Definition: Liquidity Ratios are calculated to determine the capacity of a firm to pay off its short-term obligations when they become due. In other words, firm’s cash balance or the readiness to convert its asset into cash, to pay off its current debt is called as liquidity and the ratios that compute it are called as liquidity ratios. Following are the Important liquidity … [Read more...] about Liquidity Ratios
Dividend Decision
Definition: The Dividend Decision is one of the crucial decisions made by the finance manager relating to the payouts to the shareholders. The payout is the proportion of Earning Per Share given to the shareholders in the form of dividends. The companies can pay either dividend to the shareholders or retain the earnings within the firm. The amount to be disbursed depends on … [Read more...] about Dividend Decision
Financing Decision
Definition: The Financing Decision is yet another crucial decision made by the financial manager relating to the financing-mix of an organization. It is concerned with the borrowing and allocation of funds required for the investment decisions. The financing decision involves two sources from where the funds can be raised: using a company’s own money, such as share capital, … [Read more...] about Financing Decision
CAMELS Rating
Definition: CAMELS Rating is the rating system wherein the bank regulators or examiners (generally the officers trained by RBI), evaluates an overall performance of the banks and determine their strengths and weaknesses. CAMELS Rating is based on the financial statements of the banks, Viz. Profit and loss account, balance sheet and on-site examination by the bank regulators. … [Read more...] about CAMELS Rating
Sunk Cost
Definition: A Sunk Cost is the cost already incurred by the firm and cannot be recovered or refunded. The cost which was incurred in the past and is now permanently lost is called as a Sunk Cost. Suppose, a firm has spent Rs 50,000 in the construction of a building, but due to some government law the construction has to be stopped, then the amount spent till date is a sunk … [Read more...] about Sunk Cost
Capitalized Cost
Definition: A Capitalized Cost is the cost incurred in the purchase and financing of fixed assets. It includes not only the price paid for an asset but also the expenses incurred on its installation and transportation. A capitalized cost is added to the fixed assets and is shown on the assets side of the balance sheet. These costs are not deducted from revenues during the … [Read more...] about Capitalized Cost
Lockbox Banking
Definition: The Lockbox Banking is the service offered by the commercial banks to the companies wherein, the payment made by the customers is directed to the special post office box rather than to the company. Under the lockbox banking system, the company opens up a lockbox account with a bank, which is generally at the central location, easily accessible to the bank. The … [Read more...] about Lockbox Banking
Vote on Account
Definition: The Vote on Account is the special provision given to the government to obtain the vote of Parliament to withdraw money when the budget for the new financial year is not released or the elections are underway, and the caretaker government is in place. Simply, the approval given by the parliament to withdraw a certain sum of money from the consolidated funds of … [Read more...] about Vote on Account
Guerrilla Warfare
Definition: A Guerrilla warfare is the marketing strategy adopted by the challenger firm intended to launch the intermittent attacks with an intention to harass or demoralize the competitor. This strategy is more a preparation for the war than an actual war. A guerrilla warfare can be expensive, but however, is less than the frontal, flank and encirclement attack. … [Read more...] about Guerrilla Warfare
Bypass Attack
Definition: The Bypass Attack is the most indirect marketing strategy adopted by the challenging firm with a view to surpassing the competitor by attacking its easier markets. The purpose of this strategy is to broaden the firm’s resources by capturing the market share of the competing firm. The firm can adopt any of the three approaches before launching the bypass attack; … [Read more...] about Bypass Attack