What is Marginal Products, Marginal Cost and their Differences between them; Economic of Scales and Factors that Causes the raise of the Economic of Scale

                   All praise is due to Allah, may peace, salutation and the blessing be upon the prophet Muhammad (ﷺ), his entire family, his companions and those that follow their footsteps with righteous until the last day. Indeed knowing your marginal product and Marginal cost of any business activity has helped a lot of businesses throughout the globe for the development of the business, long life sustainability and growth. it is very significant for all business owners to comprehend provided that the marginal product continues to raise the more profitable the operation of the business.

              Before going furthermore, I will like to first and foremost what talk about marginal products..? This is the extracting unit of output production produce due to the additional more unit per unit of input. Less take this example Smart production technology (Section A). Produces eighteen (18) new products with an additional and (Section B) produces thirty-five (35) new products. Moreover, from above the example, we learn that marginal products are twelve (12) extract units of new the product that is received; that is different between the two sections A and B. Besides, as a manager will also want to know the marginal products so that he or she can have the chance to maximize its total product to achieve this you must know how to add each additional unit of input which indeed affect the marginal product leading to the contribution of the total unit of product. Furthermore, it is very significant for all business owners to comprehend provided that the marginal product continues to raise the more profitable the operation of the business.

              Secondly what is a Marginal Cost…? This is the incremental cost per unit, which implies the cost of producing one extract unit of the goods. Instinctively, marginal cost at any level of production contains the cost of extract inputs required to produce the next units. In other marginal cost is the additional cost sustained during the production of the extracting unit of output. Moreover, the formulae are differences in the total cost and divide it via different in the product output; marginal cost is defined as the rate at which total cost of the products yield the production raises per unit. As a result, the marginal cost can be only influenced via variable cost but not the fixed cost. Example, Jaw’s manufacturing company limited have manufactured a heating system, the factory has outdated existing equipment to maintain the company production level. Example of marginal Cost in our businesses and other factories throughout the world.

MARGINAL COST
Quantity	Total Cost	Marginal Cost
0	150	0
5	250	175
10	350	165
15	450	155
20	550	145
25	650	135
30	750	112
35	850	295
40	950	385
45	105	465
50	1150	555
55	1250	985

From the above example, you can observe that:

1.      As the total cost raises the number of quantity of the product also raises. For the reason that the larger quantities of factor production are required.

2.       As the Marginal Cost keep reducing it comes up to quantity (Q=30) and stop, from there it keeps growing continuously.

3.      The marginal cost of producing an extra unit of heating the system at each level of production. Moreover, Extract unit has been taken into account of this an unexpected increase in regards to the raw material; if the firm has changed its contractors, as a result of the marginal cost.

DIFFERENT BETWEEN MARGINAL PRODUCT AND MARGINAL COST
MARGINAL PRODUCT	MARGINAL COST
1. Extract output generated per unit of additional input.	1. The total cost to produce per extra unit of product or output.
2. As marginal product increases	2. Marginal Cost decreases
3.

Economic of Scale

               The scope of economies of scale lower the cost per unit as the quantity of the total of the same output is achieved or produced; the scope of economic of scale lowered the cost per unit, as the range of the products, produced raises. Less take the example of a fast-food restaurant where all the breakfast, lunch and dinner are prepared the seating and kitchen equipment are been spread overs higher meals served to decrease the overall cost per meal. As well as petrol station must have service attention and office block can lower the cost per unit via providing convenience store items such as biscuit, snacks and various kind of drinks. Meanwhile providing these products are interdependent, providing both of the product lower the cost per unit.

FACTORS THAT CAUSES THE ECONOMIC SCALE TO RAISE

1.      The Specialization

2.      The Efficient Capital

3.      The Negotiation Power

4.      The Learning

               Firstly Specialization, when the large scale of the resource is employed and employ a large number of workers. Therefore this permits the companies to practices specialization splitting the job into departments with a specific task assigned in order to separate the employees. As a result, all the employees will devout to the area they must acquaint or the part they know best which permit them to perfect their talents and skills. Furthermore, above all what has been stated that the average unit is achieved at a lesser cost and the administrative level.

              Secondly Efficient Capital, the most efficient capital equipment and machine are based their cutting edge technology with high productive capacity; the companies with the huge scale of production can be able to meet the expense of equipment and in return gain their full capital. Moreover, full utilization of equipment or machinery achieved a lower cost per unit of production.

               Thirdly Negotiation Power, the larger the companies the greater the area of the power of negotiation and output with parties that is financial institutions labour unions and government. Moreover, larger companies obtain a better discount when purchasing the material for their production via bulk purchasing. As a result, people are eager to be employed in larger companies for that being the case the large companies even negotiate the lower Cost wage because people want to be employed by the larger companies. Furthermore, financial institutions especially banks are more willing to offer loans at lesser interest cost rate to well-established companies having hug scale of production.

               Fourthly learning, as the companies grow, the company both from their experience and research; the small scale companies with insufficient structure and processes, as a result, they learn via doing and they become more and more efficient day by day. Moreover, companies learn from their research while large companies can afford the high research cost resulting via the better processes and new formulas pushing their cost per unit of production lower.

              In conclusion, the marginal product and marginal has indeed paid a very significant role in the production in a lot of firms or companies regards to the input and output of the production control and increasing for the development of the company products. Moreover, the economic scale of factor also determines how the company can improve its performance and achieve their expectation using the specialization, efficient capital, negotiation of power and learning.

Bibliography

Celli, M. (2013). Determinants of Economies of Scale in Large Businesses—A Survey on UE Listed Firms. Businesses—A Survey on UE Listed Firms, 1-7.

Sabariah Sulaiman, Hairuddin Mohammad, Siti Khalijah Yaman Riduan Yunusa. (2019). FACTORS OF ECONOMIES OF SCALE FOR CONSTRUCTION CONTRACTORS. Vistana Hotel, Kuala Lumpur, Malaysia: International Congress on Technology, Engineering, and Science (IConTES 2016.

XPLAND. (2018, January 29). Retrieved from Economies of Scale: https://xplaind.com/580682/economies-of-scale

What are cash equivalents? Explain with suitable examples, their relevance in cash flow analysis.

All praise is due to Allah, may peace, salutation and the blessing be upon the prophet Muhammad (ﷺ), his entire family, his companions and those that follow their footsteps with righteous until the last day. Indeed cash flow helps the financial instructions and businesses to  know their cash and its cash equivalents in order to analyze the cash inflows and outflows in the business or other institutions support to evaluate the solvency, liquidity and financial flexibility position of particular financial institutions and businesses. Moreover, there are steps required to construct and analyzed this statement which helps the business to manage and recognized its cash inflows and cash outflows. 

Furthermore, it also helps to determine its yield from operating, investing, financing and yield balance at the end of the particular project. Before, going further I will like to, first of all, define what is cash..? Cash means to cash and cash equivalents in the business transactions. Moreover, cash equivalents are the short term investments which are highly liquid voluntarily to be converted to a known amount of cash and the near maturity which is actually three months with the restricted amount the risk of price variance due to an inflation rate of interest. There are three sections of cash flows statement which help in financial analysis of any company

ü  Operating activities

ü  Investing activities

ü  Financing activities

                     Cash flows from Operating activities are calculated to define as the cash received from customers subtracted from the cash paid for recurring operating expenses. Those area salaries, utilities, insurance and any other expenses. Moreover, when the number of operating activities is positive it means that mere cash was collected from the customers Moreover when the operating activities are negative it means the corporation spent more cash than it has collected from the customers

                   Cash flows from investing activities, when talking out the investing activities you should think about the long term section of the balance  sheet which includes the investing in property, plant and equipment and also including the other corporation which means buying stock or security of the corporation. Moreover, negative cash flows means the company is buying more property, plant and equipment or making new investments in other company while positive cash flows from investment, means the corporation is selling off some of its properties, plant and equipment or selling some of its investments in other companies. Furthermore, if you see this negative from operating activities it means that the company is selling off the assets to finance its operations.

                 Cash flows from financing activities, if you think about financing reflect on the right side of the balance sheet. Therefore, financing activity changes the long term debt and stockholder equity including company issuing new stock or purchasing treasury stock and paying the dividend. Moreover, negative cash flow from financing is highly desirable especially with a positive operating cash flows; this negative means either the company is paying back principal on long term debt or purchasing treasury stock on paying the dividend when a company purchase treasury stock, they are buying back shares of their own company and we can say this is a good thing. Furthermore, each of these share is going to be worth more money while positive cash flows if you see this its means either the company is borrowing more money long term or issuing new shares of common stock there may be a good reason but if the company is   doing these because they are having a negative outflows, they run out of money eventually you cannot keep borrowing without paying back; nobody will buy shares of stock unless you have a good net income.

               Therefore, cash flows are very important in any financial institution or company as it is the beginning and end of the financial institution’s or company’s operational cycle. For that being the case the net cash flow indicates the end measurement of the profitability of the corporation.

                Furthermore, in the construction process of the statement of the assets and the liabilities, as of an increase of the assets means it is an outflow which indicates the corporation expenditure which in access is not however good for the corporation but as of a decrease of an Assets this indicates it is an inflow of funds in the business which makes the corporation account to be liquidity and have more chance to reinvested funds again to continue making funds. Finally, as of a liabilities section, an increase of liabilities means  indicate it is an inflow of liabilities in the corporation and a decrease of liabilities in the corporation indicates it is an outflow in the corporation.

                  The required in constructing the statement cash flows are as follows:

1.      To construct the cash flows you  have to start with the Net Income from operating activities

2.       To construct the cash flows, secondly need to adjust the Net Income for the Non-cash expenses and its gains from operating activities.

3.      To construct the cash flows, thirdly need to recognize the cash inflows in the business and cash outflows from the business and these differences occurred in the current assets and liabilities from operating activities in the business.

4.      To construct the cash flows, after above-required steps are carried out then you need sum in order to yield the net cash from operation carryout from the operating activities.

5.      To construct the cash flows, you need to get the differences in long term assets that yield net cash flows from the investing activities from or in the particular company.

6.      To construct the cash flows have, therefore, you need to also get the difference of long term liabilities and its equity account yield net cash in the transaction from the financing activities of the company.

7.      To construct the cash flows, moreover, you need to sum up all the transaction from operating, investing and financing activities of the company or financial institutions.

8.    To construct the cash flows, furthermore to have ending balance, at last, you need to add the net change in cash to that of the beginning cash balance that yields ending cash of the company cash flows.

                     As a result, these constructive step mentioned above is the required procedure that must be follow in order to construct a statement of cash flows in any business or financial institutions who want to control their cash flows. Moreover, the company need a Net Income, depreciation and amortization expense which indicate a positive sign from operating again on the sale of the assets which indicate negative and its show that it is an outflow  from operating activities, the account receivable which also indicates a negative sign which means it is deducted from Net Income in the transaction from operating activities, the Inventories of the company and Prepaid are all positive which are inflow and they sum them together in the company.

                     In addition, the company accounts payable which indicate it is negative and deducted from the positive cash flows the accrued expenses is also positive which it will be deducted from negative cash flow in the particular transaction business of the company  from operating activities. When the company has purchased equipment for the business progression and enlargement because of the growth of the business and the well-being of the business which is part of the cost that is why it indicates negative. Moreover, the sale of equipment which indicates a positive sign when calculating the Net cash flow from investing.

                   In conclusion, the ideal cash flows situation would be for the company to have a positive operation along with negative operating and financing of cash flows. Moreover, which mean that the company is making so much money from the operation that is it able to make a new investment in property, plant and equipment or other companies as well as pay long term debt, pay dividend or purchasing treasury stock that is a good solid company that one can invest /her funds furthermore, the worst cash flow situation to be in would be for the company to have negative cash flows from operating along with positive  investing and financing cash flows that means the company is selling its assets, borrowing more or issuing new stock to finance the operation, the company to continue  dong that period after period.

Bibliography

AMUZU, M. S. ( 2010). CASH FLOW RATIO AS A MEASURE OF PERFORMANCE OF LISTED COMPANIES IN EMERGING ECONOMIES. Turks and Caicos Islands: St. Clements University.

corporate finance institute. (2019, March 14). Statement of Cash Flows. Retrieved from corporate finance institute: https://corporatefinanceinstitute.com/resources/knowledge/accounting/statement-of-cash-flows/

PEAVLER, R. (2019, August 14). How to Prepare a Statement of Cash Flows Using the Indirect Method. Retrieved from Small Business: https://www.thebalancesmb.com/how-to-prepare-a-statement-of-cash-flows-393584

Rober, J. J. (2007). FINANCIAL STATEMENT ANALYSIS . New York: McGraw Hill Education (India) Limited.

The Objectives of establishing International Monetary Fund, with reference of members countries

                     All praise is due to Allah, may peace, salutation and the blessing be upon The prophet Muhammad (ﷺ), his entire family, his companions and those that follow their footsteps with righteous until the last day. Indeed International Monetary Fund know as IMF was created in 1946 but initiated at the Bretton Woods Newhamshire meeting in July 1944, moreover IMF comprises of delegates from 44 countries. International Monetary Fund play a vital role in our exchange rate stability and working very hard to ensure the international Monetary System is stabilized among the member countries; via removing of all the restriction on the international trade, orderly adjustment of balance of payment (BOP) disproportions. IMF also lend money to those having problem with their balance of payment and make the general fund available to the member countries. Furthermore it was created to prevent a return of the international finance from state of total confusion with preceded some ways precipitated world war two. In 1930s, many nations follow their neighbor “begging’ economic policies, cutting the value of their currency, restricting purchases from overseas in order to save scarce of exchange etc.

                        The role or Objective of International Monetary Fund (IMF) as noted in their agreement, IMF must contribute or facilitate to the following:

•       The international Monetary Co-Operation among the members.
•       To eliminate exchange control among the member countries.
•       To establish the multilateral trade and payment among the members countries.
•        To the expansion of fund and balance growth among member countries.
•       The balance of growth of our trade among the member countries.
•       To prevent bad economic policies among member nations.
•       To ensure the exchange stability among the members countries.
•        To correct our balance of payment system maladjustments.
•       The investment of our capital among the members countries and promote confident between them.

               Firstly IMF also promote monetary cooperation and collaboration within the members’ countries, regarding monetary problem through permanent institute that provides a machine for the meeting or consultation and collaboration in different global monetary issues and problem.  

                Secondly IMF prevent exchange restrictions and trade barriers in within the members’ countries and establish multilateral system of payment. To eliminate exchange restriction imposed almost very countries; this was done before World War II as a device to intentionally fix the exchange rate at a specific level and to encourage the flows of international trade among the member countries. Moreover multilateral system of payment was designed to replace old system of bilateral trade agreements in our current transaction among the member countries.

                  Thirdly IMF facilitate the expansion and balance growth of our worldwide trade contribute immensely to the real incentive, productive capacity and employment. For that reason it also support to attain balance growth via our exchange level of employment which immensely help the member countries to boom up their economy; particularly a country with level of growth and employment rates.

                    Fourthly IMF prevent bad economic policies in particular, which in order way may lead to financial crisis of a particular country. Moreover these policies contribute immensely in managing the economic situation of a member countries more efficiently. Eventually IMF provide training and assistance, wanting to strengthen the institutional and human capacity of a particular member countries. Furthermore this is very significant to those countries that fail in their past policy, scarce resources or weak institutions.

                      Fifthly Moreover IMF stabilized exchange and orderly exchange arrangements however prevent competitive currency depreciation or devaluation. Besides it’s stabilize the currencies and then strengthen the economic condition of growth of the member countries. The International monetary fund expect the loans given to a member countries to be pay back and embark on the structural fine-tuning policies made via monitored by the Internal Monetary Fund (Investopedia, 2018)

                                   

                     Furthermore IMF promote or facilitate a confident among the member countries by means of taking sufficient measures to defend both international and national headway. Moreover International monetary fund facilitate the continue flow of capital from develop countries to under develop countries from their resources for attaining higher standard of living of its citizens also from the capital flow from the richer to the poorer as a general.   (Jonathan E. Sanford and Martin A. Weiss, 2004)

                   The international Monetary Fund (IMF) has indeed make a successful achievement in implementing the above mention objectives they play so far in our monetary system internationally.  Moreover IMF become successful in certain area as follows:

•       IMF has achieved the expansion of fund and creating sufficient provision of credit for the developing member countries throughout the global. 
•       They ensure the attaining exchange stability of the member countries.
•       IMF also attain the expansion of world trading system.
•       They also play significant role in raising the international liquidity.
•       IMF have attained in given help especially in term difficulties.
•       IMF eventually succeeded in eliminating international monetary system, moreover setting up the multilateral trade and payment system.
•       The IMF likewise eliminate the short-term disequilibrium of our balance of payments system.

      Furthermore IMF succeeded in checking competitive currency depreciation besides setting up machinery for their consultation as a result to provide export guidance in formulating both of its financial and fiscal policies of their member countries.  (Suman, 2017)

                     The example of its member countries that International Monetary Fund has successfully attained their objective are as follows.

•   India is among the member of IMF, it is evident that International Monetary Fund has been instrumental in assisting India in regard to balance of payment Issues they are experience in two occasions. Moreover this was noted in 1981-1982, has result India borrowed SDR 3.9 billion which was under the extended fund Facility as the largest agreement in International Monetary Fund. India in 1991-93 has borrowed SDR 2.2 billion under standby agreement. Furthermore India borrow SDR 1.4 billion in 1991 which under compensatory Finance Facility. (India, 2015)
•        International Monetary Fund has also help Ghana in their economic Sector and development.
•       International Monetary Fund have help The Gambia in there Micro financial linkages persist the between the banks, the public sector and Banking Sector characteristics and Risk. 

                           In conclusion, IMF indeed has contributed immensely in making the monetary system conducive  for the member countries via   eliminating international monetary system and implement multilateral trade and payment system, the short-term disequilibrium; making exchange stability as well as expanding the fund with adequate of credit for developing nations. Moreover prevent bad economic policies perhaps may lead to financial crisis and trade barriers and exchange restrictions for the betterment of the member countries.

                                                              Jazakallahu khairan

References

India. (2015, November 16). India and the IMF. Retrieved from At a Glance - India and the IMF: http://www.At a Glance - India and the IMF.htm

Investopedia. (2018, September 11). How does the International Monetary Fund function. Retrieved November 16, 2018, from http://www.How does the International Monetary Fund function%20%20%20 Investopedia.htm

Jonathan E. Sanford and Martin A. Weiss. (2004). International Monetary Fund: Organization, Functions, and Role in the International Economy. Washington, D.C.: CRS Web.

saab, K. (2012, August 8). Easy Notes and Assignments. Retrieved from Write a note on the IMF or objective and functions of the IMF: http://www.Write a note on the IMF or objective and functions of the IMF.htm

Suman, S. (2017, July 11). Economic Discussion. Retrieved from 15 Major Achievements of International Monetary Fund: http://www.15 Major Achievements of International Monetary Fund.htm