What is Capital Budgeting? Capital budgeting involves the planning of expenditures for assets, the returns from which will be realized in the future time periods. The word Capital refers to the total investment of a company in money, tangible and intangible assets. Whereas budgeting defined by “Rowland and William” it may be said to be
What is Debenture? Debentures/bonds represent creditors’ security and debenture holders are long-term creditors of the company. As a secured instrument, it is a promise to pay interest and repay the principal at stipulated times. In contrast to equity capital, variable income security, debentures are fixed income (interest) security. A Debenture is a document issued by
What is Share? Share is a part or portion of a larger amount that is divided among a number of people, or to which a number of people contribute. Shares are units of ownership interest in a corporation or financial asset that provide for an equal distribution of any profits if any are declared, in
What are Retained Earnings? Retained earnings are another method of internal sources of finance. Actually, it is not a method of raising finance, but it is called an accumulation of profits by a company for its expansion and diversification activities. Retained earnings are called under different names such as; self-finance, inter-finance, and plugging back of
What is Cost of Capital? Cost of capital may be defined as the rate that must be earned on the net proceeds to provide the cost elements of the burden at the time they are due. Cost of capital, for an investor, is the measurement of the disutility of funds in the present as compared
What is Dividend Policy? A dividend policy is a company’s approach to distributing profits back to its owners or stockholders. If a company is in a growth mode, it may decide that it will not pay dividends, but rather re-invest its profits (retained earnings) in the business. If a company does decide to pay dividends,
What is Cash Flow Statement? A cash flow statement is a statement of the inflow or outflow of cash or cash equivalent of the company in the specified period. In other words, the cash flow statement presents the reason for changes in cash passion in two Balance Sheet dates. Cash flow includes the inflow or
What is Fund Flow Statement? The fund flow statement reveals information about the sources and uses of funds during a particular financial period. But here the question arises, what is the meaning of fund and flow of fund? Meaning of Fund The term “Fund” refers to Cash, Cash Equivalents, or to Working Capital and all
What is Ratio? The term “Ratio” simply means one number expressed in terms of another. It describes in mathematical terms the quantitative relationship that exists between two numbers. The term “Accounting Ratio” is used to describe the significant relationship between figures shown on a Balance Sheet, in a Profit and Loss Account. What is Ratio
What is Break Even Analysis? The Break Even Point is the point at which sales volume total revenues and total expenses are equal, it is also said as the point of zero profit or zero loss. Break Even Analysis is a very important tool for for-profit management. With the help of break-even analysis, a firm
