What is sustainability?
Financial sustainability techniques are intended for long-term financial survival, and it should be stated that the actual aim of sustainability principles involve the opportunity to create an effective financial system for covering all the vital costs, as well as making this system flexible, high performing, and stable.
Along the financial effectiveness, the financial stability principles involve increase of the employee motivation effectiveness, managing internal and external costs, training, attracting customers, etc.
The general principles of sustainability are based on proper control of the financial project, and application of the math concepts that are used for calculating all the numeric aspects of any activity. Therefore, business activity presupposes rational spending and control of the costs, governmental sustainability is optimal planning of the budget.
Sustainability principles for better business operating
The key principles of sustainability involve creating of an available funding with proper explanation of the expenses. Then part of the costs should be recovered by financial initiatives. These will require proper and u-to-date monitoring of balance sheet, correct calculation of investments and loans, clear planning that is based on objective forecasts, as well as diversification of investments/loans and thoughtful management of risks
Mathematics of sustainability concepts
Math concepts of sustainability are based on the calculation of financial principles and defining the key financial parameters that may be used for the detailed assessment of the financial models. Therefore, the math calculation concepts involve:
- application of arithmetic operations for calculating balance. This presupposes analysis of balance sheets, and optimization of costs and expenses by controlling the spending tendencies.
- application of linear equations to problems with un-known values. This is helpful for financial forecasts, or for solving financial problems linked with defining the weak link in the calculations, and financial flow.
- application of basic functions analysis for making predictions
- Defining the math models of further financial development. This is explained by the necessity to consider all the external factors for defining the development tendencies, and outlining the possible considerations on the matters of barriers and stimulants of financial development
Objective and up-to-date view on the balance sheet
The given principles may be used for resolving any type of financial case:
- Assuming the given case, sustainability approaches may be used for resolving the problem of investment, and rate calculation.
A student invests two sums of money, $500 and $800, at different interest rates, receiving a total of $55 in interest after one year. The $500 investment receives an interest rate 2% lower than the interest rate for the $800 investment. Find the interest rate for each investment.
The interest rates for each sum will be:
- X% and x%-2
The equation will be:
- $800 * x% + $500 * (x%-2) = $55
- X% = 5
- $800 * 5% + $500 * 3% = $55
Manage risks and diversify investments/loans
Risk management principles are defined by the business principles and strategies applied. However, it is hard to define the risk with calculation only. Therefore, the risks may be assessed only by proper assessment of the entire project, while sustainability approach will be helpful for allocating the risk mitigation resources for the risk management strategy.
Works cited
Bromley, Daniel W. (2008). Sustainability. The New Palgrave Dictionary of Economics, 2nd Edition.
Soederbaum, P. (2008). Understanding Sustainability Economics. London: Earthscan.