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Essentially a Property Market tool, Absorption Rate refers to the rate at which homes are sold in the market. It is given by homes sold divided by the total number of houses available in the market.Absorption cost shows the demand for houses in the market apart from showing whether there is an ample number of homes in a given market over a specific period of time. The reverse of absorption rate shows the required and probable time it would take to get the houses sold in the market completely. In accounting, businesses use the absorption rate to find the overhead ... Read More
Absorption cost is the total cost of manufacturing a product. It includes all types of costs associated right from the beginning and till the end of manufacturing a product. Labor, insurance, and costs of raw materials are included while calculating absorption costs. Companies also include overhead costs to calculate the final absorption cost.There are differences between absorption and variable costs. Absorption cost considers all costs, such as overhead costs and costs of raw materials even if all the products are not sold at the end of the accounting period. Absorption costing being applied to accounting, inventory in the balance sheet ... Read More
Absolute Return is simply the return generated by an investment vehicle. For example, the returns generated by bonds are their absolute return. Absolute Return is not compared to any other measure of the market or benchmarks. It is a single entity and is related to the performance of the investments in the market.Absolute Return Vs Relative ReturnAbsolute Return differs from Relative Return because, while calculating Relative Return, we have to take in consideration the returns of other investment funds that are active for a certain period of time.Relative return compares the performance of the investment against market value, category of ... Read More
Abnormal return refers to abnormally high or low returns of investment. In the case of an abnormal return, the performance of the investment or funds diverges from the anticipated and usual rate of return. The effects of abnormal return are short-term and they may be due to abnormal fundamentals or fraudulent behavior of the firm holding the funds. The estimated Rate of Return (RoR) which is risk-adjusted remains completely missing in case of abnormal returns.Abnormal return is different from Alpha and excessive returns which are due to the good performance of the investments managers. Cumulative Abnormal Returns (CAR) are a ... Read More
Ability to pay is a philosophy that asks individuals to pay tax according to their ability. This means that rich people should pay more in taxes than a poorer one. The ability to pay is based on the concept that since the value of one dollar is more for poorer individuals, they should pay less than the rich.The ability to pay encourages authorities to collect and levy more taxes to the rich as they are in a better position to pay more taxes. At the same time, since poorer people are unable to pay the same amount due to various ... Read More
Abenomics refers to the collective set of reforms undertaken by the Japanese government in 2012 when Shinzo Abe became the prime minister for the second time. The aim was to bring the Japanese economy out of the stagnation that started in the 1980s.Abenomics contained stimulus and various measures to bring a change to the gloomy economy out of deflation. The reforms were put in place to make the economy competitive and end the shortage of demand that lasted for at least two decades. Achieving inflation of 2% was also a major aim of Abenomics. Additionally, Abenomics sought to increase employment ... Read More
The bonds are usually rated on their creditworthiness and long-term yield. AAA is such a rating. It is considered the best rating any bond can get and as mentioned, only bonds with a high degree of creditworthiness and yield get this rating.Businesses also get AAA ratings but the guidelines are too tough. For example, in 2020 only Microsoft and Johnson & Johnson got AAA ratings. The AAA ratings are offered to bonds that are interpreted to achieve the obligations in time. As is obvious, for the same reason, AAA bonds never face a lack of investors' interest.Creditworthiness and yield are ... Read More
Accountant responsibility is the collective term associated with the responsibilities of the accountant. This may include official responsibilities including accounting or the responsibilities toward the stakeholders. In both cases, the accountant has to remain at the best of ethical standards to make the organization more accountable and high-performing in general.Responsibilities towards BusinessThe accountant looks at the profits and losses and prepares reports for the business managers for decision-making.Accountants help auditors to audit various departments, providing financial information required by them.Accountants look at the budgets, especially during the end of the financial year to make sure there is no overspending.They keep ... Read More
An Accountant is a professional who prepares, interprets, and organizes the financial transaction of a business or an individual. Although the term "bookkeeper" is often used to mean accountants, there are many differences between the two.For example, accountants usually interpret financial information while bookkeepers just compile them. To become a bookkeeper, an associate degree is required while to become an accountant at least a bachelor's degree is needed.Additionally, accountants clearing the Certified Public Accountant (CPA) are considered the best in the profession. The CPA is the gold standard in the field of accountancy.Roles of an AccountantFollowing are some of the ... Read More
China A-shares or simply A-shares are the stocks that are traded in Shanghai and Shenzhen stock exchanges. They are also called domestic shares because the Chinese currency Renminbi is needed in the trades.These shares are heavily restricted by the Chinese government and accessing them is almost impossible by foreign investors. However, the authorities have allowed some Qualified Foreign Institutional Investors (QFII) to deal in A-shares since 2003.China A-shares and China B SharesFor the foreign investors, there are B-shares that deal in Dollars. The idea is to keep foreign investors away from getting a share in Chinese companies while also allowing ... Read More