Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows. NPV is used in capital budgeting to analyse the profitability of a projected investment or project. NPV = Cash inflows / (1+r) ^n – Cash outflows Internal rate of return (IRR) is a metric …
Explain NPV and IRR and how do you calculate the same? Read More »
Enterprise Value, or EV for short, is a measure of a company’s total value, often used as a more comprehensive alternative to equity market capitalization. The market capitalization of a company is simply its share price multiplied by the number of shares a company has outstanding. Enterprise value is calculated as the market capitalization plus …
Q If the project’s initial investment is of 100 crores and NPV of the same is ₹10 lakhs, will you go for the project or not? Suppose I am getting 6% bank interest if I keep the amount in FD. Should I still accept the project or not? A. The answer will be yes, because …
Accretion is asset growth through addition or expansion. Accretion can occur through a company’s internal development or by way of mergers and acquisitions. Dilution is a reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Adding to the number of shares outstanding …
The book value of a company is the net difference between that company’s total assets and total liabilities, where book value reflects the total value of a company’s assets that shareholders of that company would receive if the company were to be liquidated. An asset’s book value is equivalent to its carrying value on the …
Cost of Debt is the future interest rate application to the company, net of taxes. It is calculated using Yield to Maturity less taxes, where the bonds are listed. It can also be calculated by taking the risk free rate and adding the credit default spread applicable to the credit rating of the company. Do …
As per Ind AS 37, a provision is a liability of uncertain timing or amount. A liability is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits. As per Ind AS 37, A contingent liability …
Liquidity – Current ratio; Quick Ratio; Cash Ratios Liquidity Ratios A company with adequate liquidity will have enough cash available to pay its ongoing bills in the short run. Here are some of the most popular liquidity ratios: Current Ratio Current ratio = Current assets / Current liabilities The current ratio measures a company’s ability …
The operating margin ratio uses operating income and revenue to determine the profit a company is getting from its operations. This ratio, along with net profit margin, can give investors a good visibility on the profitability of a company as a whole. The operating margin ratio is calculated by dividing net operating income by total …
Suppose there are two companies, how to compare them based on profitability? Read More »
Solvency is defined as the firm’s potential to carry on business activities in the foreseeable future, to expand and grow. It is the measure of the company’s capability to fulfil its long-term financial obligations when they fall due for payment. A solvent company is one that owns more than it owes; in other words, it …
Profitability Ratio 1. Gross Profit Margin 2. Net profit Margin 3. Return on equity 4. Return on assets 5. Return on capital employed 6. Gross Profit margin 7. Net Profit margin 8. Earnings per share Valuation Ratios 1. P/E ratios 2. Earnings Yield 3. Price / Book value Favorite
WACC – Weighted Average cost of capital – (E/E+D)*Ke + [D(1-t)/E+D]*Kd E – Market Value of Equity D – Market Value of Debt Ke – Cost of equity Kd – Cost of Debt T – Tax rate A company is typically financed using a combination of debt (bonds) and equity (stocks). Because a company may …
FCFE = Net Income + D&A + Net Borrowings – Net Capital Expenditure – Net Change in working capital FCFF = Net Income + D&A + Interest (1-T) – Net Capital Expenditure – Net Change in working capital Favorite
Commercial bank: accepts deposits from customers (retail depositors, commercial depositors etc. and makes consumer and commercial loans using these deposits. It may also offer anciliary services like credit cards Investment bank: acts as an intermediary between companies and investors. Does not accept deposits, but rather sells investments, advises on M&A, etc. Loans and debt/equity issues …
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Section 18 (3) of the CGST Act as well as rule 41 of the CGST Rules stipulates that in case of change of constitution of a registered taxable person on account of sale, merger, demerger, amalgamation, lease or transfer of business, the registered person would be allowed to transfer the unutilized input tax credit to …
GST law wrt M&A, Demergers, effect of ITC on such case. Read More »
I would advice the client for settlement or litigation based on what the matter is about. Does it really amount to non-compliance? Are there interpretation issues involved? I would refer other case laws with similar matter. I will see the materiality of the amount and case. I will look at the cost of litigation. There …
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Application for Refund by Unregistered Persons CBIC has prescribed the manner of filing of application for refund by unregistered persons, i.e., manner in which an unregistered person, who has suffered the burden of GST, but the contract has been cancelled later (e.g. Construction contract or long-term Insurance policy, where the supplier is bound by the …
Being a new law, the scope for professional advice as well as litigation is vast. There are lot of avenues for tax planning under GST – which will involve the advisory function. There are several unresolved interpretation issues – this will involve the litigation function Favorite
If there is no barrier on transportation of goods from one place to another tax will be easily evaded, so for blocking this E-way bill was introduced. Whenever goods moved from one place to another E– Way bill will be generated, it is a proof that tax will be paid on such goods. No one …
Submit application within 6 months of communication of order or decision in GST APL-03 along with relevant documents as follows:- 1. Grounds of Appeal 2. Form of verification 3. Certified copy of demand order or decision. (Within 7 days of filing of appeal) The person making an appeal before tribunal should pre-deposit full amount of …
How to file appeal before GST appellate tribunal and what is the pre deposit amount? Read More »
Yes, a manufacturer of goods can avail composition scheme provided he is not a manufacturer of goods notified by Govt. If a person opts for the composition scheme in violation of the conditions he shall be liable for a penalty equivalent to the amount of tax payable. Favorite
Section 122- Penalty for certain offences under the GST Act. Section 122. (1) Where a taxable person who––This section declares the offences that attract penalty as a consequence, apart from the requirement to pay the tax and applicable interest In other words, the first sub-section (1) prescribes 21 types of offences, any one of which, if committed, can …
No. The input tax credit of input services shall be distributed only amongst those registered persons who have used the input services in the course or furtherance of business Favorite
If return is not filed within the prescribed date, as per section 234A, a person is required to pay interest at the rate of 1% per month, or part of a month, on the unpaid tax amount. Person is also required to pay penalty. Favorite
An Input Service Distributor (ISD) is a taxpayer that receives invoices for services used by its branches. It distributes the tax paid known as the Input Tax Credit (ITC), to such branches on a proportional basis by issuing ISD invoices. No. Excess credit distributed can be recovered along with interest only from the recipient and …
Where there is a change in the constitution of a registered person on account of sale, merger, demerger, amalgamation, lease or transfer of the business with the specific provisions for transfer of liabilities, the said registered person shall be allowed to transfer the input tax credit which remains unutilized in his electronic credit ledger to …
Section 18 of CGST 2017 provides for availability of credit in special circumstances. Section 18(1): Subject to such conditions and restrictions as may be prescribed— a) a person who has applied for registration under this Act within thirty days from the date on which he becomes liable to registration and has been granted such registration …
Different types of refund includes refund due to zero rated supply, inverted duty structure, balance in E-cash ledger, tax wrongly collected and paid, to UN Bodies, to Tourist, Deemed Export. No, generally refund is not avaiable on capital goods. But in case of zero rated supplies with payment of output tax, refund can be availed …
What are the types of Refund? Is refund available on Capital goods? Read More »
Rule 42 of Central Goods and Services Tax (CGST) Rules, 2017 relates to Manner of determination of input tax credit in respect of inputs or input services and reversal thereof. Rule 36 (4) provides a restriction to claim input tax credit. The taxpayer can claim input tax credit on the invoice which are appearing in …
Documents required at the time of refund filing: In case of Export of Goods • Print out of GSTR RFD-01A& ARN. • GSTR-3B/ GSTR-3/GSTR 1 of particular month • Undertaking as per para 2.0 of circular 24/2017 • Undertaking of no prosecution as per Rule 91 (1). • Statement 3 (Rule 89 (2) (b) & …
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Show cause notice is a formal communication to a person, asking to explain his side for the issue mentioned in the notice. It is generally issued in case of a breach or misconduct at the part of the recipient. The deficiency memo is issued in Form GST RFD-03 instructing the applicant to rectify the deficiency …
With LUT, an exporter can export goods or services without paying the taxes. This prevents a blockage of working capital. So LUT is advisable. But this is only if it does not have a significant amount of capital inputs. In that case, without LUT is better Refund of Capital Goods is not available under Rule …
Whether it is advisable to file LUT for Zero rated supplies or pay tax on it? Read More »
Wherein the rate of tax on procurements / inward supplies is higher than the rate of tax paid on outward supplies such case fall under inverted duty structure. A registered person can claim the refund of unutilized Input tax credit on account of IDS at the end of a tax period where credit has accumulated …
Any business entity located in the taxable territory is liable to pay RCM in case of Govt Services. Exceptions to this are – a) renting of immovable property; b) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Central …
Discuss about the RCM applicability in case of Govt Services. Read More »
Schedule I deals with certain activities which are treated as supply even if made without consideration. Schedule II deals with activities or transaction to be treated as supply of goods or services. Schedule III deals transactions not to be treated as supply Favorite
If the supply of goods happens within the same state, CGST and SGST will be applied by the supplier. Similarly, if the supply happens between two different states, the supplier charges IGST. More formally, if the state of “place of supply” is same as state of “location of supplier”, CGST and SGST (or UTGST), if …
Deemed Distinct persons (DDP) are persons with different GSTINs belong to one legal entity (single PAN) situated within the same State or in two different States. Different GSTIN is mandatory for different states but optional for different business lines within same state. GST is applicable for supply between DDP. Transfer Pricing is also applicable Favorite
With the scrapping of GST Audit, the professionals will have less work in GST. This will increase the frequency of audits and scrutiny by GST authorities since the middle layer of checks through independent audit by professionals has been removed. Litigations may increase since businesses will take any favourable or twisted interpretation of law that …
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Time of supply decides when the supplier or recipient is liable to pay GST for goods or services or both. The time for issuing an invoice would depend on the nature of supply viz. whether it is a supply of goods or services. A registered person supplying taxable goods shall, before or at the time …
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Place of supply of goods under GST defines whether the transaction will be counted as intrastate or interstate, and accordingly, levy of SGST, CGST & IGST will be determined. The state where they are consumed will have the right to collect GST – the place of supply state gets the revenue. In case of SGST, …
As per Section 16 of Integrated Goods and Service Tax Act, zero-rated supplies mean: – Export of goods or services or both; or Supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit. For example, export of mobile phones to Australia. Supply of goods or services …
GSTR-2B is a new static month-wise auto-drafted statement which is generated for every normal tax payer on the basis of information furnished by his supplier in the respective GSTR. Form GSTR 2A is a purchase-related dynamic tax return that is automatically generated for each business by the GST portal. The information is captured in GSTR …
GSTR 01 – 11th of the next month, GSTR 3B/5/5A – 20th of the next month, GSTR4 – 30th April of next F.Y., GSTR9/9A & 9C- 31st Dec. of the next F.Y. Favorite
Article 246A of the Constitution, which was introduced by the Constitution (101st Amendment) Act, 2016 confers concurrent powers to both, Parliament and State Legislatures to make laws with respect to GST i. e. central tax (CGST) and state tax (SGST) or union territory tax (UTGST). Favorite
No, RCM is applicable on goods too and not just on services. The reason for having Reverse Charge Mechanism is that – it was observed that many unorganised sector suppliers are either unregistered or very small business entities facing tax compliance issues and were unable to pay taxes intentionally or unintentionally. In such scenarios government …
Is RCM applicable only on Services? Why there is a mechanism of RCM? Read More »
If a taxable person transfers his business, either wholly or partly, to another, then the taxable person (transferor) and the person to whom the business is transferred (transferee) will be liable, jointly and severally, wholly or to the extent of such transfer, to pay the GST due. If a registered taxpayer transfers his business he …
Section 17(5) of CGST Act refers to a specific provision under GST covering blocked credits or ineligible ITC. The taxpayer cannot claim ITC while paying output tax when they make purchases listed in this provision. You cannot claim ITC on vehicles purchased for passenger transportation such as- Four-wheeler motor cars or Three-wheelers or auto rickshaws …
The GST Registration process is a simple 2-stage process. The registration form comprises 2 parts – A and B. Part A of the GST registration form includes basic information of the applicant and helps generate Temporary Reference Number (TRN), which is valid for 15 days. This TRN can be then used to fill out Part …
As per the latest notification, Zomato, Swiggy, etc. shall be responsible for charging, collecting, and paying GST at the rate of five percent on supply of “restaurant services” made by such restaurant through the e-commerce platform. The CBIC (Central Board of Indirect Taxes and Customs) has reduced the turnover limit for mandatory issuance of e-invoice …
Latest amendments in GST relating to E-commerce operator, E-invoices, ITC rulings. Read More »
The Punjab Authority of Advance Ruling (AAR) has held that the GST is not payable on notice pay recovered from outgoing employees. The CBIC issued a circular dated August 3, 2022, clarifying that the charges paid by an employee when he or she leaves without serving the mandatory notice is not taxable. A few crucial …
What do you know about the GST applicability on notice period recovery? Read More »
Financial analysis, the process of accumulating, envisioning, controlling, deciphering, and anticipating financial data and following the aim to evaluate the financial accomplishment of a particular department inside a company or of a company itself. It helps in making more reliable decision making The financial statements that include the income statement, balance sheet and cash flow …
As per Ind AS 108, Identification is based on 3 criteria. That is any operating segment should have 3 characteristics. Component of entity for which discrete financial information is available. (Income, expense, assets, liability) Component of entity whose performance is evaluated and reviewed by the Chief Operating Decision Maker (CODM) for the purpose of allocation …
1. Pan Card 2. Aadhar Card (linked with Pan) 3. Form 16 (Part-B) in case of Salaried Person 4. Bank Statement in case of Salaried Person 5. Books of Account with reconciliation of GST Portal in case of Business return. 6. In capital Gain income required purchase and Sale deed. 7. In House Property Head …
The major factors that are considered in selecting and retaining an auditor include the size of the audit firm, the status of ongoing auditor engagements, the cost of the auditor firm service and the specialty of service the auditing firm offers. one key consideration is the independence of the auditing process as history and research …
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As per IND AS 12, deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised. The criteria for recognising deferred tax assets arising from the carry forward of unused tax losses and tax …
What are the DTA creation criteria as per Ind AS and how they are different from AS? Read More »
The notes shall: (a) present information about the basis of preparation of the financial statements and the specific accounting policies used in accordance with paragraphs 117–124; (b) disclose the information required by Ind ASs that is not presented elsewhere in the financial statements; and (c) provide information that is not presented elsewhere in the financial …
What are the disclosure requirements of Disclosure note 1 of financial statements? Read More »
“The amount set by the auditor at less than materiality for the financial statements as a whole to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole.” The performance materiality aims to reduce the impact of materiality. performance materiality …
Many online Advertisement portals are non-resident and do not have permanent establishment in India. Many resident assessee make payment to this non-resident for advertisement and claim as business expenditure u/s 37. Now India is losing its revenue since payer gets the deduction and amount received by payee is not taxable, so Finance Act 2016 w.e.f. …
Supreme Court’s Landmark Judgement on Income Tax Exemption for Profit Oriented Educational Institutions (trust or societies etc.) Supreme Court overruled two previous judgements – Profit Oriented Educational Institutions (trust or societies etc.) can not Claim Income Tax Exemption u/s 10(23C) New Noble Educational Society vs Chief Commissioner of Income Tax. (Hon. CJI Uday Umesh Lalit, …
Any important recent judgements you’ve read about? Read More »
Sec 147 : Income escaping Assessment or Reassessment If any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing Officer may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance or any …
Faceless assessment means carrying out of income tax assessment procedure without human interface with the use of technology. The Cases shall be assigned to the department through automated allocation system. There will be no direct contact of A.O with assessee. a) The provisions of the proposed Section 144B will apply to assessment, reassessment, or re-computation …
As Amended by Finance Act, 2022 INTRODUCTION Finance Act, 2021 introduced major changes to the provisions of reopening of assessment of an assessee for previous assessments years. Erstwhile Sections 147 to 151 were replaced with amended Sections 147, 148, 148A, 149, 150 and 151 respectively, with effect from 1 April 2021. Thus, any notice for …
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Advance tax means tax paid in the financial year immediately preceding the A.Y. (i.e., PY) As per section 208, every person whose estimated tax liability for the year is Rs. 10,000 or more shall pay his tax in advance in the form of advance tax As discussed above, every person whose estimated tax liability for …
The DRP is an Alternative Dispute Resolution (ADR) mechanism for resolving disputes related to Transfer Pricing in International Transactions. Appeal can be filed before CIT(A), when an assessee is adversely affected by Orders passed by various Income tax authorities the taxpayer, being a foreign company or facing TP adjustment (eligible taxpayer), has an option to …
Internal transfer pricing is pricing mechanism of the organisation under which one division of an organisation charges for the product or service transferred to another division of the same organisation thereby forming basis for allocation of combined revenue among the various divisions Division could be departments within a company or a group companies of a …
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Many online Advertisement portals are non-resident and do not have permanent establishment in India. Many resident assessee make payment to this non-resident for advertisement and claim as business expenditure u/s 37. Now India is losing its revenue since payer gets the deduction and amount received by payee is not taxable, so Finance Act 2016 w.e.f. …
Double taxation means the same income getting taxed twice in hands of same assessee. Any country taxes income on baris of two rules i.e. residence rule & source rule Double Taxation Avoidance Agreements is a treaty signed between two or more countries, through which the elimination of international double taxation, promotes the exchange of goods, …
An advance ruling refers to the facility of obtaining a judgment in advance from the Authority for Advance Rulings. The facility is used when the assessee has anticipated contentious issues in the Income Tax assessment. An advance ruling enables the assessee to obtain an authoritative decision of the Authority for Advance Rulings. The Advance ruling …
“Place of effective management” means a place where key management and commercial decisions that are necessary for the conduct of business of an entity as a whole are, in substance made. A “permanent establishment ” (PE) is a fixed place of business that generally gives rise to income or tax liability in a particular jurisdiction. …
Difference between POEM and PE. What are the types of PE? Read More »
The agreement is between the Board and a person. The principle to be followed in case of merger and demerger is that the person (company) who makes the advance pricing agreement (APA) application or enters APA would only be entitled for the rollback provision in respect of international transactions undertaken by it in the rollback …
Roll back provisions in case of merger and demerger? Read More »
a] Primary adjustment is defined to mean the determination of the transfer price in accordance with the arm’s length principle resulting in an increase in the total income or reduction in the loss, as the case may be, of the taxpayer. A “secondary adjustment” has been defined to mean an adjustment in the books of …
Difference b/w primary and secondary adjustment? Read More »
Arm’s Length Price can be computed by the following methods; 1. Comparable Uncontrolled Price Method 2. Resale Price Method 3. Cost Plus Method 4. Profit Split Method 5. Transaction Net Margin Method 6. Such other methods as may be prescribed by the board 1. Comparable Uncontrolled Price Method: Under this method the price charged or …
What are the Methods for computing ALP along with examples? Read More »
Realized gains refer to profits from completed transactions whereas unrealized gains refer to profits that have materialized, but the transactions have not been completed. Realized gains are the profits earned from already completed transactions, thus they involve a receipt of cash. These are recorded in the income statement. Unrealized gains refer to profits that have …
Difference between Realized and Unrealized gains? Read More »
Ensure the accuracy of the data entry process, which involves journal entries of financial transactions and the posting of journal entries to the ledger which can be done by Automated data entry process, cross-checking the first data entries and assimilating a suite of technology-based and manual data entry techniques The next step towards the accuracy …
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Debt extinguishment occurs when a debt instrument is terminated. This occurs when the borrower repays the lender or bonds are retired by the issuer. Extinguishment may not involve full repayment of a debt; the two parties may agree on a lesser repayment amount if the borrower is unable to make a full repayment of the …
Debt covenants can simply be defined as agreements between the business and the creditors. Under this, the borrowing company is supposed to abide by certain conditions, in order to be entitled to receive the loan. If those conditions are not met, the borrower is considered to be a defaulter. For instance, “the borrower shall not …
So long as you use accrual accounting, cash flow statements are an essential part of financial analysis for three reasons: They show your liquidity. That means you know exactly how much operating cash flow you have in case you need to use it. So you know what you can afford, and what you can’t. They …
There are two ways to prepare a cash flow statement: the direct method and the indirect method: Direct method – Operating cash flows are presented as a list of ingoing and outgoing cash flows. Essentially, the direct method subtracts the money you spend from the money you receive. Indirect method – The indirect method presents …
Basic Earnings Per Share is the ratio, that is reckoned to know the earnings available to each equity share. It is calculated by considering company’s ordinary shares. On the other extreme, diluted earnings per share are computed when there are potential shares, i.e. convertible securities, in the company’s financial structure. Basic EPS is a tool …
Virtual certainty determination is a matter of judgement to be evaluated on a case to case basis , should be supported by convincing evidence, i.e., evidence available at reporting date in concrete form and cannot be based merely on forecasts of performance Reasonable certainty would normally be achieved by examining past records of the enterprise; …
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A walkthrough test is an examination of each step involved in a transaction. A transaction is traced right from the beginning to the end to understand the process flow A walkthrough test is an auditing technique that examines a process from initiation to completion. It is done on a very small sample – it may …
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(1) It is a written statement by management provided to the auditor to confirm certain matters or to support other audit evidence. (2) It does not include financial statements, the assertions therein, or supporting books and records. (3) The auditor shall request management to provide a written representation that it has fulfilled its responsibility for …
We need to perform alternative audit procedures to larger items- By verifying the subsequent cash receipt to see if customers have paid for those invoices that were not confirmed, sales and shipping documents or By visiting debtors’ places or By communicating through other modes. Favorite
The auditor should evaluate whether Sufficient and appropriate audit evidence has been obtained and conclude on appropriateness of management use of going concern basis of accounting in preparation of Financial Statements 2) Based on audit evidence obtained, conclude whether material uncertainty exists related to events or conditions that, individually or collectively, may cast significant doubt …
A. The recognition of revenue in case of FOB (Free on Board) and CIF (Cost, Insurance and Freight) basis is determined by the point at which the ownership of the goods is transferred to the buyer. In case of FOB (Free on Board) basis, the ownership of the goods is transferred to the buyer once …
A. Operating leverage and financial leverage are two types of leverage that refer to how a company uses debt to amplify the returns on its operations or investments. Operating leverage is the extent to which a company’s operations are financed with fixed costs, such as salaries and rent, as opposed to variable costs, such as …
A. Financial ratios are used to evaluate a company’s financial performance and health by comparing different financial metrics. There are many different financial ratios that can be used, but some of the most common ratios include: Liquidity Ratios: 1. Current Ratio: Current Assets/Current Liabilities 2. Quick Ratio or Acid Test Ratio: (Current Assets – Inventory)/Current …
A. Working capital is a measure of a company’s short-term liquidity and is calculated as the difference between a company’s current assets and its current liabilities. Negative working capital occurs when a company’s current liabilities exceed its current assets. This means that a company’s short-term obligations are greater than its short-term resources. When a company …
A. Free cash flow (FCF) is a measure of a company’s cash flow that is available for distribution after accounting for capital expenditures. It is the cash that a company generates after accounting for the funds necessary for maintaining and growing its business operations. The formula for calculating free cash flow is: Free Cash Flow …
A. The most important thing to look for in an annual report while performing financial due diligence is the financial statements, including the income statement, balance sheet, and cash flow statement. These statements provide a detailed picture of the company’s financial performance over the past year and can be used to analyze trends and key …
A. Deferred revenue is a liability that represents revenue that a company has received but has not yet earned. It is revenue that a company has received in advance for goods or services that will be provided in the future. There is no accounting for deferred revenue. If the customer has already paid it will …
What is Deferred Revenue? What is its importance in Due diligence. Read More »
A. The enterprise value (EV) of a company is a measure of the total value of a company. It is calculated by adding the market capitalization of the company, the outstanding debt, and any preferred stock, and then subtracting any cash and cash equivalents. The formula for calculating enterprise value is: EV = (Market Capitalization) …
A. EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a company’s financial performance that excludes certain non-cash expenses, such as interest, taxes, depreciation, and amortization. EBITDA is calculated by taking a company’s net income and adding back interest, taxes, depreciation, and amortization expenses. This results in a measure …
A. A Confidential Information Memorandum (CIM) is a document that is typically used in the process of selling or raising capital for a business. It is a document that provides detailed information about a business, including its operations, financial performance, and future prospects, to potential buyers or investors. The CIM is usually prepared by the …
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A. The most important aspect of financial due diligence is to thoroughly review and understand the target company’s financial statements, financial performance, and financial position. This includes reviewing historical financial statements, such as income statements, balance sheets, and cash flow statements, as well as understanding the trends and key drivers of the company’s financial performance. …
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A. When performing financial due diligence, the information requested will vary depending on the specific circumstances of the transaction, the nature of the business, and the specific areas of concern. However, some of the most common financial information that is requested during due diligence includes: 1. Financial statements: This includes balance sheets, income statements, cash …
While performing Due diligence, what all information would you request? Read More »
A. Target working capital refers to the optimal level of a company’s current assets and liabilities that is required to support its ongoing operations and growth. It is the ideal balance of a company’s short-term assets and liabilities that is needed to meet its operational and financial needs. Target working capital is typically determined by …
Quality of assets (QOA) refers to the condition, value, and overall performance of a company’s assets. It is a measure of the underlying economic value and performance of a company’s assets, and it is used to assess the quality of a company’s assets and its ability to generate future cash flows. One common formula is …
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Quality of Earnings (QOE) refers to the sustainability, predictability, and stability of a company’s earnings. It is a measure of the underlying economic performance of a company, and it is used to assess the quality of a company’s earnings and its ability to generate future cash flows. The formula is Net Cash from Operating Activities/Net …
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The most important deliverable for Financial Due Diligence (FDD) is a comprehensive report that summarizes the findings and conclusions of the FDD process. This report should provide a detailed analysis of the company’s financial and operational performance, including an assessment of the company’s financial stability, potential risks and opportunities, and future prospects. The report should …
