Company’s Cost of Equity

Required rates of return describe the reward investors expect from taking on a given level of risk. Cost of Equity The cost of equity is the minimum return a company must offer to attract investors and keep its share price…

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Dividends, Stock Splits, and Share Repurchases

According to the dividend discount model (DDM), the value of an investment should be equal to the present value of the expected future benefits. For common shares, these benefits come in the form of dividends and the expected capital gain…

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Dividend Payment Chronology

Dividend chronology describes the timeline for a series of events that take place after a company decides to pay dividends to its shareholders. Included in this chronology are the declaration date, ex-dividend date, record date, and payment date in that…

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Key Differences Between US GAAP and IFRS
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Disclosures Relating to Deferred Tax Items
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Measurement of Current and Deferred Tax Items

Current taxes payable or recoverable are determined using the relevant tax rates at the balance sheet date. Deferred taxes, however, are measured at the tax rate that is expected to be applicable when the asset is realized or the liability…

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Valuation Allowance for Deferred Tax Assets

US GAAP recognizes a deferred tax asset in full but reduces it by a valuation allowance if it is very likely that some or the entire deferred tax asset will not be realized. Valuation Allowance Deferred tax assets should be…

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Temporary and Permanent Differences

Temporary differences occur whenever there is a difference between the tax base and the carrying amount of assets and liabilities on the balance sheet. Permanent differences are differences between the tax and financial reporting of revenue or expense items that…

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Impact of Tax Rate Changes

Income tax rate changes can significantly impact a company’s financial statements and the financial ratios which are derived from them. It is important, therefore, for an analyst to take note of any proposed changes to tax laws that may inform…

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Changes in the Income Tax Rate

Changes in the income tax rate can influence the measurement of income tax expense, the deferred tax asset and liability carrying amount in the year the change is enforced. When the income tax rate changes, deferred tax assets, and liabilities…

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