Business Planning In Namibia

TERM OF THE DAY
Sell-Off
A sell-off is the rapid selling of securities such as stocks, bonds, ETFs, commodities or currencies. A sell-off may occur for many reasons, such as the sell-off of a company's stock after a disappointing earnings report, the departure of a important executive or the failure of an important product. Markets and stock indexes can also sell-off when interest rates rise or oil prices surge, causing increased fear about the energy costs that companies will face. Sell-offs can also be caused by political events, or terrorist acts.

TERM OF THE DAY
Ratio Analysis
A ratio analysis is a quantitative analysis of information contained in a company’s financial statements. Ratio analysis is used to evaluate various aspects of a company’s operating and financial performance such as its efficiency, liquidity, profitability and solvency.

TERM OF THE DAY
Diversification
Diversification is a risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio constructed of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio.

"Empower yourself with Knowledge. The greatest Equalizer".. Madiba

TERM OF THE DAY
Income Statement
An income statement is a financial statement that reports a company's financial performance over a specific accounting period. Financial performance is assessed by giving a summary of how the business incurs its revenues and expenses through both operating and non-operating activities. It also shows the net profit or loss incurred over a specific accounting period.
Breaking it Down:
Also known as the profit and loss statement or statement of revenue and expense, the income statement is one of... Read More

What is 'Bitcoin'
Bitcoin is a digital currency created in 2009. It follows the ideas set out in a white paper by the mysterious Satoshi Nakamoto, whose true identity has yet to be verified. Bitcoin offers the promise of lower transaction fees than traditional online payment mechanisms and is operated by a decentralized authority, unlike government-issued currencies.

There are no physical bitcoins, only balances kept on a public ledger in the cloud, that – along with all Bitcoin transactions – is verified by a massive amount of computing power. Bitcoins are not issued or backed by any banks or governments, nor are individual bitcoins valuable as a commodity. Despite its not being legal tender, Bitcoin charts high on popularity, and has triggered the launch of other virtual currencies collectively referred to as Altcoins.

[ While Bitcoins are the key player in the cryptocurrency marketplace, as you'll read below, the whole ecosystem is much greater than this one coin. For a detailed explanation of the world of cryptocurrency taught with graphic depictions and simplified example, check out Investopedia Academy's Cryptocurrency for Beginners course. ]

Read more: Bitcoin https://www.investopedia.com/terms/b/bitcoin.asp
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TERM OF THE DAY
Retained Earnings
Retained earnings refer to the percentage of net earnings not paid out as dividends, but retained by the company to be reinvested in its core business, or to pay debt. It is recorded under shareholders' equity on the balance sheet. The formula calculates retained earnings by adding net income to, or subtracting any net losses from, beginning retained earnings, and subtracting any dividends paid to shareholders.

BREAKING DOWN 'Tariff'
Tariffs are used to restrict imports by increasing the price of goods and services purchased from overseas and making them less attractive to consumers. A specific tariff is levied as a fixed fee based on the type of item, for example, $1,000 on any car. An ad-valorem tariff is levied based on the item's value, for example, 10% of the car's value.

Governments may impose tariffs to raise revenue or to protect domestic industries – particularly nascent ones – from foreign competition. By making foreign-produced goods more expensive, tariffs can make domestic-produced ones more attractive. By protecting these industries, governments can also protect jobs. Tariffs can also be used as an extension of foreign policy: imposing tariffs on a trading partner's main exports is a way to exert economic leverage.

Tariffs can have unintended side-effects, however. They can make domestic industries less efficient by reducing competition. They can hurt domestic consumers, since a lack of competition tends to push up prices. They can generate tensions by favoring certain industries over others, as well as certain regions over others: tariffs designed to benefit manufacturers in cities may hurt consumers in rural areas, who do not benefit from the policy and are likely to pay more for manufactured goods. Finally, an attempt to pressure a rival country using tariffs can devolve into an unproductive cycle of retaliation, known as a trade war.

History of Tariffs
In the pre-modern Europe, a nation's wealth was believed to consist of fixed, tangible assets such as gold, silver, land and other physical resources (but especially gold). Trade was seen as a zero-sum game that resulted either in a clear net loss of wealth or a clear net gain. If a country imported more than it exported, its gold would flow abroad, draining its wealth. Cross-border trade was therefore looked at with suspicion, and countries much preferred to acquire colonies they could set up exclusive trading relationships with, rather than trading among themselves.

This system, known as mercantilism, relied heavily on tariffs and even outright bans on trade. The colonizing country, which saw itself as competing with other colonizers, would import raw materials from its colonies; these were generally barred from selling raw materials elsewhere. The colonizing country would convert these materials into manufactured wares, which it would sell back to the colonies. High tariffs and other barriers were put in place to make sure that colonies only purchased manufactured goods from their colonizers.

Adam Smith was one of the first to question the wisdom of this arrangement. His Wealth of Nations was published in 1776, the same year that Britain's American colonies declared independence in response to high taxes and restrictive trade arrangements. Later writers such as David Ricardo further developed Smith's ideas, leading to the theory of comparative advantage: if one country is better at producing one product, while another country is better at producing another, each should devote its resources to the activity at which it excels. They should trade with one another, rather than erecting barriers that force them to divert some resources towards activities they do not perform well. Tariffs, according to this theory, are a drag on economic growth, even if they can be deployed to benefit certain narrow sectors under certain circumstances.

These two approaches – free trade based on the idea of comparative advantage, on the one hand, and restricted trade based on the idea of a zero-sum game, on the other – have experienced their ebbs and flows. Relatively free trade enjoyed a heyday in the late 19th century and early 20th, when the idea took hold that international commerce had made large-scale wars between states so expensive and counterproductive that they were obsolete. World War I proved that idea wrong, and nationalist approaches to trade (including high tariffs) dominated until the end of World War II.

At that point free trade enjoyed a 50-year resurgence, culminating in the creation in 1995 of the World Trade Organization, which acts as an international forum for settling disputes and laying down ground rules. Free trade agreements such as NAFTA and the European Union also proliferated. Skepticism of this model – sometimes labeled "neoliberalism" by critics, who tie it to 19th-century liberal arguments in favor of free trade – grew, however, and Britain voted to leave the European Union in 2016, while Donald Trump won the U.S. presidential election in the same year on a platform that called for steep tariffs on Chinese and Mexican imports.

Critics of multilateral trade deals to eliminate tariffs – who come from both ends of the political spectrum – argue that these deals erode national sovereignty and encourage a race to the bottom in terms of wages, worker protections, quality and standards. Their defenders argue that tariffs lead to trade wars, hurt consumers, hamper innovation and encourage xenophobia.

TERM OF THE DAY
Current Assets
Current assets is a balance sheet account that represents the value of all assets that can reasonably expect to be converted into cash within one year. Current assets include cash and cash equivalents, accounts receivable, inventory, marketable securities, prepaid expenses, and other liquid assets that can be readily converted to cash.

TERM OF THE DAY
Derivative
A derivative is a security with a price that is dependent upon or derived from one or more underlying assets. The derivative itself is a contract between two or more parties based upon the asset or assets. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes.

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