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Taxes and Capital Gains: Their Effects and Consequences

News articles often discuss the effects of taxes on capital gains when a company sells a long-term investment. Investors must understand the concept of capital gains to properly value their effects on firm profitability.

Published by John Garger (20,655 pts

) on Sep 3, 2009 to
Accounting & Business Finance Articles

How to Value a Perpetuity

A perpetuity is a special case in which cash flows are expected to go on forever. Valuing a perpetuity is useful in estimating long-term cash flows.

Published by John Garger (20,655 pts

) on Sep 3, 2009 to
Accounting & Business Finance Articles

Corporate Tax Laws and Improper Accumulation of Income

Current tax laws do not allow a corporation to accumulate large sums of retained earnings in lieu of distributing dividends. Doing so incurs a tax penalty.

Published by John Garger (20,655 pts

) on Sep 3, 2009 to
Accounting & Business Finance Articles

Diversification in Capital Markets: Offsetting Risk

The concept of diversification suggests that putting all of one’s eggs in one’s basket is a risky decision. Spreading investments over multiple, unrelated securities reduces the likelihood of a sudden, fatal outcome.

Published by John Garger (20,655 pts

) on Aug 24, 2009 to
Accounting & Business Finance Articles

Information in Capital Markets: A Question of Efficiency

Information travels quickly when money is on the line. In capital markets, prices of securities react to information swiftly and efficiently.

Published by John Garger (20,655 pts

) on Aug 24, 2009 to
Accounting & Business Finance Articles

The Time Value of Money

Money today is not the same as money tomorrow or even yesterday for that matter. The old adage “time is money” is an important concept in financial markets.

Published by John Garger (20,655 pts

) on Aug 24, 2009 to
Accounting & Business Finance Articles

The Dangers of Extraordinary Income for Investors

When a company sells a significant asset, the proceeds are recorded as extraordinary income on the company’s financial statements. This event has two major repercussions to investors.

Published by John Garger (20,655 pts

) on Aug 24, 2009 to
Accounting & Business Finance Articles

The Risk/Return Trade-Off Principle

In almost all aspects of life, the largest risks have the largest payoffs. In competitive financial markets, this holds true almost universally.

Published by John Garger (20,655 pts

) on Aug 21, 2009 to
Accounting & Business Finance Articles

What is Corporate Financial Management? Understanding the value of money.

Most people assume they understand the purpose of finance and the role it plays in a corporate setting. But finance deals with more than just money. The key is in the value of things.

Published by John Garger (20,655 pts

) on Aug 19, 2009 to
Accounting & Business Finance Articles

Understanding Corporations: The Investment-Vehicle Model

Often referred to as the most basic representation of a corporation, the Investment-Vehicle Model provides a simple schematic of entity relationships. However, simple is not always best.

Published by John Garger (20,655 pts

) on Aug 19, 2009 to
Accounting & Business Finance Articles

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