Tricky Subjects Flashcards
Domestic tax implications
Profit generate by a new investment will be taxable
Debt interest will be tax deductible. Using debt to finance new investments, gives tax savings when interest is paid
Higher tax rates will make debt more attractive since it will obtain tax relief at a higher rate
Dividends to shareholders will be taxed under income tax rules, but share price rises due to good investments will be taxed under capital gains tax rules
Mezzanine debt
Unsecured debt borrowing
Short term loan
Bridging loan
Topic standards
Economic
Environmental
Social
Pre bid defences
Communicate effectively with shareholders
Revalue non-current assets
Poison Pill
Crown Jewels defence
Change articles of assocation to require ‘supe majority’ approval for a takeover
Post bid defences
Appeal to their own shareholders
Attack the bidder
White knight
Counterbid/Pacman
Refer the bid to competition authorities
7 Guiding Principles
Strategic focus and future orientation
Connectivity of information
Stakeholder relationships
Materiality
Conciseness
Reliability and completeness
Consistency and comparability
8 Content elements
Organisational overview and external environment
Governance
Business model
Risks and ops
Strategy and resource allocation
Performance
Outlook
Basis of preparation and presentation
Translation risk
Risk of a gain or loss on translation of foreign assets or liabilities in year end accounts
Transaction risk
Risk that exchange rate moves between date of the transaction and the date of payment
Economic risk
long term exchange rate movements which impact the competitiveness of the business
Smoothing
Company has a balance between its fixed rate and floating rate borrowing
Matching
The company matches its assets and liabilities to have a common interest rate
Netting
The company aggregates all positions, both assets and liabilities, to determine its net exposure
Hedging
Way of using financial instruments to reduce the risk of adverse price movements of an item
