Analysis Of Different Ownership Structures Of Corporation

Corporation has become larger and larger over time as well as they owned by large number of shareholders. Different organizations will have different structure of ownerships. The separation of ownership gives owners ability to control the firms effectively. It gives owners the right to make decision on what to do on asset and who is allowed to use it. This essay will deal with ownership of corporation. To be illustration, RBC and YWCA should be a good comparing and contrasting of financial management between different ownership structure.

RBC stands for Royal Bank of Canada, is for profit organization. It is one of Canada ‘s biggest bank and one of North America’s leading diversified financial services companies, and provide personal and commercial banking, wealth management, insurance, investor services and capital markets products and services on a global basis.

YWCA stands for Young Women's Christian Association, the country’s oldest largest women's multi-service organization, and is non-profit organization. They associate with women and girls by providing literacy, life skills, employment and counselling programs in the country, and the second largest provider of childcare services. Moreover, they promote equality, economic security and lives free from violence and offer range of housing options, employment and training programs, community support programs, girls’ programs and family programs; and engage in systemic advocacy.

There are different variances in their financial report:

Letter and Accomplishments

For-profit annual reports of RBC, they will start with a letter from CEO that they will focus on the previous year financial of company. This letter will also address any hardships the company has faced and be known in publicity. They will give reader know what regulation they have followed to protect their investor. In contrast, annual report of non-profit organization will start out with indicating the reader of their organization’s purpose, reward and statistics about that how many people got benefited from their programs and services.

Goals and Objectives

Another different of the annual report is sharing the common goals and means of the organizations. In the not for profit organization, their goal is providing service needed in society. YWCA often has the goals by offering extensive services to end violence against women and girls, implement national child care, achieve economic equality, end homelessness for women and girls. On the contrary, for-profit organizations aims to maximum profit by having several objectives, having a high net worth to attract potential investors. Their responsibility is reaching the max profit for investor and themselves by creating various investment project to earn revenue.

The property rights

In the profit organization, not all member has a same number of shares. The board of RBC is not allowed to sell or harvest profit from property. The property right is diluted because they need to protect the depositors and investor asset by their regulator. In YWCA non-profit organization, they indicated the theory of “one man one vote” which is equal rights. However, the property is not possessed of them, so the property right is low. Their property owners want to ensure woman and girls do not be violence by providing transformative services in the areas of employment support and training, housing options and shelters, leadership development programs for girls and key supports for women and children.

Budgets and Cash Flow

For this indicator, whether RBC or YWCA, the main purpose is to share the general cash flow of the organization. For-profit organizations, it often shows how well they run their money, both moving (flowing) in and out of business, to impress investors. Non-profit organizations often focus on how much money they put into their programs and services to help improve life of women and girls and provide support for those in need to prevent violence.

Revenue Recognition

YWCA is donation/ charity organization, so contribution is a major source of revenue for them. A contribution cannot transfer to cash to the non-profit because the contributors do not receive anything back in exchange for the contribution. The nature of the relationship between revenue and expense is severed because it is non-reciprocal. The contribution is never earned, so contribution revenue is not recognized when earned. They recognize it when received. In contrast, RBC is profit organization, the connection between revenue and costs is important because customer/ investor gives money to RBC in exchange for service or interest return. The focus is on reciprocal transfer. Therefore, revenue is recognized when the earnings process is completed. Moreover, the performance is measured by matching cost to the revenue generated.

Expense

RBC will measure their expense in relation to revenue by using cost-revenue relationship control devices. Therefore, the customer/ investor knows what they use for their service or product. However, in charity organization, the relationship between cost and revenue is broken and the cost must be controlled directly by budgetary and management reporting system to prevent manager spending over. Therefore, they are focus more on expenditure as expense. Moreover, some donation is restricted for used or program because the donor wants to ensure the funds is used for intended purposes. Thus, non-profit organization uses revenue and expense relationship instead of cost-revenue control device to be more accuracy. Both RBC and YWCA are responsible for these reporting different because they have different missions. For RBC, they are founded to generate income and earning profit. On the other hand, YWCA is founded to serve a humanitarian need (women and girls). They put all of their income into the program and services aimed at meeting women and girls needs such as homeless, life skill, violence against, and economic equality. RBC offers services that have valued in the marketplace, and then distribute profits between board member, CEO, employees, shareholders and customers. For the not for profit organization, their stakeholders are trying to use their all ability to help community instead of providing profits.

All in all, different structure of ownerships has different variance of financial report that they need to take responsibility. YWCA is a not-for-profit organization which is scrutinized by government and public. They need to control their revenue and expense to be matched because donors will focus on their expense since it is a charity organization for helping women and girls, not earning any profit. Therefore, their financial report is focus on these variances. For RBC, it is a profit organization, so they have more variances to report to attract investor.