The Ocean

28/08/2013

Presentation Skills:
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One can read a lot of Do’s and Don’ts about presentation skills. Undoubtedly it will provide for some guidance but it’s only a start. Even up till our MBA classes, many of us have a fear of presentations and start memorizing everything to prepare ourselves but that’s a step in digression and is nothing but a fallacy.

The best way to develop this is by practice and perseverance. Add to this, if someone can diligently oversee your progress, pin- point your shortcomings and can guide you improving them steadily, the entire process can get fast-tracked.

27/08/2013

Impact of choice of inventory accounting techniques over organizations’ profitability:
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In real world, the prices for most of products usually rise over a time-period because of inflationary pressures.

FIFO (First In First out) and LIFO (Last In First Out) have been two common inventory accounting techniques. Most organizations have inventories which they account for using either of FIFO or LIFO principles.

It’s important to appreciate that how choice of a particular inventory accounting technique impacts the balance sheet or P&L statement or a cash flow statement. For a quick understanding you may like surfing through the web.

A link for quick access is:
http://www.investopedia.com/articles/02/060502.asp

Believe us that not many will have an idea about this small but powerful concept.

We go over these methods of calculating this component of the balance sheet, and how the choice affects the bottom line.

26/08/2013

Excel is a software package which allows you to juggle with numbers utilizing its different functions and is probably used almost by every professional though with different levels of expertise.

Let’s consider a simple case:
A family has its yearly income and expenses as Rs 10 lacs and Rs 8 lacs respectively. They invest their savings at 7% rate of return (after taxes) every year and want to achieve a target savings of Rs 1 Cr. Assume that family’s income rises by 10% while their expenses too go up by 8% per year.

They are looking to analyze the following:
1) How much time it will take them to reach their target number.

2) What should be the rate of return if they want to achieve the target within say 15 years or enhance the target number to Rs. 1.5 Cr.

3) Since it’s uncertain that what will be rate of return per year or what will be the % rise in income every year. They want to analyze the different scenarios (say, in a tabular form) to assess the impact of varying rates over the time period required to achieve the target.
(Assume rate of return as 5%, 6%, 7%, 8%, 9% and 10% while rate of rise in income can be taken as 2%, 4%, 6%, 8%, 10% and 12%).

4) They want to assess that which factor impacts their saving target the most. Is it % rise in income, % rise in expenses, initial absolute saving levels or % rate of return.

Ok, there are multiple ways to complete the analysis in Excel but one of quickest and simplest technique is “What-If Analysis” (MS ExcelDataData tools What-If analysis). It further has different functionalities (Goal-seek, Scenario manager, Data tables)

One can find a lot of interesting stuff on this in digital world. Explore, play and feel great as not many of us know about the efficacy of this.

Moreover do appreciate the importance of ‘Compounding of Money’ in this sample case as it’s one of founding pillar of Financial planning and Analysis