Contact Us
×

Author: Imarticus Learning

Understanding the Core Objectives of Forecasting in Business Strategy

Posted on by Imarticus Learning

In today’s dynamic business environment, it is essential for organisations to make the right predictions for future trends to stay viable and succeed. The objectives of forecasting in business depend on how you are developing an informed evaluation of future events and situations. With business forecasting, you can make accurate predictions for future trends by examining current and historical data. Basically, forecasting is a type of tool that aids companies in making well-informed business decisions about their forthcoming. So, let’s understand the core objectives of forecasting in business.

What is Business Forecasting?

Business forecasting contains the tools and techniques that are used in predicting the developments in business, such as expenses, sales, profits and losses. The main objective of forecasting in business is to establish improved strategies on the basis of these informed future predictions, helping to remove possible losses before they occur. Through quantitative or qualitative models, historical data is collected and examined to identify the problems. 

Types of Forecasting in Business

Generally, there are two types of models that are used for forecasting in business, which include:

  • Quantitative Models: Quantitative is a long-term method of forecasting in business that is examined with assessable data such as statistics and historical data. Previous performance is used to detect trends or rates of change. Through this approach, organisations can predict if variables like sales, housing values and gross domestic product, will be for a long period. Quantitative models include:
  • Econometric Modelling: This is a mathematical model that uses multiple regression equations to test the internal consistency of datasets over time and the importance of the relationship between datasets. This is useful for predicting economic shifts and the possible impact of those shifts on the organisation. Basically, these models are used in sectors, including financial forecasting, pricing strategies and market analysis.
  • Indicator Approach: This approach observes the relationship between certain indicators and makes use of the leading indicator data to evaluate the performance of the lagging indicators. Lagging indicators assess business performance eventually and provide the understanding of business strategies impact on the acquired results.
  • Trend Analysis Method: It is one of the most common methods that uses historical data to predict future trends. Also known as ‘Time Series Analysis’, this forecast method helps organisations get significant views of the future by tracking past data. Also, this is the most affordable method.
  • Qualitative Models: Qualitative is a short-term method of forecasting that depends on industry experts. This method is particularly valuable in forecasting markets for which past data is limited to make statistically appropriate decisions. Qualitative models include:
  • Market Research: With a large number of people, polls and surveys are organised about a specific product or service to predict whether the amount of the consumption will less or rise.
  • Delphi Model: Polling is done by asking a panel of experts for their opinions on specific topics. Their estimations are collected anonymously and made a forecast.

Importance of Forecasting in Business

Forecasting is essential in businesses because it provides the capacity to make well-informed decisions and develop business strategies. Financial and operational forecasting depends on present market situations and estimations of future trends. Historical data is collected and examined to discover patterns that are useful in the prediction of future events and changes.

The core objectives of forecasting in business include – helping forecasters to not only create prediction reports effortlessly, but also understand the predictions better and how to make informed decisions based on these predictions. 

Here are some reasons why forecasting is important in business:

  • It enables businesses to set goals and make strategic plans for the future.
  • It is essential in financial planning that helps organisations evaluate revenues, expenses and profits for the future.
  • It aids organisations in detecting issues, possible risks and doubts, and makes risk management strategies to minimise them.
  • It provides forecasters with beneficial insights and data, which can help them make well-informed decisions.

What is Financial Forecasting?

Financial forecasting helps organisations estimate their financial health for the future by tracking historical data. Additionally, the process should study the main market conditions and past financial trends. The main objectives of financial forecasting include the understanding of future economic performance, enabling organisations to make informed decisions and create strategic plans. 

By examining historical financial data, market trends, and other related factors, financial professionals can create forecasts for crucial financial metrics, such as expenses, revenue, profits and balance sheet items.

For those interested in transforming their career in this field, a financial analyst course can provide a complete industry-approved syllabus, exclusive real-world projects and practical training. 

Conclusion

Forecasting in business is an essential tool that helps make informed decisions about the future of the company. The core objectives of forecasting are to predict the future which can help businesses assign resources and determine the investment allocation, staffing, budgeting, marketing and more. Without forecasting, a business may not be able to regulate itself to the right path of success.

If you are looking to transform your career in the financial sector, then enrol in the Financial Analysis Prodegree in collaboration With KPMG offered by Imarticus Learning. This 4-month long program helps build a career in investment banking and corporate finance. 

Understanding Missing Values: Types, Causes, and Impacts on Data Analysis

Posted on by Imarticus Learning

Missing values in data analysis” refers to values or data that are missing from a given dataset or are not recorded for a certain variable. In this post, we will take a voyage through the complex terrain of handling missing data, a critical part of data pre-processing that requires accuracy and imagination. We’ll learn about the causes and types of missingness, as well as missing value treatment.

Common Causes of Missing Values in Data Analysis

Missing data impacts all data-related professions and can lead to a number of challenges such as lower performance, data processing difficulties, and biassed conclusions as a result of discrepancies between complete and missing information. Some of the probable causes of missing data are:

  • Human errors during data collection and entry
  • Equipment or software malfunctions causing machine errors;
  • Participant drop-outs from the study
  • Respondents refusing to answer certain questions
  • Study duration and nature
  • Data transmission and conversion
  • Integrating unrelated datasets

Frequent missingness has the ability to reduce overall statistical power and introduce biases into estimates. The relevance of missing values is determined by the magnitude of the missing data, its pattern, and the process that caused it. Therefore, a strategy is always necessary when dealing with missing data, as poor management might produce significantly biassed study results and lead to inaccurate conclusions.

Various Types of Missing Values in Data Analysis and the Impacts

MCAR or Missing Completely at Random

In MCAR, missingness has no relationship with either observed or unobserved values in the dataset. Simply put, the lack of data occurs at random, with no clear pattern. 

A classic example of MCAR occurs when a survey participant inadvertently misses a question. The chance of data being absent is independent of any other information in the dataset. This approach is regarded the best for data analysis since it introduces no bias.

MAR or Missing at Random

In MAR, the missingness may be explained by some of the observable dataset properties. Although the data is missing systematically, it is still deemed random since the missingness has no relationship to the unobserved values.

For example, in tobacco research, younger individuals may report their values less frequently (independent of their smoking status), resulting in systematic missingness due to age.

MNAR: Missing Not at Random

MNAR happens when the missingness is linked to the unobserved data. In this situation, the missing data is not random but rather linked to particular reasons or patterns.

Referring to the tobacco research example, individuals who smoke the most may purposefully conceal their smoking habits, resulting in systemic missingness due to missing data.

Treatment of Missing Values: Approach for Handling

Three commonly utilised approaches to address missing data include:

  • Deletion method
  • Imputation method
  • Model-based method

All these methods can be further categorised.

Furthermore, choosing the right treatment will depend on several factors:

  • Type of missing data: MCAR, MAR, or MNAR
  • Missing value proportion
  • Data type and distribution
  • Analytical objectives and assumptions

Implications/Impacts Various Missing Data

MCAR:

  • MCAR data can be handled efficiently with the help of simple methods such as listwise deletion or mean imputation, without compromising the integrity of the analysis;
  • Statistical results originating from MCAR data are usually unbiased and reliable.

MAR:

  • MAR data requires more intricate handling techniques such as multiple imputation or maximum likelihood estimation;
  • Failing to account for MAR in a proper manner may introduce biases and affect the validity of statistical analyses.

MNAR:

  • MNAR data is the most difficult one to handle, as the reasons for missingness are not captured within the observed data;
  • Traditional imputation methods may not be applicable for MNAR data, and specialised techniques are required that would consider the reasons for missingness.

Final Words

Understanding the factors that cause missing data is critical for any data scientist or analyst. Each mechanism – MCAR, MAR, and MNAR – has particular challenges and consequences for data processing.

As data scientists, it is critical to determine the proper process and apply appropriate imputation or handling procedures. Failure to treat missing data appropriately can jeopardise the integrity of analysis and lead to incorrect results. Missing data’s influence can be reduced by using proper strategies.

To learn more about data science and analytics concepts, enrol into the data science course by Imarticus.

Essential Technical Accounting Skills for Modern Accountants: A Comprehensive Guide

Posted on by Imarticus Learning

If you want to build your career as an accountant, then there are certain technical accounting skills that you need to excel. Apart from perfecting these technical accounting skills, you will also need to stay on top of deadlines, keep up with the changing regulations, as well as manage clients. In the modern world of today, accountants need to think and go beyond number crunching and become strategic business advisors. Keep on reading to learn about the crucial technical skills for accountants that can help you build a successful career. 

Top Technical Accounting Skills 

Expertise in Accounting Software

In the tech savvy business world of today, it is crucial to know all the ins and outs of accounting and office software such as Excel, QuickBooks, and Google Workspace. This is one technical accounting skill that you need to master as technology keeps bringing new changes in the field of accounting. 

Being Deft at Preparing and Reporting Financial Statements

This is amongst the most crucial technical accounting skills as financial statements are the bread and butter of accounting firms and business operations. You need to have in-depth knowledge on how to report and prepare financial statements if you want to be successful at your job as it will include tracking and reporting on balance sheets, creating income as well as cash flow statements. 

Knowledge of Spreadsheet Software

Excel is one of the most important tools for an accountant even today. This is why, before you pursue a career in accounting, ensure that you understand how to use Excel to organise and manipulate data. In case you don’t have a deft hand at an Excel spreadsheet, take out time and practice. You can even take up an online course before you apply for accounting jobs.

Essential Soft Skills for an Accountant

Apart from technical skills for accountant, you also need to be an expert at certain soft skills. This is important because building strong professional relationships with clients, peers and colleagues is just as important as your ability to perform complex financial analyses. Moreover, these soft skills also give you an edge over other applicants in the accounting job market. These soft skills include:

Communication

Effective communication is very important in almost all business roles and accounting is no different. Apart from being sound with your numbers you are also required to meet clients, stakeholders and fellow employees and you will be required to communicate financial updates. 

Time Management and Organization

You need to organise and also manage your time effectively if you want to become an accountant. During the tax season in the early part of the year, the volume of work usually increases and you will be required to juggle a lot of work including handling clients, making spreadsheets and reports. All this requires keeping a track of your time and staying aware of strict deadlines to file taxes and reports. 

Critical Thinking

It is true that technical accounting skills will make you successful but this job goes way beyond numbers. You will be required to have strong critical thinking skills so that you can deal with ethical dilemmas. Moreover, you will require to report errors and take care of unbalanced spreadsheets after careful thoughts and investigations so that you can come up with the best solutions. 

Problem-Solving

No matter how technologically advanced we become, an accountant needs to predict trends and make financial forecasts through his/her problem solving skills. This is why it remains as one of the most sort-after skills in accountants. You need to remember that employers do not need a robot, they are seeking creative problem solvers who can help with accounting as well as identify innovative solutions to help take their organisation forward. 

Conclusion

A career in accounting can be very fulfilling for you, provided you have the right set of technical accounting skills as well as soft skills. Kickstart your journey in the field of accounting and become a CPA with AICPA at Imarticus. This CPA course can propel your career to new heights, and will also provide you access to the exclusive AICPA community. 

How Generative AI is Shaping the Future of Content Creation

Posted on by Imarticus Learning

In today’s digital age, the future of content creation is undertaking a pivotal move, driven by improvements in Generative Artificial Intelligence (AI). And, this transformation impacts several industries, ranging from advertising and marketing to education and healthcare. Generative AI, which produces quality content, including text, images, audio, video and complex designs, is reshaping the future of content creation by making it impressive and creative. So, let’s explore what Generative AI is, how it works and how it impacts the future of content creation, including Generative AI examples.  

Understanding Generative AI

Generative AI is a transformation technology that is designed to create new content, such as text, images and videos. By using machine learning (ML), the technology helps produce personalised output based on human input. It is essential for AI engineers to train the technology using large data sets, which the model accesses while generating the best response to a prompt. Additionally, generative AI is a set of predictive artificial intelligence. On the basis of the information provided, generative AI focuses on creating the best response to the user’s prompts.

Generative AI can be used to create unique content (written, visual or audio), outline complex data, create code, support monotonous tasks or make customer service more tailored. For those interested in transforming their career in this field, a generative AI course equips them with complete insights and practical knowledge.

How Does Generative AI Work?

Generative AI works by using ML to learn a large dataset of existing content. First, the technology collects a dataset of existing content. The dataset can include anything, from text to images and videos. Then, the model is trained on the dataset. The processing time depends on the size of the dataset and the density of the model.

After the model is trained, it can be used to create new content. By using the patterns and relationships learned from the dataset, the model generates new content.

Generative AI Examples

Generative AI examples are increasing rapidly due to the fast adoption of this emerging AI technology. Generative AI is already implemented in different industries, from healthcare and education to finance and marketing. And, more examples of generative AI are developing in further sectors as developers work to enhance the technology to generate new usages.

So, here are some examples of generative AI in different industries:

  • Generative AI in Healthcare: Generative AI provides innovative solutions for treatment planning, diagnostics and drug detection, allowing healthcare providers to provide more effective services. Some of the examples of Generative AI in healthcare are:
    • AI Apps for Patients
    • AI Apps for Personalised Medicine
    • AI Apps for Early Detection of Certain Diseases
  • Generative AI in Education: Generative AI in education is used to generate custom learning plans for students as per their grades and complete understanding of different subjects. Some of the Generative AI examples in education are:
    • AI Apps for Personalised Vocabulary Learning Experiences 
    • AI Apps for Language Learning Practice
    • AI Apps for Creating Engaging Content for Course Materials

  • Generative AI in Cybersecurity: Generative AI is used in cybersecurity to replicate risky environments that can be used to check security policies and controls. Generative AI examples in cybersecurity include:
    • AI Applications for Advanced Thread Detection and Analysis
    • AI Apps for Complex Threat Detection and Response
    • AI Apps for Cybersecurity Management

  • Generative AI in Finance: Generative AI technology is used in finance to provide more customised services, enhance decision-making processes and boost operational productivity. Here are some examples of Generative AI in finance:
    • AI Apps for Fraud Detection
    • AI Applications for Personalised Financial Assistance
    • AI Apps for Personal Finance
    • AI for Personalised Invoice Processing

  • Generative AI in Advertising and Marketing: Generative AI helps reduce the time spent on manual tasks to embrace enhanced creativity. Some examples of Generative AI are:
    • AI Apps to Produce Automated Video 
    • AI Apps to Create Innovative Images
    • AI Applications to Create Dynamic Content for Campaigns

The Impact of Generative AI on the Future of Content Creation

The impact of Generative AI on shaping the future of content creation is above the realm of art and creativity. It is transforming various industries, including healthcare, education, finance, advertising and marketing. The invention of Generative AI allows you to use its tools to generate primary ideas, create unique content, discover different opportunities and produce whole pieces of artwork. 

The Bottom Line

Though Generative AI is still in its development stages, it has the ability to transform the world. And, its tools are already being used in several industries, from education and healthcare to marketing and finance, to improve creativity, productivity and personalisation. 

Now that you understand the Generative AI examples mentioned above, consider its transformative force and include it in your content plans.

So, if you are interested in enhancing your AI skills, then embark on your journey with a Generative AI course. Enrol in the Advanced Certificate Program in Generative AI in association with E&ICT Academy, IIT Guwahati offered by Imarticus Learning. This program will help you explore artificial intelligence that can create new and unique content.

Case Studies in Capital Structure: Lessons from Successful and Struggling Companies

Posted on by Imarticus Learning

Are you a finance professional? Are you looking forward to playing a leading role in the business domain? If your answer to these questions is a yes, then you need to upskill yourself and acquire knowledge related to crucial business concepts like capital structure in order to help a company maximise its returns. Read on to know the capital structure definition and capital structure theories. 

What is Capital Structure?

Capital structure involves the act of balancing the debt and equity financing of a company. Simply put, it refers to the different sources of funds, including equity and debt, that a company uses to finance its operations and investments. It can be calculated using the following formula:

Capital Structure = Debt / (Debt + Equity)

Here, debt refers to the total amount of debt financing, and equity refers to the total amount of equity financing.

Determining an optimal capital structure helps in minimising the overall cost of capital, which can balance the expenses associated with debt and equity financing. Also, a well-defined capital structure offers much-needed financial flexibility to companies that provides them access to different sources of funding depending on their needs and market conditions. 

Additionally, financial risk can be managed well by properly structuring debt and equity. Further, a company can reduce its tax liabilities by utilising debt in capital structure. Moreover, maintaining an appropriate capital structure leads to enhancing shareholder value.  

A crucial aspect of any organisation, capital structure can influence a company’s value, financial performance and the cost of capital. On the other hand, it is influenced by the industry, size, and risk profile of the company. 

Case Studies on Capital Structure

Here are some case studies that can help develop a better understanding of capital structure theories.

  1. A mid-sized industrial company, XYZ Manufacturing opted for a mix of debt and equity while expanding its operations. Its leverage increased by taking on debt and this in turn amplified returns on equity. But, higher leverage is also associated with increased risk. And, the company struggled to meet interest payments when the economy slowed down. It faced financial distress owing to a debt-heavy capital structure during the 2008 financial crisis. To cope, XYZ Manufacturing had to sell assets and renegotiate debt terms.  
  2. A research-driven company, ABC Pharmaceuticals aimed to maximise shareholder value. To achieve this, it needed the optimal debt-to-equity ratio. As debt provides a tax shield due to interest deductions, the company leveraged this advantage by issuing bonds. While too much debt could lead to bankruptcy risk, ABC Pharmaceuticals analysed its cost of debt and equity to find the sweet spot.
  3. A tech startup, DEF Innovations had a capital requirement for product development. To meet this need, they followed the pecking order theory, which suggests companies prefer 

internal funds first, then debt, and finally equity. Until DEF Innovations reached a stable growth phase, the company relied on retained earnings and short-term debt. Later, it considered equity issuance.

  1. When GHI Retail planned to expand globally, it wondered when to issue debt. The company meticulously monitored interest rates and market conditions, and issued debt when rates were favourable. This move of issuing long-term bonds during a low-interest-rate environment helped the company secure funds for its expansion. GHI Retail considered investor sentiments and capitalised on the demand for corporate bonds during bullish markets.

Conclusion

Influenced by risk appetite, industry dynamics, and market conditions, capital structure decisions are multifaceted. They require thoughtful analysis and strategic alignment. If you want to contribute to shaping a company’s financial foundation, then pursuing the Global Senior Leadership Programme Specialisation: Chief Finance Officer course by Indian Institute of Management, Lucknow, can help. Connect with Imarticus Learning for more details. 

The Science of Employee Motivation: Understanding the Psychology Behind What Drives Your Team

Posted on by Imarticus Learning

Getting into the depth and psychology of motivation, as an employee, is essential in today’s working environment. Motivation is the driving force that inspires individuals to put extra effort toward their goals and complete the objectives of the organisation they are associated with. 

Employee motivation is impacted by a variety of internal and environmental factors, unique to each individual. Let us delve deep and discuss the fundamentals, how to motivate employees and the scientific theories that support them.

The Fundamentals of Employee Motivation

Motivation is widely divided into two categories — intrinsic and extrinsic. 

Intrinsic motivation stems from internal objectives such as personal development or a sense of accomplishment, on the other hand, extrinsic motivation is impacted by external stimuli such as rewards or recognition. The challenge for employees as well as for organisations is to find the appropriate balance between intrinsic and extrinsic motivating factors.

How to Motivate Employees?

Here are the factors, that influence the employee motivation criteria:

  • Recognising individual differences: This plays a crucial role in employee motivation. Gallup’s research indicates that understanding these differences and personalising motivation strategies can show up to a 7-18% increase in employee performance.
  • Establishing a motivational work environment: The workplace has a tremendous influence on employee motivation. According to a University of Warwick research, Google’s offices, which are noted for their innovative and user-friendly design, help to enhance staff happiness and productivity by 37%.
  • The role of leadership in employee motivation: Leadership is a critical factor for creating a motivating workplace. According to Gallup’s survey, managers account for 70% of the variation in employee engagement. Effective leaders inspire and push their team members, resulting in a more engaged and productive workforce.
  • Struggles and solutions: Motivation is crucial for corporations, yet it may be challenging to achieve. Regular feedback, open communication, and acknowledging individual accomplishments are critical techniques for overcoming these obstacles.

Various Scientific Theories Behind Employee Motivation

Herzberg’s Two-factor Theory

In the year 1959, psychologist Frederick Herzberg proposed a theory that distinguishes between two types of factors that impact employee motivation:

  • Hygiene factors are aspects of the workplace which, when absent, can contribute to discontent among employees.  These considerations include compensation, working conditions, corporate rules as well as interpersonal interactions.
  • In contrast, motivators are factors that, when present, contribute to job satisfaction and motivation. They include acknowledgement, accomplishment, accountability, advancement and the nature of the task itself.


Maslow’s Hierarchy of Needs

This theory was proposed and established by a psychologist named Abraham Maslow, in 1943. It suggests that there is a hierarchy of needs for individuals, which must be satisfied in a specific order. The hierarchy consists of the following five levels:

  • Physiological needs – fair compensation that will help in survival
  • Safety needs – job security and personal well-being
  • Belongingness and need for love – harmonious relationship with colleagues
  • Esteem needs – inculcating self-confidence through recognition and advancement opportunities
  • Self-actualization needs – opportunities to realise the full potential of self for personal growth and development

According to Maslow, individuals are motivated to fulfil these needs in a sequential order, with higher-level needs becoming significant only after lower-level needs are satisfied.

Hawthorne Effect

The Hawthorne effect, named after a series of social experiments, as a part of an employee motivation project, on the impact of physical conditions on productivity at Western Electric’s factory in Hawthorne, Chicago, in the 1920s and 1930s, was first described by Henry Landsberger in 1958 after he noticed that some people worked harder and performed better when researchers were watching them.

Today, the Hawthorne effect is best understood as a rationale to make organisations understand the need to offer employees precise and meaningful feedback and praise. It is opposed by the presence of results-driven working settings that provide complete independence and prioritise performance and deliverables over the management of employees.

Expectancy Theory

As per the expectancy theory developed by psychologist Victor Vroom in the 1960s, employee motivation depends on 3 factors — expectancy, instrumentality and valence. According to this theory, individuals are driven to work hard when they feel their efforts will result in positive consequences or rewards.

Self-Determination Theory (SDT)

Psychologists Edward Deci and Richard Ryan contributed to the establishment of this theory in the 1980s. It puts emphasis on the fact that individuals have three innate psychological needs:

  • Autonomy refers to the need for free will and determination in decision-making.
  • Competence refers to the need to feel effective, capable and accomplished.
  • Relatedness refers to the need to feel the connection and support offered by others.

As a result, work environments that address these requirements promote intrinsic motivation in employees, which leads to enhanced engagement, contentment and well-being. You may do this by promoting autonomy, skill development and meaningful connections.

Apart from that, there are some other theories as well, such as the Three-dimensional Theory of Attribution, Theory X and Theory Y, and Theory Z, etc.

Final Words

Several positive psychology methods may be utilised in the workplace to promote crucial outcomes such as job stress reduction and increased motivation, engagement, and performance. Several empirical investigations have been undertaken in recent years to confirm the effectiveness of these interventions.

To achieve this goal, the Executive Certificate Programme for Strategic Chief Executive Officers, offered by IIM Raipur in association with Imarticus, is an excellent method to take your leadership capabilities to another level. This 12-month CEO course is specifically designed to educate you how you can think strategically, instil integrity and purpose, establish a high-performing team, effectively manage change, and execute with a growth mentality. 

10 Shocking Reasons Why You Should Get Your CMA Certification Now

Posted on by Imarticus Learning

If you want to make a mark in the financial and accounting world, then being a Certified Management Accountant (CMA) is the way to go. To be a CMA, you are required to register with the Institute of Management Accountants (IMA) and enrol in the CMA programme. Also, it must be noted that CMA certification provides unique professional benefits that regular bachelor’s degrees don’t. Read ahead to know about the reasons why you should get your CMA USA certificate now!

  • Enhance Financial Skills and Knowledge

With a thorough and diligent knowledge of management accounting processes, CMAs perform more specialised tasks than included in a general accountant’s job description. They are responsible for performing budget analysis and planning, making key investment decisions and risk management.

  • Career Advancement

If you enjoy managing and mentoring others, then CMA certification can be a fast track to manager-level roles. Demonstrating your knowledge of financial planning and management processes, it helps a professional stand out amongst other accountants for new roles.  

  • Get Credibility 

Having CMA certification not only speaks volumes about your skills but also solidifies your status of being a versatile accountant. Certainly, earning a CMA distinguishes you from others in the field, adding increased credibility to your other qualifications. 

  • Global Recognition

Holding acclaim around the world, CMA certification is amongst the few accounting credentials that are recognized across international borders owing to its global relevance. Professionals with this universal accreditation are highly respected in the accounting and finance world. If this interests you, then you can enrol in a reputable CMA certification course to begin your journey. 

  • Better Understanding of a Business 

Whether it is a regional business or a multinational company, this certification will help you contribute to larger business objectives. By analysing external trends and figures, CMAs prepare data in a digestible way for executive boards and other important company personnel. Also, they have a deeper understanding of a company’s financial workings. 

  • Higher Earnings 

It is observed that CMA-certified professionals earn around 60% more than their non-certified counterparts across the world. With an average of Rs 6 lakh offered per annum in India, a Certified Management Accountant earns somewhere between Rs 1.4 lakh and Rs 20 lakh annually.

  • International Appeal 

Pursuing a college degree can land you a good job in the finance or accounting sector, but if you want to bag opportunities in another country, then having CMA certification, which is recognised worldwide, is necessary. This is because CMAs are known to have the same level of expertise, irrespective of the country they are working in. And, this makes CMAs preferable for employers. 

  • Industry Opportunities 

As financial and accounting functions are available everywhere, CMAs can add value to any industry. From alternative energy, technology and artificial intelligence domains to healthcare and transport sectors, CMAs enjoy endless career development opportunities in varied fields globally.

  • Plethora of Positions 

CMA-certified professionals can successfully work as financial analysts, operations managers and vice presidents. Also, they can offer services in different business functions such as management finance, sustainability, and technology. Besides bringing opportunities to build a career, this flexibility also enhances professional satisfaction.

  • Great Future Scope

As business organizations or industries are extending to a brighter world, the job outlook for CMAs is growing. According to IMA, new CMAs grew 17% globally since 2019.

Conclusion

Earning a CMA certification provides a boost to professionals at all stages of their careers. CMA-certified professionals not only have unique and substantial skills and knowledge, but also enjoy access to different career paths. If you want to be a CMA, then connect with Imarticus Learning to pursue a well-reputed CMA certification course in India. 

Shocking Truths About ACCA That Will Change Your Career Forever

Posted on by Imarticus Learning

Accounting is an essential component of any organisation, hence it is a consistent and expanding topic. According to an IRCC estimate, more than 79,600 new accountant employment openings are expected between 2019 and 2028.

As the global economy continues to recover from the pandemic, the demand for specialists to store and assess financial records is expected to increase.

This is great news for accounting students and professionals looking to work in the sector. A widely recognized qualification, the ACCA, can not only enhance your chances in a wide range of job areas, but it can also prepare you for a long and lucrative career.

Whether you want to take your initial steps into a career in finance or you’re a financial professional wishing to build strategic leadership skills to boost your earning potential, options of ACCA careers might prove to be a boon for you.

What is ACCA?

The Association of Chartered Certified Accountants (ACCA) qualification is a globally recognised certification in accounting, and finance awarded by the ACCA body in the United Kingdom. It has a structure consisting of three levels, namely Knowledge, Skill, and Professional.

ACCA is accepted in 180 countries and it provides better career opportunities worldwide. The ACCA Course prepares professionals for various domains such as accounting, taxation, management, finance, investment banking, corporate finance, forensic and consulting.

Truths About ACCA That will Direct Your Career 

  1. ACCA is a globally recognised qualification: Employers all over the world trust ACCA, through the rigorous training of our students and members, to ensure their businesses operate at the highest international levels. Moreover, ACCA holds recognition from key regulatory bodies in India, including SEBI, and RBI, validating its acceptance within the Indian financial sector.
  2. Offers success and security with diverse career paths: The field opens doors to diverse ACCA career opportunities in finance, banking, consulting, government, and academia, beyond traditional accounting roles.
  3. Inculcates skills for life: An ACCA qualification isn’t just about mastering the numbers, it’s about shaping well-rounded finance professionals equipped with a comprehensive skill set. The ACCA course inculcates strategic thinking, technical expertise, innovative approach, ethical integrity, and leadership and management skills.
  4. A flexible qualification for modern students: ACCA accommodates candidates at different career stages, offering a flexible pathway to certification. With its modular structure and recognition of prior learning ensure accessibility for individuals with diverse backgrounds and experiences, not just recent graduates. So, an aspirant can start ACCA at his/her level.
  5. ACCA has affordable options and is a valuable investment option: While there are expenses involved with ACCA exams, study materials, and membership, ACCA provides a variety of aid alternatives. These include scholarships, discounts, payment plans, and corporate sponsorship schemes, making the qualification available to people from a variety of backgrounds.

Furthermore, ACCA graduates frequently have superior earning potential, job progression chances, and international reputation.

Essential Details About ACCA

ParametersACCA
Recognising bodyThe Association of Certified Chartered Accountants is a globally recognised degree. Candidates can pursue careers relating to many fields in taxation, accounting, and others.
Course durationThe course duration for an ACCA qualification is 3 years of studying, along with additional 2 years of training.
EligibilityAspirants can achieve the ACCA qualification in a minimum of 3 years, if they:
  • Complete a maximum of 13 exams which depend on their previous qualifications
  • Complete an ethics and professional skills module
  • Have three years of work experience in a relevant role
Job profiles A trained ACCA professional can work on the following job profiles:
  • Business analyst

  • Chief financial officer

  • Insolvency practitioner

  • Forensic accountant

Salary

(ACCA affiliates) 

For ACCA careers India, the average salaries for each level are:
  • Entry-level: INR 4-8 lakhs
  • Mid-level: INR 10-20 lakhs
  • Senior-level: INR 20-50+ lakhs

Abroad, a salary of roughly USD 50,000 is earned.

In the UK, the average salaries for each level are:

  • Entry-level: £25,000 to £35,000 per year  
  • Mid-level: £40,000 to £60,000 per year  
  • Senior-level: £65,000 and upwards, often exceeding £100,000

In Canada, the average salaries for each level are:

  • Entry-level: Between CAD 40,000 and CAD 60,000 p.a.
  • Experienced: Approximately CAD 65,000 to CAD 90,000 p.a.
  • Senior-level: CAD 100,000 or above, depending on the job.

In Australia, the average salaries for each level are:

  • Entry-level: Between AUD 50,000 and AUD 70,000 p.a.
  • Experience of few years: Around AUD 80,000 to AUD 120,000 a year
  • Senior-level: AUD 150,000 and above
Companies hiringMost MNCs and Big 4 companies hire ACCAs in India, such as: 
  • PwC
  • KPMG
  • Deloitte
  • Ernst & Young

Conclusion 

The ACCA course is intended to provide aspiring candidates with a solid foundation in finance and accounting. Whether you are a 12th-grade dropout with an aptitude for accounting or an established professional, ACCA can help you launch a successful career in accounting.

If you want to get certified, embark on a journey with Imarticus’ Association of Chartered Certified Accountants course. From ACCA-certified teachers and extensive study materials to placement bootcamps, this is your opportunity to develop your accounting career.

Understanding Venture Capital: A Comprehensive Guide for Beginners

Posted on by Imarticus Learning

Venture capital (VC) is often used in finance and startups. If you’re a budding entrepreneur or someone interested in the startup ecosystem, you’ve likely heard about venture capital but might still wonder, “What is venture capital, and how does it work?”

This guide will break down the essentials of venture capital, its different types, and how it can play a crucial role in the growth of a startup. By the end of this post, you’ll have a clear understanding of venture capital and how it can help fuel innovation and business success.

What Is Venture Capital?

Venture capital is a form of private equity financing that venture capital firms or individual investors provide to startups and small businesses with strong growth potential. Unlike traditional loans, which require regular repayments and come with interest, venture capital is usually provided in exchange for equity, or ownership, in the company. This means that the investors take on significant risks because they only make money if the startup succeeds and grows in value.

Venture capital is particularly appealing to startups because it provides the necessary capital to grow and the expertise, mentorship, and networking opportunities that come with experienced investors. However, it also means giving up a portion of ownership and control, which entrepreneurs must carefully consider.

The Importance of Venture Capital

Venture capital plays a vital role in the business world, particularly in the tech industry and other sectors where innovation is key. For startups, venture capital is often the lifeline that helps them transform an idea into a scalable business. Without access to such capital, many innovative ideas might never see the light of day.

The importance of venture capital extends beyond just financial support. Venture capitalists often bring experience, industry knowledge, and valuable connections. This can be crucial for young companies that need guidance in navigating the challenges of growing a business.

How Does Venture Capital Work?

The venture capital process typically follows a structured path involving several investment stages, from seed funding to later-stage funding. 

Here’s a step-by-step look at how venture capital works:

  1. Initial Contact: A startup reaches out to venture capital firms or is approached by them. This usually happens after the startup has developed a business plan and a clear growth vision.
  2. Pitching: The startup team presents their business idea to potential investors. This involves explaining the product, market opportunity, business model, and growth potential. The goal is to convince investors that the startup is worth their investment.
  3. Due Diligence: If investors are interested, they will conduct due diligence to assess the viability of the business. This includes evaluating the startup’s financials, market potential, and the capabilities of the founding team.
  4. Term Sheet: If the due diligence is successful, the investors will present a term sheet outlining the terms of the investment. This includes how much money will be invested, what percentage of the company the investors will own, and other deal conditions.
  5. Investment: Once the terms are agreed upon, the investors provide the capital to the startup. This is usually done in stages, with milestones the startup needs to achieve to receive further funding.
  6. Growth and Scaling: With the capital, the startup can now focus on growing and scaling its business. The venture capitalists often take an active role in helping the company succeed, offering advice and making introductions to potential partners or customers.
  7. Exit Strategy: Venture capitalists make money when the startup either goes public through an IPO (Initial Public Offering) or is acquired by a larger company. This is known as the “exit,” and it’s the point where the investors can sell their shares and realize a return on their investment.

Types of Venture Capital

Understanding the different types of venture capital is crucial for startups to identify which stage they are in and what type of funding they need. 

Here are the main types of venture capital:

  1. Seed Capital: This is the earliest venture capital stage, typically provided when a startup is still in the idea or development phase. Seed capital is used to fund initial market research product development and to build a prototype. The risk is highest at this stage because the startup may still need a product or revenue.
  2. Startup Capital: Once the idea has been developed into a product or service, it helps launch it into the market. This funding is used for product development, marketing, and hiring key staff. The startup may have some early customers but has yet to be profitable.
  3. Early-Stage Capital: Early-stage capital is provided to startups with a product and some traction in the market but needs additional funds to scale operations. This can include expanding the team, increasing production capacity, or entering new markets.
  4. Expansion Capital: Also known as growth capital, this type of funding is for more mature startups that are looking to expand rapidly. This can involve entering international markets, launching new product lines, or acquiring other companies. The company is likely generating significant revenue but needs additional capital to grow.
  5. Late-Stage Capital: Late-stage capital is provided to companies close to going public or being acquired. This funding helps the company optimize its operations, improve profitability, and prepare for an exit.
  6. Mezzanine Financing: This is a hybrid form of financing that includes both debt and equity. It is typically used by companies looking to go public or be acquired and need additional capital to bridge the gap between current operations and a successful exit.

Substantial demand

  1. Scalability: VCs prefer businesses that can grow quickly and efficiently. They want to see that the startup has a scalable business model that can generate high returns on investment.
  2. Traction: Evidence of traction, such as user growth, revenue, or partnerships, strongly indicates that the startup is on the right track. VCs want to invest in companies that have already demonstrated success.
  3. Exit Potential: Ultimately, VCs are looking for startups with a clear path to an exit, whether through an IPO, acquisition, or another form of liquidity event. The potential for a successful exit is what drives the return on investment.

Pros and Cons of Venture Capital

Like any form of financing, venture capital has its advantages and disadvantages. 

Here’s a breakdown of the pros and cons:

Pros

  1. Access to Large Amounts of Capital: Venture capital can provide significant funding that might not be available through traditional loans or personal savings. This is especially important for startups with high growth potential requiring substantial capital.
  2. Expertise and Mentorship: VCs often have extensive experience in growing businesses. Their guidance can be invaluable in helping a startup navigate the challenges of scaling, entering new markets, and avoiding common pitfalls.
  3. Networking Opportunities: VCs have vast networks of industry contacts, potential partners, and customers. They can help open doors that would otherwise be inaccessible to a young startup.
  4. No Repayment Obligation: Unlike loans, venture capital doesn’t need repaid. This allows the startup to focus on growth rather than monthly repayments.
  5. Increased Credibility: Securing venture capital can enhance a startup’s credibility. Being backed by a reputable VC firm can attract more customers, partners, and additional investors.

Cons

  1. Loss of Control: By accepting venture capital, startups give up some ownership and control. VCs often want a say in major business decisions, which can lead to conflicts if their vision aligns differently from the founders.
  2. Pressure to Grow: VCs are looking for high returns, which often means aggressive growth targets. This can pressure the startup to scale quickly, sometimes at the expense of long-term stability.
  3. Dilution of Ownership: As more funding rounds are raised, the founders’ ownership stake can become increasingly diluted. This means they will own a smaller percentage of the company as it grows.

Conclusion:

Is Venture Capital Right for You?

Understanding what venture capital is and the types of venture capital available is essential for anyone interested in the startup ecosystem. Whether you’re an entrepreneur looking to fund your next big idea or an investor seeking high-growth opportunities, venture capital offers significant risks and rewards.

For entrepreneurs, venture capital can provide the necessary fuel to turn an idea into a thriving business, but it comes with the cost of dilution and loss of control. For investors, the potential for high returns is balanced by the high risk and long time horizons associated with startup investments.

Ultimately, whether venture capital is right depends on your goals, risk tolerance, and long-term vision. By understanding the intricacies of venture capital, you can make informed decisions that align with your business or investment objectives.

Advance Your Career with Imarticus Learning’s Financial Services and Capital Markets Program in Partnership with IIM Lucknow

Imarticus Learning, in collaboration with IIM Lucknow, offers the Advanced Management Programme in Financial Services and Capital Markets. This financial services course provides an in-depth understanding of digital banking, capital markets, risk management, and fintech. Key areas covered include corporate finance, valuation, fundraising, treasury operations, and financial analytics. The program is designed to propel high-performing middle management professionals into senior management roles, reigniting their careers with cutting-edge knowledge and skills.

This financial services course provides a comprehensive curriculum that covers foundational elements such as financial planning, investment banking, risk management, and corporate banking. The curriculum will equip you with the skills to navigate and excel in the evolving financial landscape. 
Elevate your career in financial services with Imarticus Learning and IIM Lucknow’s Financial Services and Capital Markets Program!

Common Mistakes to Avoid When Analyzing Balance Sheets

Posted on by Imarticus Learning

Learning how to read a balance sheet is essential for anyone involved in finance, business, or investing. A balance sheet provides a snapshot of a company’s financial position at a specific point in time, showing what the company owns (assets), what it owes (liabilities), and the owner’s equity (shareholders’ equity). 

However, reading and interpreting a balance sheet correctly can be challenging, especially for those new to financial analysis. In this post, we’ll explore the common mistakes people make when analyzing balance sheets and offer tips on how to avoid them. 

Understanding these pitfalls will help you make more informed decisions and avoid costly errors.

  1. Ignoring the Balance Sheet Format

One of the first mistakes people make is not understanding the balance sheet format. A balance sheet is typically divided into two sections: assets on one side and liabilities and equity on the other. The two sides must always balance (hence the name), meaning the total assets must equal the total liabilities and equity. Failing to grasp this basic format can lead to confusion and misinterpretation of the data.

Tip: Before diving into the details, familiarize yourself with the balance sheet format. Know where to find the assets, liabilities, and equity, and ensure you understand how they relate.

  1. Focusing Only on Short-Term Data

Another common mistake is focusing solely on short-term data without considering the broader picture. Balance sheets are snapshots in time, and looking at just one period can give you a skewed understanding of a company’s financial health. For example, a company might have strong current assets in one quarter but a declining trend over several quarters.

Tip: Analyze balance sheets over multiple periods to identify trends. This will give you a more accurate picture of the company’s financial stability and performance over time.

  1. Overlooking Non-Current Assets

Non-current assets like property, plant, and equipment and intangible assets like patents are often overlooked in favor of current assets like cash and accounts receivable. However, non-current assets can provide valuable insights into a company’s long-term investments and potential for future growth.

Tip: Pay attention to non-current assets and consider how they contribute to the company’s long-term strategy and potential for growth. Evaluate whether these assets are being used efficiently to generate revenue.

  1. Misinterpreting Liabilities

Liabilities are a crucial part of the balance sheet but are often misinterpreted. Not all liabilities are created equal—some, like short-term debts, must be paid off quickly, while others, like long-term debt, are spread out over several years. Misunderstanding the nature of these liabilities can lead to inaccurate conclusions about a company’s financial health.

Tip: Differentiate between short-term and long-term liabilities. Consider the company’s ability to meet its short-term obligations without compromising its long-term financial stability. Also, examine the interest rates and terms associated with any long-term debt.

  1. Neglecting the Importance of Equity

Shareholders’ equity is often overlooked when analyzing a balance sheet, but it is a critical component. Equity represents the residual interest in the company’s assets after deducting liabilities. It’s essentially what the owners would be left with if the company were liquidated. Ignoring equity can result in an incomplete understanding of the company’s financial position.

Tip: Always consider the shareholders’ equity section. Look at the retained earnings and any changes in equity over time. This can provide insights into how the company funds its operations and whether it’s generating value for its shareholders.

  1. Failing to Analyze Ratios

Ratios are powerful tools for analyzing a balance sheet, yet many fail to use them effectively. Ratios like the current, quick, and debt-to-equity ratios can provide a clearer picture of a company’s liquidity, efficiency, and financial stability. Without these ratios, you might miss out on critical insights.

Tip: Use financial ratios to supplement your analysis. For example, the current ratio (current assets divided by current liabilities) can help you assess the company’s ability to pay off its short-term obligations. The debt-to-equity ratio (total liabilities divided by shareholders’ equity) can indicate how much debt the company uses to finance its assets.

  1. Overlooking Off-Balance Sheet Items

A standard balance sheet analysis often misses off-balance sheet items, such as operating leases or joint ventures. While not directly listed on the balance sheet, these items can still significantly impact a company’s financial health.

Tip: Always look for off-balance sheet items in the notes to the financial statements. Understanding these commitments can provide a complete picture of the company’s financial obligations and risks.

  1. Not Considering Market Conditions

A balance sheet doesn’t exist in a vacuum—the broader market conditions influence it. For instance, a company’s assets may be overvalued or undervalued depending on the current market trends. Ignoring these external factors can lead to a misinterpretation of the balance sheet data.

Tip: Consider the market conditions when analyzing a balance sheet. This includes industry trends, economic factors, and market volatility. Understanding how these factors impact the balance sheet can lead to more accurate conclusions.

  1. Focusing Solely on Numbers

While the numbers on a balance sheet are crucial, they don’t tell the whole story. Qualitative factors, such as management quality, company reputation, and competitive position, also play a significant role in a company’s financial health. Focusing only on the numbers can lead to an incomplete analysis.

Tip: Complement your quantitative analysis with qualitative factors. Consider the company’s management team, industry position, and other non-financial factors that could influence its performance.

  1. Misunderstanding the Relationship Between the Balance Sheet and Other Financial Statements

The balance sheet is just one piece of the financial puzzle. It must be analyzed with the income and cash flow statements to understand a company’s financial health fully. Focusing solely on the balance sheet can result in an incomplete or skewed analysis.

Tip: Integrate your balance sheet analysis with the income and cash flow statements. This will provide a more comprehensive view of the company’s financial performance and position.

  1. Overvaluing Intangible Assets

Intangible assets, such as goodwill, patents, and trademarks, are often difficult to value accurately. Some analysts may overestimate their worth, leading to an inflated assessment of a company’s financial position. Overvaluing these assets can create a misleading picture of the company’s value.

Tip: Be cautious when valuing intangible assets. Consider the potential for these assets to generate future revenue and their relevance in the industry. Cross-reference intangible asset values with similar companies in the industry to ensure they’re not overvalued.

  1. Ignoring Depreciation and Amortization

Depreciation and amortization are non-cash expenses that reduce the value of tangible and intangible assets over time. Ignoring these can lead to an inflated view of a company’s profitability and asset value. This is particularly important in capital-intensive industries where assets can lose value quickly.

Tip: Always account for depreciation and amortization when analyzing a balance sheet. Check how the company depreciates its assets and whether it aligns with industry standards. Understanding these reductions can give a clearer picture of the true value of the company’s assets.

  1. Neglecting to Compare with Industry Peers

A common mistake is to analyze a company’s balance sheet in isolation without comparing it to industry peers. This can lead to misjudgments about the company’s performance and financial health.

Tip: Always compare the balance sheet with those of industry peers. This will give you a benchmark for evaluating the company’s performance, helping you understand if it’s overperforming or underperforming relative to competitors.

  1. Failing to Consider Seasonal Fluctuations

Some industries experience significant seasonal fluctuations that affect the balance sheet. For example, retail companies may have higher inventories and receivables during the holiday season, which can skew the analysis if not considered.

Tip: Consider seasonal factors when analyzing a balance sheet. Look at the timing of the financial snapshot and compare it to other periods in the same year to account for seasonal variations.

The Final Words

Analyzing a balance sheet is a critical skill that can provide valuable insights into a company’s financial health. However, it’s easy to make mistakes that can lead to misinterpretation and poor decision-making. By avoiding the common pitfalls outlined in this article, you can enhance your ability to read and interpret balance sheets accurately. 

Consider the balance sheet format, look at both short-term and long-term data, analyze financial ratios, and consider external factors and industry benchmarks. With practice and attention to detail, you’ll become more confident in your ability to analyze balance sheets and make informed financial decisions.

Unlock Diverse Finance Career Opportunities with the Chartered Financial Analyst (CFA) at Imarticus Learning

A Chartered Financial Analyst (CFA) charter is a highly respected finance credential showcasing deep finance and investment expertise. At Imarticus Learning, this globally recognized qualification opens doors to diverse opportunities in finance careers. After completing the program, you can explore various finance career paths, gaining an edge in the competitive financial landscape.

The CFA program at Imarticus Learning covers essential topics such as economics, investment analysis, accounting, and ethics. With its well-structured curriculum, this Chartered Financial Analyst course can significantly boost your career and position you for success.

A Business Analyst, one of the prominent roles after earning a CFA, is crucial in bridging the gap between business needs and financial strategies. The role requires investment research, financial analysis, regulatory compliance, risk management, and strategic planning.

Learn more about the CFA course details and take the next step in your finance and accounting career.

Get a free 1:1 Imarticus counselling
Get a free 1:1 Imarticus counselling