Important facts in a business organization - Essay Example

04 November 2008 Week 3 Integration Paper This week's lessons have opened my eyes to a lot of important facts in a business organization. Most of the concepts which were discussed are really very basic yet are often ignored and overlooked. This week spurs my growing interest in accounting as I now understand that it goes beyond pure numerical computations. In fact, I am starting to see accounting as something that even a typical person can comprehend and utilize. The week started with the discussion on the role of cash and proceeds in measuring organizational cash flow.

At first, I thought that cash is the most important asset of a business organization because it is primarily used to finance expenditures. I have also believed that cash is the measure of the profitability of a business organization-that is, the more cash a company has, the more profitable it is. But I was wrong. Cash is significant yet is not a measure of profitability but liquidity (Keown et al 2005). It is essential in facilitating operating transactions yet an excess amount of it might also mean that the business organization is not utilizing its resources in order to gain more profitable investments.

Thus, it becomes a challenge for companies to determine the optimal amount of cash that it has. Regulation of outflows and inflows is important. The timing of cash outflow should be in sync with the generation of it(Horngren 2000). The second point of discussion is on the value of human capital. This is very much eye opening for me. I just realized that even though human capital is not listed in the balance sheet, this represents the company's greatest potential asset or greatest potential liability (Wright et al 2003).

The value of human capital could never be quantified. However, it is the role of management to align them to the organizational goals to maximize their potential. This, of course would mean the investing in training and developing the human resource as well as installing the proper motivational techniques. All in all, these lessons made me realize to improve on my competencies. Managing cash flow is not only a business of companies but also individuals like me especially with the current economic slowdown.

As an individual, studying cash flow in these times encourages me to manage my finances efficiently. Professionally, knowledge of cash flow will enable me to help my future organization succeed by looking at the amount and timing of cash inflows and outflows. On the other hand, I am quite pleased that organizations are increasingly recognizing the huge, "inquantifiable" value of human capital. However, it is also a challenge for me to equip myself with all the knowledge and skills since human capital does not refer to people but to their attributes, values, experiences, and competencies.

Thus, wanting to be a part of company's greatest asset, I am motivated to pursue personal and professional growth. Bibliography Horngren , C. et. al..2000, Accounting.4th ed. New Jersey: Prentice Hall Keown, A.J., Martin, J.D., Petty, J.W., and Scott Jr., D.F, 2005, Financial Management principles and applications, Pearson/Prentice Hall International Edition, 10th Edition. Wright, P., Gardner, T. and Moynihan, L. 2003, 'The impact of HR practices on the performance of business units' Human Resource Management Journal 13:3, 21-36.