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Category: finance ಹಣಕಾಸು

  • Finance & Management – 3

    In the earlier blog, we looked at the way each of the different Financial Statements could be used for analysis and understanding the company. We now begin at looking at each of these in detail – the first set of discussion would be regarding Balance Sheet.

    As the name suggest, a Balance Sheet indicates a balance. It derives from the famous principle in mathematics that in an equation the Left hand Side would match the Right hand Side. So what Balance does Balance Sheet really talk about? If so what is the equation.

    For business when ever any investment is made, it would be used to buy in assets etc. So, we have:
    Inputs into the business = assets that the company would invest in
    The inputs into the business would be what the owners would invest in it + any borrowing to buy up the assets = assets
    Thus we have the equation as:

    Assets = shareholder’s equity + Liability.

    This means that assets, or the means used to operate the company, are balanced by a company’s financial obligations along with the equity investment brought into the company and its retained earnings.

    When represented as it could possibly be presented as shown in the figure.

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  • Finance and Management – 2

    As mentioned in the earlier blog, we have 3 different financial statements which could be analyzed to get a host of details regarding the company. We will just have brief of how we could really use these statements.
    A Balance Sheet:
    It tells the onlooker (may be an investor in the company or a prospective investor) 3 important things
    • How much money the company has?
    • How much it owes to others?
    • What amount is left for the shareholder?
    A cash flow statement:
    Enables one look at it and get an understanding of where the money is spent.
    An Income Statement:
    This is also called the Profit and Loss Statement, and hence clearly indicates that it deals with the company’s profitability. It tells us how much the company made or lost.
    With these financial statements a person could make a choice of investing in the company, or could decide otherwise. For a manager, this performance analysis enables him realize the health of the company, the shareholder’s opinion on the company and detect the drivers and thereby work on them to increase the profitability.
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  • Finance and Management – 1

    Generally when one thinks of business or getting into one, he generally thinks of 2 things to begin with and deciding on the venture. What is the investment in money terms I would need to do, and if given this investment, by what time would I be able to earn a handsome amount for the time and money invested into the firm. Both these aspects involve money and would fall under the aspect of Finance and its management.
    Finance of a company gives an indication of the performance of the company (we will deal with the use of finance as a measure at a later date) and also give sufficient inputs to do an analysis to reveal the health of the firm. For the analysis, three basic materials are used
    • Balance Sheet
    • Income Statement
    • Cash Flow Statement
    In the next few blogs we will understand what these base materials are essentially and later on build on these and the way we could analyze. As we proceed from these, we could then move into the realm of corporate finance.
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