debt

1. A debt ratio used to measure a company's financial leverage, calculated by dividing a company’s total liabilities by its stockholders' equity. The D/E ratio indicates how much debt a company is using to finance its assets relative to the amount of value represented in shareholders’ equity.

The formula for calculating D/E ratios can be represented in the following way:

The result may often be expressed as a number or as a percentage.

This form of D/E may often be referred to as risk or gearing.

2. This ratio can be applied to personal financial statements as well as corporate ones, in which case it is also known as the Personal Debt/Equity Ratio. Here, “equity” refers not to the value of stakeholders’ shares but rather to the difference between the total value of a corporation or individual’s assets and that corporation or individual’s liabilities. The formula for this form of the D/E ratio, then, can be represented as:

D/E = Total Liabilities / (Total Assets - Total Liabilities)

INVESTOPEDIA EXPLAINS'DEBT/EQUITY RATIO'
1. Given that the debt/equity ratio measures a company’s debt relative to the total value of its stock, it is most often used to gauge the extent to which a company is taking on debts as a means of leveraging (attempting to increase its value by using borrowed money to fund various projects). A high debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. Aggressive leveraging practices are often associated with high levels of risk. This may result in volatile earnings as a result of the additional interest expense.

For example, suppose a company has a total shareholder value of $180,000 and has $620,000 in liabilities. Its debt/equity ratio is then 3.4444 ($620,000 / $180,000), or 344.44%, indicating that the company has been heavily taking on debt and thus has high risk. Conversely, if it has a shareholder value of $620,000 and $180,000 in liabilities, the company’s D/E ratio is 0.2903 ($180,000 / $620,000), or 29.03%, indicating that the company has taken on relatively little debt and thus has low risk.

If a lot of debt is used to finance increased operations (high debt to equity), the company could potentially generate more earnings than it would have without this outside financing. If this were to increase earnings by a greater amount than the debt cost (interest), then the shareholders benefit as more earnings are being spread among the same amount of shareholders. However, if the cost of this debt financing ends up outweighing the returns that the company generates on the debt through investment and business activities, stakeholders’ share values may take a hit. If the cost of debt becomes too much for the company to handle, it can even lead to bankruptcy, which would leave shareholders with nothing.

2. The personal debt/equity ratio is often used in financing, as when an individual or corporation is applying for a loan. This form of D/E essentially measures the dollar amount of debt an individual or corporation has for each dollar of equity they have. D/E is very important to a lender when considering a candidate for a loan, as it can greatly contribute to the lender’s confidence (or lack thereof) in the candidate’s financial stability. A candidate with a high personal debt/equity ratio has a high amount of debt relative to their available equity, and will not likely instill much confidence in the lender in the candidate’s ability to repay the loan. On the other hand, a candidate with a low personal debt/equity ratio has relatively low debt, and thus poses much less risk to the lender should the lender agree to provide the loan, as the candidate would appear to have a reasonable ability to repay the loan.

LIMITATIONS OF 'DEBT/EQUITY RATIO'
1. Like with most ratios, when using the debt/equity ratio it is very important to consider the industry in which the company operates. Because different industries rely on different amounts of capital to operate and use that capital in different ways, a relatively high D/E ratio may be common in one industry while a relatively low D/E may be common in another. For example, capital-intensive industries such as auto manufacturing tend to have a debt/equity ratio above 2, while companies like personal computer manufacturers usually are not particularly capital intensive and may often have a debt/equity ratio of under 0.5. As such, D/E ratios should only be used to compare companies when those companies operate within the same industry.

Another important point to consider when assessing D/E ratios is that the “Total Liabilities” portion of the formula may often be determined in a variety of ways by different companies, some of which are not actually the sum of all of the company’s liabilities. In some cases, companies will only incorporate debts (like loans and debt securities) into the liabilities portion of the formula, while omitting other kinds of liabilities (unearned revenue, etc.). In other cases, companies may calculate D/E in an even more specific way, including only long-term debts and excluding short-term debts and other liabilities. Yet, “long-term debt” here is not necessarily a term with a consistent meaning. It may include all long-term debts, but it may also exclude long-term debts nearing maturity, which are then categorized as “short-term” debts. Because of these differentiations, when considering a company’s D/E ratio one should try to determine how the ratio was calculated and should be sure to consider other ratios and performance metrics as well.


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Big Anal Finance

Estate planning involves planning for the disposition of one's assets after death. Typiccally, there is a tax due to the state or federal government at one's death. Avoiding these taxes means that more of one's assets will be distributed to one's heirs. One can leave one's assets to family, friends or charitable groups.

Corporate finance[edit]
Main article: Cor

Corporate finance deals with the sources of funding and the capital structure of corporations and the actions that managers take to increase the value of the firm to the shareholders, as well as the tools and analysis used to allocate financial resources. Although it is in principle different from managerial finance which studies the financial management of all firms, rather than corporations alone, the main concepts in the study of corporate finance are applicable to the financial problems of all kinds of firms. Corporate finance generally involves balancing risk and profitability, while attempting to maximize an entity's wealth and the value of its stock, and generically entails three primary areas of capital resource allocation. In the first, "capital budgeting", management must choose which "projects" (if any) to undertake. The discipline of capital budgeting may employ standard business valuation techniques or even extend to real options valuation; see Financial modeling. The second, "sources of capital" relates to how these investments are to be funded: investment capital can be provided through different sources, such as by shareholders, in the form of equity (privately or via an initial public offering), creditors, often in the form of bonds, and the firm's operations (cash flow). Short-term funding or working capital is mostly provided by banks extending a line of credit. The balance between these elements forms the company's capital structure. The third, "the dividend policy", requires management to determine whether any unappropriated profit (excess cash) is to be retained for future investment / operational requirements, or instead to be distributed to shareholders, and if so in what form. Short term financial management is often termed "working capital management", and relates to cash-, inventory- and debtors management.

Corporate finance also includes within its scope business valuation, stock investing, or investment management. An investment is an acquisition of an asset in the hope that it will maintain or increase its value over time that will in hope give back a higher rate of return when it comes to disbursing dividends. In investment management – in choosing a portfolio – one has to use financial analysis to determine what, how much and when to invest. To do this, a company must:

Identify relevant objectives and constraints: institution or individual goals, time horizon, risk aversion and tax considerations;
Identify the appropriate strategy: active versus passive hedging strategy
Measure the portfolio performance
Financial management overlaps with the financial function of the Accounting profession. However, financial accounting is the reporting of historical financial information, while financial management is concerned with the allocation of capital resources to increase a firm's value to the shareholders and increase their rate of return on the investments.

Financial risk management, an element of corporate finance, is the practice of creating and protecting economic value in a firm by using financial instruments to manage exposure to risk, particularly credit risk and market risk. (Other risk types include Foreign exchange, Shape, Volatility, Sector, liquidity, Inflation risks, etc.) It focuses on when and how to hedge using financial instruments; in this sense it overlaps with financial engineering. Similar to general risk management, financial risk management requires identifying its sources, measuring it (see: Risk measure: Well known risk measures), and formulating plans to address these, and can be qualitative and quantitative. In the banking sector worldwide, the Basel Accords are generally adopted by internationally active banks for tracking, reporting and exposing operational, credit and market risks.

Financial services[edit]
Main article: Financial services
An entity whose income exceeds its expenditure can lend or invest the excess income to help that excess income produce more income in the future. Though on the other hand, an entity whose income is less than its expenditure can raise capital by borrowing or selling equity claims, decreasing its expenses, or increasing its income. The lender can find a borrower—a financial intermediary such as a bank—or buy notes or bonds (corporate bonds, government bonds, or mutual bonds) in the bond market. The lender receives interest, the borrower pays a higher interest than the lender receives, and the financial intermediary earns the difference for arranging the loan.

A bank aggregates the activities of many borrowers and lenders. A bank accepts deposits from lenders, on which it pays interest. The bank then lends these deposits to borrowers. Banks allow borrowers and lenders, of different sizes, to coordinate their activity.

Finance is used by individuals (personal finance), by governments (public finance), by businesses (corporate finance) and by a wide variety of other organizations such as including schools and non-profit organizations. In general, the goals of each of the above activities are achieved through the use of appropriate financial instruments and methodologies, with consideration to their institutional setting.

Finance is one of the most important aspects of business management and includes analysis related to the use and acquisition of funds for the enterprise.

In corporate finance, a company's capital structure is the total mix of financing methods it uses to raise funds. One method is debt financing, which includes bank loans and bond sales. Another method is equity financing - the sale of stock by a company to investors, the original shareholders (they own a portion of the business) of a share. Ownership of a share gives the shareholder certain contractual rights and powers, which typically include the right to receive declared dividends and to vote the proxy on important matters (e.g., board elections). The owners of both bonds (either government bonds or corporate bonds) and stock (whether its preferred stock or common stock), may be institutional investors - financial institutions such as investment banks and pension funds  or private individuals, called private investors or retail investors.

Public finance[edit]
Main article: Public finance
Public finance describes finance as related to sovereign states and sub-national entities (states/provinces, counties, municipalities, etc.) and related public entities (e.g. school districts) or agencies. It usually encompasses a long-term, strategic perspective regarding investment decisions that affect public entities. These long-term, strategic periods usually encompass five or more years. Public finance is primarily concerned with:

Identification of required expenditure of a public sector entity
Source(s) of that entity's revenue
The budgeting process
Debt issuance (municipal bonds) for public works projects
Central banks, such as the Federal Reserve System banks in the United States and Bank of England in the United Kingdom, are strong players in public finance, acting as lenders of last resort as well as strong influences on monetary and credit conditions in the economy.

Capital[edit]

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The Fallacy of Euro-Area Discipline

Throughout the Greek crisis, policymakers have acted on the assumption that Greece’s best chance at sustainable growth is through the conditionality and discipline of an IMF-EU adjustment program. Already, the desire to stay in the eurozone and receive the promised rescue package of at least €86 billion has led to significant legislative measures, and the ESM and IMF programs under negotiation will be comprehensive in the scope of their structural reforms. In contrast, “Grexit” would be chaotic, and at least initially, make it difficult for any government to reach consensus on strong policies needed to restore durable growth. In that environment, the boost to growth from devaluation could prove short-lived.

A recent article in the European Central Bank’s May Economic Bulletin provides a note of caution with this conclusion. It finds that, looking across Europe since 1999, there has been little economic convergence inside the Eurozone. Instead, the bulk of the convergence that has taken place has occurred in the non-euro area countries of Eastern Europe (see chart). Within the Eurozone, easy capital flows prior to the crisis and an incomplete economic and financial union prevented shocks from being adequately buffered, and has limited growth in periphery countries. They conclude policies matter:

“An important lesson from the euro area sovereign debt crisis is that the need for sound economic policies does not end once a country has adopted the euro. There are no automatic mechanisms to ensure that the process of nominal convergence which occurs before adoption of the euro produces sustainable real convergence thereafter. The global financial crisis that started in 2008 has showed that some countries participating in Economic and Monetary Union (EMU) had severe weaknesses in their structural and institutional set-up. This has resulted in a large and protracted fall in real per capita income levels in these countries since 2008.”

This is not an argument for Grexit. The reverse also holds: the need for sound policies does not end once a country has left the Eurozone. Rather, their work reinforces the notion that it is ownership of the reform process by the government and its population, rather than the discipline that comes from euro area membership, that is the single most important factor behind a successful adjustment effort.

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Public Finance

This was originally posted by my colleague John Campbell on his Africa in Transition blog. John was formerly U.S. Ambassador to Nigeria and is currently the Ralph Bunche senior fellow at the Council on Foreign Relations.

The Natural Resource Governance Institute, a New York-based think tank and advocacy organization, has issued a must-read report, Inside NNPC Oil Sales: A Case for Reform in Nigeria. The authors are Aaron Sayne, Alexandra Gilles, and Christina Katsouris. The Nigeria National Petroleum Corporation (NNPC) sells about half of Nigeria’s oil, worth an estimated $41 billion in 2013.

The report concludes that NNPC’s approach to oil sales “suffers from high corruption risks and fails to maximize returns for the nation.” The report is detailed—it runs to seventy-one pages with additional annexes. It is thoroughly convincing and offers specific recommendations. It notes that “the bad practices that undermine NNPC oil sale performance all have political interference at their root.” The report also argues that the new presidential administration of Muhammadu Buhari has a unique opportunity to tackle the problems at NNPC, which have long been ignored.

At almost the same time the Natural Resource Governance Institute issued its report, President Buhari announced a wholesale sacking of the directors and senior management at NNPC. The president relieved the group managing director and the executive vice chairman, who had been appointed by former president Goodluck Jonathan. The following day, he fired the nine NNPC executive directors.

Buhari’s choice of group managing director is Emmanuel Kachikwe. He has been executive vice chairman and general counsel of Exxon-Mobil (Africa). Among other academic attainments, he holds masters and doctorate degrees from the Harvard Law School,according to Nigerian media. He has also worked for Texaco Nigeria. Nigerian media reports that he intends to reduce the number of group managing directors from nine to four.

As with his appointment of new military service chiefs, Buhari’s choices indicate that he focuses on expertise and experience, rather than on political connection. Inside NNPC argues that reform of NNPC does not require omnibus legislation, but rather a bold agenda with a short timeline. Buhari’s personnel choices fit that prescription.

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Build a Company

This article is about sex in sexually reproducing organisms. For the act, see Sexual intercourse. For other uses, see Sex (disambiguation).

The male gamete (sperm) fertilizing the female gamete (ovum)
Organisms of many species are specialized into male and female varieties, each known as a sex.[1] Sexual reproduction involves the combining and mixing of genetic traits: specialized cells known as gametes combine to form offspring that inherit traits from each parent. Gametes can be identical in form and function (known as isogamy), but in many cases an asymmetry has evolved such that two sex-specific types of gametes (heterogametes) exist (known as anisogamy).

 By definition, male gametes are small, motile, and optimized to transport their genetic information over a distance, while female gametes are large, non-motile and contain the nutrients necessary for the early development of the young organism. Among humans and other mammals, males typically carry XY chromosomes, whereas females typically carry XX chromosomes, which are a part of the XY sex-determination system.

The gametes produced by an organism determine its sex: males produce male gametes (spermatozoa, or sperm, in animals; pollen in plants) while females produce female gametes (ova, or egg cells); individual organisms which produce both male and female gametes are termed hermaphroditic. Frequently, physical differences are associated with the different sexes of an organism; these sexual dimorphisms can reflect the different reproductive pressures[clarification needed] the sexes experience.

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