What is Cash Conversion Cycle and how to interpret it?
Cash conversion cycle is one of the important tools in hands of users of financial statements including investors to measure liquidity performance of the business and ultimately it will also reflect how good the entity is being managed with its resources especially in short-term. Cash is life line of every kind of business. Without cash […]
What factors are considered in determining useful life of intangible asset?
Determining useful life of an intangible asset is not as easy as a tangible asset as most often intangible assets are of such nature that are unique and have no similar asset in the market through which can ascertain its value and useful life. And we cannot ignore determination of useful life aspect of the […]
What is meant by ‘net of’ in accounting or tax and other business related subjects?
The expression ‘net of’ represents the exclusion of something from a particular sum. For example net of tax means the resultant amount which is exclusive of tax or in other words the amount we get after deducting tax is net of tax amount. We can see its uses in wide variety of ways in accounting […]
Are prepaid expenses financial asset?
In order to confirm whether a particular asset is a financial asset or not, we will have to look at the definition of financial asset International Accounting Standard IAS 32 defines the term financial asset in para 11. Although the definition of financial asset is a bit detailed and lengthy but I will be quoting […]
What is the difference between soft capital rationing and hard capital rationing
Capital rationing is the process of regulating the capital expenditure when capital is scarce. When capital is in limited supply i.e. raising capital is not easy then company will have to pick and choose between what investment choose and what to just let go even if all the investments are favourable. This is done by […]
What is Capital rationing?
Rationing basically means a process of controlled distribution of such resource which is scarce i.e. available in limited supply. The basic reason behind controlling the distribution process is to ensure that resource is distributed fairly and no one is left deprived of such resource or at least perception of deprivation does not arise. The same […]
