Saturday, September 7, 2013

Elements of Present Value

  1. Uncertainty price bearing
  2. Variations timing of future CF expectations
  3. Other factors
  4. Time value of $$
  5. Estimated future CF 

Useful Financial Information

The objective of financial reporting is to provide financial information that is useful to its primary users.

Useful FS fundamental qualitative characteristics:
  • Relevance 
    • Predictive value
    • Confirming value
    • Materiality
  • Faithful Representation
    • Completeness
    • Neutrality
    • Freedom from error
Enhancing Characteristics:
  • Comparability
  • Verifiability
  • Timeliness
  • Understandability
Constraints:
  • Cost/Benefit
Reference: Statements of Financial Accounting Concepts (SFAC) No. 8

Carried Position - VC

To be in a carry position means that a fund is in a profit position, & because of this position, the profit can be allocated to the GP in excess of the amount/percentage that the GP had originally contribute.

The amount to be allocated will be based on a carried interest percentage,which is different from the partnership percentage for the partners of the fund (typically 20% to the GP and 80% to the LP as opposed to partnership percentage of 1% and 99%, respectively).