Saturday, December 29, 2007
Friday, December 28, 2007
Management Strategy Consulting - Links
Strategy+Business(Booz-Allen Hamilton)
McKinsey Quarterly(McKinsey)
Executive Agenda(A.T. Kearney)
Mercer Management Journal(Mercer Management Consulting)
Course and Direction (Center for Simplified Strategic Planning)
IdeaBridge White Papers(IdeaBridge Consulting)
Many Worlds
Harvard Business Review(Harvard Business School)
Knowledge at Wharton(University of Pennsylvania)
California Management Review (Haas School of Business)
Business Strategy Review (London Business School)
Sloan Management Review(Sloan School of Business)
CEO Refresher(Refresher Publications)
Strategic Finance(Institute of Management Accountants)
The Magazine: Strategy(Fast Company)
Management First(MCB University Press)
Wednesday, December 19, 2007
Leadership
'Lincoln on Leadership' is a prescribed text book for our leadership class. Best book on the topic. Anyone wants to be a leader should read this book to understand how Lincoln shaped America. This is still relevant in today's society. The book that has become 'Clinton's private bible about how to govern'.
Never Ever Give up - A short video on Abraham Lincoln
Monday, December 3, 2007
BATNA Negotiation - Getting to Yes
Best Alternative to Negotiated Agreement - BATNA
We had a wonderful negotiaton session. ILWs Intensive Learning Weekend.
The acronym, as you may know, stands for the ‘best alternative to a negotiated agreement’ – the options when your negotiations fail to result in an agreement. “This term was first used by Roger Fisher and William Ury of the Harvard Program on Negotiation in their famous book, ‘Getting to Yes’.”
Your BATNA determines the point at which you can say no to an unfavourable proposal, the book explains. “Thus, it is critical to know your BATNA before entering into any negotiation. If you don’t, you won’t know whether a deal makes sense or when to walk away.”
The second key concept is the reservation price, also known as the walk-away, or ‘the least favourable point at which you would accept a deal’. Together with BATNA, this gives you the confidence in negotiation.
Third, ZOPA, the ‘zone of possible agreement,’ or the range in which a deal can take place. This exists in ‘the overlap’ between the high and low limits between the parties’ reservation prices. Therefore, no ZOPA, no overlap, no agreement, “no matter how skilled the negotiators.”
Lastly, value creation has to happen through trades, meaning goods or services have only modest value to their holders compared to ‘exceptional value to the other party’.
Both parties end up satisfied, however, because “each party usually gets something it wants in return for something it values much less.”
Both parties end up satisfied, however, because “each party usually gets something it wants in return for something it values much less.”
Saturday, December 1, 2007
Economically Speaking
Here is a question that came up.
How is the price determined in a black market?
Economic Answer: The price is determined by supply and demand in a competitive market.
In a competitive market, the supply and demand determines the price. If the supply is more, the demand will be less and price will be lower. If the demand is more and the supply is less the price will be higher.
The other layman answer: Whatever the sellers asks for...
An interesting articles in New York Times:
Flesh Trade: Selling Kidneys for Money
http://www.nytimes.com/2006/07/09/magazine/09wwln_freak.html?_r=2&ex=1189569600&en=5baab363cbbfbb67&ei=5070&oref=slogin&oref=slogin
How is the price determined in a black market?
Economic Answer: The price is determined by supply and demand in a competitive market.
In a competitive market, the supply and demand determines the price. If the supply is more, the demand will be less and price will be lower. If the demand is more and the supply is less the price will be higher.
The other layman answer: Whatever the sellers asks for...
An interesting articles in New York Times:
Flesh Trade: Selling Kidneys for Money
http://www.nytimes.com/2006/07/09/magazine/09wwln_freak.html?_r=2&ex=1189569600&en=5baab363cbbfbb67&ei=5070&oref=slogin&oref=slogin
Friday, October 5, 2007
Sunday, September 30, 2007
Accounting Formulas
Basic equations
B/S: Assets = Liabilities + Owners’ equity
I/S: Revenue – Cost of Goods Sold – SG&A – Tax = Net Income
C/F: Cash flow during the year = cash flow from operation + cash flow from investing + cash flow from financing
Statement of Owners’ equity: Retained earningst = Retained earningst-1+ NIt - Dividendt
Accounts Receivable
A/REB = A/RBB + Credit Sales – Cash Received – Write-off + Recovery
ADAEB = ADABB + Bad Debt Expense – Write-off + Recovery
Two methods for determining Allowance for Bad Debts
Percentage of (Credit) Sales
− Fixes the Bad Debt Expense recorded for the year
Aging Method
− Fixes the Ending Balance of Allowance for Bad Debts
− Bad Debt Expense is as a “Plug-in”
Relevant entries
Credit sales: Dr. A/R Cr. Revenue
Record bad debt expense: Dr. Bad debt expense Cr. ADA
When bad debt happens: Dr. ADA Cr. A/R
Recovery of bad debt: Dr. A/R Cr. ADA
Inventory
INVEB = INVBB +Purchase/Production – COGS
LIFO Reserve = cumulative difference in FIFO – LIFO inventory **or**
LIFO Reserve = Ending InvFIFO – Ending InvLIFO
Change in LIFO Reserve = COGSLIFO – COGSFIFO
PP&E
PPEEB = PPEBB + Acquisitions – Disposals
Straight-line depreciation = (Purchase price – salvage value) / Useful life
AccDepEB = AccDepBB + Depreciation – AccDepDisposal
MV / Proceeds from sales = (BV-AccDep) + gain/loss
Cash flow statement
• Indirect method differs from direct method only in the CFO session.
• CFO (indirect method) = NI + depreciation – (increase in operating non-cash current assets) + (increase in operating current liabilities) – gain from sale of PPE
• • • • • • • • • • • • • • • •
Accounting For Income Taxes
• Permanent Differences: Differences between financial statement (“pretax”) GAAP income and taxable income that will never be recaptured/reversed, e.g. Government Fines, Tax-Exempt Revenue.
• Temporary Timing Differences: Differences between pretax GAAP income and taxable income that will be recaptured/reversed at some point in the future. Temporary differences create Deferred Tax Liabilities or Deferred Tax Assets
• Deferred Tax Liabilities (DTL)
Taxable Income <> Pretax GAAP Income
Taxes Payable > GAAP Tax Expense
Taxpayer pays higher taxes today. An asset must be recorded to account for the value of lower taxes to be paid at some point in the future.
Assume depreciation is the only source of deferred tax expense, then deferred tax expense = change in DTL = (tax depreciation – book depreciation) * tax rate
• • • • • • • •
Marketable securities: recording of gains and losses (or price increase/decrease):
Sales of securities Price change – not sold yet
Trading securities IS – Realized gains/losses IS – Unrealized gains/losses
Available-for-sales IS - Realized gains/losses SE – Unrealized gains/losses
B/S: Assets = Liabilities + Owners’ equity
I/S: Revenue – Cost of Goods Sold – SG&A – Tax = Net Income
C/F: Cash flow during the year = cash flow from operation + cash flow from investing + cash flow from financing
Statement of Owners’ equity: Retained earningst = Retained earningst-1+ NIt - Dividendt
Accounts Receivable
A/REB = A/RBB + Credit Sales – Cash Received – Write-off + Recovery
ADAEB = ADABB + Bad Debt Expense – Write-off + Recovery
Two methods for determining Allowance for Bad Debts
Percentage of (Credit) Sales
− Fixes the Bad Debt Expense recorded for the year
Aging Method
− Fixes the Ending Balance of Allowance for Bad Debts
− Bad Debt Expense is as a “Plug-in”
Relevant entries
Credit sales: Dr. A/R Cr. Revenue
Record bad debt expense: Dr. Bad debt expense Cr. ADA
When bad debt happens: Dr. ADA Cr. A/R
Recovery of bad debt: Dr. A/R Cr. ADA
Inventory
INVEB = INVBB +Purchase/Production – COGS
LIFO Reserve = cumulative difference in FIFO – LIFO inventory **or**
LIFO Reserve = Ending InvFIFO – Ending InvLIFO
Change in LIFO Reserve = COGSLIFO – COGSFIFO
PP&E
PPEEB = PPEBB + Acquisitions – Disposals
Straight-line depreciation = (Purchase price – salvage value) / Useful life
AccDepEB = AccDepBB + Depreciation – AccDepDisposal
MV / Proceeds from sales = (BV-AccDep) + gain/loss
Cash flow statement
• Indirect method differs from direct method only in the CFO session.
• CFO (indirect method) = NI + depreciation – (increase in operating non-cash current assets) + (increase in operating current liabilities) – gain from sale of PPE
• • • • • • • • • • • • • • • •
Accounting For Income Taxes
• Permanent Differences: Differences between financial statement (“pretax”) GAAP income and taxable income that will never be recaptured/reversed, e.g. Government Fines, Tax-Exempt Revenue.
• Temporary Timing Differences: Differences between pretax GAAP income and taxable income that will be recaptured/reversed at some point in the future. Temporary differences create Deferred Tax Liabilities or Deferred Tax Assets
• Deferred Tax Liabilities (DTL)
Taxable Income <> Pretax GAAP Income
Taxes Payable > GAAP Tax Expense
Taxpayer pays higher taxes today. An asset must be recorded to account for the value of lower taxes to be paid at some point in the future.
Assume depreciation is the only source of deferred tax expense, then deferred tax expense = change in DTL = (tax depreciation – book depreciation) * tax rate
• • • • • • • •
Marketable securities: recording of gains and losses (or price increase/decrease):
Sales of securities Price change – not sold yet
Trading securities IS – Realized gains/losses IS – Unrealized gains/losses
Available-for-sales IS - Realized gains/losses SE – Unrealized gains/losses
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