Discounted Cash Flow Modelling to Achieve Personal Financial Goals

A discounted cash flow or DCF model is a style of calculation linking streams of future money flows to lump sum amounts. Discounted cash flow models have a range of business-related applications, and are used extensively by economists, accountants, actuaries, engineers, business valuators, finance professionals, and others.

For example, a company may wish to finance a project if (and only if) the Internal Rate of Return exceeds 10% per year. The anticipated development costs for the project may be large for the initial year. On the other hand, significant revenues are anticipated for Year 2 onward. The company directors rely on a DCF model to help determine whether or not the project's Internal Rate of Return exceed their 10% threshold.

Discounted cash flow models also have important applications in everyday life that are often overlooked. For example, consider auto dealers who advertise low finance rates to prospective clients. From a car buyer's perspective, low finance rates are understood to be good, since they mean lower monthly payments. By using a DCF model, a buyer can determine the monetary value on the low finance rate offer.

Everyday use of a Discounted Cash Flow model would include (but would not be restricted to) the following:

  • Mortgage Refinancing: For homeowners with a fixed-rate mortgage, refinancing often debts paying a penalty. A DCF model can be used to calculate whether the interest savings exceeded the penalty cost
  • First-Time Home Ownership: First time home ownership involves many new costs, and can be intimidating to many of us. A DCF model can help by comparing long term home ownership costs against rental costs
  • Lease or Own Vehicle: A DCF model can help car shoppers in their decision whether to buy or lease a vehicle

Examples of these and other everyday applications can be viewed at the author's website.

Through the above (and other) practical applications, Discounted Cash Flow models can assist all of us in achieving our personal financial goals.

Local Internet Advertising Can Be Your Best Friend

Advertising online for a business is no longer the wave of the future. The future is now. Online exposures an industry to thousands of people with the click of a button. Most people will see a company's name on the web faster than anywhere in the advertising marketplace. Online has a variety of different advertising methods that one can utilize. There are national sites, as well as local sites. Free listings, paid ads, text, pictures, blogs, and pop ups are just a few methods. One can spend as much money or as little money, as they want to on promotional campaigns.

The type of business needing advertisements can help determine which sites to display. For example, when selling cars, a good placement is a website that sells auto parts or auto insurance. Any site connected to automobiles, including parts, service, or information is a good target site.

Public blog sites are an option that gets many hits. Place blogs about the company on public websites. There are local blog sites as well as national ones. Companies can also create their own blog page to boost content, links and visibility. A smaller business is well-suited to advertising online locally to reach the public sector they wish to reach. There is no need to advertise nationally without the business operates nationwide.

A key to advertising local online is to use search engine optimization (SEO). This is a method of taking the words a person may use in a search, and applying them to the advertisement text. The more search words used in the advertisement, the more people that will hit on the targeted site. If the desire is local advertising, add the preferred location so it will appear on a local search.

Utilize all the free listings, and place as many free ads as possible. The more times a business manages to place a listing, the higher it will rank. This ranking determinates in what order the site will come up compared to others when a search is launched.

Every company also needs a web page. Create one, even if it is only one page. The more colorful and graphic the page is, the more attention it will draw. Anytime a business places an ad, a picture should accompany the text if possible. Use photos that promote the business, but will also grab attention. It will not matter what the text says, unless the public is enticed to read it. Keyword research and careful selection of terms will help target potential clients. Learn to grab public attention, and the rest will follow.

Financial Reporting & Auditing in Singapore

The Accounting Profession of Singapore

The Institute of Certified Public Accountants of Singapore (ICPAS) is the national body representing the accounting profession in Singapore. It maintains a register of qualified accountants comprising mainly local graduates. Membership is open to members of the Institutes of Chartered Accountants of England and Wales, Australia, Scotland, Ireland and a number of other accounting bodies. Generally, prior to being admitted as a full member, they must attend a week-long pre-admission course. Members are designated as certified public accountants (CPA).

The Public Accountants Board, whose council members are appointed by the Ministry of Finance, licenses and registers accountants who wish to practise. It also handles practice monitoring, disciplinary matters and regulations on professional conduct.

Accounting Records in Singapore

All companies incorporated under the Companies Act are required to maintain books of accounts that sufficiently explain the transactions and financial position of the company.

The books may be kept either at the company’s registered office or at another place the directors think fit. If the books are maintained outside Singapore, sufficient records must be maintained in Singapore to facilitate the preparation and/or audit of financial statements that reflect accurately the company’s financial position.

Sources of Accounting Principles

Financial Periods Commencing before 1 January 2003 The principal source of accounting principles in Singapore, namely Statements of Accounting Standards (SAS) and Interpretation of Statements of Accounting Standards (INT), are issued by ICPAS. These standards are essentially International Accounting Standards (IAS) modified for certain transitional provisions. They provide guidelines on the accounting measurements and disclosure requirements. Businesses may depart from such standards if the standards conflict with disclosure exemptions granted by law. Otherwise, ICPAS may take disciplinary action against any of its members who are in violation of the standards.

Rules on accounting measurements are generally established by SAS and INT. Disclosure requirements are governed by SAS, INT and the Companies Act.

ICPAS is a member of the International Accounting Standards Committee (IASC). Compliance with IASC standards are not mandatory, but the institute supports the IASC objectives of formulating and publishing standards for observance during presentation of audited financial statements and promoting worldwide acceptance of such standards.

Financial Periods Commencing on or after 1 January 2003 With the implementation of section 37 of the Companies (Amendment) Act 2002, SAS issued by ICPAS will not be used with effect from annual financial periods commencing on or after 1 January 2003. Instead, Singapore Financial Reporting Standards (FRS), issued by the new accounting standards-setting body, the Council on Corporate Disclosure and Governance (CCDG), are now effective. FRS are essentially adopted from International Financial Reporting Standards (IFRS). The previous SAS were adopted from the same set of IFRS (formerly referred to as IAS) but with modification to certain transitional provisions. Consequently, there are differences between FRS and SAS.

Interpretations of Standards are authoritative guidance on the application of the relevant standards. CCDG adopted all international interpretations as Interpretations of FRS (INT FRS) with effect from financial periods beginning on or after 1 January 2003.

Compliance with FRS is a statutory requirement whereby any non-compliance amounts to a breach of the Companies Act by the directors.

Financial Reporting in Singapore

The Companies Act requires that an audited set of financial statements, made up to not more than six months before every Annual General Meeting, is to be presented to the shareholders at the meeting. Generally if a company incorporated in Singapore has one or more subsidiaries, it must prepare consolidated financial statements unless it meets certain criteria as provided for in FRS 27 Consolidated and Separate Financial Statements. Currently, financial statements under the Companies Act consist of the balance sheet, income statement together with explanatory notes. With the Companies (Accounting Standards) Regulations 2002 coming into operation for financial periods on or after 1 January 2003, a complete set of financial statements will comprise the balance sheet, income statement, statement of changes in equity, cash flow statement and explanatory notes.

The financial statements must be accompanied by the directors’ and auditors’ reports and by a statement from the directors declaring that the financial statements show a true and fair view and that it is reasonable to believe that the company can reasonably pay its debts as they become due.

Companies which meet specific provisions in the Companies Act may be exempt from having their accounts audited but nevertheless must prepare financial statements that comply with the Companies Act.

Annual Requirements for Companies in Singapore

The Companies Act requires every company, except for those exempted in accordance with the provisions in the Act, to appoint one or more auditors qualified for appointment under the Accountants Act to report on the company’s financial statements. The auditors are to ascertain whether proper books of accounts have been kept and whether the financial statements agree with the company’s records. They will then report on the trueness and fairness of the financial statements to the shareholders at the Annual General Meeting.

Audit Exemption Starting with the financial year beginning on or after 15 May 2003, the following companies are no longer required to have their accounts audited. However, they are still required to prepare accounts (and consolidated accounts where applicable) that comply with FRS.

o Small exempt private companies An exempt private company with revenue in a financial year below S$5m is exempted from appointing auditors and from audit requirements. Revenue is defined according to the statutory accounting standards, i.e. the FRS.

o Dormant companies A dormant company is exempted from appointing auditors and from the audit requirements if it has been dormant either (a) from the time of its formation or (b) since the end of the previous financial year. A company is considered dormant during a period in which no accounting transaction occurs, and the company ceases to be dormant on the occurrence of such a transaction. For this purpose, transactions arising from the following are disregarded:

  • Taking of shares in the company by a subscriber to the memorandum
  • Appointment of company secretary
  • Appointment of auditor
  • Maintenance of a registered office
  • Keeping of registers and books
  • Fees, fines or default penalties paid to the Registrar of Companies

How Many Times Have You Had A Jewelry Dilemma

Which necklace style is appropriate with this outfit? Should I use a long necklace or a short necklace will be better suited? The following list describes the most common necklace lengths and how to use them.

Collar – 12-13 inches in length

Collars are usually made up of two or more strands and lie snugly on the middle of the neck. Collars are an ideal complement to elegant V-neck, boat neck or off the shoulder fashions.

Choker – 14-16 inches in length

A choker is despite the most classic and versatile of all the single strand lengths and is designed to lie around the base of the neck. It is appropriate with everything from casual to formal eveningwear, and completes any neckline imaginable. Is the perfect length to add subtle elegance to your workday paired with a button-down shirt, yet just as stylish with a cocktail dress. This is a good necklace length for a child. This way the necklace has "growth room".

Princess – 17-19 inches in length

The princess length necklace is best suited for crew and high necklines. It also fulfills low plunging necklines. This is an excellent choice if you are not certain which strand length is most appropriate and is the perfect necklace length for a pendant.

Matinee – 20-24 inches in length

The matinee necklace is the right choice for casual or business dressing. It looks best with high necklines and adds sophistication to a professional look. The matinee length is also very well suited for fancier wear such as long sundresses and formal gowns. The extra length of the matinee necklace gives the wearer a sense of luxury and confidence. It certainly may dress up an outfit.

Opera – 28-34 inches in length

The opera necklace offers many attractive options. Can be worn as a single strand, it is refined and perfect for high or crew necklines. Can be doubled upon itself and serves as a versatile two-strand choker. It can be knotted at the neckline or above the bust to create a stylish vintage look. Traditionally, opera length necklaces are worn with eveningwear, although can be used to accessorize more casual attires.

Rope or Lariat – Over 45 inches in length

The rope necklace is very elegant and dangerously sexy. It can be made with several clasps placed in strategic locations, enabling it to be broken down into different necklace and bracelet combinations, or doubled and even tripled to create a stunning multi-strand choker. This versatile length may also be tied in a knot for a charming modern look. Ropes can also be knotted and slung over the shoulder to accentuate the beauty of a backless dress. Lariats are at last 48 inches long, with the ends left unattached for knotting or wrapping around the neck.

Now that you know all about necklaces lengths make sure you include all of them in your wardrobe so you do not have to worry about not having the right one when you need it.