Question

Q4. (25 marks) Explain the different method of Bonds and Investment Accounting we have done in class. If you start your own private company and wish to raise capital, what ratios should you consider important? о

Answer 1

The accounting haid for ca for investments occurs when fonds investment instrument. If the investor intends to hold inwestment to its and has the ability to do so, instmunt is classified as held to maturity maturity date Methory lost method of 욥 a business halds delt rewrities to maturity with the intent to sell ore closified as held to Maturity Securities. Hell to maturity securities reported at amortized cost less impairment. fair value method for value, also called fair price is a coneht used in accounting and economics defined as a rectiona unbiased estimate of the potential market price of gourts. Series or assets, thing into ournt sich objectie fectos os - is acquisition costs, replement wits, on costs of close substitutes 1 actual utility at a given level of development of productive capability i sunnly se denone

Date 1 7 Debt and equity securities that are bought and near term them in the securities These securities ore Value with unrealized going and in earrings. 2 helt priminally for the purpose of selling corried at historic book Page No. classified as trocking reported at four losses including Equity Method It is the process of treating equity investments, usually 20-10/ in associate compenies. The irwator beeps such equities as an asset. The inwestors prepentional shore of the associate conpartys net income breases the ivestment In the inwestors inome statement , the proportional shore of incest ees net income on net loss - line item. reported The ownership of more than 50% of voting stock subsidiary Its finstial Statements into the parents. an inwithent fr sole trading bolone that . croates consolidate The ownership of loss then dot creses position value lif available in the investors hold for

Page NO. Date 1 1 Chitul then there retion ply If you wish to raise key rolei- Profitability ratius Solvency saties Liquidity Valuation ratios Profitability ratios It is a bey espect to relyre when wreidering to invest in a confery. It helps proach inight into how much profit a confery georites how much that profit rekty to other important information about the confeny. che retios & They Solverny incestors used by the to get a picture of her well a conhery with its long term financial obligations. Debt to assets and delet to equity are toh ture ratios often used o quick checks of conterys debt levels. و Liquidity sotios compong can reng its delts. shows how well They also share in generating cosh or to repay creditors quebly. measures how quickly This also company cever expenses how quickly and easily a confery to purchae adelitional aseets

Page No. Date Valection Ratios They They are some of the most commonly quoted are easily used ration for crealyzing the attractiveness of an jwestment in a compery. In general, the lover the ratio level, the more attractive . an investment in a compery becomes