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do i need a sales and purchase agreement | in the exchange of goods a spa protects both the buyer and seller while a spa is technically not required it is often a very good idea to have terms and conditions outlined in a legal document prior to the transaction occurring you will often have no legal recourse in a failed transaction without a contract in place | |
are spas legally binding | yes spas are legally binding often the last document furnished as part of the purchase or sale of an asset it is signed by authorized representatives from both parties when both sides are prepared to execute the deal | |
what is a sales lead | a sales lead is a person or business who may eventually become a client sales lead also refers to the data that identifies an entity as a potential buyer of a product or service businesses gain access to sales leads through advertising trade shows direct mailings third parties and other marketing efforts a sales lead is not really a sales prospect per se because a business would need to examine and qualify the potential new client further to determine their intent and interest | |
how a sales lead works | the sales process begins when a sales professional generates qualifies and places the sales lead data into a company s sales pipeline salesmen use the lead s contact information to send sales pitch emails direct marketing materials and to make outbound sales calls several factors determine the quality of sales leads such as a sales lead s validity depends on whether the targeted person was aware of the sales opportunity when they responded the age of internet sales leadsas of 2023 91 8 of americans regularly access the internet 1 because of this high level of access the internet provides ample opportunities to obtain sales leads however acquiring sales leads is a strategic process that requires skill and effort businesses gain quality sales leads by using the internet to inform themselves about consumers unmet needs or problems and then offer solutions to them for example technology sector businesses may provide e books hold webinars and broadcast podcasts to enlighten consumers about using a product or software sales professionals could hold interactive online sessions and publish question and answer q a materials for a similar purpose the internet allows sales professionals to extend their reach globally however many internet users are wary of providing their personal information online increasingly consumers are demanding that the information they submit online is kept private social media marketingsocial media marketing is a type of digital marketing that uses popular social media platforms such as facebook x formerly twitter pinterest and instagram to reach potential customers and share a company s message effective social media marketing campaigns try to engage social media users by encouraging comments likes and sharing of the company s messages and posts some social media campaigns are primarily to develop brand awareness of a company s products or services others develop sales leads by encouraging viewers to signup or provide their contact details in exchange for a free product discount or download the freebie that the company entices the viewer with is called a lead magnet lead magnets can take many forms popular ones include trial subscriptions free consultations special reports tip sheets white papers and sample products the marketer will then use the provided contact information to send the prospect additional messages that will entice the person to make an actual purchase alternative ways to find sales leadsthe type of business you have and the customers you are trying to reach will impact how you look for and acquire sales leads traditional in person networking tends to be quite effective industry trade shows and networking events provide a wealth of sales leads for businesses as does your local chamber of commerce disseminating information about products or services through advertising in local media also is useful social responsibility can foster sales leads as well by being socially responsible businesses that give also receive when a company or its employees donate time effort or supplies to local public service and nonprofit organizations they don t just get to feel good about helping others they also put their company s name in front of many viewers sometimes through media coverage which can generate numerous contacts including sales leads | |
what is a sales qualified lead | a qualified lead or sometimes a sales qualified lead is a potential customer who has moved through the sales pipeline their information has been acquired as a sales lead and they have demonstrated enough interest that the sales team can work to turn them into an active customer | |
how do businesses protect against losing leads s private information | as companies store more data from sales leads and customers the impact of a privacy breach becomes more serious businesses can spend significant money dealing with the fallout of a data breach some companies concerned about potential losses they could suffer from privacy breaches of their customers confidential information will opt to buy cyber and privacy insurance | |
how long it takes to turn leads into active customers will depend on your business model type of products or services ideal customer and the cost of a purchase it will be easier for example to turn a lead into a customer for a 5 product than for a 500 product because most consumers take longer to make big purchasing decisions leads may need to be exposed to your brand or product seven or more times before they are ready to become an active customer | the bottom linea sales lead is a person or business entity that may become a client or customer but isn t one now it can also refer to the data that a company holds which identifies potential buyers companies use many methods to acquire leads including advertising direct response marketing email marketing social media and cold calls the quality of a sales lead is determined by the accuracy of the contact information you have for them the incentive used to motivate them to become a prospective buyer and whether they are aware of the sales opportunity a qualified sales lead is one that is ready to be passed to the sales team and converted into a customer | |
what is a sales tax | a sales tax is a consumption tax imposed by the government on the sale of goods and services a conventional sales tax is levied at the point of sale collected by the retailer and passed on to the government a business may be liable for sales taxes in a given jurisdiction if it has a presence there which can be a brick and mortar location an employee or an affiliate depending on the laws in that jurisdiction understanding sales taxconventional or retail sales taxes are only charged to the end user of a good or service because the majority of goods in modern economies pass through a number of stages of manufacturing often handled by different entities a significant amount of documentation is necessary to prove who is ultimately liable for sales tax suppose a sheep farmer sells wool to a company that manufactures yarn to avoid paying the sales tax the yarn maker must obtain a resale certificate from the government saying that they are not the end user the yarn maker then sells the product to a garment maker who must also obtain a resale certificate finally the garment maker sells fuzzy socks to a retail store which will charge the customer sales tax as part of the price different jurisdictions can charge different levels of sales taxes also states counties and municipalities may levy sales taxes of their own this can make the purchase price of the same item in different locations differ sales taxes are closely related to use taxes which apply to items purchased from outside their jurisdiction use taxes are generally set at the same rate as sales taxes but are difficult to enforce except when applied to large purchases of tangible goods an example of a use tax would be when a georgia resident purchases a car in florida the buyer would be required to pay the local georgia sales tax as though they had bought it there comparison shoppers might use the net of tax price to see if buying an item in one location is beneficial over buying it in another location nexusa nexus is generally defined as a physical presence but this presence is not limited to having an office or a warehouse whether a business owes sales taxes to a particular government depends on the way that government defines a nexus having an employee in a state can constitute a nexus as can having an affiliate such as a partner website that directs traffic to your business page in exchange for a share of profits this scenario is an example of the tensions between ecommerce and sales taxes for example new york has passed amazon laws requiring internet retailers such as amazon com inc amzn to pay sales taxes despite their lack of physical presence in the state there are four u s states with no sales taxes delaware new hampshire montana and oregon alaska also has no statewide sales tax but allows city and county governments to charge a local sales tax excise taxesin general sales taxes take a percentage of the price of goods sold a state might have a 4 sales tax a county 2 and a city 1 5 so that residents of that city pay 7 5 in total certain items are often exempt such as food others are exempt below a certain threshold such as clothing purchases of less than 200 conversely some products carry special taxes known as excise taxes sin taxes are a form of excise tax such as the local excise tax of 1 50 new york city charges per pack of 20 cigarettes on top of the state excise tax of 4 35 per pack of 20 cigarettes a sales tax is different from a value added tax in that the sales tax is only collected once a vat is collected throughout the production process value added taxthe u s is one of the few developed countries where conventional sales taxes are still used outside of the u s many countries have adopted value added tax vat schemes these charge a percentage of the value added at every level of production of a good in the example above the yarn maker would pay a percentage of the difference between what they charge for yarn and what they pay for wool similarly the garment maker would pay the same percentage on the difference between what they charge for socks and what they pay for yarn this is a tax on each company s gross margins rather than on the end user the main objective of the vat is to eliminate tax on tax i e double taxation which cascades from the manufacturing level to the consumption level the u s system with no vat implies that tax is paid on the value of goods and margin at every stage of the production process this would translate to a higher amount of total taxes paid which is carried down to the end consumer in the form of higher costs for goods and services | |
what is the sales tax in california | california has a statewide sales tax of 7 25 in addition some municipalities may impose local sales taxes | |
what states have the lowest sales tax | the states with the lowest average sales taxes are hawai i 4 44 wyoming 5 36 and alaska 1 76 in addition four states delaware new hampshire oregon and montana do not allow any sales tax to be charged at all | |
what states have the highest sales tax | louisiana has the highest sales tax with a statewide average tax of 9 55 according to the aarp this includes both state and average local taxes tennessee arkansas and washington also have high average sales taxes of above 9 the bottom linea sales tax is a percentage based tax on finished products at the point of sale sales taxes are common in the united states where each level of government may charge an additional percentage of gross sales they are less common outside the u s where many countries use a value added tax instead | |
what is salvage value | salvage value is the estimated book value of an asset after depreciation is complete based on what a company expects to receive in exchange for the asset at the end of its useful life as such an asset s estimated salvage value is an important component in the calculation of a depreciation schedule investopedia nono floresunderstanding salvage valuean estimated salvage value can be determined for any asset that a company will be depreciating on its books over time every company will have its own standards for estimating salvage value some companies may choose to always depreciate an asset to 0 because its salvage value is so minimal in general the salvage value is important because it will be the carrying value of the asset on a company s books after depreciation has been fully expensed it is based on the value a company expects to receive from the sale of the asset at the end of its useful life in some cases salvage value may just be a value the company believes it can obtain by selling a depreciated inoperable asset for parts companies take into consideration the matching principle when making assumptions for asset depreciation and salvage value the matching principle is an accrual accounting concept that requires a company to recognize expense in the same period as the related revenues are earned if a company expects that an asset will contribute to revenue for a long period of time it will have a long useful life if a company is not sure of an asset s useful life it may estimate a lower number of years and a higher salvage value to carry the asset on its books after full depreciation or sell the asset at its salvage value if a company wants to front load depreciation expenses it can use an accelerated depreciation method that deducts more depreciation expenses upfront many companies use a salvage value of 0 because they believe that an asset s utilization has fully matched its expense recognition with revenues over its useful life a company can change its expected salvage value at any time it just needs to prospectively change the estimated amount to book to depreciate each month depreciation methodsthere are several assumptions required for developing depreciation schedules there are five primary methods of depreciation financial accountants can choose from straight line declining balance double declining balance sum of years digits and units of production the declining balance double declining balance and sum of years digits methods are accelerated depreciation methods with higher depreciation expense upfront in earlier years each of these methods requires consideration for salvage value an asset s depreciable amount is its total accumulated depreciation after all depreciation expense has been recorded which is also the result of historical cost minus salvage value the carrying value of an asset as it is being depreciated is its historical cost minus accumulated depreciation to date straight line depreciation is generally the most basic depreciation method it includes equal depreciation expenses each year throughout the entire useful life until the entire asset is depreciated to its salvage value assume for example that a company buys a machine at a cost of 5 000 the company decides on a salvage value of 1 000 and a useful life of five years based on these assumptions the annual depreciation using the straight line method is 5 000 cost 1 000 salvage value 5 years or 800 per year this results in a depreciation percentage of 20 800 4 000 the declining balance method is an accelerated depreciation method this method depreciates the machine at its straight line depreciation percentage times its remaining depreciable amount each year because an asset s carrying value is higher in earlier years the same percentage causes a larger depreciation expense amount in earlier years declining each year using the example above the machine costs 5 000 has a salvage value of 1 000 a 5 year life and is depreciated at 20 each year so the expense is 800 in the first year 4 000 depreciable amount 20 640 in the second year 4 000 800 20 and so on the double declining balance ddb method uses a depreciation rate that is twice the rate of straight line depreciation in the machine example the depreciation percentage is 20 therefore the ddb method would record depreciation expenses at 20 x 2 or 40 of the remaining depreciable amount per year both declining balance and ddb require a company to set an initial salvage value to determine the depreciable amount this method creates a fraction for depreciation calculations using the example above if the useful life is five years the denominator is 5 4 3 2 1 15 the numerator is the number of years left in the asset s useful life the depreciation expense fraction for each of the five years is then 5 15 4 15 3 15 2 15 and 1 15 each fraction is multiplied times the total depreciable amount this method requires an estimate for the total units an asset will produce over its useful life depreciation expense is then calculated per year based on the number of units produced this method also calculates depreciation expenses based on the depreciable amount formula and calculation of salvage valuethere are several ways a company can estimate the salvage value of an asset first it may use the percentage of the original cost method this method assumes that the salvage value is a percentage of the asset s original cost to calculate the salvage value using this method multiply the asset s original cost by the salvage value percentage percentage of cost method original cost anticipated salvage value percentagecompanies can also get an appraisal of the asset by reaching out to an independent third party appraiser this method involves obtaining an independent report of the asset s value at the end of its useful life this may also be done by using industry specific data to estimate the asset s value companies can also use comparable data with existing assets they owned especially if these assets are normally used during the course of business for example consider a delivery company that frequently turns over its delivery trucks that company may have the best sense of data based on their prior use of trucks salvage value is almost never exactly known in advance unless there is a contract in place for the sale of the asset at a future date it s usually an estimated amount salvage value vs other valuessalvage value is the estimated value of an asset at the end of its useful life it represents the amount that a company could sell the asset for after it has been fully depreciated on the other hand book value is the value of an asset as it appears on a company s balance sheet it is calculated by subtracting accumulated depreciation from the asset s original cost the balance sheet reports the book value not the salvage value salvage value is also similar to but still different from residual value in some contexts residual value refers to the estimated value of the asset at the end of the lease or loan term which is used to determine the final payment or buyout price in other contexts residual value is the value of the asset at the end of its life less costs to dispose of the asset in many cases salvage value may only reflect the value of the asset at the end of its life without consideration of selling costs last salvage value is most comparable to scrap value there may be a little nuisance as scrap value may assume the good is not being sold but instead being converted to a raw material for example a company may decide it wants to just scrap a company fleet vehicle for 1 000 this 1 000 may also be considered the salvage value though scrap value is slightly more descriptive of how the company may dispose of the asset example of salvage valueimagine a situation where a company acquires a fleet of company vehicles the company pays 250 000 for eight commuter vans it will use to deliver goods across town if the company estimates that the entire fleet would be worthless at the end of its useful life the salve value would be 0 and the company would depreciate the full 250 000 let s say the company assumes each vehicle will have a salvage value of 5 000 this means that of the 250 000 the company paid the company expects to recover 40 000 at the end of the useful life to appropriately depreciate these assets the company would depreciate the net of the cost and salvage value over the useful life of the assets the total amount to be depreciated would be 210 000 250 000 less 40 000 if the assets have a useful life of seven years the company would depreciate the assets by 30 000 each year | |
how is salvage value calculated | salvage value can be calculated by in a few different ways first companies can take a percentage of the original cost as the salvage value second companies can rely on an independent appraiser to assess the value third companies can use historical data and comparables to determine a value | |
is salvage value the selling price | yes salvage value can be considered the selling price that a company can expect to receive for an asset the end of its life in other cases that asset may be scrapped or turned into raw materials however those materials may be sold therefore the salvage value is simply the financial proceeds a company may expect to receive for an asset when its disposed of though it may not factor in selling or disposal costs | |
what is salvage value vs book value | book value is the historical cost of an asset less the accumulated depreciation booked for that asset to date this amount is carried on a company s financial statement under noncurrent assets on the other hand salvage value is an appraised estimate used to factor how much depreciation to calculate it s a guess on how much the company can get for the asset at the end of its life and this value though helpful to determine components of a financial statement isn t actually reported on a company s financial statement the bottom linesalvage value is the amount a company can expect to receive for an asset at the end of the asset s useful life a company uses salvage value to estimate and calculate depreciate as salvage value is deducted from the asset s original cost a company can also use salvage value to anticipate cashflow and expected future proceeds | |
what is sampling | sampling is a process in statistical analysis where researchers take a predetermined number of observations from a larger population sampling allows researchers to conduct studies about a large group by using a small portion of the population the method of sampling depends on the type of analysis being performed but it may include simple random sampling or systematic sampling sampling is commonly done in statistics psychology and the financial industry investopedia crea taylor | |
how sampling works | it can be difficult for researchers to conduct accurate studies on large populations in some cases it can be impossible to study every individual in the group that s why they often choose a small portion to represent the entire group this is called a sample samples allow researchers to use characteristics of the small group to make estimates of the larger population the chosen sample should be a fair representation of the entire population when taking a sample from a larger population it is important to consider how the sample is chosen to get a representative sample it must be drawn randomly and encompass the whole population for example a lottery system could be used to determine the average age of students in a university by sampling 10 of the student body sampling is commonly used when studying large portions of the population for economic purposes for instance the monthly employment report involves the use of sampling the u s bureau of labor statistics bls reports researchers should be aware of sampling errors this occurs when the sample that is selected doesn t represent the entire population this means that the results taken from the sample deviate from the larger population sampling error may occur randomly or because there is some form of bias for instance some members of the sample group may choose not to participate or they differ in some way from other participants sampling isn t an exact science so the results should be taken as generalizations as such don t make conclusions about the broader population based on the sample group types of audit samplingas noted above there are several different types of sampling that researchers can use these include random judgment block and systemic sampling these are discussed in more detail below with random sampling every item within a population has an equal probability of being chosen it is the furthest removed from any potential bias because there is no human judgement involved in selecting the sample for example a random sample may include choosing the names of 25 employees out of a hat in a company of 250 employees the population is all 250 employees and the sample is random because each employee has an equal chance of being chosen auditor judgment may be used to select the sample from the full population an auditor may only be concerned about transactions of a material nature for example assume the auditor sets the threshold for materiality for accounts payable transactions at 10 000 if the client provides a complete list of 15 transactions over 10 000 the auditor may just choose to review all transactions due to the small population size the auditor may alternatively identify all general ledger accounts with a variance greater than 10 from the prior period in this case the auditor is limiting the population from which the sample selection is being derived unfortunately human judgment used in sampling always comes with the potential for bias whether explicit or implicit block sampling takes a consecutive series of items within the population to use as the sample for example a list of all sales transactions in an accounting period could be sorted in various ways including by date or by dollar amount an auditor may request that the company s accountant provide the list in one format or the other in order to select a sample from a specific segment of the list this method requires very little modification on the auditor s part but it is likely that a block of transactions will not be representative of the full population systematic sampling begins at a random starting point within the population and uses a fixed periodic interval to select items for a sample the sampling interval is calculated as the population size divided by the sample size despite the sample population being selected in advance systematic sampling is still considered random if the periodic interval is determined beforehand and the starting point is random assume that an auditor reviews the internal controls related to a company s cash account and wants to test the company policy that stipulates that checks exceeding 10 000 must be signed by two people the population consists of every company check exceeding 10 000 during the fiscal year which in this example was 300 the auditor uses probability statistics and determines that the sample size should be 20 of the population or 60 checks the sampling interval is 5 or 300 checks 60 sample checks therefore the auditor selects every fifth check for testing assuming no errors are found in the sampling test work the statistical analysis gives the auditor a 95 confidence rate that the check procedure was performed correctly the auditor tests the sample of 60 checks and finds no errors so he concludes that the internal control over cash is working properly example of samplingbusinesses aim to sell their products and or services to target markets before presenting products to the market companies generally identify the needs and wants of their target audience to do so they may employ sampling of the target market population to gain a better understanding of those needs to later create a product and or service that meets those needs in this case gathering the opinions of the sample helps to identify the needs of the whole during a financial audit a certified public accountant cpa may use sampling to determine the accuracy and completeness of account balances in their client s financial statements this is called audit sampling 2 audit sampling is necessary when the population the account transaction information is large | |
what is sampling error | sampling error is what happens when the sample collected for review doesn t represent the entire population being studied this jeopardizes the accuracy and validity of the study being conducted for instance sampling error occurs if researchers include professors in the sample when they re trying to determine how students feel about the university experience sampling error may be random or the result of some type of bias | |
what is cluster sampling | cluster sampling is a form of probability sampling when researchers conduct cluster sampling they divide the population into smaller groups they then select individuals randomly from these groups to form their samples and conduct their studies this kind of sampling is used when both the overall population and sample size is too large to handle | |
what s the difference between probability and non probability sampling | probability sampling gives researchers the chance to come to stronger conclusions about the entire population that is being studied it involves the use of random sampling which means that all of the participants in the group are equally likely to get a chance to be chosen as a representative sample of the entire population the result is often unbiased non probability sampling on the other hand allows researchers to easily collect information this type of sampling is generally biased as it is unknown which participants will be chosen as a sample the bottom linestatisticians often resort to sampling in order to conduct research when they re dealing with large populations sampling is a technique that involves taking a small number of participants from a much bigger group this is often found when data needs to be collected about the population including statistical analysis population surveys and economic studies | |
what is a sampling distribution | a sampling distribution is a concept used in statistics it is a probability distribution of a statistic obtained from a larger number of samples drawn from a specific population the sampling distribution of a given population is the distribution of frequencies of a range of different outcomes that could possibly occur for a statistic of a population this allows entities like governments and businesses to make more well informed decisions based on the information they gather there are a few methods of sampling distribution used by researchers including the sampling distribution of a mean | |
how sampling distributions work | data allows statisticians researchers marketers analysts and academics to make important conclusions about specific topics and information it can help businesses make decisions about their future and boost their performance or it can help governments plan for services needed by a group of people a lot of data drawn and used are actually samples rather than populations a sample is a subset of a population put simply a sample is a smaller part of a larger group as such this smaller portion is meant to be representative of the population as a whole sampling distributions or the distribution of data are statistical metrics that determine whether an event or certain outcome will take place this distribution depends on a few different factors including the sample size the sampling process involved and the population as a whole there are a few steps involved with sampling distribution these include once the information is gathered plotted and analyzed researchers can make inferences and conclusions this can help them make decisions about what to expect in the future for instance governments may be able to invest in infrastructure projects based on the needs of a certain community or a company may decide to proceed with a new business venture if the sampling distribution suggests a positive outcome each sample has its own sample mean and the distribution of the sample means is known as the sample distribution special considerationsthe number of observations in a population the number of observations in a sample and the procedure used to draw the sample sets determine the variability of a sampling distribution the standard deviation of a sampling distribution is called the standard error while the mean of a sampling distribution is equal to the mean of the population the standard error depends on the standard deviation of the population the size of the population and the size of the sample 1knowing how spread apart the mean of each of the sample sets are from each other and from the population mean will give an indication of how close the sample mean is to the population mean the standard error of the sampling distribution decreases as the sample size increases determining a sampling distributionlet s say a medical researcher wants to compare the average weight of all babies born in north america from 1995 to 2005 to those from south america within the same time period since they cannot draw the data for the entire population within a reasonable amount of time they would only use 100 babies in each continent to make a conclusion the data used is the sample and the average weight calculated is the sample mean now suppose they take repeated random samples from the general population and compute the sample mean for each sample group instead so for north america they pull data for 100 newborn weights recorded in the u s canada and mexico as follows the researcher ends up with a total of 1 200 weights of newborn babies grouped in 12 sets they also collect sample data of 100 birth weights from each of the 12 countries in south america the average weight computed for each sample set is the sampling distribution of the mean not just the mean can be calculated from a sample other statistics such as the standard deviation variance proportion and range can be calculated from sample data the standard deviation and variance measure the variability of the sampling distribution 2types of sampling distributionshere is a brief description of the types of sampling distributions in statistics a population is the entire pool from which a statistical sample is drawn a population may refer to an entire group of people objects events hospital visits or measurements a population can thus be said to be an aggregate observation of subjects grouped together by a common feature 3plotting sampling distributionsa population or one sample set of numbers will have a normal distribution however because a sampling distribution includes multiple sets of observations it will not necessarily have a bell curved shape following our example the population average weight of babies in north america and in south america has a normal distribution because some babies will be underweight below the mean or overweight above the mean with most babies falling in between around the mean if the average weight of newborns in north america is seven pounds the sample mean weight in each of the 12 sets of sample observations recorded for north america will be close to seven pounds as well but if you graph each of the averages calculated in each of the 1 200 sample groups the resulting shape may result in a uniform distribution but it is difficult to predict with certainty what the actual shape will turn out to be the more samples the researcher uses from the population of over a million weight figures the more the graph will start forming a normal distribution | |
why is sampling used to gather population data | sampling is a way to gather and analyze information about a larger group it is done because researchers aren t able to study entire populations due to the sheer volume of subjects involved as such not everyone in the larger group can be included as it may take too long to study and analyze the data it allows entities like governments and businesses to make important decisions about the future whether that means investing in an infrastructure project social service program or new product | |
why are sampling distributions used | sampling distributions are used in statistics and research they highlight the chance or probability of an event that may take place this is based on a set of data that is gathered from a small group within a larger population | |
what is a mean | a mean is a metric used in statistics and research it is the average for at least two numbers the mean may be determined by adding up all the numbers and dividing the result by the number of numbers in that set this is known as the arithmetic mean you can determine the geometric mean by multiplying the values of a data set and taking the root of the sum equal to the number of values within that data set the bottom lineresearchers aren t able to make conclusions about very large groups because of the number of subjects involved that s why they use sampling sampling allows them to take a small group from a large population and analyze data once that data is collected researchers can plot out sampling distributions which allow them to determine whether an event may take place within a certain population this may include business growth or population trends which can help businesses governments and other entities make better decisions for the future | |
what is a sampling error | a sampling error is a statistical error that occurs when an analyst does not select a sample that represents the entire population of data as a result the results found in the sample do not represent the results that would be obtained from the entire population sampling is an analysis performed by selecting a number of observations from a larger population the method of selection can produce both sampling errors and non sampling errors understanding sampling errorsa sampling error is a deviation in the sampled value versus the true population value sampling errors occur because the sample is not representative of the population or is biased in some way even randomized samples will have some degree of sampling error because a sample is only an approximation of the population from which it is drawn calculating sampling errorthe sampling error formula is used to calculate the overall sampling error in statistical analysis the sampling error is calculated by dividing the standard deviation of the population by the square root of the size of the sample and then multiplying the resultant with the z score value which is based on the confidence interval sampling error z n where z z score value based on the confidence interval approx 1 96 population standard deviation n size of the sample begin aligned text sampling error z times frac sigma sqrt n textbf where z z text score value based on the qquad text confidence interval approx 1 96 sigma text population standard deviation n text size of the sample end aligned sampling error z n where z z score value based on the confidence interval approx 1 96 population standard deviationn size of the sample types of sampling errorsthere are different categories of sampling errors a population specific error occurs when a researcher doesn t understand who to survey selection error occurs when the survey is self selected or when only those participants who are interested in the survey respond to the questions researchers can attempt to overcome selection error by finding ways to encourage participation a sample frame error occurs when a sample is selected from the wrong population data a non response error occurs when a useful response is not obtained from the surveys because researchers were unable to contact potential respondents or potential respondents refused to respond eliminating sampling errorsthe prevalence of sampling errors can be reduced by increasing the sample size as the sample size increases the sample gets closer to the actual population which decreases the potential for deviations from the actual population consider that the average of a sample of 10 varies more than the average of a sample of 100 steps can also be taken to ensure that the sample adequately represents the entire population researchers might attempt to reduce sampling errors by replicating their study this could be accomplished by taking the same measurements repeatedly using more than one subject or multiple groups or by undertaking multiple studies random sampling is an additional way to minimize the occurrence of sampling errors random sampling establishes a systematic approach to selecting a sample for example rather than choosing participants to be interviewed haphazardly a researcher might choose those whose names appear first 10th 20th 30th 40th and so on on the list one way to reduce the likelihood of sampling error is to use a larger sample size the monthly employment situation report compiled each month by the bureau of labor statistics is calculated from a survey of 119 000 businesses and government agencies due to the enormous sample size these surveys have an extremely low rate of sampling error 1examples of sampling errorsassume that xyz company provides a subscription based service that allows consumers to pay a monthly fee to stream videos and other types of programming via an internet connection the firm wants to survey homeowners who watch at least 10 hours of programming via the internet per week and that pay for an existing video streaming service xyz wants to determine what percentage of the population is interested in a lower priced subscription service if xyz does not think carefully about the sampling process several types of sampling errors may occur a population specification error would occur if xyz company does not understand the specific types of consumers who should be included in the sample for example if xyz creates a population of people between the ages of 15 and 25 years old many of those consumers do not make the purchasing decision about a video streaming service because they may not work full time on the other hand if xyz put together a sample of working adults who make purchase decisions the consumers in this group may not watch 10 hours of video programming each week selection error also causes distortions in the results of a sample a common example is a survey that only relies on a small portion of people who immediately respond if xyz makes an effort to follow up with consumers who don t initially respond the results of the survey may change furthermore if xyz excludes consumers who don t respond right away the sample results may not reflect the preferences of the entire population sampling error vs non sampling errorthere are different types of errors that can occur when gathering statistical data sampling errors are the seemingly random differences between the characteristics of a sample population and those of the general population sampling errors arise because sample sizes are inevitably limited it is impossible to sample an entire population in a survey or a census a sampling error can result even when no mistakes of any kind are made sampling errors occur because no sample will ever perfectly match the data in the universe from which the sample is taken company xyz will also want to avoid non sampling errors non sampling errors are errors that result during data collection and cause the data to differ from the true values non sampling errors are caused by human error such as a mistake made in the survey process if one group of consumers only watches five hours of video programming a week and is included in the survey that decision is a non sampling error asking questions that are biased is another type of error | |
what is sampling error vs sampling bias | in statistics sampling means selecting the group that you will actually collect data from in your research sampling bias is the expectation which is known in advance that a sample won t be representative of the true population for instance if the sample ends up having proportionally more women or young people than the overall population sampling errors are statistical errors that arise when a sample does not represent the whole population once analyses have been undertaken | |
why is sampling error important | being aware of the presence of sampling errors is important because it can be an indicator of the level of confidence that can be placed in the results sampling error is also important in the context of a discussion about how much research results can vary | |
how do you find the sampling error | in survey research sampling errors occur because all samples are representative samples a smaller group that stands in for the whole of your research population it s impossible to survey the entire group of people you d like to reach it s not usually possible to quantify the degree of sampling error in a study since it s impossible to collect the relevant data from the entire population you are studying this is why researchers collect representative samples and representative samples are the reason why there are sampling errors | |
what is sampling error vs standard error | sampling error is derived from the standard error se by multiplying it by a z score value to produce a confidence interval the standard error is computed by dividing the standard deviation by the square root of the sample size the bottom linesampling error occurs when a sample drawn from a population deviates somewhat from that true population large sampling errors can lead to incorrect estimates or inferences made about the population based on statistical analysis of that sample in general sampling errors can be placed into four categories population specific error selection error sample frame error or non response error a population specific error occurs when the researcher does not understand who they should survey a selection error occurs when respondents self select their participation in the study this results in only those that are interested in responding which skews the results a sample frame error occurs when the wrong sub population is used to select a sample finally a non response error occurs when potential respondents are not successfully contacted or refuse to respond | |
what is a samurai bond | a samurai bond is a yen denominated bond issued in tokyo by a non japanese company and subject to japanese regulations other types of yen denominated bonds are called euroyens and issued in countries other than japan typically in london | |
how a samurai bond works | a company may choose to enter a foreign market if it believes that it would get attractive interest rates in this market or if it has a need for foreign currency when a company decides to tap into a foreign market it can do so by issuing foreign bonds which are bonds denominated in the currency of the intended market simply put a foreign bond is issued in a domestic market by a foreign issuer in the currency of the domestic country foreign bonds are mainly used to provide corporate or sovereign issuers with access to another capital market outside their domestic market to raise capital a foreign issuer who wants access to the japanese debt market would issue a bond referred to as a samurai bond samurai bonds give issuers the ability to access investment capital available in japan the proceeds from the issuance of samurai bonds can be used by non japanese companies to break into the japanese market or it can be converted into the issuing company s local currency to be used on existing operations issuers may simultaneously convert proceeds from the issue into another currency in order to take advantage of lower costs that may result from investor preferences that differ across segmented markets or from temporary market conditions that differentially affect the swaps and bond markets samurai bonds can also be used to hedge against foreign exchange rate risk issuing companies that operate in an unstable domestic economy might opt to issue bonds in the japanese market which is largely defined by its stability the benefit of samurai bonds to investors in japan is that they are not exposed to currency risks of purchasing bonds in another currency benefits of a samurai bondsamurai bonds are denominated in japanese yen thus samurai bonds give a company or government an opportunity to expand into the japanese market without the currency risks normally associated with a foreign investment since the bonds are issued in yen the bonds are subject to japanese bond regulations attracting investors from japan and providing capital to foreign issuers since investors bear no currency risk from holding these bonds samurai bonds are attractive investment opportunities for japanese investors example of a samurai bondin 2017 to accelerate indonesia s infrastructure development program the indonesian government issued three five and seven year samurai bonds worth 40 billion yen 50 billion yen and 10 billion yen respectively u s issuers make up about a third of outstanding samurai issuers as of 2017 u s issuers cannot deduct their interest costs for newly issued bonds and investors are subject to a 30 withholding tax on their coupon payments samurai bonds vs shogun bondsthe samurai bond is not to be confused with the shogun bond which is issued in japan by a non japanese issuing entity but denominated in a currency other than the yen other foreign bonds include kangaroo bonds maple bonds matador bonds yankee bonds and bulldog bonds | |
what is the sarbanes oxley sox act of 2002 | the sarbanes oxley act of 2002 is a law the u s congress passed on july 30 of that year to help protect investors from fraudulent financial reporting by corporations 1 also known as the sox act of 2002 it mandated strict reforms to existing securities regulations and imposed tough new penalties on lawbreakers the sarbanes oxley act of 2002 came in response to financial scandals in the early 2000s involving publicly traded companies such as enron corporation tyco international plc and worldcom 2 the high profile frauds shook investor confidence in the trustworthiness of corporate financial statements and led many to demand an overhaul of decades old regulatory standards the act took its name from its two sponsors sen paul s sarbanes d md and rep michael g oxley r ohio 34investopedia matthew collinsunderstanding the sarbanes oxley sox actthe rules and enforcement policies outlined in the sarbanes oxley act of 2002 amended or supplemented existing laws dealing with security regulation including the securities exchange act of 1934 and other laws enforced by the securities and exchange commission sec 5 the new law set out reforms and additions in four principal areas major provisions of the sarbanes oxley sox act of 2002the sarbanes oxley act of 2002 is a complex and lengthy piece of legislation three of its key provisions are commonly referred to by their section numbers section 302 section 404 and section 802 1 because of the sarbanes oxley act of 2002 corporate officers who knowingly certify false financial statements can go to prison section 302 of the sox act of 2002 mandates that senior corporate officers personally certify in writing that the company s financial statements comply with sec disclosure requirements and fairly present in all material respects the financial condition and results of operations of the issuer at the time of the financial report officers who sign off on financial statements that they know to be inaccurate are subject to criminal penalties including prison terms section 404 of the sox act of 2002 requires that management and auditors establish internal controls and reporting methods to ensure the adequacy of those controls some critics of the law have complained that the requirements in section 404 can have a negative impact on publicly traded companies because it s often expensive to establish and maintain the necessary internal controls section 802 of the sox act of 2002 contains the three rules that affect recordkeeping the first deals with destruction and falsification of records the second strictly defines the retention period for storing records the third rule outlines the specific business records that companies need to store which includes electronic communications besides the financial side of a business such as audits accuracy and controls the sox act of 2002 also outlines requirements for information technology it departments regarding electronic records the act does not specify a set of business practices in this regard but instead defines which company records need to be kept on file and for how long the standards outlined in the sox act of 2002 do not specify how a business should store its records just that it s the company it department s responsibility to store them | |
what is a savings account | a savings account is an account at a bank or credit union that is designed to hold your money savings accounts typically pay a modest interest rate but they are considered safe for parking cash that you want available for short term needs some savings accounts pay a higher yield than other savings accounts they may have some limitations on how often you can withdraw funds generally savings accounts offer flexibility that can be ideal for building an emergency fund saving for a short term goal like buying a car or going on vacation or simply earning a little interest on your savings investopedia joules garcia | |
how savings accounts work | savings and other deposit accounts are secure bank accounts used to story your funds while potentially earning interest for banks they are important sources of funds for lending for that reason you can find savings accounts at virtually every bank or credit union whether they are traditional brick and mortar institutions or operate online in addition some investment and brokerage firms offer savings accounts savings account interest rates vary with the exception of promotions promising a fixed rate until a certain date banks and credit unions might change their rates at any time typically the more competitive the rate the more likely it is to fluctuate changes in the federal funds rate can trigger institutions to adjust their deposit rates some institutions offer high yield savings accounts with significantly higher interest rates for larger minimum deposits which may be worth investigating some conventional savings accounts require a minimum balance to avoid monthly fees or earn the highest published rate while others have no balance requirement know the rules of your particular account to ensure you avoid diluting your earnings with fees money can be transferred in or out of your savings account online at a branch or atm by electronic transfer or by direct deposit transfers can usually be arranged by phone as well some banks limit withdrawals to six per month if you exceed that the bank may charge a fee close your account or convert it to a checking account the amount you can withdraw is unlimited so you can withdraw up to the amount in the account 1just as with the interest earned on a money market certificate of deposit or checking account the interest earned on savings accounts is taxable income the financial institution where you hold your account will send a 1099 int form at tax time whenever you earn more than 10 in interest income the tax you ll pay will depend on your marginal tax rate 2pros and cons of savings accountseasy to usecan be linked to checking accountwithdraw balance at any timeup to 250 000 is federally insuredpays less interest than other optionseasy access can make withdrawals temptingmay require minimum balance | |
how to maximize earnings from a savings account | although most major banks offer low interest rates on their savings accounts many banks and credit unions provide much higher returns in particular online banks offer some of the highest savings account rates because they don t have physical branches or have very few they spend less on overhead and can often offer higher more competitive deposit rates as a result the key is to shop around starting with the bank where you hold your checking account even if that institution doesn t offer a competitive savings account rate it will give you a frame of reference for how much more you can earn by moving your savings or opening an additional account elsewhere as you shop for the best rates however beware of account features that can curtail your earnings or even drain them some promotional savings accounts will only offer the attractive rate they re advertising for a short period of time others will cap the balance that can earn the promotional rate with dollar amounts above that maximum earning a paltry rate even worse is a savings account with fees that cut into the interest you earn each month | |
how to open a savings account | to set up a savings account visit one of the bank or credit union s branches or establish the account online for those institutions that offer it you ll need to provide your name address and telephone number as well as photo identification also because the account earns taxable interest you ll need to provide your social security number ssn some institutions will require you to make an initial minimum deposit at the time you open the account others will allow you to open the account first and fund it later you can make your initial deposit in a savings account with a transfer from an account at that institution an external transfer a mailed in or mobile deposit check or a deposit in person at a branch | |
how much to keep in your savings account | the amount you keep in your savings account will depend on your goals for the funds or your use of the account if you ve set up the savings account to sweep excess funds from your checking account your balance is likely to vary regularly in contrast if you are building up to a savings goal your balance will likely start low and increase steadily over time if your savings account is your emergency fund aim for enough to cover at least three to six months living expenses that gives you some financial cushion if you face an unexpected expense like a medical or car repair bill or if you lose your job depending on your financial situation you may want to keep some of that emergency fund in a simple savings account and invest the rest to seek higher returns keep in mind that up to 250 000 of your deposits are protected by fdic insurance or ncua insurance that ensures your funds are safe should the institution fail for most consumers this more than covers what they have on deposit but if you are holding more than 250 000 in deposit accounts consider splitting your balance across more than one account holder or institution 43kids and student savings accountsyou must be 18 or over to open a savings account on your own in the u s but many savings accounts are designed for minors you can get a savings account for a child by co signing for the account bank accounts designed for students usually have maximum age restrictions for example you may not be able to open a student bank account if you are over 25 these accounts designed to teach younger adults how to use a bank account usually have lower fees and requirements but they also tend to offer lower interest rates frequently asked questions faqs | |
how do you open a savings account | you can open a savings account by visiting a bank branch with your government issued id and any cash or checks you wish to deposit you will also be asked for your address contact information and a social security number or taxpayer identification number tin you may have to open a checking account as well as a savings account and there may be a minimum deposit threshold it is also possible to open a savings account with an online bank | |
what savings account will earn you the most money | savings account rates change often so it is worth taking the time to compare the offerings from different banks and credit unions as of june 2024 the best savings rates ranged from about 4 5 to 5 5 | |
how do you close a savings account | most banks allow three ways to close an account you can either visit the bank in person submit a written cancellation request form or close the account over the phone in each case you may be asked to provide identifying information the bottom linesavings accounts offer one of the simplest ways to earn interest on the money you have they offer higher interest rates than a regular checking account while still making it easy to spend and withdraw money however savings account rates are much lower than other investments and they don t keep pace with inflation consult a financial advisor to review the options for you money to meet your financial goals | |
what is a savings account | a savings account is an account at a bank or credit union that is designed to hold your money savings accounts typically pay a modest interest rate but they are considered safe for parking cash that you want available for short term needs some savings accounts pay a higher yield than other savings accounts they may have some limitations on how often you can withdraw funds generally savings accounts offer flexibility that can be ideal for building an emergency fund saving for a short term goal like buying a car or going on vacation or simply earning a little interest on your savings investopedia joules garcia | |
how savings accounts work | savings and other deposit accounts are secure bank accounts used to story your funds while potentially earning interest for banks they are important sources of funds for lending for that reason you can find savings accounts at virtually every bank or credit union whether they are traditional brick and mortar institutions or operate online in addition some investment and brokerage firms offer savings accounts savings account interest rates vary with the exception of promotions promising a fixed rate until a certain date banks and credit unions might change their rates at any time typically the more competitive the rate the more likely it is to fluctuate changes in the federal funds rate can trigger institutions to adjust their deposit rates some institutions offer high yield savings accounts with significantly higher interest rates for larger minimum deposits which may be worth investigating some conventional savings accounts require a minimum balance to avoid monthly fees or earn the highest published rate while others have no balance requirement know the rules of your particular account to ensure you avoid diluting your earnings with fees money can be transferred in or out of your savings account online at a branch or atm by electronic transfer or by direct deposit transfers can usually be arranged by phone as well some banks limit withdrawals to six per month if you exceed that the bank may charge a fee close your account or convert it to a checking account the amount you can withdraw is unlimited so you can withdraw up to the amount in the account 1just as with the interest earned on a money market certificate of deposit or checking account the interest earned on savings accounts is taxable income the financial institution where you hold your account will send a 1099 int form at tax time whenever you earn more than 10 in interest income the tax you ll pay will depend on your marginal tax rate 2pros and cons of savings accountseasy to usecan be linked to checking accountwithdraw balance at any timeup to 250 000 is federally insuredpays less interest than other optionseasy access can make withdrawals temptingmay require minimum balance | |
how to maximize earnings from a savings account | although most major banks offer low interest rates on their savings accounts many banks and credit unions provide much higher returns in particular online banks offer some of the highest savings account rates because they don t have physical branches or have very few they spend less on overhead and can often offer higher more competitive deposit rates as a result the key is to shop around starting with the bank where you hold your checking account even if that institution doesn t offer a competitive savings account rate it will give you a frame of reference for how much more you can earn by moving your savings or opening an additional account elsewhere as you shop for the best rates however beware of account features that can curtail your earnings or even drain them some promotional savings accounts will only offer the attractive rate they re advertising for a short period of time others will cap the balance that can earn the promotional rate with dollar amounts above that maximum earning a paltry rate even worse is a savings account with fees that cut into the interest you earn each month | |
how to open a savings account | to set up a savings account visit one of the bank or credit union s branches or establish the account online for those institutions that offer it you ll need to provide your name address and telephone number as well as photo identification also because the account earns taxable interest you ll need to provide your social security number ssn some institutions will require you to make an initial minimum deposit at the time you open the account others will allow you to open the account first and fund it later you can make your initial deposit in a savings account with a transfer from an account at that institution an external transfer a mailed in or mobile deposit check or a deposit in person at a branch | |
how much to keep in your savings account | the amount you keep in your savings account will depend on your goals for the funds or your use of the account if you ve set up the savings account to sweep excess funds from your checking account your balance is likely to vary regularly in contrast if you are building up to a savings goal your balance will likely start low and increase steadily over time if your savings account is your emergency fund aim for enough to cover at least three to six months living expenses that gives you some financial cushion if you face an unexpected expense like a medical or car repair bill or if you lose your job depending on your financial situation you may want to keep some of that emergency fund in a simple savings account and invest the rest to seek higher returns keep in mind that up to 250 000 of your deposits are protected by fdic insurance or ncua insurance that ensures your funds are safe should the institution fail for most consumers this more than covers what they have on deposit but if you are holding more than 250 000 in deposit accounts consider splitting your balance across more than one account holder or institution 43kids and student savings accountsyou must be 18 or over to open a savings account on your own in the u s but many savings accounts are designed for minors you can get a savings account for a child by co signing for the account bank accounts designed for students usually have maximum age restrictions for example you may not be able to open a student bank account if you are over 25 these accounts designed to teach younger adults how to use a bank account usually have lower fees and requirements but they also tend to offer lower interest rates frequently asked questions faqs | |
how do you open a savings account | you can open a savings account by visiting a bank branch with your government issued id and any cash or checks you wish to deposit you will also be asked for your address contact information and a social security number or taxpayer identification number tin you may have to open a checking account as well as a savings account and there may be a minimum deposit threshold it is also possible to open a savings account with an online bank | |
what savings account will earn you the most money | savings account rates change often so it is worth taking the time to compare the offerings from different banks and credit unions as of june 2024 the best savings rates ranged from about 4 5 to 5 5 | |
how do you close a savings account | most banks allow three ways to close an account you can either visit the bank in person submit a written cancellation request form or close the account over the phone in each case you may be asked to provide identifying information the bottom linesavings accounts offer one of the simplest ways to earn interest on the money you have they offer higher interest rates than a regular checking account while still making it easy to spend and withdraw money however savings account rates are much lower than other investments and they don t keep pace with inflation consult a financial advisor to review the options for you money to meet your financial goals | |
what is say s law of markets | say s law of markets is a classical economic theory that says that the income generated by past production and sale of goods is the source of spending that creates demand to purchase current production the law comes from an 1803 book titled treatise on political economy or the production distribution and consumption of wealth by french economist jean baptiste say 1modern economists have developed varying views and alternative versions of say s law understanding say s lawsay s law of markets was developed by the french classical economist and journalist jean baptiste say say was influential because his theories addressed how a society creates wealth and the nature of economic activity to have the means to buy a buyer must first have sold something say reasoned so the source of demand is prior to the production and sale of goods for money not money itself in other words a person s ability to demand goods or services from others is predicated on the income produced by that person s own past acts of production say s law says that a buyer s ability to buy is based on the buyer s successful past production for the marketplace say s law ran counter to the mercantilist view that money is the source of wealth under say s law money functions solely as a medium to exchange the value of previously produced goods for new goods as they are produced and brought to market in turn by their sale they produce money income that fuels demand to subsequently purchase other goods in an ongoing process of production and indirect exchange to say money was simply a means to transfer real economic goods not an end in itself according to say s law a deficiency of demand for a good in the present can occur from a failure to produce other goods in the past which would otherwise have sold for sufficient income to purchase the new good say went on to state that such deficiencies of production of some goods would under normal circumstances be relieved before long by the inducement of profits to be made in producing the goods that are in short supply however he pointed out that the scarcity of some goods and glut of others can persist when the breakdown in production is perpetuated by ongoing natural disaster or government interference say s law therefore supports the view that governments should not interfere with the free market and should adopt laissez faire economics investopedia alison czinkotaimplications of say s lawsay drew four conclusions from his law say s law thus contradicted the popular mercantilist view that money is the source of wealth that the economic interests of industries and countries are in conflict with one another and that imports are harmful to an economy later economists and say s lawsay s law still lives on in modern neoclassical economic models and it has also influenced supply side economists supply side economists especially believe that tax breaks for businesses and other policies intended to spur production without distorting economic processes are the best prescription for economic policy in agreement with the implications of say s law austrian economists also hold to say s law say s recognition of production and exchange as processes occurring over time focus on different types of goods as opposed to aggregates emphasis on the role of the entrepreneur to coordinate markets and conclusion that persistent downturns in economic activity are usually the result of government intervention are all particularly consistent with austrian theory say s law was later simply and misleadingly summarized by economist john maynard keynes in his 1936 book general theory of employment interest and money in the famous phrase supply creates its own demand though say himself never used that phrase 2 keynes rewrote say s law then argued against his own new version to develop his macroeconomic theories keynes reinterpreted say s law as a statement about macroeconomic aggregate production and spending in disregard of say s clear and consistent emphasis on the production and exchange of various particular goods against one another keynes then concluded that the great depression appeared to overturn say s law keynes revision of say s law led him to argue that an overall glut of production and deficiency of demand had occurred and that economies could experience crises that market forces could not correct keynesian economics argues for economic policy prescriptions that are directly contrary to the implications of say s law keynesians recommend that governments should intervene to stimulate demand through expansionary fiscal policy and money printing because people hoard cash in hard times and during liquidity traps | |
what does say s law hold in simple terms | say s law holds that production drives demand as the production and sale of goods creates the income that makes the purchase of other goods possible this differs from the idea that money itself is the source of demand | |
what is law of supply | in economics the law of supply states that as prices for goods increase so does the quantity produced conversely as prices fall so does supply | |
what are implications of say s law in present | say s law continues to hold influence in modern economics particularly among supply side economists supply side economists typically contend that increased supply drives economic growth as such they support policies aimed at stimulating supply such as reduced regulation or tax breaks the bottom linesay s law posits that the production of goods creates demand by generating the income one would need to purchase other goods this theory also known as the law of markets was introduced by the french economist jean baptiste say it continues to have resonance including among supply side economists as well as detractors among keynesians | |
what is scalability | scalability refers to the ability of an organization to perform well under an increasing or expanding workload a system that scales well will be able to maintain or increase its level of performance even as it s tested by growing operational demands | |
when applied to institutions scalability refers to the ability to handle increased market demands a scalable company in the corporate world can maintain or improve its profit margins while sales volume increases the term can also apply to systems like computer networks | understanding scalabilityscalability refers to an organization s ability to grow without being hampered by its structure or available resources when faced with increased production whether in a financial context or within the context of business strategy the idea of scalability has become more relevant as technology makes it easier to acquire customers expand markets and scale up this concept is closely related to the term economies of scale which refers to the way a company can reduce its production costs and increase profitability when it produces more of a given product by effectively spreading production costs over a greater number of units the company makes each of them less expensive to produce diseconomies of scale occurs when increased production leads to greater costs and lower profits according to a study by the management consulting firm mckinsey company while most companies tend to focus on launching new businesses the real value comes from being able to scale them up based on an analysis of u s venture capital vc data two thirds of value is created when a company scales up to penetrate a significant portion of the target market 1example of scalability in the tech sectorsome tech companies have an ability to scale quickly putting them in the coveted category of high growth enterprises the reason can be a lack of physical inventory and a software as a service saas model of producing and delivering goods and services companies with low operating overhead and little to no burden of warehousing or maintaining an inventory don t require a lot of resources or infrastructure to grow rapidly even companies that aren t directly related to the technology industry have a greater ability to scale up by taking advantage of technologies customer acquisition through the use of tools like digital advertising has become a lot easier and far less expensive banks can use digital advertising strategies to increase sign ups for online banking services expanding their customer base and revenue potential other technologies that help with scaling include labor saving innovations like automated warehouse management systems that are used by large retailers like amazon and walmart | |
what makes a company scalable | a scalable business focuses on the implementation of processes that lead to an efficient operation the workflow and structure of the business allow for scalability scalable companies tend to have an established group of leaders including c level executives investors and advisors they provide strategy and direction for successful growth scalable businesses also have consistent brand messaging across their divisions and locations a lack of brand enforcement sometimes causes companies to lose sight of their core value decreasing scalability yahoo is an example it lost sight of its core business and suffered as a result after the company scaled up quickly 2a scalable company also has effective tools for measurement so the entire business can be assessed and managed at each level this management leads to efficient operations and helps with capital budgeting | |
what does scale mean in business | scaling or scaling up a business means growing it in such a way that its revenues increasingly outpace its costs | |
what is a scale up in business | a scale up often refers to a business that has survived its start up phase established itself in its market and moved into an early growth phase | |
what is a high growth enterprise | a high growth enterprise is one that is successfully scaling up the organisation for economic cooperation and development oecd defines it as having an average annualized growth greater than 20 a year over three years and with 10 or more employees at the beginning of the observation period the european union sets the growth threshold at 10 in its definition 3 the oecd also refers to such businesses as scalers the bottom linescalability refers to a business or other entity s capacity to grow to meet increased demand a business that can scale up successfully should benefit from economies of scale where production costs are spread across more units resulting in higher profit margins | |
what is scalping in trading | scalping is a trading strategy geared towards profiting from minor price changes in a stock s price traders who implement this strategy place anywhere from 10 to a few hundred trades in a single day with the belief that small moves in stock prices are easier to catch than large ones traders who implement this strategy are known as scalpers many small profits can easily compound into large gains if a strict exit strategy is used to prevent large losses understanding scalpingscalping utilizes larger position sizes for smaller price gains in the smallest time period of holding it is performed intraday the main goal is to buy or sell a number of shares at the bid or ask price and then quickly sell them a few cents higher or lower for a profit the holding times can vary from seconds to minutes and in some cases up to several hours the position is closed before the end of the total market trading session scalpers need to be disciplined and need to stick to their trading regimen very closely any decision that needs to be made should be made with certainty but scalpers should also be very flexible because market conditions are very fluid and if a trade isn t going as expected they ll need to fix the situation as quickly as possible without incurring too much of a loss scalping characteristicsscalping is a fast paced activity for nimble traders it requires precision timing and execution scalpers use day trading buying power of four to one margin to maximize profits with the most shares in the shortest amount of holding time this requires focusing on the smaller time frame interval charts such as the one minute and five minute candlestick charts momentum indicators such as stochastic moving average convergence divergence macd and the relative strength index rsi are commonly used price chart indicators such as moving averages bollinger bands and pivot points are used as reference points for price support and resistance levels scalping requires account equity to be greater than the minimum 25 000 to avoid the pattern day trader pdt rule violation margin is required to execute short sale trades 1scalping strategiesscalpers buy low and sell high buy high and sell higher or short high and cover low or short low and cover lower they tend to utilize level 2 and time of sales windows to route orders to the most liquid market makers and ecns for quick executions the point and click style execution through the level 2 window or pre programmed hotkeys is the quickest method for the speediest order fills scalping is purely based on technical analysis and short term price fluctuations due to the extensive use of leverage scalping is considered a high risk style of trading some of the common mistakes that scalpers make are poor execution poor strategy not taking stop losses over leveraging late entries late exits and overtrading scalping generates heavy commissions due to the high number of transactions a per share commission pricing structure is beneficial to scalpers especially for those who tend to scale smaller pieces in and out of positions example of scalpingsuppose a trader employs scalping to profit off price movements for abc stock trading for 10 the trader will buy and sell a massive tranche of abc shares say 50 000 and sell them during opportune price movements of small amounts for example they might choose to buy and sell in price increments of 0 05 making small profits that add up at the end of the day because they are making the purchase and sale in bulk | |
is scalp trading illegal | no scalp trading is not illegal the act of buying and selling large transactions with small price movements is completely legal under financial regulation however it is a risky strategy that requires knowledge and discipline | |
why is scalping risky | to generate money from scalping you have to make a large amount of transactions for minimal profits the risk in trading large transactions is not worth the small profits for some traders generally scalpers have to make dozens to hundreds of trades a day and close those trades in the same day which requires a lot of time concentration and monitoring | |
why do brokers not like scalping | a reason brokers may not like scalping is that it places a lot of stress on their systems due to the constant buying and selling of scalp traders additionally with many trades being bought and sold constantly in large numbers it is difficult for brokers to manage risk the bottom linescalping is a very specific type of intraday trading that may not be suitable for all traders it requires flexibility and discipline to profit off of small price moves on large orders if you re thinking about scalping make sure you re already an experienced trader or practice before putting real money to use | |
what is scarcity | scarcity is an economic concept where individuals must allocate limited resources to satisfy their needs scarcity occurs when demand for a good or service is greater than availability scarcity affects the monetary value individuals place on goods and services investopedia mira norianproduction and demandif goods and services are abundant and unlimited there is no need to make decisions about allocating resources however scarcity limits the choices available to consumers in an economy scarcity makes goods more valuable and sellers can set higher prices scarcity also describes the relative availability of factors or production or economic inputs 1suppose producing a widget requires two labor inputs workers and managers with one manager required per 20 workers the available labor pool consists of 20 000 workers and 5 000 managers there are more available workers than managers yet workers are a relatively scarce resource since they re needed for a ratio of 20 per manager for production but outnumber managers by a ratio of only 4 to 1 in the labor pool societies face limitations when trying to increase supply production capacity land available for use time and labor are all considerations another way to deal with scarcity is by reducing demand through quotas rationing or price caps scarcity forces consumers to make choices that come with associated opportunity costs opportunity cost is the cost of what is given up compared to the value of the alternative natural resource scarcityabundant common resources over consumed at zero cost at first often prove limited climate isn t a tangible asset and its value is hard to calculate but the costs of climate change affect companies and societies air is free but clean air has a cost in terms of the economic activity discouraged to prevent pollution for health and quality of life some natural resources that may appear free because they are easily and widely accessible eventually prove scarce as they are depleted from overuse in a tragedy of the commons economists increasingly view a climate compatible with human welfare as scarce goods because of the cost of protecting them and place a price on them for a cost benefit analysis 23governments may require manufacturers and utilities to invest in pollution control equipment or to adopt cleaner power sources governments and the regulated industries eventually pass costs to taxpayers and consumers scarcity and the marketscarcity may denote a change in a market equilibrium raising the price based on the law of supply and demand in those instances scarcity denotes a decrease over time in the supply of the product or commodity relative to demand 4 the growing scarcity reflected in the higher price required to attain a market equilibrium could be attributable to one or more of the following | |
does scarcity mean something is hard to obtain | scarcity can explain a market shift to a higher price compare the availability of economic inputs or convey the opportunity cost in allocating limited resources the definition of a market price is one at which supply equals demand meaning all those willing to obtain the resource at a market price can do so scarcity can explain a market shift to a higher price compare the availability of economic inputs or convey the opportunity cost in allocating limited resources | |
when is scarcity intentionally created | a prominent example of intentional scarcity can be seen in the drug market inventors of new drugs and devices secure patents to prevent competitors from manufacturing the same products for a limited amount of time this intentionally creates scarcity allowing inventors to benefit commercially from their work for a window | |
how does monetary policy affect scarcity | in the u s the federal reserve controls the money supply when governments print too much money the value of the money decreases supply is high and money is less scarce however too much money in an economy can lead to inflation governments tend to keep the money supply relatively scarce through contractionary policy the main contractionary policies employed by the united states include raising interest rates increasing bank reserve requirements and selling government securities the bottom line | |
what is scenario analysis | scenario analysis is the process of estimating the expected value of a portfolio after a given period of time assuming specific changes in the values of the portfolio s securities or key factors take place such as a change in the interest rate scenario analysis is commonly used to estimate changes to a portfolio s value in response to an unfavorable event and may be used to examine a theoretical worst case scenario | |
how scenario analysis works | as a technique scenario analysis involves computing different reinvestment rates for expected returns that are reinvested within the investment horizon based on mathematical and statistical principles scenario analysis provides a process to estimate shifts in the value of a portfolio based on the occurrence of different situations referred to as scenarios following the principles of what if analysis or sensitivity analysis sensitivity analysis is simply how different values of an independent variable affect a dependent variable under specific conditions these assessments can be used to examine the amount of risk present within a given investment as related to a variety of potential events ranging from highly probable to highly improbable depending on the results of the analysis an investor can determine if the level of risk present falls within their comfort zone scenario analysis is only as good as the inputs and assumptions made by the analyst scenario analysis exampleone type of scenario analysis that looks specifically at worst case scenarios is stress testing stress testing is often employed using a computer simulation technique to test the resilience of institutions and investment portfolios against possible future critical situations such testing is customarily used by the financial industry to help gauge investment risk and the adequacy of assets stress testing is also used to help evaluate internal processes and controls in recent years regulators have also required financial institutions to carry out stress tests to ensure their capital holdings and other assets are adequate 1scenario analysis in different situationsthere are many different ways to approach scenario analysis a common method is to determine the standard deviation of daily or monthly security returns and then compute what value is expected for the portfolio if each security generates returns that are two or three standard deviations above and below the average return this way an analyst can have a reasonable amount of certainty regarding the change in the value of a portfolio during a given time period by simulating these extremes scenarios being considered can relate to a single variable such as the relative success or failure of a new product launch or a combination of factors such as the results of the product launch combined with possible changes in the activities of competitor businesses the goal is to analyze the results of the more extreme outcomes to determine investment strategy the same process used for examining potential investment scenarios can be applied to various other financial situations in order to examine value shifts based on theoretical scenarios on the consumer side a person can use scenario analysis to examine the different financial outcomes of purchasing an item on credit as opposed to saving the funds for a cash purchase additionally a person can look at the various financial changes that may occur when deciding whether to accept a new job offer businesses can also use scenario analysis to analyze the potential financial outcomes of certain decisions such as selecting one of two facilities or storefronts from which the business could operate this could include considerations such as the difference in rent utility charges and insurance or any benefit that may exist in one location but not the other | |
what are the advantages of scenario analysis | the biggest advantage of scenario analysis is that it acts as an in depth examination of all possible outcomes because of this it allows managers to test decisions understand the potential impact of specific variables and identify potential risks | |
what are the disadvantages of scenario analysis | the main disadvantage to scenario analysis is simple incorrect assumptions can lead to models that are way off the mark or garbage in garbage out scenario analysis is also susceptible to biases of the user and tends to be heavily dependent on historical data | |
what is scenario analysis in risk management | scenario analysis involves a thorough look at a wide range of possible outcomes including those on the downside this allows risk managers to identify prepare for and manage risk exposures | |
what is scenario analysis in strategic management | scenario analysis can be applied to almost any managerial decision particularly those related to competitive strategy said differently scenario analysis allows managers to test strategic proposals for example whether or not to acquire a smaller competitor and figure out how it will turn out under different conditions | |
what is the difference between scenario analysis and sensitivity analysis | scenario analysis looks at a wide range of possible outcomes but it analyzes the effect of manipulating all variables at the same time the result is typically a base case scenario a best case scenario and a worst case scenario on the other hand sensitivity analysis assesses the impact of changing just one variable at a time the bottom linescenario analysis is the process of estimating the expected value of a portfolio after manipulating a number of key variables the method can be used in both investment strategy and corporate finance while it s a great tool for investors and managers to utilize scenario analysis is only as good as the assumptions and inputs made by the user | |
what is schedule 13d | schedule 13d is a form that must be filed with the u s securities and exchange commission sec when a person or group acquires more than 5 of a voting class of a company s equity shares schedule 13d must be filed within 10 days of the filer reaching a 5 stake schedule 13d is also known as a beneficial ownership report understanding schedule 13dinvestors may decide to buy a large number of shares in a publicly held company for a variety of reasons for example they could be activist investors attempting a hostile takeover institutional investors who believe the stock is undervalued or a dissident shareholder contemplating a proxy contest with the goal of replacing management | |
when a person or group of persons acquire a significant ownership stake in a company characterized as more than 5 of a voting class of its publicly traded securities the sec requires that they disclose the purchase on a schedule 13d form in some cases they may be able to use a simpler form called the schedule 13g | once the disclosure has been filed with the sec the public company and the exchange s on which the company trades are notified of the new beneficial owner schedule 13d is intended to provide transparency to the public regarding who these shareholders are and why they have taken a significant stake in the company the form signifies to the public that a change of control such as a hostile takeover or proxy fight might be about to take place so that current shareholders in the company can make informed investing and voting decisions the obligation to file schedule 13d lies with the new beneficial owner this is because the target company might not know the person or group behind the transaction the beneficial owner must file schedule 13d within 10 days following the purchase of the shares 1requirements for schedule 13dschedule 13d requires that the beneficial owner provide relevant information about several items which include the following item 1 security and issuer this section asks about the type of securities purchased and the name and address of the company that issued them item 2 identity and background in this section the buyers identify themselves including their type of business citizenship and any criminal convictions or involvement in civil suits within the past five years item 3 source and amount of funds or other considerations this section notes where the money is coming from including whether any of it was borrowed item 4 purpose of transaction this section of schedule 13d alerts investors to any change of control that might be looming among other disclosures beneficial owners must indicate whether they have plans involving a merger reorganization or liquidation of the issuer or any of its subsidiaries item 5 interest in securities of the issuer here the beneficial owner lists the number of shares being purchased and the percentage of the company s outstanding shares that this purchase represents item 6 contracts arrangements understandings or relationships with respect to securities of the issuer the beneficial owner should describe any agreement or relationship they have with any person regarding the target company s securities for example that might involve voting rights finder s fees joint ventures or loans or option arrangements item 7 material to be filed as exhibits these include copies of any written agreements the beneficial owner has entered into with regard to the securities special considerations disclosure of material changesif there are any material changes to the information filed in schedule 13d the beneficial owners must amend their schedule 13d within two days a material change includes any increase or decrease of at least 1 in the percentage of the class of securities held by the beneficial owner most schedule 13d filings are available for viewing in the sec s edgar database the database presents form 13d as sc 13d general statement of acquisition of beneficial ownership any amended form is denoted as sc 13d a real world example of schedule 13dthe media conglomerate iac interactivecorp iac purchased a significant amount of equity shares in mgm resorts international mgm the resulting 13d was filed on august 20 2020 with the sec 2below is a portion of the 13d filing for mgm | |
what is schedule 13g | the securities and exchange commission sec schedule 13g form is an alternative filing for the schedule 13d form and is used to report a party s ownership of stock which exceeds 5 of a company s total stock issue schedule 13g is a shorter version of schedule 13d with fewer reporting requirements schedule 13g can be filed in lieu of the sec schedule 13d form as long as the filer meets one of several exemptions both schedule 13d and schedule 13g forms are referred to as beneficial ownership reports according to the sec a beneficial owner is anyone who directly or indirectly shares voting power or investment power these forms are intended to provide information about individuals who have significant holdings in publicly traded companies and thus allow for other investors and other interested parties to make informed decisions about their own investments the ownership of over 5 of a publicly traded stock is considered significant ownership and reporting this to the public is a requirement 1 investors and any other interested parties can view the schedule 13g forms of any publicly traded company through the sec s edgar system understanding schedule 13gthere are several exemptions that permit a filer to file form schedule 13g instead of schedule 13d institutional investors can file a schedule 13g if they acquired securities while doing normal business and they have no intention of influencing control of the issuer individuals who are not institutional investors can file a schedule 13g if they have not acquired the security with the intent of influencing control over the issuer and are not directly or indirectly the beneficial owner of 20 or more of the security under section 13 d 6 a or b of the securities exchange act of 1934 there are additional exemptions for investors an investor may also be exempt if their beneficial ownership was acquired before december 22 1970 2 there are several filing deadlines for schedule 13g for institutional investors they are required to file within 45 days of the end of the year in which they finish above 5 or within 10 days of first finishing a month above 10 if the initial filing has not yet been completed passive investors are required to file within 10 days of acquiring 5 or more of a security finally exempt investors as defined by section 13 d 6 a or b of the securities exchange act of 1934 must file within 45 days of the end of the year in which they become obligated to file any changes to the information contained in a schedule 13g form must be amended through additional reporting institutional investors are required to file an amendment to report any changes within 45 days of the end of the year or within 10 days of first finishing a month above 10 and then within 10 days of any month end where the holder s ownership increases or decreases by 5 or more passive investors have similar requirements for reporting amendments the sec can impose fines on individuals and or companies for improperly filing schedule 13g forms or failing to file them individuals can be cited if they fail to promptly report information about their holdings and transactions and companies can be fined if they do not report that their employees have not properly filed any required forms even if it is inadvertent the failure to timely file a required beneficial ownership report is a violation of the requirements set out under sections 13 d 13 g and 16 a of the securities exchange act of 1934 it is very important that fund managers and other investors are aware of their internal control policies and procedures in order to settle improper filing claims with the sec individual investors have been forced to pay upwards of 150 000 in financial penalties 3 the sec makes an effort to police these sorts of violations because these forms are intended to protect the public keeping them aware of the trading activity of insiders and ultimately preventing insider trading and other acts of stock manipulation | |
what is schedule a form 1040 or 1040 sr itemized deductions | schedule a form 1040 or 1040 sr itemized deductions is an internal revenue service irs form for u s taxpayers who itemize their tax deductible expenses rather than take the standard deduction schedule a is an attachment to form 1040 that u s taxpayers use to report their annual income taxes who can file schedule a any u s taxpayer can file a schedule a form and claim itemized deductions as an alternative to taking the standard deduction choosing whichever option depends on the taxpayer and can provide greater tax savings eligible deductions may include qualified medical expenses a portion of state and local taxes mortgage interest certain sales tax payments and some charitable contributions many taxpayers who once itemized their deductions on schedule a have found it more advantageous to claim the standard deduction the tax cuts and jobs act tcja of 2017 limits the amount taxpayers can deduct for state and local taxes to a maximum of 10 000 for married couples or 5 000 for married taxpayers filing separately the law nearly doubled the previous standard deduction who benefits from filing schedule a the 10 000 limit on deductions for state and local taxes may be a deciding factor for residents of high tax states if a married couple in the state cannot find the additional balance in eligible deductions on top of the 10 000 they ll likely choose the standard deduction many taxpayers have eligible deductions that total less than the standard deduction and do not need to keep track of their expenses or collect their receipts additionally itemized deductions are subject to challenge by the irs while taking the standard deduction is not | |
when a taxpayer has significant eligible expenses that exceed the standard deduction filing schedule a makes sense mortgage interest on an expensive home is often a good benchmark for deciding which to choose | if your annual mortgage interest found on your mortgage interest statement or form 1098 is higher than the standard deduction it is advantageous to itemize deductions on schedule a you can deduct home mortgage interest on the first 750 000 375 000 if married filing separately of indebtedness however higher limitations of 1 million or 500 000 if married filing separately apply if you deduct mortgage interest from debt incurred before dec 16 2017 | |
how to file schedule a | the instructions for schedule a explain which of your expenses are deductible and where they should be listed on the form schedule a can be downloaded on the irs website schedule a requires taxpayers to list their deductible expenses in any or all of the six designated categories like the standard deduction the itemized deductions on schedule a are subtracted from the taxpayer s adjusted gross income agi to determine taxable income if you itemize your deductions save documentation of eligible expenses throughout the year including receipts invoices and images of canceled checks | |
what is schedule a | schedule a is an internal revenue service tax form that allows you to itemize their deductions when filing their taxes itemized deductions reduce your taxable income filers can choose between either the standard deduction or itemized deduction | |
what can be claimed on schedule a | schedule a is used to claim itemized deductions that reduce your taxable income and the total amount of taxes you pay the categories that can be itemized include taxes interest paid gifts to charity medical and dental expenses casualty and theft losses and other miscellaneous expenses | |
what cannot be itemized on schedule a | some items that cannot be itemized on schedule a include federal income and excise taxes social security or medicare taxes federal unemployment railroad retirement taxes customs duties federal gift taxes per capita taxes or foreign real property taxes who files schedule a u s taxpayers file schedule a when itemizing deductions when they submit their annual tax returns taxpayers are allowed to either use the standard deduction or itemize deductions the goal is to choose the method that results in the greatest savings in tax payment the bottom lineschedule a is the tax form used by taxpayers who itemize their deductible expenses rather than take the standard deduction a taxpayer with significant eligible expenses that exceed the standard deduction will file a schedule a and may be able to claim qualified medical costs state and local taxes mortgage interest sales tax payments and some charitable contributions | |
what is schedule k 1 | schedule k 1 is a federal tax document used to report the income losses and dividends for a business or financial entity s partners or an s corporation s shareholders the k 1 form is also used to report income distributions from trusts and estates to beneficiaries a schedule k 1 document is prepared for each relevant individual partner shareholder or beneficiary a partnership then files form 1065 the partnership tax return that contains the activity on each partner s k 1 an s corporation reports activity on form 1120 s trusts and estates report the k 1 form activity on form 1041 investopedia zoe hansenunderstanding schedule k 1the u s federal tax code allows the use of a pass through strategy in certain instances which shifts tax liability from the entity such as a trust or a partnership to the individuals who have an interest in it the entity itself pays no taxes on earnings or income rather any payouts along with any tax due on them pass through directly to the stakeholders this is where schedule k 1 comes in the purpose of the k 1 form is to report each participant s share of the business entity s gains losses deductions credits and other distributions whether or not they re actually distributed in the case of a partnership while not filed with an individual partner s tax return the financial information posted to each partner s k 1 form is sent to the irs with form 1065 income generated from partnerships is added to the partner s other sources of income and entered on form 1040 12schedule k 1 is similar to form 1099 in that it reports dividends interest and other annual returns from an investment whether you receive a k 1 or a form 1099 depends on the investment master limited partnerships mlps real estate limited partnerships relps and certain exchange traded funds etfs are all types of investments that routinely issue k 1s 32aspects of schedule k 1a partnership is defined as a contract between two or more people who decide to work together as partners the rules of this business arrangement are stated in a partnership agreement the partnership has at least one general partner gp who operates the partnership gps are liable for their actions as partners and for the activities of other gps in the partnership limited partners on the other hand are liable for the debts and obligations of the partnership based only on the amount of capital they contribute the partnership agreement dictates how the partners share profits which impacts the information on schedule k 1 2schedule k 1 requires the partnership to track each partner s basis in the partnership in this context basis refers to a partner s investment or ownership stake in the enterprise a partner s basis is increased by capital contributions and their share of income it s reduced by a partner s share of losses and any withdrawals assume for example that a partner contributes 50 000 in cash and 30 000 in equipment to a partnership and the partner s share of income is 10 000 for the year that partner s total basis is 90 000 less any withdrawals they ve made the basis calculation is important because when the basis balance is zero any additional payments to the partner are taxed as ordinary income the basis calculation is reported on schedule k 1 in the partner s capital account analysis section 2a partner can earn several types of income on schedule k 1 including rental income from a partnership s real estate holdings and income from bond interest and stock dividends many partnership agreements provide guaranteed payments to general partners who invest the time to operate the business venture and those guaranteed payments are reported on schedule k 1 the guaranteed payments are put in place to compensate the partner for the large time investment a partnership may generate royalty income and capital gains or losses and those items are allocated to each partner s schedule k 1 based on the partnership agreement those receiving k 1 reported income should consult with a tax professional to determine if their proceeds trigger the alternative minimum tax 4types of schedule k 1sthe k 1 forms used by the three entities partnerships s corporations and trusts vary slightly in the way they look but they all have the same purpose they report to the irs and individual partners shareholders and beneficiaries the amounts of income losses deductions credits and other distributions they may have received k 1s are sent to the irs with the partnership s tax return form 1065 and also to each partner so that they can add the information to their own tax returns 5s corporations file an annual tax return using form 1120 s they include schedule k 1 information about each shareholder s share of income losses deductions and credits 6trusts and estates use form 1041 to file their tax returns beneficiaries receive a k 1 that shows the income that they need to report on their own tax returns 7if you spot an error on the schedule k 1 you receive ask the issuer to correct it and send the revised version to the irs 8who files a schedule k 1 there are four main types of entities required to file a k 1 individual taxpayers typically don t file k 1 forms instead they transfer the information provided in the k 1 to their personal individual tax return for example if you re a partner use the information on schedule k 1 to prepare your income tax return s you typically aren t required to attach the k 1 form unless specifically required per the form instructions but be sure to keep it in your records the partnership files a copy of schedule k 1 form 1065 the u s return of partnership income with the irs 2if you re a shareholder use the information on schedule k 1 form 1120 s to prepare your income tax return s again you usually aren t meant to include the k 1 form with them but file it with your records the corporation files form 1120 s the u s income tax return for an s corporation with the irs 9if you re a beneficiary of a trust or estate use the information on schedule k 1 form 1041 to prepare your income tax return s the k 1 isn t filed with your tax return unless backup withholding was reported in box 13 code b 10 keep it with your records the trust or estate files a copy of schedule k 1 form 1041 with the irs | |
what is irs schedule k 1 | schedule k 1 is an internal revenue service irs tax form that s issued annually it reports the gains losses interest dividends earnings and other distributions from certain investments or business entities for the previous tax year these are usually pass through entities that don t pay corporate tax themselves because they directly pass profits on to their stakeholders or investors participants in these investments or enterprises use the figures on the k 1 to compute their income and the tax due on it 2who gets an irs schedule k 1 among those likely to receive a schedule k 1 are | |
is irs schedule k 1 income considered earned income | that depends on the individual s participation and status for trust and estate beneficiaries limited partners and passive investors schedule k 1 income is more akin to unearned income for general partners and active owners in a business or pass through business entity the income can be considered earned income and they may owe self employment tax on it 11 | |
when should i receive my irs schedule k 1 | schedule k 1 forms are notorious for arriving late the irs says they are due by march 15 or the 15th day of the third month after the entity s tax year ends whether that means they need to be issued by then or to actually be in taxpayers hands by that date seems open to interpretation most authorities agree you should receive one by march 15 or the closest business day to that 12the bottom linea schedule k 1 is a federal tax form that pass through entities like partnerships and s corporations and sometimes trusts and estates send to their partners shareholders or beneficiaries the form reports the income losses and gains passed to each party with an interest in the entity this information is then used by the recipient to prepare their own tax returns | |
what is scope | scope refers to the combined objectives and requirements needed to complete a project the term is often used in project management as well as in consulting properly defining the scope of a project allows managers to estimate costs and the time required to finish the project that s what makes scope management such an important part of a business it saves both time and money there are generally two different types of scope in project management these are project and product scope understanding scopescope is a term used in project management project management involves the planning and organization of a company s resources to complete a specific task event or action and is usually a one time event scope describes the required processes and resources to complete a project or produce a product by identifying and recognizing different variables of a project through scope management companies are able to save money properly defining the scope of a project allows managers to estimate costs and the time required to finish the project as mentioned above there are two types of scope product scope and project scope the product scope is a way to identify a product or service s functions while the project scope highlights everything needed to deliver that product or service in short product scope represents the functional requirements while project scope is the how to part of project management a deliverable can include any objective or milestone within a project such as the creation of products services or processes additionally it can consist of incremental changes staged across the project plan used to govern or assess the pace of the project s progress product scope vs project scopeproduct scope identifies the characteristics and functions of a product or service these characteristics include physical features such as size and materials as well as functional specifications functional considerations include what the product is designed to do and its purpose or end use product scope focuses on the result or the actual offering this is the final product or service product scope may also refer to a service or other item for customer use product scope often considers how to evaluate whether the object is on track for completion and whether it meets the expected outcome conversely the project scope encompasses all the work needed to deliver a product or service in short the project scope describes how the mission will be accomplished it includes identifying and documenting the project s goals deliverables tasks project members deadlines and milestones documentation consists of the scope statement statement of work and a breakdown of the work structure the project scope also outlines the project s limits by specifying what is not included within the scope of the plan it can incorporate information about the project s budget or available resources information regarding the project schedule as well as the assignment of tasks may also be included in the project scope workgroups will often be assigned listing the internal or external personnel who will be involved with the project special considerationsuncontrollable changes that extend deadlines are known as scope creep extended deadlines may change the original requirements of the project s scope as the project progresses small changes to the original plan occur expanding the scope from the initial limits regarding budget and time small changes can lead to additional changes resulting in a cascading effect of further considerations and requirements effective project management considers the possibility of scope creep and incorporates strategies to mitigate it understanding the vision or primary objective proper initial planning as well as devising and adopting approaches to avoid scope creep from the outset are ways to prevent scope creep according to the project management institute the combined project management costs for all phases of a project total somewhere between 7 11 of the project s true interest cost 1visualizing a project s scopeproject managers use a variety of tools to plan and communicate a project s scope two popular tools to do this are the gantt chart and the program evaluation review technique pert the gantt chart is a graphical depiction of a project schedule it is a bar chart that shows the start and finish dates of several elements of a project that include resources milestones tasks and dependencies henry gantt an american mechanical engineer designed the gantt chart the program evaluation review technique pert chart is a visual representation of a series of events that must occur within the scope of a project s lifetime a pert chart allows managers to evaluate the time and resources necessary to manage a project this evaluation includes the ability to track required assets during any stage of production in the course of the entire project scope faqsin the business world scope refers to the combined objectives and requirements needed to complete a project scope is a term commonly used by project managers company abc wants to increase its product line and remodels its manufacturing building to produce a variety of electronic devices such as laptops tablets and phones since the cost of operating the manufacturing building is spread out across a variety of products the average total cost of production decreases the costs of producing each electronic device in another building would be greater than just using a single manufacturing building to produce multiple products economies of scope focus on the average total cost of production of a variety of goods in contrast economies of scale focus on the cost advantage that arises when there is a higher level of production for a single good the scope of a project is a detailed outline which encompasses all the work needed to deliver a product or service this includes the project s goals deliverables tasks project members deadlines and milestones a proper project scope statement should include the following elements an introduction stating the purpose of the project the deliverables required to complete the project a determination of the project s milestones as well as any constraints or exclusions the bottom linein order to properly execute the rollout of a new project or product it is essential to have a firm grasp of the project s scope with its comprehensive look at a business s operations and assets scope is a concept of the utmost importance to project managers and businesses as a whole | |
what is a scrip | a scrip is is a substitute or alternative to legal tender holding a scrip entitles the bearer to receive something in return scrips come in many different forms primarily as a form of credit with the document acknowledging the debt scrips also represent a temporary document representing fractional shares resulting from a split or spin off or they may indicate currency issued by a private corporation such as frequent flier miles because they are used as currency substitutes scrips can be useful in the study of money and monetary economy understanding scripsin a broad sense the term scrip refers to any type of substitutional currency that replaces legal tender in many instances a scrip is a form of credit but is generally always some form of documentation of debt scrips were created to pay or compensate employees under the truck system this system which began during the industrial revolution meant that employees were paid in kind with commodities vouchers tokens or some other form instead of cash this was usually to the benefit of the employer not the employee scrips have also been widely used in localized commerce when traditional or legal currency is unavailable or in short supply this includes small communities or towns such as the first coal towns in remote locations military bases ships at sea for long periods of time and in occupied countries during wartime the practice of paying wages in company scrip was abolished by the fair labor standards act of 1938 the same law abolished child labor and set the minimum wage at 25 cents an hour 1types of scripduring the american industrial revolution scrip was a common form of payment in company towns and remote communities where the employer was also the only provider of food and housing by paying workers in a private currency that could only be used in the company stores the employer could both extract more wealth from their workers and also prevent them from leaving the exploitative nature of company scrip was a factor in several strikes and armed rebellions 2although paying wages in scrip was prohibited in 1938 scrip is still used in today s world for certain companies scrips may come in the form of rewards points or coupons for example canadian retailer canadian tire issues its own form of currency canadian tire money that looks like real currency but isn t customers receive a percentage of canadian tire money back when they make purchases this cash can then be used toward purchases made at retail and gas station purchases other forms for scrip include land scrip token coins such as those used on subways vouchers ious and tokens and tickets used at arcades or game centers even points earned on certain credit cards may be considered scrip companies that are short on cash often pay scrip dividends when a company offers its shareholders a scrip dividend it offers them the choice to receive dividends in the form of more shares or in cash by receiving a scrip dividend investors can increase the size of their holdings without paying extra fees or charges the most widely visible and most modern form of scrip is used in the retail industry in the form of gift cards or gift certificates since it can sometimes be considered improper to give cash as a gift it can be acceptable to give someone a gift card as a present gift cards also allow the user to control how and where the card is spent since they can only be used in specific locations gift cards or certificates for certain stores or restaurants further restrict the recipient s spending special considerationsscrip evolved in the 1980s to include a popular method of fundraising now popular among bands athletic groups schools and other nonprofit organizations here s how it works retailers provide nonprofit groups with gift cards and certificates at a discounted rate those organizations can then sell the scrip the gift cards to family friends and people in their communities at full face value the nonprofit keeps the discount from the sale of the card as revenue or as money toward its fundraising goal for example a school may try to raise money for a class trip using scrip fundraising the money collected from the sale of the gift cards i e the discount would be used to fund the trip advantages and disadvantages of scripthe primary advantage of using scrip is that the issuing company can limit its cash outflows while encouraging repeat business for example a company that issues refunds in store credit makes it more likely for the unhappy customer to return and also allows them to preserve the positive cash flow from the original purchase likewise issuing a scrip dividend will allow a company to retain cash flow while still rewarding their shareholders this extra capital can then be reinvested in the company without additional borrowing shareholders who receive a scrip dividend can increase their holdings for free without any additional fees there may be tax benefits to receiving a non cash dividend 3conversely a scrip dividend may raise concerns that the company is experiencing cash flow issues in some cases shareholders may have to sell their additional shares to pay tax on the extra dividends if the share price rises after a scrip dividend is announced a company may end up paying more in dividends than they originally planned 3shareholders can increase their holdings without having to buy stock companies can save cash and reinvest in their operations scrip dividends allow investors to gain more shares without having to spend money scrip systems typically work to the advantage of the company issuing the scrip not the consumers over reliance on scrip may raise questions about the solvency or ethics of a company | |
what is meant by scrip | scrip is a type of alternative or substitute currency that can only be redeemed at a certain company rewards points gift cards and coupons are all familiar examples of scrip that can be used in place of legal tender | |
how do scrips work | companies issue scrips to do business while postponing cash payment to a later date since scrip can only be redeemed at the issuing company paying in scrip effectively ensures that the recipient will continue doing business with the company while allowing the issuer to reduce their cash outflows in some cases scrips can be used as a cash substitute in remote areas where official currency is in short supply | |
what is scrip in the stock market | a scrip issue or bonus issue is when a company creates new shares and awards them to existing stockholders this is different from a scrip dividend where stockholders are given the choice of receiving cash or shares | |
what is meant by scrip dividend | a scrip dividend is when a company gives its shareholders the option of receiving a dividend in either cash or company stock receiving a dividend in stock allows the shareholder to grow their holdings without having to buy the shares on the open market while also allowing the company to reinvest the extra capital into its operations there may also be tax advantages to receiving a non cash dividend | |
what is a scrip election | a scrip election gives shareholders the right to choose or elect to receive a scrip dividend instead of a cash dividend the bottom linea scrip is an alternative to legal tender and it entitles its bearer to some amount of value historically scrips have been used to pay workers or to circulate a substitute of money in communities where currency was in short supply today scrips can be found in the form of gift cards store credit and loyalty point programs | |
what is seasonality | seasonality is a characteristic of a time series in which the data experiences regular and predictable changes that recur every calendar year any predictable fluctuation or pattern that recurs or repeats over a one year period is said to be seasonal seasonal effects are different from cyclical effects as seasonal cycles are observed within one calendar year while cyclical effects such as boosted sales due to low unemployment rates can span time periods shorter or longer than one calendar year understanding seasonalityseasonality refers to periodic fluctuations in certain business areas and cycles that occur regularly based on a particular season a season may refer to a calendar season such as summer or winter or it may refer to a commercial season such as the holiday season companies that understand the seasonality of their businesses can predict and time inventories staffing and other decisions to coincide with the expected seasonality of the associated activities thereby reducing costs and increasing revenue it is important to consider the effects of seasonality when analyzing stocks from a fundamental point of view because it can have a big impact on an investor s profits and portfolio a business that experiences higher sales during certain seasons may appear to make significant gains during peak seasons and significant losses during off peak seasons if this is not taken into consideration an investor may choose to buy or sell securities based on the activity at hand without accounting for the seasonal change that subsequently occurs as part of the company s seasonal business cycle seasonality is also important to consider when tracking certain economic data economic growth can be affected by different seasonal factors including the weather and the holidays economists can get a better picture of how an economy is moving when they adjust their analyses based on these factors for example roughly two thirds of u s gross domestic product gdp is made up of consumer spending which is a seasonal measure the more consumers spend the more the economy grows conversely when they cut back on their purse strings the economy will shrink if this seasonality was not taken into account economists would not have a clear picture of how the economy is truly moving seasonality also affects industries called seasonal industries which typically make most of their money during small predictable parts of the calendar year examples of seasonalitythere are many different instances where seasonality can be observed as it relates to the regular transition throughout times of the year for example if you live in a climate with cold winters and warm summers your heating costs likely rise in the winter and fall in the summer you expect the seasonality of your heating costs to recur reasonably every year around the same time similarly a company that sells sunscreen and tanning products within the united states sees sales jump up in the summer as demand for their products increases on the other hand the company will likely see a significant drop in the winter another area affected by seasonality is retail sales retail sales measure consumer spending and demand and are reported every month by the u s census bureau data fluctuates at certain times of the year primarily during the holiday shopping season this period falls into the fourth quarter of the year between october and december many retailers experience seasonal retail sales seeing a big jump in consumer spending around the holiday season special considerationslarge retailers including e retail giant amazon may hire temporary workers to respond to higher consumer demand associated with the holiday season in 2018 the company said it would hire approximately 100 000 employees to help offset the increased activity expected in stores meanwhile retailer target said it would hire 120 000 for the same holiday period like most retailers these decisions were made by examining traffic patterns from previous holiday seasons and using that information to predict what may be expected in the coming season once the season is over many temporary employees are no longer needed based on the post season traffic expectations a lot of data is affected by the time of the year and adjusting for the seasonality means that more accurate relative comparisons can be drawn between different time periods adjusting data for seasonality evens out periodic swings in statistics or movements in supply and demand related to changing seasons by using a tool known as seasonally adjusted annual rate saar seasonal variations in the data can be removed for example homes tend to sell more quickly and at higher prices in the summer than in the winter as a result if a person compares summer real estate sales prices to median prices from the previous year he may get a false impression that prices are rising however if he adjusts the initial data based on the season he can see whether values are truly rising or just momentarily increasing by the warm weather | |
what is a seasonally adjusted annual rate saar | a seasonally adjusted annual rate saar is a rate adjustment used for economic or business data such as sales numbers or employment figures that attempts to remove seasonal variations in the data most data is affected by the time of the year and adjusting for the seasonality means that more accurate relative comparisons can be drawn between different time periods understanding a seasonally adjusted annual rate saar a seasonally adjusted annual rate saar seeks to remove seasonal impacts on a business to gain a deeper understanding of how the core aspects of a business perform throughout the year for example the ice cream industry tends to have a large level of seasonality as it sells more ice cream in the summer than in the winter and by using seasonally adjusted annual sales rates the sales in the summer can be accurately compared to the sales in the winter it is often used by analysts in the automobile industry to account for car sales seasonal adjustment is a statistical technique designed to even out periodic swings in statistics or movements in supply and demand related to changing seasons seasonal adjustments provide a clearer view of nonseasonal changes in data that would otherwise be overshadowed by the seasonal differences calculating a seasonally adjusted annual rate saar to calculate saar take the un adjusted monthly estimate divide by its seasonality factor and multiply by 12 analysts start with a full year of data and then they find the average number for each month or quarter the ratio between the actual number and the average determines the seasonal factor for that time period imagine a business earns 144 000 over a course of a year and 20 000 in june its average monthly revenue is 12 000 making june s seasonality factor as follows 2 0 0 0 0 1 2 0 0 0 1 6 7 20 000 12 000 1 67 20 000 12 000 1 67 the following year revenue during june climbs to 30 000 when divided by the seasonality factor the result is 17 964 and when multiplied by 12 that makes the saar 215 568 indicating growth alternatively saar can be calculated by taking the unadjusted quarterly estimate dividing by its seasonality factor and multiplying by four seasonally adjusted annual rates saars and data comparisonsa seasonally adjusted annual rate saar helps with data comparisons in a number of ways by adjusting the current month s sales for seasonality a business can calculate its current saar and compare it to the previous year s sales to determine if sales are increasing or decreasing similarly if a person wants to determine if real estate prices are increasing in their area they can look at the median prices in the current month or quarter adjust those numbers for seasonal variations and convert them into saars which can be compared to numbers for the previous years without making these adjustments first the analyst is not comparing apples with apples and as a result cannot make clear conclusions for example homes tend to sell more quickly and at higher prices in the summer than in the winter as a result if a person compares summer real estate sales prices to median prices from the previous year they may get a false impression that prices are rising however if they adjust the initial data based on the season they can see whether values are truly rising or just being momentarily increased by the warm weather seasonally adjusted annual rates saars vs non seasonally adjusted annual rateswhile seasonally adjusted sa rates try to remove the differences between seasonal variations non seasonally adjusted nsa rates do not take into account seasonal ebbs and flows concerning a set of information nsa data corresponds to the information s annual rate while sa data corresponds to its saar | |
what is sec form s 1 | sec form s 1 is the initial registration form for new securities required by the sec for public companies that are based in the u s any security that meets the criteria must have an s 1 filing before shares can be listed on a national exchange such as the new york stock exchange companies usually file sec form s 1 in anticipation of their initial public offering ipo form s 1 requires companies to provide information on the planned use of capital proceeds detail the current business model and competition and provide a brief prospectus of the planned security itself offering price methodology and any dilution that will occur to other listed securities 1sec form s 1 is also known as the registration statement under the securities act of 1933 2 additionally the sec requires the disclosure of any material business dealings between the company and its directors and outside counsel investors can view s 1 filings online to perform due diligence on new offerings prior to their issue foreign issuers of securities in the u s do not use sec form s 1 but instead must submit an sec form f 1 3 | |
how to file sec form s 1 | companies can use the sec s online edgar the electronic data gathering analysis and retrieval system to submit forms including form s 1 that are required by the sec individuals or companies have to first fill out a form id an electronic application that is used to apply for a cik central index key and to get access codes in order to file on edgar 6 edgar filers quick reference guides provide guidance on all the required steps as well as technical specifications and answers to faqs 7form s 1 has two parts part i which is also called the prospectus is a legal document that requires information on the following business operations the use of proceeds total proceeds the price per share a description of management financial condition the percentage of the business being sold by individual holders and information on the underwriters 8part ii is not legally required in the prospectus this part includes recent sales of unregistered securities exhibits and financial statement schedules 9the issuer will have liability if there are material misrepresentations or omissions amending sec form s 1the form is sometimes amended as material information changes or general market conditions cause a delay in the offering in this case the issuer needs to file form s 1 a 4 the securities exchange act of 1933 often referred to as the truth in securities law requires that these registration forms be filed to disclose important information upon registration of a company s securities this helps the sec achieve the act s objectives requiring investors to receive significant information regarding securities offered and prohibit fraud in the sale of the offered securities an abbreviated registration form is the s 3 which is for companies that don t have the same ongoing reporting requirements 10investors look to the information a company supplies in its sec form s 1 filing to make a decision about whether or not they want to invest in its stock during an initial public offering example of an sec form s 1 filingeventbrite inc a global ticketing and event tech platform completed its ipo in september 2018 pricing 10 million shares at 23 11 there was an initial s 1 form filed in august followed by five s 1 a filings 12 the initial filing included a proposed maximum dollar amount the company intended on raising the underwriters its strategies for growth and an explanation of the dual classes of stock it also described eventbrite s business and historical financial information | |
what is the sec yield | the sec yield is a standard yield calculation developed by the u s securities and exchange commission sec that allows for fairer comparisons of bond funds it is based on the most recent 30 day period covered by the fund s filings with the sec the yield figure reflects the dividends and interest earned during the period after the deduction of the fund s expenses it is also referred to as the standardized yield understanding the sec yieldthe sec yield is used to compare bond funds because it captures the effective rate of interest an investor may receive in the future it is widely considered a good way to compare mutual funds or exchange traded funds etfs because this yield measure is generally very consistent from month to month the resulting yield calculation shows investors what they would earn in yield over the course of a 12 month period if the fund continued earning the same rate for the rest of the year it is mandatory for funds to calculate this yield this yield differs from the distribution yield which is typically displayed on a bond s website calculation of the sec yieldmost funds calculate a 30 day sec yield on the last day of each month though u s money market funds calculate and report a seven day sec yield the standardized formula for the 30 day sec yield consists of four variables a interest and dividends received over the last 30 day periodb accrued expenses over the last 30 day period excluding reimbursementsc the average number of shares outstanding on a daily basis which were entitled to receive distributionsd the maximum price per share on the day of the calculation the last day of the periodthe formula of the annualized 30 day sec yield is 2 x a b c x d 1 6 1 example of sec yieldassume investment fund x earned 12 500 in dividends and 3 000 in interest the fund also recorded 6 000 worth of expense of which 2 000 was reimbursed the fund has 150 000 shares entitled to receive distributions and on the last day of the period the day the yield is being calculated the highest price the shares reached was 75 in this scenario the variables equal a 12 500 3000 15 500b 6 000 2 000 4 000c 150 000d 75once these numbers are plugged into the formula it looks like this 30 day yield 2 x 15 500 4 000 150 000 x 75 1 6 1 or 2 x 0 00615 1 23 | |
what is second world | the outdated term second world included countries that were once controlled by the soviet union second world countries were centrally planned economies and one party states notably the use of the term second world to refer to soviet countries largely fell out of use in the early 1990s shortly after the end of the cold war 1but the term second world has also been used to cover countries that are more stable and more developed than offensive term third world countries but less stable and less developed than first world countries examples of second world countries by this definition include almost all of latin and south america turkey thailand south africa and many others investors sometimes refer to second world countries that appear to be headed toward first world status as emerging markets instead 2some countries could be considered second world by either of these two definitions understanding second worldby the first definition some examples of second world countries include bulgaria the czech republic hungary poland romania albania russia and china among others 3with regard to the second definition according to geo strategist and london school of economics doctorate parag khanna approximately 100 countries exist that are neither first world oecd nor third world least developed or ldc countries khanna emphasizes that within the same country there can be a coexistence of first and second second and third or first and third world characteristics 4 a country s major metropolitan areas may exhibit first world characteristics for example while its rural areas exhibit third world characteristics china displays extraordinary wealth in beijing and shanghai yet many of its non urban regions are still deemed developing key criteria in defining world segregationscriteria such as unemployment rates rates of infant mortality and life expectancy standards of living and distribution of income can be used to determine a country s status even within the united states some argue that although the majority of the nation is fully developed certain places are stagnant in their growth even regressing to a status closer to a developing nation definition mit economist peter temin argues that the united states has even regressed to a developing nation status temin believes that close to 80 of the entire u s population is part of a low wage sector laden with debts and facing fewer possibilities for growth 5 |
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