The most basic function of a bank is to take deposits and lend money. In order to make profit banks usually charge higher interest while lending money and pay less interest on deposits. The difference between the interest earned from loan and interest on deposits is called net interest income or bank’s core business income. In this article, you will learn what is the net … [Read more...] about Why Net interest margin (NIM) is important to banks
What is Monetary policy and how does it works
A country’s economic objective is met by two types of policy: Monetary policy is enacted by the country’s central bank. Fiscal policy is used by the government. A country’s monetary policy deals with money, currency and interest rates. In India, monetary policy is set by the Reserve Bank Of India (RBI), being the central bank of India. In the United States, the … [Read more...] about What is Monetary policy and how does it works
Fiscal Policy: What is the purpose and its effect
A country’s fiscal policy along with the monetary policy plays a crucial role in managing the growth in the economy. The main purpose of both fiscal and monetary policy is to achieve full employment, maintain or achieve high economic growth and to stabilise the price and wages. Fiscal policy refers to the use of the Government spending and tax policies to influence the … [Read more...] about Fiscal Policy: What is the purpose and its effect
What is Stagflation and when it’s triggered
Stagflation is derived from two words stagnation and inflation. Stagflation is an economic term used to describe a condition that describes slow growth, high unemployment and rise in prices of goods and services. In other words, stagflation is a combination of three negatives: slower economic growth, higher unemployment and high inflation. Inflation refers to a sustained … [Read more...] about What is Stagflation and when it’s triggered
Deflation: Definition, Causes and is it good or bad for us
In economics, deflation occurs when there is a general decline in prices for goods and services across all segments of the industry. As prices decline, the purchasing power of money rises over time. Deflation benefits the end consumer as their purchasing power increases. They can buy more goods and services due to lower prices with the same income over time. Purchasing … [Read more...] about Deflation: Definition, Causes and is it good or bad for us
Inflation: How It’s Measured and Managed
Inflation is one of the most familiar words in economics. It's often used to describe the impact of rising oil or food prices on the economy. For example, if oil prices go up by $25 per barrel, then input cost of business and transportation costs will increase. In response, the cost of many other products and services will rise. Inflation may plunge countries into a … [Read more...] about Inflation: How It’s Measured and Managed
Understanding economic moats in stock investing
One of the most essential components of Warren Buffett's investing strategy is what he calls economic moats. It means a company’s competitive advantage that allows it to earn outsized profit for a long term. In this article, we will understand what economic moat is and how it helps a company to have a competitive advantage over its competitors. There are companies that … [Read more...] about Understanding economic moats in stock investing
Revenue vs. Net Profit: What is the difference
Revenue is the total amount of income that a company has incurred by selling its goods and services to customers. It's the money that the company has incurred for a period through its ordinary course of business. Revenue is also known as sales for a manufacturing or trading concern and gross receipts for a service industry. You will find companies reporting "revenue from … [Read more...] about Revenue vs. Net Profit: What is the difference
Demat Account: All you need to know
As per law, Demat Account is a must to trade in financial securities through a stock exchange. Demat account is used to hold shares and other financial securities in electronic format. Demat stands for Dematerialised. All financial securities like shares, e-gold, IPOs, government securities, exchange-traded funds, bonds and mutual funds traded in the stock exchanges are kept … [Read more...] about Demat Account: All you need to know
Understanding Accounts receivable turnover ratios
Accounts receivable turnover ratio (ART) is calculated by dividing net sales by the average accounts receivable. It's also known as the debtor's turnover ratio. Many financial analysts prefer to take credit sales in place of total sales. However, in the income statement, companies do not report credit sales figures, therefore total sales can be considered in absence of … [Read more...] about Understanding Accounts receivable turnover ratios