What Are Capital Expenditure (cap-Ex)?

Q.1. What are Capital Expenditure (CAP-EX)?

Ans.

Capital Expenditures are amounts spent to acquire or upgrade productive assets (such as buildings, machinery and equipment, vehicles) to increase the capacity or efficiency of a firm for more than one accounting period. A capital expenditure is always incurred with a view point of getting future benefits. These expenditures are termed as assets and always appear on asset side of balance sheet.

Q.2. What is contribution margin?

Ans.

Contribution margin is the fraction of sales that contributes to offsetting fixed costs. Alternatively, unit contribution margin is the amount each unit sale adds to profit: it's the slope of the Profit line.Contribution margin is the marginal profit per unit sale. The Total Contribution Margin (TCM) is Total Revenue (TR, or Sales) minus Total Variable Cost (TVC):

TCM = TR ? TVC .

Q.3. What is Depreciation?

Ans.

Depreciation is the reduction in the value of an asset due to usage, passage of time, wear and tear, technological outdating or, depletion or other such factors. It is also classified as the allocation of the original cost of the asset over its useful life. It is a non cash expenditure that is tax deductible. It appears on the debit side of the profit and loss A/c

Q.4. What are Futures?

Ans.

A futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. Futures contracts are special types of forward contracts in the sense that the former are standardized exchange-traded contracts and can not be customized. Futures price is derived from the price of underlying. Underlying could be commodity, share, interest rate, currency etc

Q.5. What is a Cost Unit?

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A Cost Unit is a unit of quantity of product , service or time ( or combinations of these) in relation to which costs are ascertained or expressed.

Q.6. What are Capital Markets?

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The capital market is the market for securities, where companies and governments can raise long term funds. The capital market includes the stock market and the bond market. Financial regulators, such as the U.S. Securities and Exchange Commission, {In India SEBI ( Securities Exchange Board of India )}oversee the capital markets in their designated countries to ensure that investors are protected against fraud. The capital markets consist of the primary market, where new issues are distributed to investors, and the secondary market, where existing securities are traded.

Q.7. What is Market Capitalization or capitalized value?

Ans.

Market capitalization/capitalisation (capitalized/capitalized value) is a measurement of corporate or economic size equal to the current market price times the number of shares outstanding of a public company.

Likewise, the capitalization of stock markets or economic regions may be compared to other economic indicators. The total market capitalization of all publicly traded companies in the world was US$51.2 trillion in July 2008.

Q.8. What is Free-Float Cap?

Ans.

The "open market" shares that are free for trading by anyone are called the "free-float" shares. When we are calculating the Sensex, we are interested in these "free-float" shares!

A particular company may have certain shares in the open market and certain shares that are not available for trading in the open market.

Q.9. What is Deferred tax?

Ans.

Deferred tax is an accounting concept, meaning a future tax liability or asset, resulting from temporary differences between book (accounting) value of assets and liabilities and their tax value, or timing differences between the recognition of gains and losses in financial statements and their recognition in a tax computation

Q.10. What is deferred tax liability?

Ans.

Deferred tax liabilities generally arise where tax relief is provided in advance of an accounting expense, or income is accrued but not taxed until received. Examples of such situations include:

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