Excise duty and duty free credit entitlement

Excise duty is levied on things produced within the country.Excise duty is a part of the p&L statement of most of the construction companies.

There is sometimes another term used known as the accruals under duty free credit entitlement
It is basically an entitlement to import capital goods duty free under the duty free credit entitlement certificate route.

"The only exception to the latest standpoint would be import of agriculture, dairy products, motorcars, sports utility vehicles and all-purpose vehicles. These products and items cannot be imported under the entitlement available in the DFCEC route.

Under the DFCEC route, service providers (other than hotels) are entitled to duty-free imports equivalent to 10 per cent of the average foreign exchange earned by them in preceding three licensing years. Hotels are entitled for duty-free imports equivalent to 5 per cent of the average foreign exchange earned by them in preceding three years.
This entitlement would be available only to those service providers, who have a total foreign exchange earning of over Rs 30 lakh in the preceding one/two/three licensing years."

Share Issue expenses

Share issue expenses are adjusted against the share premium account. and are not part of the expenses in profit and loss. So, according to the double entry book keeping one entry would go to the cash flow statement i.e. Decrease the asset size and the other would be part of the balance sheet i.e. Equity and would decrease it.

Therefore since Equity decreases and asset decreases the equation
A=E+L is balanced

Distributions

It is hard to compare distributions, so we use summary statistics to simplify the task and compare the data with each other.

4 ways to characterize the distribution
1) Central Tendency
1) Arithmetic Average
2) Median (Divides the sample of data in half)
3) Most frequently observed value
2) Dispersion from center (What is the average departure from the centre)
1) Range of deviation
2) Mean absolute deviation. (Average distance from the mean)
3) Variance: Average squared distance from the mean
3) Symmetry
1)Skewness: - am i more likely to see more observations above the mean or below the mean.
4) Pointiness: Kurtosis: Does my tail look fat to you. Relative measure of the pointedness of the distribution and tails. More kurtosis means that we can expect more extreme observations than we do in the normal distribution.

Real worlds is negative skewed and excess kurtosis
These summary statistics help us get the shape and the location of the distribution

Time Value of Money

Time value of money is similar to opportunity cost. I have some money that i can invest in some project, but what is my next best opportunity. If i can see the difference, then okay but if not then search for another opportunity given the resources that you have.

Value is relative, compare with next best investment, if it does then it generates value for you.
Every instrument can be thought of as a series of cash flows. The diagram that we draw is called the time line. Divide future in periods. Give them a time subscript. you make an investment at time=0 to buy something and after that you hope to operate this or get some positive returns from the business. Forever perhaps or for a limited time period. The ideas is to figure out when cash flows occur. Using this diagram is extremely simple. Do use the time line even if the problem looks trivial. Donot hesitate to use the time line in order to note the time value of money.

We talk about two values, present value and future value.what would my cash flows be worth, if i kept investing these cash flows in the next best opportunity. Cash flows earn interest on interest as cash flows are invested year after year or period after period.

How much of the next-best investment would i buy to get these cash flows

PV and FV are additive in nature, that i can break up.

For loans
PV of payments = principal that you borrow
At any time at balance = FV of principal - FV of payments made

Interest Rates
APR (Annual Percentage Return ) is Bull shit. It is less than informative.
We need information on the following things
Time period covered by the Rate
Compounding Frequency
Rate

THree ways to quote rates or return of rates
Periodic Rate, Rp. The r that we use in FV and PV is a periodic rate. so first figure out what the periodic rate is.

Second way) Stated annual rate RA.
THird way )Very Handy tool as it is very informative = 1 year periodic rate =simple annual rate =annual rate compounded 1 per year.

(1+annual rate ) = (1+rp)^n
rp=ra/m