Syncapos: ...

You are not really typing and uploading...you are COPYING AND PASTING another person's job.
Whereas all your posts can be helpful to some, I think it is wrong for you to present yourself as the original author.
It is actually called PLAGIARISM.

Does this link look familiar? [url]www.terry.uga.edu/~akefalas/courses/mirrors.htm[/url]

u kno about d link yet u made no move about educating nairalanders. He's made d move and now u and kind are out to discourage...? What kind of human are u? Back off pls...!

Syncapos should be check, i guess he sells information on nairaland...moderator be inform

Sincerely, when people know a money making secret and they begin to charge for it it smells funny and cranky!
If the money making secret is really true and working then I believe they will pack and pack 1st then inform their wife and children and brothers and sisters and father and mother, etc. before thinking of outsiders on nairaland. Just my thought sirs!

Great, more pls.

na wao!you won finish person data plan?

LESSON 3 CONT.:

Other Liabilities

It includes all liabilities captured in the specific categories presented.

16 Other liabilities N12,000

Total current liabilities
Finally, the total current liabilities item sums up all of the items listed under this classification.

17 Total current liabilities N170,000

Long-term Liabilities In the matter of current liabilities, you will recall that we included debts due within one year from the balance sheet date. Here, under the heading of long-term liabilities are listed debts due after one year from the date of the financial report.

Deferred income taxes
One of the long-term liabilities on the sample balance sheet is deferred income taxes. The government provides businesses with tax incentives to make certain kinds of investments that will benefit the economy as a whole. Current and long-term debt are summed together to produce the figure listed on the balance sheet as liabilities.

LESSON 3 CONT.:

For instance, a company can take accelerated depreciation deductions for investments in plant and equipment.
These rapid write-offs in the early years of investment reduce what the company would otherwise owe in current taxes, but at some point in the future the taxes must be paid.

Companies include a charge for deferred taxes in their tax calculations on the income statement and show what taxes would be without the accelerated write-offs.

That charge then accumulates as a long-term liability on the balance sheet.

18 Deferred income taxes N16,000

Debentures

The other long-term liability on the balance sheet is 12.5% debentures due in 2020. The money was received by the company as a loan from the bond-holders, who in turn were given a certificate called a bond, as evidence of the loan. The bond is really a formal promissory note issued by the company, which in this case agreed to repay the debt at maturity in 2020 and also agreed to pay interest at the rate of 12.5% per year.

LESSON 3: HOW TO READ FINANCIAL STATEMENTS CONT.:

Bond interest is usually payable semi-annually. Typical's bond issue is called a debenture because the bonds are backed by the general credit of the corporation rather than by the company's assets. Debentures are the most common type of bond issued by large, well-established corporations today.

Companies can also issue first mortgage bonds, which offer bondholder an added safeguard because they are secured by a mortgage on all or some of the company's property.

First mortgage bonds are considered one of the highest grade investments because they give investors an undisputed claim on company earnings and the greatest safety.
If the company is unable to pay off the bonds in cash when they are due, holders of first mortgage bonds have a claim or lien before other creditors (such as debenture holders) on the mortgaged assets, which may be sold and the proceeds used to satisfy the debt.

19. 12.5% Debentures payable 2020 N130,000.

LESSON 3 CONT.:

Other long-term debt:

Other long-term debt includes all debt other than what is specifically reported on in the balance sheet. In the case of Nairaland, this debt was extinguished in 2010.

20 Other long-term debt N 0

Total liabilities

Current and long-term debt are summed together to produce the figure listed on the balance sheet as total liabilities.

21 Total liabilities N316,000

Shareholders' Equity This item is the total equity interest that all shareholders have in this corporation. In other words, it is the corporation's net worth after subtracting all liabilities. This is separated for legal and accounting reasons into the categories discussed below.

Capital Stock In the broadest sense this represents shares in the proprietary interest in the company. These shares are represented by the stock certificates issued by the corporation to its shareholders. A corporation may issue several different classes of shares, each class having slightly different attributes.

LESSON 3 CONT.:

Preferred Stock
These shares have some preference over other shares with respect to dividends and in distribution of assets in case of liquidation.

Specific provisions can be obtained from a corporation's charter. In Nairaland's case, the preferred stock is a N5.83 cumulative N100 par value, which means that each share is entitled to N5.83 in dividends a year, before any dividends are paid to the common shareholders. Cumulative means that if in any year the dividend is not paid, it accumulates in favor of the preferred shareholders and must be paid to them when available and declared before any dividends are distributed to the common stockholders. Sometimes preferred shareholders have no voice in company affairs unless the company fails to pay them dividends at the promised rate.

22 Preferred stock N5.83 cumulative, N100 par value, authorized issued and outstanding 60,000 preferred shares..

LESSON 3 CONT.:

Common Stock

Each year before common shareholders receive any dividends, preferred holders are entitled to N5.83 per share, but no more. Common stock has no such limit on dividends payable each year. In good times, when earnings are high, dividends may also be high. And when earnings drop, so may dividends.

23 Common stock N5.00 par value authorized 20,000,000 shares, issued 15,000,000 shares N75Million

Additional Paid-in Capital

This is the amount paid in by shareholders over the par or legal value of each share. Nairaland's common stock has a par value of N5.00 per share. In 1999, Nairaland sold 500,000 shares of stock for a total of N9,000.

The N9,000 was allocated on the balance sheet between capital stock and additional paid-in capital. 500,000 shares at a par value of N5.00 for a total of N2.5Million was allocated to common stock. The remaining N6.5Million was allocated to additional paid-in capital.

LESSONS 3 CONT.:

Retained Earnings
When a company first starts in business, it has no retained earnings. Retained earnings accumulate as the company earns profits and reinvests or "retains" profits in the company.

In other words, retained earnings increase by the amount of profits earned, less dividends declared to shareholders. At the end of its first year, if profits are N80,000 and dividends of N30,000 are paid on the preferred stock but no dividends are declared on the common, the balance sheet will show retained earnings of N50,000.

In the second year, if profits are N140,000 and Nairaland pays N30,000 in dividends on the preferred and N40,000 on the common, the accumulated retained earnings will be N120,000:

Balance at the end of the first year N 50,000 Net profit for second year N140,000 N190,000 Less:
all dividends N70,000 Retained earnings at the end of the second year N120,000.

LESSON 3 CONT.:

The balance sheet for Nairaland shows the company has accumulated N249,000 in retained earnings.

25 Retained earnings N249,000

Foreign Currency Translation Adjustments When a company has an ownership interest in a foreign entity and the entity's results are to be captured in the company's consolidated financial statements, the financial statements of the foreign entity must be translated to Nigeria Naira. Generally, the translation gain or loss should be reflected as a separate component of shareholders' equity called foreign currency translation adjustment. This adjustment should be distinguished from adjustments relating to transactions which are denominated in foreign currencies. The gain or loss in these cases should be included in a company's net income.

26 Foreign currency translation adjustments N1,000

LESSON 3 CONT.:

Treasury stock
When a company re-acquires its own stock, it is reported as treasury stock and is deducted from shareholder's equity. Of the cost and par methods of accounting, the former method is more commonly applied to treasury stock. Under the cost method the cost of re-acquired stock is deducted from share holders' equity.

Any dividends on shares held in the treasury should never be included as income.

27 Treasury Stock N5,000

The sum total of stock (net of treasury stock), additional paid-in capital, retained earnings and foreign currency translation adjustments, represents the total shareholder's equity.

28 Total shareholders' equity: N346,000

LESSONS 3 CONT.: JUST WHAT DOES THE BALANCE SHEET SHOW?

In order to analyze balance sheet figures, investors look to certain financial statement ratios for guidance. One of their concerns is whether the business will be able to pay its debts when they come due. They are also interested in the company's inventory turnover and the amount of assets backing corporate securities (bonds, preferred and common stock), along with the relative mix of these securities. In the following section, we discuss various ratios used for balance sheet analysis.
Net Working Capital: One very important thing to be learned from the balance sheet is net working capital or net current assets, sometimes called working capital. This is the difference between total current assets and total current liabilities. You will recall that current liabilities are debts generally due within one year from the date of the balance sheet. The source from which to pay those debts is current assets and must be paid when it comes due..

LESSON 3 CONT.:

Thus, working capital represents the amount that is left free and clear after all current debts are paid off. For Nairaland this is:

6 Current assets N400,000

17 Less: current liabilities N170,000 Working capital N230,000
If you consider yourself a conservative investor, you should invest only in companies that maintain a comfortable amount of working capital. A company's ability meet obligations, expand volume, and take advantage of opportunities is often determined by its working capital.

Moreover, since you want your company to grow, this year's working capital should be larger than last year's.

Current Ratio What is a comfortable amount of working capital? Analysts use several methods to judge whether a company has a sound working capital position. To help you interpret the current position of a company in which you are considering investing, the current ratio is more helpful than the dollar total of working capital.

LESSON 3 CONT.:

Moreover, since you want your company to grow, this year's working capital should be larger than last year's.

Current Ratio

What is a comfortable amount of working capital? Analysts use several methods to judge whether a company has a sound working capital position. To help you interpret the current position of a company in which you are considering investing, the current ratio is more helpful than the dollar total of working capital. The first rough test for an industrial company is to compare the current assets figure with the total current liabilities.
A current ratio of 2 to1is generally considered adequate. This means that for each N1 of current liabilities, there should be N2 in current assets. To find the current ratio, divide current assets by current liabilities. In Nairaland's balance sheet:
6 Current assets N400,000

Current liabilities

N170,000 = 2.35 or 2.35 to 1

Thus, for each N1 of current liabilities, there is N2.35 in current assets to back it up.

Investment in a good market is a way to get the financial stability in the future. Stocks,

gold,silver,real estate as well as tax lien certificates are just good investments. Having a

business coach who can give you the advice in starting your own business is an advantage.



People have gotten rich purely on bonds investments alone but they are also not without risk even
though they are contracts (bonds) for a defined return. With any contract, there is always the
possibility that the parties can not live up to their obligations.There are risk free investments
such as CD's, saving accts and treasury bonds but the problems with the investments are that they
rarely keep up with inflation.

This is too much!

minute: Investment in a good market is a way to get the financial stability in the future. Stocks,

gold,silver,real estate as well as tax lien certificates are just good investments. Having a

business coach who can give you the advice in starting your own business is an advantage.



People have gotten rich purely on bonds investments alone but they are also not without risk even
though they are contracts (bonds) for a defined return. With any contract, there is always the
possibility that the parties can not live up to their obligations.There are risk free investments
such as CD's, saving accts and treasury bonds but the problems with the investments are that they
rarely keep up with inflation.

thanks mam. But for a newbie, how do i start and where do u think i should start from? Pls mr oluwoshumi, d question is directed to u too!

Nice thread. Pls keep it coming.

I have an idle fund of about 300K and am contemplating on where to invest, I need some advice though I have the following in mind

Treasury bill 150k
Bond 100k
shares 50k
Mutual fund ?

I am investing low in shares to hedge and take some risk which could fall on either side. If negative then my returns on the fixed instrument can cover up. OR WHAT DO U THINK HOUSE?.
I could also invest in mutual fund but from my review of price history on Stanbic IBTC asset management website, I observed this is not a good time to buy mutual fund as the prices are high, so I will wait till year end or early new year when the prices are always low according to record anyway.

If any one has a contrary view pls help me out with prove.

Hmm. Quite an interesting thread. I have been dying to understand all these financial jargon. Thanks so much for the tutorials. I am subscribed, infact reserving front seat.

@Yinkaoke... First, since the funds is idle funds and not that you really needs it now... I will advice you to buy equities as this is the best time to invest in good companies that are under-priced... I don't give tips, i will have love to give you list of good companies that you can invest in, but continue learning so you can discern that yourself...
Your investment plan is too defensive as you are buying too much T-Bills and Bonds.. To be balance, make availabe 200k for equities and the other for T-Bills...
Are the one that inbox me about off-shore investing? Anyway i hope you got my response. Thanks.

@Yinkaoke... First, since the funds is idle funds and not that you really needs it now... I will advice you to buy equities as this is the best time to invest in good companies that are under-priced... I don't give tips, i will have love to give you list of good companies that you can invest in, but continue learning so you can discern that yourself...
Your investment plan is too defensive as you are buying too much T-Bills and Bonds.. To be balance, make availabe 200k for equities and the other for T-Bills...
Are the one that inbox me about off-shore investing? Anyway i hope you got my response...

@Ozor1, you are very welcome to learn if you desire to....

@All, who have shown interest in this thread, thanks for your time...
Due to popular demand, i will be dealing with real estate investing from my next lesson, though i will not be finishing on the Financial statements part as its too long and will recommend you read it up yourself for those who are daring... So, i will post about the link for you to read it up, though it has been posted before by Syncapos.. But for emphasis sake, i will re-post it... Thanks.

olushowunm: @All, who have shown interest in this thread, thanks for your time...
Due to popular demand, i will be dealing with real estate investing from my next lesson, though i will not be finishing on the Financial statements part as its too long and will recommend you read it up yourself for those who are daring... So, i will post about the link for you to read it up, though it has been posted before by Syncapos.. But for emphasis sake, i will re-post it... Thanks.

Well done...u try...

Its been a while since i post on this thread and it will only be good if i can help thousands of willing people to invest effectively...
I did post one thread here on Nairaland and its not been getting proper review, so i'd like you to check it out: search on goodle "The Nigeria's Gloomy future on Nairaland"..
Its about what will happen is few years time if we don't change our perspective... I tried to look at the macro and micro economic climate and try to put it up against personal finance which i believe is a must for all...
Please review it and comment here and there any observation and questions you have...
I wish you best of luck in your investments endeavours... As i promise earlier i will be going into Real Estate Investing this week so get your front seat ready... Thanks.

In continuation of this thread, i want to go into real estate investments.

First, i will take the part of Nigerian Real Estate, it will cover these:
1.Sources of deal
2. Land speculation and Investing

3. Triple play leverage
4. Sources of finance/leverage
5.Land Verification/ dealing with communities
6. How to invest with little or no capital.
7. Land can never be manufactured!
This is for the unrelenting and daring soul... So watch out!

NIGERIA REAL ESTATE INVESTMENT;

To begin with, i will start with the notion that there is fraud in land administration in Nigeria. As to be expected of a third-world growing nation like Nigeria where we all tend to exhibit rent-seeking behaviour, we should note that if you are defrauded in land transaction, its either you don't know how to deal in a country like Nigeria or you are just a lazy man who don't think or asks questions.

To get genuine land for any speculation deal, you must get some facts at your disposal, you must be able to take an holistic view of real estate potential of where you live in.
Lets say i live in Lagos, and i'm interested in Lekki & Ofada real estate. First these are the fast-developing areas of both state and getting a slice of it is not a bad idea.

You can check for large acreage still available through credible real estate agency or you go into that community, meet local people & make friends first & never letting out intention, just tell them you are interested in farming.