Public Deposits and Inter-Corporate Deposits
Public Deposits Public deposits refer to unsecured deposits raised by companies from the public, primarily to finance their working capital requirements. These deposits serve as a short-term financing option for companies. In India, companies are subject to strict regulatory limits regarding public deposits. A company can accept deposits from the public up to a maximum…
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Understanding a Lease Agreement and Legal Aspects of Leasing
A lease is a contract that outlines the terms under which one party agrees to rent an asset. This asset could include real estate, vehicles, equipment, or other types of property. The lessor is the party who owns the asset and provides the right to use it, while the lessee is the party who uses…
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Accounting of Lease Transactions in the Books of Lessor and Lessee
Meaning of Lease: A lease is a contract that outlines the terms under which one party agrees to rent an asset. The leased asset could include real estate, vehicles, equipment, or other types of property. The lessor is the person who owns the asset and provides the right to use it to a third party,…
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The Rationale and Financial Decision behind Leasing
Leasing of assets is a major financing decision because it allows a business to access and utilize an asset without having to purchase it outright, essentially “renting” the asset by making periodic payments to the owner (lessor) instead of taking on the upfront capital cost, thus impacting the company’s capital structure and overall financial strategy;…
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Discounted and Non-Discounted Cash Flow Methods for Investment Appraisal
The Cash flow statement represents the increased or decreased position of cash and cash equivalents in a business Cash flow methods for Investment Appraisal can be broadly categorised into discounted cash flow and non-discounted techniques. In investment appraisal, “discounted cash flow” methods consider the time value of money by discounting future cash flows to their…
Misconceptions about Cost of Capital clarified
Common misconceptions about the cost of capital include believing it is solely the cost of equity, considering it a desired return rather than a required return, thinking it is a fixed number for a company, assuming retained earnings are “free,” and not factoring in the weighted average of different capital sources when calculating it (such…
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