ISA 300 Planning an Audit of Financial Statements is an auditing standard that deals with audit planning. It defines auditors’ responsibility to plan an audit of financial statements. Audit planning involves various steps. This process usually occurs before the fieldwork starts. As a result, planning can significantly impact the work that auditors perform during their […]
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An exchangeable debt or bond can be converted into equity of a company other than the issuer of the debt. The investors keep the option of converting the bond into equity but not the legal obligation. An exchangeable bond offers embedded diversification of risk for the investors. At the same time, investors face a higher
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Decoupling inventory is a type of safety stock in a manufacturing process. It is used to separate the inventory stocks for each step in the manufacturing process. It aims to remove any bottlenecks due to shortage or any other reason. Decoupling inventory refers to safety stocks of inventory that cover any turbulence due to internal
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A call provision gives the issuer a right to redeem the issued debt before the maturity date. A call provision can be offered with any fixed-income instrument such as preferred stocks or bonds. The call provision is most commonly used with bonds, termed callable bonds. Issuers embed the call provision with a bond to protect
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Warrants and call options are both similar in several ways. These instruments give a holder the right but not the obligation to buy shares of a company at a specified period on or before the maturity date. They function similarly with holders looking to make profits or use these instruments for tax advantages. There are
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Venture Capital or simply called VC in short form is a type of private equity. Venture Capital Funds manage the VC for investors looking to invest money in startups and early growth stage companies. It is termed as a high-risk high-reward investment type. These are managed funds by VC firms and investors. Venture capital funds
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Collateralized debt obligations (CDOs) are derivates that are used for repackaging the debt products and are sold in the secondary market. Banks and other financial institutes have large portions of asset-backed loans and debt products. These institutes sell these debt obligations to investors in the secondary market. Collateralized Debt Obligations are backed by assets and
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Time draft and sight draft are both payment instruments used in international trade. Both types of instruments offer certain benefits to both parties in a trade deal. A time draft is a confirmed payment for the exporter but comes with a delay. A sight draft is a quicker payment method but becomes payable upon presentation
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A bill of exchange can have different types of draft payment instruments. The most common ones are sight draft and time draft. It becomes payable at sight to the payee. A sight draft is a preferred payment method by the exporters as it protects them from the default risk. An exporter can keep the title
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A trade acceptance is a bill of exchange with a promise to pay by the buyer. It is widely used in international trade. An acceptance provides further assurance to the seller of payment. Unlike a common type of bill of exchange, a trade acceptance becomes a legal obligation. It comes with the amount and payment
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