IFRS

are designed as a common global language for

business affairs so that company accounts are
understandable and comparable across
international boundaries. They are a consequence of
growing international shareholding and trade and
are particularly important for companies that have
dealings in several countries. They are progressively
replacing the many different national accounting
standards. They are the rules to be followed by
accountants to maintain books of accounts which
are comparable, understandable, reliable and
relevant as per the users internal or external.

GAAP
Generally accepted accounting principles
(GAAP) are the standard framework of guidelines
for financial accounting used in any given
jurisdiction; generally known as accounting
standards or standard accounting practice.
These include the standards, conventions, and
rules that accountants follow in recording and
summarizing and in the preparation of
financial statements. Many businesses choose to
"opt out" of GAAP practices as they operate on a
cash basis, as opposed to an accrual basis.

SHARE
The capital of a company is divided
into shares. Each share forms a unit
of ownership of a company and is
offered for sale so as to raise capital
for the company.

EQUITY SHARE
An equity share, commonly referred
to as ordinary share also represents
the form of fractional or part ownership
in which a shareholder, as a fractional
owner, undertakes the maximum
entrepreneurial risk associated with a
business venture. The holders of such
shares are members of the company
and have voting rights.

PREFERENCE SHARES
Preference shares allow an investor
to own a stake at the issuing
company with a condition that
whenever the company decides to
pay dividends, the holders of the
preference shares will be the first to
be paid.

BOND
In finance, a bond is an instrument
of indebtedness of the bond issuer
to the holders. It is a debt security,
under which the issuer owes the
holders a debt and, depending on the
terms of the bond, is obliged to pay
them interest (the coupon) and/or to
repay the principal at a later date,
termed the maturity date.

DEBENTURE
A type of debt instrument that is not secured
by physical assets or collateral. Debentures are
backed only by the general creditworthiness
and reputation of the issuer. Both corporations
and governments frequently issue this type of
bond in order to secure capital. Like other types
of bonds, debentures are documented in an
indenture.

TYPES OF SHARE CAPITAL

Authorised share capital is also referred to, at times, as registered capital. It is the total
of the share capital which a limited company is allowed (authorised) to issue. It presents
the upper boundary for the actually issued share capital.
Shares authorised = Shares issued + Shares unissued

Issued share capital is the total of the share capital issued (allocated) to shareholders.
This may be less or equal to the authorised capital.
Shares outstanding are those issued shares which are not treasury shares. These are all the shares
held by the investors in the company.[2]
Treasury shares are those issued shares which are held by the issuing company itself, the usual
result of a buyback.
Shares issued = Shares outstanding + Treasury shares

Issued capital can be subdivided in another way, examining whether it has been paid for by
investors:
Subscribed capital is the portion of the issued capital, which has been subscribed by all
the investors including the public. This may be less than the issued share capital as there
may be capital for which no applications have been received yet ("unsubscribed capital").
Called up share capital is the total amount of issued capital for which the shareholders
are required to pay. This may be less than the subscribed capital as the company may ask
shareholders to pay by instalments.
Paid up share capital is the amount of share capital paid by the shareholders. This may
be less than the called up capital as payments may be in instalments ("calls-in-arrears") .

SWEAT EQUITY
Sweat equity shares means such
equity shares as are issued by a
company to its directors or employees
at a discount or for consideration,
other than cash, for providing their
know-how or making available rights
in the nature of intellectual property
rights or value additions, by whatever
name called.

UNDERWRITER
An underwriter is a company or other
entity that administers the public issuance
and distribution of securities from a
corporation or other issuing body. An
underwriter works closely with the issuing
body to determine the offering price of the
securities, buys them from the issuer and
sells
them
to
investors
via
the
underwriter's
distribution network.

MERCHANT BANKING
A bank that deals mostly in (but is
not limited to) international finance,
long-term loans for companies and
underwriting. Merchant banks do not
provide regular banking services to
the general public.

SERVICES OF MERCHANT
BANK

GREEN SHOE OPTION

A provision contained in an
underwriting agreement that gives the
underwriter the right to sell investors
more shares than originally planned by
the issuer. This would normally be
done if the demand for a security issue
proves higher than expected. Legally
referred to as an over-allotment option.

PRIVATE PLACEMENT
The sale of securities to a relatively small
number of select investors as a way of
raising capital. Investors involved in
private placements are usually large
banks, mutual funds, insurance
companies and pension funds. Private
placement is the opposite of a public
issue, in which securities are made
available for sale on the open market.

IPO
IPO (initial public offering) is the
first sale of a company's shares to
the public, leading to a stock market
listing, known as a flotation in the
UK. This is done by listing the shares
on a stock exchange of the
company's choosing such as the
London Stock Exchange.

FPO
FPO (Follow on Public Offer) is a
process by which a company, which
is already listed on an exchange,
issues new shares to the investors or
the existing shareholders, usually the
promoters. FPO is used by companies
to diversify their equity base.

PORTFOLIO
A grouping of financial assets such as
stocks, bonds and cash equivalents,
as well as their mutual, exchangetraded and closed-fund counterparts.
Portfolios are held directly by
investors and/or managed by
financial professionals.

MUTUAL FUND
A mutual fund is a professionally
managed investment fund that pools
money from many investors to
purchase securities.

NAV
DEFINITION of 'Net Asset Value - NAV'
A mutual fund's price per share or
exchange-traded fund's (ETF) per-share value.
In both cases, the per-share dollar amount of
the fund is calculated by dividing the total value
of all the securities in its portfolio, less any
liabilities, by the number of fund shares
outstanding.

AMC
A company that invests its clients'
pooled fund into securities that
match its declared financial
objectives. Asset management
companies provide investors with
more diversification and investing
options than they would have by
themselves.

TIME VALUE OF MONEY

The idea that money available at the
present time is worth more than the
same amount in the future due to its
potential earning capacity. This core
principle of finance holds that,
provided money can earn interest,
any amount of money is worth more
the sooner it is received.

NPV
Net Present Value (NPV) is the
difference between the present
value of cash inflows and the
present value of cash outflows.
NPV is used in capital budgeting to
analyze the profitability of a
projected investment or project.

INTERNAL RATE OF RETURN

A metric used in capital budgeting
measuring the profitability of potential
investments. Internal rate of return is a
discount rate that makes the
net present value (NPV) of all cash flows
from a particular project equal to zero. IRR
calculations rely on the same formula as
NPV does.

PROFITABILITY INDEX
Profitability index (PI), also known
as profit investment ratio (PIR) and
value investment ratio (VIR), is the
ratio of payoff to investment of a
proposed project. It is a useful tool
for ranking projects because it allows
you to quantify the amount of value
created per unit of investment.

AVERAGE RATE OF RETURN

Accounting rate of return, also
known as the Average rate of
return, or ARR is a financial ratio
used in capital budgeting. The ratio
does not take into account the
concept of time value of money. ARR
calculates the return, generated
from net income of the proposed
capital investment. The ARR is a
percentage return.

CAPITAL STRUCTURE
A mix of a company's long-term debt,
specific short-term debt, common
equity and preferred equity. The
capital structure is how a firm
finances its overall operations and
growth by using different sources of
funds.

CAPITAL BUDGETING
The process in which a business
determines whether projects such as
building a new plant or investing in a
long-term venture are worth pursuing.
Oftentimes, a prospective project's
lifetime cash inflows and outflows are
assessed in order to determine whether
the returns generated meet a sufficient
target benchmark.

GDP
Gross Domestic Product (GDP) is the
broadest quantitative measure of a
nation's total economic activity. More
specifically, GDP represents the
monetary value of all goods and
services produced within a nation's
geographic borders over a specified
period of time.

GNP
Gross National Product (GNP) is an
economic statistic that includes GDP,
plus any income earned by residents
from overseas investments, minus
income earned within the domestic
economy by overseas residents.

FISCAL POLICY
Fiscal policy is the means by which
a government adjusts its spending
levels and tax rates to monitor and
influence a nation's economy. It is
the sister strategy to monetary
policy through which a central bank
influences a nation's money supply.

MONETARY POLICY
Monetary policy is the process by
which monetary authority of a
country, generally a central bank
controls the supply of money in the
economy by its control over interest
rates in order to maintain price
stability and achieve high economic
growth.

FISCL DEFICIT
DEFINITION of 'Fiscal Deficit' When
a government's total expenditures
exceed the revenue that it generates
(excluding money from borrowings).
Deficit differs from debt, which is an
accumulation of yearly deficits.

REVENUE DEFICIT
Revenue deficit occurs when the
actual amount of revenue received
and/or the actual amount of
expenditures do not correspond with
predicted revenue and expenditure
figures. Revenue surplus, which
occurs when the actual amount
exceeds the projected amount.