From the category archives:

Research Papers

Financial Instruments as per Ind ASThe book covers financial instruments from the perspective of the issuer as well as the investor. It explains the concept of recognition, classification and subsequent measurement of financial assets and liabilities, de-recognition of financial assets and liabilities and impairment model. It also covers fair value and cash flow hedge accounting, disclosures required for financial instruments, fair value concepts and effects of fluctuations in foreign exchange. It includes lucid commentary on Financial Instruments as per Ind AS, discussing Ind AS 32, Ind AS 109, Ind AS 107, and some portions of Ind AS 113 and Ind AS 21. As we all know, Financial Instruments accounting is a new concept in India. The Indian Accounting Standards relating to financial instruments are quite complex and voluminous. The said standards (along with other 34 standards) are applicable from 1st April 2016 for Phase 1 companies, while the rest of the world would be adopting the equivalent standard IFRS 9 only from 1st Jan 2018. This book includes the basics of financial instruments and also dwells deep into the Indian Accounting Standards mentioned above with several practical case studies along with solutions for the same. Key Features Discussion based on Ind AS 32, 109, 107, 113 & 21 Elucidating topics with practical case studies Includes lucid explanation on hedge Accounting A guide to the certificate course in Ind AS (ICAI) and Dip in IFRS (ACCA, UK).

See: LearnAccountingStandards

See: LearnIndAS

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Brand has value which can be quantified

by R. Krishnaswamy on April 11, 2010

From the foregoing it is clear that the brand has a value and it can be quantified.  The ACTUARIAL BRAND VALUATION advocated above is ideally suitable for Indian conditions.  It will be also be clear from the above that this valuation is going to be of immense help to companies in so many areas.  It brings out the value of a real asset, which has remained hidden so far.  Reporting of the value of this invisible asset will immensely enhance the company’s image and push up its stock market value leading to more sales which in turn will lead to economies of the scale which in turn again will bring down the cost of production.  It is also very useful in cases of acquisition/ merger/ takeover/ licensing/ franchising/ joint venture etc.  Particularly for the Banks which lend money to the companies against its assets, the brand valuation is a boon as the Bank can now be more aware of the additional security that is available. Also in the software industry there has been a lot of acquisitions not only of companies and brand but also of “Intellectual Property” traits such as trade marks, patents, copyrights and designs, know-how, technology, software and databases.  These intangible assets also have the same valuation issues as Brand and can be valued by the methodology described above.

We would like to close this paper with a quote from Pemberton (1998).

“Actuarial Science has a distinctive method which is well-suited to operating within realities in which there are limited regularities.  It uses local empirical knowledge to grasp low-level generalisations, has respect for the pattern of local causal influences, and builds bottom-up models for the purpose of establishing approximations.  It recognises the role of skill in applied modelling and treats it as central to the method.   It is focussed on financial realities”.

Spurred by this quote, we have made a modest attempt to extend the Methodology of Actuarial Science to an area of contemporary concern in Corporate Finance.

In fine, it is no exaggeration to say that a brand revolution is now on and its importance is next only to IT revolution.  We can very well say that B(G)rand days are ahead.

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Brand valuation methodologies

April 11, 2010

We shall now see briefly the various valuation methods that are adopted in arriving at the value of brands and dwell more in detail about the methodology suitable to the Indian conditions. The methodologies adopted for valuation of brands can be distilled into three broad strands: Cost-Based Market-Based Economic-Based Any method chosen should necessarily satisfy […]

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Why value Brands?

April 11, 2010

The recent years have witnessed a growing awareness among corporates about the financial power of the brands they own.  There are two reasons for this phenomenon. First, there has been mounting evidence to support the hypothesis that consumers are becoming increasingly brand conscious not just in relation to products which are earmarked for conspicuous consumption, […]

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Actuarial Brand Valuation

April 11, 2010

Our paper focuses on the application of the actuarial methodology to corporate finance. One of the contemporary concerns in Applied Corporate Finance has been the valuation of intangible assets in general and valuation of brands in particular.  In a recent survey conducted among the CEOs of software companies in India, it has been found that […]

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Brand Valuation

April 11, 2010

Being skilled mathematicians, Actuaries are able to analyse past events, assess the present risks involved, and model what could happen in the future.  Actuaries then forecast the long-term financial implications of business decisions to assess the most likely outcome and the chances of more or less favourable outcomes occurring.  Traditionally, actuaries have played a vital […]

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Unleashing the financial power of brands

April 11, 2010

An Actuarial Approach (Presented to the 3rd Global Conference of Actuaries held on 15th and 16th February, 2001 at New Delhi) and Published in THE HINDU ABSTRACT Consumers are becoming increasingly brand conscious.  Most of the consumer’s purchase decisions are now brand driven.  This has created a growing awareness among Corporates about the Financial Power […]

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Determining Discount Rates for Employee Benefit Valuations

April 5, 2010

1.1    Discount rates are the heart of almost all actuarial and long term financial models.  In the recent times there has been growing interest in the theory and practice related to determination of discount rates.  One such recent development has been the decision of the Institute of Actuaries, UK to commission a thought – leadership […]

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