Concepts of Throughput Accounting and Theory of Constraints

Financial Management

Kaizen – Understanding the Japanese Business Philosophy of Continuous Improvement

Operations Management

Role of Leaders in Shaping Organizational Culture

Management Principles

Organizational Culture – Development and Importance

Management Principles

Five Important Organizational Cultural Models

Management Principles

Persuasion in Advertising

The major objective of advertising inherent in the presentation and promotion of ideas, goods or services is to achieve predetermined objectives through persuasive communication, precipitating the change or reinforcement of desired attitude or behavior. “It is not neutral; it is not unbiased”: Yes, advertising is not neutral or unbiased. All ads that appear are controlled by the advertiser and are intended to serve the advertiser’s interest in some way. Advertising has gained much attention because it is the best known and most widely discussed form of promotion and a very important promotional tool. There are several reasons for this. It can be a very cost-effective method to reach a large audience. It can also be used to create images and build symbolic meanings for a company or brands. It is an important feature for companies dealing in products or services that are difficult to differentiate on functional attributes. Advertising alone, Continue reading

Abey Francis

Cash Flow Statement – Meaning, Components and Preparation Methods

The cash flow statement was previously known as the  flow of funds statement. The cash flow statement reflects a firm’s liquidity. The balance sheet is a snapshot of a firm’s financial resources and obligations at a single point in time, and the income statement summarizes a firm’s financial transactions over an interval of time. These two financial statements reflect the accrual basis accounting used by firms to match revenues with the expenses associated with generating those revenues. The cash flow statement includes only inflows and outflows of cash and cash equivalents; it excludes transactions that do not directly affect cash receipts and payments. These noncash transactions include depreciation or write-offs on bad debts or credit losses to name a few.  The cash flow statement is a  cash basis  report on three types of financial activities: operating activities, investing activities, and financing activities. Noncash activities are usually reported in footnotes. The Continue reading

Abey Francis

Rights Issue or Rights Offering

RIGHTS ISSUE Normally, whenever an existing company makes a fresh issue of equity capital or convertible debentures the existing shareholders or convertible debenture holders have the first right to subscribe to the issue in proportion to their existing holdings.   Only what is not subscribed to by the existing shareholders can be issued to the public.   Thus, an issue offered to the existing shareholders or convertible debenture holders as their right is known as rights issue, as opposed to an issue open to the public at large, in which case we call it a public issue.   An investor may exercise this right to subscribe to the offered issue, or he may sell the rights separately in the market.   The rights have a market value only when the issue is made below the market value of the security.   When this happens, as can be expected, the market Continue reading

Abey Francis

Economic Value Added (EVA) – Definition, Calculation and Implementation

Economic Value Added (EVA) is a value based financial performance measure, an investment decision tool and it is also a performance measure reflecting the absolute amount of shareholder value created. It is computed as the product of the “excess return” made on an investment or investments and the capital invested in that investment or investments. “Economic Value Added (EVA) is the net operating profit minus an appropriate charge for the opportunity cost of all capital invested in an enterprise or project. It is an estimate of true economic profit, or amount by which earnings exceed or fall short of the required minimum rate of return investors could get by investing in other securities of comparable risk.” Economic Value Added (EVA) is a variation of residual income with adjustments to how one calculates income and capital. Stern Stewart & Co., a consulting firm based in New York, introduced the concept on Continue reading

Abey Francis

The Art of Negotiation – Importance of Negotiation in Business

In the world of business the most difficult thing to achieve, is perhaps, nothing but the negotiation table. Reaching a negotiated settlement and winning over the other side is the most complex and intricate task for which our marketers always strive for. From the management science to the business calculus and from the politics to the diplomacy as well as from the socialism to psychology, negations include and encompass every art. Negotiating people need to be resumed not only in one of above mentioned disciplines, but they should have the mastery to employ all the tools, when required. With the rapidly changing world of the business and economics the art of the negotiation is also becoming more and more volatile and evaporative. One can’t suppose the negotiated settlements to withstand or stay for the certain period of the time but the need to renegotiate can be arisen any time when Continue reading

Abey Francis

Capital Profit and Revenue Profit

Meaning Of Capital Profits The amount of profit earned by the business from the sale of its assets, shares, and debentures is capital profit. If assets are sold at a price more than their book values then the excess of book value is capital profit. Similarly, if the shares and debentures are issued at a price more than their face value, then the excess of face value or premium is capital profit. Such profit is not earned in the ordinary course of the business. It is not available for the distribution to shareholders as dividend. Such profits are transferred to capital reserve. It is used for meeting capital losses. It is shown on the liabilities side of balance sheet. Meaning Of Revenue Profits Revenue profit is the difference between revenue incomes and revenue expenses. It is earned in the ordinary course of the business. It results from the sale of Continue reading

Abey Francis