The auditor’s responsibilities are to obtain sufficient appropriate audit evidence regarding, and conclude on, the appropriateness of management’s use of the going concern basis of accounting in the preparation of…
If the financial statements have been prepared using the going concern basis of accounting but, in the auditor’s judgment, management’s use of the going concern basis of accounting in the…
SA-570 deals with the auditor’s responsibilities in the audit of financial statements relating to going concern and the implications for the auditor’s report. Under the going concern basis of accounting,…
You need not cover all, but know at least 6-8 points from this As per SA 570, Events or Conditions That May Cast Significant Doubt on the Entity’s Ability to…
As per SA 570, under the going concern basis of accounting, the financial statements are prepared on the assumption that the entity is a going concern and will continue its…
Leveraged buyout (LBO) is the acquisition of another company using a significant amount of borrowed money to meet the cost of acquisition. The assets of the company being acquired are…
A reverse merger (also known as a reverse takeover or reverse IPO) is a way for private companies to go public, typically through a simpler, shorter, and less expensive process.…
Horizontal merger is when two companies which belong to the same industry merge – for example the Vodafone and Idea merger. They belong to the same industry i.e. telecommunications. A…
▪ Synergy ▪ Diversification ▪ Growth ▪ Eliminating competition
A merger occurs when two separate entities combine forces to create a new, joint organization. An acquisition refers to the takeover of one entity by another. A new company does…
A conglomerate merger is a merger between firms that are involved in totally unrelated business activities. There are two types of conglomerate mergers: pure and mixed. Pure conglomerate mergers involve…
▪ Competition Commission of India ▪ Reserve Bank of India ▪ Depositories ▪ Stock exchanges ▪ Registrar of Companies ▪ Regional Director ▪ Official liquidator ▪ NCLT – replaced High…
Advantages of mergers ▪ Economies of scale – bigger firms more efficient ▪ More profit enables more research and development. ▪ Struggling firms can benefit from new management. Disadvantages of…
Generally, a good budget is considered to be the one that ● has buy-in from all departments in the company (if possible) ● is realistic, yet strives for improvement ●…
Incremental budgeting adds an allowance for changes in revenues and costs for the upcoming year by taking the current year's budget/actual performance. Zero-based budgeting considers revenues and costs from scratch…
The following are the types of budget: Incremental budgeting. Activity-based budgeting Value proposition budgeting Zero-based budgeting Imposed budgeting Negotiated budgeting Participative budgeting
DEFINITION OF ASSERTION: It refers to the representations by management, explicit or otherwise, that are embodied in the financial statements, as used by the auditor to consider the different types…
Audit risk means the risk that the auditor might give an inappropriate audit opinion that Financial Statements are free from material misstatements when in fact the financial statements are materially…
RETURN ON INVESTMENT ROI compares the profits of an investment compared to the cost of the investment to determine gains. RETURN ON CAPITAL EMPLOYED ROCE looks at earnings before interest…
As per IND AS 115, the transaction price i.e. ₹1,20,000 will be divided in the proportion of relative standalone prices. ₹120,000 will be divided in proportion of 100,000: 50,000 Price…
This is one of the most commonly asked questions of all time, and irrespective of domain. It is as important as the "Tell me something about yourself question". You must…
The required rate of return is the minimum annual percentage earned by an investment that will induce individuals or companies to put money into a particular security or project. The…
Unsystematic risk, also known as "specific risk," "diversifiable risk" or "residual risk," is the type of uncertainty that comes with the company or industry you invest in. Unsystematic risk can…
In theory, the risk-free rate is the minimum return an investor expects for any investment because he or she will not accept additional risk unless the potential rate of return…
Unlevered beta compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta of a company without any debt. Unlevering a beta…
The formula for calculating beta is the covariance of the return of an asset with the return of the Market, divided by the variance of the return of the benchmark…
Beta: Beta represents the sensitivity of a stock with respect to market. Examples: Stock with 1.1 of beta means if market is up by 10% over a period, stock will…
Beta is a measure of the volatility, or systematic risk, of a security or a portfolio incomparison to the market. A security's beta is calculated by dividing the covariance the…
CAPM = Rf + B (Rm-Rf) Rf = Risk Free rate B = Beta Rm = Market risk The capital asset pricing model (CAPM) is a model that describes the…
The Cost of Equity is always higher than Cost of Debt. Note that we have used the word ALWAYS not USUALLY. This is because for any given company, equity will…
Private equity firms mostly buy mature companies that are already established. The companies may be deteriorating or are not making the profits they should be making, due to inefficiency. Private…
The main objectives of FP&A department include measuring historical performance, evaluating future business needs, highlighting issues and strengths in the business, clearly communicating the most relevant financial information to management,…
Financial modelling is a quantitative analysis which is used to decide or a forecast about a project generally in asset pricing model or corporate finance. Different hypothetical variables are used…
Working capital is the amount of a company's current assets minus the amount of its current liabilities. The adequacy of a company's working capital depends on the industry in which…
The most popular credit indicators are - For long term debt: Leverage ratios: Debt / Equity, Debt / Total Capital, Debt / EBITDA, Coverage ratios: Interest Coverage (very important), fixed…
An asset acquisition strategy is the purchase of a company by buying its assets instead of its stock. An asset acquisition strategy may be used for a takeover or buyout…