Objectivity in Accounting

Financial accounting can be defined as a process of designing and operating an information system for collecting, information in order to make financial decisions. It is said to collect accurate financial data and other financial information, and to accumulate and combine it in an organized and systematic way, according to the principles and rules of accounting, for reporting purpose. Financial accounting is objective in the sense that it is not biased which means it is true and fair in review. It is very importance for any organisation because the information gathered through financial accounting can be used to make financial or economic decision making. One of the purposes of financial accounting is to provide information about the performance of the company to external people as well as internal managers within the organisation. The external people can be in form of stakeholders, creditors, suppliers, tax authorities etc. The financial information gathered Continue reading

Customer Confidence Winning Strategies Adopted by Organizations

The concept of winning customer confidence has received much attention among various stakeholders such as customers, shareholders, investors, and the government as they strive to establish whether their interest is being taken into account. Companies use multiple tactics to convince potential and existing consumers concerning why their products stand out from that of other competitors. Various customer confidence winning strategies such as celebrity and expert endorsement, attitude changing, low involvement, and high involvement approaches to make the advert more appealing, hence, this helps in boosting sales. Companies invest a substantial amount of resources in employing these criteria to keep the targeted audience hooked, in turn, this aids in increasing sales as well as the market share. Despite being costly, advertisers find it worthwhile to apply these techniques, i.e., celebrity endorsement since it helps to boost sales and it allows customers to make it a point of reference. Many of the Continue reading

Theories of International Investments

International investments mean investments beyond borders. International investments refer to investments by entities of a nation in nations other than their own. Foreign investments involve export of capital. The opportunity for International investments is directly emanating from economic reformist policies adopted by most of the countries of the world including centrally planned and command economies. Liberalization, Privatization and Globalization (LPG) are vigorously pursued by the countries giving an up-thrust on investment opportunities. Broadly there are two types of foreign investment, namely, foreign direct investment (FDI) and foreign portfolio investment (FPI). FDI refers to investment in a foreign country where the investor retains control over the investment. It typically takes the form of starting a subsidiary, acquiring a stake in an existing firm or starting a joint venture in the foreign country. Direct investment and management of the firms concerned normally go together. If the investor has only a sort of Continue reading

Factoring of Receivables – Meaning and Mechanism

Raising short term and medium term debt by inviting and accepting deposits from the investing public has become an established practice with a large number of companies both in the private and public sectors. This is the outcome of the process of dis-intermediation that is taking place in Indian economy. Similarly, issuance of Commercial Paper by high net-worth Corporates enables them to raise short-term funds directly from investors at cheaper rates as compared to bank credit. In practice, however, commercial banks have been the major investors in Commercial Paper in India, implying thereby that bank credit flows to the corporate sector through the route of CPs. Inter-Corporate loans and investments enable the cash rich corporations to lend their surplus resources to those who need them for their working capital purpose. Factoring of receivables is a relatively recent innovation which enables corporates to convert their receivables into liquidity within a short Continue reading

Different Types of Information Systems Used in Different Levels of Management

Information system means by which people and organizations utilize technologies, collect, store use and distribute information. Good information system is used to provide important information for decision making. The information technology may be used for the processing, storing or distribution of data. These technologies collectively include information technology and data. It is an organized combination of people, hardware, software, communications networks, and data resources that stores and retrieves, transform and disseminate information in an organization. Very main functions of information systems is systems analysis and design, that is to say, analyzing a customer’s business condition (or trouble), with deference towards information processing, and designing and implementing an suitable–generally computerized–solution to the difficulty. Information systems professionals who focus in this part are known as systems analysts. The procedure begins with a complete determination of the client’s information needs and business processes. The result normally involves various programming, in addition to the Continue reading

Capital Asset Pricing Model (CAPM) – Definition, Formula and Calculation

The risk or variation in return of a security is caused by two types of factors. The first type of factors will affect the return of almost all securities in the market. Examples of such sources of risks are changes in the interest rates and inflation of the economy, movement of stock market index and exchange rate movement. The risk caused by such factors is known as systematic risk. Apart from systematic risk, the variation in return of a security is also caused by some other factors which are specific to a security, like a strike in a company or the caliber of the management of a company. The risk caused by such factors is known as unsystematic or specific risk. The unsystematic risk of a security can be diversified away by combining different securities into a portfolio. But systematic risk cannot be diversified away by the construction of a Continue reading