Difference between Retained earnings and Reserves

 Retained earnings 

Retained earnings are part of company's net income which is left after paying out dividends to shareholders. It uses to reinvest in the main business. 

Formula = (Previous Retained earnings + Net income) - Net dividend paid to shareholders 

Reserves

Reserves refers to a fund which an enterprise creates for fulfil future contingencies and unexpected liability. It is a part of the profit it uses to meet future losses or liability. Usually company transfer certain percentage of profit to reserves every year before giving dividend. 

Russia-Ukraine Invasion effects on global economy

Russia-Ukraine war effects on global economy 

Trade and Commodities: Commodity Prices were already on the rise and the respective indices skyrocketed since the start of invasion. 

Supply Chain: Due to the accelerated demand which outstripped supply, the world saw heavily disrupted global supply chains. 

Inflation: The combination of Higher commodity prices and supply chain crunch ultimately led to spikes in both producer and consumer inflation in most developed markets. 

Finance and Investment: The sanctions will definitely affect the financial interactions between Russia and the rest of the world, as Russia's participation in the financial and payments network is technically suspended. 

Components of Intellectual Capital (IC)

Intellectual Capital is the learning capacity, ability, and knowledge of employees, which in turn, reinforces the organizations' competitive edge. Initially, the gap between a company's book value and market value treated as IC. IC is helpful in improving firms' financial and market performance. 

Components of Intellectual Capital

Human Capital: Human capital is the summation of a person's intellect and expertise used by a          company to attain its long-term gals. 

Structural Capital/ Organizational Capital: It consists of supporting structure that enable the          company to access. It consists of hierarchical structures, methods, schedules, frameworks,                      technologies, data bases and so on that stay within the company. 

Relational Capital/ Customer Capital: It is capital formed outside the organization and is mainly      linked to the market, boosting its capabilities. It shows relationship with the customers, industry,            suppliers, society, government, shareholders and relationship with other companies. 

Innovation Capital: Introduction of unique products, which give greater value to the customers. In    addition, it offers better options for consumers than competitors in terms of quality, price, and                rewards. Therefore, therefore, the company's expenditure on R&D is considered the innovation              capital. 

Process Capital: Process have evolved into a vital component of every company and a critical              instrument for defining how assets are managed. It describes how a firm prepares its activities to            achieve its goals. It is a part of Innovation Capital that encourages the development, accessibility, and    sharing knowledge. 

Methods of Raising share capital

 An existing company has three methods for expanding its share capital. 

1. First is through a fresh issue of shares to existing shareholders in proportion to shares held by them---        Right issue or Bonus issue

2. Second is by making an open offer, inviting the public in general to subscribe the shares---IPO

3. The third method is by making a bulk allotment to individuals, companies, venture capitalists or any          other person through a fresh issue----  Private placement 

Recourse Vs Non-Recourse loan

Recourse is the Lender's legal  right to collect the Borrower's pledge collateral if the borrower does not pay their debt obligation

Recourse Loan: It allows lender to pursue additional assets when a borrower defaults on a loan if the debt's balance surpasses the collateral's value. 

Non-Recourse loan: It permits the lender to seize only the collateral specified in the loan agreement, even if its value does not cover the entire debt. 

Tools of Financial Analysis

Trend Analysis: Trend analysis involves assessment of arithmetical relationship in which each item of several years  has to the same item of base years. 

Common size statements: It shown in analytical percentages of total assets, total liabilities and total sales. The total are taken as 100 and differences are expressed as a percentage. 

Independent Director

An independent director is an non-executive director of a company who helps the company in improving corporate credibility and governance standards. He or She does not have any kind of relationship with the company.