Simply stated, IT financial management is the process of overseeing IT expenditures, with the goal of providing both business units and IT departments with a common framework to evaluate services and plan for future investments to optimize IT spending. As technologies become more complex, the financial management of IT investments has proven challenging. Many IT organizations lack financial management experience.
The ratio of debt to equity, usually the relationship between long-term borrowings and shareholders' funds. Goodwill Any surplus money paid to acquire a company that exceeds its net tangible assets value.
Gross profit Sales less cost of goods or services sold. Also referred to as gross profit margin, or gross profit, and often abbreviated to simply 'margin'.
See also 'net profit'. Initial public offering IPO An Initial Public Offering IPO being the Stock Exchange and corporate acronym is the first sale of privately owned equity stock or shares in a company via the issue of shares to the public and other investing institutions.
In other words an IPO is the first sale of stock by a private company to the public. IPOs typically involve small, young companies raising capital to finance growth.
For investors IPOs can risky as it is difficult to predict the value of the stock shares when they open for trading. An IPO is effectively 'going public' or 'taking a company public'.
Letters of credit These mechanisms are used by exporters and importers, and usually provided by the importing company's bank to the exporter to safeguard the contractual expectations and particularly financial exposure of the exporter of the goods or services.
Also called 'export letters of credit, and 'import letters of credit'. When an exporter agrees to supply a customer in another country, the exporter needs to know that the goods will be paid for. The common system, which has been in use for many years, is for the customer's bank to issue a 'letter of credit' at the request of the buyer, to the seller.
The letter of credit essentially guarantees that the bank will pay the seller's invoice using the customer's money of course provided the goods or services are supplied in accordance with the terms stipulated in the letter, which should obviously reflect the agreement between the seller and buyer.
This gives the supplier an assurance that their invoice will be paid, beyond any other assurances or contracts made with the customer.
Letters of credit are often complex documents that require careful drafting to protect the interests of buyer and seller.
The customer's bank charges a fee to issue a letter of credit, and the customer pays this cost. The seller should also approve the wording of the buyer's letter of credit, and often should seek professional advice and guarantees to this effect from their own financial services provider.
In short, a letter of credit is a guarantee from the issuing bank's to the seller that if compliant documents are presented by the seller to the buyer's bank, then the buyer's bank will pay the seller the amount due.
The 'compliance' of the seller's documentation covers not only the goods or services supplied, but also the timescales involved, method for, format of and place at which the documents are presented.
It is common for exporters to experience delays in obtaining payment against letters of credit because they have either failed to understand the terms within the letter of credit, failed to meet the terms, or both. It is important therefore for sellers to understand all aspects of letters of credit and to ensure letters of credit are properly drafted, checked, approved and their conditions met.
It is also important for sellers to use appropriate professional services to validate the authenticity of any unknown bank issuing a letter of credit. Letters of guarantee There are many types of letters of guarantee.
These types of letters of guarantee are concerned with providing safeguards to buyers that suppliers will meet their obligations or vice-versa, and are issued by the supplier's or customer's bank depending on which party seeks the guarantee. While a letter of credit essentially guarantees payment to the exporter, a letter of guarantee provides safeguard that other aspects of the supplier's or customer's obligations will be met.
The supplier's or customer's bank is effectively giving a direct guarantee on behalf of the supplier or customer that the supplier's or customer's obligations will be met, and in the event of the supplier's or customer's failure to meet obligations to the other party then the bank undertakes the responsibility for those obligations.
Typical obligations covered by letters of guarantee are concerned with: Tender Guarantees Bid Bonds - whereby the bank assures the buyer that the supplier will not refuse a contract if awarded. Performance Guarantee - This guarantees that the goods or services are delivered in accordance with contract terms and timescales.Financial planning software, personal finance software, and investment software for consumers, investors, financial advisers and investment managers.
Financial management of Information Technology (IT) resources is a powerful process to improve service while lowering costs. Simply stated, IT financial management is the process of overseeing IT expenditures, with the goal of providing both business units and IT departments with a common framework to evaluate services and plan for future investments to optimize IT spending.
Will your retirement income plan work? Here are three ways to tell. In finance, the net present value (NPV) or net present worth (NPW) is the summation of the present (now) value of a series of present and future cash flows.
Because NPV accounts for the Time value of money NPV provides a method for evaluating and comparing products with cash flows spread over many years, as in loans, investments, payouts from insurance contracts plus many other applications.
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Fulfillment by Amazon (FBA) is a service we offer sellers that lets them store their products in Amazon's fulfillment centers, and we directly pack, ship, and provide customer service for these products.