IPO & FPO – What are they ?

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We hear the terms : IPO & FPO from time to time, especially in the stock market , and when a new major company is established.

Let’s define some terms first – that would make future explaining easier for us later :

– IPO: The short term of Initial Public Offering .

– FPO: The short term of Follow-up Public Offering .

Simple, isn’t it ? Let’s explain the terms more ..

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For companies who issue IPOs & FPs ; IPOs are more profitable than FPOs. It also comes before FPOs !! Yes, IPOs come first, and then come FPOs.

Companies ( mostly bigger ones ) , plan and issue an IPO to generate money from investors, while FPO serves for adding more cash to the initial public.

IPOS are projects held by a certain company, enabling investors ( individuals & corporates ) and common people with interest in stock markets and shares , to buy a certain % of the new shares the company is sending for sale in the stock market.

London Perfume Co.
So , when an investor buys 10,000$ of shares in IPO, and the company’s capital is 1,000,000 USD, he/she is gaining 0.1% part of the company , and so on ..

Generally speaking ; profits generated ( mostly ) are higher in IPO VS FPO, and so are losses.

That is because , when investing in an IPO;  there are no information about the coming share situation, and how the share would re-act in the coming times.

While , when investing in FPO, that is a follow-up public offering, the corporate is lacking cash, but also has to publish its performance and financial numbers to the public , and analyzers can review them and decide – to the nearest possible level – how the share would act in the future times, and should an investment be done to it or not !!

Having historical information also means that share’s price won’t change much ( upper & less ) , this reduces profits more than IPOs.

FPO is risky too , since when a corporate starts an IFP, it means it needs extra cash – and that is risky in the business world.

At last, IPO & FPO have benefits and risks related to each, and you should be careful .. Have a say ? Let’s hear from you in this form.

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Assets VS Liabilities – Define Both !!

Assets VS abilities, what is the difference between these two terms? What is related to monetizing and cash flow management , and what is a risk factor in the corporate’s operations?

These main ideas, and more , will be discussed in this article , so let’s start talking in details …Assets - Money CountingAssets VS Liabilities – What is the difference between ?

The simplest definition is what is said usually in the business world : “Assets are what you own, liabilities are what you owe to other” … Simple isn’t it ?

And you should know that : The more your assets outweigh your liabilities, the stronger the financial health of your business. But if you find yourself with more liabilities than assets, you may be on the cusp of going out of business.

Examples Of Assets : 

  • Cash in the bank and cash in the vault ( that one in the office or branches ) .
  • Stocks available in the warehouses, or in the shops – which didn’t pay for the stocks yet.
  • Office equipment and related ( computers , printers, softwares , licenses )
  • Real-estates, lands and buildings ( all kinds ) ,
  • and vehicles, cars or heavy vehicles ( and trucks ) , that the company owns – but not the owners’ property

Examples Of Liabilities

  • Bank debts
  • Bonds the corporate had issued ( a semi or full-Gov. body / or market-wide corporate can do such )
  • Wages and salaries that aren’t paid yet
  • Taxes and fees to be paid for the Gov. in certain periods
  • Amounts owed for the suppliers ( stock / services , etc … ) costs, money that isn’t paid yet .. They should be paid in the coming times.

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What are types of assets ?

Assets can be grouped in many ways, we will consider the most famous ones here , like :

Liquidation status                           &                         Tangibility

Liquidity Status

This factor is related to the ability to turn the asset in cash; how much time and efforts this takes to be done. 

Liquidating a car is harder than liquidating some computers or furniture , but easier than selling a factory or heavy machinery , for example.

Easily liquidated assets ( easily salable in less than one week ) are called Current Assets, but assets that are harder to liquidate are grouped differently, they are called The fixed assets. They are held longer in the corporate’s books, and – usually – have high values and longer times to be fully consumed.

Tangible Assets

A remarkable categorisation of the assets in the corporate, the asset’s tangibility.

A tangible asset is an asset that can be touched or felt or seen by the human eyes – have a physical body. 

& intangible assets ?

But corporates have more than just “touchable” assets, they have Intangible assets. The assets that can’t be touched and are non-physical in nature. Examples include features such as “Brand-names, domain names, software or even computer databases, even customers names and emails” . Money In A JarThese assets are believed to bring in more company value than the tangible which are subject to depreciation.

Liabilities – How to differentiate ?

A liability is the amounts owed to other parties, and obligation on the corporate to be paid . It required the corporate to give away some economical benefits to fulfill this obligation.

Current & Long term liabilities

Current obligations are obligations to be paid within 12 months from the due date . All liabilities with longer payment terms are classified as long-term. That includes bank loans, taxes, debentures amounts , and even the pension payments, etc…

Liabilities are mentioned , in the corporate’s balance sheets, in the left section

Assets vs. Liabilities: Comparison Chart

Public Finance VS Private Finance Table
Click To Enlarge

The Comparison table is courtesy of DifferenceBetween.Net ).

Have a say ? Email us your questions here.GVM LED

Dividing – Economics VS Finance

* Economics science, in general, is divided in two main parts :

  • Micro Economics
  • Macro Economics

Micro-Economics : Small-scale market & interactions studies .. It studies interactions between individual markets, and focuses on specialization and supply & demand relations – between small entities and markets.

 Macro-Economics : Large-scale market & interactions studies .. It is not focusing on single or small or individual markets or entities , but on large and bigger variables – national , regional or world-wide levels. Terms include such as: National income and output, GDP, Price inflation and unemployment rate in a country, region or the whole world .

Public Finance VS Private Finance
            Click to Enlarge

Finance , generally , is divided between 2 parts:

* Public finance  &

* Personal ( Private ) finance

OK, let’s get into more details .. The term “business finance” is about goods and products and the business environment related. What concerns us here is the difference between public finance & private ( personal finance ).

Public Finance

Public finance is the science’s part sector that deals with the : Allocation of resources and budgets set for the Government entities & bodies – no privates . This part is about Governmental incomes ( Taxes, Fines , customs, Fees, etc… ) , and how these allocations are sent on the public service and expenses ( salaries, infra structure building, Military affairs, civil affairs – buildings , maintenance , etc… )

Private Finance

The 2nd part of the finance as science . It consists of two parts :

  • Business Finance                       &                   Personal Finance
  • Business Finance studies the processes and steps taken to optimise corporates & business organizations’ financial matters. It is related to acquire cash & funding allocations, fund raising, cash & credit operations, managing cash flows, managing liabilities ( debts & obligations on the corporate) , all towards the best ways to maximise the business’s set goals and targets.
  • Personal finance manages the process of optimizing finances of the persons, families and single humans !!

Personal finance involves financial planning for the person’s income and expenses to reach maximum benefit . That includes salaries, freelancing income, stuff selling , insurance policies ( profits and expenses ), car expenses ( installments, maintenance , all costs related ) , bank loans, mortgages , stock market investments, retirement plans, and the list goes on.


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Difference between public & private finance

This table shows a summary of the differences between Public & Private finance. Source .

Public Finance VS Private Finance Table
        Click To Enlarge

Going more in details, here is an explanation of the previous table ( some text quoted from the marvelous site DifferenceBetween.Net ..

  • Income and Expenditure Adjustments in Public and Private Finance ( Vice Versa )

Usually, each Government adjusts its income according to the expenditure budget expected for the coming period ( usually year ). The government first creates an outline for its national expenditure ( to fulfill the social comforts required ), and then plan how to get these amounts from its different income channels ( tax adjustments, fees increases and such ) …

Well, the scenario is reversed in the private sector – the management would adjust their expenses budget based on the expected income during the period – or future estimates..

Private finance involves cutting your coat according to your cloth.

1. Borrowing in Public vs. Private Finance

The government can borrow from the nation or its main institutes ( like Social Security Association, Customs Dept. or others ) . Gov. can simply go back to the people to ask for loans in whichever financial asset it has e.g. bonds.

However, an individual / corporate can’t borrow from itself, and has to go to financial corporates ( Governmental or private ones ) to meet certain conditions and get the loan required.

2. Currency ownership in Public vs. Private Finance

Nation’s currency is the government’s issue, it is – always – in charge of all aspects related to currency, from the creation, printing , distribution and monitoring of use .

No one in the private sector is allowed to create currency, this is illegal and most countries classify it as a capital offense.

3. Present vs. future Income

The public sector is more involved with future planning and making long-term decisions. Decisions that could show results in the long-term, reaching even ten years.

These investments could include building of schools, hospitals , airports, water sewage systems, roads and urbanization .

The private industry makes is financial decisions in shorter times ( based on industry too – like planes make take 10 years planning ) . Usually planning is for the coming two years.



4. Objective Difference in Public and Private Finance

The public sector’s main objective is to create social benefit, economical welfare and stability in the country. Even if that meant occurring losses in certain projects, or not making profits from some as well.

The private industry seeks to maximize profits / gains on the personal and corporate levels.

5. Coercion ( force to Get Revenue )

The government can use force to get revenue from individuals. This could involve the use of law & security forces to collect certain amounts or fight certain frauds.

The private sector however, doesn’t have this authority.

6. Ability to Make Huge and Deliberate Changes

Government bodies, and staff related to the financial sector in, can make huge decisions on income amounts without much consequences from direct controls , since the ultimate result is not about profits but has other sides.

Businesses and individuals can’t change their decisions or face severe consequences immediately as such.



7. Surplus Budget Concept

Excess income or surplus budgets is a great virtue in the private sector, this is however not the case in public finance; the government is expected to only raise what is needed for a fiscal year. Of what use would it be to have surplus budgets?

It would be much easier to offer tax reliefs to the tax-payers so as to off-set the surplus.

Want more resources to learn about finance & economics ? Check these books :

– Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics

The Infographic Guide to Personal Finance: A Visual Reference

– Or check this well-chosen list of Finance for Beginners Books @ Amazon.Com Site

Finance As Science

This article is about educating you about Personal Finance; What is it? why it is important to our lives? How to improve money management skills in your life, and more .

It is not an easy subject to handle but we will tell you everything you need to know – right here.

So, what is the personal finance as a term ?                          

It is “the “art” of taking the most-suitable financial ( money-related ) decisions for a person or family ; that includes incomes, budgeting, ways to spend the allocated amounts you have, investments, retirement plans and such ( Source ).

But there are some definitions that we need to explain before talking personal finance, let’s broaden our scope first and learn things like … What is finance ? What is the difference between finance and economics ? Do finance and business mean the same ?

Let’s start digging in depth .

Disclosure: Please note that some of the links below are affiliate links and at no additional cost to you, I’ll earn a commission. Know that I only recommend products and services I’ve personally used and stand behind. When you use one of my affiliate links, the company compensates me, which helps me run this blog and keep all of my in-depth content free of charge for readers (like you).

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Economics VS Finance

Well, Economics is a social science with a lot of theories and processes in to study, and aspects to review .

It studies the production, consumption and distribution of services or goods and all regulations and processes in between , and their effect on other aspects of people’s lives and manner.

The science of economics tries the general economy works, and how do different economies interact in the world. Cash Flow Word

The analysis of “The Science of Economics” is applied in various fields, like finance, businesses environments, universe of education, laws and regulations, Gov. institutions and bodies… and all life’s aspects.

That is good to know, now what about Finance as a science ? Well, Finance “in short” concentrates of aspects of : Saving money & lending money” … That is called Fund management science. Consider this – for example – The financial studies are interested, and coordinate the interests of the lenders and borrowers that are doing business in a certain market ( big or small) , while the study of economics is more about the study of the goods & services – which are circulating in the same market.

In short , finance is the science of studying the financial markets , and it is part of that.

Got the main idea now ? Let’s proceed to more categories.

Dividing – Economics VS Finance
* Economics , in general , is divided in two main parts :

  • Micro Economics
  • Macro Economics

Micro-Economics : Small-scale market & interactions studies .. It studies interactions between individual markets, and focuses on Dollar Signspecialization and supply & demand relations – between small entities and markets.

 Macro-Economics : Large-scale market & interactions studies .. It is not focusing on single or small or individual markets or entities , but on large and bigger variables – national , regional or world-wide levels. Terms include such as: National income and output, GDP, Price inflation and unemployment rate in a country, region or the whole world .

Finance, generally, is divided between two parts;

– Public finance                    &

– Personal finance / Private Finance

Example showing public sector’s bodies & segmentation

OK, let’s get into more details .. The term “business finance” is about goods and products and the business environment related. What concerns us here is the difference between public finance & private ( personal finance ).

To clear things more – and to keep your interest ; I expanded the subject further in this article



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