Tidbits | wealthymatters

Global Recession

June 25, 2012 4 Comments

For over a decade now I have enjoyed reading Swaminathan S. Anklesaria Aiyar’s Sunday TOI editorial column Swaminomics.I like his insight and willingness to call a spade a spade.Read and enjoy his article below.

Bad news: World is sliding into a new recession

24 JUN, 2012,SWAMINATHAN S ANKLESARIA AIYAR,TNN

Many rich countries have struggled for three years to emerge fully from the Great Recession of 2008-09 . Alas, the world is slipping into a new recession. No global authority has dared say so, but the writing is on the wall.

A classic lead indicator of a global recession is a crash in commodity prices, which is evident today.

Brent crude, the benchmark variety that determines Gulf oil prices for India, has fallen from $125/barrel in January to barely $ 90/barrel. Major global commodity indices have slumped over 20%. Mittal and Tata are closing some global steel plants because of falling demand. Prices of non-ferrous metals, cotton, coal and iron ore have crashed. Read more of this post

Filed under Tidbits Tagged with Brent crude, crash in commodity prices, European Central Bank (ECB), Fiscal Deficit, global recession, Great Recession of 2008-09, HSBC Purchasing Managers' Index, IMF, Josef Joffe, lead indicator of recession, Maastricht Treaty, postaday, recession, Swaminathan S. Anklesaria Aiyar, Swaminomics, The US Federal Reserve

Don’t Get Too Used To Your Money

June 25, 2012 5 Comments

The article below is from Saturday’s ET.I was struck by the advice not to get too used to money and that sometimes you will regret saving it.

I also enjoyed reading all the highlighted tidbits on the economic scenario in Europe.

I was also reminded of my history lessons from my school days;of how a sense of economic injustice in Germany led to 2 World Wars. Read more of this post

Filed under Tidbits Tagged with European Central Bank, European Stability Mechanism, German currency, Germany, hyperinflation, Organization for Economic Cooperation and Development, postaday, reunification, thrift, Weimar period

Questions To Ask The Seller Of A Business

June 23, 2012 6 Comments

Here is a checklist of questions for a buyer to ask the seller of a business and in this order:

1. How the market operates? Get the broad picture initially by learning about the market place of the business, how its product is facing up to competition. Get the competitor profile, growth rate in the market and whether the business is beating the market or just following it. You can also find out latest market trends.

2. Who are customers & suppliers? Ask the buyer to talk about his customers and suppliers. Some of them may be known to you. It is better to a dwell little more here not the least because you want a lot of names but to assess how critical they are, in terms of volume and value. Also you must ask the buyer about credit terms offered and obtained. Will these terms continue to be in force once the business changes hands is yet another clarification you need.

3. Who is the staff? Number of staff, the gross emoluments and their experience should engage your attention. Key members and how important they are is also a relevant question. Will the staff be happy to get a new owner? Ostensibly, their cooperation is vital for the sale and transition to new owner. Staff is, in essence, in every business which is of course not saying a lot. Read more of this post

Filed under Entrepreneurship, Tidbits Tagged with postaday, questions to ask before buying a business

How Much To Pay For A Business ?

June 23, 2012 Leave a comment

When a seller quotes a price for his business it is known as “Ask price”. In response a buyer offers his price; this is known as “Bid Price”. After negotiation both parties agree at a price to close the deal. In order to make a bid price a buyer must do a valuation of the business he is interested in. There are five methods of valuing a business before buying it:

1. Asset Value: This is the easiest method in valuing a business. Underlying assumption in this method is that the business is a going concern. You tally all assets tangible and intangibles, fixed and current to get the total value. In the case of fixed assets either you can take the value net of associated depreciation or on replacement value basis. Current assets are appraised generally on realizable amount basis. Intangibles such as goodwill can be re-estimated. From the total assets value you must deduct outside liabilities to arrive at net value of assets in a business. Although the method is a popular one, it lacks credence as it does not take the capacity of the assets to generate income in the future, which is more meaningful to the buyer than just jotting up assets. Moreover, small businesses as well as service providers are very lean on assets but fat on earnings. Hence, asset value may not be representative for these businesses. On the other side of the coin, large scale industry is asset rich but whether they generate adequate returns on assets employed is a moot point. Read more of this post