The personal income and wealth levels in the United Kingdom Essay

The personal income and wealth levels in the United Kingdom - Essay Example The issue of personal incomes and wealth have gained centre focus especially in the aftermath of the global economic crisis that highlighted unethical practices in use by top business executives. This report will try to explore these claims in light of statistical data so that these claims can be substantiated with a solid background. Monitoring personal income and wealth levels is necessary around the world in order to classify the income disparity between the top and bottom earners in society. This also helps to define the local poverty indices as it provides the amount of people living below the poverty line. The wealth of a country can also be defined using a detailed measure of personal incomes and wealth because such a measure is better than using the gross domestic product (GDP) per capita which is seen as rough measure only. A number of different methods are usually utilised in order to describe personal income and wealth including: Individual incomes before tax; Income distr ibution as per age classifications; Income distribution as per regions; Income distribution as per job types; Post tax household income; Wealth levels; Sources of income. A number of other measures may also be specified such as the disposable income depending on the statistical availability of such data. However, such measures are generally more supported in the North American domain which is unlike current practice in the European domain. Given that this report will be concerned with personal income and wealth levels in the United Kingdom, so data extraction and statistical classification will be limited to its geographic domains. By presenting the statistical objects of personal income and wealth related above, this report will try to classify the level of poverty and income disparity in the United Kingdom. 3. Data Collection Methodology A number of different sources offer information relating to personal income and wealth levels but most of these sources are unreliable. In the Un ited Kingdom, the real sources to extract such information are the Office for National Statistics (ONS) and Her Majesty’s Revenue and Customs (HRMC). These sources derive information from tax collection levels as well as other estimates and measurements which tend to lend them an air of credibility that is unchallengeable. For the purposes of this report the information that has been collected, analysed and displayed has been derived solely from ONS and HRMC. This information is freely available online on the official portals of both official websites. Furthermore, this information is presented in these domains with appropriate noise removal and smoothing which tends to enhance the quality of data being employed. Information relating to personal income and wealth is extensive making it hard to classify and manipulate so data extraction has been limited to the post 1990 period alone. The global economic crisis lies in the wake of the early twenty first century ensuring that th e information extracted is relevant and appropriate. 4. Data Presentation When the United Kingdom is compared to other nations, it becomes clear that the United Kingdom is a wealthy country. Within the United Kingdom there are no people who live on less than four pounds a day worth of income. The global poverty line was used at $1 per day (Sachs, 2005) which was revised in 2008 by the World Bank which raised its level to $1.25 per day (Ravallion et al., 2009). When these figures are compared to each other it becomes

Finance Policy Assignment Example | Topics and Well Written Essays - 1750 words

Finance Policy - Assignment Example A business’s financial position is evident from its profit and loss account and the balance sheet. The balance sheet and the profit and loss statement should communicate the appropriate results of the firm to the CEO so that he can make decisions regarding investment. The financial statements of the firm should be made available to all so that they can make their own conclusions from the financial statements with respect to the operations in the firm. It is very important that the financial information provided must be reliable and authentic. The primary objective of my role as CFO is to interpret the firm’s accounts accurately and identify which of the investment methods could benefit the firm in the long as well as the short run. This could be achieved by making appropriate review of the financial statements as well as developing accurate interpretations. This is supposed to benefit the firm and its stakeholders. b) The company can use concise financial report, which consists of Consolidated Income Statement, Statement of Comprehensive Income, Balance Sheet, and Statement of Changes in Equity, Statement of Cash Flows so that all the third party investors and stakeholders could evaluate the firm’s business. ... The taxation requirements of the government should be met with appropriate heads showing profits before tax and profits after tax. Similarly the employees can get an idea about the functioning of the firm by analyzing the financial statements. The creditors and debtors value in the balance sheet along with the bad debts gives a clear understanding about the total debtors and creditors of the firm. The shareholders can understand the way the firm is functioning through the payment of dividends and the return on equity, which is projected in the financial statements. Question 2 a) High dividend policy to the shareholders signifies that the firm is earning high profits and, thus, is paying high dividend to its shareholders. This creates anticipation among the shareholders that the firm will pay them a higher amount of dividend in the next financial year. High dividend also signifies that the portion of debt capital in the firm in comparison to its equity capital is less, which implies t hat the firm has its own financial stability. b) If there are negative profits in the firm then the firm will pay a lesser amount of dividend. If the firm chooses to retain a high portion of its earnings for investment activities, even then the dividend payment will be less. c) High dividend payouts are popular and well appreciated by all the shareholders. But the problem that arises here is that if the firm earns high profits and provides high dividend to its investors in one year and in the next financial year its profit is less comparatively and so it fails to pay high dividends, then the shareholders will be unhappy with the firm. This will affect the bond and relation they have with the firm. As the shareholders are the primary investors in the