On Lending Business – 1

For a software engineer like me it has been a constant struggle to understand the financial statements of lending businesses like banks and NBFCs. Early this year, I came across this book which improved my knowledge on lending businesses leaps and bounds. Few days back my friend Vishal analyzed the annual report of a lending company. You can…

Calculating Maintenance Capital Expenditure

The earnings that you can take out of the business every year without affecting its competitive position is called as Owner Earnings. I wrote about it in detail here. This term was coined by Warren Buffet and the formula for calculating it is given below. The capital expenditure (capex) he refers to is maintenance capex and…

Accounting For Pensions

So far I wrote about accounting for debt, leases, taxes, and stock compensation. You can find them all here. Some companies pay its retired employees for services they provided in their working years. These payments are called as pensions, which is the topic of this post. In every pension plan, three entities are involved (1) company or employer who…

Accounting For Stock Compensation

So far I wrote about accounting for debt, leases and taxes. You can find them all here. Companies pay its employees using cash and stocks. All cash payments made to employees are shown as expenses in the income statement. But when it comes to stock compensation things are not that straightforward. Companies pay its employees using restricted stocks and stock options…

Accounting For Taxes

So far I wrote about accounting for long-term debt and leases. You can find them here and here. In this post I will be writing about accounting for taxes. In US, every company maintains two sets of books. One of them is prepared according to the GAAP rules which are read by investors, creditors, and…