Knowledge Seeker

Man is by far the most critical resource of an organisation. No amount of money,materials and machines can produce results by themselves. Men are needed tomanage them. Machines can be programmed to take over routine, repetitive jobs, butonly a human brain can design the machines.Surround yourself with the best people you can find, delegate authority,…

Developing a new idea, concept or product can be very creative, challenging and exciting.But, that is only one part of the story. The other part of the story, and usually the moredifficult part, is to translate this idea into a successful business. This requires detailedplanning and organising of finance, marketing, administration, etc. While new productdevelopment…

Reserves and surplus or retained earnings normally arise out of profitable operations. It is a surplus not distributed by the firm as dividends. In other words, these are profits that are to be retained within the business. When a firm starts its operations it has no retained earnings. If in the first year it earns…

Trading account is prepared to ascertain the Gross Profit and Loss of a firm, where Gross Profit is the excess of net revenue over cost of goods sold (the credit side of the trading account exceeds the debit side). Similarly, Gross Loss is the excess of cost of goods sold over net revenue (the debit…

To start with, we need two successive balance sheets and the operating statement or profit and loss account linking the two balance sheets.There are two ways in which this statement can be drawn up. The first method is the direct method whereby major classes of gross cash receipts and gross cash payments are disclosed. The…

liabilities are claims of outsiders against the business. In otherwords, these are amounts owed by the business to people who have lent money or provided goods or services on credit. If these liabilities are due within an accountingperiod or the operating cycle of the business, they are classified as current liabilities.Most of such liabilities are…

FUND FLOW STATEMENT An analysis of the fluctuations of current assets and current liabilities i.e. workingcapital tells us how the working capital has increased or decreased. Now, we want toknow where the increased working capital is applied if it has increased, and fromwhere funds have been transferred if it has decreased. The profit and loss…

Dividend payout ratio is the dividend per share divided by the earnings per share. Dividend payout ratio indicates the extent of the net profit distributed to the shareholders by way of dividend. A higher dividend payout ratio indicates that the company does not require further funds in the near future or it may also indicate…

One of the objectives of the firm/company iswealth/value maximization, of the stake of various stakeholders. The value ismaximized when the market price of equity shares increases. The market priceof equity shares is a function of the present and future earning potential of thefirm. An appropriate and operationally feasible way to measure valuemaximization is to measure…