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Vaneeza Shah

Reasons for the Industrial Revolution in the US

Last Updated: August 21, 2024

The history of the industrial revolution goes back to the late 17th century when Britain started to industrialize. It rapidly spread across Europe and North America by the mid-18th century. Samuel slater was the pioneer of industrialization in the United States. Samuel was born in England on June 9, 1768. He started working at a cotton mill when he was only 10 years old.

When he came to know that Americans are interested in learning new techniques of the industrial revolution, he eagerly wanted to take these ideas along, to America, but since exporting such designs or immigration of textile workers out of the country was prohibited in England, he tried to memorize these techniques instead as much as he could.

He then escaped England and went to New York illegally. There he met Moses brown, a well-known Rhode Island industrialist, who took his services and invested in their first project together where they successfully created the first water-powered roller spinning textile mill in 1793.

Progressively, a huge number of industrialists replicated Slater’s mill design, and slowly but surely Slater gained popularity among the people of the United States.

Slater was later given the title of “father of the American industrial revolution” by Andrew Jackson for his services. Though numerous British people considered him a traitor for betraying them and called him “Slater the traitor”.

Eli Whitney also has prodigious popularity for his contributions to the industrial revolution of America. He is widely known for the invention of the cotton gin in 1793.

A cotton gin was a revolution in the cotton industry as it made the conversion of cotton into cloth a lot easier and faster. This way more cotton was produced in less time.

The textile was a dominant industry during the industrial revolution epoch and rightly so became the first industry to use modern production methods. The United States managed to become the momentous industrial state by the 20th century.

Special Causes of the Industrial Revolution in America

Embargo act 1807

In the Napoleonic war, America was a neutral country until Britain seized one of Americas cargo ships and asked workers to join their army as a result of which, then US president, Thomas Jefferson implemented the embargo act 1807 according to which America was restricted to have trade with any foreign country aiming particularly at France and Britain.

As a result, America was left with the only choice to manufacture their own goods in their own country. This way they seek new ideas to improve their economy which gave the American industry an instant boost. The embargo act of 1807 and the Napoleonic war were the turning points in American industrialization.

Presence of Minerals

The presence of coal, iron, copper, gold, nickel, timber, etc. in the United States in abundance was another cause of the industrial revolution in America. They used all these resources to produce their own goods and export them.

Railroads

Railroads across America had a great impact on the growth of the industry since traveling became easy from one part of the country to the other. Simultaneously, exporting goods within the country and especially to the west became much easier.

This way the demand for goods also increased since the consumption was increased. Railroads were also a reason a lot of immigrants came to the United States for working and earning. Such an abundant supply of labor helped people easily open up their own industries.

General causes of the Industrial Revolution in America and Europe

Capitalism

Capitalism is a system that allows individuals to independently execute their economic affairs privately rather than the government doing it. The idea of capitalism was introduced by Adam smith.

He argued against mercantilism and was in favor of capitalism.  If we go back into history and observe carefully it is quite evident that capitalism was a major cause behind industrialization first in British and North America and later, the rest of Europe.

For the industrial revolution, it was necessary for the wealthy men to come forward and contribute their wealth to build factories and make them work.

It wasn’t possible without money in hand to have industrialization revolutionize and so those who invested a huge chunk of their wealth didn’t want any loss either so it was necessary for the government to give them the ownership and let them do it privately since their main motive would be to gain as much profit as they could by any means.

This way, they would work efficiently and make more profit. And they successfully did and we saw a rapid rise in industrialization in America.

Imperialism

European imperialism wasn’t exactly a major cause or a direct cause of industrialization but it somehow triggered industrialization to rise.

Imperialism and industrialization was two-way process. Each helped the other to grow. During the epoch of imperialism, large areas of the world came under European control.

Europe took this opportunity and started to gather resources from the imperialized countries (India, Australia, Africa, New Zealand, and North America) and subsequently used these resources to produce goods in their own factories and exported them to the rest of the world.

This way Europe produced goods at a mass level. As industrialization mushroomed they needed more land to have their industries on and hence they colonized more countries to have a larger area to produce and export goods.

East India Company is a great example of English imperialism in the subcontinent. How they entered India for trade purposes and then began to influence their politics and gradually took over subcontinent means they colonized India.

Vaneeza Shah

Syeda Vaneeza is a science student at University. She has a deep interest in article writing, blog writing and data entry work. She always seeks perfection in her work.

Filed Under: Business Leave a Comment

Different Types of Corporate Financial Reporting

Last Updated: August 19, 2024

Corporate financial reporting is the system that builds the economic reports of a company. A corporate financial report not only shows the financial statements of a company but also aims to highlight the necessary financial data and furthermore shows the application of financial policies.

The three main and basic targets of financial reporting are as follows:

  1. to provide lenders and investors insights of a company’s financial health
  2. to helps in determining a company’s cash flow
  3. to tracks and analyzes your business’ income and reports it concurrently.

Good financial reporting can take your company to new heights, as it shows the true financial position of a company. If the accountants work efficiently to highlight the company’s weak points, they can be saved from hidden losses.

Corporate financial reporting includes income statement, balance sheet, statement of cash flows, and statement of retained earnings and change of equity.

Income Statement or Profit Loss Statement

One of the three important financial statements is the income statement. The income statement summarizes a company’s revenues and losses over a specified period of time that could either be the end of every month, every six months, or every year, depending on the company’s policies.

Income statements give investors and lenders an estimate about how much a company’s monthly or yearly profits and losses are. Therefore it is also called a profit and loss statement.

It clearly reports a company’s financial performance and consequently gives investors an idea of the profitability and future growth of the company that helps them analyze whether or not to invest in it.

The income statement aims at four things: revenue, expenses, gains, and losses.

Starting with the details of sales down to computing net income, and earnings per share (EPS), the income statement has it all.

Net income= (total revenue+gains) – (total expenses and losses)

Balance Sheet

A balance sheet gives an overview of a company’s finances at the moment. It’s a financial statement that reports a company’s assets, liabilities, and shareholders’ equity during that specific time.

Or you can say it’s a statement that identifies what a company owns and owes, as well as the amount invested by the shareholders. What really matters when someone’s looking to invest in your business is the fact that “Is your current asset subtotal compare to the current liabilities subtotal enough to pay off your short-term obligations/debt?

More debt than listed equity in the balance sheet is clear single that company may dangerously have a high amount of borrowing in the future, therefore it is also known as debt to equity ratio. The former information also helps creditors decide whether lending the additional credit would result in bad debt.

To make it easier for you to understand, let me define some major terms used above in more detail.

Assets

Anything owned by your company that has a dollar value is called an asset. List your asset in cash, or how easily they can be consumed or turned into cash.

A current asset is anything that you plan to convert into cash eventually within a year or so. Current assets include money in a current account, money in transit, accounts receivable, short-term investment, inventory, pre-paid expenses, and cash equivalents.

Long-term assets are the things you don’t plan to convert into cash within a year. Long-term assets include property, machinery and equipment, intangible assets (goodwill, franchise agreement, copyrights, and trademarks), and long-term investments.

Liabilities

Liabilities are the things that your business owes to others.

Assets and liabilities are listed in both the long and current terms. These current liabilities include payable accounts, wages against hours employees have worked, taxes and loans to be paid in the same year.

Whereas non-current or long-term liabilities include loans that you don’t have to pay within twelve months and bonds your company has issued.

Equity

Equity is the money held by your company. It shows what belongs to the corporate owners. Equity is dropped if the owner draws money out of the company to pay themself or when the corporation issues dividends to the shareholders.

Cash flow Statement

A cash flow statement is a financial statement that summarizes the cash or cash equivalent entering or leaving the company in a specific period of time.

Cash flow determines how well a company generates cash to pay off its debt obligations and fulfill its expenses. This way the statement of cash flow reconciles the income statement and balance sheet, serving along as one of the three core financial statements for any corporate.

Statement of cash flow is of utmost importance to both investors and lenders to determine whether to work with your company or not. Because it certainly indicates how financially stable a company is.

The important elements of cash flow statements include,

  • Cash from operating activities
  • Cash from investing activities
  • Cash from financing activities

Supplemental information (disclosure of exchange of significant items that did not involve cash and reports the amount of taxes paid and the interest paid)

Operating Activities

This shows the day-to-day business income and regular expenses in a given period of time such as income from sales and paid receivables. Outflows may include payments to the suppliers, insurance, and company taxes.

Investing activities

Cash flow from investing activities signifies cash generated or spent upon bigger items like the purchase or sale of an asset, real estate, or equipment.

Financing Activities

Cash flow from financing activities is used to finance a business. It is the total amount of funds a company generates in a given period of time. Finance activities include issuance and repayment of equity, issuance, and repayment of the debt, payment of dividends, and capital lease obligations. It shows how a company funds its operations and includes changes in all the accounts of debt and equity.

Statement of Retained Earnings

Retained earnings statement represents the total amount of income your company has generated after dividends are paid to the shareholders. This statement reconciles the beginning and ending retained earnings of a company over a specific period of time.

This statement is further used by analysts to analyze how corporate profits are utilized. Retained earnings are the profits reserved by a company for further investment in future projects if they are already not used in making payment of any debt obligations.

Vaneeza Shah

Syeda Vaneeza is a science student at University. She has a deep interest in article writing, blog writing and data entry work. She always seeks perfection in her work.

Filed Under: Accounting & Taxation Leave a Comment

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