Current ratio Quick ratio Inventories turnover period*

Q: What are the benefits and Flaws of Payback Screening?

A: The payback period alludes to what extent it takes for a speculator to hit breakeven to recoup the…

Q: What is fraud?

A: Misstatement risk: It implies to a risk that the financial statements of the company are…

Q: What items could increase the risk of material misstatement?

A: Risk of material misstatement (ROMM) is a risk that the financial statements when audited will…

Q: What is the Aggregating Risk over Time?

A: Aggregating Risk over time is the measure of a solitary customer's presentation of a foundation or…

Q: Why do we need stress testing and scenario analysis?

A: A stress test or scenario analysis is used to determine and analysis the outcome of a financial…

Q: Why is the declining-balance method most widely used?

A: Double-declining-balance method: The depreciation method which assumes that the consumption of…

Q: What is event risk?

A: Event risk is the likelihood of a sudden event adversely affecting an organization, industry, or…

Q: What is a break-even point and how is it calculated?

A: Break-even point: Break-even point is defined as a situation where a firm’s expenses and revenues…

Q: Is funding a type of risk?

A: Funding means providing the funds to the party and charging interest rates from them. Firms need…

Q: What is the meaning of break-even point?

A: Break-Even Sales: Sales volume required to cover the fixed and variable costs and left out with…

Q: What is commercial risk?

A: In financial terms, risk is defined as the possibility that the real profits from an outcome or…

Q: What is the difference between positive and negative predictive value?

A: Positive predictive value is the probability that subjects with a positive screening test truly have…

Q: What is the difference between probability and statistics?

A: The problems considered by probability and statistics are inverse to each other. In probability…

Q: What is breakup value?

A: Answer: Break-up value is nothing but a valuation that suggests the business will be split into…

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.