09 March 2021

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Internal Control over Financial Reporting (ICFR)

in All Articles, Auditing and Internal Control

Central Bank Guidelines on Internal Control over Financial Reporting The State Bank of Pakistan vide its BSD circular no.7 dated May 27, 2004 (https://www.sbp.org.pk/bsd/2004/C7.htm) has issued guidelines on the internal control over financial reporting for all banks / DFIs naming SBP Internal Control Guidelines) and in order to ensure consistency in the process of compliance with the internal control guidelines, SBP vide BSD Circular No.5 dated Feb 24, 2009 https://dnb.sbp.org.pk/bsrvd/2009/C5.htm has provided the roadmap naming SBP road map identifying various activities / stages involved in the internal control program. The requirements of each stage of the roadmap has been further elaborated...

20 January 2021

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Earnings per Share (EPS) – IAS 33

Posted by Ali Murtaza

in Accounting, All Articles

Introduction Earnings per Share (EPS) is an important concept of accounting. In this article we are covering below topics of EPS; Basic concept and formula of EPS Preference Shares treatment Issue of new shares Bonus Issue Basic Concept and formula of earnings per share The rules for calculating Earnings per Share are defined in IAS 33. It is very easy concept. The profit is adjusted with few items is divided by weighted average number of shares in the particular period. Which Earnings shall be taken? Earnings is the profit after deducting taxation (PAT). Preference Shares: EPS is a measure of earnings per ordinary shares. Company has Preference Shares These shares...

15 January 2021

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How Marketing Department Works

Posted by Ali Murtaza

in All Articles, How Department Works

Introduction How Marketing Department Works! The function of marketing department in any organization is very important in today's world. This department is generally responsible for development and implementation of marketing strategies. It also plans for the company which includes creation of corporate brand, create awareness of products and services. Marketing Department Responsibilities Depending on the organization the marketing department is responsible for following functions. Development of marketing strategies Marketing Department develops and executes strategies , it also prepare plans for the organization in accordance with the business and strategic objectives. Promotion of company products To create visibility of the corporate brands and promotions of company’s products and...

15 January 2021

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Foreign Exchange Rates

Posted by Ali Murtaza

in All Articles, Financial Management

Foreign Exchange Rate Foreign exchange rate is the price at which currency of one country is exchanged with currency of another currency. There are two methods of presenting currencies; Direct Quote Indirect Quote 1) Direct Quote Direct quote is the number of units required for domestic currency to be exchanged with foreign currency. In the direct quote domestic currency is written first. For example, Pakistan rupees with US dollar can be expressed in direct quote as Rs.160 for US $ 1. This is written as Rs.160 / $1. 2) Indirect Quote Indirect quote is the number of units required for foreign currency to be exchange with local currency.In...

15 January 2021

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PRICE-SENSITIVE INFORMATION

Posted by Ali Murtaza

in All Articles, Corporate Laws, Stock Exchange

Rules 5.6.1 of Pakistan Stock Exchange (PSX) requires each listed company to give notice to SECP and PSX for all price sensitive information. Every Listed Company shall immediately inform to the Commission (SECP) and the Exchange (PSX) all price-sensitive information relating to the business and other affairs of the listed company that may affect the share price of the company in the manner prescribed by the Exchange from time to time. When to share The said information needs to be communicated to the Exchange before it is intimated to any other person or it is printed in newspaper or shown in electronic media. What...

15 January 2021

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Diluted Earnings per Share (EPS) – IAS 33

Posted by Ali Murtaza

in Accounting, All Articles

Introduction Diluted earnings per Share (EPS) is an important concept of accounting. In this article we are covering below topics of diluted EPS; Meaning of Dilution Convertible shares and convertible bonds Options and Warrants Employee share options Basic Concept of Diluted EPS Dilution means reduction in strength. A company issues convertible shares / bonds, options and warrants which increases the share capital of the company and reduces earning per share hence dilution. Diluted EPS is calculated by adjusting earnings of the company and also its number of shares. Earnings are adjusted because interest or dividend shall no longer be paid upon conversion of shares...

15 January 2021

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Compliance for Stock Exchange Broker 1/2

Posted by Ali Murtaza

in All Articles, Company Briefing, Stock Exchange

Compliance for Stock Exchange Broker We have compiled Regulatory Compliance applicable for Stock Exchange Broker as follows. Compliance at client level Confirmations of the orders by the clients are required to be transmitted within 24 hours of the execution of the order. The Broker must not pledged any of the shares of the client. The Broker must compiled with all the requirements of Standardized Account Opening Form. All transactions by the clients in terms of buying, selling, payments, receipts, margins, commission are recorded in in books of accounts on timely, adequately and proper manner. Maintenance of record of credit and extension of...

15 January 2021

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Modified Internal Rate of Return (MIRR)

Posted by Ali Murtaza

in All Articles, Financial Management

How MIRR is different from IRR Modified internal rate of return is a calculation of the return from a project, with an assumption that cash flows earned from a project shall be reinvested to earn a return equal to the company’s cost of capital (Ke) and not IRR. Therefore, in the example of the project with an NPV of Rs.500,000 at a cost of capital (Ke) of 10%, MIRR would be calculated with the assumption that project cash flows are reinvested at a return of 10% per year (which is company cost of capital ke) and not at 15% which is...

15 January 2021

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Internal Rate of Return (IRR)

Posted by Ali Murtaza

in All Articles, Financial Management

Internal Rate of Return (IRR) The internal rate of return (IRR) is another method investment appraisal other than Net Present Value (NPV). It is the discount rate which makes Net Present Value Zero. The companies have their own target of rate of return on particular projects. If internal rate of return (IRR) is higher or equal to the project rate of return ascertained by the company then project is feasible and should be accepted. If internal rate of return (IRR)is lower than the project rate of return ascertained by the company then the project needs to be rejected. How to calculate Internal rate...

15 January 2021

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Time value of money

Posted by Ali Murtaza

in All Articles, Financial Management

Introduction Time value of money is the basic concept of finance which says that value of money as of today is more than value of money in the future period. To calculate time value of money we have two methods; Compounding Discounting Time value of money - Compounding Compounding is the estimate of future cash flows that shall arise when any sum of amount is invested at a given interest rate for a given time period. An amount that is invested today is multiplied by compound factor to arrive at future cash flows at specific interest rate. Where: i = interest rate n = number of years Example 1: A company wants...