Sample Essay on Risk Assessment

Risk Assessment

Trucking companies face the risks of being denied financial assistance for marketing their businesses. Most financing organizations find it risky to finance the marketing of these businesses because they lack proper payment abilities. Such companies do not have enough assets to use as a means of acquiring financial benefits (Salibury.edu, 2014). They also lack adequate collaterals to use as a backup plan for any loan granted to them. Financial corporations find these institutions risky to deal with.

Another capital risk that these companies have to deal with is lack of long term assets they can use as a means of financing marketing activities. Most of their operations rely heavily on their liquidity and profit states. Such sources of income are not enough to finance their long term business activities (Salibury.edu, 2014).  These companies also encounter the risk of losing more time and property while waiting for loans to be approved by banks. Similarly, traditional financing methods are also risky plans to use by these banks.

Below is a typical income statement for a normal trucking company

Sales                                        1,000

Cost of goods sold                      5,000

Depreciation                                1,000

EBIT                                       1,000

Interest                                        400

Expenses                                     9300

Taxable income                         2,000             taxes 35% of the total

Taxes                                       3,200

Net income                              22,200

The best mitigation plan that the company might use is to ensure that they overcome the risk is to come up with an appropriate plan like having assets for marketing (Salibury.edu, 2014). They should also lessen their expenses to ensure that they save more money to use for their funding needs. The companies should use durable methods and other sources of capital for their usage, which will also ensure that they use less money and save money to use as capital.

References

Salibury.edu. (2014). Calculating total cash flows.