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Embargo: Thursday, 11 August 2016, 9am GMT


Results of the ifo world economic Survey (WES) for the 3rd quarter 2016
Ifo World Economic Climate Suffers Setback

Munich, 11 August 2016 The Ifo Index for the world economy fell by 4.5 index points
to 86.0 in the third quarter, dipping to its lowest level in over three years at ten index
points below its long-term average. These results contrast with the improvement seen
last quarter. Experts assessments of the current economic situation remain
unfavourable, while their economic expectations are far more negative than last quarter.
Sentiment in the world economy is subdued.

According to WES experts, last quarters upward trend ground to a halt in nearly all
regions. In Europe in particular the economic climate clouded over in the wake of the
Brexit vote. The only exceptions to this rule were the Eastern European EU countries,
where the climate brightened. In Asia the climate indicator fell to its lowest level in seven
years. In North America the index was only slightly higher than its long-term average.
There was, however, an improvement to the economic climate in Latin America and the
CIS states, although the index rose from a very low previous level.

Average short-term interest rates worldwide are expected to remain almost stable over
the next six months, while long-term interest rates will increase in the second half of
2016. The US dollar is expected to strengthen over the next six months.

Clemens Fuest
President of the Ifo Institute
How to Negotiate a Loan
Everyone at one time or another has the need to arrange a loan. Most of us will do this
many times when buying homes, cars, even appliances. Loan negotiations should be
approached with care and consideration as there are many ways to arrange financing
and the easiest are typically the most expensive.

Anticipate If You Will Need Financing Before Negotiating a Loan for a Purchase

The biggest mistake when people arrange financing is that they don't anticipate needing
a loan before starting the process of negotiating for the item in question That is, they
focus on the home or car or television and try to get the best price for what they want.
Then they are presented the financing terms by the person selling them the item. By
then they are tired of the process and only want to get home and enjoy their recent
acquisition. Unfortunately, it is the financing that can make a good buy an expensive
acquisition. Before going on a buying spree consider how you will buy the item. If you
know you are going finance it, consider setting up a line of credit with your bank or
other lender so you do not have to take the seller's financing unless that is better than
what you have arranged.

Develop Relationships

As with any negotiation, you will want to spend time getting to know the people you are
dealing with before having to talk turkey. Tellers at your bank are not able to give you
the best financing terms but a loan officer who knows you, your situation and your
expectations can be groomed through regular contact on your art to help when you
decide to take out a loan or line of credit. Cultivate a relationship with a loan officer
when you are in the bank so that you have a "history" to use when you need a favor.

Why do you Need a Loan?

Discuss why you are buying the item with the lender and explain how you plan to
absorb the cost into your current obligations. Establishing how well you are prepared
will give the lender confidence that you have a plan, it is well thought out, and you will
be able to make your payments. He or he will have more confidence in your
performance and may be more inclined to help you get the best terms.

Identify the Needs of the Lender or Seller

When you have selected the item discuss financing options with the seller. Take the
time to establish what your parameters are and what you expect. Ask how sales are
going in general. What you want to find out is how motivated they are to sell the item to
you. If it is a home and the market is down their motivation could easily be greater than
your interest in the house! You want to solicit as much information as you can before
discussing the financing options.

Develop Your Power

When purchasing a car or a house the financing is a large part of the cost. Car dealers
can make a lot of money of the financing terms. If you have bank financing available,
you are able to negotiate a cash price and use your own financing or take the dealer
financing if it is better for you. Now that you have the power to choose the dealer loses
his control over you and may offer more attractive terms to keep you as a borrower as
well as a buyer.

Come Prepared

If you have come to the financing discussion prepared, you will be a unique customer.
That gets you respect and perhaps some fear as your being informed erodes the power
the seller usually enjoys. Now you have the chance to lead the discussion in the
direction you want. You are able to compare the terms being offered with what you
know you can get from your bank or personal lender. Unused to this approach, the seller
is likely to follow your lead and start trying to match or beat the terms you have
available rather than selling you on how great his terms are. The difference is that you
have become an equal rather than a pigeon.

Have a Winning Attitude

As always, use your persuasiveness to keep the discussions moving forward toward
your goal. Persuasion can include deference, manipulation, bluffing and intimidation
among many techniques. The most persuasive argument is one delivered with a winning



Working capital (abbreviated WC) is a financial metric which represents operating

liquidity available to a business, organisation or other entity, including governmental
entity. Along with fixed assets such as plant and equipment, working capital is considered
a part of operating capital. Gross working capital is equal to current assets. Working
capital is calculated as current assets minus current liabilities. If current assets are less
than current liabilities, an entity has a working capital deficiency, also called a working
capital deficit.

A company can be endowed with assets and profitability but short of liquidity if its assets
cannot readily be converted into cash. Positive working capital is required to ensure that
a firm is able to continue its operations and that it has sufficient funds to satisfy both
maturing short-term debt and upcoming operational expenses. The management of
working capital involves managing inventories, accounts receivable and payable, and

Working capital is the difference between the current assets and the current liabilities.

The basic calculation of the working capital is done on the basis of the gross current
assets of the firm.

Working capital is the difference between the current assets and the current liabilities.

The basic calculation of the working capital is done on the basis of the gross current
assets of the firm.


Current assets and current liabilities include three accounts which are of special
importance. These accounts represent the areas of the business where managers have the
most direct impact:

accounts receivable (current asset)

inventory (current assets), and
accounts payable (current liability)

The current portion of debt (payable within 12 months) is critical, because it represents
a short-term claim to current assets and is often secured by long-term assets. Common
types of short-term debt are bank loans and lines of credit.

An increase in net working capital indicates that the business has either increased
current assets (that it has increased its receivables, or other current assets) or has
decreased current liabilitiesfor example has paid off some short-term creditors, or a
combination of both

Current assets and current liabilities include three accounts which are of special
importance. These accounts represent the areas of the business where managers have the
most direct impact:

accounts receivable (current asset)

inventory (current assets), and
accounts payable (current liability)

The current portion of debt (payable within 12 months) is critical, because it represents
a short-term claim to current assets and is often secured by long-term assets. Common
types of short-term debt are bank loans and lines of credit.
An increase in net working capital indicates that the business has either increased
current assets (that it has increased its receivables, or other current assets) or has
decreased current liabilitiesfor example has paid off some short-term creditors, or a
combination of both.

Profit and los account

Trading Account
It is the first stage of final accounts

2 It shows the gross result (gross profit or gross loss) of the business
All direct expenses (expenses connected with purchase or production
of goods) are considered in it.
4 It does not start with the balance of any account

5 Its balance (G.P or G.L) is transferred to profit and loss account.

Introduction to Balance Sheet

The accounting balance sheet is one of the major financial statements used by accountants
and business owners. (The other major financial statements are the income statement,
statement of cash flows, and statement of stockholders' equity) The balance sheet is also
referred to as the statement of financial position.

The balance sheet presents a company's financial position at the end of a specified date.
Some describe the balance sheet as a "snapshot" of the company's financial position at a
point (a moment or an instant) in time. For example, the amounts reported on a balance
sheet dated December 31, 2016 reflect that instant when all the transactions through
December 31 have been recorded. Because the balance sheet informs the reader of a
company's financial position as of one moment in time, it allows someonelike a
creditorto see what a company owns as well as what it owes to other parties as of the
date indicated in the heading. This is valuable information to the banker who wants to
determine whether or not a company qualifies for additional credit or loans. Others who
would be interested in the balance sheet include current investors, potential investors,
company management, suppliers, some customers, competitors, government agencies,
and labor unions.

In Part 1 we will explain the components of the balance sheet and in Part 2 we will
present a sample balance sheet. If you are interested in balance sheet analysis, that is
included in the Explanation of Financial Ratios.

We will begin our explanation of the accounting balance sheet with its major components,
elements, or major categories:
1. Assets
2. Liabilities
3. Owner's (Stockholders') Equity

In AccountingCoach PRO you will find some special materials on the balance sheet. For
example, the video seminar Understanding Financial Statements provides a line-by-line
explanation of a balance sheet. PRO also includes a visual tutorial, business forms, and
exam questions that will help you learn and retain information on the balance sheet.

Assets are things that the company owns. They are the resources of the company that
have been acquired through transactions, and have future economic value that can be
measured and expressed in dollars. Assets also include costs paid in advance that have
not yet expired, such as prepaid advertising, prepaid insurance, prepaid legal fees, and
prepaid rent. (For a discussion of prepaid expenses go to Explanation of Adjusting

What is Cash Flow?

Cash flow is the money that is moving (flowing) in and out of your business in a month.
Although it does seem sometimes that cash flow only goes one way - out of the
business - it does flow both ways.

Cash is coming in from customers or clients who are buying your products or
services. If customers don't pay at time of purchase, some of your cash flow is
coming from collections of accounts receivable.

Cash is going out of your business in the form of payments for expenses, like
rent or a mortgage, in monthly loan payments, and in payments for taxes and
other accounts payable.

Think of 'cash flow' as a picture of your business checking account. If more money is
coming in than is going out, you are in a "positive cash flow" situation and you have
enough to pay your bills. If more cash is going out than coming in, you are in danger of
being overdrawn, and you will need to find money to cover your overdrafts. This is why
new businesses typically need working capital, in the form of a loan or line of credit, to
cover shortages in cash flow.

Why Cash Flow is So Important

Lack of cash is one of the biggest reasons small businesses fail. The Small Business
Administration says that "inadequate cash reserves" are a top reason startups don't
succeed. It's called "running out of money," and it will shut you down faster than
anything else.
Cash Flow When Starting a Business

Dealing with cash flow issues is most difficult when you are starting a business. You
have many expenses and money is going out fast. And you may have no sales or
customers who are paying you. You will need some other temporary sources of cash,
like through a temporary line of credit, to get you going and on to a positive cash flow

Cash Flow in a Seasonal Business

Cash flow is particularly important for seasonal businesses - those that have a large
fluctuation of business at different times of the year, like holiday businesses and
summer businesses. Managing cash flow in this type of business is tricky, but it can be
done, with diligence.

How to Analyze Cash Flow

The best way to keep track of cash flow in your business is to run a cash flow report.

A cash flow statement looks at the change to cash (in this case, your business
checking account), from different business activities and increases or decreases in
other accounts on the business balance sheet.

For example:

What happens to cash if a customer pays a bill?

What happens to cash if your business purchases supplies?
What happens to cash if you buy a computer?
What happens to cash if you pay an employee or independent contractor?

At times, you may need to keep track of cash flow on a weekly, maybe even a daily


Pricing a product

Definition: To establish a selling price for a product.

No matter what type of product you sell, the price you charge your customers or clients
will have a direct effect on the success of your business. Though pricing strategies can
be complex, the basic rules of pricing are straightforward:

All prices must cover costs and profits.

The most effective way to lower prices is to lower costs.
Review prices frequently to assure that they reflect the dynamics of cost, market
demand, response to the competition, and profit objectives.
Prices must be established to assure sales.

Before setting a price for your product, you have to know the costs of running your
business. If the price for your product or service doesn't cover costs, your cash flow will
be cumulatively negative, you'll exhaust your financial resources, and your business will
ultimately fail.

To determine how much it costs to run your business, include property and/or
equipment leases, loan repayments, inventory, utilities, financing costs, and
salaries/wages/commissions. Don't forget to add the costs of markdowns, shortages,
damaged merchandise, employee discounts, cost of goods sold, and desired profits to
your list of operating expenses.

Most important is to add profit in your calculation of costs. Treat profit as a fixed cost,
like a loan payment or payroll, since none of us is in business to break even.

Because pricing decisions require time and market research, the strategy of many
business owners is to set prices once and "hope for the best." However, such a policy
risks profits that are elusive or not as high as they could be.

When is the right time to review your prices? Do so if:

You introduce a new product or product line;

Your costs change;
You decide to enter a new market;
Your competitors change their prices;
The economy experiences either inflation or recession;
Your sales strategy changes; or
Your customers are making more money because of your product or service.

Prices are generally established in one of four ways:


New Product Development and Die Casting

Process. Friend or Foe?

The design of any product is only limited by the imagination of the designer, the laws of
physics and the capability and reliability of the process (es). This is an area where multi-
discipline teams can bring greater and more rapid success to new product launches. Die
castings are particularly design-dependent as much of the tool design is dictated by the
product design. To a large extent it can be said the product designer is designing the
tooling. Parting lines dictate the location, thickness and overall size of tool steel. Quite
often the location of gate (metal feed entries) are a result of the available parting line
rather than a best choice based on design for quality. Good practice would have the metal
enter in the thickest area of the casting and flow toward the thinner areas last. Again the
opposite can be dictated by product design, for example if the only practical area to gate
happens to be a thin area which feeds metal to the thickest area last. The result is shrinkage
porosity. Porosity defects in this situation are not only undesirable, but also inevitable!
Given the opportunity early in the design development, the designer and die casting
supplier can often reach compromise that provides the necessary function and ultimately
reduces cost.

On one such program, the designer and die casting supplier working together began from
what many call the "gray box" design stage. "Gray box" designs, provide a basic function
and performance requirement, but leave much of the form, wall section and process up to
the final designer. Beginning from that point, the casting design was developed with the
tooling and gating design in mind. The result was a casting that included features not
previously thought possible while achieving cost targets.

What then is a product designer to do?

I advise developing relationships with supplier companies that have the proven expertise
to assist in value added engineering. They know where weakness would exist in the
tooling designed in certain ways and also know of capabilities that the designer may not
be aware of. Examples abound of innovations that came from collaborating with the
supplier engineers.

Just because a company has been in business for a long time, is no guarantee they have
trained experienced personnel. By the same token, young companies can have qualified
personnel. How can you tell you have contacted a company capable of providing this
service? Ask them for the following information.

Do they have personnel who have dedicated 10 or more years in their specific

Can they provide references?

Can they provide examples related to your specific application?

What if you are the casting supplier wanting to provide this service?

Let your customers know that you have the capability and willingness to help.

Be committed to the long term. It takes time. Programs can take 12 to 24 months or
longer from initial meeting to first samples.

Introduce your customers to your technical team.

The role of auditors

Auditors play a pivotal role in the accounting industry. In this lesson, you will learn
what an auditor is, what they do, and the steps in the auditing process.
Auditors play a pivotal role in the accounting industry. In this lesson, you will learn
what an auditor is, what they do, and the steps in the auditing process.

What Is an Auditor?
Audit. . . just the sound of the word makes many people cringe. The first thing that
comes to mind when I heard the word is tax audits. I just can't picture an auditor coming
to look through every nook and cranny that I have, looking for something that I failed to
report on my taxes. The reality of that is that audits are actually a good thing, and
auditors aren't crotchety old people that resemble Scrooge.

An auditor, for the purpose of accounting, is a person whose job it is to make sure that
information reported on financial statements is true and accurate and that the financial
statements are prepared according to GAAP principles. GAAP, which is short for
generally accepted accounting principles, are the guidelines for financial reporting
that accounting professionals must follow.

What Do They Do?

Hard to believe, but the most important thing that an auditor does is to form an opinion.
Anybody can do that, right? Well, maybe so, but an auditor's opinion is not just any old
opinion. His opinion makes or breaks the reliability of financial statement information.
You see, GAAP protocol on financial reporting requires that an auditor's opinion be a
part of notes to the financial statements. Notes to the financial statements are
footnotes that appear at the bottom of the reports that give financial statement users
added details about items that appear on the statements.

The general assumption for the purpose of financial statement auditing is that the
auditor will form his own independent opinion based solely on the information collected
in the audit. If the auditor's opinion doesn't appear on the financial statements, then they
don't meet the set standards. Audited financial statements that contain the concise,
written opinion of an independent auditor are deemed to be true, valid and reliable.

Audit Process
Now that you know what auditors are and what they do, let's talk about the audit process
in accounting. This type of audit is called a financial audit. A financial audit is an audit
that examines the financial records of a company. There are six basic steps that must be
completed when performing a financial audit.

The first thing that an auditor would do is to look at the way that financial information
is given to the accounting department from other departments. Auditors look for
timeliness in getting documents, such as receipts, invoices, bank statements, and
payment records, from each individual department to the accounting department. The
time line of this activity can and will affect when revenue and expenses are recognized

What is 'Taxation'

Taxation refers to compulsory or coercive money collection by a levying authority,

usually a government. The term "taxation" applies to all types of involuntary
levies, from income to capital gains to estate taxes. Though taxation can be a
noun or verb, it is usually referred to as an act; the resulting revenue is usually
called "taxes."


Taxation is differentiated from other forms of payment, such as market

exchanges, in that taxation does not require consent and is not directly tied to
any services rendered. The government compels taxation through an implicit or
explicit threat of force. Taxation is legally different than extortion or a protection
racket because the imposing institution is a government, not private actors.
Tax systems have varied considerably across jurisdictions and time. In most
modern systems, taxation occurs on both physical assets, such as property, and
specific events, such as a sales transaction. The formulation of tax policies is one
of the most critical and contentious issues in modern politics