‘Capital Instruments’ means monetary instruments in capital markets such as equity shares, debentures, preference shares and share warrants issued by a company. Indian companies are permitted to raise money by way of capital instruments for their operational purposes. The instruments issued in capital markets are listed below: Equity shares: Equity shares are the shares joint-stock…
[Cash Budget pattern of financing seasonal productions like sugar, tea, and construction activities] The request for financial assistance from business enterprises dealing in seasonal products like sugar, tea, construction activities, film industries, order-based activities, etc. is facilitated by the banks through Cash Budget financing plans. In such a pattern of business dealings, the requirement of…
Scenario Analysis Scenario Analysis is a financial process through which investors & business managers can determine the amount of risk they are taking before making the investment or starting a new project. It is a way of structured thinking in which the earnings or value impact is computed for different interest rate scenario that may…
RBI issued a Master Direction on January 7, 2025 – Reserve Bank of India (Non-resident Investment in Debt Instruments) Directions, 2025 Consolidating all earlier regulatory circular for debt instruments in India. These Directions shall be applicable with immediate effect. These Directions shall be applicable to all transactions by eligible non-residents in debt instruments. The following…
Introduction Ratios are essential tools for assessing the earning capacity, financial soundness, and operational efficiency of a business organization. Accounting ratios, a group of metrics derived from financial statements, are widely used to measure management’s aptitude, efficiency, and profitability. By expressing relationships between various accounting data points, these ratios form the basis of ratio analysis.…
Accounting ratios are metrics used to compare two or more financial data points from a company’s financial statements to measure its profitability, efficiency, and overall financial health. These ratios are typically expressed in various forms, such as proportions, fractions, percentages, or terms of the number of times one value relates to another. Equation for Ratios:…
Working capital is the operating capital of a business which is used in its day-to-day operations, calculated as the current assets minus the current liabilities. The positive working capital commonly indicates that a company can pay off its short-term liabilities almost immediately. Sources of working capital are Share Capital, retained profits, debentures, long-term loans, and…
A financial manager plays a pivotal role in overseeing the financial health of an organization. Their responsibilities encompass a wide array of tasks aimed at ensuring the efficient utilization of funds while maintaining long-term financial stability. This article explores the key roles and responsibilities of financial managers in India. Key Responsibilities of a Financial Manager…
Both reserves and provisions refer to the amount retained by an organization to deal with all possible contingencies in the future. In accounting parlance, reserves are appropriations out of profits and provisions are charges against profits. Although the IFRS Standards sometimes call provisions a ‘reserve’, they are not the same thing – a provision is…
A common size financial statement is an income statement or balance sheet in which all items are expressed as percentages of a common base figure rather than as absolute numerical figures. For example, in a common-size income statement you will find the income and expenditure amounts as percentage of net sales. Similarly, a common size…
