An entity should report separately information about an operating segment that meets any of the following quantitative thresholds: ā Its reported revenue, including both sales to external customers and intersegment sales or transfers, is 10% or more of the combined revenue, internal and external, of all operating segments. ā The absolute amount of its reported…...
In addition to financial considerations, there are several non-financial factors that organizations should take into account when making a make or buy decision. These non-financial considerations play a significant role in determining the optimal choice and ensuring the long-term success of the decision. Here are some key non-financial factors to consider: 1. Core Competencies: Assessing…...
Marginal costing and standard costing are two different approaches used in cost accounting to analyze and control costs. Here’s a brief explanation of the differences between the two: 1. Definition and Focus: – Marginal Costing: Marginal costing focuses on analyzing the behavior of costs in relation to changes in production volume. It segregates costs into…...
The audit committee is typically entrusted with the approval and oversight of related party transactions (RPTs) due to its specific role and responsibilities within an organization. The audit committee is a subcommittee of the board of directors and is composed of independent directors who possess financial expertise and knowledge of corporate governance practices. There are…...
When evaluating the make or buy decision, it’s crucial to consider not only financial factors but also non-financial considerations that can have a significant impact on the decision-making process. Some key non-financial considerations include: 1. Control and Flexibility: Making a product or performing a service in-house gives the organization greater control and flexibility over the…...
Capital expenditure refers to the expenses incurred by a company for acquiring, improving, or extending its fixed assets, which are expected to provide benefits over multiple accounting periods. These expenditures are capitalized on the balance sheet and are typically large in nature. Examples of capital expenditures include the purchase of property, plant, and equipment (PP&E),…...
In the case of export of goods, the recognition of revenue follows certain principles and guidelines outlined in accounting standards. Revenue from export sales is typically recognized when the following criteria are met: 1. Identification of the contract: The existence of a legally enforceable contract between the exporter and the customer is essential. The contract…...
1. Financial Performance: This involves assessing the company’s financial statements, including the balance sheet, income statement, and cash flow statement, to understand the company’s profitability, liquidity, and financial health. 2. Business Operations: The annual report provides insights into the company’s core business operations, including its products or services, market presence, and competitive position. It may…...
Estimating the Net Realizable Value (NRV) involves assessing the expected selling price of an item less any estimated costs necessary to make the sale. When a competitor is selling the same product at a lower price, it does not directly affect NRV. However, if there is a significant difference, it may be an indication that…...
The valuation of raw materials under the relevant Indian Accounting Standards (Ind AS) follows the principle of “lower of cost and net realizable value” (LCNRV). This principle is similar to the “lower of cost or market” (LCM) principle under the previous Indian Generally Accepted Accounting Principles (GAAP). According to Ind AS 2, Inventories, raw materials…...
Deferred Tax Assets (DTAs) are recognized under both the previous Indian Accounting Standards (AS) and the current Indian Accounting Standards (Ind AS), but there are some differences in the criteria for their recognition. Under AS, DTAs were recognized only to the extent that there was virtual certainty of sufficient future taxable income against which the…...
OD (Overdraft) and CC (Cash Credit) are two common types of borrowing facilities provided by banks, but they differ in their nature and usage: Nature: Overdraft (OD): An overdraft is a facility that allows an individual or business to withdraw funds from their bank account even if the account balance is zero or negative. It…...
CIBIL (Credit Information Bureau India Limited) and CRISIL (Credit Rating Information Services of India Limited) are both important entities in the financial industry, but they serve different purposes and have distinct roles: CIBIL is a credit information company that collects and maintains credit-related data of individuals and companies. It operates as a credit bureau and…...
DSCR stands for Debt Service Coverage Ratio. It is a financial metric used by lenders to assess a borrower’s ability to meet their debt obligations, specifically interest and principal payments. The DSCR measures the cash flow available to cover debt payments, providing an indication of the borrower’s capacity to service their debt. The calculation of…...
One important yardstick in the assessment of a term loan is the Debt Service Coverage Ratio (DSCR). DSCR is a financial metric used by lenders to evaluate a borrower’s ability to generate sufficient cash flow to meet their debt obligations. It provides an indication of the borrower’s capacity to repay the loan. DSCR is calculated…...
Debtor days and inventory days are calculated to assess the efficiency and effectiveness of a company’s working capital management. These ratios provide valuable insights into the company’s liquidity, cash flow, and operational efficiency. Debtor days, also known as accounts receivable days or average collection period, measures the average number of days it takes for a…...
When analyzing the annual report of a company, several key areas should be considered to gain insights into the company’s financial performance, strategies, and overall health. Here is a structured approach to analyzing an annual report: 1. Financial Statements: Review the balance sheet, income statement, and cash flow statement to assess the company’s financial position,…...
Ensuring the completeness and accuracy of financial statements is crucial to maintain the integrity of financial reporting. Here are some key measures that can be taken to achieve this: 1. Robust Internal Controls: Implementing strong internal controls is essential to ensure the completeness and accuracy of financial statements. This includes segregation of duties, proper authorization…...
Financial statements are key financial documents that provide an overview of a company’s financial performance and position. The main components of financial statements include: 1. Income Statement: Also known as the statement of operations or statement of comprehensive income, the income statement shows the company’s revenues, expenses, gains, and losses over a specific period. It…...
Goodwill impairment occurs when the value of a company’s goodwill asset on the balance sheet is determined to be lower than its recorded amount. The impairment is recognized when there is a significant decline in the company’s business or when the fair value of the reporting unit carrying the goodwill falls below its carrying value…....
Accounts receivable and deferred revenue are both important financial concepts related to revenue recognition, but they represent different aspects of a company’s financial transactions: Accounts Receivable: Accounts receivable (AR) represents the money owed to a company by its customers for goods or services that have been delivered but not yet paid for. It arises when…...
The scenario you presented, where a company has had positive EBITDA for the past 10 years but recently went bankrupt, may seem contradictory at first. However, it is important to understand that EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is just one measure of a company’s financial performance and does not capture the full…...
Free cash flows of a firm refer to the cash generated by its operations that is available for distribution to investors, debt repayment, or reinvestment in the business. It represents the cash flow that remains after deducting operating expenses, taxes, and capital expenditures necessary to maintain and expand the company’s operations. Here are some key…...
Valuing a company involves assessing its worth or intrinsic value, which can be determined using various methods. Here are some common approaches to company valuation: 1. Comparable Company Analysis: This method involves comparing the company to similar publicly traded companies or recent transactions in the same industry. Key financial ratios, such as price-to-earnings (P/E), price-to-sales…...
The income statement is not directly affected by changes in inventory because it follows the matching principle of accounting. The matching principle states that expenses should be recognized in the same period as the revenues they help generate. As a result, the income statement primarily focuses on the recognition of revenues and expenses incurred during…...
Working capital refers to the difference between a company’s current assets and its current liabilities. It represents the funds available to cover day-to-day operations and is a key indicator of a company’s liquidity and short-term financial health. Working capital is essential for meeting short-term obligations, managing inventory, funding operational expenses, and sustaining ongoing business activities…....
The time it takes to collect accounts receivable can vary depending on various factors such as industry practices, company policies, customer payment terms, and the efficiency of the company’s credit and collection processes. In general, the collection period for accounts receivable is measured in days and is commonly referred to as the “Days Sales Outstanding”…...
LIFO (Last-In, First-Out) and FIFO (First-In, First-Out) are two commonly used inventory valuation methods. They differ in how they assign costs to inventory and calculate the cost of goods sold (COGS): LIFO: Under the LIFO method, it is assumed that the most recently purchased or produced inventory is sold first, and the cost of goods…...
Usually, the shareholders of the target prefer getting Cash rather than equity. The acquirer prefers issuing shares. The acquire should issue shares in case the purchase consideration is same in all cases – this is the least risky option. However if there is excess cash and no investment opportunity, cash may be used The method…...
In general, a technology company would likely have a higher beta compared to a manufacturing company. Beta is a measure of a stock’s volatility or sensitivity to market movements. A beta greater than 1 indicates higher volatility, while a beta less than 1 suggests lower volatility compared to the overall market. Technology companies are often…...
Foreign Exchange Reserves are cash and other reserve assets such as gold held by a central bank or other monetary authority that are primarily available to balance payments of the country, influence the foreign exchange rate of its currency, and to maintain confidence in financial markets. Reserves are held in one or more reserve currencies,…...
In general, the treatment of excise duty paid in deferred tax follows the principles of temporary differences between the carrying amount of an asset or liability for accounting purposes and its tax base. If there is a temporary difference that results in taxable or deductible amounts in future periods related to the excise duty paid,…...
The treatment of land in deferred tax depends on the accounting policies followed by the company and the applicable tax laws in the jurisdiction. Generally, land is considered a non-depreciable asset, and its value does not change over time for accounting purposes. However, for tax purposes, land may be subject to certain tax rules and…...
The Comparable Uncontrolled Price (CUP) method is a transfer pricing technique used to determine the arm’s length price for transactions between related entities. It involves comparing the price of a controlled transaction with the price of a similar transaction between unrelated parties (uncontrolled transaction). The goal is to ensure that the pricing of intercompany transactions…...
Financial instruments are contracts that give rise to a financial asset in one entity and a financial liability or equity instrument in another entity. They encompass a broad range of financial assets and liabilities, such as cash, trade receivables, loans, bonds, derivatives, and equity instruments. These instruments represent a key aspect of an entity’s financial…...
CIF (Cost, Insurance, and Freight) and FOB (Free On Board) are terms used in international trade to define the responsibilities and costs associated with the shipment and delivery of goods between buyers and sellers. These terms indicate who is responsible for various expenses, risks, and when ownership of the goods transfers from the seller to…...
As per Indian Accounting Standard (Ind AS) 12, a deferred tax liability documented on a company’s balance sheet signifies an impending tax payment obligation in the future. This liability is computed by multiplying the company’s expected tax rate by the variance between its taxable income and accounting profit before taxes. The deferred tax liability accounts…...
A Deferred Tax Liability is an entry on a company’s balance sheet, in accordance with Indian Accounting Standard (Ind AS) 12, signifying taxes that are payable in the future due to timing differences between their accrual and actual payment. The deferral arises from the contrasting timing of tax recognition and payment. Notably, a common instance…...
The operating cycle, also known as the cash conversion cycle, is a vital financial metric that measures the time it takes for a company to convert its investments in inventory and other resources into cash flow from sales. It reflects the efficiency of a company’s working capital management and provides insights into how quickly a…...
Goodwill is only charged to the profit and loss (P&L) statement when there is an indication that its carrying value may be impaired, i.e., when the value of goodwill has decreased due to a loss in its revenue-generating capacity or some other adverse effect. If a company’s revenue-generating potential remains intact and there is no…...
The ratio of Total Outside Liabilities (TOL) to Tangible Net Worth (TNW) is a financial metric used to assess a company’s financial leverage and risk. It provides insights into the proportion of a company’s total liabilities that are financed by its tangible net worth, which represents the net value of its tangible assets after deducting…...
Gross Domestic Product (GDP) rate is a key economic indicator that measures the overall size and growth of a country’s economy over a specific period. It represents the total value of all goods and services produced within a country’s borders during a given time, typically measured on an annual basis. The GDP rate provides valuable…...
The discount rate, often referred to as the required rate of return or cost of capital, is a crucial concept in finance used to determine the present value of future cash flows. It represents the rate of return an investor or company requires to justify investing in a particular project or asset, considering the inherent…...
To record the construction, demolition, and relocation of the tower, the following steps should be taken: Record the initial construction of the tower: Debit the Property, Plant, and Equipment (PPE) account for the cost of construction, which is 5 lakhs. Credit the Cash/Bank account for the same amount. Record the depreciation of the tower: Debit…...
Solvency ratios are financial metrics that provide insights into a company’s ability to meet its long-term financial obligations and remain financially stable over time. These ratios focus on the company’s debt levels in relation to its assets, equity, and earnings. Here are some key solvency ratios that help assess financial stability: Debt-to-Equity Ratio: This ratio…...
Under Indian Accounting Standards (Ind AS), cash discounts are generally considered a reduction of the purchase cost of inventory and are deducted from the cost of the inventory rather than added to it. Reference: Ind AS 2, “Inventories” Paragraph 11 of Ind AS 2 states that the cost of inventory should include all costs of…...
The Insolvency and Bankruptcy Code (IBC) was introduced in India to address the pressing need for a comprehensive and efficient framework for dealing with insolvency and bankruptcy matters. It aimed to streamline and expedite the resolution process of distressed companies and individuals, promote a culture of entrepreneurship, enhance credit availability, and protect the interests of…...
EBITDA removes the differences in profit arising on account of “newness” of assets or differences in Depreciation Method. 2 companies can be compared even if 1 follows SLM and the other WDV. If we used EBIT to compare an old airline company and a new airline company, the old one would appear more profitable (assuming…...
Tax Evasion: Tax Evasion is an illegal way to minimize tax liability through fraudulent techniques like deliberate under-statement of taxable income or inflating expenses. It is an unlawful attempt to reduce one’s tax burden. Tax Evasion is done with a motive of showing fewer profits in order to avoid tax burden. It involves illegal practices…...
Basic examples of financial instruments are cheques, bonds, securities. There are typically three types of financial instruments: cash instruments, derivative instruments, and foreign exchange instruments. Favorite… To get access, please buy CA Interview Question Bank...
IAS 16 Property, Plant and Equipment is the IFRS accounting standard that deals with fixed assets and depreciation.Component depreciation refers to a method of allocating the cost of an asset over its useful life by separately identifying and depreciating its individual components or parts. Instead of treating the entire asset as a single unit for…...
Diminishing marginal utility is a concept in economics that states that the satisfaction or benefit derived from consuming an additional unit of a good or service decreases as the quantity consumed increases. In simpler terms, it means that the more of something we have or consume, the less satisfaction we get from each additional unit…....
The breakeven point (break-even price) for a trade or investment is determined by comparing the market price of an asset to the original cost; the breakeven point is reached when the two prices are equal. In corporate accounting, the breakeven point formula is determined by dividing the total fixed costs associated with production by the…...
Financial Analyst Financial analysts tend to work with the overall picture. They review financial decisions based on current market trends, stated business objectives, and possible investment options. These professionals’ evaluations help determine whether a project or venture is worthy enough for investment. There are two main types of financial analysisāfundamental analysis and technical analysis. Financial…...
The current ratio is a liquidity ratio that measures whether a firm has enough resources to meet its short-term obligations. It compares a firm’s current assets to its current liabilities, and is expressed as follows:- Current ratio = Current Assets/Current Liabilities Favorite… To get access, please buy CA Interview Question Bank...
Tangible net worth is a financial measure that represents the net worth of a company, excluding intangible assets such as intellectual property, goodwill, and brand value. It focuses on the tangible assets and liabilities of a company, which are the physical assets and liabilities that can be measured and valued. To calculate tangible net worth,…...
When the degree of operating leverage is higher than the degree of financial leverage, when the operations are very risky and there are fluctuating cash flows then this type of company should keep more equity. When the degree of financial leverage is higher than the degree of operating leverage, when the operations are less risky…...
The cost of equity is generally higher compared to other sources of funding due to several factors: Higher Risk: Equity represents ownership in a company, which means equity investors bear the highest level of risk. Unlike debt holders who have a fixed claim on the company’s assets and income, equity investors have residual claims and…...
In this condition, we have to capitalize it along with the project, we cannot separately classify it, the reason for this is any expenditure that is necessary to bring your asset to the location and condition necessary for the intended use by the management that we should capitalize , and it is directly attributable expenditure…...
PPE should be derecognised (removed from PPE) either on disposal or when no future economic benefits are expected from its use or disposal. A gain or loss on disposal is recognised as the difference between the disposal proceeds and the carrying amount of the asset at the date of disposal. Favorite… To get access, please...
Inflation rate refers to the percentage change in the general level of prices for goods and services over a specific period, typically a year. It measures the rate at which the purchasing power of a currency is eroded over time. Inflation is often expressed as an annual percentage increase in the Consumer Price Index (CPI)…...
A trust is a fiduciary relationship in which one party, known as a trustor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary. Trusts are established to provide legal protection for the trustorās assets, to make sure those assets are distributed…...
The most common capital investment evaluation tools are the Payback Period (PP), Return on Investment (ROI), Net Present Value (NPR), and Internal Rate of Return (IRR). Each method can provide insight into investment options, but each also has limitations. If net present value is positive, the project should be accepted. If internal rate of return…...
Terminal value is an estimate of the value of a project or investment at the end of its projected life or a specific period in the future. It represents the cash flow or value that is expected to continue beyond the forecast period. Terminal value is commonly used in financial valuation models, such as discounted…...
We do not use a DCF if the company has unstable or unpredictable cash flows (tech or bio-tech start-up) or when debt and working capital serve a fundamentally different role. For example, banks and financial institutions do not re-invest debt and working capital is a huge part of their Balance Sheets – so you wouldn’t…...
Consistency Principle Incremental Principle Separation Principle Post Tax Principle Favorite… To get access, please buy CA Interview Question Bank...
The economic factors that influence corporate bond yields are interest rates, inflation, and economic growth. All these factors affect corporate bond yields and exert influence on each other. The pricing of corporate bond yields is a multivariable, dynamic process in which there are always competing pressures. For example, economic growth is bullish for corporations as…...
The cost of equity is typically higher than the cost of debt, primarily due to the difference in the inherent risks associated with each source of financing. Cost of Debt: When a company raises funds through debt, it involves borrowing money from creditors (lenders) and agreeing to pay interest and principal over a specified period…....
Negative IRR indicates that the sum total of the post-investment cash flows is less than the initial investment, i.e. the non-discounted cash flows add up to a value which is less than the investment. Yes, both in theory and practice negative IRR exists, and it means that an investment loses money at the rate of…...
Minority Interest also referred to as non-controlling interest (NCI), is the share of ownership in a subsidiaryās equity that is not owned or controlled by the parent corporation. The parent company has a controlling interest of 50 to less than 100 percent in the subsidiary and reports financial results of the subsidiary consolidated with its…...
Hedging is a risk management strategy used to minimize or offset potential losses or risks arising from price fluctuations or uncertain events in financial markets. It involves taking an opposing position or entering into a financial contract that is designed to mitigate the impact of adverse movements in the value of an asset, liability, or…...
1.Map out the risks Whatever you do, it is important to properly map the risks inherent in your business so that your employees are aware of the best way that they can handle them. There must be absolutely no doubt in your employees mind what they must not do. Even with the best of intentions…...
The end goal of financial restructuring is to improve the financial health, stability, and sustainability of a company. It involves making strategic changes to the company’s financial structure, operations, and obligations in order to achieve specific objectives. The ultimate goals of financial restructuring can vary depending on the circumstances and challenges faced by the company,…...
āŖ A company cannot meet its debt obligations / interest payments. āŖ Creditors can accelerate debt payments and force the company into bankruptcy. āŖ An acquisition has gone poorly, or a company has just written down the value of its assets steeply and needs extra capital to stay afloat (see investment banking industry). āŖ There…...
Restructuring bankers advised distressed companies ā businesses going bankrupt, in the midst of bankruptcy, or getting out of bankruptcy ā and help them change their capital structure to get out of bankruptcy, avoid it in the first place, or assist with a sale of the company depending on the scenario. Favorite… To get access, please...
Swap ratio refers to the ratio at which shares of one company are exchanged for shares of another company in a merger or acquisition. It determines the relative valuation or exchange rate of the shares involved in the transaction. When two companies decide to merge or when one company acquires another, they may agree to…...
Divestiture refers to the process of selling or disposing of assets, business units, or subsidiaries by a company. It involves the deliberate decision to divest or exit certain operations or investments in order to streamline the business, focus on core activities, reduce costs, or improve financial performance. Divestiture can take various forms, including selling off…...
Accounts payable (AP) and accounts receivable (AR) are two types of financial transactions that businesses engage in. Accounts payable (AP) represents the amount of money a company owes to its suppliers or vendors for the goods or services they have provided. In other words, it is the amount of money that a business owes to…...
Accruals refer to expenses or revenues that have been recognized in the accounting records before they have been paid or received, respectively. They are recorded to reflect the economic activity of a business accurately, even if the cash transactions have not yet taken place. There are two types of accruals: Accrued expenses (Accrued liabilities): These…...
Prepaid expenses are future expenses that have been paid in advance. You can think of prepaid expenses as costs that have been paid but have not yet been used up or have not yet expired. The amount of prepaid expenses that have not yet expired are reported on a company’s balance sheet as an asset…....
Dividend should be declared based on future needs of the organisation. If the company has positive NPV projects available do not declare dividend, else do. Alternatives to distribution of dividend: Buy back of shares: This comes out with advantages such as a. When the growth potential is limited they use unused cash to buy back…...
Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life. It is NOT to reduce the value of the asset due to wear and tear. It is an allocation of Historical Cost ONLY. Similarly it is not bringing down an asset to its market value. Similarly, obsolescence is…...
A cash flow hedge is a risk management strategy used by businesses to mitigate the potential impact of future cash flow fluctuations. It involves entering into a financial derivative contract, such as a forward contract, futures contract, or swap, to offset the variability in cash flows arising from specific risks. The objective of a cash…...
MARGINAL COSTING Marginal costing is generally a decision making, you have to use marginal costing when you want to decide whether you want to fulfil the next order or what my actual profit on the additional order. It is generally not used for accounting purpose but a decision making process. And it includes only variable…...
The answer is, if you are not paying any dividend then there is opportunity cost for my investor and that opportunity cost is reflected in CAPM, so even if dividend is not being paid there is always a cost. It is measured using CAPM model which does not depend on whether the company is paying…...
To evaluate whether to start the factory or not, a comprehensive financial analysis should be conducted. Here are some key steps to consider: Cost-Benefit Analysis: Assess the potential benefits and costs associated with the factory. Identify the expected revenue streams, market demand for the products, and potential profitability. Consider factors such as production costs, operational…...
The main difference between EBITDA and cash flow from operation is working capital changes and taxes. In EBITDA, it is before tax and in cash flow from operations, it is after tax. The second difference is that EBITDA is on an accrual basis and cash flow from operations is on cash basis. Favorite… To get...
The following items are added to the cost of inventory: 1.Purchase price of goods 2.Direct labor costs incurred to bring the goods to their present location and condition 3.Direct overhead costs, such as rent, utilities, insurance, and depreciation of plant and equipment used in the production process 4.Freight-in or transportation costs incurred to acquire the…...
There can be various reasons why one loss-making company may choose to take debt while the other may not. Some possible reasons could be: Risk tolerance: The company that has taken debt may have a higher risk tolerance and may be willing to take on more debt to finance its operations or expansion plans, whereas…...
An operating segment is a component of an entity: (a) that engages in business activities from which it may earn revenues and incur expenses (b) whose operating results are regularly reviewed by the entity’s chief operating decision maker (CODM) to make decisions about resources to be allocated to the segment and assess its performance; and…...
Ind AS 36 “Impairment of Assets” deals with the testing of assets for impairment. It requires companies to evaluate their assets, including goodwill, to assess if there is any impairment in their value. If there is a significant decline in the recoverable amount of an asset, then it needs to be written down to its…...
Actuarial goodwill arises when the purchase price of an entity exceeds the fair value of its net identifiable assets, and the excess cannot be attributed to any specific asset or liability. This excess represents the value of intangible assets, such as brand recognition, customer relationships, and intellectual property. In such a situation, an actuary can…...
Liquidity Ratios: 1.Current Ratio: Current Assets / Current Liabilities 2.Quick Ratio: (Current Assets – Inventory) / Current Liabilities 3.Cash Ratio: Cash and Cash Equivalents / Current Liabilities Coverage Ratios: 4. Debt-to-Equity Ratio: Total Debt / Total Equity 5.Debt-to-Asset Ratio: Total Debt / Total Assets 6.Interest Coverage Ratio: Earnings Before Interest and Taxes (EBIT) / Interest…...
Because Market value is attributable to equity holders and EBITDA is attributable to both equity and debt holders. When we calculate any multiple, we should take numerator and denominator for either equity holders only or both equity and debt holders like below ratios: Equity multiples ā P/E, P/BV, P/TBV Firm wide multiples: EV/ EBITDA, EV…...
A stock split is a corporate action in which a company increases the number of its outstanding shares by issuing additional shares to current shareholders, while maintaining the same overall value of the company. For example, in a 2-for-1 stock split, shareholders would receive two shares for every one share they currently own, effectively halving…...
A rights issue, also known as a rights offering, is a type of corporate fundraising method in which a company offers its existing shareholders the right to purchase additional shares in proportion to their current shareholding. The new shares are typically offered at a discounted price compared to the market price. The purpose of a…...
A bonus issue, also known as a bonus share issue or scrip issue, is a corporate action in which a company issues additional shares to its existing shareholders at no cost. These bonus shares are distributed to shareholders in proportion to their current shareholding. The purpose of a bonus issue is to reward existing shareholders…...
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…...
Accumulated depreciation is the total amount of the depreciation expenditure allocated to a particular asset since the asset was used. It is a contra asset account, i.e. a negative asset account that offsets the balance in the asset account with which it is usually linked. The accumulated balance of depreciation increases over time, adding the…...
Provision Provision liability reduces an assetās value because of a present obligation arising out of a past event The event which can result in a provisional liability may or may not occur. The estimated amount of the provisional liability is not certain Any increase or decrease in provision liability gets recorded in the Profit and…...
