Federal budget 2009 & textile sector

Federal budget 2009 & textile sector

Introduction

Pakistan is the 4th largest cotton producer and 3rd largest cotton consumer. The textile and clothing industry has been the main driver of the export based industry for the last 50 years in terms of foreign currency earnings and jobs creation.

Textile Industry has made an investment of about 7.5 billion US$ during the last ten years (1999-2009). China, India and Bangladesh are posing tough challenge by virtue of their competitiveness.

What comprise its cost & revenue?

Cost is determined by

Raw material

Labour

Factory overhead ( mainly energy)

All other cost

Revenue is determined by whatever sale is made.

It has two markets to sale.

Local sale

Export sale

IMPORTANT QUESTIONS ARE

How textile industry will grow ( 2008 2.6 2009 -.7)

How to enhance its exports

How to increase foreign exchange reserves

How to create employment opportunities in the country

How to lower cost of doing business in pakistan to cater foreign investment

Demands from textile industry

Immediate financial relief

Special treatment on energy ( gas & electricity)

Market access

Federal budget 2009

A) "The government is managing the affairs of our country within a strategic policy framework expressed in its Nine Point Agenda of economic and socialrecovery. I take this opportunity to highlight these nine pillars:

I. Macroeconomic Stability and Real Sector Growth.

II. Protecting the Poor and the Vulnerable.

III. Increasing Productivity and Value Addition in Agriculture.

IV. Making Industry Internationally Competitive.

V. Capital and Finance for Development.

VI. Removing Infrastructure Bottlenecks through Public Private Partnerships.

VII. Integrated Energy Development Programme.

VIII. Human Capital Development for the 21st Century.

IX. Governance for a Just and Fair System."

"SOURCE BUDGET SPEECH FOR FISCAL YEAR 2009-10 "

B) Some of the textile circles feared that the federal budget would prove last nail in manufacturing sector's coffin, as the budget lacks a booster for growth of manufacturing sector, guaranteeing job creation over the last four decades.

C) The State Minister for Finance & Revenue Hina Rabbani Khar did not explained in her budget speech as to how the government was going to revive the industrial sector, particularly textile industry, which contributes 67 per cent to the country’s total exports

D) With a view to moving industry towards consolidation and value addition an Export Investment Support Fund, worth Rs. 40 billion has been proposed for FY 2009-10. The government will contribute Rs 10 billion towards this fund; another Rs 10 billion would be contributed by the Export Development Fund; balance Rs 20 billion would be contributed by governmental agencies through mopping up of surpluses in commercial banks.

"SOURCE BUDGET SPEECH FOR FISCAL YEAR 2009-10 "

The announcement of Rs 40 billion as industrial support fund does not clarify that what is being earmarked for which sector.????

E) 'The government proposes to declare fiscal 2009/10 as the year of industrial recovery.'

But it spreads disappointment simultaneously by missing the measures to bring the textile industry out of woe.

Federal budget 2009- 2010 of Pakistan

Federal budget 2009- 2010 of Pakistans

To know & download Federal budget 2009- 2010 of Pakistans .
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Economic Survey of Pakistan 2009

Economic Survey of Pakistan 2009

To know & download
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IAS-2 Inventories ( Measurement of cost)

IAS-2 Inventories (Accounting treatment)

Inventories shall be measured at the lower of cost and net realisable value.

Net realisable value is the:

estimated selling price in the ordinary course of business
less
the estimated costs of completion and
the estimated costs necessary to make the sale.

The cost of inventories shall comprise all :

costs of purchase,

costs of conversion and

other costs incurred in bringing the inventories to their present location and condition.

Inventory cost should not include:

abnormal waste

storage costs

administrative overheads unrelated to production

selling costs

foreign exchange differences arising directly on the recent acquisition of inventories invoiced in a foreign currency

interest cost when inventories are purchased with deferred settlement terms.

Illustration 1

ABC ltd record shows the following data regarding abc material.

Invoice value of $ 1,000 ( Net of Trade discount $ 2)

Freight $5

Storage cost $ 1

Compute the cost of material to be recognised as per IAS -2

Solution:

Cost of material:

costs of purchase $ 1,000 + Freight $5 = $ 1,005

Storage cost is not included as per IAS-2

costs of purchase (including taxes, transport, and handling) net of trade discounts received.

Standard cost & retail method

The standard cost and retail methods may be used for the measurement of cost, provided that the results approximate actual cost.

Specific costs.

For inventory items that are not interchangeable, specific costs are attributed to the specific individual items of inventory.

For items that are interchangeable:

IAS 2 allows the FIFO or weighted average cost formulas.

(Fifo & weighted average illustration as per above.)

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Japan's economy takes sharp downturn as GDP falls 4%

Japan's economy takes sharp downturn as GDP falls 4%

Japan's GDP contracted at an alarming rate in the first quarter, dropping 4% compared with the previous quarter and 15.2% compared with the same period last year. The decline, the fourth consecutive quarter of such, was the biggest since 1955, when Japan started keeping GDP records

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North Korea sees record expansion in trade

North Korea sees record expansion in trade

The value of North Korean foreign trade, excluding deals with South Korea, set a record last year, Yonhap News reported. Exports increased 23% to $1.13 billion, while imports expanded 32.7% to $2.69 billion

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Canada's banks stay strong, profitable through recession

Canada's banks stay strong, profitable through recession

When market conditions in Canada were at their worst during the first quarter, the country's major banks were making a profit. None of the banks has needed a government bailout. Mortgage interest is not tax deductible, eliminating an incentive to borrow, and when loan to value is more than 80%, the mortgage must be insured by an agency of the Canadian government

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Spanish prime minister moves to keep jobs, cut taxes

Spanish prime minister moves to keep jobs, cut taxes

Facing Spain's most dramatic setback in 40 years, Prime Minister Jose Luis Rodriguez Zapatero took aggressive action to breathe life into the economy. He plans to cut taxes for small businesses that keep their employees and pay $2,700 bonuses to people who buy cars made in Spain. He also plans to eliminate airport fees for airlines that carry at least the same number of passengers as last year.The government had already announced stimulus measures valued at about €71 billion, including an €11 billion public works program.

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China's foreign direct investment drops 7 months straight

China's foreign direct investment drops 7 months straight

In April, foreign direct investment in China fell 22.5%, the seventh consecutive monthly decline. "This is a reflection of multinational companies around the world tightening their belts," said David Cohen, an economist with Singapore's Action Economics. "The weakness is being offset by the fiscal-stimulus measures of the Chinese government.

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Japan's 10 automakers expect 2009 losses to cross $10B

Japan's 10 automakers expect 2009 losses to cross $10B

Hit hard by plummeting auto sales worldwide and the strength of the yen, Japan's 10 automakers predicted that their combined losses for fiscal 2008 -- $3.35 billion -- will more than triple to $10.48 billion this fiscal year. "We've begun to see the bottom, but there's no sign of recovery," Mitsubishi Motors President Osamu Masuko said.

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Industrial production slides 20.2% in eurozone

Industrial production slides 20.2% in eurozone

Industrial output across the eurozone dropped 20.2% in March compared with the same month last year, according to Eurostat, the EU's statistics office. The surprisingly sharp decline marked the biggest year-on-year fall since 1991, when records began to be kept.

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Indian industrial production sees worst drop since 1993

Indian industrial production sees worst drop since 1993

Output from India's factories, mines and utilities fell 2.3% in March compared with the same month last year, as exports suffered amid the severest global downturn since World War II. The drop in production was triple the figure analysts predicted and the worst for India's economy since January 1993.
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Oracle won't divest Sun's hardware business

Oracle won't divest Sun's hardware business

Oracle Corp Chief Executive Larry Ellison said he won't sell off Sun Microsystems Inc's hardware business, dispelling speculation that he only wanted the company for its software units.

Oracle's steadily rising profit margins have impressed Wall Street in recent years, and analysts say it is a risky move for it to buy Sun, which has lost $2 billion in the first three quarters of its current fiscal year.

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BoE announces surprising initiative to buy more bonds

BoE announces surprising initiative to buy more bonds

The Bank of England surprised the City by ordering a £50 billion expansion of its scheme for buying corporate and government bonds. The move is part of the bank's aggressive campaign to bolster the economy and stabilize the financial sector. The move came as the BoE's Monetary Policy Committee kept interest rates at 0.5% for the second straight month.

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Oil price hits 5-month high on cheerier economic news

Oil price hits 5-month high on cheerier economic news

Rising optimism about the U.S. economy, the world's biggest energy user, drove the price of oil to more than $56 a barrel Wednesday for the first time this year. The price for New York's benchmark futures contract peaked at $56.07 a barrel, then later settled to $55.90 in New York trading

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China's central bank vows to keep pouring money into economy

China's central bank vows to keep pouring money into economy

The People's Bank of China said it is committed to providing an "ample" supply of money to stimulate economic growth, pointing to a 600% expansion of new lending in March. Experts said the central bank's efforts will likely succeed. "The momentum is gathering for quite a strong recovery in growth in the second half of the year," said Peng Wensheng, an economist at Barclays Capital.

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IMF sees shaky recovery for most Asian economies

IMF sees shaky recovery for most Asian economies

Asia's economies, excluding China and India, are expected to decline 2.9% this year and expand 1.6% next year, the International Monetary Fund said. When China and India are put back into the equation, the figures come to a 1.3% expansion this year and 4.3% growth in 2010. The IMF is encouraging Asian policymakers to continue their stimulus programs into next year.

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Australia's central bank holds benchmark rate at 3%

Australia's central bank holds benchmark rate at 3%

After six months of aggressive interest-rate cuts aimed at boosting economic growth, the Reserve Bank of Australia left its key interest rate at 3%, the lowest in 50 years. The decision followed the release of data showing that approvals for construction projects increased by 3.5% in March

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First truly actively managed ETF makes debut

First truly actively managed ETF makes debut

The first exchange-traded fund whose managers pick its stocks is making its debut Monday.
Unlike other ETFs, which mainly track indexes, the "actively managed" Grail American Beacon Large Cap Value ETF will be comprised of names that the ETF's managers choose based on research aimed at finding good, cheap stocks.
A few other ETFs bill their portfolios as "actively managed," meaning the stocks aren't bought simply because they mirror those in an index such as the Standard & Poor's 500-stock index. But in those actively managed ETFs, offered by Invesco Ltd.'s PowerShares Capital Management LLC, managers buy stocks based on computer models

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American Export analysis

American Export analysis( data)

Eurozone unemployment spikes to 8.9%

Eurozone unemployment spikes to 8.9%

Despite growing optimism from businesses and consumers, unemployment in the 16-nation eurozone surged to 8.9% in March, the highest rate in almost five years, according to the EU's statistics office. Across all 27 EU countries, joblessness edged up from February's 8.1% to 8.3% in March.

Eurostat's first estimate for inflation was the same as March and well below the European Central Bank target of just under 2 percent. It won't give details for each nation until May 15.
EU officials forecast that some 3.5 million jobs will be lost in the EU this year — although employers say that will likely be far higher at around 4.5 million.
Spain, hit hard by a collapsing housing boom and lower tourist numbers, now has the highest jobless rate in the EU at 17.4 percent. More than a third of Spanish workers under the age of 25 are out of a job.

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Asian export decline & South Korea's exports plummet 19%

Asian export decline & South Korea's exports plummet 19%

Marking six straight months of decline, South Korea's export volume dropped 19% in April. Although the nation's export-driven economy has been hit hard by the recession, it has not suffered the spectacular downturns seen in Taiwan and Japan, largely because of the pricing advantage it gets from the weakness of the South Korean currency, the won.

India, Indonesia and South Korea reported significant year-on-year declines in exports on Friday.However, a growing gap in trade performance was underlined by India’s latest figures, with exports tumbling 33 per cent in March to $11.5bn (€8.7bn, £7.7bn) from a year earlier – the biggest drop on record.

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Japan's manufacturing sector starts growing again:

Japan's manufacturing sector starts growing again

After six months in decline, Japanese manufacturers reported that industrial output rose in March, primarily in general machinery and electronic components. The manufacturers projected accelerating growth, following up last month's 1.6% expansion with an estimated 4.3% increase this month and 6.1% growth in May. "After a heavy correction that began last autumn - production fell 35 percent between July and February - it appears that progress has been made on the production and inventory fronts.

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or

http://www.forbes.com/feeds/ap/2009/04/30/ap6358876.html

U.S. economy shrinks more than expected

U.S. economy shrinks more than expected

The U.S. economy contracted at a steeper-than-expected pace in the first quarter, weighed down by sharp declines in exports and business inventories, according government data on Wednesday that showed the economy was still deep in recession.The Commerce Department said on Wednesday inventories were drawn down by a record $103.7 billion -- potentially good news for the economy because it suggests businesses have cut their stockpiles of merchandise to levels that will let them start placing new orders, stimulating production.

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CHINA IMPORT & EXPORT ANALYSIS

(source department general economic affairs)

CHINA IMPORT & EXPORT ANALYSIS

China import and export analysis shows the sign of amazing hardwork, dignity and prosperity.

CHINA 1999

Export 194.9 ($ billion)
Import 165.7 ($ billion)
Balance 29.2 ($ billion)

CHINA 2000

Export 249.2 ($ billion)
Import 225.1 ($ billion)
Balance 24.1 ($ billion)

CHINA 2001

Export 266.2 ($ billion)

Import 243.6 ($ billion)

Balance 22.5 ($ billion)

CHINA 2002

Export 325.6 ($ billion)
Import 295.2 ($ billion)
Balance 30.4 ($ billion)

CHINA 2003

Export 438.2 ($ billion)

Import 412.8 ($ billion)

Balance 25.5 ($ billion)

CHINA 2004

Export 593.3 ($ billion)
Import 561.2 ($ billion)
Balance 32.1 ($ billion)

CHINA 2005

Export 762.0($ billion)

Import 660.0 ($ billion)

Balance 102 ($ billion)

CHINA 2006

Export 969.1($ billion)
Import 791.6 ($ billion)
Balance 177.5 ($ billion)

CHINA 2007

Export 1218.6($ billion)
Import 955.8 ($ billion)
Balance 262.2($ billion)

CHINA 2008

Export 1428.5($ billion)
Import 1133.1 ($ billion)
Balance 295.5($ billion)

Now compare that china has export sale from 194.9 ($ billion) to 1428.5($ billion) within nine years which is 656% growth. and Balance from 29.2 ($ billion) to 295.5($ billion) which is 911.9% growth. The china's top trade partners 2008 are:

1. United states


2. japan


3. Hong Kong


4. South Korea


5. Taiwan


6. Germany


7. Australia


8. Russia


9. malaysia


10. singapore

Domestic demand to reduce China's current-account surplus, Zhou says

Domestic demand to reduce China's current-account surplus, Zhou says

The expansion of China's domestic spending will steadily shrink the nation's enormous current-account surplus, says Zhou Xiaochuan, governor of the People's Bank of China. China's economic-stimulus efforts are starting to produce some positive results, Zhou said, adding that the current-account surplus "will no longer be a serious problem" in the medium term.

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China close to spending $10 billion on stimulus:

China close to spending $10 billion on stimulus:

The government of China is getting ready to spend about $10 billion of its previously announced $586 billion economic-stimulus package, the state newspaper the Economic Observer reported, quoting an unidentified official of the National Development and Reform Commission. This phase of stimulus spending will principally go into infrastructure projects, the newspaper said.

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Major high-tech firms slash costs to pump out profit

Major high-tech firms slash costs to pump out profit

With technology giants such as Apple, Google and IBM beating analysts' earnings estimates, the tech sector is gaining respect for its ability cut costs and hang onto profitability through a serious downturn. Analyst Rob Enderle said high-tech is positioned to respond to changing conditions, and "tech might very well lead us out of the recession

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China's appetite for U.S. debt appears to be waning

China's appetite for U.S. debt appears to be waning

The Chinese government owns a substantial portion of U.S. Treasuries, making it the country's biggest creditor. As the U.S. looks to sell huge sums of debt to pay for its economic stimulus, signs are emerging that China might not be as interested as it used to be. Also, People's Bank of China Governor Zhou Xiaochuan recently suggested changing the reserve currency, sparking concerns that the Asian giant is turning its back on the U.S. dollar

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Worst of recession over for eurozone, index suggests

Worst of recession over for eurozone, index suggests

An unexpected, sharp rise in the European purchasing-managers index, widely followed as a leading economic indicator, points to the possibility that the eurozone has already gone through the worst of the recession and is poised to move in the direction of growth. The composite purchasing-managers index posted its biggest improvement this month since the survey began in 1998

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Think tanks: Germany's economy to contract 6% this year

Think tanks: Germany's economy to contract 6% this year

Germany's economy is headed for a 6% decline this year that will push unemployment to more than 10% next year, according to research by eight think tanks working for the German Economy Ministry. Timo Klein, a spokesman for IHS Global Insight, said the joint forecasts offer a "very dark picture of German economic prospects in the foreseeable future

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U.K. economy shrinks more than expected

U.K. economy shrinks more than expected

Britain's GDP fell 1.9% in the first quarter, worse than the expected 1.5% and last quarter's 1.6%. Manufacturing was the major culprit, having declined 6.2%. "I very much doubt that GDP is going to contract at these sort of rates for any longer, but I do think it will still contract all throughout 2009," said George Buckley of Deutsche Bank. "So there's still a lot of weakness to come, but not as weak as we're seeing today

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Britain's budget bets on fast recovery

Britain's budget bets on fast recovery

Amid a deepening downturn and an International Monetary Fund forecast of a feeble recovery beginning next year, U.K. Chancellor Alistair Darling presented Parliament with a budget that gambles on growth returning to Britain's economy "towards the end of this year" and a rate of growth in 2010 much greater than what many economists predicted. Vince Cable, Treasury spokesman for the opposition Liberal Democrat party, said the government had been "totally dishonest" in anticipating a "spectacular" recovery.

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McDonald's first-quarter profit rises

McDonald's first-quarter profit rises

McDonald's Corp reported a higher quarterly profit on Wednesday, as global sales at established restaurants rose despite a recession, and the company said its April same-store sales are trending at least as strong or better than results from the first quarter.

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IMF acknowledges global economy in recession

IMF acknowledges global economy in recession

The International Monetary Fund, which had been reluctant to say the global economy is in recession, acknowledged the situation and said a turnaround is not likely until next year. "By any measure, this downturn represents by far the deepest global recession since the Great Depression," according to the IMF's twice-yearly World Economic Outlook.

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Economists see advantages in breaking up huge banks

Economists see advantages in breaking up huge banks

The idea of breaking up the biggest financial companies in the U.S. into smaller entities, which would have problems that are easier to spot, diagnose and fix, is gaining support from world-famous economists. Nobel Prize-winning economist Joseph Stiglitz said the country has "little to lose, and much to gain, by breaking up these behemoths, which are not just too big to fail but also too big to save

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Ireland publishes "Recession Survival Guide"

Ireland publishes "Recession Survival Guide

After so many years of runaway prosperity, the Irish might have forgotten how to handle hard times. To remind them, the government issued the "Recession Survival Guide" to help people live on reduced income. The government said a few simple steps can save consumers as much as €3,000 a year. Some economists complained that the advice could drive down consumer spending, thereby increasing unemployment

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Bank of Japan expected to slash GDP forecast

Bank of Japan expected to slash GDP forecast

With experts generally agreeing that Japan's economy is contracting at twice the rate anticipated by the Bank of Japan, the central bank is likely to reduce its economic and price forecasts next week, economists said. Policymakers can be expected to take a fairly cautious view of the outlook because "the risk lingers that growth will stumble after being lifted temporarily by fiscal stimulus," said Mari Iwashita, chief market economist at Daiwa SMBC Securities.

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Pakistan Monetary policy April-June 2009

Pakistan Monetary policy April-June 2009


Therefore, SBP has decided to lower the policy discount rate by
100 bps to 14 percent effective 21 April, 2009.

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BABY OF THE YEAR 2009

BABY OF THE YEAR 2009

Congratulations to baby family and it won $ 300 from me.

U.K. recession bottoming out, business group says

U.K. recession bottoming out, business group says

The U.K. is not going to see a recovery until next year, but the nation's economy has hit bottom, with significant further decline unlikely, according to the Confederation of British Industry. The CBI forecast that Britain's GDP will contract by 3.9% this year.

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China wants closer surveillance of major reserve currencies

China wants closer surveillance of major reserve currencies

China sovereign wealth fund plans more investments in Europe

Reforms to the international financial system should include "strengthened surveillance" of the economic policies of nations that issue the most important reserve currencies used in global trade, said Wen Jiabao, China's premier. The U.S. was not mentioned by name, but Chinese officials recently expressed concern about the nation's assets held in U.S. dollars.

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Google’s Sales Growth Slows as Economy Hampers Demand

Google’s Sales Growth Slows as Economy Hampers Demand

Google Inc., owner of the world’s most popular search engine, reported slower profit and sales growth in the first quarter as the recession discouraged users from clicking on ads. Net income climbed 8.9 percent to $1.42 billion, or $4.49 a share, the company said yesterday. Excluding revenue passed on to partner sites, sales were $4.07 billion, compared with the average analyst estimate of $4.1 billion in a Bloomberg survey.The slump in advertising spending led to Google’s first sequential drop in quarterly sales since it went public in 2004. The company is now cutting research, marketing and side projects to cope with the economy, which shrank 6.3 percent last quarter.

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Citigroup posts smaller loss; shares surge

Citigroup posts smaller loss; shares surge

Citigroup Inc said on Friday that cost-cutting efforts and improved investment banking and trading results led to a substantially smaller first-quarter loss for shareholders, despite a big increase in credit costs from consumer banking and credit cards.

Citigroup's quarterly loss narrowed to $966 million, or 18 cents per share, from $5.19 billion, or $1.03, a year earlier. According to Reuters Estimates, the loss was 12 cents per share before one-time items. On that basis, analysts had expected a loss of 30 cents per share

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Whistle-blower's tip blew Satyam fraud wide open

Whistle-blower's tip blew Satyam fraud wide open

It was an anonymous e-mail to a board member that forced into the open the accounting fraud that nearly destroyed Satyam Computer Services, according to a 14,000-page report prepared by India's Serious Fraud Investigation Office. Satyam's chairman confessed to the fraud and announced it publicly, but it was a whistle-blower who set off events that gave him no alternative, according to the report.

According to the investigation report, the falsification of the company’s accounts began in the financial year 2001-02 after there was an informal meeting between Ramalinga Raju, his brother Rama Raju and Mr Srinivas, apart from the company’s vice-president finance G Ramakrishna. The scope of the falsification of accounts, which was around Rs 234 crore in 2001-02 ballooned to Rs 5,422 crore by 2007-08 and Rs 7,333 crore by end-September 2008, the official said.

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China's growth grinds to slowest rate in 10 years

China's growth grinds to slowest rate in 10 years

Marking its slowest growth in a decade, China posted a GDP expansion of 6.1% in the first quarter, down 4.5 percentage points from the first quarter of 2008, said Ma Jiantang, director the nation's National Bureau of Statistics. Industrial output during the quarter expanded 5.1% year on year, while the consumer-price index declined 1.2% in March.

The country's foreign exchange reserves rose 16 percent year-on-year to 1.9537 trillion U.S. dollars by the end of March.

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IBM not interested in Sun at any price:

IBM not interested in Sun at any price

Sun Microsystems Inc would be willing to resume takeover talks with International Business Machines Corp if IBM made a stronger commitment to closing a deal, Bloomberg said, citing two people familiar with the matter.

IBM had withdrawn a $7 billion offer for Sun earlier this month, after the smaller company rejected the bid of up to $9.40 per share as too low, sources with knowledge of the matter have said.

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Wal-Mart CEO doesn't see a quick end to recession

Wal-Mart CEO doesn't see a quick end to recession

The head of Wal-Mart Stores Inc said on Wednesday that he still saw a "lot of stress" in the economy and did not anticipate a quick end to the recession.There's still a lot of stress," Wal-Mart CEO Mike Duke said on a taped interview on NBC's "Today Show."

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PwC warns banks to hold more assets in subsidiaries

PwC warns banks to hold more assets in subsidiaries

PricewaterhouseCoopers, the administrator for Lehman Brothers' European operations, said international banks should increase assets held in subsidiaries to avoid a repeat of the turmoil caused by Lehman's collapse. Meanwhile, the U.K. Financial Services Authority is advocating a series of proposals that would require British subsidiaries to hold more assets. Banks are concerned that the requirements would hurt their competitiveness and tie up capital

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Some Japanese firms defy recession, post record profits

Some Japanese firms defy recession, post record profits

Despite a serious economic downturn sweeping across Japan, many retailers and restaurants are posting all-time record profits. Companies that deliver time-saving convenience and lower prices are thriving as Japanese consumers embrace products that satisfy basic needs inexpensively.

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IFRS (COMING SOON)

IFRS (COMING SOON)

The detail analysis and discussion on all IFRS along with illustrations will be start from 15/06/2009 inshallah.

FUNCTIONS OF MONEY

FUNCTIONS OF MONEY

Money

• Commodity or token
• Generally acceptable as means of payment
• i-e method of setting a debt

FUNCTIONS OF MONEY

1. Medium of exchange (object that is generally acceptable in exchange for goods and services.)
2. Unit of account (Agreed measure for stating the prices of goods and services.)
3. Store of value ( Held and exchanged later for goods and services

IN U.S money comprises of:

• Currency (notes & coins)
• Deposits (At banks & depository institutions)

Official measures of money

M1

• Currency and travellers checks
• Checking deposits

M2

• M1
• PLUS Time deposits
• Plus Savings deposits
• Plus Money market mutual funds & other deposits

M1 is money. M2 is counted as money. Deposits are money but checks and credit cards are not.

China announces aid package for ASEAN countries

China announces aid package for ASEAN countries

China said it will offer $15 billion in credits and a $10 billion infrastructure fund to its neighbors in Southeast Asia as part of a program to help them get through the economic downturn. The aid will be available to the 10 members of the Association of Southeast Asian Nations, the Chinese government said

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Portfolio management process

Portfolio management process

The portfolio management process consists of:

1) Policy statement

• Construction
• Risk definition
• Providing road map

2) Financial and Economic environment analysis

• Study current environment
• Predict future environment

Both Policy statement and Financial and Economic environment analysis are used to construct investment strategy

3) Portfolio of investments

• Construction of portfolio
• Comprising asset class

4) Feed back

• Comparison of actual results with planned

The portfolio management process is a continuous process.

Gwadar Sea Port

About Gwadar

Gawadar derives its name from two Balochi words “GWAT” wind and “DAR” door. Gwadar district was created on 1st July 1977. It consists of two sub divisions viz Gwadar and Pasni. It is bounded on the north by Turbat (KECH) and Awaran districts, on the east by Awaran and Lasbela districts, on the south by Arabian Sea and on the west by Iran. Total area of the district is 15,216 sq.km and population is 172,948. The coast line of Gwadar is about 600 kms long.

The area is fast developing into an industrial zone based on fisheries. Three mega projects, Gawadar deep sea port, costal highway and 132 kv electricity line will be completed by December 2003. There are four airports: Gawadar, Jiwani, Pasni and Ormara. There are daily flights between Karachi and these places. Gwadar has two motels, two local hotels and restaurants with basic facilities.

Gwadar Sea Port

The Gwadar deep-sea port emerges as a place of great strategic value, enhancing Pakistan's importance in the whole region, extending from the Persian Gulf through the Indian Ocean to Southeast Asia and the Far East.Gwadar port is on the Arabian Sea at the mouth of the Gulf through which 30% of the world's daily oil supply passes.

The Gwadar Port was built on a turnkey basis by China and signifies an enlarging Chinese footprint in a critically important area. Gwadar Port became operational in 2008, with the first ship to dock bringing 52000 tonnes of wheat from Canada.

Commercially, it is hoped that the Gwadar Port would generate billions of dollars in revenues and create at least two million jobs.In 2007, the government of Pakistan handed over port operations to PSA Singapore for 25 years, and gave it the status of a Tax Free Port for the following 40 years. The main investors in the project are Pakistani Government and People's Republic of China. China's plan to be engaged in many places along oil and gas roads is evident.

BENEFITS

Besides the Geo-strategic importance mentioned earlier, some of the evident economic benefits of the development of Gwadar Port are;

* Capitalize on opportunities for trade with landlocked Central Asian States and Afghanistan.

* Promote trade and transport with Gulf States.

* Trans-shipment essentially of containerized cargo.

* Unlock the development potential of hinterland.

* Diversion of influx of human resources from up country to Gwadar instead of Karachi.

* Socio economic uplift of the province of Baluchistan.

* Establishment of shipping related industries.

* Oil storage, refinery and petrochemicals

* Export Processing and Industrial Zones

* Reduce congestion & dependency on existing Ports Complex at Karachi/PQA.

* Serve as an alternate port to handle Pakistani trade in case of blockade of existing ports.

* Will become a Regional Hub for major trade and commercial activities.

Pre-feasibility Studies

Pre-feasibility Studies

Pre-feasibility studies are well researched yet generic due diligence reports that facilitate potential entrepreneurs in project identification for investment

A typical pre-feasibility study provides:

1) Comprehensive information for investment opportunity in a business.

2) Specific information regarding different business areas like, marketing, technical, industrial information etc. for the existing entrepreneurs to improve their exiting setup.

3) Project investment information and financial projections to support viability of the business.

There are 124 Pre-feasibility Studies are available relating to agriculture , carpets, food, IT , services etc.

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U.S. job losses total 742,000 for March

U.S. job losses total 742,000 for March

Layoffs in the U.S. private sector in March outstripped economists' forecasts, reaching 742,000, compared with the 663,000 that experts expected, according to ADP Employer Services. Businesses will have to see more evidence that the downturn is leveling out "before the drop in payrolls will slow," said Ian Shepherdson, chief U.S. economist at High Frequency Economics

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Islamic finance expected to hit $1.6 trillion by 2012

Islamic finance expected to hit $1.6 trillion by 2012

A report from consultancy Oliver Wyman predicts that assets of the Islamic finance industry worldwide will increase to roughly $1.6 trillion by 2012. Currently, the industry is estimated to have assets of as much as $1 trillion. The report identifies growth opportunities in Southeast Asia, Pakistan and the Middle East

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Royal Bank of Scotland cuts 9,000 jobs

Royal Bank of Scotland cuts 9,000 jobs

Anger has erupted after the Royal Bank of Scotland announced plans to cut 9,000 jobs, with half of the losses planned in Britain.

The scale of the part-nationalised lender's latest redundancy programme – under plans to cut 9,000 technology, property, operations and processing jobs worldwide in the next two years – provoked union outrage.

The bank will cut 4,500 of these jobs in Britain in a clear-out of its back-office operations - on top of the 2,700 UK positions lost in the retail and corporate bank earlier this year.

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Exchange-traded fund introduction

Exchange-traded fund

An exchange-traded fund (or ETF) is an investment vehicle traded on stock exchanges, much like stocks. An ETF holds assets such as stocks or bonds and trades at approximately the same price as the net asset value of its underlying assets over the course of the trading day. Most ETFs track an index, such as the S&P 500 or MSCI EAFE. ETFs may be attractive as investments because of their low costs, tax efficiency, and stock-like features.

A new investing trend of increasing importance is the exchange-traded funds (ETFs). These new financial assets have some characteristics of index mutual funds, closed-end funds, and even individual stocks. An ETF is a basket of stocks that tracks a particular sector, investment style, geographical area, or the market as a whole.

ETFs have characteristics of both direct and indirect investing.

TYPES OF ETFS

1. Broad Domestic Market Index ETFs

ETFs that fall into this category track a market index. They follow an index based on a country’s stock market and are usually the most active ETFs on that exchange.

2. Style ETFs

Some ETFs track a certain investment style or market capitalization (large-cap, small-cap). Style ETFs are most actively traded in the United States and exist on growth and value indexes developed by S&P / BARRA and Russell.

3. Sector or Industry ETFs

ETFs that fall into this category track a sector index or a basket of stocks representing a certain industry.

4. Country or Region ETFs

There are certain ETFs that track the performance of foreign country and regional indexes. This is one of the fastest-growing segments of ETF categories

Russia to implement $111.5 billion stimulus, Putin says

Russia to implement $111.5 billion stimulus, Putin says

Bracing for a year "that will be very hard for us," Russian Prime Minister Vladimir Putin told the nation's lower house of parliament that the government is readying a $111.5 billion stimulus. So far in the downturn, he said, Russia has "managed to avoid the worst scenario.

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China's economy could rebound this year, World Bank says

China's economy could rebound this year, World Bank says

China could turn around its economic slowdown by midyear, then go on to return stability to its neighbors across Asia, according to the World Bank. Driven by the government's mammoth economic stimulus, China's recovery "is likely to begin this year and take full hold in 2010," the World Bank said

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More economists see U.S. starting recovery this summer

More economists see U.S. starting recovery this summer

With stocks rallying and some economic indicators turning positive, increasingly more economists are predicting that a U.S. recovery is not far away. Some even suggested that growth will be robust when it returns rather than a feeble upturn. Lakshman Achuthan, managing director of the Economic Cycle Research Institute, said recovery could be as little as four months away

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Retail sales, producer prices slide in Europe

Retail sales, producer prices slide in Europe

In Europe, the fall in February's producer prices outstripped predictions by economists, and the drop in retail sales set a record, raising concerns that the region is on the verge of deflation. Prices at the factory gate in the eurozone declined 1.8%, the most since April 1999, and retail sales fell 4%, the biggest drop since the rate was first collected in 1996

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Sun shares drop on failed IBM talks

Sun shares drop on failed IBM talks

Shares of Sun Microsystems Inc tumbled 24 percent on Monday after the company rejected rival computer and software maker International Business Machines Corp's $7 billion offer.

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Investors' confidence strong for Brazil, China, India

Investors' confidence strong for Brazil, China, India

Despite the recession, investment capital is flowing into funds that focus on the emerging markets of Brazil, China and India, while investors are growing negative about Russia, Turkey, and Eastern and Central Europe, according to a survey of 156 financial institutions conducted by the Emerging Markets Private Equity Association. Of the respondents, 77% said they anticipate returns of more than 16% from equity investments in emerging markets during the next three to five years

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Hong Kong in worst economic crisis since WWII

Hong Kong in worst economic crisis since WWII

Hong Kong's economy, ravaged by rapid deterioration in the trade, property and finance sectors, is in the midst of its greatest challenge since World War II, said Donald Tsang, the Chinese territory's CEO. The government is prepared to implement another round of stimulus spending, about midyear, if necessary. With nearly $60 billion in reserves, Hong Kong is well positioned to act decisively, Tsang said

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What is the Balanced Scorecard?

What is the Balanced Scorecard?

The balanced scorecard is a strategic planning and management system used to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organizational performance against strategic goals

The four perspectives


The grouping of performance measures in general categories is seen to aid in the gathering and selection of the appropriate performance measures for the enterprise। Four general perspectives have been proposed by the Balanced Scorecard:

Financial perspective;
Customer perspective;
Internal process perspective;
Innovation and learning perspective.

The financial perspective examines if the company’s implementation and execution of its strategy are contributing to the bottom-line improvement of the company। It represents the long-term strategic objectives of the organization and thus it incorporates the tangible outcomes of the strategy in traditional financial terms. Some of the most common financial measures that are incorporated in the financial perspective are EVA, revenue growth, costs, profit margins, cash flow, net operating income etc।

The customer perspective defines the value proposition that the organization will apply to satisfy customers and thus generate more sales to the most desired (i।e. the most profitable) customer groups. The measures that are selected for the customer perspective should measure both the value that is delivered to the customer (value proposition) which may involve time, quality, performance and service, and cost, and the outcomes that come as a result of this value proposition (e.g., customer satisfaction, market share).

The internal process perspective is concerned with the processes that create and deliver the customer value proposition। It focuses on all the activities and key processes required in order for the company to excel at providing the value expected by the customers both productively and efficiently.

The innovation and learning perspective is the foundation of any strategy and focuses on the intangible assets of an organization, mainly on the internal skills and capabilities that are required to support the value-creating internal processes. The Innovation & Learning Perspective is concerned with the jobs (human capital), the systems (information capital), and the climate (organization capital) of the enterprise

IMF Executive Board Concludes 2009 Article IV Consultation with Pakistan

IMF Executive Board Concludes 2009 Article IV Consultation with PakistanPublic Information Notice

Public Information Notices (PINs) form part of the IMF's efforts to promote transparency of the IMF's views and analysis of economic developments and policies. With the consent of the country (or countries) concerned, PINs are issued after Executive Board discussions of Article IV consultations with member countries, of its surveillance of developments at the regional level, of post-program monitoring, and of ex post assessments of member countries with longer-term program engagements. PINs are also issued after Executive Board discussions of general policy matters, unless otherwise decided by the Executive Board in a particular case.

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German companies adjust approach to deals in Russia

German companies adjust approach to deals in Russia

German companies looking to Russia for opportunities to expand are not discouraged by the economic downturn, but they have sharpened their focus on retailing, particularly the food sector. Major German supermarket chains, including Aldi and Liddl, are looking for acquisition targets in Russia. Analysts said Russian companies that handle about 27% of food retailing in the country are looking for buyers

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Your Money - What the Bank Does

Your Money - What the Bank Does



This pamphlet discusses the work of the Bank in a short and accessible way for the general public. It outlines the importance of low inflation, trust in banknotes, and a stable financial system.



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Courtesy bank of England

The Production Possibilities Frontier

The Production Possibilities Frontier (Introduction)

The PPF curve shows the possible combinations of goods and services available to an economy, given that all productive resources are fully and efficiently employed.

When the economy is at point i, resources are not fully employed and/or they are not used efficiently.

Point g is desirable because it yields more of both goods, but not attainable given the amount of resources available.

Point d is one of the possible combinations of goods produced when resources are fully and efficiently employed.

SWOT ANALYSIS

SWOT ANALYSIS INTRODUCTION

SWOT stands for:
• Strengths
• Weaknesses
• Opportunities
• Threats

A SWOT Analysis is a strategic planning tool used to evaluate the Threats, Opportunities and Strengths, Weaknesses, involved in a project or in a business venture or in any other situation requiring a decision.
This is an important tool in order to formulate strategy. This Matrix is an important matching tool that helps managers develops four types of strategies: SO Strategies (strength-opportunities), WO Strategies ( weakness- opportunities), ST Strategies (strength-threats), and WT Strategies (weakness-threats).

Strengths are attributes of the organization that are helpful to the achievement of the objective.

Weaknesses are attributes of the organization that are harmful to the achievement of the objective.

Opportunities are external conditions that are helpful to the achievement of the objective.

Threats are external conditions that are harmful to the achievement of the objective.

Strengths and weaknesses are internal factors. For example, strength could be your specialist marketing expertise. A weakness could be the lack of a new product.

Opportunities and threats are external factors. For example, an opportunity could be a developing distribution channel such as the Internet, or changing consumer lifestyles that potentially increase demand for a company's products. A threat could be a new competitor in an important existing market or at echnological change that makes existing products potentially obsolete.

Conclusion

Successful businesses build on their strengths, correct their weaknesses and protect against internal vulnerabilities and external threats. They also keep an eye on their overall business environment and spot and exploit new opportunities faster than competitors. SWOT analysis is a tool that helps many businesses in this process.

SWOT analysis is based on the assumption that if managers can carefully review such strengths, weaknesses, opportunities, and threats, a useful strategy for ensuring organizational success will become evident to them.

British manufacturing shows signs of revival

British manufacturing shows signs of revival

The Purchasing Managers Index, a closely watched measure of U.K. manufacturing, spiked up from 34.9 in February to 39.1 in March, leading some economists to suggest that Britain's recession has hit bottom and the economy is poised for recovery. The latest figure, based on a combination of factory production and unfilled orders for manufactured items, marks the highest point for the index since the collapse of Lehman Brothers

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3 major economies in Asia sink deeper into crisis

3 major economies in Asia sink deeper into crisis

The latest economic data from Japan, China and South Korea prove that although there are signs that the global economic downturn is slowing, the picture for Asia is growing ever darker. A widely followed survey of sentiment among manufacturers in Japan shows the greatest pessimism since 1974, when the survey was first conducted

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Factors of Production (Introduction)

Factors of Production

Factors of production are the resources that are used to produce goods and services

1. Natural resources:

The things created by acts of nature such as land, water, mineral, oil and gas deposits, renewable and nonrenewable resources.

2. Labor:

The human effort, physical and mental, used by workers in the production of goods and services.

3. Physical capital.

All the machines, buildings, equipment, roads and other objects made by human beings to produce goods and services.

4. Human capital:

The knowledge and skills acquired by a worker through education and experience.

5. Entrepreneurship:

The effort to coordinate the production and sale of goods and services. Entrepreneurs take risk and commit time and money to a business without any guarantee of profit.

IMF Completes First Review Under Stand-By Arrangement with Pakistan and Approves US$847.1 Million Disbursement

IMF Completes First Review Under Stand-By Arrangement with Pakistan and Approves US$847.1 Million Disbursement

The Executive Board of the International Monetary Fund (IMF) today completed the first review of Pakistan's economic performance under a program supported by a 23-month Stand-By Arrangement (SBA). The completion of the review enables the immediate disbursement of an amount equivalent to SDR 568.5 million (about US$ 847.1 million), bringing total disbursements under the program to an amount equivalent to SDR 2.64 billion (about US$3.93 billion).

For press release from IMF

BOND INDENTURE INTRODUCTION

BOND INDENTURE INTRODUCTION

The contract that specifies all the rights and obligations of the issuer and the owners of a fixed income security is called the bond indenture. The indenture defines the obligations of and restrictions on the borrowed and forms the basis for tall future transactions between the bondholder and the issuer. These contract provisions are known as covenants and include both negative covenant (prohibitions on the borrower) and affirmative covenants(actions that the borrower promises to perform) sections.

Negative covenants include restrictions on asset sales ( the company can't sell assets that have been pledged as collateral), negative pledge of collateral (the company can't claim that the same assets back several debt issues simultaneously), and restrictions on additional borrowings (the company can't borrow additional money unless certain financial conditions are met).

Affirmative covenants include the maintenance of certain financial ratios and the timely payment of principal and interest. For example, the borrower might promise to maintain the company's current ratio at a value of two or higher. If this value of the current ratio is not maintained, then the bonds could be considered to be in (technical) default.

Difference between equity security and fixed income security

Difference between equity security and fixed income security


Equity Securities

The most important equity security is common stock. Stock represents ownership interest in
a corporation. Equity securities may pay dividends from the company’s earnings, although
the company has no legal obligation to do so. Most companies do pay dividends, and most
companies try to increase these dividends on a regular basis.
Unlike fixed-income securities, equity securities represent an ownership interest in a corporation. These securities provide a residual claim—after payment of all obligations to fixed-income claims on the income and assets of a corporation

Fixed Income Securities

A fixed income security usually provides a known cash flow with no growth in the income stream. Bonds are the most important fixed income securities.A bond is a legal obligation to repay a loan’s principal and interest, but carries no obligation to pay more than this. Interest is the cost of borrowing money. Most preferred stocks pay a fixed annual dividend that does not change overtime consequently. For investment purposes, preferred stock is considered a fixed income security.

Canadian official projects 8.5% contraction in Q1 GDP

Canadian official projects 8.5% contraction in Q1 GDP

Canada's GDP is headed toward a first-quarter contraction of 8.5%, said Kevin Page, the Canadian Parliament's independent budget officer. If Page's projections are correct, Canada will suffer this year its worst economic conditions since the end of World War II, a finance critic from the Liberal Party said. Page said he was handicapped by the government's refusal to give him some of the data he needed. Financial Post (Canada)/Reuters .

Break Even Analysis

Break Even Analysis

It is the point at which total variable and fixed costs are compared with sales revenue in order to determine the level of sales volume, sales value or production at which the business makes neither a profit nor a loss.

One of the most common tools used in evaluating the economic feasibility of a new enterprise or product is the break-even analysis. The break-even point is the point at which revenue is exactly equal to costs. At this point, no profit is made and no losses are incurred. The break-even point can be expressed in terms of unit sales or dollar sales. That is, the break-even units indicate the level of sales that are required to cover costs. Sales above that number result in profit and sales below that number result in a loss. The break-even sales indicates the dollars of gross sales required to break-even.

Break even point (for output) = fixed cost / contribution per unit

Contribution per unit= selling price (p.u) - variable cost (p.u)

Break even point (for sales) = fixed cost / contribution (pu) * Selling price (pu)

Fixed Costs

Fixed costs are those business costs that are not directly related to the level of production or output. i-e, even if the business has a zero output or high output, the level of fixed costs will remain broadly the same.

Examples are;

Admin expenses
Rent of office building
Marketing and research cost
etc.

Variable Costs

Variable costs are those costs which vary directly with the level of output.

Examples are;

Manufacturing expenses i-e labour cost, raw material cost etc

Assumptions are:

It assumes that fixed costs (FC) are constant.
It assumes average variable costs are constant per unit of output, at least in the range of likely quantities of sales.
It assumes that the quantity of goods produced is equal to the quantity of goods sold

Illustration

Abc limited has following monthly data. calculate break even point.

Average Selling price per unit $ 10
Average Variable cost per unit $ 6
Fixed cost (Estimated) $ 20,000

Break Even analysis

Monthly Sales (units) 5,000
Monthly Sales ($) 50,000

Therefore, no profits are made from the sale of this product until more than 5,000 units are sold or more than $ 50,000 in gross sales is generated.

Break-even analysis can be very helpful in the evaluation of a new venture. In most instances, success takes time.Many new enterprises and products actually operate at a loss (at a point below break-even) in the early stages of development. Knowing the price or volume necessary to break-even is critical to evaluating the time-frame in which losses are permissible. The break-even is also an excellent benchmark by which a company’s short-termgoals can be measured/tracked. Break-even analysis mandates that costs be analyzed. It also keeps a focus
connection between production and marketing.

SYSTEM SOFTWARE & APPLICATION SOFTWARE

SYSTEM SOFTWARE & APPLICATION SOFTWARE


The system software controls the computer. It communicates with computer’s hardware(key board, mouse, modem, sound card etc) and controls different aspects of operations.

It includes following sub categories:

o Operating system
o Device drivers
o Utilities

Operating system

An operating system is the program that manages all the other programs in a computer. It is a integrated collection of routines that service the sequencing and processing of programs by a computer.
So it is the the software responsible for controlling the allocation and usage of hardware resources such as memory, central processing unit (CPU) time, disk space, and peripheral devices.

Device driver

The device driver software is used to communicate between the devices and the computer. We have monitor, keyboard and mouse attached to almost all PC’s; if we look at the properties of these devices we will see that the operating system has installed special software to control these devices. This piece of software is called device driver software. When we attach a new device with the computer, we need software to communicate with this device. These kinds of software are known as device drivers e.g.CD Rom driver, Sound Card driver and Modem driver.

Utility Software

Utility software is a program that performs a very specific task, usually related to managing system resources. You would have noticed a utility of Disk Compression.Whenever you write a file and save it to the disk, Compression Utility compresses the file (reduce the file size) and write it to the disk and when you request this file from the disk, the compression utility uncompressed the file and shows its contents. Similarly there is another utility, Disk Defragmentation which is used to defragment the disk. The data is stored on the disks in chunks, so if we are using several files and are making changes to these files then the different portions of file are saved on different locations on the disk. These chunks are linked and the operating system knows how to read the contents of file from the disk combining all the chunks. Similarly when we delete a file then the place where that file was stored on the disk is emptied and is available now to store other files. As the time goes on, we have a lot of empty and used pieces on the disk. In such situation we say that the disk is fragmented now. If we remove this fragmentation the chunks of data on the disk will be stored close to each other and thus reading of data will be faster.For the purpose of removing fragmentation on the disk the Defragmentation utility is used.

Application software

A program or group of programs designed for end users. For example a program for Accounting, Payroll, Inventory Control System, and guided system for planes. GPS (global positioning system), another application software, is being used in vehicles, which through satellite determines the geographical position of the vehicle.

Most Popular Application Software Categories are:

Web browsers
Email clients
Word processors

The Global Information Technology Report 2008-2009

The Global Information Technology Report 2008-2009

The Report stresses the importance of ICT as a catalyst for growth in the current global turmoil

Denmark and Sweden once again lead the rankings of The Global Information Technology Report 2008-2009, released for the eighth consecutive year by the World Economic Forum. The United States follows suit, up one position from last year, thus confirming its pre-eminence in networked readiness in the current times of economic slowdown. Singapore (4), Switzerland (5) and the other Nordic countries together with the Netherlands and Canada complete the top 10.
The Report underlines that good education fundamentals and high levels of technological readiness and innovation are essential engines of growth needed to overcome the current economic crisis. Under the theme “Mobility in a Networked World”, this year’s Report places a particular focus on the relationship and interrelations between mobility and ICT.
With record coverage of 134 economies worldwide, the Report remains the world’s most comprehensive and authoritative international assessment of the impact of ICT on the development process and the competitiveness of nations.
The Report is produced by the World Economic Forum in cooperation with INSEAD, the leading international business school, and is sponsored by Cisco Systems.

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The Global Information Technology Report 2008-2009