Archive by Author Omkar Gore - Blogger, MoneyWorks4me
Spotting the corporate pension problems – II

Spotting the corporate pension problems – II

In the previous blog, we talked about the defined benefit and defined contribution pension schemes, how they are funded, managed and why certain companies prefer one scheme over the other. So now, that you are acquainted with the working of pension schemes; the next obvious question would be how and what all these calculations work and mean in real life. Answering your question, this article explains how the pension expenses and provisions are calculated. It also aids in detecting earnings manipulation consequently impacting the employee’s retirement benefits. In case of defined contribution, every year, some amount is expensed by the company so there is no complexity at all. But in case of defined benefit, the accounting is a bit tedious job. But as mentioned earlier, one should only understand the logic of the process to make sound investment decisions. For providing monthly or yearly pension to the retired employee till […]

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Category:Learn
Spotting the corporate pension problems – I

Spotting the corporate pension problems – I

Have you ever wondered why a government job was always cherished by the older generation? Were pension funds the major reason for our grandparents fascination towards government jobs? Well, it seems so! Retirement benefits are provided to take care of employee’s basic expenses post retirement in the form of pension, gratuity, provident fund and healthcare benefits. But, as an investor, what does it mean to you? To give you a glimpse, investors in BT group (a leading provider of telephone services), got a shock in 2009 when company’s pension deficit rose to billions of dollars! High levels of pension scheme deficits hamper the ability of companies to invest in their businesses, which consequently reflects in its share prices and thus, affects the retail investors. Let’s delve deeper and find out why investment into certain companies with a particular pension scheme is not good for investors. To begin with, let’s take […]

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Category:Learn
Revealing the truth about Quality of Earnings

Revealing the truth about Quality of Earnings

What is the first thought that strikes our mind when we come across names such as Enron and Satyam Computers? The only thing we remember about these two completely different companies is their involvement in accounting frauds. Why is it that most of the so called intelligent Wall Street investment experts and the retail investors failed to smell the rat? The only possible reason could be utter negligence to the quality of the earnings posted by such tainted companies. Now, let’s try to understand what is meant by “Quality of earnings” and how the firms can manipulate the numbers to positively surprise the markets positively. Why go so far into the history to find a case? Recently (in 2008), Jet Airways changed its depreciation accounting method to artificially boost its profits. It is rightly said that don’t judge a book by its cover.  As retail investors, it is very important […]

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