What is Net Present Value (NPV)?

The net present value is a mathematical formula that is being used by businesses for capital budgeting. In fact, it is considered as the most effective method to analyzing the profitability of a project or investment.

The net present value analysis is highly sensitive to future cash inflows that a project or investment will yield. In addition, this formula can be calculated using spreadsheets and tables.

The Net Present Value (NPV) compares the value of your money today to the value of the same amount of money in the future, taking the returns and inflation into account. Continue reading

How to Manage Your Account Receivables Profitably?

Account receivables (AR) are defined as amounts of money that consumer owe a business or company for products and services obtained through credit.

These are considered as sales of the business or company that is not yet paid in cash. Despite being considered as company’s current asset, it is still hard to consider products or services as completely purchased or sold unless cash payments are made.

In case your business or company makes sales on the basis of credit, it is essential to maintain and implement a sound account receivable management. Failure to do so can pose negative effects on the company’s cash flow. Continue reading

Key Strategies to Enhance ITO – Inventory Turn Over

Clearance Sales, Mid-Night Sales and all other discounted sales at the malls and stores are always been the much awaited event of shoppers.

It could be for the reason that shoppers will be able to get commodities in a reasonable price or discounted prices. The rush to go to the malls is there, and even the air at the malls will seem festive every time there are sales being made.

Buying public are always being attractive to mall’s sales for Clearance Sales means that you can get signature clothing and bags on discounted prices. Continue reading

What is LBO – Leverage Buy Out ?

Business always have its twists and turns and in every miscalculated decision of the company can result to financial losses and obtaining debts are oftentimes being resorted to in order to improve the financial status of the company with the hopes that it will be able to get back to the business world.

If a company will not resort to debt incurring activity, it will resort to merger and acquisition.

Usually, in merger and acquisition, a company can have a Leverage Buy Out a process of acquisition of a company of certain asset of which the purchase price is a combination of debt and equity. The cash flow of the target is being used to secure for the repayment. Continue reading

Factors That Determine Interest Rate

In a financial institution, there are many important aspects to consider. One of these many aspects is the interest rate. To obtain financial stability, a financial institution needs a steady flow of money which they get from their interest rate.

Another example of the factors that determine the interest rates is the evaluation of the lender’s own team of management specialists. Another factor that determines interest rates is the credits of the company.

Also, one of the factors that determine interest rate is the strength of the borrower in terms of his credits. Continue reading

Financial Structuring

Everything is about money and financial resources, banks had been playing a vital role in the materialistic world. In fact, you cannot do away with banks especially if you are engaging yourself to business transactions. It is an institution that cannot be ignored when it comes to financial resources and flow of money. Bank is considered that is in between whenever there are financial transactions that are being made.

In the banking industry, it has the capacity to mediate individual types of financial transactions. It has developed some financial jargons such as Financial Structuring.

This is a financial transaction wherein a sizeable or large financial investment will be broken down into smaller investment in order to avoid the government’s keen eyes scrutiny for laundering. Continue reading