accounting and finance basic definitions ([email protected])

8/8/2019 ACCOUNTING AND FINANCE BASIC DEFINITIONS ([email protected])

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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010

FINANCE:FINANCE:Acquiring Company

A company that seeks to acquire another firm.

Actual Realized Rate of Return,- ksThe rate of return on a common stock actually received by stockholdersks may be greater or less that ^ks and/or ks.

Adjustable Rate Preferred Stocks (ARPs)Preferred stocks whose dividends are tied to the rate on Treasurysecurities.

After-tax Cost of Debt, kd (1-T)The relevant cost of new debt, taking into account the tax deductibility of interest; used to calculate the WACC.

Agency ProblemA potential conflict of interest between the agent (manager) and (1) theoutside stockholders or (2) the creditors (debt holders)

Amortization ScheduleA table showing precisely how a loan will be repaid. It gives the requiredpayment on each payment date and a breakdown of the payment, showinghow much is interest and how much is repayment of principal.

Amortized LoanA loan that is repaid in equal payments over its life.

Annual CompoundingThe arithmetic process of determining the final value of a cash flow orseries of cash flows when interest is added once a year

Annual Percentage Rate (APR)The periodic rate X the number of periods per year.

Annual Percentage Rate (APR)A rate reported by banks and other lenders on loans when the effectiverate exceeds the nominal rate of interest.

AnnuityA series of payments of an equal amount at fixed intervals for a specifiednumber of periods.

Annuity DueAn annuity whose payments occur at the beginning of each period.

ArbitrageThe simultaneous buying and selling of the same commodity or security intwo different markets at different prices, and pocketing a risk-free return.

BenchmarkingThe process of comparing a particular company with a group of "benchmark" companies.


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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010Bond

A long-term debt instrument.

Breakeven PointThe volume of sales at which total costs equal total revenues, causingoperating profits (or EBIT) to equal zero.

Call OptionAn option to buy, or "call," a share of stock at a certain price within aspecified period.

Capital Asset Pricing Model (CAPM)A model based on the proposition that any stock's required rate of return isequal to the risk-free rate of return plus a risk premium which reflects onlythe risk remaining after diversification.

Capital BudgetingThe process of planning expenditures on assets whose cash flows are

expected to extend beyond one year.

Capital MarketsThe financial markets for stocks and for long-term debt (one year orlonger)

Capital RationingA situation in which a constraint is placed on the total size of the firm'scapital budget.

Cash BudgetA table showing cash flows (receipts, disbursements, and cash balances)for a firm over a specified period.

Cash Flow (CF)This term designates uneven cash flows.

Common Stockholders' Equity (Net Worth)The capital supplied by common stockholder-capital stock, paid-in capital,retained earnings and, occasionally, certain reserves. Total equity iscommon equity plus preferred stock.

Compounding

The arithmetic process of determining the final value of a cash flow orseries of cash flows when compound interest is applied.

Congeneric MergerA merger of firms in the same general industry, but for which no customeror supplier relationship exists.

Conglomerate MergerA merger of companies in totally different industries.

Convertible BondA bond that is exchangeable, at the option of the holder, for common stockof the issuing firm.


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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010Corporate Bonds

Bonds issued by corporations.

Cost of New Common Equity, keThe cost of external equity; based on the cost of retained earnings, butincreased for flotation costs.

Cost of Preferred Stock, kpsThe rate of return investors require on the firm's preferred stock. kps iscalculated as the preferred dividend, Dps, divided by the net issuing price,

Cost of Retained Earnings, ksThe rate of return required by stockholders on a firm's common stock.

Coupon Interest RateThe stated annual rate of interest on a bond.

DebentureA long-term bond that is not secured by a mortgage on specific property.

Declaration DateThe date on which a firm's directors issue a statement declaring a dividend.

Defensive MergerA merger designed to make a company less vulnerable to takeover.

DepreciationThe charge for assets used in production Depreciation is not a cash outlay.

Discount BondA bond that sells below its par value; occurs whenever the going rate of interest rises above the coupon rate.

Discount InterestInterest that is calculated on the face amount of a loan but is paid inadvance.

DiscountingThe process of finding the present value of a cash flow or a series of cashflows; discounting is the reverse of compounding.

Diversifiable RiskThat part of a security's risk associated with random events; it can beeliminated by proper diversification.

Dividend YieldThe expected dividend divided by the current price of a share of stock.

Earnings Per Share (EPS)Net income divided by the number of share of common Stock outstanding.

Economic Value Added

Value added to shareholders by management during a given year.Ex-Dividend Date


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The date on which the right to the current dividend no longer accompaniesa stock; it is usually four working day prior to the holder-of-record date.

Expected Rate of Return, ^kThe rate of return expected to be realized from an investment; theweighted average of the probability distribution of possible results.

Expected Rate of Return,^ ksThe rate of return on a common stock that a stockholder expects toreceive.

Expected Return on a Portfolio, ^kpThe weighted average of the expected returns on the assets held in theportfolio.

Expected Total ReturnThe sum of the expected dividend yield and the expected capital gainsyield.

ExternalitiesEffects of a project

Financial LeverageThe use of debt financing.

Financial MergerA merger in which the firms involved will not be operated as a single unitand from which no operating economies are expected.

Financial RiskAn increase in stockholders' risk, over and above the firm's basic businessrisk, resulting from the use of financial leverage.

Floating Rate BondA bond whose interest rate fluctuates with shifts in the general level of interest rates.

Forward ContractA contract under which one party agrees to buy a commodity at a specificprice on a specific future date and the other party agrees to make the sale.Physical delivery occurs.

Future Value (FV)The amount to which a cash flow or series of cash flows will grow over agiven period of time when compounded at a given interest rate.

Future Value Interest Factor for an Annuity (FVIFAi,n)The future value interest factor for an annuity of n periods compounded at ipercent.

Future Value Interest Factor for i and n (FVIFi,n)The future value of $1 left on deposit for n periods at a rate of i percent perperiod.

Futures Contract


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Standardized contracts that are traded on exchanges and are "marked tomarket" daily, but where physical delivery of the underlying asset isvirtually never taken.

Growth Rate, gThe expected rate of growth in dividends per share.

HedgingUsing transactions to lower risk.

Holding CompanyA corporation that own sufficient common stock of another firm to achieveworking control over it.

Horizontal MergerA combination of two firms that produce the same type of good or service.

IRR The discount rate which forces the PV of a project's inflows to equal the PV

of its costs.

Income BondA bond that pays interest only if the interest is earned.

InflationThe tendency of prices to increase over time.

InflowA cash receipt.

Internal Rate of Return (IRR) MethodA method of ranking investment proposal using the rate of return on aninvestment, calculated by finding the discount rate that equates thepresent value of future cash inflow s to the project's cost.

Intrinsic Value,^PoThe value of an asset that, in the mind of a particular investor, is justifiedby the facts;^Po may be different from the asset's current market price, itsbook value, or both.

Joint VentureA corporate alliance in which two or more independent companies combinetheir resources to achieve a specific, limited objective.

Junk BondA high-risk, high-yield bond.

Just-in-Time (JIT) SystemA system of inventory control in which a manufacturer coordinatesproduction with suppliers so that raw materials or components arrive justas they are needed in the production process.

Long HedgesFutures contracts are bought in anticipation of (or to guard against) priceincreases.

Marginal Cost of Capital (MCC)


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The cost of obtaining another dollar of new capital; the weighted averagecost of the last dollar of new capital raised.

Market PortfolioA portfolio consisting of all stocks.

Market Price Po

The price at which a stock sells in the market.

Market Value Added (MVA)The difference between the market value of equity and the amount of equity capital that investors supplied.

Marketable SecuritiesSecurities that can be sold on short notice.

Maturity DateA specified date on which the par value of a bond must be repaid.

Merger The combination of two firms to form a single firm.

Money MarketsThen financial markets in which funds are borrowed or loaned for shortperiods (less than one year).

Mortgage BondA bond backed by fixed assets. First mortgage bonds are senior in priorityto claims of second mortgage bon

Natural Hedges

Situations in which aggregate risk can be reduced by derivativestransactions between two parties.

Net Cash FlowThe actual net cash, as opposed to accounting net income, that a firmgenerates during some specified period.

Net Present Value (NPV) MethodA method of ranking investment proposals using the NPV, which is equal tothe present value of future net cash flows, discounted at the marginal costof capital.

Operating LeverageThe extent to which fixed costs are used in a firm's operations.

Operating MergerA merger in which operations of the firms involved are integrated in hopeof achieving synergistic benefits.

Operation Cash FlowThat cash flow which arises from normal operations; the differencebetween sales revenues and cash operation expenses, after taxes onoperation income.

Opportunity CostThe return on the best alternative use of an asset, or the highest returnthat will not be earned if funds are invested in a particular project.

Option


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A contract which gives its holder the right to buy (or sell) an asset at apredetermined price within a specified period of time.

Ordinary (Deferred) AnnuityAn annuity whose payments occur at the end of each period.

Out-Sourcing

The practice of purchasing components rather than making them in-house.

OutflowA cash deposit, cost, or amount paid. Has a minus sign.

Parent CompanyA holding company; a firm which controls another firm by owning a largeblock of its stock.

PartnershipAn unincorporated business owned by two or more persons.

Payback PeriodThe length of time required for an investment's net revenues to cover itscost.

PerpetuityA stream of equal payments expected to continue forever.

Premium BondA bond that sells above its par value; occurs whenever the going rate of interest falls below the coupon rate.

Present Value (PV)

The value today of a future cash flow or series of cash flows.Present Value Interest Factor for an Annuity (PVIFAi,n)

The present value interest factor for an annuity of n periods discounted at ipercent.

Present Value Interest Factor for i and n (PVIFi,n)The present value of $1 due n periods in the future discounted at i percentper period.

Primary MarketThe market in which firms issue new securities to raise corporate capital.

Progressive TaxA tax system where the tax rate is higher on higher incomes. The personalincome tax in the United States, which goes form 0 percent on the lowestincrements of income to 39.6 percent, is progressive.

Project Cost of Capital, kpThe risk-adjusted cost of capital for an individual project.

Relevant Cash FlowsThe specific cash flows that should be considered in a capital budgetingdecision.

Relevant Risk


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The risk of a security that cannot be diversified away, or its market risk.This reflects a security's contribution to the riskiness of a portfolio.

Required Rate of Return, ksThe minimum rate of return on a common stock that a stockholderconsiders acceptable.

Residual ValueThe value of leased property at the end of the lease term.

Retained EarningsThat portion of the firm's earnings that has been saved rather than paid outas dividends.

Return on Common Equity (ROE)The ratio of net income to common equity; measures the rate of return oncommon stockholders' investment.

Return on Total Assets (ROA)

The ratio of net income to total assets.

RiskThe chance that some unfavorable event will occur.

Secondary MarketThe market in which "used" stocks are traded after they have been issuedby corporations.

Secondary MarketsMarkets in which securities and financial assets are traded among investorsafter they have been issued by corporations.

Secured LoanA loan backed by collateral, often inventories or receivables.

Short HedgesFutures contracts are sold to guard against price declines.

SpeculationWith futures, it involves betting future price movements.

Stock DividendA dividend paid in the form of additional shares of stock rather than incash.

Stock RepurchaseA transaction in which a firm buys back shares of its own stock, therebydecreasing share outstanding, increasing EPS, and, often, increasing thestock price.

Stock SplitAn action taken by a firm to increase the number of share outstanding,such as doubling the number of share outstanding by giving eachstockholder two new share for each one formerly held.

Sunk Cost


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A cash outlay that has already been incurred and which cannot berecovered regardless of whether the project is accepted or rejected.

Target CompanyA firm that another company seeks to acquire.

Treasury BondsBonds issued by there federal government, sometimes referred to asgovernment bonds.

Uneven Cash Flow StreamA series of cash flows in which the amount varies from one period to thenext

Vertical Merger

A merger between a firm and one of its suppliers or customers.

WarrantA long-term option to buy a stated number of shares of common stock at aspecified price.

Weighted Average Cost of Capital, WACCA weighted average of the component costs of debt, preferred stock, andcommon equity.

Zero Coupon BondA bond that pays no annual interest but is sold at a discount below par,thus providing compensation to investors in the form of capitalappreciation.

Zero Growth StockA common stock whose future dividends are not expected to grow at all;that is g=0.

What is risk?


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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010Risk reflects the chance that the actual return on an investment may varyfrom the

expected return. One way to measure risk is to calculate the variance andstandard

deviation of the distribution of returns.

How many types of risks are present in the market? How wecan measure it?

Risks can be divided into systematic and unsystematic risks. The totalrisk of a

security/portfolio/asset can be calculated by using standard deviation andcoefficient of

variation.

What do you understand by Systematic Risk?

An investment risk which applies to all securities of the same class,which cannot be

avoided by diversifying ones portfolio. Economic, social or political factorswill cause

price fluctuations of all shares alike. Hence, the prices of shares in themarket tend to

rise and fall together.

What is ROI? The term return on investment is widely used in connection with theperformance of a

company or project. It is calculated as:

ROI= Earning Before Interest and Taxes/ Total Assets.

What is meant by gearing ratio?

Gearing ratio is not a specific ratio. It is a general term given toleverage ratios that

express the capital of a firm.

Can you explain, what is P/E ratio?

The P/E ratio takes the stock price and divides it by the last fourquarters' worth of

earnings.

What is the importance of P/E Ratio in stock valuation?

Price-Earning Ratio is the ratio of market price per share toearnings per share. The


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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010higher the PE ratio the better the value of the stock.

What do you understand by cost of capital?

The minimum rate of return a firm must earn on its investment in order tosatisfy the

expectations of investors who provide the funds to the firm. It is oftenmeasured as the

weighted arithmetic average of the cost of various sources of financetapped by the firm.

What is Weighted Average Cost of Capital (WACC)?

In the long run, the company wants a balanced capital structure (the rightmix of debt

and equity) and for financing any investment project, it tries tomaintain its capital

structure intact.

What is CAPM (Capital Asset Pricing Model)?

The Capital Asset Pricing Model (CAPM) reflects the market for differentfinancial

assets. The model suggests that asset prices will adjust to achieve theprecise return, and

to compensate investors for the risk of the asset, when it is held with a

perfectlydiversified portfolio.

Tell us something about Portfolio Theory?

Overall investment strategy that seeks to construct an optimal portfolio byconsidering

the relationship between risk and return, especially as measured by alpha,beta, and R-

squared. This theory recommends that the risk of a particular stock shouldnot be looked

at on a stand-alone basis, but rather in relation to how that particularstock's price varies

in relation to the variation in price of the market portfolio. The theory goeson to state

that given an investor's preferred level of risk, a particular portfolio can beconstructed

that maximizes expected return for that level of risk, also called

modern investmenttheory.


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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010What do you understand by the term IRR?

The Internal Rate of Return (IRR) is that rate at which the net presentvalue of the

expected cash flows is equal to zero. In other word s, it is the rate,which equates the present value of cash inflows to the present value of cash outflows.

If IRR were less than the cost of capital of capital what wouldyou do?

While evaluating the feasibility of a project we compare the internal rate of return and

cost of capital. If IRR is less than the cost of capital, then the project is notviable and

cannot be accepted as the cost is less than the return.

What is a Treasury Bill?

A short-term government debt instrument with a maturity of one year orless. Bills are

sold at a discount to face value (or par value) with the interest earnedbeing the

difference between the face value received at maturity and the price paid .

What is Bill and Bond?

A bill of exchange is a kind of cheque or promissory note. It is a writtenorder by one

person directing another to pay a specific sum on a specific date sometimein the future.

If the bill of exchange is drawn on a bank, it is called a bank draft. If it isdrawn on

another party, it is called a trade draft.

A debt instrument issued for a period of more than one year with the

purpose of raisingcapital by borrowing. The Federal government, states, cities,corporations, and many

other types of institutions sell bonds. Generally, a bond is a promise torepay the

principal along with interest (coupons) on a specified date (maturity).

What do you mean by Perpetual Bond?

A bond with no pre-determined redemption date. Many have a date afterwhich they may


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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010be redeemed by the issuer, such as UK government 2% Consols (1923 andafter).

Effectively, they have an open-ended issuers call.

What do you understand by Zero Coupon Bond?

These bonds are issued at a discount to their face value and areredeemed at par on

maturity. The difference between their face value and the issue pricerepresents the

return to the investors.

What is the difference between Zero Coupon Bond and DeepDiscount Bond?

Deep discount bond is issued with a very low coupon or no coupon thatsell at a price farbelow. A Zero-coupon bond is a bond in which no periodic coupon is paidover the life of the

contract. Instead, both the principal and the interest are paid at thematurity date. A

bond that has no coupon is called a zero-coupon bond.

What is project finance?

The amount required to meet the cost of the project is called projectfinance. The means

of project finance are: Share Capital, Term Loans, Debenture Capital.

Deferred Credit: Facility under which suppliers of plant and machinery offerto make the

Payment over a period of time.

Incentive Sources: The aid given by government and its agencies like seedcapital

Assistance, capital subsidy and tax deferment or exemption.Other Sources: These include public deposits, leasing and hire purchase.

Is cash a source or use of funds?

It depends upon the source of the cash generated.

What is "leverage"?

Suppose a user of a forward market adopts a position worth Rs.100. Asmentioned above,

no money changes hands at the time the deal is signed. In practice, agood-faith deposit


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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010would be needed. Suppose the user puts up Rs.5 of collateral, using Rs.5 of capital, a

position of Rs.100 is taken. In this case, we say there is "leverage of 20times". This

example involves a forward market.

What is financial and operating leverage?

Financial leverage measures the effect of change in EBIT on the EPS of thecompany,

and operating leverage examines the effect of change in the quantityproduced on the

EBIT of the company.

Does higher leverage always increase the risk of a firm?

No. Higher leverage always does not increase the risk of a firm. Theproportion of

financial and operating leverages makes the difference in the risk of a firm.

What is meant by Net working capital? What are the sourcesof working capital finance?

Net working capital can be defined in the following two-ways:

Net-working capital is the difference between current assets andcurrent liabilities

Net-working capital is the proportion of a firms current assets whichis financed with

long-term funds

What do you understand by Mortgage?

Mortgage is the transfer to interest in specific immovable property forthe purpose of

securing an existing or a future debt or the performance of anengagement, which may

give rise to pecuniary liability.

What is Share buyback? What are its advantages tocompanies and investors?

Share buyback is a companies plan to buy back its own shares from themarketplace,

reducing the number of outstanding shares, and typically an indication thatthe

companies management thinks the shares are undervalued. Generallyfirms buyback the


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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010shares to increase the market value of the shares.

What is sweat equity?

These are shares issued by the company to its directors and employees. The shares are

issued in accordance with regulation issued by SEBI in case of listedcompanies.

When does a company undertake a Bonus Issue?

A company may choose to capitalize its reserves by issuing bonus sharesto existing

shareholders in proportion to their holdings. Bonus shares are issued freeof cost, but

since the number of shareholders remains the same and theirproportionate holdings do

not change, bonus shares do not increase the shareholders ownership of the company.

What is the advantage of Convertible Debenture over otherdebentures?

Fixed interest secured loan certificates, which carry a provision of conversion into a

certain number of shares at par or at a premium or a certain date. Whenonly a part of

the loan is converted the certificate is called a partly convertibledebenture, and when

the entire amount is converted it is called a fully convertible debenture.

What is known as bridge financing?

Bridge financing is the finance made by a venture capital fund for a shortperiod of 6

months to 1 year before the company goes public.

What is a Venture Capital and what is its other name?

Funds made available for start-up firms and small businesses withexceptional growth

potential. Managerial and technical expertise is often also provid ed .Also called risk

capital.

What is mezzanine Finance?

Mezzanine Financing is a type of equity financing used in takeovers, whichuses preferred


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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010shares and convertible securities to make a target firm larger.

Can all companies issue Commercial Paper?

Short duration usage promissory notes with fixed maturity issued mostlyby the leading

creditworthy and highly credit rated companies. These are unsecuredinstruments

negotiable by endorsement and delivery.

What is EVA?

Economic Value Added (EVA) is the difference between the firms after-taxreturn on

capital and its cost of capital.

What is meant by horizontal integration?

An integration (merger or acquisition) of one company by another companyin the same

industry.

What is Synergy in mergers?

Synergy in mergers results from complementary activities. For instance,one firm may

have substantial financial assets and another firm may have

profitable investmentopportunities. Hence after merger, the combined value of the firms is likelyto be greater

than the sum of the individual entities.

What is Share Splitting?

Share Splitting is division of the share capital of a company into smallerunits. The effect

of a share split is the same as a scrip issue although the technicalitiesdiffer. Share splits

are usually carried out when the existing shares reach such a high pricethat trading in

them becomes difficult.

When a Split of shares occur?

This occurs when the shares are divided into shares of smallerdenomination. Rs.100

shares may be split into ten Rs.10 shares. It usually happens when theprice becomes


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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010unwieldy.

What do you understand by Short Position?

Shares which a person has sold short, by delivering borrowed certificates,but which he has not yet covered by actually buying shares to repay theloan as on a particular date.

What do you understand by Speculation?

An activity, in which a person assumes high risks, not bothered about thesafety of his

invested principal, to achieve large capital gains. The time span inwhich the gain is

sought to be made is usually very short.

What is delisting? What are its implications for investors?

Delisting is removing a particular scrip from the trading activities on anexchange. The

delisting decision has to be taken by the regulators of the exchange.Delisting gives the

negative impression of the scrip to the investor. Hence, generally investorsdo not show

interest in delisted scrip.

ACCOUNTING:ACCOUNTING:FINANCIAL ACCOUNTINGFINANCIAL ACCOUNTING

What is the primary objective of Financial Accounting?

The primary objective of the Financial Accounting is to communicateand provide

information to the investors and creditors on the economic activities of the

enterprisethat will help them in their investment decisions.

What are financial statements? Name the major financialstatements.

The Financial statements are the reports that result from the process of accounting

which allow the interested parties to evaluate the profitability and thesolvency of the

business. The major financial statements are


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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010 Profit and Loss Account

Balance sheet

Cash Flow statement

What is the difference between balance sheet and profit &

loss account? The balance sheet is one of the most important financial statements of acompany. It is

reported to investors at least once per year. It may also be presentedquarterly,

semiannually or monthly. The balance sheet provides information on whatthe company

owns (its assets), what it owes (its liabilities), and the value of thebusiness to its

stockholders (the shareholders' equity). The name, balance sheet, isderived from the

fact that these accounts must always be in balance. Assets must alwaysequal the sum of

liabilities and shareholders' equity.

A company's income statement/profit and loss account statement is arecord of its

earnings or losses for a given period. It shows all of the money acompany earned

(revenues) and all of the money a company spent (expenses) during thisperiod. It also

accounts for the effects of some basic accounting principles such asdepreciation.

The income statement is important for investors because

What are the principal qualitative characteristics of financialstatements?

The principle characteristics of financial statements are the attributes thatmake the

information provided in the financial statements useful to the users. Theprinciple

qualitative characteristics are

Understandability: They should be readily understandable to the users. Forthis purpose


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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010users are deemed to have reasonable knowledge of business and economicactivities.

Relevance: To be useful information must be relevant to the decision-making needs of

the users.

Reliability: Information is said to be reliable when it is free from errors, biasand can be

depended upon by the users to represent faithfully, which it purports torepresent.

Comparability: Users must be able to compare the financial statements of an enterprise

through time in order to identify trends in its financial position andperformance.

What is meant by the quality of financial reporting? What isconservatism, and how does it affect the quality of earnings?

The quality of financial reporting refers to how close the financialstatements are to

economic reality. The closer the financial statements are to economicreality, the higher

is the quality of financial reporting. The less that management usesdiscretionary means

to manipulate earnings, the higher the quality of financial reporting.Conservatism

means that management should take great care not to overstate assetsand revenues and

not to understate liabilities and expenses. The more conservativemanagement is in

making accounting judgments, the higher will be the quality of financialreporting.

What are the major constraints on relevant and reliablefinancial statements?

The major constraints are Timeliness: If there is undue delay informationbecomes irrelevant .Balance between cost and benefit: The benefitsderived from information should exceed the cost of providing it.

Balance between the various qualitative characteristics: In practice it hasbecome

Necessary to achieve an appropriate balance between the qualitativecharacteristics.

True and fair view presentation:


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What are the golden rules of Accounting?

The golden Rules of Accounting are:

Debits always equal Credits

Increases do not necessarily equal Decreases

Assets - Liabilities = Owner's Equity (The accounting equation)

What is Fundamental Accounting equation?

Accounting equation is a mathematical expression used to describe therelationship

between the assets, liabilities and owner's equity of the business model. The basic

accounting equation states that assets equal liabilities and owner's equity,but can be

modified by operations applied to both sides of the equation, e.g., assetsminus liabilities

equal owner's equity.

What are Accounting Standards? List few advantages.

Accounting Standard s are rules and criteria of accountingmeasurement evolved by

several accounting standard setting bodies established in developing anddeveloped

countries.

International Accounting Standard Board (IASB) - InternationalAccounting Standards.

Financial Accounting Standards Board (FASB) US GenerallyAcceptable

Accounting Practices (specifically Statements on Financial AccountingStandards).

In India Institute of Chartered accountants of India AccountingStandards.

The advantages

i. Reduces to a reasonable extent eliminates confusing variations inthe accounting

treatment.


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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010ii. Lays down disclosure requirements beyond that required by law.

iii. To a limited extent facilitates comparison of financial statementsglobally.

Tell me something about Accounting for goodwill

Goodwill is considered to be one of the largest intangible assets, the valueof which

companies want to reflect correctly in their financial statements.Accounting for this

asset, poses many challenges for accountants, as it is an unidentifiableintangible asset.

Tell us what you know about Accounts Receivables and

Payables?Accounts Receivable, normally abbreviated as A/R, is the money that is

currently owed to

a company by its customers. The reason why the customers owemoney is that the

product has been delivered but has not been paid for yet. Companiesroutinely buy

goods and services from other companies using credit. Although typicallyA/R is almost

always turned into cash within a short amount of time, there are instanceswhere a

company will be forced to take a write-off for bad accounts receivable if ithas given credit

to someone who cannot or will not pay. This is why you will see somethingcalled

allowance for bad debt in parentheses beside the accounts receivablenumber.

Accounts Payable is the money that the company currently owes toits suppliers, its

partners and its employees. Basically, these are the basic costs of doingbusiness that a

company, for whatever reason, has not paid off yet. One company'saccounts payable is

another company's accounts receivable, which is why both terms aresimilarly structured.

A company has the power to push out some of its accounts payable, whichoften


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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010produces a short-term increase in earnings and current assets.

Tell me something about Accounting for goodwill

Goodwill is considered to be one of the largest intangible assets, the valueof which

companies want to reflect correctly in their financial statements.Accounting for this

asset, poses many challenges for accountants, as it is an unidentifiableintangible asset.

Can you provide us a suitable definition of goodwill?

Goodwill as an intangible asset can be defined from two approaches:

Residuum approach

Under this method, goodwill is taken to be the difference between thepurchase price

and the fair market value of an acquired companies assets.

Excess profits approach

Under this method, the present value of the projected future excessearnings over

normal earnings for similar businesses is recorded as goodwill. Due touncertainty of

future earnings, valuing goodwill using this method is difficult.

What is debenture redemption reserve?

The companies (Amendment) Act 2000 require every company to createdebenture

redemption reserve for redemption of debentures out of appropriation of profits every

year until redemption. This reserve cannot be utilized by the companyexcept for the

purpose of redemption.

What is deferred revenue expenditure?

Deferred revenue expenditures represent types of assets whoseusefulness do not expire

in the year of their occurrence but generally expires in the near future. These types of


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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010expenditures are carried forward and are written off in futureaccounting periods.

Sometimes, we make some revenues expenditure but it eventuallybecomes a capital asset

(generally of an intangible nature). Example, if we undertake substantial

repairs to theexisting building, the deterioration of the premises may be avoided. If wecharge the

whole expenditure during the current, the current year expenses are affect.However,

since the benefit of this expenditure is enjoyed over a number of years. So,to overcome

this only a part of the expenditure is charged current year and thebalance carried

forward and written off gradually during the future periods.

What are contingent liabilities?

These are liabilities, which materialize on the happening or non-happeningof an event.

Contingent liabilities are not real liabilities and as such do not appear in theliability side

of balance sheet. But are disclosed by way of a note in the balance sheet.

What do you understand by contract account?

Account in which posting data for contracts or contract items areprocessed for which the

same collection/payment agreements apply. Contract accounts aremanaged on an open

item basis within contract accounts receivable/payable.

What are marketable securities?

Marketable securities are cash substitutes. Marketable securities areinvestments with

short-term maturities with little risk due to interest rate fluctuations.Examples of

marketable securities include Treasury Bills, Negotiable Certificates of Deposit, and

Commercial Paper.


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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010What is depreciation? List few methods of providingdepreciation.

It is common knowledge that when an asset is used over a period of time, itlooses its

value. This loss in value is called depreciation. Pickles defines it as "thepermanent and

continuing diminution in the quality, quantity or value of an asset"Depreciation is the

continuous shrinkage of book value of an asset. Few method of depreciation are

Straight line Method: An equal amount is written off every year duringthe working life of

an asset so as to reduce the cost of the asset to nil or its residual value at

the end of itsuseful life.

Reducing Balance Method: A fixed percentage of the diminishingvalue of the asset is

written off each year so as to reduce to its break up value at the end of itslife.

Machine hour method: If it is practicable to keep a record of the actualrunning hours of

each machine, depreciation may be calculated on the basis of the hours forwhich the

concerned machine worked.

Define FIFO and LIFO. Explain what effects that FIFO andLIFO have on the balance

sheet during a period of rising prices and during a period of falling prices?

FIFO is the inventory cost flow assumption that treats the first goods in as

the first goodssold. LIFO is the inventory cost flow assumption that treats the last goodsin as the first

goods sold. In a period of rising prices, FIFO values inventory at currentcosts. However,

LIFO would value inventory at costs that the company could haveincurred years ago.

The analyst should take the LIFO cost flow assumption into account andconsider


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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010adjusting the inventory of a company using LIFO upward to account forinflation.

What are marketable securities?

Marketable securities are cash substitutes. Marketable securities areinvestments with

short-term maturities with little risk due to interest rate fluctuations.Examples of

marketable securities include Treasury Bills, Negotiable Certificates of Deposit, and

Commercial Paper.

MANAGEMENT ACCOUNTINGMANAGEMENT ACCOUNTINGWhat is a Cost? What do you mean by cost unit?

A Cost is a resource consumed to accomplish a specified objective. A CostUnit is a unit

of output in the production of which the costs are incurred.

What is Budget?

Budget is a quantitative representation of the policy to be pursued duringa specified

period of time for purpose of attaining predefined objectives.

What is Standard cost?

It is a predetermined or forecast estimate of cost to manufacture asingle unit, or a

number of units of a product, during a specific immediate future unit of aproduct.

What is a Standard costing?

It is the preparation and use of standard costs, their comparison withactual costs, and

analysis of variances to their causes & points of incidence.

What is a direct cost?

A cost which can be economically identified with a specific saleable costunit.

What do you understand by cost center?


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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010It is a smaller segment of activity or area of responsibility for which costscan be

accumulated. Responsibility in a cost center is restricted to costs only.

How is investment center different from cost center?

Investment center is a profit center whose performance is measuredby its return on

capital employed. Cost center is a smaller segment of activity or area of responsibility for

which costs can be accumulated. Responsibility in a cost center isrestricted to costs only.

How does standard costing affect performance?

A control technique which compares standard costs and revenues withactual results to

obtain variances which are used to stimulate improved performance.

How do you calculate opportunity cost?

The value of a benefit sacrificed in favor of an alternative course of action.

What is EOQ?

Economic Order Quantity-It represents the quantity of goods ordered whichminimizes

the sum of inventory ordering costs and carrying costsHow do the financial experts use cost sheet

Through the use of a cost sheet, financial experts estimate the detailedcost in respect

of a cost center or a cost unit and also makes inter-firm comparison byincluding cost

data of different firms.

How do you identify direct labor?

Labor that is directly identifiable with a specific product or activity.

What is the importance of Cost-Volume-Profit Analysis?

Managing cost is one of the most important aspects of a successfulbusiness. A firm

should have a clear understanding of the financial impact of every decisionit takes. For

example, when a firm acquires loan, its fixed cost increases due to increase

in payment


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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010by way of interest. In such a situation, a firm should be able toanalyze sales volume

required to cover the additional cost incurred.

Cost-Volume-Profit (CVP) Analysis evaluates various business decisionsand helps the

finance manager to account for any deviation caused in the profits, bymanipulating cost

and sales of the firm. CVP analysis can also be stated as the relationshipbetween cost

(fixed and variable), volume (in units or in rupees) and profit.

Can you identify the two basic tools used for CVP analysis?

Contribution margin analysis

Break-even analysis

What is BEP analysis?

Break-Even analysis is an analytical technique to study the relationshipbetween fixed-

assets, variable costs, profits and sales. The Break-Even Point (BEP)represents the level

of sales at which the operating income and operating costs areequal so that profit is zero.

How do you calculate contribution margin?

The difference between the selling price and the variable cost of a productor service.

Both the per-unit manufacturing and non-manufacturing variable costs arededucted

from the selling price to determine the contribution margin. In aggregate,contribution

margin is the difference between total sales and total variable costs.

Contribution Margin Ratio = Sales Variable Costs / Sales

What is break-even point for a company?

The activity level that yields zero profit. It is the level at which there isneither profit nor

loss. Here the total revenue equals the total costs.

How do you calculate absorption costing?

A product costing method in which all costs of production, direct andindirect, fixed and


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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010variable, are included in the cost of products. Also called full costing.

What do you understand by Zero-based Budgeting?

A method of budget review and evaluation that requires all projects andprograms, new

and old, to justify all resources. Each project starts the budget evaluationprocess without

a resource commitment even if it is an ongoing project.

How a company can be benefited by Zero-Based Budgeting?

There are plenty of reasons. Such as:

i. Results in efficient allocation of resources as it is based on needsand benefits

ii. Drives managers to find out cost effective ways to improveoperations

iii. Detects inflated budgets

Can you define flexible budget?

A flexible budget is a budget, which by recognizing different cost behaviorpatterns, is

designed to change as volume of output changes.

Why is it important to calculate variance for a company?

Variances represent deviations of actual performance from standardperformance. There

can be cost variances, profit variances and sales value variances.Variances can be

favorable or unfavorable depending upon their impact on the profits of theorganization.


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MARKETINGMARKETINGDefine Marketing

It is an integrated process through which companies build strong customerrelationships and create value for their customers and for themselves

What are the key success factors in direct marketing?

Customer Database, Targeting, Appropriate media, Appropriate distribution.

Since direct marketing facilitates first hand information of customers,marketing

function can be aligned more suitably to achieve marketing objectives.

How will you access customer needs?

Customer needs are of different types based on physiological, psychological,social and

many other factors. For need identification the marketer has to study thecomplete

profile of the customer. Marketing research is one of the basic tools forunderstanding

customer needs.

What is the difference between customer need and want?

Need is driven by the behavioral stimuli in customer. To satisfy the needcustomer

develops wants eg., biological need is thirst. Individual may want toquench the thirst

with water or soft drink.

What is the importance of 4 Ps in marketing?

Study and understanding of product, price, place and promotion are essentialin making

marketing mix decisions. In planning marketing strategy external marketforces like

industry, competition, customer profile, government policies, state of economy factors

SKY RIDERS UNIVERSITY OFSARGODHA


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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010are to be aligned with internal policies on product, price, place and promotionto

achieve optimum marketing results.

Explain the characteristics of services. The characteristics of services are Intangibility, Inseparability, Variability andPerishability

What is the difference between Marketing and Selling? Canthere be selling without

marketing and vice versa? Are Modicare products, marketed orsold?

Concept explained by Kotler, identifying customer wants and needs andsatisfying them by

creating value exchanges for transferring products and services for mutualbenefits to

customers.

Selling involves exchanging goods / services and recovering value. In otherwords, it can

be termed as a process of changing ownership.

What do you understand by marketing mix? Are theydifferent from products and

services?

Marketing Mix consists of internal factors influencing the target customer. Theinternal

factors are product, price, place (distribution) and promotion. When matchedwith the

external factors i.e., competition, consumers, govt.. policies and nature of the

economythey result in effective marketing mix. This will enable organizations to attractcustomers

and meet the Marketing objective.

Briefly tell us about various pricing strategies?



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There are two main basic pricing policies. In penetration policy, prices are atlower levels

to competition to increase penetration and market coverage and to attractlarge

customer segments to become one of the major players in the market. Thiscan be

adopted only when the competition is intense in terms of quality, price andproduct

acceptance in market place. When the competition is weak, price isfixed at the

maximum level the market can absorb to skim the profits before thecompetition catches

up with their improvement in marketing mix offerings.

What is societal marketing concept?

societal marketing also takes care of social of the organization for the benefitof the society.

e.g.: Johnson and Johnson setting up plants for destroying bio-degradablepacking material.

How will you convince the customer that your product is betterthan your competitors?

Showing your competitors in inferior light is bad selling and marketing.Instead it is

always beneficial to stress your product features, which are differentcompared to

competitors offering and how they benefit user better compared tocompetitors. In case

there is very little difference with competitors products it will be necessary to

highlightyour superior customer service and what extra you will be giving indeliverables in

service.

Define the following concepts.



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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010a) Image: Image is the set of beliefs, ideas, and impressions a person holdsregarding

product / service.

b)Position: The place in the minds of consumers, where the product issituated vis--

vis the competitors.

c)Product feature: Characteristics of the product that supplement theproducts

basic function.

d) Competitive advantage: Strong points in terms of customerbenefits, which a

company may possess with respect to its competitors.e) Positioning strategy: Brand building strategy in the minds of consumers vis--vis

the competitors.

f) Customers perception: How the customer is viewing the companiesbrands.

What is BCG Matrix and what does it show?

This matrix was coined by Boston Consulting Group, a reputed management

consultancyfirm. This is a portfolio evaluation model, which evaluates various StrategicBusiness

Units (SBUs) of the firm on relative market share and industry growth rate. This matrix

helps managers address the issue of resource allocation between variousSBUs and the

business that the firm should exit/reinforce its presence.

What are competitive advantage and core competence of acompany?

Competitive Advantage:

Competitive edge with respect to its competitor



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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010Core competence:

Competence inherent within the company

Explain Porters five forces Model

Five forces that determine the intrinsic long-run profit attractiveness of amarket or

market segments are: Potential Entrants, Suppliers, Industry Competitors,Buyers and

Substitutes.

Define Centralization and Decentralization

Centralization is said to be a process where the concentration of decisionmaking is in a few hands. All the important decision and actions at the lower

level, all subjects and actions at the lower level are subject to the approval of top management

Decentralization: The lower the level where decisions are made, the greater isthe decentralization.

What are push and pull strategies?

In pull system, the following processes go to pick up what they need toreplace what they have

used up from preceding processes. An approach opposite to this / pushsystem.

What is benchmarking?

What is the difference between a brand and a product?

While brand is a name, term, symbol, design or logo, product is of anidentifiable generic

nature object.



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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010Describe the steps in carrying out benchmarking in the realm of marketing.

Benchmarking: - Benchmarking is the process of determining who is the verybest, who

sets the standard, and what that standard is.

E.g.: in retail banking provision of getting bank balance over telephone.

Steps in bench marking:

1) Determine the function to benchmark

2) Identify the key performance variables to measure

4) Identify the best in-class companies

5) Measure the companies performance6) Specify the programs and actions to close the gap

7) Implement and monitor results

Give an example of any reputed company to elucidate thefollowing terms. Mission,

Vision, Strategy, Goal, Marketing Plan and Product Plan.

Coca Cola Pakistan

Mission: To take coke at the arms reach of desireVision: Vast potential in increasing 10 to 15 times in terms of per capitaconsumption of

beverage

Strategy: Building Coke brand and retail infrastructure to achieve twinobjective of

increasing market size and taking leadership position in cola market

Goal: Rs10, 000 corer by 2010

Marketing Plan: Sales target and resource requirement in terms of financialbudget,

manpower, logistics for a market like Delhi, or any other specific market.



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Mixed QuestionMixed Ques tionWhat is market research? How can a company benefit from it?

The systematic design, collection, analysis and reporting of data relevant to aspecific

marketing situation facing an organization is marketing research. Marketingresearch is

an input for making better and informed decisions.

What are the various steps involved in market research?

The steps involved in the market research process include: defining theproblem and

research objectives; developing the research plan; implementing the researchplan and

interpreting and reporting the findings.

Differentiate between primary and secondary data? Whichwould you rely more? Why?

Primary data is the information collected for the specific purpose at handwhereas,

Secondary data is the information that already exists somewhere, having beencollected

for another purpose. The primary data is comparatively more reliable as theinformation collected for the problem in hand is relevant, accurate andsufficient.

What are the ingredients of secondary research?

Secondary data consist of information that already exists somewhere, havingbeen

collected for another purpose. Secondary research is a good starting point andoften

helps to define problems and research objectives. In most cases the companymust also

collect primary data.



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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010What tools do you use for market research?

Tools of market research include commercial data sources, online databasesand

Internet data sources, observational research, survey research, experimentalresearch,

focus group interviewing, and in-depth interviewing.

What is Fiscal Deficit?

The fiscal deficit is the difference between the government's totalexpenditure and its

total receipts (excluding borrowing).

What is GDP and how it is calculated? Gross Domestic Product(GDP) represents the total market value of all final goods and servicesproduced in a country in a given year. The GDP can be calculated inthe following methods: GDP = C + I + G + NX.

Why do companies outsource?

Mainly companies outsource their non-core activities to achieve competitiveadvantage

due to various reasons; traditionally companies used to outsource just toreduce and

control the operating costs.

What do you know about GATT and WTO?

The General Agreement on Tariffs and Trade (GATT) was first signed in 1947. The

agreement was designed to provide an international forum that encouragedfree trade

between member states by regulating and reducing tariffs on tradedgoods and by

providing a common mechanism for resolving trade disputes. Eight majortrade

negotiations had taken place starting from first round in 1947 (Geneva), to itseighth



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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010round in Uruguay in 1986-94. Then it was converted into WTO.

The World Trade Organization (WTO) began its operations in 1995 as asuccessor of

GATT, which represents the rules-based regime of the policy of economicglobalization.

The central operating principal of the WTO is that commercial interests should

supersede all others. Any obstacles in the path of operations and expansion of global

business enterprise must be subordinated. Its membership includes 146nations

including US.

Please describe the operating cycle. Give examples.

Operating cycle of a firm begins with the acquisition of materials and ends

with thecollection of the receivables by selling the finished goods. It has fourcomponents: Cash,

Inventory, Bills Payable, Bills Receivables.

Operating cycle = + accounts payable (in days) -inventory replacement(in days) -

accounts receivable (in days)

What is the difference between stakeholders and shareholders?

Shareholders are the owners of the company who invested money in the formof share

capital. Stakeholders include the shareholders along with customers,employees,

creditors, suppliers, community neighbors, and various governmentalagencies.



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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010Shareholders are those who have voting rights and rights of electing themembers of the

board of directors. But stakeholders don't have such rights.

Shareholders share both the profits and loss of the company. But thestakeholders if they

share, then it is only the profits and not the losses of the company.

Shareholders value is easier to define than stake holders value, so it is easierto account

for shareholders than for stakeholders.

What are benefits and services?

Benefits are important means by which organizations successfully attract,

motivate andretain employees. The employers should establish and maintain an employeebenefit

program that rewards the efforts of employees in the organization and incomparable

and competitor organizations in tandem with the prevailing market price forthe

knowledge, skill and attitude. Employees seek benefits and services from theemployer to

take advantage of low costs, taxes, and inflation protection.

Do you have any knowledge about Patents?

Patents are the intellectual property rights, authorized by the government,which permits

its owner to exclude members of the public from making, using, or selling theclaimed

invention. Different types of patents are like follows.



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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010Utility patents: is granted to anyone who invents or discovers anynew and useful

machine, article of manufacture, processes (Methods), compositions such aschemicals,

drugs etc., and improvements of known devices or new uses of old devices.

The patent term is 20 years.

Design patents: is granted to anyone who invents a new, original, andornamental design

for an article of manufacture. Term is 14 years.

Plant patents: may be granted to anyone who invents or discovers andasexually

reproduces (by means other than seeds) any distinct and new variety of plants. Term is

20 years.

Why team and teamwork have assumed importance in todaysorganizations?

A team is a group of interdependent people who share a commonpurpose, have

common work methods and hold one another accountable. The most commonfocus of

teamwork is behavior related to task performance and group process. In aneffective

team, task behavior and group process must be integrated with each other aswell as with

needs and wants of the people making up the group. Teamwork activitiesoften begin by

clarifying the teams purpose, priorities, goals, and objectives.

What does empowerment mean?

Empowerment is a process of enhancing feelings of self effectiveness amongemployees.

By identifying conditions that foster among them a feeling of powerlessnessthe

organization ensures their removal by both formal organizational practicesand informal



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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010techniques of providing effective information. Empowerment makes theemployees

motivated and committed and makes employees to aspire to do a better jobbecause they

get personally rewarded.

Why is performance appraisal so important to organizations?

Performance means contribution made by an individual employee in the

accomplishment of organizational objectives. Performance can be observedand

measured by a mix of quantity, quality, time and cost. The success of anorganization will

therefore depend on its ability to measure accurately the performance of itsmembers.

Performance appraisal means all those procedures that are used by theorganization to

evaluate the personality, the performance, and the potential of itsgroup members.

Please explain the meaning and finer aspects of Managementby Objectives (MBO)?

The MBO technique is one of the ways of seeking to control, coordinate, andmotivate

managers. It consists of six stages

Corporate objectives defined at board level.

Management tasks analyzed, with formal job specifications allocatingresponsibilities

Performance standards set.

Specific objectives agreed and set.

Individual targets harnessed with corporate objectives.

MIS established to monitor achievement against objectives. .

What is the meaning of Brainstorming?

Under this method, a problem is posed and alternative solutions areinvited from the



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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010participants. Their suggestions are then critically examined and theassessment of their

abilities is made. The purpose of this method of training is to enable theexecutive to

take maximum number of decisions within a limited period of time.

Accounting:

The bookkeeping methods involved in making a financial record of business transactions and in the preparation of statements concerningthe assets, liabilities, and operating results of a business.

Financial Accounting

Reporting of the financial position and performance of a firm throughfinancial statements issued to external users on a periodic basis.

Managerial Accounting

The process of identifying, measuring, analyzing, interpreting, andcommunicating information for the pursuit of an organization's goals.

This is also known as "cost accounting".

Key Difference between Managerial and Financial accounting

The key difference between managerial and financial accounting is thatmanagerial accounting information is aimed at helping managers withinthe organization make decisions. In contrast, financial accounting isaimed at providing information to parties outside the organization.

Finance

The science of the management of money and other assets.

The management of money, banking, investments, and credit.

finances Monetary resources; funds, especially those of a governmentor corporate body.



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The supplying of funds or capital.

Financial Management

In other words, financial management is about planning income, and expenditure and make

decisions that will enable one to survive financiallyMay refer to:

Managerial finance , the branch of finance that concerns itself with themanagerial significance of finance techniques

Corporate finance , an area of dealing with the corporate financialdecisions

Managerial finance

Managerial finance is the branch of the finance that concerns itself withthe managerial significance of finance techniques. It is focused onassessment rather than technique.

Corporate finance

Corporate finance is the field of finance dealing with financialdecisions business enterprises make and the tools and analysis used tomake these decisions. The primary goal of corporate finance is tomaximize corporate value while managing the firm's financial risks .

Marketing

Philip Kotler defines marketing as 'satisfying needs and wants through anexchange process' It is an integrated process through which companies buildstrong customer relationships and create value for their customers and forthemselves.

Management:

The act, manner, or practice of managing; handling, supervision, orcontrol: management of a crisis; management of factory workers.

The person or persons who control or direct a business or otherenterprise.

Computer:

A computer is an Electronic Device that can accept data, process it andgive result after processing

Statistics :

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The mathematics of the collection, organization, and interpretation of numerical data, especially the analysis of population characteristics byinference from sampling.

Economics :

The social science that deals with the production, distribution, andconsumption of goods and services and with the theory andmanagement of economies or economic systems.

Managerial Economics

Application of economic principles to decision making in business firmsor other management units. The basic concepts are drawnfrom microeconomic theory, but new tools of analysis have been added.Statistical methods, for example, are increasingly important inestimating current and future demand for products. The methods of

operations research and programming provide scientific criteria formaximizing profit, minimizing cost, and selecting the most profitablecombination of products. Decision-making theory and game theory,which recognize the conditions of uncertainty and imperfect knowledgeunder which business managers operate, have contributed tosystematic methods of assessing investment opportunities.

Operations management

Operations management is an area of business concerned with theproduction of goods and services, and involves the ensuringthat business operations are efficient in terms of using as little resourceas needed, and effective in terms of meeting customer requirements. Itis concerned with managing the process that converts inputs (in theforms of materials, labor and energy) into outputs (in the form of goodsand services).

Investment:

The Commitment of funds to one or more asset that will be held oversome future time period

Total Quality Management:

Management practices designed to improve the performance of organizational processes in business and industry. Based on conceptsdeveloped by statistician and management theorist W. EdwardsDeming, TQM includes techniques for achieving efficiency, solvingproblems, imposing standardization and statistical control, andregulating design, housekeeping, and other aspects of business orproduction processes. See also International Organization forStandardization (ISO); Total Quality Control (TQC).

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MOZAM MUSHTAQ PRESENTATION M-COM(FINANCE) SESSION 2008-2010International Business

International business is a term used to collectively describe allcommercial transactions ( private andgovernmental , sales , investments , logistics , and transportation ) that

take place between two or more nations . Usually, private companiesundertake such transactions for profit ; governments undertake them forprofit and for political reasons. It refers to all those business activitieswhich involves cross border transactions of goods, services, resourcesbetween two or more nations. Transaction of economic resourcesinclude capital, skills, people etc. for international production of physicalgoods and services such as finance, banking, insurance, constructionetc

Human Resources Management (HRM)

Term that is replacing personnel management and implying that

personnel managers should not merely handle recruitment, pay, anddischarging, but should maximize the use of an organization's humanresources

Taxation

The act or practice of imposing taxes.

The fact of being taxed.

An assessed amount of tax.

Revenue gained from taxes.

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