CS Futurz

Social Networking is becoming a platform for Stock Hoaxes

noreply@blogger.com (Anonymous) — Tue, 12 Mar 2013 08:46:00 +0000

Under a report published in Business Line - it says that the social networking sites are becoming fertile grounds for preposterous stock market tips and advices.

In such hoaxes, anonymous users set up their accounts with names that may sound similar to prominent stock market players, issue negative commentary that creates confusion and panic amongst investors and results in massive decline of shares in the market.

One should always follow the reliable and trusted source of advice received in the matters of stock market tips. One should investigate the rumor with the stock market professionals and then react accordingly. Instead of getting bamboozled, one must always rely to the trusted source of information such as broker, research analyst or any stock market expert.

SEBI (Amendment) Bill 2013 widens the criteria of SAT Chief

noreply@blogger.com (Anonymous) — Tue, 12 Mar 2013 08:29:00 +0000

Rajya Sabha Passes SEBI (Amendment) Bill 2013 that widens the criteria for selection of Securities Appellate Tribunal (SAT) chief.Finance Minister P.Chidambaram stresses a lot on the actions to be taken against the people involved in Insider Trading. It is a serious offence and SEBI should improve the surveillance.

The SEBI (Amendment) Bill 2013 proposes to appoint a Retired High Court Judge (having held the position for 7 years) to the head of SAT.

The existing provision prescribe only a serving or retired Supreme Court Judge or Chief Justice of a High Court as a head of Tribunal.

Bonus Shares: A New Perspective

noreply@blogger.com (Anonymous) — Fri, 08 Mar 2013 14:55:00 +0000

In the case of listed companies, the Securities and Exchange Board of India's DIP (disclosure and investor protection) and ICDR(Issue of Capital and Disclosure Requirements) regulations currently, the said company cannot issue bonus shares by capitalizing its revaluation reserves.

The Question arises whether an unlisted company can do so.....Well, the guidance note issued by ICAI clearly states that the company cannot issue bonus shares out of reserve created by the revaluation of its assets.

However, in case of Bhagvati Developers Vs. Peerless General Finance & Investment Co, the SC held that a non listed company can do so....The enactment of companies bill addressed the issue and stated a company including non listed, cannot issue bonus shares by capitalizing its revaluation reserves.

This clarifies the situation of the Bonus Issue under IPO and Public Issue of Securities.

What is Trade to Trade Settlement System?

noreply@blogger.com (Anonymous) — Fri, 08 Mar 2013 14:52:00 +0000

A Trade to Trade settlement system is such that delivery is absolutely mandatory.

Day-trading (intra-day buying and selling) is not encouraged in stocks that are in trade-to-trade segment.

If you sell shares (from your demat account) that are under trade-to-trade transaction & buy them back later on the same day, then the investor in such a case has to give delivery for the shares sold.

However, a day later, the investor shall get delivery of the shares bought which clearly signifies that each trade is separate.

If you do not have shares in your demat account, you cannot sell them. This is because you have to give delivery. The shares that you buy, come into your demat account after a couple of days; thus you cannot sell them on the same day.

Budget 2013 -14: SEBI & Others

noreply@blogger.com (Anonymous) — Thu, 28 Feb 2013 15:31:00 +0000

1. In order to curb the Insider Trading and malpractices, budget has proposed to amend SEBI Act as to provide sufficient protection to the investors.

2. SEBI to simplify the procedures and prescribe uniform Registration & additional norms for entry for foreign portfolio investors. (FPI is foreign direct investment in capital market).

3. Rule that, where an investor has a stake of 10 per cent or less in a company,it will be treated as FII and, where an investor has a stake of more than 10 per cent, it will be treated as FDI will be laid.

4. FIIs will be permitted to participate in the exchange traded currency derivative segment to the extent of their Indian rupee exposure in India.

5. SEBI to prescribed requirement for angel investor pools by which they can be recognised as Category I AIF venture capital funds.

6. Small and medium enterprises, to be permitted to list on the SME exchange without being required to make an initial public offer (IPO).
Here SME Exchange means a platform of the Exchange is intended for small and medium sized companies with high growth potential. The SME platform of the Exchange shall be open for SMEs whose post issue paid up capital shall be less than or equal to Rs.25 crores. The platform shall allow new, early stage ventures and small quality companies to raise much needed growth capital as they grow, mature and transit to the Exchanges’ main board.

7. Stock exchanges to be allowed to introduce a dedicated debt segment on the exchange.
Others

1. Surcharge of 10 percent on persons (other than companies) whose taxable income exceeds 1 crore.

2. Increase surcharge from 5 to 10 percent on domestic companies whose taxable income exceed 10 crore.

3. Tobacco products, SUVs and Mobile Phones to cost more.

4. In case of foreign companies who pay a higher rate of corporate tax, surcharge to increase from 2 to 5 percent, if the taxabale income exceeds 10 crore.

5. In all other cases such as dividend distribution tax or tax on distributed income, current surcharge increased from 5 to 10 percent.

6. Education cess to continue at 3 percent.

7. Contributions made to schemes of Central and State Governments similar to Central Government Health Scheme, eligible for section 80D of the Income tax Act.

8. Donations made to National Children Fund eligible for 100 percent deduction.

9. Proposal to introduce Commodity Transaction Tax (CTT) in a limited way. CTT applicable on the sale of commodities. Agricultural commodities will be exempted. CTT shall be at the rate of 0.01% on the value of transaction and the tax shall be payable by the seller.

10. Modified provisions of GAAR will come into effect from 1.4.2016.

11. No change in the normal rates of 12 percent for excise duty and service tax.

12. No change in the peak rate of basic customs duty of 10 perent for non-agricultural products.

13. Duty on specified machinery for manufacture of leather and leather goods including footwear reduced from 7.5 to 5 percent.

14. Duty on pre-forms precious and semi-precious stones reduced from 10 to 2 percent.

15.Duty on Set Top Boxes increased from 5 to10 percent.

16. Duty on raw silk increased from 5 to 15 percent.

17. Duty on imported luxury goods such as high end motor vehicles, motor cycles, yachts and similar vessels increased.

18. Duty free gold limit increased to 50,000 in case of male passenger and 1,00,000 in case of a female passenger subject to conditions.

19. Excise duty on SUVs increased from 27 to 30 percent. Not applicable for SUVs registered as taxis.

20. Duty on mobile phones priced at more than 2000 raised to 6 percent.

21. Exemption of Service Tax on copyright on cinematography limited to films exhibited in cinema halls.

22. Proposals to levy Service Tax on all air conditioned restaurant.

23. Additional deduction of interest upto 1 lakh for a person taking first home loan upto 25 lakh during period 1.4.2013 to 31.3.2014 (Total 2.5 lacs)

24. Income limit under Rajiv Gandhi Equity Savings Scheme (RGESS) will be raised from Rs. 10 lakh to Rs. 12 lakh.

ON Rajiv gandhi Equity Scheme (http://rgess.com/)

Who can invest in RGESS?

New retail investors with an annual income of less than 10 lakhs.

How much can I invest?

The maximum amount eligible for claiming benefit under RGESS is Rs. 50,000.

Tax Benefit - Deduction u/s 80 CCG, is available on 50% of the amount invested. The benefit is in addition to deduction available u/s Sec 80C.

Lock-in Period - 3 years. Fixed lock-in during first year followed by a flexible lock-in for subsequent two years.

CS Executive Guidelines Answers

noreply@blogger.com (Anonymous) — Thu, 26 Jul 2012 13:34:00 +0000

CS Executive Guidelines answers have been put together to facilitate the learning.

Please note that the guidelines answers are the most recommended thing that one can take into account while studying CS. You must go through all the guidelines answers which can add some value in learning and clearing exams.

In case you need any clarifications, please feel free to get in touch with me at mukul.singh@csfuturz.com

Happy Learning!!!!

Public Provident Fund Scheme, 1968 (PPF, 1968) and Senior Citizens Savings Scheme, 2004 (SCSS, 2004) – Revision of interest rates

noreply@blogger.com (CS Futurz) — Sun, 08 Apr 2012 06:18:00 +0000

Referring to the circular RBI/2011-12/359 dated January 20, 2012 regarding interest rates on small savings schemes, the Government of India have vide their Office Memorandum (OM) No. 6-1/2011-NS.II (Pt.) dated March 26, 2012, advised the rate of interest on various small savings schemes for the financial year 2012-13.

Accordingly, the rates of interest on PPF, 1968 and SCSS, 2004 for the financial year 2012-13 effective from April 01, 2012, on the basis of the interest compounding/payment built-in in the schemes, will be as under:

Scheme	Rate of interest w.e.f. 01.12.2011	Rate of interest w.e.f. 01.04.2012
5 year SCSS, 2004	9.0% p.a	9.3% p.a
PPF, 1968	8.6% p.a	8.8% p.a

This will result in good amount of saving in PPFs and SCSS.

SEBI (Debenture Trustee) IInd Amendment Regulation 2011

noreply@blogger.com (CS Futurz) — Wed, 25 Jan 2012 19:35:00 +0000

The SEBI (Debenture Trustee) IInd Amendment Regulation 2011 states that the net-worth of Debenture Trustee shall now be Rs. 2 Crore. Go to the Official Copy of Order.

Basic Concepts of Income tax

noreply@blogger.com (CS Futurz) — Wed, 25 Jan 2012 16:18:00 +0000

The Income Tax Act - Basic Concepts have been explained lucidly and can be read under Google Docs.

In the case of Vodafone

noreply@blogger.com (CS Futurz) — Sun, 22 Jan 2012 13:08:00 +0000

The Supreme Court on Friday, gave a remarkable decision, by directing the government to return Rs 2500 crore to Vodafone International Holding with interest over a $ 2.2 billion tax bill for its purchase of Hutchison Whampoa’s Indian mobile business in 2007.

This decision is indeed a welcoming note for all the Foreign Investors to make more and more investments in our country together with an increase confidence on the Indian judiciary.

Vodafone had started off its operation in year 2007 by acquiring 67% stake in the Hutchison- Essar Ltd from Hong Kong based Hutchison Group through companies based in Netherlands and Cayman Island.

The case took off with, The Income Tax Department raising query that since the capital gains were made in India through the deal, the company was liable to pay the tax and issued a show cause notice to it asking as to why it should not be treated as representative assessee of the Vodafone International Holding.

Vodafone, challenged the show cause notice before the Bombay High Court saying it was share transfer carried outside India. The appeal was rejected by the high court in December 2008 which was again challenged by Vodafone before the Supreme court.

The Supreme Court also dismissed the appeal in January 2009 and directed Income Tax Department to decide whether it had jurisdiction to tax the transaction. The Supreme Court, still, observed Vodafone would be at liberty to challenge the Income Tax department’s decision if it went against Vodafone and the question of law would also be open.

The Income Tax Department replied to this order in May 2010 saying, that the department has competent jurisdiction over the Vodafone, to be treated as an ‘assessee in default’ for failure to deduct tax at source. This decision of IT department was challenged by Vodafone before the Bombay High Court.

The High court passed its judgment on September 8, 2010, dismissing Vodafone’s petition and held that “the essence of the transaction was a change in the controlling interest in HEL which constituted a source of income in India”. It said the “the proceedings which have been initiated by the Income Tax Authorities cannot be held to lack jurisdiction”.

Vodafone again moved to the Supreme Court challenging the High Court decision which had held ‘that the Indian Income Tax department had jurisdiction over the deal.’ On January 20, 2012, Supreme Court dismissed the judgment of Bombay High Court asking Vodafone International Holding to pay income tax of Rs 11000 crore on a deal abroad and directed the Income Tax department to return Rs 2500 crore to the company which was deposited by the company earlier within 2 months along with 4% interest.

Source: corporatelawreporter

Bond vs Debenture

noreply@blogger.com (CS Futurz) — Tue, 17 Jan 2012 17:50:00 +0000

Financial Crisis can come in any form and the person who is prepared in advance can fight with this crisis. To avoid these unforeseen financial crises everyone invests in different instrument that can generate returns on the income. There are many options available in the market that can be classified as risky and non risky. It is very well understood that risky instruments fetch high instruments and the non risky ones can give low returns.

Here, Debentures and bonds are two such options that can give good returns on the investment. Debenture is an instrument issued by a company that is generally in the form of convertible or non convertible into equities. Bonds are either issued by companies or by governmentand can be seen as a loan taken by them to meet their financial needs. These two instruments are basically loan taken from the investor but the repayment scenarios are generally different.

Debentures

Debentures come from a latin word called ‘debre’ meaning ‘to borrow’. Debentures are loans to the company. The companies issue debentures which are coveting expansion and can build sustenance in the business in the medium to long term. Just like equities these can be transferred to anyone, but does not have voting rights in the company’s general meetings. Debentures are simply loans taken by the companies and do not provide the ownership in the company. Debentures are of two types convertible and nonconvertible. The convertible debentures are the ones that can be converted into equity shares at a later time. This convertibility provides attraction to the investor but yield lower interest rates. Non convertible debentures does not convert into equity shares thus can yield a higher interest rate.

Debenture holders may be secured or unsecured, the holder of an unsecured debenture is an unsecured creditor. Like any other unsecured creditor, he has two remedies:

He may sue for the principal and interest and execute the decree against the property of the company.
He may present a petition for the winding up of the company under section 433 of the act, on the ground that the company is not able pay its debts.

If the company is already in the course of winding up, he may prove in such winding up the amount due to him like any other unsecured creditor. Whereas, a secured debenture holder stands in a stronger position as compared to unsecured debenture holder . In addition to the above two remedies available to the unsecured debenture holder, he can exercise the following remedies.

Sale : he will have an express or implied power of sale.
Debenture holders action : when a company commits a default in payment of debts, a debenture holder may bring a suit against the company to obtain payment and to enforce the security.
Appointment of receiver: the debenture holders may appoint a receiver here termed as ‘Debenture Trustee’ to take charge of the assets
Valuation of security and proof of balance : if the company is being wound up and his security is insufficient, the debenture holder may value his security and prove for the balance of his debt or give up his security and prove for the whole debt.

Bonds

Bonds are actual contract notes issued by the borrower (here company or government) to pay interest at regular intervals and return the principal on the maturity of the bond. These bonds are issued by the companies for future expansions. The bonds are also issued by the government for its expenses. A bond is seen as loan taken by a borrower from the investor so unlike equity share it does not give stake in the company but he is seen as a lender. These bonds are redeemed at a definite time. These are secured loans and can yield low to medium interest rate.

Debenture holders get periodical interest on their money and upon completion of the term they get their principal amount back.Bond holders do not receive periodical payments. Rather, they get principal plus interest accrued upon the completion of the term. They are much more secure than debentures and are issued mostly by government firms.

In Brief:

• Debentures have a charge on the assets of the company which is not envitable in the case of Bonds as held in the case of Laxman Bharamji v. Emperor.

• Unsecured Debentures are like unsecured loans which carries a higher rate of interest.

• Debenture holders get periodical interest whereas bond holders receive accrued payment upon completion of the term.

• Bonds are more secure as they are mostly issued by government firms in comparison to Debentures since the latter is issued by a company.

Disclosure of Track Record of the public issues managed by Merchant Bankers

noreply@blogger.com (CS Futurz) — Tue, 17 Jan 2012 16:57:00 +0000

SEBI in its circular CIR/MIRSD/1/2012 dated 10th Jan'2012 stated that:

1. The offer document shall contain necessary disclosures so as to enable investors to take informed decision when it comes to Investments.Further, a merchant banker is required to exercise due diligence and satisfy himself about all the aspects of the issue with adequate of disclosures of the information that may be necessary for the Investors.

2. Therefore, it is necessary for investors to evaluate the post-issue performance of the issuer in terms of disclosures made in the offer documents. This will also enable them to understand the level of due diligence exercised by the merchant bankers.

3. In view of the above, it has now been decided in consultation with the merchant bankers that they shall disclose the track record of the performance of the public issues managed by them. The track record shall be disclosed for a period of three financial years from the date of listing for each public issue managed by the merchant banker. In case, there are more than one merchant banker, all of them are supposed to sign the Due Diligence Certificate as disclosed in the offer document, that shall disclose the track record.

4. The circular shall be applicable for the public issues listed from the date of this circular, with immediate effect. However, in case of past public issues managed during the last three years, the track record as specified in Clause 3 above shall be disclosed latest by March 31, 2012.

Sebi to reform IPO norms

noreply@blogger.com (CS Futurz) — Sun, 15 Jan 2012 19:53:00 +0000

Capital markets regulator Sebi on Thursday said it is in the process of reforming the initial public offer (IPO) norms to ensure minimum price volatility on the day of listing. "We are in the process of reforming IPO process which will ensure that much safer process and volatility in the initial days of listing is much less ... We are looking into every aspect," Securities and Exchange Board of India (Sebi) whole-time member Rajeev Agarwal said. - www.business-standard.com

Lack of funds no excuse for dishonouring bonds: Delhi High court

noreply@blogger.com (CS Futurz) — Sun, 15 Jan 2012 19:52:00 +0000

NEW DELHI: A government cannot be allowed to dishonour its sovereign guarantee on grounds of lack of funds, the Delhi High Court has said, while ordering the Jammu-and-Kashmir-government to redeem its bonds bought from its financial institution by Airport Authority of India (AAI).

"The state cannot say that it does not have the fund to honour its sovereign guarantee. The court would enforce the sovereign guarantee, because a sovereign guarantee cannot be allowed to fail, if rule of law is to be upheld," Justice Vipin Sanghi said.

The court's direction came on the plea of AAI against default in payment of redemption of bonds as well as the half yearly interest payable by Jammu and Kashmir State Financial Corporation.

The AAI had bought the JKSFC bonds to finance its own employee's provident fund.

The court also directed the state government to pay Rs 10.4 crore to the AAI for redemption of the bonds bought by it from JKSFC.

The court also disallowed the plea that the matter did not fall under its territorial jurisdiction saying that the financial transactions between the parties took place here.

The bench directed the Jammu and Kashmir government to "honour its sovereign guarantee" and "to make payments of the amount due comprising of the face value of the bonds which is Rs 10.4 crore along with interest up to the date of redemption at the rates prescribed in the said bonds".

It further asked the state to pay overdue interest to AAI on the amount due and payable on the date of redemption at the rate of 8 per cent.

The AAI had subscribed to the bonds to "prudently manage and invest the Contributory Provident Fund (CPF) of its employees."
Source: economictimes

Framework of SEBI

noreply@blogger.com (Anonymous) — Sun, 15 Jan 2012 16:29:00 +0000

The framework of SEBi can be well understood by clicking above

What are Exchange Traded Funds

noreply@blogger.com (Anonymous) — Sun, 15 Jan 2012 16:27:00 +0000

ETFs and Gold ETFs

An Exchange Traded Fund (ETF) is a security that trades on a stock exchange and generally tracks the performance of an index. It is a single stock representing a basket of securities underlying the index which can be comprised of stocks, bonds, or other assets such as commodities. However, ETFs have evolved over recent years to allow for exposure to alternative asset classes, the implementation of more sophisticated investment strategies, and even active management.

Gold Exchange Traded Funds (ETFs) are open ended mutual funds that are passively managed and most of them seek to mirror the return of an index, a commodity or a basket of assets. ETFs are listed and traded on stock exchanges like stocks. They enable investors to gain broad exposure to indices or defined underlying asset (commodity) with relative case, on a real-time basis, and at a lower cost than many other forms of investing.

Gold ETFs provided investors a means of participating in the gold bullion market without the necessity of taking physical delivery of gold, and to buy and sell that participation through the trading of a security on stock exchange. Gold ETF would be a passive investment; so, when gold prices move up, the ETF appreciates and when gold prices move down, the ETF loses value.

Gold ETF tracks the performance of Gold Bullion. Gold ETFs provide returns that, before expenses, closely correspond to the returns provided by physical Gold. Each unit is approximately equal to the price of 1 gram of Gold. But, there are Gold ETFs which also provide a unit which is approximately equal to the price of ½ gram of Gold.

Source:equitybulls

Financial Market Jargons

noreply@blogger.com (Anonymous) — Sun, 15 Jan 2012 16:19:00 +0000

Some Financial Market Terminologies

Bear Market
A market in which stock prices are falling.

Bonds
Promissory notes issued by a corporation or government to its lenders, usually with a specified amount of interest for a specified length of time.

Bull Market
A market in which stock prices are rising.

Commodities
Products used for commerce that are traded on a separate, authorized commodities exchange. Commodities include agricultural products and natural resources such as timber, oil and metals. Commodities are the basis for futures contracts traded on these exchanges.

Debenture
A long-term debt instrument issued by corporations or governments that is backed only by the integrity of the borrower, not by collateral. A debenture is unsecured and subordinate to secured debt. A debenture is unsecured in that there are no liens or pledges on specific assets.

Delist
The removal of a security's listing on a stock exchange. This is done when the security no longer exists, the company is bankrupt, the public distribution of the security has dropped to an unacceptably low level, or the company has failed to comply with the terms of its listing agreement.

Exchange-Traded Fund (ETF)
A special type of financial trust that allows an investor to buy an entire basket of stocks through a single security, which tracks and matches the returns of a stock market index. ETFs are considered to be a special type of index mutual fund, but they are listed on an exchange and trade like a stock. Also known as an index participation unit (IPU).

Inflation
An overall increase in prices for goods and services, usually measured by the percentage change in the Consumer Price Index.

Initial Public Offering (IPO)
A company's first issue of shares to the general public.

Insider Trading
There are two types of insider trading. The first type occurs when insiders trade in the stock of their company. Insiders must report these transactions to the appropriate securities commissions. The other type of insider trading is when anyone trades securities based on material information that is not public knowledge. This type of insider trading is illegal.

Market Maker

A trader employed by a securities firm who is required to maintain reasonable liquidity in securities markets by making firm bids or offers for one or more designated securities up to a specified minimum guaranteed fill. Market makers for the stock of issuers listed on Toronto Stock Exchange are referred to as Registered Traders.

Mutual Fund
A fund managed by an expert who invests in stocks, bonds, options, money market instruments or other securities. Mutual fund units can be purchased through brokers or, in some cases, directly from the mutual fund company.

New Issuer Listing - IPO (Initial Public Offering)
An IPO (initial public offering) is an issuer's first offering of its securities made to the public in accordance with a prospectus. The offering is often made in conjunction with an issuer's initial application for listing on an exchange.

Over-The-Counter (OTC) Market
The market maintained by securities dealers for issues not listed on a stock exchange. Almost all bonds and debentures, as well as some stocks, are traded over-the-counter in Canada. An OTC market is also known as an unlisted market.

Preferred Share
A class of share capital that entitles the owner to a fixed dividend ahead of the issuer's common shares and to a stated dollar value per share in the event of liquidation. It usually does not have voting rights, unless a stated number of dividends have been omitted.

Prospectus
A legal document describing securities being offered for sale to the public. It must be prepared in accordance with provincial securities commission regulations. Prospectus documents usually disclose pertinent information concerning the company's operations, securities, management and purpose of the offering.

Put Option
A put option is a contract that gives the holder the right to sell a specified number of shares at a stated price within a fixed time period. Put options are purchased by those who think a stock may decline in price.

Securities
Transferable certificates of ownership of investment products such as notes, bonds, stocks, futures contracts and options.

Settlement
The process that follows a transaction when the seller delivers the security to the buyer and the buyer pays the seller for the security.

Share Certificate
A paper certificate that represents the number of shares an investor owns.

Short Selling
The selling of a security that the seller does not own (naked or uncovered short) or has borrowed (covered short). Short selling is a trading strategy. Short sellers assume the risk that they will be able to buy the stock at a lower price, cover the outstanding short, and realize a profit from the difference.

Underwriting
The purchase for resale of a new issue of securities by an investment dealer or group of dealers who are also known as underwriters. The formal agreements for these transactions are called underwriting agreements.

Warrant
A security giving the holder the right to purchase securities at a stipulated price within a specified time limit. Exercise of the warrant is solely at the discretion of the holder. Warrants are not exercisable after the expiry date. A warrant is often issued in conjunction with another security as part of a financing. A warrant may be traded as a listed security or it may be held privately.

Source:tmxmoney

Holding & Subsidiary Accounts

noreply@blogger.com (Anonymous) — Sun, 15 Jan 2012 15:48:00 +0000

Holding and Subsdiary Accounts - Click above to read more.

Section 15HA Non Compliance of Fraudulent and Unfair Trade Practices

noreply@blogger.com (Anonymous) — Sun, 15 Jan 2012 15:46:00 +0000

SAT Decision in the case of M/S Alka Securities - Section 15HA which is the non compliance of FUTP - SEBI imposed a penalty of Rs 10 Lac. The detailed order can be read here

Capital Vs Revenue Expenditure - In the Case of Airport Authorities India

noreply@blogger.com (Anonymous) — Sun, 15 Jan 2012 15:43:00 +0000

Section 37(1) of Income Tax Act defines Capital Expenditure Vs Revenue Expenditure through a

Case Law - Re: In the Airport Authority of India. Read More

noreply@blogger.com (CS Futurz) — Sun, 15 Jan 2012 15:03:00 +0000

Memorandum of Understanding

A document that conveys joint treaty on any subject between two or more parties. Memorandum of understanding is generally acknowledged as obligatory, even if no lawful claim could be based on the rights and obligation laid down in them. To be legally effective, a memorandum of understanding must:-

(1) Identify the parties in contract,

(2) Explain the subject matter of the agreement and its objectives.

(3) Summarize the essential terms of the agreement.

(4) Must be signed by the contracting parties. Also known as Letter of Intent.

S.72 Set off and Carry Forward of Losses - In the Case of Nandi Steels

noreply@blogger.com (CS Futurz) — Fri, 13 Jan 2012 05:15:00 +0000

Section 72: Set Off and Carry Forward of Losses Explained

Gains on Fixed Assets Vs. Set Off of Business Loss u/s 72

M/S. Nandi Steels Limited, Bangalore

Asstt. Commissioner of Income Tax, Bangalore

Section 72: Gains arising from “business assets” not eligible for set-off against brought forward business loss

The assessee sold land & building used for business purposes. Though the gain was offered as capital gains, the assessee claimed, relying on Cocanada Radhaswami Bank Ltd 57 ITR 306 (SC) and other judgements, that as the assets were “business assets”, the gains arising from such business assets were eligible for set-off against the brought forward business loss u/s 72.

The issue was referred to a Special Bench. HELD by the Special Bench against the assessee:

S. 72 (1) defines that the business loss brought forward shall be set-off against the “profits & gains of any business or profession” of the subsequent year. The expression “profits & gains of business” means income earned from the business carried on by the assessee and not the income connected to the business or profession carried/practiced by the assessee. The land & building were fixed & capital assets used or the business purposes. Therein the gains arising are assessable as capital gains and were not eligible for set-off against the brought forward business loss u/s 72. For detailed Judgement - click here

(Cases Followed: Express Newspapers 53 ITR 250 (SC); Cocanada Radhaswami Bank 55 ITR 17(SC) distinguished; Steelcon Industries reversed)

New Year Tips by Warren Buffett

noreply@blogger.com (CS Futurz) — Fri, 13 Jan 2012 03:10:00 +0000

Warren Buffett's New Year's advice.

Holding & Subsidiary Accounts

noreply@blogger.com (Anonymous) — Fri, 11 Nov 2011 07:05:00 +0000

Notes for Holding and Subsidiary Accounts for CS Executive.

Click on the Name above to see the document.

Drawing Conclusions from Your Final Balance Sheet

noreply@blogger.com (CS Futurz) — Fri, 16 Sep 2011 13:42:00 +0000

You can analyze balance sheet numbers through a series of ratio tests to draw conclusions, check your cash status, and track your debt. Because these are the types of tests financial institutions and potential investors use to determine whether or not to loan money to or invest in your company, it’s a good idea to run these tests yourself before seeking loans or investors.

Testing your cash

When you approach a bank or other financial institution for a loan, you can expect the lender to use one of two ratios to test your cash flow: the current ratio and the acid test ratio (also known as the quick ratio).

Current ratio

This ratio compares your current assets to your current liabilities. It provides a quick glimpse of your company’s ability to pay its bills.

The formula for calculating the current ratio is:

Current assets ÷ Current liabilities = Current ratio

The following is an example of a current ratio calculation:

$5,200 ÷ $2,200 = 2.36 (current ratio)

Lenders usually look for current ratios of 1.2 to 2, so any financial institution would consider a current ratio of 2.36 a good sign. A current ratio under 1 is considered a danger sign because it indicates the company doesn’t have enough cash to pay its current bills.

A current ratio over 2.0 may indicate that your company isn’t investing its assets well and may be able to make better use of its current assets. For example, if your company is holding a lot of cash, you may want to invest that money in some long-term assets, such as additional equipment, that you need to help grow the business.

Acid test (quick) ratio

The acid test ratio only uses the financial figures in your company’s Cash account, Accounts Receivable, and Marketable Securities. Although it’s similar to the current ratio in that it examines current assets and liabilities, the acid test ratio is a stricter test of a company’s ability to pay bills.

The assets part of this calculation doesn’t take inventory into account because it can’t always be converted to cash as quickly as other current assets and because, in a slow market, selling your inventory may take a while.

Many lenders prefer the acid test ratio when determining whether or not to give you a loan because of its strictness.

Calculating the acid test ratio is a two-step process:

1. Determine your quick assets.

Cash + Accounts Receivable + Marketable Securities = Quick assets

2. Calculate your quick ratio.

Quick assets ÷ Current liabilities = Quick ratio

The following is an example of an acid test ratio calculation:

$2,000 + $1,000 + $1,000 = $4,000 (quick assets)

$4,000 ÷ $2,200 = 1.8 (acid test ratio)

Lenders consider a company with an acid test ratio around 1 to be in good condition. An acid test ratio less than 1 indicates that the company may have to sell some of its marketable securities or take on additional debt until it’s able to sell more of its inventory.

Assessing your debt

Before you even consider whether or not to take on additional debt, you should always check out your debt condition. One common ratio that you can use to assess your company’s debt position is the debt to equity ratio. This ratio compares what your business owes to what your business owns.

Calculating your debt to equity ratio is a two-step process:

1. Calculate your total debt.

Current liabilities + Long-term liabilities = Total debt

2. Calculate your debt to equity ratio.

Total debt ÷ Equity = Debt to equity ratio

The following is an example of a debt to equity ratio calculation:

$2,200 + $29,150 = $31,350 (total debt)

$31,350 ÷ $9,500 = 3.3 (debt to equity ratio)

Lenders like to see a debt to equity ratio close to 1 because it indicates that the amount of debt is equal to the amount of equity. With a debt to equity ratio of 3.3, most banks probably would not loan the company in this example any more money until either its debt levels were lowered or the owners put more money into the company