Students, suppose you are working in the treasury department of an MNC. Your company enters into foreign currency transactions every day. We know that forex market is volatile and exchange rate volatility can turn profits into losses overnight. Therefore, your responsibility is not to predict the market, but to protect the company using hedging tools […]
Hedging: A Tool to Manage Foreign Currency Risk Read More »
Purchasing power parity (PPP) is an economic theory of exchange rate determination. It states that the price levels between two countries should be equal. Example: If markets are efficient and trade is possible, exchange rates should reflect the purchasing power of currencies. This idea leads to the Purchasing Power Parity (PPP) Theory. In simple words:
Understanding Purchasing Power Parity (PPP) in Foreign Exchange Transactions Read More »
Alternative Minimum Tax (AMT), introduced for non-corporate taxpayers to address disparities in tax payments and prevent individuals from significantly reducing their tax liability through tax benefits. The AMT includes a provision for the carry forward of the AMT credit, which allows taxpayers to use the excess amount paid as AMT against their regular tax liability
Alternative Minimum Tax (AMT) and AMT Credit Adjustment – A Conceptual Overview Read More »
Minimum Alternate Tax (MAT) is an important provision under the Income Tax Act, 1961, designed to ensure that taxpayers with substantial income do not avoid tax liability by claiming various deductions and exemptions. However, students often face confusion regarding its applicability, computation, and differences. To build conceptual clarity, case-based learning can be highly effective. By
Minimum Alternate Tax (MAT): Concept and Practical Application Read More »
Under the Income Tax Act, 1961, domestic companies in India have the option to be taxed either under the normal provisions or under concessional tax regimes such as Section 115BAA of Income Tax Act and Section 115BAB. Under the normal provisions, the applicable tax rate depends on the company’s turnover. Companies with turnover up to
Tax rates for Indian Domestic Companies—Normal vs Concessional Regime Read More »
Filing the correct Income Tax Return (ITR) form is a crucial responsibility for taxpayers. However, many people—especially students and first-time filers—often get confused about which ITR form applies to their specific situation. This blog aims to simplify that confusion by providing a clear guide on ITR form numbers and their practical applicability, helping students and
Understand ITR: Choosing the Right Form for Filing Income Tax Read More »
Translation Exposure: The translation exposure is also called accounting exposure or balance sheet exposure. Translation risk is based on assets, equities, liabilities on the Balance Sheet in foreign currency to domestic currency. Strictly speaking. There is no actual gain or loss seen here. Transaction Exposure: A firm may have some contractually fixed payments and receipts
Understanding Transaction and Translation Risk Adjustments in Financial Statements Read More »
A firm dealing with foreign exchange may be exposed to foreign currency exposures. The exposure is the result of possession of assets and liabilities and transactions denominated ‘in foreign currency. When exchange rate fluctuates, assets, liabilities, revenues, expenses that have been expressed in foreign currency will result in either foreign exchange gain or loss. A
Understanding Operating Risk Adjustments in Financial Statements Read More »
Depository Receipt (DR) is used as means in the international capital market to raise fund vis equity. This is a marketable instrument. ADR and GDR is a certificate document where there is a backing of underlying shares issued by the Indian Company. ADR An Indian company issues ADRs in the US so that US investors
Financing through the International Equity Market Read More »
International capital markets refer to financial markets that facilitate the buying and selling of financial instruments such as equities, bonds, and derivatives across national borders. There are two main ways that someone accesses the capital markets—either as debt or equity. Companies may raise debt (ECB, Eurobond), equity (ADR, GDR), or hybrid securities (FCCB) depending on
Financing through the International Debt Market Read More »
