Economic and Business Reporting
Economic and business reporting
Monday, March 18, 2013
10:28 AM
Inflation (Cost of living)
Dfn:
Overall increase in the price level usually measured in a period of one year
Types of inflation:
1. Demand pull
* People have money the desire to purchase is high, in case prices can be increased * Price of commodity low-demand is high
* More income-high demand
1. Cost -push
* Price rising coz of production cost, forced to increase price. e.g. rising of fuel, minibuses rising prices too
******[deflation] opposite,
******liquidity how fast you can convert an assert into money/amount of money circulating in an economic system [in economics]
Ways of reducing inflation: or 1. Contractionary fiscal policy measures | expansionary fiscal policy| Ensuring that it has reduced spending/expenditure | Increase expenditure | It has increased tax measures | Remove tax burden |
Contractionary monetary policy
* Putting bank rates(discount rate)
To regulate the supply of money in eco system
Instituted by central bank
******interest rate/bank rate [price of money]
* Borrow money from citizens on a tenor(period government borrows you money) Open market operations (OMO)
* Liquidity Reserve Ratios(LRR)
* Money banks keep without pumping it into the eco system
Winners and losers during inflation
Losers
i. People who are on fixed income[salaried workers paid per month] i. Lenders -coz value of the money will be reduced e.g. if there is devaluation
Winners
Borrowers-giving back to lender as value is lesser than before
***inflation is not bad, bad is uncontrollable inflation.
Reading Assign-implications of inflation.
Calculating inflation [computing cost of living]
Consumer price index [CPI]
Measure of all goods and services bought at a certain price by a typical consumer. At what price are people buying goods at the market?
Producer price index[PPI]
Measure of all goods and services bought at a certain price by a producer.
STEPS OF CALCULATING INFLATION
Fixing an index (basket)
Consider all things bought on a market., then attach weight
Come up with abase period
If you want to calculate inflation this year, you need to know inflation of last year. e.g. I am using last year's inflation rate
Calculate the inflation rate
Change in inflation between two periods.
Education K2000/2000 learners | Bags of maizeK5000/bag =1000 | Fanta K100/bottle200 | 2,000000 | | |
K4000000 | 5,0000| K20000 |
100%=9,020,000
Attach weights=4000,000X100
9,020, 000
Monday, March 18, 2013
10:28 AM
Inflation (Cost of living)
Dfn:
Overall increase in the price level usually measured in a period of one year
Types of inflation:
1. Demand pull
* People have money the desire to purchase is high, in case prices can be increased * Price of commodity low-demand is high
* More income-high demand
1. Cost -push
* Price rising coz of production cost, forced to increase price. e.g. rising of fuel, minibuses rising prices too
******[deflation] opposite,
******liquidity how fast you can convert an assert into money/amount of money circulating in an economic system [in economics]
Ways of reducing inflation: or 1. Contractionary fiscal policy measures | expansionary fiscal policy| Ensuring that it has reduced spending/expenditure | Increase expenditure | It has increased tax measures | Remove tax burden |
Contractionary monetary policy
* Putting bank rates(discount rate)
To regulate the supply of money in eco system
Instituted by central bank
******interest rate/bank rate [price of money]
* Borrow money from citizens on a tenor(period government borrows you money) Open market operations (OMO)
* Liquidity Reserve Ratios(LRR)
* Money banks keep without pumping it into the eco system
Winners and losers during inflation
Losers
i. People who are on fixed income[salaried workers paid per month] i. Lenders -coz value of the money will be reduced e.g. if there is devaluation
Winners
Borrowers-giving back to lender as value is lesser than before
***inflation is not bad, bad is uncontrollable inflation.
Reading Assign-implications of inflation.
Calculating inflation [computing cost of living]
Consumer price index [CPI]
Measure of all goods and services bought at a certain price by a typical consumer. At what price are people buying goods at the market?
Producer price index[PPI]
Measure of all goods and services bought at a certain price by a producer.
STEPS OF CALCULATING INFLATION
Fixing an index (basket)
Consider all things bought on a market., then attach weight
Come up with abase period
If you want to calculate inflation this year, you need to know inflation of last year. e.g. I am using last year's inflation rate
Calculate the inflation rate
Change in inflation between two periods.
Education K2000/2000 learners | Bags of maizeK5000/bag =1000 | Fanta K100/bottle200 | 2,000000 | | |
K4000000 | 5,0000| K20000 |
100%=9,020,000
Attach weights=4000,000X100
9,020, 000
some links:
ACC 303 Financial accounting for business combinations
AFM 311 Advanced Financial Accounting
REPORTING COMPANY PROFILES 3/25/2013, 11:09 AM
INTRODUCTION TO BASIC ACCOUNTING
Accounting
Refers to the process of preparing and presenting accounts (financial statements)
CONVENTIONS IN ACCOUNTING
1. Consistency
Should maintain standards of presenting financial statements If it wants to change, should communicate in advance to stakeholders
1. Disclosure
Any company has to report all major/significant or transactions that took place in a certain period
1. Conservatism
Company should not include illusionary data.
Should not window dress
Tell the public the truth (be honest)
Users of financial statements
1. Shareholders:
Need to know if their company is at all performing or not
1. Creditors:
Will access if the company will be able to pay back a loan or if it wants a loan.
1. Investors [potential]:
Will have an idea if it will be a good idea to invest in a company (if its making profits or not)
1. Labour/employees:
Will use it to negotiate for increments/wages.
1. Government
Busn 1001 Business Reporting And Analysis
All [core] activity of your institution, look money you have paid to stakeholders. [how money is circulating] pay 4 raw materials Difference [expenditure n income]
Investing activities
Capture money you generate and spend but are not core issues of your organisation e.g. increasing your assets [purchase a new plant, property, equipment] e.g. loans
Financing activities
Money generated from their shares
Money got from loans
Dividends paid to shareholders
Loan impairments
Banks discuss potential that chances are low that other borrowers * not able to pay back loans
* not to pay the real value they got in the first place.
Measuring national income
To measure income of a nation GDP and GNP are used.
GDP [Gross Domestic Product] : the market value of all final goods and services produced within a country in a given period of time. GNP [Gross National Product] : the market value of all final goods and services produced by citizens of a country in a given period of time.
GDP
Capture income
Able to know expenditure- how people spend their money
* [Can either capture income or expenditure to calculate GDP]
(GDP) y= consumption, investments, income + net exports
Net exports = difference between imports and exports.
Nominal GDP
Real GDP
Nominal GDP -inflation rate (change in prices)
Sugar (50) 250 (2012) =K12, 500
Sugar (70) 450 (2013) = K31, 500
Real GDP -change in production
We have a base year.
Sugar 250 (2012)
Now = 70 x 250 =K17, 500
=K17500-12500
=5000
=500x100
12500
=40%
Weakness of GDP as a tool for measuring National Income
* Does not tell distribution of wealth income in a country. * Does not give true reflection of a country and environment
Balance of payment (BOP)
Record of all money transactions between a country and the rest of the world[other countries]. -it records exports and imports.
Exports and imports
Positive BOP [BOP surplus] - Net exporter
Negative BOP [BOP Deficit] -Net importer
BOP ACCOUNTS
*current account
*capital
*Financial
Money out -Debt Money in - Credit
1. CURRENT ACCOUNT (Balance of Trade)
Simply captures transaction in terms of trade at a certain period e.g. within a month
1. CAPITAL ACCOUNT
Items not necessarily finished, equipments that do not give instant money but if you use them can aid/facilitate production of goods/service e.g. machines, building
1. Financial account
Exchange of hard cash.
Stock exchange market
Types of companies
Private and Public
Every
Issue financial statements to the public
* To ensure accountability coz they take money from the public. * Before making undertaking any plans (expansionary or any operations) there is a need to consult shareholders for consent; calling for general meetings. * There is a need to list the company on stoke market, its easy to raise capital.
Stock exchange market
place where buyers and sellers interact.
Distribution of ownership
A place where people who want to claim part of a company buy shares (buy ownership of a company), or company owners venture to raise capital.
Dfn:
Where company owners raise money and individuals invest their money with a hope of getting profits.
Capital [ordinary] money you invest in business.
Capital [economics] - factor of production (man made)
-land (natural resources/items)
Dividend -is a return on a share.
Types of shares
Ordinary/common share
* Dividend is paid after a company has paid all its debts * If there are losses, no dividend is declared
* Goodness is if a company is making profits, dividends are high * You can sell shares if busi isnt good, but cheaper
Preferential shares
* there is a fixed return (share/amount)
* Whether a company makes a profit or a loss, a company has to pay you your dividend.
Stock market as an economic indicator
Propensity [chance] to save.
Propensity to consume.
Journalistic role
Its coz public companies take money from the public and there is a need to tell them what is going on the stock exchange warn the public how the market is fairing).
Stock market jargons or terms:
Market capitalization:
Total number of shares offered on the market
Prices per share
>result of total shares issued X price per share
Price per share (units). In MSE, prices are always in tambala.
Indices/average (index):
A mathematical measure used to track the performance of a certain group of companies in a basket or sector.
* Domestic share index (DSI)
* Foreign share index (FSI)
* Malawi All share index (MASI)
Earning per share
E/share ratio
**************************************************
Price earning ratio (P/E)
Earning per share.
You consider net income, divide it with total shares you've in a company. To an investor, there will be a clue how much they are making per share. It will also apply to dividend.
Price value ratio (P/BV)
Before putting shares on the market, a company decides on a price to sell per share. P/BV is expected price.
P/BV = P
Expected price
=700/0.75
=3/4
=700*4/3
=933.33
If there is 1, it’s balanced,
More than 1, you're over valuing your shares. If it liquidates, you will sell less.
NB: concentrate on P/E and P/BV
Share volume
How much shares have been sold per day.
Dividend yield%
Profit/earning given to an individual per share.
Earnings yield %
Earning to the company as whole.
Basis points
A hundredth point/unit.
C/A: Tread carefully. Caution the shareholders, there is going to be extensive change in shareholding.
Cum Dix (CD): Cumulative Dividend - after a company has declared shares, shareholders will not receive their dividend on the spot. They can receive for e.g. in two months.
Bullish: possibility that prices will be rising.
Bearish: prices will be decreasing.
REPORTING COMPANY PROFILES 3/25/2013, 11:09 AM
INTRODUCTION TO BASIC ACCOUNTING
Accounting
Refers to the process of preparing and presenting accounts (financial statements)
CONVENTIONS IN ACCOUNTING
1. Consistency
Should maintain standards of presenting financial statements If it wants to change, should communicate in advance to stakeholders
1. Disclosure
Any company has to report all major/significant or transactions that took place in a certain period
1. Conservatism
Company should not include illusionary data.
Should not window dress
Tell the public the truth (be honest)
Users of financial statements
1. Shareholders:
Need to know if their company is at all performing or not
1. Creditors:
Will access if the company will be able to pay back a loan or if it wants a loan.
1. Investors [potential]:
Will have an idea if it will be a good idea to invest in a company (if its making profits or not)
1. Labour/employees:
Will use it to negotiate for increments/wages.
1. Government
Will help it comparing statistics e.g. GNP, GDP (individual companies,
industry>>>>>)
1. Researchers:
Esp. in business. How businesses are performing
1. Public at large
Give trends on how things are happening
Give idea how companies are prospering
Branches of Accounting
1. Financial accounting
Prepare and present records on how
1. Cost accounting
Cost
1. Social responsibility
Its effect on society
1. Management
Issues of transactions only on management
1. Human resources accounting
New branch, attaching value to human resource
Financial accounting:
Prepare account , present financial performance and position of an organization
Accounting equation:
Assets=liabilities +shareholders or owners equity (capital)
*****Assets: thing of value an organization posses or owns. *****liabilities: an obligation that you have to meet now or in future in which will remove your revenue or increase.
Capital = assets -liabilities
Liabilities =assets -capital
e.g.
Asset = 5000(owners equity) + 15 000 (liability)
(20000)
Examples of financial statements
1. Income statement (profit and loss of account)/ statement of operations Whether a company is making profits or losses .
Profit: excess of revenue over expenses
Loss: excess of expenses over revenue
Profit is a reward, coz being in a business is a risk. High risk(profits high or loss high)
If there are profits will assist (allocation of resources: e.g. guiding where to pump in more money, where to put more workers, when to remove some) sustain the operation.
Functions of profits:
* Growth of business
* Given to shareholders as dividends
* Paid as tax
Profit and loss account
Three sections:
1. Trading account
Issues of buying and selling (e.g. profits after investing. Expenses & revenue) EBIT (earnings before interest and tax)
EBITDA (earnings before interest and tax depreciation and amortization killing loans by paying in installments)
1. Profit and loss account proper
Capture issues
1. Appropriation accounts
Allocate money into functions, money retained.
1. Balance sheet
Shows financial position of a company as per particular day/date.
Assets| Currents assets -those disposed off within a year. (inventory) Non-current (long-term) fixed (PPE) -those that can be turned into money later| Liabilities | Current -obligations to be paid within a year Non-current -long term debts e.g. debenture | Equity | Shares of offer|
Statement of cash flow
Shows how an organisation uses its money and how it gets the money.
Statement of cash flow divides flow of the money into three activities namely: * Operating activities
* Investing activities
* Financing activities
1. Researchers:
Esp. in business. How businesses are performing
1. Public at large
Give trends on how things are happening
Give idea how companies are prospering
Branches of Accounting
1. Financial accounting
Prepare and present records on how
1. Cost accounting
Cost
1. Social responsibility
Its effect on society
1. Management
Issues of transactions only on management
1. Human resources accounting
New branch, attaching value to human resource
Financial accounting:
Prepare account , present financial performance and position of an organization
Accounting equation:
Assets=liabilities +shareholders or owners equity (capital)
*****Assets: thing of value an organization posses or owns. *****liabilities: an obligation that you have to meet now or in future in which will remove your revenue or increase.
Capital = assets -liabilities
Liabilities =assets -capital
e.g.
Asset = 5000(owners equity) + 15 000 (liability)
(20000)
Examples of financial statements
1. Income statement (profit and loss of account)/ statement of operations Whether a company is making profits or losses .
Profit: excess of revenue over expenses
Loss: excess of expenses over revenue
Profit is a reward, coz being in a business is a risk. High risk(profits high or loss high)
If there are profits will assist (allocation of resources: e.g. guiding where to pump in more money, where to put more workers, when to remove some) sustain the operation.
Functions of profits:
* Growth of business
* Given to shareholders as dividends
* Paid as tax
Profit and loss account
Three sections:
1. Trading account
Issues of buying and selling (e.g. profits after investing. Expenses & revenue) EBIT (earnings before interest and tax)
EBITDA (earnings before interest and tax depreciation and amortization killing loans by paying in installments)
1. Profit and loss account proper
Capture issues
1. Appropriation accounts
Allocate money into functions, money retained.
1. Balance sheet
Shows financial position of a company as per particular day/date.
Assets| Currents assets -those disposed off within a year. (inventory) Non-current (long-term) fixed (PPE) -those that can be turned into money later| Liabilities | Current -obligations to be paid within a year Non-current -long term debts e.g. debenture | Equity | Shares of offer|
Statement of cash flow
Shows how an organisation uses its money and how it gets the money.
Statement of cash flow divides flow of the money into three activities namely: * Operating activities
* Investing activities
* Financing activities
Operating (operational)activities
All [core] activity of your institution, look money you have paid to stakeholders. [how money is circulating] pay 4 raw materials Difference [expenditure n income]
Investing activities
Capture money you generate and spend but are not core issues of your organisation e.g. increasing your assets [purchase a new plant, property, equipment] e.g. loans
Financing activities
Money generated from their shares
Money got from loans
Dividends paid to shareholders
Loan impairments
Banks discuss potential that chances are low that other borrowers * not able to pay back loans
* not to pay the real value they got in the first place.
Measuring national income
To measure income of a nation GDP and GNP are used.
GDP [Gross Domestic Product] : the market value of all final goods and services produced within a country in a given period of time. GNP [Gross National Product] : the market value of all final goods and services produced by citizens of a country in a given period of time.
GDP
Capture income
Able to know expenditure- how people spend their money
* [Can either capture income or expenditure to calculate GDP]
(GDP) y= consumption, investments, income + net exports
Net exports = difference between imports and exports.
Nominal GDP
Real GDP
Nominal GDP -inflation rate (change in prices)
Sugar (50) 250 (2012) =K12, 500
Sugar (70) 450 (2013) = K31, 500
Real GDP -change in production
We have a base year.
Sugar 250 (2012)
Now = 70 x 250 =K17, 500
=K17500-12500
=5000
=500x100
12500
=40%
Weakness of GDP as a tool for measuring National Income
* Does not tell distribution of wealth income in a country. * Does not give true reflection of a country and environment
Balance of payment (BOP)
Record of all money transactions between a country and the rest of the world[other countries]. -it records exports and imports.
Exports and imports
Positive BOP [BOP surplus] - Net exporter
Negative BOP [BOP Deficit] -Net importer
BOP ACCOUNTS
*current account
*capital
*Financial
Money out -Debt Money in - Credit
1. CURRENT ACCOUNT (Balance of Trade)
Simply captures transaction in terms of trade at a certain period e.g. within a month
1. CAPITAL ACCOUNT
Items not necessarily finished, equipments that do not give instant money but if you use them can aid/facilitate production of goods/service e.g. machines, building
1. Financial account
Exchange of hard cash.
Stock exchange market
Types of companies
Private and Public
Every
Issue financial statements to the public
* To ensure accountability coz they take money from the public. * Before making undertaking any plans (expansionary or any operations) there is a need to consult shareholders for consent; calling for general meetings. * There is a need to list the company on stoke market, its easy to raise capital.
Stock exchange market
place where buyers and sellers interact.
Distribution of ownership
A place where people who want to claim part of a company buy shares (buy ownership of a company), or company owners venture to raise capital.
Dfn:
Where company owners raise money and individuals invest their money with a hope of getting profits.
Capital [ordinary] money you invest in business.
Capital [economics] - factor of production (man made)
-land (natural resources/items)
Dividend -is a return on a share.
Types of shares
Ordinary/common share
* Dividend is paid after a company has paid all its debts * If there are losses, no dividend is declared
* Goodness is if a company is making profits, dividends are high * You can sell shares if busi isnt good, but cheaper
Preferential shares
* there is a fixed return (share/amount)
* Whether a company makes a profit or a loss, a company has to pay you your dividend.
Stock market as an economic indicator
Propensity [chance] to save.
Propensity to consume.
Journalistic role
Its coz public companies take money from the public and there is a need to tell them what is going on the stock exchange warn the public how the market is fairing).
Stock market jargons or terms:
Market capitalization:
Total number of shares offered on the market
Prices per share
>result of total shares issued X price per share
Price per share (units). In MSE, prices are always in tambala.
Indices/average (index):
A mathematical measure used to track the performance of a certain group of companies in a basket or sector.
* Domestic share index (DSI)
* Foreign share index (FSI)
* Malawi All share index (MASI)
Earning per share
E/share ratio
**************************************************
Price earning ratio (P/E)
Earning per share.
You consider net income, divide it with total shares you've in a company. To an investor, there will be a clue how much they are making per share. It will also apply to dividend.
Price value ratio (P/BV)
Before putting shares on the market, a company decides on a price to sell per share. P/BV is expected price.
P/BV = P
Expected price
=700/0.75
=3/4
=700*4/3
=933.33
If there is 1, it’s balanced,
More than 1, you're over valuing your shares. If it liquidates, you will sell less.
NB: concentrate on P/E and P/BV
Share volume
How much shares have been sold per day.
Dividend yield%
Profit/earning given to an individual per share.
Earnings yield %
Earning to the company as whole.
Basis points
A hundredth point/unit.
C/A: Tread carefully. Caution the shareholders, there is going to be extensive change in shareholding.
Cum Dix (CD): Cumulative Dividend - after a company has declared shares, shareholders will not receive their dividend on the spot. They can receive for e.g. in two months.
Bullish: possibility that prices will be rising.
Bearish: prices will be decreasing.
No comments:
Post a Comment