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Features - Editor, 11 February 2008

Environmental and Social Accounting for China Business (Part 2)



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Environmental and Social Accounting for China Business (Part 1)

How China Business Can Protect Investors

It is always better to avoid extremes. The stakeholder concept should not make stock investors feel left out! China business can adapt management accounting systems to take care of particular investor concerns. The Trailing Twelve Months (TTM) concept of influential US business web sites is an important lead. China business should move away from quarterly comparisons alone. There could be many seasonal variations for quarterly changes. A TTM approach is more reliable. Sensitivity Analysis is uncommon even in the US. China business can stand apart by show-casing Net Present Value (NPV) under various assumptions. This applies to the Internal Rate of Return (IRR) as well. Who knows the future for sure? Even pay-back periods can change in adverse business conditions. Sensitivity profiles of pay-back, NPV, and IRR, will encourage investors. Everyone gains if investment analysis is complete!

A Whole New Role for Accounting in China Business

China business can learn from the experiences of other countries. Better accounting holds keys to more lasting business. It can also help investors choose the best investment projects. All stakeholders can use the powers of accounting. It can emerge as a new source of strength for China business. Investors from all over the world will favor China business if the country adopts new systems of management accounting. China business customers in other countries will also love the move. It is comforting to know what your favorite brands do for the environment. No one wants to buy products made in sweat shops! It is not to find fault, but to seek improvement.

What do you think? Please visit the ‘Contact Us’ facility on this web site. Use the form to let us know your views. Do you know of instances in which China business units have used environmental accounting concepts? Is China business as bad in social accounting terms as some people try and make it out to be? How can China business evolve to a higher plane of social responsibility?

We have started work on a new series entitled “The Changing Face of China Business”. We have started research on how 2008 and the years beyond may look in this magnificent country. Please bookmark this web site, or let us know if you would like a custom alert when the first piece is published. Do stay in touch!

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