Atlanta, Georgia based multinational soft drink giant Coca-Cola and its local bottlers said Tuesday that they plan to invest $ 5 billion in India by 2020, approximately 3 billion more than the company had originally planned. This expansion strategy and investment is targeted as a result of consistent growth the company has seen in India over the past five years.
While a robust financial analysis example can teach you many things and span across numerous practical applications, there is none that is as relevant as the one involved in your own personal financial planning. This particular financial analysis example shows you how you can set up a spreadsheet model to evaluate and attain your personal financial goals. Relevant concepts such as Present Value, Future Value and Real Rate of Return, among others, are discussed. The exportable spreadsheet can be found at the end of the tutorial.
Authored by: Jenni Li
Mutual funds are a very popular form of investment these days. Most people already own mutual funds within their brokerage account or retirement plan. New investors should understand this type of investment and why a significant number of people prefer them.
Mutual funds are investment that will involve a group of investors that combine their money. They employ a portfolio manager that could invest their asset funds inside in the stock market or other securities. The manager will deal with researching and maintaining winning assets around the stock market.
Cash flow analysis is so crucial because cash is king! When evaluating a company’s performance, most stakeholders whether internal or external, are interested in how well the company is generating cash. Having a strong grasp of cash flow analysis can give you great insights into the company’s past, present and future performance. There are a few types of cash flow analysis and in a series of tutorials we will explore the cash flow statement, cash flow ratios, discounted cash flow and free cash flow.
This tutorial will give you step by step instructions on how to price a bond. If you were thinking of investing in bonds or looking to learn how to price a bond for your class, you’ve come to the right place! (There is a spreadsheet bond price calculator at the end of the tutorial)
Individual investors and companies that are fortunate enough to have excess cash sitting around may invest in debt securities that are either issued by the government or other private entities. Issuance of a bond is usually done by large organizations and governments. These organizations issue bonds because they have a financing need to improve their overall cash position.
Accounting for Bonds is not a difficult topic to comprehend, nor is it a difficult task to execute. The journal entries involved are pretty straight forward and setting up the amortization schedule is also intuitive. Accounting for Bonds is a continuation of “The Basics and Pricing of Debt Securities” post. If you have not read that post or if you are unfamiliar with how bonds are priced, please do so before reading this article as it will only help you understand the concepts better.
This tutorial covers the basics of inventory valuation. For merchandisers, manufacturers and wholesalers, inventory is often times the largest asset item represented on the balance sheet as a current asset. It is considered one of the more liquid assets because the basic assumption is that inventory owned by a company will be sold in the near future and converted to cash (the most liquid of any asset type). Inventory includes items that are ready for sale (finished goods), items in the process of being produced (work in progress) and raw materials that will be used to produce the final goods.
Generally Accepted Accounting Principles (GAAP) are a set of common and widely accepted standards used by accountants and organizations in preparing financial information about a business entity. GAAP is borne out of some clearly defined objectives which include the necessity for business organizations to provide financial information that are useful for evaluation by external parties like creditors and investors. Consistency in the approach, format and presentation derived from the accounting framework and applicable laws makes the provided information very helpful in the decision making process for outside parties.
Accounting as we know it can be separated into two distinct branches. Although both involve heavy analysis and interpretation of performance data, use of assumptions and reporting in some form or fashion, they are very different in terms of approach and ultimate purpose. For starters, one of the two deals with information that is prepared specifically for external users of the economic information pertaining to a company’s ongoing operations (financial accounting) and the other prepared specifically for a corporation’s internal users enabling them to make better operating decisions (management accounting).
Understanding the relationship between financial statements enable you to manage business operations better. These relationships stem from the accounting information system and the way double-entry accounting is setup. The accounting cycle makes continuous utilization of this system to output four standard financial statements at the end of each accounting period. Those statements are :
(1) The Income Statement (2) Statement of Owner’s (Shareholder’s) Equity (3) The Balance Sheet (4) The Statement of Cash Flows
While each statement tells its own story, there are specific links and relationships between them that provide insights into the “bigger picture”. Moreover, a thorough comprehension of the relationship between financial statements will make you feel more confident about the information you are looking at and in your ability to analyze the numbers.