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MARITIME AND COASTGUARD AGENCY

Maritime And Coastguard Agency 2

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Table of Contents

Introduction………………………………………………………………………………………………………

Background……………………………………………………………………………………………………….

Risk and Uncertainty ofMCA……………………………………………………………………………….

Advantages………………………………………………………………………………………………………..

Disadvantages……………………………………………………………………………………………………..

FormulaView………………………………………………………………………………………………………

SensitivityAnalysis………………………………………………………………………………………………

Conclusion…………………………………………………………………………………………………………..

Bibliography………………………………………………………………………………………………………..

Appendix…………………………………………………………………………………………………………..

Maritime and coastguard Agency

This paper researches on the background of a Maritime and coastguardAgency (MCA) as a case study. MCA is a merchant navy shipping companybased in UK. It is an administrative company whose main role issafeguarding peoples living adjacent to the coast and enforcing theBritish and international maritime safety rules and laws (Blackmore,2008). Merchant navy accounts to the UK, describing maritime financesof ships. The main objective of this paper is to examine a company’smodel and its merits and demerits. In addition, this paper exploresthe company’s risks and uncertainties, opportunities and defects ofits model.

Background

As noted from, Blackmore (2008), Maritime and Coastguard Agency is aUK administration company working to safeguard people livingadjacent to the coast and carrying out British and internationalaquatic law and safety procedure. This encompasses harmonizing searchand rescue(SAR) at sea through Her Majesty`s Coastguard (HMCG),ensuring that crafts meets international and UK safety standards,monitoring and averting sea water pollution including buildingcapacity and providing (Harding &amp Riding, 2007). Merchant NavyCertificate of Competency (licenses) to crafts` directors and crew toSTCW pre-requisites (Blackmore, 2008). It is in control of “SirAlan Massey”, the administration that assumed office in July 2010.Additionally, according to Harding &amp Riding (2007), this agencyconsist of three varied outward facing plan of save and search andstop action through Her Majesty`s Coastguard, habour in addition toan emblem government authority of crafting via a structure of marinemanagers and the growth of worldwide standards and rules forshipping via the International Maritime Authority (Harding &ampRiding, 2007). The MCA has now established an AutomaticIdentification System (AIS) chain distributed in the whole of UK forreal time tracking and checking of transport activities from theseaboard (Blackmore, 2008).

Risks and uncertainty

It is worth noting that, a capital risk is a variable which is beingfaced by businesses periodically in the revenues. Bragg (2001) addsthat, it is a situation through which a business is expected to remiteffects and these effects are usually predictable. Uncertainty can betermed as a condition in which a business acquires at least tworesults or outcomes and the probability of the outcomes cannot bedetermined and cannot be assessed (Bragg, 2001). This is caused bymarket report which cannot be predicted. Uncertainty is well examinedin the insurance of a company. For instance, it is impossible for aninsurance company to foretell the death of insured employees or anyother insured flawed commodities. Many companies have got balancedrevenues while others don’t have. Thus, a risk is usually connectedto noncurrent costs of a company.

Advantages

It reduces the company’s economic failure

Risk management declines financial failure of a company. Forexample, risks sustained from market can cause suspicion on laterrevenue as a result of future changes in markets. If the marketsituation becomes worse, company’s finances may be affectednegatively hence cut down the shareholders’ convenience. In spiteof that, with risk management, market odd effects to the company canbe restrained. The number of shareholders will increase and thechances of them incurring losses can be reduced (Horngren, Datar, &ampFoster, 2006).

Enhanced growth on safety and jobs

Financial risk management enhances the growth of employmentsafety in addition to jobs. The company`s employees are crucialcontributors to the company and therefore their safety need to betaken into consideration. In addition, financial challenges initiatean imbalance between deployment and job market. Most people are notemployed because of the company being liquidated and riskscollapsing. Therefore, financial risk management declines thiscondition through ensuring the company doesn’t arrive atliquidation levels.

Disadvantages

Financial risk management possesses limited disadvantages. Companiestake cautions in financial risk management due to high cost involved.A lot of firms are not willing to alter their financial statementsdue to high cost in addition to its time consuming processes(Horngren, Datar, &amp Foster, 2006).

Formula view

It exist four economical ratios used by accounting managers inestimating the risks and uncertainty affecting the business or acompany. These includes Operating Leverage Effect Ratio (OLE),Contribution Margin Ratio (CMR), Combined Leverage Ratio (CLR) andFinancial Leverage Ratio (FLR).

The following are the formulas being used for each ratio

  1. Contribution Margin Ratio = Sale – Variable Cost

  2. Contribution Margin Ratio = Contribution MarginSales. Which Is 1–Variable Costs/Sales.

  3. Operating Leverage Effect Ratio = Contribution Margin Ratio Operating Ratio

  4. Financial Leverage Ratio = Operating IncomeNet Income

  5. Combined Leverage Ratio = Operating Ratio Financial Leverage Ratio.

Case study

Maritimeand Coastguard Agency as a case study is expecting to maintainsimilar catalog at the end of the fiscal year as before at theinitial year. The following are the estimates of the fiscal year:

  • Total operating cost is £147,721,000

  • Net operating cost is £140,681,002

  • Staff is £61,534,000

  • other cost is £62,355,000

  • Fixed cost is £27,632,000

  • Cost per Unit is £18

  • It is expected that 2,305,000 units will be sold at the price of £30 per unit.

Thecontribution Margin Ratio of the company will be as follows

Sensitivity Analysis

This is the evaluation of certain financial elements of a companyand their changes, and the effectiveness they have on the companylargely. It is analyzed to identify the changes of variables in eachones input on the results of a given paradigm and for this case arethe risk and uncertainty paradigm and its calculation methods. Thesensitivity analysis of risk and uncertainty providescrucial aid to a designer when ascertaining subdivision features atearly stages of the design processes, leading to favorable, effectiveand safe crafts (Horngren, Datar, &amp Foster, 2006).Assessing crew needs is a complicated and crucial procedure. Crewneeds are complicated by the mechanization balance shipping classand natureof business course. Previously, simplelaws and standards, for instance those in Marine Safety Manual, havereally been able to successfullyidentify crew needs. Nonetheless,scientific technology in addition to commercialized tension isinducing alterationsthat may pose the traditional methods for assessing crew needsobsolete. These alterations necessitatedthe examination of important contributions to crew needs: jobs andtasks that iscompulsory to be carried out to sail crafts safely (NRC, 1990). Thispaper examines how an analysis of craftstasks provides a proper basis forassessing crew needs and requirements.

Conclusion

Thispaper proposes that more research be done on this case study. The MCAshould ensure its survey budget for maintaining maritime charts isspent efficiently and effectively. Survey information tendering mayrequire more weather and sea condition paradigms, use of variousmeasurement technologies leading to considerable varied quotationsfrom various contractors. From this study the MCA Company needs asolution to increase job security and job opportunities to itsstakeholders as well as assisting the reduction of financial failure. Financial risk management is a crucial practice that MCA hasembraced (Horngren, Datar, &amp Foster, 2006).

Bibliography

Blackmore, E. 2008, The British Mercantile Marine. CharlesGriffin and Company, London.

Bragg, S. M. 2001, Cost accounting a comprehensive guide. JohnWiley, New York.

Harding, S., &amp Riding, J. 2007, Research to determine theregulatory approaches to recreational vessels within the EU, Canada,Australia, New Zealand and the USA. Marico Marine Group,Southampton.

Horngren, C. T., Datar, S. M., &amp Foster, G. 2006, Costaccounting: a managerial emphasis (12th ed.). Pearson PrenticeHall, Upper Saddle River, NJ.

Appendix

    1. . Total operating cost is 147,721,000

    2. . Net operating cost is 140,681,002

    3. . staff cost and other costs are 61,534,000 and 62,355,000 simultaneously.

    4. . Fixed costs are 27,632,000

    5. . cost per unit is 18

. Itis expected that 2,305,000 units will be sold at the price of 30 perunit.

Calculate the contribution Margin Ratio of thecompany.