Valuation of inventory based on spot price of the Brent Crude

If barrels are traded at the spot price, while the inventory has been purchased at different times, the value of the inventory changes with the change of the spot prices. Eight methods of valuation has been used to determine the real value of 5 million barrels, with changes of the spot price. Here is an approach to the valuation of inventory, and inventory levels across the three months of January, February and March 2018, and the spot price for selling off. Inventory Valuation  

Petrol and Diesel under VAT versus GST

Keeping petrol and diesel under the gambit of GST can have serious implications by keeping the retail prices low and steady. Here is an analysis that proves that petrol and diesel under GST can have an extra cushion while distributing earnings under the regime, while the states earn a percentage of the revenue. Petrol under VAT Petrol Under GST

Effective rate of crude oil for future against the spot price

When you buy Crude Oil, based on imports or refining at places in EMs like India and China, certain spot rates and futures are used against normal hedging. Future versus Spots are also a type of risk assessment, based on currency fluctuations, which need to be addressed via rates for barrels in USD. Here is an approach for assessment whether the fixed price is better, or hedging through futures is better than the spot prices. In most of the cases, SD will be more than mean. The SD is calculated based on futures versus spot, giving a price edge for…

Notes for the aviation sector

AI or Air India needs to dissect points based on earnings and crew management, including a turn-around strategy towards selective disposal of certain type of carriers. Here is a qualitative approach for Air India to increase the top-line while decreasing costs. A general observation can be made for the aviation sector as well. Currently, AI is facing disinvestment, as of May 2018. Turnaround_strategy_for_Air_India

Determining currency value of any country

How is the currency determined in the open market? The value of any currency is determined by many factors. A few qualitative factors that determine the currency weight and value is given below. Volume and amount traded– The percentage of any currency traded in inter-country and intra-country transactions, including the extent of the currency traded is a good factor for transaction determined currency value. Reserves in the central bank- The amount of reserves in the central bank can determine the steady rate of any currency. Transactions for the currency vis-a-vis another currency- Transactions against any other currency can determine the…

Determining the equilibrium point for Brent Crude

Determining the price for the Brent Crude can be a stern task. A graph can be drawn based on the supply and demand, the graph of which can determine the curve that can allow stability of the prices based on the demand of the crude oil. Prices of the Brent Crude is taken as a reference against the supply-demand curve, which will allow prices to fall under the equilibrium range based on the stretch or curve. Here is an approach. Equilibrium Point of demand versus supply with the change of Brent Crude  

Hedging of Oil price versus US Dollar versus a host currency

Given the rise of Brent Crude versus the valuation of US Dollars as a currency, it is necessary to hedge the prices against the inventory post production. If a 2% spread is taken out for INR versus USD, then we arrive at a range, within which Brent Crude can be priced for hedging. Hence, it becomes important for hedging a currency vis-a-vis the rise and fall of the Brent Crude. Too much volatility can affect exchange rates, as well as affect inventory levels. The host currency is taken to be INR. Here is an approach. Oil versus Dollar Hedging_of_Brent_Crude_Oil_versus_US_Dollars

Inflation measures

Inflation can be measured by arresting macro economic principles based on inflows of investments in any country. Inflation needs to be targeted via parameters that enable coupling and de-coupling of certain economic parameters, which can ease inflation. Here is an approach. Inflation Measures

Repo rate and reverse repo rate

Repo rate and reverse repo rate determine the rate at which the central banks lend to the commercial banks and vice-versa. Securities are traded at this rates, which raise the reserve of the central banks. Here is a small report that determines transactions based on the repo rates. Repo rate and Reverse repo rate

FOREX Trade & Hedging

FOREX trade can be a good reference for the currency to determine, rather ascertain the basic rate of interest, which is determined by the central banks as the repo rate. Currency hedged for a longer time versus keeping in vaults, show a path to recovery against any FOREX trading. Here is a glimspe of the FOREX that is traded, to keep the interest rates steady. Two conclusions can be drawn. Hedging of Brent Crude in USD per barrel terms, and repo rate spread for hedging against currency fluctuations. FOREX changes are assumed for a change of two years in the…

My name is BOND

Bonds, convertible or non-convertible, corporate or treasury, taxed or free, government backed or corporate backed, creditor or debitor related, adjusted to yield or not, play an important factor in determining the growth of any country. Here is a glimpse of the BOND buying program for the ECB, the Feds, with reference to currency printing in Latin America, which has lead to dilution of currency. Yields at 1% or 2% can be substantial than the credit growth of many EMs or emerging markets. Parking money for a small amount of time, not invested in stocks can have huge implications for the…

Notes for the Central Bankers

Dedicated to the Feds, RBI, Central bank of China and Bank of England, South Africa, Brazil and Australia Are currencies overvalued or undervalued? Given the top three economies which have very wide disparities in their nominal and real rates of exchange, including effective exchange rates, it becomes pertinent to apply logic and facts for the widening CADs in these countries. Taking a closer look at the case of RBI in India, the Central Bank has taken a very dovish stance related to the CAD. Here are a few points that can be introduced for the widening CAD, affecting inflation in…

‘The Cinderella Man’

Why do mergers do not go through? The five main reasons for which a merger and acquisition fail are- Lack of funding to close a deal The difference in valuation and the ‘valuation perspective’ Government intervention due to financial regulation Hostility previewed from the bidding company Lack of transparent behavior and earnings There is one main reason that an acquisition does not go through, as they do not prove ground hostile takeovers. Some of the bids are given below. Dawn Raid– During a ‘dawn raid’, a firm or investor aims to buy a substantial part of the holding, in the…

And my subscription charges are …

Subscription Model for subscribers There can be various types of subscription models based on intellectual assets. Some of them are- Free Subscription Model– Everything is free in this subscription. No charges are levied. Freemium Model– Only basic charges are done, and higher pricing is kept for premium assets. Pay-as-you-go Model– The subscriber pays in the run, for selective assets. Secured Model– Certain time sensitive and data sensitive intellectual assets can be a secured model. Such assets can be of digital value. Premium Model– The charges are on the higher side, with a higher subscription fee. Pay-Block Model– An initial payment…