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Companies/Organisations Articles
Page 52 of 59
Differentiate between investing and trading.
The major differences between investing and trading are as follows −InvestingCreates wealth over a long period of time.Buying and holding.Market fluctuations has no effect.Add on benefits − bonus, dividends etc.Fundamental indicators are EPS, price to earnings, current ratio etc.Long term period.Creates wealth by compound interest and dividends.Low risk.Industry, economics, financials, competitors etc. will be affected.Very few brokerage charges.Makes sound investments.TradingGenerates profit frequently.Buying and selling of stocks.Daily market fluctuations will effect.No add on benefits.Technical indicators: moving averages, stochastic oscillators etc.Short term period.High risk.Psychology of market, money management, risk rewards etc. will be affected.Have brokerage charges.Requires active environment.
Read MoreCompare stock market and commodity market.
The major differences between stock market and commodity market are as follows −Stock marketHave same security in same grades.All securities have same face value and characteristics.Doesn’t deteriorate over a period of time.Derive its value from an underlying asset.Supply is fixed.Commodity marketHave several grades/varieties of products/commodity.Grade may vary from other lots in same grade.Greater implications for buyers and sellers.Has basic role in future market.Supply is not fixed.
Read MoreCompare CAPEX and OPEX.
The major differences between CAPEX and OPEX are as follows −CAPEXBenefits organization more than one year.Also called as capital expenditure, capital expense.One-time purchase.Long term tenure.They are depreciated or amortized over the time.Listed as property or equipment.Earns profits slowly/gradually.Lending institutions act as source of finance.CAPEX comes in balance sheet.Examples − buying of fixed assets, expansion of buildings, purchasing vehicles etc.OPEXOngoing expenses to run day to day operations.Also called as operating expenses, operating expenditure, revenue expenditure.Pay as you go.Relatively shorter term tenure.Fully deducted in the accounting period in which they were incurred.Listed as operating cost.Earned profits for shorter time.Personal saving act as ...
Read MoreWrite the difference between present value and net present value.
The major differences between present value and net present value are as follows −Present valueSum of discounted value of cash flow at a particular discounting rate.Measures future cash flows today.Does not measures additional wealth.Does not provide any information about incremental value of a project/investment.Present value = Future value / (1 + r)^n.Calculates present value of future cash flow.Easier to use.Uses time value of money concept.Decision making by individuals.Net present valueSum of discounted value of future cash flows net of initial investments made by the company.Measures value of a project.Calculates additional wealth generated.Calculates incremental value.Net present value = present value of ...
Read MoreDifferentiate between invoice and bill.
The major differences between invoice and bill are as follows −InvoiceWill have detail list of purchased products, their quantity, price, taxes (if any) etc.Handed over by seller to buyer at any time (before/after service or product).Advanced has to be paid.Records all the items placed.Invoices may arrive along with the goods or after they arrive.If invoice bills arrive late, it serves as a record to cross-checked the contents with the buyer.Examples − amazon, bike showrooms etc.BillServes as request for payment.Handed over directly to buyer from seller.Payment is made immediately.Records sold items, their price, total cost, services etc.For online goods, there will ...
Read MoreCompare between private equity and venture capital.
The major differences between private equity and venture capital are as follows −Private equityInvestments made in those companies which are not publicly listed on any stock exchange.Buys from mature and public companies.Focus will be on all kind of industries.Want to acquire almost full stake of the company in an LBO.Combination structure (debt + equity).Investments made in few companies.Mainly focus on corporate governance.Less risk involved.Venture capitalFinancing small business.Invest mostly in start-up or early stage companies.Focus on technology, biotech and clean tech companies.Acquires minority stake (
Read MoreDifferentiate between ADR AND GDR.
The major differences between American Depository Receipt (ADR) and Global Depository Receipt (GDR) are as follows −American Depository Receipt (ADR)Main purpose is to acquire resources in USA.Main objective is to attract investments from foreign companies.Issued by US domestic capital market.Foreign companies can trade in US markets.US dollar as currency.Listed in The New York Stock Exchange (NYSE) or NASDAQ.Retail investor market.Negotiation done in US only.Legally complicated.Onerous disclosure of terms.Global Depository Receipt (GDR)Main purpose is to acquire resources in different parts of the world.Main objective is to invest in different parts of the world.Issued by European capital market.Foreign companies can trade anywhere ...
Read MoreWrite the difference between financial leverage and operating leverage.
The major differences between financial leverage and operating leverage are as follows −Financial leverageOperating leverageUse of capital structure to earn better returns and to reduce taxes.Tells about capital structure of the firm.Measures financial risk.Relates EBIT and EPS.More the financial leverage, more financial risk.Preferred high.DFL = EBIT/EBT.Rise to financial risk.Degree of financial leverage relates to liabilities side in balance sheet(different source of finance).Firm ability to use fix costs to generate more returns.Tells about fixed cost of the firm.Measures operating risk of the business.Relates sales and EBIT.Higher the operating leverage, more operating risk.Preferred low.Rise to business risk.DOL = Contribution/EBIT.Degree of operating leverage ...
Read MoreWrite the difference between leasing and financing.
The major differences between leasing and financing are as follows −LeasingFinancingLegal agreement between lessor and lessee.Ownership is with lessor.Principal and interest component is considered.Risk is with lessor.Very affordable.We can use the asset.Monthly payments are low.Choice of buy the asset or return to the lessor is available.Partial amount is paid to buy the asset.Ownership is with the borrower.Down payment or instalments are considered.Risk is with borrower.Restricts affordability.We can own the asset.High monthly payments, when compared to lease.Own the asset after fully payment is made.
Read MoreCompare IFRS and Indian GAAP.
The major differences between International Financial Reporting Standards (IFRS) and Indian Generally Accepted Accounting Principles (GAAP) are as follows −IFRSIndian GAAPThe full form of IFRS is International Financial Reporting Standards.Developed by International Accounting Standards Board (IASB).A company has to disclose a note that its financial statements comply with IFRS.Adopted by more than 110+ countries.IFRS 1 provide clear instructions about how to adopt IFRS for first time.No exemption for cash flow statements.IAS 16 mandates component accounting.It has comprehensive guidance for balance sheets, an entity to present assets and liabilities and classify them as current or non-current items.The full form of GAAP ...
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