Finance

 Argentina and Brazil are set to begin preparatory work to establish the second largest currency bloc in the world. The name suggested for the new currency is "sur".  The "sur" when it officially becomes a medium of exchange in the two largest latin American economies, would facilitate comparisons of prices and other key investment decision parameters.  What else should investors expect? A look at lessons from "euro", the largest currency union would be helpful. The euro eliminates currency risk within the eurozone. It facilitates and promotes cross border invesments by businesses. Businesses operating in both Argentina and Brazil would no longer face currency risks if and when sur becomes a daily currency in both countries. Elimination of currency risks and facilitation of price comparison would enable cross border businesses in the two countries to lower costs and increase profits. How? Businesses would have a range of best deals from suppliers to choose...

Every budget is a test of your capability to balance your expenses and your income. It's a tough test that many of us fail. The reason is simple, most of us are never prepared to live within our means. Most of us when we have a little, we want to prove to those who don't really care about us that we have arrived  and when we're sent packing from the heaven the people built for us, we go outside our means to buy mansions in the hottest part of hell in attempt to prove to the world that we are still in heaven. Who really cares about where you're , what you have and how you are at any time of your life? Maybe your loved ones, outside them you're alone. So, if you want to balance your budget and achieve financial freedom, you've to die to what people think of your lifestyle, how they live without fiscal discipline and live within your means.

What's the primary job of every entrepreneur? Take profitable risks, do everything legitimate to at least preserve capital when profit can't be made. This job wouldn't be done when a business survives the volatile early stage, breaks even, enjoys profitability for few years and then goes bankrupt as a result of venturing into risky ventures. The going concern concept would be defeated.  So, what long term business survival options do some entrepreneurs pick to preserve their assets when they go into volatile ventures? One of them is the Special Purpose Vehicle (SPV) also known as Spechial Vehicle Entity (SPE). A special purpose vehicle or special purpose entity is defined as a subsidiary created by a parent company for a special purpose. The special purpose most often, is to isolate a parent company from financial risk by providing securitization of assets  The above is made possible by the fact that SPV has Its legal status as a separate company. This status makes its obli...

A worker is likely to gain experience, become more efficient and faster as they carry out a repeated performance of a job task. Human beings improve skills, gain experience, exposure and specialize as they repeat the performance of a particular task. This is known as the learning curve effect. A worker with the no previous experience and knowledge is untried the first time they perform a new operation. As the worker repeats the operation and becomes more familiar with it, their labor efficiency increases and their labor cost per unit decreases. After the passage of time, the regular rate of decline in cost per unit is established and used as a basis to predict future labor cost.. The learning process begins at the point the first unit comes off from the production line. And each time cumulative production is doubled, the average taken to produce a unit of cumulative production is a percentage of the average time of the previous cumulative production. What is the learning curve theory? ...

  Currency redesign by the Central Bank of Nigeria and its complementary withdrawal limits have come to stay. The recent news from the Central Bank of Nigeria (CBN) is an indication of the near irreversibility of the policy implementation. The news claimed that volume of currency in circulation, not in vaults of banks has dropped by at least 5 percent in just one month. So withdrawal limits are going to be enforced to the letter but Nigerians may not have the luxury of time (Senate is urging CBN to set June 30, 2023 as the new deadline).  In the event of no deadline extension beyond January 31st, 2023, how're Nigerians going to make urgent purchases above weekly withdrawal limits? Or even make long term arrangements? Financial transactions are often done on two bases, cash and credit. In many economies, where individuals take their creditworthiness serious, most financial transactions are done on credit basis. In Nigeria, it's mostly on cash basis and soon, this is no longer g...

  Having a great business idea without a startup capital is like wandering a vast desert in search of an oasis. You are literally going to leap in when you see one. Then gulp down the water with all the impurities. It’s wise to understand what capital gearing is before you decide to borrow or not to borrow to start your business. What is capital gearing? It’s a financial ratio that shows the amount of debt of a company to it’s equity. It’s a measure of financial risk. This risk increases toward volatility as the ratio of debt to equity gets higher. The higher the gearing ratio, the more the interest payable on debt and the lower the earnings on equity. You may end up borrowing to service debt commitments. The risk doesn’t end with sinking deeper into more debts, your control of the company could also be threatened. Your creditors may want to teach you best ways to run your business profitably. This may come in the form of business partnership and so called, “business support”. In m...

  It’s very difficult to achieve financial prosperity without puting the concept of opportunity cost to use in your spending. It’s normal to have many wants competing for your money, which may not be enough to get all of them for you.  So, to get the best out of your spending, you must understand the value attached to the best alternative foregone.  This is opportunity cost.   Understanding ande applying the concept of opportunity of cost to your personal finance, are going to help you achieve the following seven personal financial goals; 1.Spending  Within Budgetary Provision: A good budget should be a financial plan that accommodates absolutely necessary expected spending within expected income.  Obviously, a good budget is not possible in the absence of opportunity cost as you wouldn’t be to put in the budget, only things which enhance personal financial health.   So after the budget has been set up with the help of opportunity cost, ...