The Foreign Exchange Markets, where people buy and sell foreign currency, also referred to as the "Forex" or "FX" market, is the largest financial market in the world, 30 times larger than the combined volume of all US equity markets.
Currencies are traded in pairs, for example Euro/US Dollar or US Dollar/Japanese Yen.
Foreign money held by a government to support its own currency. About 5% of daily turnover is from companies and governments that buy or sell products and services in a foreign country or must convert profits made in foreign into their domestic currency. The other 95% is trading for profit, or speculation.
Countertrade means exchanging goods or services which are paid for, in whole or part, with other goods or services, rather than with money. A monetary valuation can however be used in counter trade for accounting purposes.
Countertrade also occurs when countries lack sufficient hard currency, or when other types of market trade are impossible.
For example Coburn Tool corporation, an American manufacturer of large and small machine tools and parts, gears, valves, and bearings, was a major supplier to industries and companies world-wide. Because of the ride of the U.S. dollar on exchange market and serious financial crises in many of the countries in which Coburn did business, sales, particularly to Latin America, began to decline.
The basic economic institution in different economics systems is the business, Businesses determine much of how the economy operates. Businesses produce goods and services, and they come in every shape and size. Although the vast majority of the world’s companies are small, in many countries the economy is dominated by large firms. Large business differ from small ones in a wide variety of ways. In many countries there are nationalized companies belonging to the state, as well as private companies. A private company might be a small firm with just one owner or a very large firm with thousands of shareholders “ownig” he firm.
The death of Ambrose Harper, one of the two men who founded the company Harper & Grant ltd., causes a crisis in the firm. H&G is a private company. It was started originally by Hector Grant's father and the late Ambrose Harper together. A private company can be formed by two or more people. They sign Memorandum of Association, stating the number of shares they agree to take, and their signature is followed by the signatures of anyone else, often members of the family, who will also take shares in the company. In a private company there cannot be more than fifty members, or shareholders. The authorized capital of H&G Ltd was originally P5000, but the company has grown, and each 1 share is now worth about P100. Each share carries a vote at a shareholder's meeting.
Every year the accounts of a limited company must be approved by auditors, acting on behalf of the shareholders. Their duty is to ensure that the directors are reporting correctly on the state of affairs of the company. They do not judge whether the directors are managing the company efficiently or not. That is something the shareholders must judge for themselves.
Until recently, the accounts of Harper&Grant have been audited by Hector Grant’s son-in-law, who is in private practice as an accountant. A new firm of auditors has now been appointed.
They check the highlights, making up the Profit Statement, the Balance Sheet, the Directors’ Report.