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Cash Flow Statement (Contd) Illustration 01 In the following example we have provided you with a Balance Sheet with comparative figures and some additional information. All figures including those given in additional information are in thousands of Rupees. Cash flow statement- Explanation We have started with profit before tax that was provided in the additional [...]

Cash Flow Statement IAS-7 Cash Flow Statement Cash Flow Statement: 1. Cash flow statement shows the movement in cash resources of the business. 2. This statement shows the sources from which business generated cash and its application. • For any business it is important to ensure that: 1. Sufficient profits are made to compensate owners [...]

Prospectus & Non-Current Liabilities – 4th Schedule Prospectus – Section 2 (1) 29 • A prospectus is defined as: “Prospectus” means any document described or issued as prospectus, and includes any notice, circular, advertisement, or other communication, inviting offers from the public for the subscription or purchase of any shares in, or debentures of, a [...]

IASB’s Framework (Contd) Elements of Financial Statements The transactions and other events are grouped together in broad classes and in this way their financial effects are shown in the financial statements. These broad classes are the elements of financial statements. The framework lays out these elements as follows. • Measurement of financial position in the [...]

Replacement Models Lectures WHY REPLACEMENT? If any equipment or machine is used for a long period of time, due to wear and tear, the item tends to worsen. A remedial action to bring the item or equipment to the original level is desired. Then the need for replacement becomes necessary. This need may be caused [...]

HISTORICAL COMPARATIVE RESEARCH History has several meanings; one of which could refer to ‘the events of the past.’ Historiography is the method of doing historical research or of gathering and analyzing historical evidence. Historical-comparative research is a collection of techniques and approaches. It is a distinct type of research that puts historical time and /or [...]

FIVE CORE PRINCIPLES OF MONEY AND BANKING 1. Time has Value Time affects the value of financial instruments. Interest payments exist because of time properties of financial instruments Example At 6% interest rate, 4 year loan of $10,000 for a car Requires 48 monthly installments of $235 each Total repayment = $235 x 48 = [...]

HISTORICAL COMPARATIVE RESEARCH History has several meanings; one of which could refer to ‘the events of the past.’ Historiography is the method of doing historical research or of gathering and analyzing historical evidence. Historical-comparative research is a collection of techniques and approaches. It is a distinct type of research that puts historical time and /or [...]

Trade-Off Triangle Good project management deals with three factors: time, cost and performance. Projects are successful if they are completed on time, within budget, and to performance requirements. In order to bring the many components of a large project into control there is a large toolkit of techniques, methodologies, and tools. These techniques provide the [...]

INVESTMENT THEORIES Investment is the most volatile component of GDP. When expenditure on goods and services fall during a recession, much of the decline is usually due to a drop in investment spending. Economists study investment to better understand the fluctuations in the economy’s output of goods and services. The models of GDP, such as [...]

THE MUNDELL-FLEMING MODEL The Mundell-Fleming model portrays the relationship between the nominal exchange rate and the economy output. It is an extension of IS-LM model. Key assumption of this model is the small open economy with perfect capital mobility. r = r* (given) IS* CURVE: GOODS MARKET EQUILIBRIUM Goods market equilibrium-the IS* curve: Y = [...]

ECONOMIC GROWTH (CONTINUED) Previously, in the Solow model, • The production technology was held constant • Income per capita was constant in the steady state. Neither point is true in the real world TECHNOLOGICAL PROGRESS IN THE SOLOW MODEL A new variable: E = labor efficiency. Assume: Technological progress is labor-augmenting: it increases labor efficiency [...]

ECONOMIC GROWTH PER CAPITA INCOME OF SELECTED COUNTRIES, 2004 (IN US $) Norway 43,350 Saudi Arabia 8,530 Switzerland 39,880 Mexico 6,230 United States 37,610 Malaysia 3,780 Japan 34,510 Brazil 2,710 United Kingdom 28,350 Russia 2,610 Belgium 25,820 Egypt 1,390 Germany 25,250 China 1,100 France 24,770 Indonesia 810 Australia 21,650 India 530 Italy 21,560 Pakistan 470 [...]

MONEY AND INFLATION (CONTINUED) A COMMON MISPERCEPTION A common misperception about inflation is that inflation reduces real wages. This is true only in the short run, when nominal wages are fixed by contracts. In the long run, the real wage is determined by labor supply and the marginal product of labor, not the price level [...]

CLOSED ECONOMY, MARKET CLEARING MODEL (CONTINUED) DIMINISHING MARGINAL RETURNS As a factor input is increased, its marginal product falls (other things equal). Intuition is that increase L while holding K fixed. Fewer machines per worker Lower productivity MPL AND THE DEMAND FOR LABOR Units of output Each firm hires labor up to the point where [...]

CLOSED ECONOMY, MARKET CLEARING MODEL KEY QUESTIONS TO BE ADDRESSED What determines the economy’s total output/income? How the prices of the factors of production are determined? How total income is distributed? What determines the demand for goods and services? OUTLINE OF MODEL (A closed economy, market-clearing model) SUPPLY SIDE includes factor markets (supply, demand, price) [...]

NATIONAL INCOME ACCOUNTING (CONTINUED) COMPUTATION OF NOMINAL AND REAL GDP Compute nominal and real GDP in each year using 2001 as the base year. Years 2001 2002 2003 Price (Rs) Quantity Price (Rs) Quantity Price (Rs) Quantity Good A 30 900 31 1,000 36 1,050 Good B 100 192 102 200 100 205 Nominal GDP [...]

THEORY OF COSTS PRODUCTION WITH TWO OUTPUTS–ECONOMIES OF SCOPE Economies of scope exist when the joint output of a single firm is greater than the output that could be achieved by two different firms each producing a single output. Examples: Chicken farm–poultry and eggs Automobile company–cars and trucks University–Teaching and research What are the advantages [...]

MARKETS AND PRICES (Continued) ECONOMICS; ANOTHER PERSPECTIVE Economics is the study of the choices made by people who are faced with scarcity. Scarcity is a situation in which resources are limited but can be used in different ways; so one good or service must be sacrificed for another. SOCIETY’S CHOICES The decisions of producers, consumers [...]

PROBLEMS OF LOWER INCOME COUNTRIES (LICs) There are huge income and wealth disparities in the world we live in. Roughly one-fourth of the world’s population accounts for on three-fourths of the world’s resources and consumption. The per capita income in the world’s poorest countries is $330 per year whereas in the richer countries, is $24,000 [...]

INTERNATIONAL TRADE AND FINANCE INTERNATIONAL TRADE: By international trade, we mean the exchange of goods and services between different countries. For any individual country, trade is important for several reasons: the trade balance drives the BOPs and deeply influences foreign exchange reserves and the exchange rate; trade helps determine the overall production and consumption possibilities [...]

THE FOUR BIG MACROECONOMIC ISSUES AND THEIR INTER-RELATIONSHIPS (CONTINUED) EXOGENOUS GROWTH THEORY The Exogenous growth model, also known as the Neo-classical growth model or Solow growth model is a term used to sum up the contributions of various authors to a model of long-run economic growth within the framework of neoclassical economics. The most important [...]

THE FOUR BIG MACROECONOMIC ISSUES AND THEIR INTER-RELATIONSHIPS (CONTINUED) THE CONCEPT OF ECONOMIC GROWTH AND GROWTH RATE Economic growth is increase in an economy’s level of production, output or income. We can talk about production or output in two broad definitional contexts. One, we can compare real GDP with some other measure of welfare (for [...]

MACROECONOMIC DATA & NATIONAL INCOME ACCOUNTING (CONTINUED) GDP at factor and market prices: Factor price is the price at which firm sells its final output to the consumers. While market price includes factor price plus the indirect taxes imposed by the government. GDP at market price is higher than the GDP at factor price. GDP [...]

MACROECONOMIC DATA & NATIONAL INCOME ACCOUNTING THE USE OF MACROECONOMIC DATA As said: “there are lies, damned lies and statistics.” Likewise, macroeconomic statistics are also susceptible of both manipulation and misinterpretation. In order to ensure that you understand what a particular number or data representation really means, the following need to be considered: i. Data [...]

MARKET STRUCTURES (CONTINUED) OLIGOPOLY Similar to monopoly in the sense that there are a small number of firms (about 2-20) in the market and, as such, barriers to entry exist. It is similar to perfect competition in the sense that firms compete with each other, often feverishly, which may result in prices very similar to [...]

PRODUCER BEHAVIOR: PRODUCTION SIDE ANALYSIS (CONTINUED) THERE ARE TWO THEORIES OF PRODUCTION 1.  Short run productivity theory or the law of diminishing marginal returns. This theory states that as we increase the amount of a variable factor with the fixed factor, initially the output will increase but afterwards there will come a point when each [...]

PRODUCER BEHAVIOR: PRODUCTION SIDE ANALYSIS FIRM A firm is any organized form of production, in which someone or collections of individuals are involved in the production of goods and services. An organization that combines resources for the production and supply of goods and services. The firm is used by entrepreneurs to bring together otherwise unproductive [...]

INTRODUCTION TO ECONOMICS (CONTINUED) COST & BENEFIT ANALYSIS Rational choice is the choice based on pure reason and without succumbing to one’s emotions or whims. Consumers can decide about the rational decision by using cost and benefit analysis. Rational choice is a general theory of human behavior that assumes individuals try to make the most [...]

Input 1. Objectives The objective of this lecture is to provide answers to the following questions: What is a keyboard? What are different keys on keyboard? What is their functionality? 2. Keyboard It is an input device to give computer some input. It is like pen in writing. It is called keyboard because it is [...]