Deficit Financing and Inflation Explained Simply

Normally, any entity spends basis its earnings or how much money is in their bank. But, governments are an exception to this behavior. If government has to spend, they spend. They may not exactly care if they have the money to spend or not. If they don’t have the money, governments will simply print some …

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How VAT works?

VAT -- Value-Added Tax -- is the biggest tax reform in the last 50 years of independent India and will change forever the way traders do their business. But do you understand VAT? Don't you need advice on the new VAT laws and how they affect your business? No need to worry, help is at …

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Usage of debit note and credit note

Purchasing and Selling of goods are very common in day to day life, and in the same way, returns of goods are also a very usual thing nowadays. Debit Note and Credit Note are used while the return of goods is made between two businesses. Debit Note is issued by the purchaser, at the time of …

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Gross Profit vs. Operating Profit vs. Net Profit

At the core, profit is earnings minus expenses. However, we want to bifurcate and come up with various variations of profit to understand the business better. Therefore, at the first level, we have gross profit. Gross Profit is nothing but 'Sales - COGS' This shows how much profit are we earning without considering our expenses and …

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Decoding or understanding your restaurant bill

Not everyone is aware about Service Tax and VAT taxation details. So let's demystify these charges and understand the components that inflate your restaurant bills. Service charge Service charge is collected by the restaurant for rendering its service to you. It is not a tax and is not levied by the government but purely charged …

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Calculating Distributor or Dealer ROI

This is a post that is written on gyaanokplease.blogspot.com and the link to the original article is here. I just cannot emphasize enough about how well this article has been written and hence I've included even some of the comments. Thanks to gyaanokplease for this post. So probably the first thing that your distributor/dealer/stockist is …

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Working Capital Management and Profitability

Working Capital is the total of the amounts invested in current assets of the company. Net working capital results from the deduction of current liabilities from current assets; Working Capital Management consists of determining the volume and composition of sources and uses of working capital in such a way that would increase the wealth of …

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Strategic Channel Management

A sales channel is about where you're going to sell and how you're going to sell. In fact, it is about where you're consumer is willing to purchase your product, where the consumer expects the product to be available, what is the consumer decision making process regarding your category and product, and what is your …

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Link between SCM and Finance Management

In many companies, financial, information and physical flows are often not synchronised. Managers take ecisions from an operational or financial point of view and do not recognise the impact of supply chain management on financial performance or vice versa. Growth, profitability and capital utilisation are better optimised through information, financial and physical supply chains integration. …

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Price Sensitivity Model

  In the 1970s, Dutch economist Peter H. van Westendorp  introduced  a  simple method  to assess consumers’ price perception.  It is based on the premise that there is a range of prices bounded bya maximum that a consumer is prepared to spend and a minimum below which credibility is  indoubt.  The Price Sensitivity Meter (sometimes called …

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How and Why did paper money start?

People had some mutual requirements and started to exchange commodities. Two people exchange some quantities of wheat and rice as they wish to eat both. If they decide that the demand for rice is double that of wheat, they will come to an agreement that for every two Kgs of wheat, one Kg of rice …

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Inflation and its affect on the FMCG industry

The last few years were a golden period for the FMCG industry. The economy was growing at a faster rate, imput prices were low, and inflation was low. This year the food inflation is very high around 12%, and the raw material cost has increased upto 15 to 20 percent compared to last year. The …

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Basics of a Balance Sheet

Balance Sheet of a Company:  A balance sheet gives the picture of assets and liabilities of the company as on the last minute of 31st March YYYY. So, many times the balance sheet of a company appears better than what it is in real. Sometimes, companies will request all debtors to clear the outstandings just …

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Profit & Loss Statement of a Company

Profit and Loss Account Statement (P&L Statement): 1. Profit = Sales - Costs 2. So, you basically have two entities: Sales and Costs.    The other names used to refer to Sales are: Fees, Income, Sales, Revenue, and Turnover.    The other names used to refer to Costs are: Expenditure. 3. Classification of Costs or …

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What is a Limited Company ?

Limited Company : When we say XYZ Pvt Ltd or Public Ltd, what we mean by the word 'limited' in this context is the liability of the shareholders. It means, the liability of the shareholders, for the debts of the company, is limited to the extent of the share capital subscribed by them. Let us …

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