Survival and Positive Growth during an Economic Downturn Assignment

Survival and Positive Growth during an Economic Downturn - Assignment Example This study will evaluate and arrive at a consensus regarding each of the financial aspects to provide a plan that will help the organization survive during a depression or recession and lead to a positive growth. It is therefore aimed at providing inputs from the financial perspective of business during the economic downturn. The idea of providing inputs or making changes and venturing into new arenas in terms of cost efficiency and management are discussed as they are the need of the hour. The whole economic system functions on the money supply in the market, and this supply is facilitated by the various business enterprises that are the backbone of every economy. To begin with, let us get acquainted with the "Great Depression of the 1930's" and the current economic downturn. The Great Depression was the worldwide economic downturns that lead to widespread poverty and unemployment as businesses failed. Though the exact cause of the Great Depression is unknown, it began with the Stoc k market crash by the end of 1929. A normal change in the business cycle that becomes a short recession can lead to a depression. During the 'The great depression' the construction industry came to a stunning halt in many countries with prices of crops falling by almost 60%, leading to widespread unemployment, as these sectors have few alternative employment options. However, the economy started showing signs of recovery during early 1933 and the economy stabilized thereafter leaving potential room for the growth of the business. A report about recession where the Former US Federal Reserve Chairman Alan Greenspan commented "the current global recession will "surely be the longest and deepest" since the 1930s and more government rescue funds are needed to stabilize the U.S. financial system."To stabilize the American banking system and restore normal lending, additional TARP funds will be required," Greenspan said in a speech to the Economic Club of New York. The U.S. Treasury's Trou bled Asset Relief Program designed to help bail out banks has been partially successful". The current recession too had the stock markets crashing with the heavy downturn in the construction industry segment. Greenspan further comments "a housing recovery is a necessary condition for the end of the financial crisis, and said that "the prospect of stable home prices remains many months in the future." The effect of this economic downturn is the huge cut down on spending by corporate houses leading to widespread unemployment. According to the Forbes Digital Company "Working capital management" means a "managerial accounting strategy focusing on maintaining efficient levels of both components of working capital, current assets and current liabilities, in respect to each other. Working capital management ensures a company has sufficient cash flow in order to meet its short-term debt obligations and operating expenses." It is only in the implementation of an effective working capital man agement can companies see the return on investment and better earnings.