Financial Ratios and Statistics – FahStats

Archive for October, 2010

Excel provides three add-in financial functions for analyzing United States Treasury bills: TBILLEQ, which calculates the bond-equivalent yields; TBILLPRICE, which calculates the price of a Treasury bill; and TBILLYIELD, which calculates the yield on a Treasury bill.The Treasury bill functions use a set of standard arguments: the settlement date, the maturity date, the discount rate, and the price. The settlement date specifies the date the bill is settled, or purchased. The maturity date specifies the date the bill matures, or expires. (You may enter these date arguments either as text strings enclosed in quotation marks or as serial date values.) The discount rate specifies the annual discount rate used to price the bill. The price specifies the price per $100 of face value.NOTE: Excel uses only the integer portion of the arguments you supply to the Treasury bill functions. If you enter an argument with decimal values, Excel truncates the argument to just its integer component.All three functions return an error value if the settlement or maturity date isn’t a valid date, if the discount rate is less than zero, if the settlement date falls after the maturity date, or if the maturity date isn’t within one year of the settlement date.TBILLEQThe TBILLEQ function calculates the bond-equivalent yield for a Treasury bill given its settlement date, maturity date, and a discount rate. It uses the following syntax:TBILLEQ(settlement,maturity,discount)For example, if you want to calculate the equivalent bond yield on a Treasury bill if the settlement date is April 8, 2001, the maturity date is July 15, 2001, and the discount rate is 3%, you use the following formula:=TBILLEQ(“4/8/2001?,”7/15/2001?,.03)The function returns the value .03067, or 3.067%.TBILLPRICEThe TBILLPRICE function calculates the price per $100 of face value for a Treasury bill given the settlement date, the maturity date, and the discount rate. It uses the following syntax:TBILLPRICE(settlement,maturity,rate)For example, if you want to calculate the price on a Treasury bill if the settlement date is April 8, 2001, the maturity date is July 15, 2001, and the discount rate is 3%, you use the following formula:=TBILLPRICE(“4/8/2001?,”7/15/2001?,.03)The function returns the value 99.1833, which means that you would pay $99.1833 for each $100 of Treasury bill face value.TBILLYIELDThe TBILLYIELD function calculates the yield delivered by a Treasury bill given the settlement date, maturity date, and price. It uses the following syntax:TBILLYIELD(settlement,maturity,price)For example, if you want to calculate the yield on a Treasury bill if the settlement date is April 8, 2001, the maturity date is July 15, 2001, and the price is 99.1833, you use the following formula:=TBILLYIELD(“4/8/2001?,”7/15/2001?,99.1833)The function returns the value 0.0302482, which is equivalent to 3.0248%.

Budgeting involves the planned allocation of funds to various departments in a business organization. Budgeting is often done by enterprises on a periodic basis. In simpler terms, it means planning for and estimating the financial position of an organization in a given time period.The process of budgeting is very basic. Budgeting helps keep track of the health of a business, be it big or small. An individual with a basic income can also plan his budget. A simple rule for making a financial statement is keeping the accounts very simple. The expenses can be noted on a day-to-day basis; these expenses can be clubbed under one subcategory.The usefulness of a budget depends on the reliability of the information used to create it. Unrealistic estimates of prices, yields, or input quantities would lessen the accuracy of the budget and could possibly lead to a faulty financial decision.The process of budgeting can help make sound management decisions in any organization, if the information used for making the statement is reliable. If the process is undertaken on a one-year cycle, one should plan the next budget at least three months prior to the end of the current one. If the budgeting is for much shorter periods, for instance one month, one should begin preparing next month’s budget within one to two weeks prior to the start date.As per business terminologies there are six broad types of budgets made by enterprises, namely, sales budget, production budget, material purchase budget, staff budget, overheads budget, and capital expenditure budget.Most organizations use structured planning to yield maximum results in key areas, including return-on sales, revenue growth, asset management and equity. Many businesses carry out the process almost on a daily basis, and include the majority of the activities associated with business planning, such as growth areas, competitors, cash flow and profit.One of the prime benefits of carrying out annual business planning is that it gives organizations the opportunity to understand the performance, and also helps in realizing the factors affecting it. It also helps to make continuous improvements and anticipate problems, and offers sound financial information on which to base decisions, improved clarity and focus.

If you run your own business–whether it’s a retail store, direct sales, hobby shop or freelance consulting–chances are you’ve thought about getting a business credit card. It’s probably a good idea, since it makes it easy for you to separate your business expenses from your home expenses, a task that helps keep your paperwork organized and simplifies things at tax time. When you’re ready to apply for a business card, follow this checklist:

1. Choose a card

Some cards offer special deals, financing or rewards for small business owners. For example, some rebate cards offer you a percentage back on everything you buy at a certain store, like a warehouse store or online store. Other cards offer cash rebates when you spend at supermarkets, gas stations or home improvement stores. If you travel often, a frequent flier or travel rewards card might get you the best and biggest bonuses. Choosing the right reward card–depending on the type of business you operate and the expenses you incur–can mean extra money in your pocket all year long.

2. Gather up paperwork

You’ll need basic information about your company’s financial situation, including the name of your business, the tax identification number, the business address, the number of years you’ve been an owner, the number of employees, the nature of the business, the business’ average annual income, and the amount in the business’ checking account. You’ll also need to know the legal entity of your business, such as whether it’s a sole proprietorship, a corporation, a partnership, a non-profit, etc.

3. Fill out the application

You can find applications for almost all business credit cards online, although in most cases you can also call and apply over the phone (a good idea if you have any questions). Depending on your credit rating, you may have to provide extra documentation of your business’ current financial status, so be prepared to mail or fax information if requested. After you fill out the application, approval can take anywhere from thirty seconds to a month.

To find business credit cards online, do an Internet search or check the websites of major credit card companies.