Henderson and Co.
Memo
To: Jessica Post CEO
From: Tracy Bleimeyer CEO TB
Date: September 20, 2015
Re: Review of investment choices
There are various types of investment choices that you can invest in. I want to go over these with you. There are three types of investing: ownership, cash, and lending.
An ownership investment is the most popular and the most rewarding. A few examples would be: to buy into stocks. Once you purchase a stock you have a certificate which says that you own a portion of that company called shares. This usually returns the owner with a profit. If you own a portion of a recording company and they record a profit, other investors are going to want shares too. This in turn makes the price for that share increase
…show more content…
thus if you choose to sell this share you also get an increase profit. This is considered a dividend and actually evens out on the balance sheet. A cash investment would be you putting in the money to run a business. This is what an entrepreneur does. This is also an ownership investment with many potential large profits. If you rent or buy a home or an apartment dwelling that needs repairs and you resell it, this is also an investment. If you own a signed painting from someone famous, or a baseball or jersey signed by the player and you can make a profit, this is also a cash investment. This will be recorded as a debit to cash on the balance sheet. A lending investment is when you are the bank.
You do not have a high return with this but the risk is lower than that of an ownership. A bond would fall into this category. A bond varies from a variety of CD’s from a bank or Treasuries and international debt issues. You would purchase a bond through a company. If this company falls bankrupt, you usually still get the money owed to you. Another example would be a money market fund. This has minimal risk but also a minimal in return. This is more of a liquid account and you are able to write checks against it just like you would your checking account. This is a form of a liability and would be recorded on the balance sheet as a debit on the balance …show more content…
sheet. There are many types of securities but I will discuss three options for you. 1- Trading securities are debt and equity securities that a company intends to sell in the nearby future.
Trading securities are posted on the balance sheet and are reported at the fair value market. Some examples of debt security would be: corporate bonds, convertible debt, U.S. Government bonds. Debt investments are classified as trading, available for sale, or held to maturity.
2- Held to maturity securities are also debt securities, but a company holds onto it until it matures. These are reported and measured on the balance sheet at the amortized cost value. They are classified as noncurrent assets, unless they reach their maturity within one year after the balance sheet date.
3- Available for sale securities are debt and equity securities that is not classified as trading or held to maturity. Available for sale securities are recorded on the balance sheet either as current or noncurrent, all depending on if the company has the intend to sell these securities in the near future or not. They are reported at the fair value on the balance sheet. They are classified as current assets if they intend to liquidate within one year. Or long term assets if they intend to hold onto them for a long period of
time. http://www.investopedia.com/articles/younginvestors/10/what-is-an-investment.asp http://www.investopedia.com/exam-guide/cfa-level-1/assets/choosing-accounting- method.asp http://simplestudies.com/accounting-for-short-term-investments.html/page/2 John Wild, Ken W. Shaw, Barbara Chapatti, 2015, Fundamental Accounting Principles 22nd edition
Debt capital refers to money borrowed. Examples of this include bonds and short-term commercial paper. Bonds are more widely used because it provides a company with years to come up with the principal while paying interest only. Bonds are rated (i.e. AAA, AA, BB, etc.), these ratings correspond to the risk of default. The higher the rating, the lower likelihood of default and therefore a lower interest rate accepted by the lender. Short-term commercial paper is typically...
The national debt of the United States is calculated using the worth of the Treasury securities that have been distributed by the Treasury and other bureaus of the federal government. Debt held by the public consists of debt held by persons, businesses, the Federal Reserve System, and foreign, state, and local governments. Debt that is held by the government consists of trading securities that are held in accounts managed by the federal government. Examples of debt held by the government are funds owed to program beneficiaries, such as the Social Security Trust Fund.
Investment. An investment is an asset or item that is purchased with the hope that it will generate income or appreciate in future. In an economic sense, an investment is the purchase of goods (in our case being the Adidas Yeezy shoes) that are not consumed today but are used in future to create wealth and also in a financial sense an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher. Investment involves putting money, time and effort. One first has to have a
Stock investment means you are purchasing a share of the company, therefore the company’s success determines the value of your investment. Buying stocks is not a difficult process; clarification of some important terminology and differentiation helps gives you the foundation to start investing.
In reviewing the company’s balance sheet, the current assets and liabilities were reviewed and liquidity ratios were calculated. The capital structure and the fixed and intangible asset accounting of the company were also reviewed. Off-balance sheet items such as leases and contingent liabilities were reported and noted. All of these aspects of the balance sheet were reviewed in order to do a proper analysis of the company’s balance sheet.
...n. Based on the definition of asset/liability, the operating leases items meet it. Therefore the amount should show as asset/liability off balance sheet as well.
When looking at all of these areas, I have come to the conclusion that the best and safest way to invest your money, is mutual funds. With getting rich as the key goal ending point, it only makes sense to choose mutual funds over stocks. With decent rates, easier to maintain, diversified, and less risk it only makes sense to choose mutual funds over stocks.
Gold mining stocks provide you an option of taking indirect exposure in the yellow metal. They have a better capital appreciation potential compared to direct investment. Not only are they very liquid, but also require low initial investment. But they are quite volatile and riskier compared to other options.
There are two different ways in which money can be invested. The first way that money can be invested is through stocks. Stocks are defined as a mean by which money can be invested. The two different types of stocks are; common, and preferred. This type of investing involves the individual actually putting money toward a company that they want to invest in, some of these include companies like; Wal-Mart, among many others. The other way that money can be invested is through bonds. There are many different types of bonds that can be invested in today. Some of these include; personal bonds, as well as many
One of the most common questions in investing is whether you should be investing in stocks or in real estate. The reason why investors invest in one or the other and are happy about the decision is because they have both worked out well though the common factor is obviously the fact that the investor got in and out of the investment at the right time.. In fact, many investors have done well with both and they can both be good investments, depending on the market conditions at any given point in time. A certain amount of financial education and the knowledge of using any investment tool to advantage is critical.
a bond, one should seek the guidance of an experienced investor. By choosing a bond that is
The resources are long term in nature and provide benefits to the organization for many years. Common noncurrent assets are Property, Plant and Equipment, long-term investments and intangible assets, such as copyrights, goodwill and patents. Noncurrent assets are capitalized, which according to Investopedia, means that “the company allocates the cost of the asset over the number of years for which the asset will be in use, instead of allocating the entire cost to the accounting year in which the asset was purchased.” This means that the cost is depreciated over the useful life of the asset. The cost of a noncurrent asset is listed on the balance sheet at carrying cost, or the difference between the purchase price of the asset less depreciation.
Assets that are used to support contractual obligations providing for guaranteed, fixed benefit payments are normally held in the company‟s General Account. Other invested assets, used to support the liabilities associated with investment risk pass through products or lines of
Maintaining a company’s financial assets is a daunting task. Cash management techniques and short-term financing provide accounting executives with the tools needed to survive the constant changes within the economy. The combination of these tools and the knowledge of the world economy will assist companies in maintaining current assets and facilitates growth.
Mutual funds will let small investors have more choices than they would have when investing on an individual level. The money from several investors is invested in different companies so that the risk is minimized. The strategy in this type of investment is to assure that a profit is made from some of the businesses so that if one should fail, others will still do well. You should really research where your money will be going and what kind of track record the businesses have had in terms of gains before investing.