Finance Articles

Finance articles section focuses on various concepts of finance like budget, stock market and economics of various products & services. Apart from these articles on global financial institutions, different banking systems and topics of international importance in the field of finance are present.



Leveraged Buyout : Is it Worth the Risk ? 19 July 2011

A leveraged buyout or LBO is the acquisition of a company or division with borrowed funds.  In LBO, the firm acquiring the target company will finance the acquisition with a combination of debt and equity. It is similar to individual buying a rental house with a mortgage. In case of mortgage, it is secured by the value of the house being purchased and in some cases; rental income from the house is used to pay down the mortgage.  Similarly, some portion of the debt incurred in an LBO is secured by the assets of the acquired business. The cash flow generated by bought out service is used to service the debt incurred in its buyout.

 

Transfer Pricing Demystified 17 July 2011

Transfer Pricing is simply the act of pricing of goods and services or intangibles when the same is sold to between divisions of a company or between companies in the same group. There can be either Market-based, i.e. equivalent to what is being charged in the outside market for similar goods, or it can be non-market based. The value at which goods and services are transferred from one unit to another unit is called transfer price.

 

Depository Receipts 09 July 2011

A depository receipt is a negotiable financial instrument issued by a bank to represent a foreign company's publicly traded securities. The depositary receipt trades on a local stock exchange.  It is a physical certificate which allows investor to hold shares in equity of other countries. American Depository Receipt (ADR) is one of commonly used depository receipt. DRs have spread to other parts of the globe in the form of global depositary receipts (GDRs) European DRs and International DRs. ADRs are typically traded on a U.S. national stock exchange, such as the New York Stock Exchange (NYSE), while GDRs are commonly listed on European stock exchanges such as the London Stock Exchange.  Generally ADRs and GDRs are denominated in US dollars.

 

Co-branded Credit Cards 07 July 2011

Indians have always been attracted by freebies. So launching co branded credit cards in a country like ours is sure to be a good idea. Though such products were launched in other markets after it reached maturity, in India though the usage and uptake of credit cards is minimal the co branded cards have been a hit. Co branding is actually good for both the credit card companies as well as to the participating companies. Both get customers to spend on the basis of the getting something free or getting cash back on their expenditure.

 

Non Banking Financial Company- Boosting economic growth 27 June 2011

Banks are the most important institutions which are responsible in managing and securing the wealth of the common man. The banking industry, whether public banks or private banks, are the most trusted business entities, where people with all their trust deposit their hard earned money for safety. However, there is another institution which has gradually made its presence felt in this field- Non Banking Financial Company.

 

Systematic Investment Plan- the Power of Compounding 27 June 2011

Ever since ages, the concern for people has been accumulating wealth which would be sufficient to lead a prosperous and healthy lifestyle. By gaining education and then by doing business or work, people look out for the best possible professions which would not only give them personal satisfaction but would also yield good returns in terms of money. Apart from earning from the regular place of employment, people also invest in diverse institutions, policies and systems like banks, shares, mutual funds etc which helps in appreciating the value of money. However, people are afraid to invest a lump sum amount for a long duration as it deprives them of liquid cash. Thus people prefer smaller investments for a smaller time period and for that there is one tool, which is simply known as a Systematic Investment Plan (SIP).

 

Digging out the Black Money 25 June 2011

Economic growth in various countries has a cascading effect on the overall progress of a country. Manufacturing, industrial growth, employment and prosperity of the citizens all form a part of the developmental cycle. Economic development leads progress of the nation by having good infrastructure, facilities, services, lesser tax and higher income for the people. However, even in developing countries and emerging economies there is one aspect which is deteriorating progress and eroding the economy by the minute- Black Money.