WTF is Equity????? - Part 3

Ok, so we have established that Equity is your investment into YOUR business and it is an important aspect of financing your business.

We have also established that bringing in more Equity means having to share your business with other people. Its kind of like bringing another person in to tell you how to live your life (why would ANYONE want to do that???).

Ok, but what we still have not explored is how Equity works out in the stock market.

First off, let us take a look at your normal business. It starts off as a normal single-owner business and then said single owner finds some partners to expand his business and they grow larger. So lets say the business grows EVEN larger, it needs more sources of finance. Debt is expensive, so said owner gets EVEN more people to contribute money to the business.

WTF is Equity???? - Part 2

Ok, so now we know what the dealie is with Equity, right? For those of you who forgot, you can continue reading, pretending that you DO know, or you can have a quick look here.

Equity is that magical word which basically represents your share of ownership in the business. So, as mentioned in the previous post, if you put in $1000 into your business, that means that you own a $1000 in you business. Right? Of course.

Now, you can continue with this 'arrangement' of being a lonely soul, owning your business all by yourself 100%. But yet, for some strange reason, Business Owners, (Just like Single Men) decide to go out and find a partner, even though they were doing perfectly fine on their own (Just like Single Men). So, lonely business owner seeking partner finds a partner and says, 'Hey, invest in my business and we can share profits equally!'

WTF is Equity??????

Ok, this is a special one for all you accounting students out there. Now, for the more experienced ones, i'm sure you are well aware of what Equity is and how it affects your business, but for a lot of students, especially the new ones and the poor business course students who are forced to take horrible, horrible accounting, the term 'Equity' can be very confusing. So, to start off, lets take a look at the basics:

Every business is made up of three things basically:

1. Assets
2. Liabilities
3. Equity

The Privatisation of Water - A business perspective

The other day I had the opportunity to watch the controversial video of Peter Brabeck-Letmathe, Nestle's current CEO who claimed that water should be privatised and that the stand that some NGOs take to 'claim water as a human right' to be 'extreme'.

No doubt this statement provoked much anger from individuals and NGOs from all around the world and thus Nestle's corporate communication went into recovery mode, clarifying that Mr. Brabeck-Letmathe does indeed believe water is a human right.

No doubt, water is an important resource to all human beings, if it is not the most important resource of all. That being said, while every human being has a right to clean, potable (drinkable) water, clean water is but a scarce resource and like all resources is subject to market fluctuations.

Accounting Students - You don't HAVE to become Accountants

After a year of no updates, (lets just say it has been a very long and eventful year), I have decided to restart this blog, mainly because of the 10k+ hits I have been receiving lately. I suppose with so many people visiting my blog, perhaps it would be best if I started adding more posts.

So, to restart this blog, lets talk about something a bit controversial, that's right! You saw the title, just because you have spent three years of your life learning financial reporting, balancing accounts and memorising IFRSs, does NOT mean you should spend the rest of your life doing so. Heck, I don't even think your first job should even be in an accounting firm!