How Initial Public Offering Works?
An Initial Public Offering is not only an indication that a private company needs more capital to fuel its growth; it’s also a symbol that the business has made its mark on the world map.
Not all businesses go for capital raising. Only a few who feel that they are competitive enough to go big only go for initial public offering. But IPO is not all a bed of roses.
IPO has become an arduous process that not only costs the business more money; but also more regulatory requirements, which very few companies can crack.
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An Initial Public Offering is not only an indication that a private company needs more capital to fuel its growth; it’s also a symbol that the business has made its mark on the world map.
Not all businesses go for capital raising. Only a few who feel that they are competitive enough to go big only go for initial public offering. But IPO is not all a bed of roses.
IPO has become an arduous process that not only costs the business more money; but also more regulatory requirements, which very few companies can crack.
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What is a Financial Crisis?
Financial Crisis describes a situation when the key financials assets of the market see a steep decline in market value in a relatively very short interval of time, or when the leading businesses are unable to pay their huge debts, or when financing institutions face a liquidity crunch and are unable to give the money back to the depositors, which lead to panic in the capital markets and investors.
The panic created in the market due to this crisis can lead to several other events that can further deteriorate the market sentiments. For example, investors can go on selling their stakes or can withdraw the money from their savings accounts with banks out of fear of bank failures.
Read Types of Financial Crisis
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Financial Crisis describes a situation when the key financials assets of the market see a steep decline in market value in a relatively very short interval of time, or when the leading businesses are unable to pay their huge debts, or when financing institutions face a liquidity crunch and are unable to give the money back to the depositors, which lead to panic in the capital markets and investors.
The panic created in the market due to this crisis can lead to several other events that can further deteriorate the market sentiments. For example, investors can go on selling their stakes or can withdraw the money from their savings accounts with banks out of fear of bank failures.
Read Types of Financial Crisis
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Types of Financial Crisis
There are several key events as well that can be classified as Financial Crisis:-
1 - Financial Bubble
2 - Stock Market Crash
3 - Sovereign Default
4 - Currency Crisis
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There are several key events as well that can be classified as Financial Crisis:-
1 - Financial Bubble
2 - Stock Market Crash
3 - Sovereign Default
4 - Currency Crisis
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What is Financial Bubble?
A financial bubble is a part of the economic cycle in which the prices of the assets increase very rapidly and suddenly crash. In this case, assets are generally overvalued and are not supported by the fundamentals of the asset, generally due to the exuberant behaviour of the market. When none of the investors is interested in investing further, the price crashes, and it is called “bubble burst.”
There have been many such events in the past, such as the Dot Com Bubble Burst, the US Housing Bubble burst, etc.
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A financial bubble is a part of the economic cycle in which the prices of the assets increase very rapidly and suddenly crash. In this case, assets are generally overvalued and are not supported by the fundamentals of the asset, generally due to the exuberant behaviour of the market. When none of the investors is interested in investing further, the price crashes, and it is called “bubble burst.”
There have been many such events in the past, such as the Dot Com Bubble Burst, the US Housing Bubble burst, etc.
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What is Stock Market Crash?
Similar to the financial bubble, there are situations when instead of one asset alone, the whole markets suffer the burn and crashes after making huge gains over the period of time. It can be due to the regulation changes by the government or eco-political situation of the country, or other similar reasons that impact the whole market.
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Similar to the financial bubble, there are situations when instead of one asset alone, the whole markets suffer the burn and crashes after making huge gains over the period of time. It can be due to the regulation changes by the government or eco-political situation of the country, or other similar reasons that impact the whole market.
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What is Sovereign Default?
The bonds issued by the government are generally considered as risk-free, and they always have very high credit ratings because the probability of governments defaulting on their debts is very low. But there have been incidents in the past when the governments have defaulted, and it is called a sovereign default. For example, Greece faced a sovereign default crisis after the recession period of 2007-08.
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The bonds issued by the government are generally considered as risk-free, and they always have very high credit ratings because the probability of governments defaulting on their debts is very low. But there have been incidents in the past when the governments have defaulted, and it is called a sovereign default. For example, Greece faced a sovereign default crisis after the recession period of 2007-08.
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What is Currency Crisis?
At times, the currency of a country gets devalued suddenly by a huge amount against other currencies; it is called the currency crisis. It often leads foreign investors to pull out their money from the market because, in the local currency, the value of their investment gets decreased. Also, sometimes governments themselves try to devalue their currencies in order to increase the exports. But this measure is not a part of the currency crisis as that involves non-purposeful events only.
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At times, the currency of a country gets devalued suddenly by a huge amount against other currencies; it is called the currency crisis. It often leads foreign investors to pull out their money from the market because, in the local currency, the value of their investment gets decreased. Also, sometimes governments themselves try to devalue their currencies in order to increase the exports. But this measure is not a part of the currency crisis as that involves non-purposeful events only.
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What is Asset Financing?
Asset Financing refers to a ailment of loan based on the financial strength of the organization by mortgage or hypothecation of balance sheet assets which includes land & building, Vehicles, Machinery, Trade Receivables as well as short term investments where assets amount is decided into regular payment intervals of the unpaid portion of the asset along with interest.
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Asset Financing refers to a ailment of loan based on the financial strength of the organization by mortgage or hypothecation of balance sheet assets which includes land & building, Vehicles, Machinery, Trade Receivables as well as short term investments where assets amount is decided into regular payment intervals of the unpaid portion of the asset along with interest.
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Types of Asset Financing
Below given are the 5 different types that you should know.
1 – Financial Lease
2 – Hire Purchase
3 – Operating Lease
4 – Equipment Lease
5 – Asset Refinance
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Below given are the 5 different types that you should know.
1 – Financial Lease
2 – Hire Purchase
3 – Operating Lease
4 – Equipment Lease
5 – Asset Refinance
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What is Financial Lease?
In Financial Lease, all rights and the obligations of the ownership is transferred to (the business) Lessee and for any duration. The value of the asset is shown on the balance sheet of the lessee as a liability or an asset during the agreement period, whereas the rent is treated as an expense and debited to the Profit and loss account. Lessee is wholly responsible for the maintenance of the asset during the agreement period.
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In Financial Lease, all rights and the obligations of the ownership is transferred to (the business) Lessee and for any duration. The value of the asset is shown on the balance sheet of the lessee as a liability or an asset during the agreement period, whereas the rent is treated as an expense and debited to the Profit and loss account. Lessee is wholly responsible for the maintenance of the asset during the agreement period.
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What is Hire Purchase?
In Hire Purchase, a finance company here called lessor purchases the asset on behalf of Lessee (the business). In this option, the asset is owned by the lessor till the last payment is made and during the final payment, the lessee is given the option of purchasing the equipment at a nominal rate. The value of the asset is shown on the balance sheet of the lessee as a liability or an asset during the agreement period, whereas the rent is treated as an expense and debited to the Profit and loss account.
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In Hire Purchase, a finance company here called lessor purchases the asset on behalf of Lessee (the business). In this option, the asset is owned by the lessor till the last payment is made and during the final payment, the lessee is given the option of purchasing the equipment at a nominal rate. The value of the asset is shown on the balance sheet of the lessee as a liability or an asset during the agreement period, whereas the rent is treated as an expense and debited to the Profit and loss account.
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What is Operating Lease?
Under this lease, the asset is taken for a short period and not for the entire working life. Here, the lessor will take back the asset at the end of the agreement and maintenance responsibility in some cases lies with the lessor or otherwise, the lessee is responsible. The asset is not shown on a balance sheet as it is for a nominated period and the payment is charged in the profit and loss account.
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Under this lease, the asset is taken for a short period and not for the entire working life. Here, the lessor will take back the asset at the end of the agreement and maintenance responsibility in some cases lies with the lessor or otherwise, the lessee is responsible. The asset is not shown on a balance sheet as it is for a nominated period and the payment is charged in the profit and loss account.
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What is Equipment Lease?
Under equipment Lease, there is a contractual agreement where the owner of asset i.e. the lessor, permits the lessee to use the asset for a contracted period for which regular rentals are to be paid. Here, the ownership of equipment remains with the lessor and in case of contravention of any terms of the agreement then, the lessor has the right to cancel the lease agreement.
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Under equipment Lease, there is a contractual agreement where the owner of asset i.e. the lessor, permits the lessee to use the asset for a contracted period for which regular rentals are to be paid. Here, the ownership of equipment remains with the lessor and in case of contravention of any terms of the agreement then, the lessor has the right to cancel the lease agreement.
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What is Asset Refinance?
Under asset refinancing, assets like vehicles, buildings, etc are used to secure a loan. It’s like if the payments of loans are not done, the lender takes the asset that was secured against the loan to cover up its given amount. The amount borrowed depends on the value of the asset. Sometimes, Asset-backed lending is used for debt consolidation.
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Under asset refinancing, assets like vehicles, buildings, etc are used to secure a loan. It’s like if the payments of loans are not done, the lender takes the asset that was secured against the loan to cover up its given amount. The amount borrowed depends on the value of the asset. Sometimes, Asset-backed lending is used for debt consolidation.
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What is the difference between Bank Draft and Certified Cheque?
Bank Draft is a financial instrument issued by bank in favor of a specified entity on the request of the payer where payment is already received by the bank and the amount is transferred to that entity when it is presented.
Certified cheque is issued by someone who has an account with the bank in favor of payee where the amount is transferred from that account to the payee after the presentation given the availability of funds of the issuer.
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Bank Draft is a financial instrument issued by bank in favor of a specified entity on the request of the payer where payment is already received by the bank and the amount is transferred to that entity when it is presented.
Certified cheque is issued by someone who has an account with the bank in favor of payee where the amount is transferred from that account to the payee after the presentation given the availability of funds of the issuer.
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What is Business Ethics?
Business Ethics can be defined as studying, applying, implementing and practicing self-defined principles, policies and standards on various aspects like corporate governance, whistle blowing, corporate culture, corporate social responsibility, fair and honest dealings, etc. which are been prescribed by various statutes, governing bodies non-compliance of which may lead the business to fines and penalties with/without punishments.
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Business Ethics can be defined as studying, applying, implementing and practicing self-defined principles, policies and standards on various aspects like corporate governance, whistle blowing, corporate culture, corporate social responsibility, fair and honest dealings, etc. which are been prescribed by various statutes, governing bodies non-compliance of which may lead the business to fines and penalties with/without punishments.
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What is Business Entity Concept?
The business entity concept declares that a business stands independently from its owner, and hence the two should be treated as separate entities when recording transactions. Therefore, all business transactions (income, expenses, assets, liabilities, and equity) must be kept separate from the owner’s personal account to ensure accurate accounting records.
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The business entity concept declares that a business stands independently from its owner, and hence the two should be treated as separate entities when recording transactions. Therefore, all business transactions (income, expenses, assets, liabilities, and equity) must be kept separate from the owner’s personal account to ensure accurate accounting records.
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What is a Business Exit Strategy?
A business exit strategy can be defined as an exit plan whereby any person running an existing business plans to liquidate its ownership stake either through sale or another such transfer mechanism whereby the proprietor (existing owner) will no longer have any financial/ legal interest in that business generally planned to either exit loss-making business or to meet immediate cash requirements.
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A business exit strategy can be defined as an exit plan whereby any person running an existing business plans to liquidate its ownership stake either through sale or another such transfer mechanism whereby the proprietor (existing owner) will no longer have any financial/ legal interest in that business generally planned to either exit loss-making business or to meet immediate cash requirements.
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What Is Abenomics?
Abenomics refers to a range of economic and social policies devised and implemented by former Japanese Prime Minister Shinzo Abe to revive the nation’s economy. Thus, the term combines the phrases ‘Abe’ and ‘Economics.’ He proposed these reforms soon after holding office for the second time in 2012.
Abe’s Keynesian economic policies aimed to get the country out of a two-decade deflationary spiral. The three-arrow principle encompassed monetary, fiscal, and growth measures. Other objectives included expanding the money supply, increasing government spending, raising inflation, and implementing regulatory reforms.
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Abenomics refers to a range of economic and social policies devised and implemented by former Japanese Prime Minister Shinzo Abe to revive the nation’s economy. Thus, the term combines the phrases ‘Abe’ and ‘Economics.’ He proposed these reforms soon after holding office for the second time in 2012.
Abe’s Keynesian economic policies aimed to get the country out of a two-decade deflationary spiral. The three-arrow principle encompassed monetary, fiscal, and growth measures. Other objectives included expanding the money supply, increasing government spending, raising inflation, and implementing regulatory reforms.
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What are Three Arrows Of Abenomics?
1- Fiscal Policy
2- Monetary Policy
3- Structural Reforms
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1- Fiscal Policy
2- Monetary Policy
3- Structural Reforms
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