Basically, there are two types of circular flow of income - Real Flow and Money Flow. The biggest difference between real flow and money flow is that in case of real flow, exchange of goods and services takes place among various sectors of the economy, but when we talk about money flow, the monetary exchange between the two sectors exists. A two-sector economy is one where only two sectors exist, i.e. the household sector, which represents the consumer group and producer sector which … [Read more...]

The concept of stock and flow is mainly used while computing the national income of a country. There are a number of terms related to national income which are classified into stock and flow. For Example: While savings is stock, investment is a flow, the distance between two places is a stock, but the speed of the vehicle is a flow. Similarly, income is a flow, whereas wealth is a stock. So, what we have understood with the given examples is that stock implies the reserve of inventory or … [Read more...]

While autonomous investment is not influenced by the change in the level of income, output, profit and sales, induced investment is generally affected by these factors, and that is the crucial difference between these two types of investment. What is Investment? Investment can be understood as that part of the person's income which is spent into financial schemes, with an aim of further production of capital assets. While making an investment, the following factors should be taken into … [Read more...]

The basic difference between internal check and internal audit is that internal check is a routine checking procedure, which involves cross-checking of every aspect of the work performed, at the time when it is performed, and recording the same. On the contrary, in internal audit, each and every component of the work is examined, by an independent staff, specially recruited for the purpose. The aim of internal audit is to provide an independent and objective assurance that the company's risk … [Read more...]

Based on the stage at which the funding is provided, export finance is divided into pre-shipment and post-shipment finance. As their name suggests, pre-shipment finance is the credit advanced to the exporters before the shipment of goods, whereas post-shipment finance refers to the credit extended when the goods are already shipped. What is Trade finance? Trade finance refers to financing for the purpose of trade, which includes both domestic as well as international trade. Trade transaction … [Read more...]

Finance is an offshoot of economics, which deals with the arrangement, management and deployment of money in an optimum way. It has two main branches - private finance and public finance. Private Finance is all about the management of finances at an individual level. On the other hand, public finance is a field of finance in which one studies the role of government and the impact of the various activities undertaken by the government, in an economy. One of the main difference between … [Read more...]

Asset management is a consultancy service offered by banks or firms, which discusses, oversees, and manages the assets of a person or entity. On the contrary, wealth management is not just investment advice or strategy, because it addresses all the facets of an individual's household's or company's financial life in a consultative and analytical manner. Keeping an eye on wealth is extremely important for its continuous increase and effective management. Moreover, it will also help the … [Read more...]

In Horizontal Financial Analysis, the comparison is made between an item of financial statement, with that of the base year's corresponding item. On the other hand, in vertical financial analysis, an item of the financial statement is compared with the common item of the same accounting period. Financial Statement implies the formal and final summary of the financial affairs of the concern, indicating the performance, profitability, position, etc. The process of thoroughly analysing the … [Read more...]

Turnover is a broad term which is used in different contexts in different disciplines. In general, it implies the business or trading done by a company, in terms of money, in a given period. On the other hand, the word revenue is specific in nature, which refers to the proceeds received by the company in a particular period. It is not the profit of the company, rather it is the receipts of the company. Whenever we talk about how big a company is? or how successful it is? Or how much it has … [Read more...]

Secondary market refers to a market wherein already issued securities and financial instruments are traded. It includes both exchanges and OTC market. Exchange refers to the formally established stock exchange wherein securities are traded and they have a defined set of rules for the participants. When the trading is performed through the exchange, it is under the supervision of the exchange and so it ensures that all the rules and regulations are duly complied with. Conversely, Over the … [Read more...]