First written on August 11, 2009 Page updated on Friday, October 30, 2009 Banking, Finance, Microfinance, Business Valuations, Capital Raising Strategies, Investments, Insurance, Private Equity and Venture Capital - Free membership is necessary. Click here for free membership. All articles are written by Madhavan Gopalachary. He is a Visiting Professor on the subjects underlined above in a leading B-school in Chennai, TN, India.  What is a balance sheet ? - A balance sheet is essentially a statement of all assets and liabilities of any commercial organization, shown in a tabular form, at the end of the financial year in the annual report. In this statement, the assets and liabilities must be equal, as otherwise something is wrong in the entries. It is always accompanied by a profit and loss statement Why giant institutions like Bear Stearns go bust? - The financial institution of Bear Stearns went bust recently and the takeover attempt by J P Morgan is undergoing a tussle. The shareholders are up in arms over the price offered and J P Morgan had agreed to revise the price. While it will take some time for the dust and matter to settle, it may appear very strange to many as to how giant organizations like Bear Stearns can collapse overnight without a warning Balance sheet or profit and loss statement - which is better ? - I came across the above Google search query at my site today and I got my topic to write about. Most ask this question and focus on the P&L statement rather than the balance sheet Business Valuations - The owner of the business is not the right person to valuate his own business. The best way is to hire a Chartered Business Valuator. However, this does not mean the company will be bought or sold at that price. The final prize is decided by the individual Positions, Interests and Needs of the buyer and seller. The premium that is paid over and above the fair market value is based on urgency of the need Why is cash flow is so very important ? - Unfortunately, to quote Mr. Robert Heller ' Like good health, a positive cash flow is something you're most aware of  when you haven't got it. That is one of the most profound and truthful statements in life Cost Cutting - when it should be done? - I read an article by Ms. Carol Hymowitz in the Wall Street Journal titled ‘Jeffrey Immelt defends GE’s wide reach’ on July 11, 2008. Mr. Jeffrey Immelt is under fire for missing his first quarter target by 5.9%. According to the report, Mr. Immelt attributed the primary reason to the poor economic condition that is prevailing. I am giving below some of my observations Future trends in private equity investments - More and more large deals are being done by private equity firms and this trend will increase. With increasing wealth in the hands of few high net worth individuals globally, it is plain that making a company go public means inviting trouble. Even a company with a very large market capitalization like GE is not safe today from private investors. There are and will be risks What are hedge funds? - In mid April 2008, the New York Times reported that one US based hedge fund manager took home a compensation of more than USD 3 billion in the year 2007. It is a mind boggling sum and many poor countries do not have their GDPs equal to it. Billion dollar salaries have become a reality in managing hedge funds as there are many such fund managers Importance of Costing - A business must be profitable, otherwise it need not exist. Accounts are maintained, balance sheets, profit & loss and cash flow statements are made. This is called 'Financial Accounting'. Financial accounting has its limitations. A business must maintain optimum efficiency, minimum wastage and losses. Financial accounting does not indicate these crucial aspects of a business Investment Analysis - The crashing of stock markets and other scandals like L'affaire Madoff have reduced investor confidence. Many have questioned as to what went wrong. How could professional Swiss and French private bankers go so blatantly wrong ? Let it be clear that investment is different from speculation. Unfortunately, the happenings in the stock markets are more due to greed, speculation, high leveraging and frauds. The capital markets need a paradigm shift Leveraged buyouts - A leveraged buyout (or LBO) or highly-leveraged transaction (HLT) or "bootstrap" transaction occurs when a financial agency gains control of a majority of a target company's equity through the use of borrowed money or debt in the form of bonds or loans. Often, the assets of the company being acquired are used as collateral for the loans in addition to the assets of the acquiring company SEC, Accounting Frauds and Insider Trading - In October 2006, the ' New York Times' reported that the SEC was under an investigation by a senate investigation committee for its handling of the issue of 'insider trading' by hedge funds. It was felt by the government legislators that SEC might not have put in adequate action and efforts on the issue. This means an investigating and a regulating body itself is being investigated What does microfinance mean ? - Microfinance is a type of banking service that is provided by microfinance institutions, commonly referred to as MFIs, to very poor, self unemployed or low-income individuals or groups who would otherwise have no other means of gaining financial services because they have no collateral security to offer What is a Ponzi Scheme? - The Wall street is hit with yet another scandal. This time it is the Ponzi scheme perpetrated by the Wall street hedge fund manager and trader Bernard L Madoff. About USD 50 billion is almost gone. The first question that is raised is what the hell is a Ponzi scheme ? Since we had not come across this term before, we had to carry out some research on it What is arbitrage ? - This term basically means that a buyer buys some stock at a lower price and sells at a higher price either in the same market or in a different market. According to Mr. Robert Heller, the author of 'The new naked manager', it is the greatest game in town. It is not restricted to stocks or securities. It can be currencies or any other commodity or precious metals or minerals Whither Financial Services Industry ? - The New York Times carried two articles today. One was about the employees feelings in Lehman Brothers and the other one was about fading away of the hedge funds industry. I have written a few articles about the industry. Lehman Brothers is the latest financial institution that is on the auction block What is expenditure ? - While it is always prudent to control expenditure, there is some expenditure which should not be cut or reduced, even in bad times. The temptation is always to cut some of the necessary expenses in bad times. Unfortunately, this has a boomerang effect The views, opinions and interpretations are personal. Sponsorship does not mean that the sponsors endorse them. © Copyright, Oct-09 . MMG Communications. Without prejudice. All rights reserved