Monday, 23 January 2012
Sunday, 22 January 2012
Core Attributes of an Effective Corporate Governance System
Companies should have the following core attributes:
1) Clearly defined rights of shareholders and other core stakeholders.
2) Clearly defined responsibilities of manager and director to stakeholders.
3) Identifiable and measurable accountabilities for the performance of the responsibilities.
4) Fairness and equitable treatment in all dealings between managers, directors, and shareholders.
5) Complete transparency and accuracy in disclosures regarding operations, performance, risk and financial position.
Geographical Revenue Information - Toyota
A part from Europe, the net revenues of Toyota have not increased in any other geographic region. Merely looking at the figure and deciding about the causes of this effect is not a reasonable approach. There could be several reasons ranging from economic to behavioral which have resulted this pattern.
Saturday, 21 January 2012
Friday, 20 January 2012
Ratio Impact of Lease Accounting - CFA Level II (FRA)
| | Finance Lease | Operating Lease |
| Current Ratio (CA/CL)* | Lower | Higher |
| Working Capital (CA – CL)* | Lower | Higher |
| Asset turnover (Revenue/TA) | Lower | Higher |
| Fixed Asset turnover(Rev./Net Fixed Asset) | Lower | Higher |
| Return on Assets (NI/TA) in early years | Lower(due to higher fixed assets) | Higher( due to high NI and lower asset base) |
| Return on Asset (NI/TA) in subsequent years | Higher | Lower |
| Return on Equity (NI/Shareholder’s equity) in early years | Lower | Higher |
| Return on Equity (NI/Shareholder’s equity) in subsequent | Higher | Lower |
| Debt-to-Asset ratio | Higher | Lower |
| Debt-to-Equity ratio | Higher | Lower |
News Pick - Dow Stocks Will Boost Dividend Payouts 12% in 2012
Among the reasons US companies pay dividend regularly is due to the fact that their shareholders expect from them that they pay dividends. There is a complete reading in CFA Level I and Level II curriculum regarding Dividends. Below is the link to the article written by Larry Barret which discusses the prospective rise in dividends companies listed in DJIA.
Read the article: http://www.onwallstreet.com/news/dow-component-firms-raise-dividend-outlook-2676937-1.html
Thursday, 19 January 2012
US GAAP vs IFRS - Inventories
| READING 22 - INVENTORIES | ||
| | USGAAP | IFRS |
| Inventory Cost Flow Method | 4 methods: · Specific Identification, · FIFO · W. Avg. Cost · LIFO | 3 methods: · Specific Identification, · FIFO · W. Avg. Cost |
| Change in Inventory valuation method | · Allowed only if it results in more reliable and relevant information. · Thorough Disclosure of why the new method is superior and preferable · If change is from LIFO to any other method then applied retrospectively · If change is to LIFO then prospectively applied | · Allowed only if it results in more reliable and relevant information. · If change is justifiable then it is applied retrospectively |
| Inventory Valuation Rules | · Measured at lower of Cost or Market · Market usually = replacement cost · NRV – Normal Profit < Market < NRV | · Measured at lower of Cost or NRV · NRV = Est. Selling Price – Est. Selling & Completion Cost |
| Disclosure | · Either on Balance sheet or Foot Notes carrying amount in classifications suitable to company must be disclosed · Company using LIFO method must disclose LIFO Reserves | · Either on Balance sheet or Foot Notes carrying amount in classifications suitable to company must be disclosed |
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