Taniya Saha

  Hedge Fund: Meaning, Examples, Types, and Strategies Introduction to Hedge Funds Today’s financial markets rely on hedge funds which are appreciated for being flexible, aggressive and having the chance for significant profits. Previously, hedge funds were known for being secret and restricted to certain people, but this has changed and they are now more talked about in the financial world. A hedge fund allows professionals to invest clients’ money so they can earn a high rate of return. Hedge funds use various methods such as leveraging, short selling, trading derivatives and arbitrage which means they can get good returns in all conditions. Meaning and Concept of Hedge Funds The main purpose of a hedge fund is to hold money from well-informed investors and invest it in a wide selection of assets. The name hedge comes from the action of hedging which defends against changes in the market. But nowadays, hedge funds try to make steady returns by exploiting various strategie...

Discounted Cash Flow vs. Non-Discounted Methods in Investment Decisions Introduction The appraisal of investment projects is a key task in corporate finance and capital budgeting that decides how well a company can grow and maintain its operations in the long run. Companies regularly encounter situations in which they must spend large amounts of capital on items such as a new product line, new facility or another acquisition. It is important to make good investing choices in order to earn profit and outperform the competition. A range of capital budgeting techniques is used by analysts and financial managers to evaluate whether such projects can be financed. The methods are mainly divided into Discounted Cash Flow (DCF) techniques and non-Discounted techniques. Valuation methods of both kinds use their own base beliefs about what determines the potential return, even if they aim to assess the same thing. A key driver of the difference is the approach to the time value of money whic...

  How Tax Policies Affect Financial Forecasts and Projections Introduction Fiscal management relies heavily on tax policies which also play a big role in creating the business environment in any economy. For a company, adopting these policies matters for its profit, what it invests and future budgeting. So, any process that creates future financial forecasts for strategy must understand the effects of tax rules on businesses. Here, the report investigates how tax rules impact financial forecasting, look at how tax policies impact various financial areas and detail some strategies that enterprises rely on to address or take advantage of taxes when modeling their finances. Understanding Tax Policies Tax policies are the laws and regulations that tell a government how to tax its people. These aspects are corporate tax rates, capital gains tax, VAT, sales tax, payroll taxes, how depreciation happens, tax credits and incentives. Sometimes, tax policies help to grow the economy b...

  How to Calculate FCFF and FCFE: A Practical Guide Introduction to Free Cash Flows Free Cash Flow is an essential measure for anyone analysing a company’s finances. Among the different types, FCFF and FCFE are widely accepted in deciding a company’s financial health, the potential to gain from investments and its value. Being able to work out FCFF and FCFE is vital for those analysing a business who don’t rely only on net income or EBITDA. Understanding FCFF (Free Cash Flow to the Firm) Free Cash Flow to the Firm (FCFF) is the amount of cash the company earns from operations that goes to both debt and equity investors. It shows the cash amount a firm can give to all its investors while still running its operations. In this case, FCFE is the money left out of cash flow once all repeat expenses, additional investments and debt obligations are covered and it belongs solely to the company’s equity shareholders. Both approaches use the firm’s operations as their base, but they ...

How to Forecast Working Capital Needs Accurately Introduction Any company’s financial planning process relies heavily on working capital management. It checks if a company has enough resources to fulfill its duties now and can continue its day-to-day work. In other words, working capital is what is leftover after a company takes away current liabilities from its current assets. Having a negative working capital increases the danger of liquidity issues, whereas a positive working capital means it can cover its quick payments comfortably. To avoid overfunding or underfunding their operations, companies in this situation should be sure to correctly calculate their working capital requirements.   Working capital forecasting gives managers insight into future changes, supports smart investment moves and keeps extra cash or resources from being wasted. It’s not only about money. When working capital is forecasted correctly, businesses perform better, receive better credit rates a...