The Zen of Corporate Finance

I promised my friends that I will do a small presentation on the drivers of the intrinsic value of a business. To fulfill that promise I am doing this write up. Take a look at the Net Operating Profits Less Adjusted Taxes (NOPLAT) for Great and Gruesome. Both companies are generating the same NOPLAT and…

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…

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…

Accounting For Leases

In the previous post we learnt how to do accounting for long-term debt. In this post I will be writing about accounting for leases. A lease is a rental agreement by which one party (the lessor) transfers to another party (the lessee) the right to use an asset for a stated period of time in return for…

Accounting For Long-Term Debt

I am a Software Engineer by profession. Some of the accounting concepts involving operating leases, pensions, stock options, deferred taxes, and long-term debt issuances sound arcane to me. When I encounter them in the annual reports I ignore them. This limitation didn’t bother me much until I read one of the principles of Penman – Ignore Information At Your Peril.…