors will be evaluated which needs to be practiced for the creation of higher returns. Thus the purpose of this paper is to discuss the focus of previous literatures on the relation between finance and small large ventures development and to point out some of the remarkable financial contributions which certainly be different in case of diverse financial characteristics of ventures. Research aim and Objectives The aim of the research is to discuss the financial characteristics of small and large ventures and their implication in the business. To attain the aim of the research, the following objectives need to be followed: To discuss the relationship of financial characteristics of small and large ventures and its impacts in terms of growth or failure of the business To investigate how accountant and management took their decisions by evaluating the financial characteristics of a company To discuss the role of the financial characteristics of business and their contribution invest for creating higher returns on the basis of financial ratio analysis Research Question How does the financial characteristics of small and large ventures impact on the success or failure of a company? How do the financial characteristics of company helps to take sound investment decisions? What is the role of the financial characteristics of business in the creation of higher returns on the basis of financial ratio analysis? Problem Statement The financial constraints faced by the companies in their operations are considered to have a negative effect on their business growth (Claessens et al., 2012). This is deemed worrying for a developed organization that does not acquire any adequate technology and infrastructure for gaining attention of the big businesses or target consumers. In the recent era of globalization, strengthening the financial performance of the companies is deemed increasingly important. The companies are facing tough competition in maintaining their financial position and this creates lot of problem for the accounting professionals who are the responsible to keep records correctly. For this reason, the company needs to be competitive and considering the same, they require focusing on improving their financial performance (Claessens et al., 2012). The recent research will facilitate discussing the relationship of financial characteristics of small and large ventures and its impacts in terms of growth or f ailure of the business. Preliminary Critical Literature Review Choosing right kind of business entity is the challenging consideration for the business owner. However, the size of the ventures indicates several business aspects. Small ventures are partnerships, privately owned corporations, or sole proprietorships that certainly have a lesser employees or less revenue than a regular-size corporation or business. However, ventures shall be defined small in term of being able to apply for government supports or other preferential tax policies varies depending on the industry or country of operation (Claessens et al., 2012). On the contrary, the large business concerns are associated with different financial structure and more employee base to handle the operations effortlessly. On the statistical or quantitative perspectives, The Australian Bureau of Statistics (ABS) classified a small venture as a active trading business entity with 0-19 employees. Interestingly, the macro business organizations are small businesses with 0-4 staffs. Furthermore, businesses with 20-199 employees are considered as medium business who is contributing the active trading business. This indicates that they are successfully remitting in respect of the role of GST. Lastly, more than 200 employees associated with the company is the perfect example of the large business venture. Financial characteristics of small and large ventures: Small sized ventures are often come together for analytical purpose, although the industry in which the small business is in also likely to play a significant role for determination of the firms financial characteristics. Generally, the financial characteristics comprised with the several financial ideas like profitability, indebtedness and liquidity. On the economic perspectives, small ventures are less likely to borrow compare to larger ones. Benavides-Velasco et al., (2013) stated that large business tends to be made more leveraged compare to small ventures at the time of borrowings. Such fact indicates less exposure of handling debt or liabilities with the help of asset acquisitions in case of the small ventures. In other words, Vogel (2014) explains this fact as the reduced accessibility to finance for small ventures compare to the larger ones. It further reflects the more fluctuating revenue streams of companies which make the gearing ratio of companies more dispersed relative to medium or large business organizations (Graph 1). Industry is also considered to be a significant driver for the analysis of the financial characteristics for deriving the gearing for a business in a particular industry because size of ventures plays large role in this context. On the general perspectives, the small ventures indicate more profitability compare to medium and large companies (Cheng et al., 2014). However, the factor of profitability is indeed varies across industry. For instance, large construction companies tend to have higher return of assets relative to small companies. In most of the industries, however, the median ROA is higher for small business entities. This may indicate that small companies are more risky compare to large ventures with having a greater variation in returns. Lastly, liquidity is the entitys ability to pay its short-term obligations or debt. Here the small companies have fewer capabilities to handle the liquidity relative to large ones. Based on above discussion this can be said that financial characteristics of companies help to analyze financial position of companies on the perspective of industry (Van Der Wijst 2012). Research Process To accomplish the research on an organized manner, this paper will follow a research process. Initially, this paper explains the research topic and background of the different forms of ventures. In the second part, all the financial characteristics of small, medium, large scale ventures and its diverse implications will be discussed. This piece of critical literature review helps in understanding the role of the financial characteristics of companies in decision making and to generate higher returns. Throughout the research, the study will follow a methodical framework and conduct the research gathering sufficient data which needs to be analyzed for getting the expected research outcome. Research Methodology In the methodology section of the research, the study will explore theoretical framework. Here the secondary research will be conducted for gathering the points of financial characteristics of small and large enterprises. Generally, the decision making approach of different types of ventures are different. For this reason, an in depth discussion procedure will be conducted and the descriptive research design will be followed. According to Lambert Lambert (2012), the descriptive research is all about casting light on present issues or problems through the data collection process that enables to describe the financial characteristics more comprehensively which will help to identify its contribution in the financial decision making as well. The descriptive research design is also suitable for assessing characteristics or behaviors of sample population. On the other hand, the deductive research approach will be practiced to explain the means of research questions, which can be derived f rom the propositions of the theory. Here the common observation regarding the financial characteristics of different types of companies will be recorded and understands how an investor make decision by evaluating the financial characteristics on the basis of financial ratio analysis. Data Collection and Analysis Here the sufficient data will be gathered by exploring the secondary data collection method. To know the answers of the research questions, several case studies, journal articles, newspapers, will be collected to gather the necessary resources for conducting this research. Although the research methods are split widely into qualitative and quantitative methods, this study will follow the qualitative data analysis. Under this method, qualitative research does not involve numbers or numerical figures in the research; however this method would be preferable because qualitative analysis results in rich data that gives an in-depth picture and observations. It would be useful to explore how financial characteristics of ventures impacts on the accountants or investors decision making in the business. After conducting this research successfully, this study will clearly identify the relevant features or financial characteristics relevant to a particular size of the ventures. It is obvious that different types of ventures have different financial capabilities and exposures which indicate a specific purpose of investments within the target company. With this understanding, the study will identify the role the financial characteristics in the success or failure of the company. By investigating the positive financial aspects of the company, the accountant or shareholders of the company will get the perfect decision and ensure higher returns as well. Conclusion: Based on the above analysis it can be said that financial characteristics needs to be evaluated before initiating any business projects. It will help to structure business ideas effectively in terms of intending capabilities, size of businesses. However, the financial interpretations and decision making abilities are completely depends on the accountant of the company. Thus a right projections and understanding of financial characteristics help to create higher returns of the business. Here the limitation of the report is that the financial characteristics are identified only on the basis of financial ratios. Financial capabilities need to be analyzed by proper financial tools Financial capabilities of business needs to be monitored frequently Investment decisions of business needs to be taken on perspective of industry standard References: Benavides-Velasco, C. A., Quintana-Garca, C., Guzmn-Parra, V. F. (2013). Trends in family business research.Small Business Economics,40(1), 41-57. Brewer, I. Genay, H. (2015). Small Business Investment Companies: Financial Characteristics and Investments.Journal Of Small Business Management,33(3), 38. Retrieved from https://www.questia.com/library/journal/1G1-17438228/small-business-investment-companies-financial-characteristics Cheng, S., Hameed, A., Subrahmanyam, A., Titman, S. (2014). Short-term reversals and the efficiency of liquidity provision.Queens University Working Paper. Claessens, S., Kose, M. A., Terrones, M. E. (2012). How do business and financial cycles interact?.Journal of International economics,87(1), 178-190. Kiyotaki, N., Moore, J. (2012).Liquidity, business cycles, and monetary policy(No. w17934). National Bureau of Economic Research. Lambert, V. A., Lambert, C. E. (2012). Qualitative descriptive research: an acceptable design.Pacific Rim International Journal of Nursing Research,16(4), 255-256. Rba.gov.au. (2016). Retrieved 21 December 2016, from https://www.rba.gov.au/publications/workshops/other/small-bus-fin-roundtable-2012/pdf/03-fin-character-small-bus.pdf Van Der Wijst, D. (2012).Financial structure in small business: Theory, tests and applications(Vol. 320). Springer Science Business Media. Vogel, H. L. (2014).Entertainment industry economics: A guide for financial analysis. Cambridge University Press.