Telstra is knows as largest company of Australia in telecommunications sector. The company has branches more than 6 nations cross UK, US and Australia. Since the Telstra is one of the major telecommunication has branches all over the world company purchase network form the local government like in Australia it is NBN and UK it is British telecom
Purchasing power parity is theory will be helpful in understanding the Telstra purchasing style. Purchasing power parity medium helps the company to understand the difference between the nations and their purchasing style . One of the major assumptions taken here would be the difference between the country and their difference prices that has made the company to where it is feasible to do business in that nations or not.
Purchasing power parity is based on the law of price which suggest that, identical form of services sold by the same company in difference prices at different nations because of the two separate market compositions. PPP theory also considers taxation policy of various nations in order adjust the exchange rate.
Where S= exchange rate of currency
P1= Cost of service, x, in currency 1
P2= Cost of service, x, in currency 2
The revenue cycle of the Qantas depicts that, company has earn more than 16 billion as per it annual report of 2014. Company has large market presence in more than 4 continents. As per the annual report, company has revenue growth worth of 12.09% per year which shows that company has bale maintain it profitability in spite of severe competition in airline industry.
The revenue cycle of the company shows that company has focused specifically in there major strategies like pricing , selling and inventory allocations.
Figure 1: Revenue cycle of Qantas
(Source: Horngren, Harrison and Oliver, 2012, pp-764)
The revenue cycle of the company is very much effective as the company has able to manage it cash position via managing the accounts receivables and accounts payables. The revenue cycle of the company shows that, Qantas is very recognizes it accounts receivables which is very much attainable via controlling operational functions (Horngren, Harrison and Oliver, 2012). Company prepares the sales day book in order to understand the credit sales and cash sales.
McDonalds is one of the largest retail chain restaurants brand in all over the world. Company has able to control its expenditure very much based on its expenditure cycle theory. The expenditure cycle theory of the McDonalds shows that, company has set budget and benchmarking system for future in order to assess and control it different expenditure all through the years (Kieso, Weygandt and Warfield, 2012). In order to expand their business, company has taken long term loan for which company has pay high interest rates which is decreasing the company profitability.
Since, the company expenditure cycle is very much based on the recurring set of business activities and related to data processing. One of the primary objective of the expenditure cycle is to minimize the total cost of managing the inventory such bread and other food items. Expenditure cycle of the McDonalds helps the company in decision making of optimal form of inventory management. Company orders supplies and receive the supplies stores it along with pay for goods supplies. As per the Expenditure cycle company often follows the EOQ system which also known as the economic ordering quantity.
The above theory explain that, although McDonalds is using EOQ model which restricted the company cost but company fails control its loan amount which is hurting the company expenditure cycle.
The Payroll Cycle can be effective for Starbucks to have better understanding about their operation. If the pay of the employees is increasing at continuous interval then it can be understood that employees of Starbucks are able to provide quality service and higher productivity. Apart from that, payroll cycle involves three external sources such as banks, government agencies and insurance companies. The HRM department of Starbucks can provide details regarding terminations, hiring and changes in the pay rate due to rise in the pay or salary or promotions. On the other hand, other departments can provide information relating to the hours worked and it can help in understanding the performance of operation of Starbucks. Moreover, the payroll cycle can help in getting effective information about the tax information from the government so that Starbucks can make decision whether to make changes in the price of the products offered or not. Further, the payroll cycle can help in updating the payroll master file, updating tax rates and deductions, validating attendance data and time, schemes for pay, etc (Horngren, Harrison and Oliver, 2012). Therefore, it can be valuable for Starbucks to have better control over their operations and structure the payroll system for their employees.
The conversion cycle will assist Toyota in knowing the amount of time the business will take in order to sell the inventory and making cash available. The conversion cycle will provide appropriate time that the company will be bearing to convert their assets or inventory into cash. On the other hand, the time will be known through acquiring cash for the product sold on credit to clients. Therefore, Toyota will have a clear picture about how faster they can generate cash or receive payments for their product and services. Thus, it will help Toyota to make decision whether in future they should sell products on credit or not. Apart from that, if conversion cycle shows larger result then it will not be a healthier cycle for Toyota and on the other side if the conversion cycle shows smaller result then the company will receive payment in quick time. Moreover, cash conversion cycle will help Toyota in measuring how efficiently and quickly they can pull out cash from operation. Further, conversion cycle will let Toyota know when they can be able to pay to their suppliers (Kieso, Weygandt and Warfield, 2012). Thus, Toyota will better understand the gap between account receivables and account payable.
Horngren, C., Harrison, W. and Oliver, M. (2012). Accounting. Upper Saddle River, N.J.: Pearson Prentice Hall.
Kieso, D., Weygandt, J. and Warfield, T. (2012). Intermediate accounting. Hoboken, NJ: Wiley.
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