Finance terminology

6. Capital employed & Shareholders fund:

1. The total amount of capital used for the acquisition of profits. 2. The value of all the assets employed in a business. 3. Fixed assets plus working capital. 4. Total assets less current liabilities.By "employing capital" you are making an investment. The capital invested in a business by the shareholders, including retained profits.

7. Depreciation vs amortization:

Amortization usually refers to spreading an intangible asset's cost over that asset's useful life. Depreciation, on the other hand, refers to prorating a tangible asset's cost over that asset's life.

8. Capital gain/loss:

An increase in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price. The gain is not realized until the asset is sold. A capital gain may be short term (one year or less) or long term (more than one year) and must be claimed on income taxes. A capital loss is incurred when there is a decrease in the capital asset value compared to an asset's purchase price.

9. Memorandum of association and article of association:

Document that regulates a firm's external activities and must be drawn up on the formation of a registered or incorporated firm. Articles of association are simply the basic internal rules of operation for a business or non-profit organization that govern what tasks need to be done, what positions are required to perform the necessary functions, and how the processes in place are to be performed.

10. EPS:

Basic EPS is calculated by dividing profit or loss attributable to ordinary equity holders of the parent entity (the numerator) by the weighted average number of ordinary shares outstanding (the denominator) during the period.

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RAVI BHANDARI