Financial Credit on Brand Capitalization - Essay Example

Financial credit given to manufactured goods like car brands is an issue of concern to an economist who views it as one of the probable factors towards a volatile monetary system. Traditionally, the return on investment or more commonly known as ROI along a particular venture is a signature of its viability and excellence (Tollington, 2002). Nevertheless, the impact of ethereal nameless chattels like this on stakeholders and to a broader extent global economy is a state of economic precariousness.

Alan Greenspan (2008) in a didactic reaction believed, “Much of the financial system's risk-valuation models failed, not because they were too complex but because they were "too simple to capture the full array of governing variables that drive global economic reality (Greenspan, Alan, 2008)".

Greenspan enunciated the present call for across-the-board lithe policies within the financial markets. This could be straightforward if the Basel II, Switzerland international tenets would be more open that it may rather be more of strengthening the market elasticity and open competition, rather than intransigence (Greenspan, Alan, 2008).

Nonchalantly, volatilities are inflationary, which in accountancy is the reduction of the acquisition influence of the monetary component (Horngren, 1984) of a financial system.

In a country like the United Kingdom, the promptings of national strokes for positive corporate governance as well as financial accounting to enhance investor confidence is vital; hence, a study on the financial credit of top ten selling car brands is imperative.

In addition, the researcher believed in the informative nature of the findings of this study that may be of assistance to economic policymakers of the land.

Finally, the baseline statistics drawn together from the result of this study shall provide direction to other investigators, as they look for supplementary understanding principally those interested in the areas of Accountancy, Finance, and Economics.

Traditionally, accounting is a methodological way of recording and analyzing financial data in entrepreneurial entities (The Merriam-Webster Dictionary, 2004). Typically, accounting has two fundamental financial statements, the income statement and the balance sheet (Keiser and DeMicco, 1993). The income statement is a record asserting the monetary gain or loss of a company within a specified period configured by subtracting the total revenue from the total cost to reflect the difference (Keiser and DeMicco, 1993).  On the other hand, the balance sheet shows the monetary situation at a specified period.

Nevertheless, despite arithmetical precision and accuracy, accounting statements are only occasionally faithful reflections of every detail concerning cost and revenue in a company (Keiser and DeMicco, 1993). This is because in most instances the rate of depreciation of a valued item is only a presumption for lack of precise data on its actual lifespan (Keiser and DeMicco, 1993); the practical reason for warranties indicating the period where for example a commodity like a car may perform at its maximum level.   Logically, a value given to an intangible asset added to its capitalization, akin to the brand of a car is therefore definitely only a guess. Despite this vagueness in values, however, mainstream industries found it an infallible part of business success (Keiser and DeMicco, 1993). However, there are people in the UK who regarded this as tricky, seemingly contradictory to standardized rules (Tweedie and Whittington, 1990). Some enthusiasts though associated the style with creativity in accounting techniques.