Prasanna Gangakhedkar

  Gross Value Added (GVA): Meaning, Concept, and Relevance Introduction In the realm of economics and national income accounting, Gross Value Added (GVA) is a key measure used to understand the economic contribution of various sectors or industries. It provides a snapshot of the actual value that producers contribute to the economy. GVA is commonly used by policymakers, economists, and analysts to evaluate economic performance and compare sectoral output. While Gross Domestic Product (GDP) is more widely known, GVA plays a crucial role in its computation. In fact, GVA is considered the building block of GDP , as it measures value generation at the sector or industry level before accounting for taxes and subsidies. What is Gross Value Added (GVA)? Gross Value Added refers to the value of goods and services produced in an economy, sector, or industry after deducting the cost of inputs and raw materials used in the production process. It essentially represents the net output ...

  Gross Leverage Ratio: Understanding a Company’s Debt Exposure Introduction The amount of debt the company has, and how risky is it is one of the most critical questions an investor or an analyst should be able to answer in the world of finance and corporate analysis. Gross Leverage Ratio is a basic but effective instrument that is applied in analyzing this question. It provides a glimpse of leveraging position of a company in other words, how much a company depends on borrowing as a source of funds to carry out its operations and expansion. We must learn what leverage is since, along with speeding up growth and profits, there is risk. The Gross Leverage Ratio can be used to determine whether a firm faces a risk of management of its debts or it is at a risk of default in its financial standings. What Is the Gross Leverage Ratio? Gross Leverage Ratio is a financial ratio that aids in the determination of how much a firm has depended on the use of debt in its capital. It is an e...

Graham Number: Meaning, Example, and Limits Introduction Graham Number is a strict method of valuation that helps an investor to know the true price of stock. Benjamin Graham who is considered to be the father of value investing introduced it. His investing approach was centred on identifying fundamentally sound firms and purchasing these firms at a price-point that was lower than its value in order to develop a margin of error. The Graham Number embodies such idea because Graham Number establishes a cap on the price at which a stock can be overvalued. This is one of the most convenient approaches that investors may use to determine whether a given stock is at a fair price or not in relation to the earnings and the book value of the company.   Meaning of the Graham Number The Graham Number determines the maximum amount an investor needs to spend, to buy the share of a stock, through consideration of these two important financial indicators:   ·      ...

  Goodwill (Accounting): Meaning, How It Works, and How to Calculate Introduction Goodwill in accounting and finance terms is a distinct and intangible asset that denotes the occasion whereby one company buys another company with a transaction that goes above the accrued fair value of assets of the purchased company total net (identifiable assets). It is the appreciation of reputation of any company, customer loyalty, brand recognition, etc., which are non-physical but render earnings ability to earn valuable monetary returns. Goodwill is an important part of a merger or an acquisition and is only noticeable when business combination is eminent. Meaning of Goodwill Goodwill is an intangible asset which emerges when the acquisition price of a company is more than the fair price of that company as indicated by its identifiable net assets value (assets minus liabilities). It contains among the others: Brand value • Customer base Loyal customers • High Quality workforce ...

GAFAM Stocks: What They Are and Why They Matter Introduction The tech companies in the contemporary financial world have become the proficient driving force of the global development of the economy and innovations. Out of these, a cluster of five technological powerhouses, namely, Google (Alphabet), Apple, Facebook (Meta), Amazon, and Microsoft, also referred to as GAFAM, it has become the new normal to associate power, profitability and global influence. These are among the most highly valued firms in the world and their presence in the financial market, investments and technological advancement can hardly be overstated.   What does GAFAM Mean? • Google (traded under Alphabet Inc). • Apple Inc. • Facebook (currently referred to as Meta Platforms Inc. • Amazon.com Inc. • Liberty omics biotechnology inc. All these five companies have transformed the digital economy by encompassing invention in software, hardware, cloud computing, intelligent software and artificial intelligence, ele...

Gross Working Capital: Meaning, How to Calculate, and Comparison with Net Working Capital Introduction The phenomenon of working capital is a basic phenomenon in financial management, which indicates the temporary financial health of the company and its solvency in terms of covering the daily operating costs of the company. It is very crucial in safeguarding business continuity, particularly to those companies that have large amounts of transactions in their operations. Gross Working Capital and Net Working Capital are two standard terminologies related to the working capital. Although they are interchangeably used, they have different financial standpoints.   Gross Working Capital Meaning Gross Working Capital is the sum amount of current assets of a company. It is a list of assets that are likely to be turned into cash within one year and that are vital to the smooth operation of the business. The concept neither considers any liabilities nor obligations and is only bas...

  Gearing Ratios: Meaning, Types, and How to Calculate 1. Introduction to Gearing Ratios The gearing ratios are the financial parameters employed in the evaluation of the financial leverage of a company. They show the extent of funding of operations of a firm through debt financing versus equity financing. Putting it in a simpler terminology, gearing indicates the proportion of money borrowed (debt) and the capital (equity) of the owner of the business. A high gearing level implies that the company uses a lot of leverage in its capital structure whereas low gearing level indicates that the company uses more shareholder funds. The level of gearing in a company is imperative to understand since it has an influence on risk, return, and financial stability. 2. Importance of Gearing Ratios in Finance Gearing ratios play a very important role in financial analysis particularly in the analysis of a risk profile of a company. These ratios are closely watched by creditors, investo...

  Gross Rate of Return: Meaning, Formula, and Difference from Net Return Gross rate of return is a key idea in the financial and investment field. Before any deductions are applied, it stands for how much an investment has returned. The return consists of funds gained through interest, dividends, and capital gains. Basically, it shows the actual increase in the money an investment earned during a given period. Overall performance and how much money an asset can earn are indicated by gross return. It is what the investment brings in before deducting all the costs it incurs to be invested and kept. As gross return comes first, it is usually larger than the net return after outgoing expenses are counted. Components of Gross Rate of Return There are several parts that make up the gross rate of return. • Interest from bonds, dividends on stocks, and rental income together may generate you an income from your property investments. • Rising value of the asset over the years increase...