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The Regulation of Consumer Financial Products: An Introductory Essay with Four Case Studies

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Financial Innovation and Engineering in Islamic Finance pp 163–176 Cite as

Case Study: Analysis of Selected Shariah Compliant Financial Products

• Samir Alamad 2  
• First Online: 14 April 2017

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Part of the book series: Contributions to Management Science ((MANAGEMENT SC.))

The previous chapter (Chap. 10 ) built on analysis in the previous chapters in order to paint the picture for the framework of engineering Shariah compliant solutions for a financial innovation to be offered by IFIs. This framework for financial innovation and engineering was established in the previous chapter with a clear demonstration of the thinking and analytical processes from an Islamic juristic perspective.

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AAOIFI. (2014). Shariah standards . Bahrain: Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).

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Dusuki, A. W., & Mokhtar, S. (2010). Critical appraisal of Shariah Issues on ownership in asset-based sukuk as implemented in the Islamic debt market . ISRA Research Paper No. 8/2010.

Dusuki, A. W., et al. (2012). A framework for Islamic financial institutions to deal with Shariah non-compliant transactions . ISRA Research Paper No. 42/2012.

El-Diwany, Tarek (editor). (2010). Islamic Banking and Finance: What It Is and What It Could Be, UK: 1st Ethical Charitable Trust.

Khir, K., Gupta, L., & Shanmugam, B. (2008). Longman Islamic banking a practical perspective . Malaysia: Pearson.

Lotter, P., & Howladar, K. (2007). Understanding Moody’s approach to unsecured corporate sukuk . Dubai: Moody’s Investors Service.

Rammal, H. G. (2006). The importance of Shari’ah supervision in IFIs. Corporate Ownership and Control, 3 (3), 204–208.

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Alamad, S. (2017). Case Study: Analysis of Selected Shariah Compliant Financial Products. In: Financial Innovation and Engineering in Islamic Finance . Contributions to Management Science. Springer, Cham. https://doi.org/10.1007/978-3-319-52947-9_11

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• Financial services describes the various offerings within the finance industry, including money management and digital banking technology.
• And below we’ve outlined major terms, topics, and trends to provide a high-level financial services industry overview.
• Do you work in the Financial Services industry? Get business insights on the latest tech innovations, market trends, and your competitors with data-driven research .

The financial services sector is accelerating its adoption of digital technology. Paying with cash, participating in in-personal meetings with financial consultants, and even using an ATM are all fading facets of financial services.

To help you navigate the evolving industry, we’ve outlined major terms, topics, and trends to provide a high-level financial sector overview.

What is the financial services industry?

Financial services is a broad term used to describe the various offerings within the finance industry–encompassing everything from insurance and money management to payments and digital banking technology. 

There are a multitude of stakeholders and moving parts within financial services, from credit card issuers and processors, to legacy banks and emerging challengers. And with financial activity becoming increasingly digitized, especially as consumers are choosing to manage their finances from home amid the ongoing coronavirus pandemic, financial institutions and startups are sharpening their technology and expanding remote services.

Financial Services Industry Overview

There are three general types of financial services: personal, consumer, and corporate. These three categories encompass the major players and influencers for companies and organizations trying to climb the ladder of the industry. 

Personal Finance

Why is personal finance management (PFM) important? Personal finance is an individual’s budgeting, saving, and spending of monetary resources, like income, over time–while taking into consideration various monthly payments or future life events. It sets consumers up for all stages and major events in life, from buying their first car to retirement planning.

When choosing a bank or other financial institution, consumers typically look for businesses that offer personal finance services, such as financial advisors. As money management activities increasingly migrate online, consumers are looking to banks that allow them to manage personal accounts remotely and take control of their own financial health via online platforms and mobile apps. 

Financial institutions that offer personal finance management (PFM) tools are particularly attractive to younger, tech-savvy consumers. Some of the top players in the personal finance market include:

• Chime: This US neobank provides fee-free financial services through its mobile app. It recently launched a new Visa credit card, designed to help customers build a credit history. And during the coronavirus pandemic, Chime built customer loyalty by rolling out $200 stimulus check advances to 100,000 customers.
• N26: This German-headquartered neobank has no branch network, meaning it reaches consumers completely virtually. N26 products include a free checking account, personal loans, and a suite of PFM tools. 
• Personal Capital: This US-headquartered direct-to-consumer (D2C) digital wealth manager offers savings and retirement planning services.
• Varo: In 2020, Varo became the first neobank to receive FDIC approval and to receive a national bank charter. According to Insider Intelligence, Varo plans to use the approval to add credit products such as short-term loans, credit cards, and home financing.
• Cleo: You may recognize this service from Facebook Messenger. This AI-powered money management chatbot is now offered as an app that pulls in customers’ bank data to analyze spending in real time and generate personalized financial insights.

Like what you’re reading? Click here to learn more about Insider Intelligence’s leading Financial Services research.

Consumer Finance

From investing in real estate to paying for college, consumer finance helps people afford products and services by paying in installments over a fixed period of time. The consumer financial services market is made up of key players including credit card services, mortgage lenders, and personal and student loan services.

Some popular consumer finance services include:

• American Express: Amex is a popular payment firm, known for its charge and credit card services accompanied by various rewards programs. Recently, Amex partnered with Marriott Bonvoy to offer rewards for spending at gas stations and restaurants to a travel-focused credit card, in an effort to adjust perks based on the effects of the pandemic.
• Ally Financial: This digital-only bank went public in 2014 and is currently used by over 8.5 million people. It provides financial services ranging from vehicle financing  and insurance to mortgages and personal loans.
• LendingTree: This is the largest online lending marketplace in the US. LendingTree connects borrowers with various lenders to help them  find the best deals on loans–including car, home, and personal–credit cards, deposit accounts, and insurance.

Corporate Finance

Corporate financing is an all-encompassing term to describe the financial activities of a business, such as sources of funding, capital structure, actions to increase the company value, and tools to allocate resources. 

Jobs in the corporate finance sector include accountants, analysts, treasurers, and investor relation experts that all work to maximize the value of a company. 

Three key sources of funding in corporate finance include:

• Private equity: This is the value of company shares not publicly listed. High-net-worth investors buy shares of private companies or established mature companies that are failing. They are essentially in complete control of the companies they invest in. 
• Venture capital: Venture capital (VC) is financing provided to startups that firms believe are poised for long-term growth. Due to the risk associated with investing in young businesses, venture capitalists typically invest in less than 50% of the equity of the companies.
• Angel investors: These are independently wealthy individuals looking for small businesses and startups to invest in. Angel investors are essentially purchasing a portion of the company, which forces founders to relinquish some control.

Financial Services Industry Regulations

Regulatory bodies are interconnected with various industries, and financial services is no exception. Independent agencies are designated to oversee different financial institutions’ operations, uphold transparency, and ensure their clients are treated fairly.

Two key regulatory agencies within financial services include: The Financial Industry Regulatory Authority (FINRA) and the Office of the Comptroller of the Currency (OCC). 

• FINRA: This is the largest independent US regulator that oversees brokerage firms and exchange markets. In 2019 the FINRA launched the Office of Financial Innovation to aid communication between regulators, investors, and financial service providers. Essentially, it was set up to assist in understanding and regulating the technological advancements in the finance industry. 
• OCC: This is an independent bureau within the US Department of the Treasury designed to regulate all national banks. Most recently, the OCC announced that banks cannot use the coronavirus pandemic as a means for accelerating branch closures. According to Insider Intelligence, the OCC is standing by existing rules that govern bank closures.

Financial Services Industry Trends & Statistics

From personal finance to commercial banks, digital advancement and increased financial technology is rapidly transforming the financial sector. And two trends in particular that are driving this digital evolution are: tapping into a huge gig worker opportunity and the growing influence of big tech companies.

Gig Economy Workers

According to Insider Intelligence, gig workers have been massively underserved by financial services because they represent a high-risk demographic. 

But thanks to technological advancement in the financial sector, institutions can conduct more thorough risk assessments, which could make serving gig workers worthwhile. Half of the US population is expected to do gig work by 2028, and financial institutions that cater to this demographic could capture a major monetization opportunity.

Digital gig work generated $204 billion in customer volume in 2018 and is expected to grow to $455 billion by 2023, according to a recent Mastercard study.

Big Tech Companies

Big tech companies, like Apple and Amazon, could grab up to 40% of the $1.35 trillion in US financial services revenue from incumbent banks, according to an Insider Intelligence report.

Apple’s launch of the Apple Card could open doors to additional financial tools such as debit cards or PFM applications. And Amazon could bring Amazon Pay in-store–which could attract merchants by saving them interchange costs, cutting into a $90 billion annual source of revenue for issuers and networks. 

And with 54% of respondents to a Bain study indicating that they trust at least one tech company more than their own bank, consumer trust is making big tech players a huge threat in the finance industry.

Financial Services Industry Analysis

The influence of tech-savvy consumers, looming threat of big tech companies, and shifting attitudes of regulators toward new tech, are all impacting the financial services industry. 

Financial growth can be achieved with a touch of a button. And whether you’re an individual exploring wealth management options, or a CEO trying to increase the value of your company to shareholders, advanced tech will guide you to success within the finance sector.

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What Is Financial Analysis?

Understanding financial analysis, corporate financial analysis, investment financial analysis, types of financial analysis, horizontal vs. vertical analysis.

• Example of Financial Analysis
• Financial Analysis FAQs

The Bottom Line

• Corporate Finance
• Financial statements: Balance, income, cash flow, and equity

Financial Analysis: Definition, Importance, Types, and Examples

Financial analysis is the process of evaluating businesses, projects, budgets, and other finance-related transactions to determine their performance and suitability. Typically, financial analysis is used to analyze whether an entity is stable, solvent , liquid , or profitable enough to warrant a monetary investment.

Key Takeaways

• If conducted internally, financial analysis can help fund managers make future business decisions or review historical trends for past successes.
• If conducted externally, financial analysis can help investors choose the best possible investment opportunities.
• Fundamental analysis and technical analysis are the two main types of financial analysis.
• Fundamental analysis uses ratios and financial statement data to determine the intrinsic value of a security.
• Technical analysis assumes a security's value is already determined by its price, and it focuses instead on trends in value over time.

Investopedia / Nez Riaz

Financial analysis is used to evaluate economic trends, set financial policy, build long-term plans for business activity, and identify projects or companies for investment. This is done through the synthesis of financial numbers and data. A financial analyst will thoroughly examine a company's financial statements —the income statement , balance sheet , and cash flow statement . Financial analysis can be conducted in both corporate finance and investment finance settings.

One of the most common ways to analyze financial data is to calculate ratios from the data in the financial statements to compare against those of other companies or against the company's own historical performance.

For example, return on assets (ROA) is a common ratio used to determine how efficient a company is at using its assets and as a measure of profitability. This ratio could be calculated for several companies in the same industry and compared to one another as part of a larger analysis.

There is no single best financial analytic ratio or calculation. Most often, analysts use a combination of data to arrive at their conclusion.

In corporate finance, the analysis is conducted internally by the accounting department and shared with management in order to improve business decision making. This type of internal analysis may include ratios such as net present value (NPV) and internal rate of return (IRR) to find projects worth executing.

Many companies extend credit to their customers. As a result, the cash receipt from sales may be delayed for a period of time. For companies with large receivable balances, it is useful to track days sales outstanding (DSO), which helps the company identify the length of time it takes to turn a credit sale into cash. The average collection period is an important aspect of a company's overall cash conversion cycle .

A key area of corporate financial analysis involves extrapolating a company's past performance, such as net earnings or profit margin , into an estimate of the company's future performance. This type of historical trend analysis is beneficial to identify seasonal trends.

For example, retailers may see a drastic upswing in sales in the few months leading up to Christmas. This allows the business to forecast budgets and make decisions, such as necessary minimum inventory levels, based on past trends.

In investment finance, an analyst external to the company conducts an analysis for investment purposes. Analysts can either conduct a top-down or bottom-up investment approach. A top-down approach first looks for macroeconomic opportunities, such as high-performing sectors, and then drills down to find the best companies within that sector. From this point, they further analyze the stocks of specific companies to choose potentially successful ones as investments by looking last at a particular company's  fundamentals .

A bottom-up approach, on the other hand, looks at a specific company and conducts a similar ratio analysis to the ones used in corporate financial analysis, looking at past performance and expected future performance as investment indicators. Bottom-up investing forces investors to consider  microeconomic  factors first and foremost. These factors include a company's overall financial health, analysis of financial statements, the products and services offered, supply and demand, and other individual indicators of corporate performance over time.

Financial analysis is only useful as a comparative tool. Calculating a single instance of data is usually worthless; comparing that data against prior periods, other general ledger accounts, or competitor financial information yields useful information.

There are two types of financial analysis: fundamental analysis and technical analysis .

Fundamental Analysis

Fundamental analysis uses ratios gathered from data within the financial statements, such as a company's earnings per share (EPS), in order to determine the business's value. Using ratio analysis in addition to a thorough review of economic and financial situations surrounding the company, the analyst is able to arrive at an intrinsic value for the security. The end goal is to arrive at a number that an investor can compare with a security's current price in order to see whether the security is undervalued or overvalued.

Technical Analysis

Technical analysis uses statistical trends gathered from trading activity, such as moving averages (MA). Essentially, technical analysis assumes that a security’s price already reflects all publicly available information and instead focuses on the  statistical analysis of price movements . Technical analysis attempts to understand the market sentiment behind price trends by looking for patterns and trends rather than analyzing a security’s fundamental attributes.

When reviewing a company's financial statements, two common types of financial analysis are horizontal analysis and vertical analysis . Both use the same set of data, though each analytical approach is different.

Horizontal analysis entails selecting several years of comparable financial data. One year is selected as the baseline, often the oldest. Then, each account for each subsequent year is compared to this baseline, creating a percentage that easily identifies which accounts are growing (hopefully revenue) and which accounts are shrinking (hopefully expenses).

Vertical analysis entails choosing a specific line item benchmark, then seeing how every other component on a financial statement compares to that benchmark. Most often, net sales is used as the benchmark. A company would then compare cost of goods sold, gross profit, operating profit, or net income as a percentage to this benchmark. Companies can then track how the percent changes over time.

Examples of Financial Analysis

In the nine-month period ending Sept. 30, 2022, Amazon.com reported a net loss of $3 billion. This was a substantial decline from one year ago where the company reported net income of over $19 billion.

Financial analysis shows some interesting facets of the company's earnings per share (shown above. On one hand, the company's EPS through the first three quarters was -$0.29; compared to the prior year, Amazon earned $1.88 per share. This dramatic difference was not present looking only at the third quarter of 2022 compared to 2021. Though EPS did decline from one year to the next, the company's EPS for each third quarter was comparable ($0.31 per share vs. $0.28 per share).

Analysts can also use the information above to perform corporate financial analysis. For example, consider Amazon's operating profit margins below.

• 2022: $9,511 / $364,779 = 2.6%
• 2021: $21,419 / $332,410 = 6.4%

From Q3 2021 to Q3 2022, the company experienced a decline in operating margin, allowing for financial analysis to reveal that the company simply earns less operating income for every dollar of sales.

Why Is Financial Analysis Useful?

The financial analysis aims to analyze whether an entity is stable , liquid, solvent, or profitable enough to warrant a monetary investment. It is used to evaluate economic trends, set financial policies, build long-term plans for business activity, and identify projects or companies for investment.

How Is Financial Analysis Done?

Financial analysis can be conducted in both corporate finance and investment finance settings. A financial analyst will thoroughly examine a company's financial statements—the income statement, balance sheet, and cash flow statement.

One of the most common ways to analyze financial data is to calculate ratios from the data in the financial statements to compare against those of other companies or against the company's own historical performance. A key area of corporate financial analysis involves extrapolating a company's past performance, such as net earnings or profit margin, into an estimate of the company's future performance.

What Techniques Are Used in Conducting Financial Analysis?

Analysts can use vertical analysis to compare each component of a financial statement as a percentage of a baseline (such as each component as a percentage of total sales). Alternatively, analysts can perform horizontal analysis by comparing one baseline year's financial results to other years.

Many financial analysis techniques involve analyzing growth rates including regression analysis, year-over-year growth, top-down analysis such as market share percentage, or bottom-up analysis such as revenue driver analysis .

Last, financial analysis often entails the use of financial metrics and ratios. These techniques include quotients relating to the liquidity, solvency, profitability, or efficiency (turnover of resources) of a company.

What Is Fundamental Analysis?

Fundamental analysis uses ratios gathered from data within the financial statements, such as a company's earnings per share (EPS), in order to determine the business's value. Using ratio analysis in addition to a thorough review of economic and financial situations surrounding the company, the analyst is able to arrive at an intrinsic value for the security. The end goal is to arrive at a number that an investor can compare with a security's current price in order to see whether the security is undervalued or overvalued.

What Is Technical Analysis?

Technical analysis uses statistical trends gathered from market activity, such as moving averages (MA). Essentially, technical analysis assumes that a security’s price already reflects all publicly available information and instead focuses on the statistical analysis of price movements. Technical analysis attempts to understand the market sentiment behind price trends by looking for patterns and trends rather than analyzing a security’s fundamental attributes.

Financial analysis is a cornerstone of making smarter, more strategic decisions based on the underlying financial data of a company. Whether corporate, investment, or technical analysis, analysts use data to explore trends, understand growth, seek areas of risk, and support decision-making. Financial analysis may include investigating financial statement changes, calculating financial ratios, or exploring operating variances.

Amazon. " Amazon.com Announces Third Quarter Results ."

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Financial Statements Examples – Amazon Case Study

Financial Statements are informational records detailing a company’s business activities over a period.

Austin has been working with Ernst & Young for over four years, starting as a senior consultant before being promoted to a manager. At EY, he focuses on strategy, process and operations improvement, and business transformation consulting services focused on health provider, payer, and public health organizations. Austin specializes in the health industry but supports clients across multiple industries.

Austin has a Bachelor of Science in Engineering and a Masters of Business Administration in Strategy, Management and Organization, both from the University of Michigan.

• What Are Financial Statements?

Amazon’s Balance Sheet

Amazon’s income statement, amazon’s cash flow statement, usage of financial statements, amazon case study faqs, what are financial statements.

Investors need financial statements to gain a full understanding of how a company operates in relation to competitors. In the case of Amazon , profitability metrics used to analyze most businesses cannot be used to compare the company to businesses in the same sector.

Amazon remains low in profitability continuously to reinvest in growing operations and new business opportunities. Instead, investors can point to the metrics signified in Amazon’s cash flow statement to demonstrate growth in revenue generation over the long term.

There are three main types of financial statements, all of which provide a current or potential investor with a different viewpoint of a company’s financials. These include the following below. 

Balance Sheet

The balance sheet represents a company’s total assets, liabilities, and shareholder ’s equity at a certain time. 

Assets are all items owned by a company with tangible or intangible value, while liabilities are all debts a company must repay in the future.

Shareholders' equity is simply calculated by subtracting total assets from total liabilities. This represents the book value of a business.

Income Statement

The income statement represents a company’s total generated income minus expenses over a specified range of time. This can be 3 months in a quarterly report or a year in an annual report . 

Revenue includes the total money a company makes over a set time. 

This includes operating revenue from business activities and non-operating revenue, such as interest from a company bank account.

Expenses include the total amount of money spent by a company over time. These can be grouped into two separate categories, Primary expenses occur from generating revenue, and secondary expenses appear from debt financing and selling off held assets.

Cash Flow Statement

The cash flow statement represents a company’s total cash inflows and outflows over a specified time range, similar to the income statement. Cash in a business can come from operating, investing, or financing activities. 

Operating activities are events in which the business produces or spends money to sell its products or services. This would be income from the sales of goods or services or interest payments and expenses such as wages and rent payments for company facilities.

Investing activities include selling or purchasing assets, which can include investing in business equipment or purchasing short-term securities. Financing activities include the payment of loans and the issuance of dividends or stock repurchases.

Key Takeaways

• Financial statements have information relevant for investors to understand the operations and profitability of a business over a specified time.
• Fundamental analysis typically focuses on the main three financial statements: the balance sheet, income statement, and cash flow statement.
• Although analyzing business financials can provide an unaltered outlook into the operations of a business, the numbers don’t always demonstrate the full story, and investors should always conduct thorough due diligence beyond pure statistics.
• Investors must ensure all of a company's financial statements are analyzed before forming a thesis, as inconsistencies in one sheet may be caused by an unusual one-time expense or dictated by a global measure out of the company’s control (ex., COVID-19).

Now that we have a general understanding of the financial statements, we can begin to take a look at Amazon’s most recent quarterly filing. 

Company filings can be found by using EDGAR (database of regulatory filings for investors by the SEC) or from Amazon’s investor relations website.

Before we begin analyzing this sheet, it is important to take note of the statement just below the title, indicating that the data is being displayed in millions. 

This can throw off newcomers, who may be very confused upon seeing Amazon’s revenue is $53,888. Amazon’s quarterly revenue is indeed $53.8 billion as calculated in millions.

When looking at Amazon’s assets, it is important to note the difference between current and total assets. Current assets are categorized separately due to the expectation that they can be converted to cash within the fiscal year.

Current assets can be used in the current ratio to analyze Amazon’s ability to pay off its short-term obligations. The current ratio formula is:

Current Ratio = Current Assets / Current Liabilities

Amazon’s current ratio sits at 0.92, which is below the e-commerce industry average of 2.09 as of March 2023 (Source: Macrotrends ).

This could mean that Amazon is potentially overvalued compared to competitors, but this is only one metric and should ultimately be all of an investment decision, especially considering the capital-intensive nature of Amazon’s business model.

It is also important to understand all of the vocabulary used to detail items in Amazon’s balance sheet. Some of the major items’ definitions can be found below:

Assets are classified as follows.

• Cash and cash equivalents: Assets of high liquidity, such as certificates of deposit or treasury bonds.
• Marketable securities: Liquid securities can be sold in the public market, such as stock in another company or corporate bonds.
• Accounts receivable (A/R): Money owed to the company that has not been received yet, such as from items previously bought on credit.
• Inventories: Unsold finished or unfinished products from a company that has yet to be sold.
• Property and equipment (PP&E): Assets owned by a company that is used for business activities. It may include factory assets or other types of real estate.
• Operating leases: Assets rented by a business for operational purposes. Calculated as the net present value on the balance sheet.
• Goodwill: Calculates intangible assets that cannot be sold or directly measured, such as customer reputation and loyalty.

Liabilities are of the following types.

• Accounts payable (A/P): Obligations accrued through business activities that must be paid off shortly.
• Accrued expenses: Current liabilities for a business that must be paid in the next 12 months.
• Unearned revenue: This represents revenue earned by a business that has not yet received. Prevents profits from being overstated for a specific period.
• Long-term debt: Debts in which payments are required over 12 months.
• Lease liabilities: Payment obligations of a lease taken out by a company.
• Stockholders’ equity: Net worth of a business/asset value to shareholders.
• Retained earnings: Net profit remaining for a company after all liabilities are paid.

Amazon’s next statement in its quarterly filing is the income statement. The income statement is useful for comparing a company’s growth over time and matching it up against competitors in the same or different sectors.

An essential factor to note when looking at a company’s income statement is whether its revenue and net income are consistently growing year over year. Investors should also be aware of Wall Street expectations, as they can heavily influence the business’s share price.

Many important ratios are used when analyzing a company’s income statement. Some of the most notable ones include:

• EV/EBITDA = (Market Capitalization + Debt - Cash) / (Revenue - Cost of Goods Sold - Operating Expenses)
• Gross Margin =  (Revenue - Cost of Goods Sold) / Revenue
• Operating Margin = Operating Income / Revenue
• Net Margin = Net Income / Revenue
• Return on Equity (ROE) = Net Income / Average Shareholder Equity (End Value + Beginning Value / 2)
• Earnings Per Share = Net Income / Shares Outstanding

Let’s use these ratios to conduct a comparables analysis between Amazon and eBay, a company at a much lower valuation relative to the e-commerce giant.  Here are their ratios side-by-side, as of Amazon’s Q1 2023 and eBay’s Q1 2023 filings:

* = EV/EBITDA ratios sourced from finbox.com , March 2023 trailing twelve months (TTM)

Looking at these statistics on paper, it is clear to see that Amazon seems overvalued compared to eBay due to lower margins, negative earnings per share, and an EV/EBITDA multiple over three times as high as the business. 

However, pure stats on an income statement cannot fully justify purchasing one company or another. The statement merely shows what a company is doing without a corporate spin.

One thing to note that is unique about Amazon’s business model is how the company invests huge amounts of capital into R&D and technology to expand its operations continuously.

Their numbers don’t account for the massive cash flows and growth opportunities that the business takes advantage of.

When conducting fundamental analysis, an investor must consider all aspects of a business beyond the financial statements, including comparing business models to competitors and setting benchmarks encompassing the overall sector.

Amazon’s cash flow statement is where the company begins to shine compared to its competitors in the online commerce sector. The company has consistently increased cash flow from operating activities and constantly returns value to shareholders in the form of capital appreciation.

It is notable for focusing on what the company is doing inside of its cash flow statements to get a better picture of why its income or stock price is trending a certain way. 

For example, an explosive drop in net income in an otherwise stable company could be due to mismanagement or hampered growth but is most likely due to M&A activity charged in a quarter that may be skewing the numbers. The cash flow statement clears this up.

Compared to 2022, Amazon has increased its annual cash from operating activities by over 38% from the previous year based on a 12-month rolling basis.

This increase has also resulted in an 11.7% increase in investment expenditures, which should allow Amazon to continue growing faster than similar companies.

In comparison, according to eBay’s most recent 10-K filing , the company generated an 82% growth in operating cash flow (OCF), however, this stat can be very misleading due to the company’s lack of investment in processes such as R&D and SG&A.

In 2022, the company reported $92M in investing activities, representing only 26% of operating cash flows. Amazon reported over $37.6B in investing activities representing approximately 88% of its OCF.

The income statement can misrepresent how well a company is doing, as while eBay has a higher net income, Amazon strategically reinvests its cash flows into R&D and other expenses to produce more over time continuously. 

What makes the cash flow statement so essential to fundamental analysis is the fact that it is tough to manipulate its numbers through financial engineering or clever accounting. 

The statement purely shows precisely where all of the money a company makes is being used. Many investors use the cash flow statement to tell the true financial health of a business, as profits can often not be indicative of a growth company's value.

The stock price of a company can easily be swayed by sentiment or the market cycle , and the income statement can be skewed through large one-time transactions or large amounts of financed revenue. The amount of money in the possession of a company is very hard to adjust.

Amazon currently has much better growth prospects than eBay and thus sells at a higher premium in the open market , but you wouldn’t understand why unless you took in the full picture of the company.

Everything You Need To Master Valuation Modeling

To Help You Thrive in the Most Prestigious Jobs on Wall Street.

Financial statements are excellent tools to learn more about a business in terms of an overall market or sector of operation. Using financial statements to determine the current value of a business is essential for understanding a company’s stock price.

Along with the ratios mentioned, analysts often form their methodologies over time to focus on companies that are strong in specific financial circumstances. 

Tools such as stock screeners can sort millions of companies by certain factors. For instance, some investors may seek defensive companies with consistent dividend growth over long periods, while others may seek growth companies with the most innovative new technology.

Investors should keep all of this information in mind, as well as pay attention to the reports of analysts with varied performance outlooks. It is essential to seek out the opinions of multiple sources before establishing an opinion on a business.

Looking at reports from analysts specializing in the industry can also ensure that your expectations are reasonable compared to industry experts. 

If your thesis results in Amazon growing its revenues by 20% a year while analysts across the country are only expecting growth in the range of 5-7%, it could be a sign that you may have overlooked a key factor in your due diligence .

The overall goal of using financial statements is to fully understand the company you are investing in to justify a position. Although your views may slightly differ from experts, quality due diligence can result in somewhat varied outcomes based on an investor’s outlook for the future.

Using EBITDA instead of net income strips away the capital structure and taxation of a business to analyze the pure earnings potential of a business. This is more practical for investors to see the general trajectory of a company’s income over time.

For example, companies may decide on completing a merger or acquiring another company. This will require a company to report its current and acquired assets on its balance sheet .

Over time, these assets must be recorded as expenses through the use of depreciation, which is the process of deducting from gross revenue to account for the decreasing value of company plant assets. 

If these assets increase in value over time, this could decrease revenues over time not due to company performance but because of increased prices for equipment outside of the company’s control. 

Without looking at EBITDA, company financials may paint a completely different picture with the use of net income that may or may not be justified at all.

ROE is an important metric to distinguish how good a company is at generating profits with investor capital compared to its share price and competitors. It is yet another indicator used to analyze the trajectory of a business over time. 

Using ROE can also demonstrate how much financing a company requires to generate its revenue and if investors are really getting a great return for the amount of money shareholders contribute. 

A startup that has recently gone public on the stock exchange may have a very low to negative ROE compared to an established company. Still, the startup may have the margins and growth to justify its valuation . 

Much like every financial ratio, ROE doesn’t demonstrate the entire story of a business, and the full picture of a business must be considered to decide on an equity investment.

To proliferate and take market share from competitors, Amazon undercuts prices on many products to decrease competition and remain the top player in the industry.

Amazon, like many other companies recently since the pandemic, has also faced significant increases in operating expenses , thus lowering operating and net margins in the short term. Once Amazon begins to slow expansion, these margins are expected to rise.

Amazon’s net income is very low for many of the same reasons. The company is profitable yet is constantly reinvesting into new businesses and products to further grow cash flows for future expenditures.

Amazon investors are not focused on income but rather on its ability to continuously grow in the long term. Growth companies like Amazon do not issue dividends because they believe that the money is better reinvested in business operations.

Everything You Need To Master Financial Statement Modeling

To Help you Thrive in the Most Prestigious Jobs on Wall Street.

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Every Client That Comes To Work With Us Has Their Own Story.

Here are some case studies that best exemplify how we’ve helped different clients over the years., every client that comes to us has their own story., case studies, cash flow planning for burnt out physician.

Jackie and Larry Stein Jackie and Larry are in their mid-50s. As a department chair at one of Boston’s large healthcare networks, Jackie must balance her clinical workload, administrative duties, and research goals. However, after several decades in medicine, the workload and stress

Pharma Executive with Complex Stock Options

Robert and Claire McDonough Robert and Claire are both in their early 40s with twin eight-year-old boys. Claire works in the development office for an international non-profit and Robert is a cardiologist turned pharmaceutical executive

Retiring With A Concentrated Stock Portfolio

Stacy and John Simmons Stacy and John came to Artemis to get their financial house in order in preparation for their retirement. They had long-managed their investment portfolio on their own but felt they were ready to enlist some professional support

Physician Couple with Public Pensions and Estate Planning Needs

Betsy and Tyler Armstrong Betsy and Tyler are both physicians in their early 50s. They live in Cambridge with their two teenage children and beloved golden retriever. Betsy has spent her entire career in the public sector

Financial Ally for Her Next Chapter

Tiffany Jones Tiffany is single, in her early 40’s, and a PANK™ (Professional Aunt, No Kids). She decided to retire early after a successful 20-year career in technology sales and start her own consulting business. Initially, Tiffany hired us to create a

Diversification and Discretion For Busy Finance Executives

Susan Rice Susan and her partner, Imani, are both busy executives with two children. Susan works in the investment division of an asset management firm. Because of her role, she needs an advisor who can have discretion over her

Am I Going to Run Out of Money?

Linda Gonzalez Linda has been widowed for 15 years. She retired from work 10 years ago, and now owns a beautiful condo in the city. Due to all the recent volatility in the stock market, she has become concerned that she may run out of money to cover her lifestyle

Seeking Sustainable Investing with a Gender Lens

Kristin Seeley Kristin is a single woman and has never had a problem managing her finances. Recently, she has become interested in sustainable and gender lens investing. Yet when she approached her current financial advisor about restructuring her

Young Family – Overwhelmed By Decisions

John and Mary Freedman John and Mary were married three years ago and have a two-year-old son. Mary works in private equity and earns a nice income but a good portion of it is going to be paid over time in the form of “carry” and not available to spend, nor is it very

Help Me Give it All Away!

Hilary Arnold Hilary Arnold, a busy senior executive in the healthcare industry, has saved quite a bit of money over the years. In addition, she comes from an extremely wealthy family and is the beneficiary of several large trusts. Although Hilary is capable of

Can I Afford To Divorce?

Elizabeth Amory Elizabeth Amory has been married for 27 years and has two adult sons. Sadly, the marriage is failing and Elizabeth does not have a clear picture of their finances. Frankly, she doesn’t know whether she can even afford to leave the marriage and

Managing Wealth When On The Cusp Of Retirement

Priya and Manish Rao Priya and Manish have been married for 38 years and have been preparing to begin their retirement soon. Fortunately, Priya’s mother has recently gifted them a large portfolio of municipal bonds, creating a significant financial windfall for

Merging Finances In Your Fifties After Getting Remarried

Joe and Jenny Smith Joe and Jenny Smith are recently married, corporate litigators, both in their early 50s and each have two children from prior marriages. Before coming to Artemis, they had not yet merged their finances, their portfolios, or their households.

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Virtual tax preparation case studies

Welcome! You may be a tax preparer working with the public. If you are offering some or all of your tax preparation services virtually, the case studies below may provide you some good ideas of how to adapt and best serve your tax preparation customers.

Check out the creative ways some Volunteer Income Tax Assistance (VITA) providers have utilized their volunteers, leveraged social media, and offered additional services to their VITA customers.

Case studies

CA$H Maine has been a leader in using tax time to communicate the importance of saving and to provide saving options. At tax sites, staff in the role of opportunity guides help taxpayers save and take other actions that improve their financial well-being. They use information collected at intake to engage taxpayers in conversations about their financial challenges and goals and how saving a portion of their tax refund could help. This follows one of our Tax Time Savings Initiative’s promising practices for increasing saving at tax time : dedicate staff or volunteers to encourage saving.

CA$H Maine is a statewide collaboration of 10 local coalitions from across the state, made up of 50 nonprofit and for-profit partners. Since 2003, CA$H Maine has provided free tax return preparation services, typically serving around 4,500 filers during tax season.

In past years, CA$H Maine used a train-the-trainer model to prepare opportunity guide volunteers. Due to the heavy winters in Maine, many local organizations have already developed technologies and procedures that enabled them to work remotely, and CA$H Maine was able to use the University of Maine’s remote training platform to train leaders from each local coalition. Those local leaders, in turn, trained their opportunity guides.

CA$H Maine’s challenges this year were two-fold. First, the train-the-trainer model for opportunity guides had proven burdensome for local coalition leaders, given their other responsibilities, and it also led to training inconsistencies. Second, midway through the 2020 tax season, the COVID-19 pandemic limited the ability to conduct in-person trainings and forced the organization to rely on virtual technology for both service delivery and program management.

CA$H Maine’s leadership decided to deliver a single statewide opportunity guide volunteer training via the remote training platform for 2021.

CA$H Maine offered the two-hour training at five different times in January. Because no one signed up for the Saturday offering, just four sessions were held during both daytime and evening hours. Attendance ranged from four to 27, with a total of 55 participants. Those who couldn’t attend a session live could access a recording.

Although the two-hour session length seemed daunting, the sessions moved quickly and smoothly. Training participants viewed the experience positively, especially the discussions of how to use sample conversation starters to talk with filers about savings.

Local coalition coordinators also liked the unified approach. One commented that a consistent statewide training for the opportunity guide volunteers provided updates and new information in an environment that helped them make the best use of their time as volunteers, as well as instilled confidence in their role and provided context by sharing historical information about CA$H Maine.

Looking Forward

CA$H Maine expects to continue the virtual opportunity guide and return preparer trainings beyond the pandemic. One potential improvement the coalition coordinator identified was trying to move some of the presentation content into handouts or online resources to open up time for conversations among volunteers in virtual breakout rooms.

CA$H Maine’s statewide coordinator cited the principal benefits from her perspective: “It broadened access to training expertise, promoted consistency that maximizes the likelihood of successful savings conversations, and gave local volunteers the opportunity to see and experience the program’s statewide reach.”

“And it sure beats battling snow plows,” she added.

Money Power Day® is CASH Campaign of Maryland’s (CASH) annual and free financial fitness fair that usually draws 800 to 1,000 attendees. The fair offers a combination of workshops, an exhibitor hall (for non-profit organizations, businesses, and government agencies), and financial services including credit counseling, legal services, and tax-return preparation. This implements one of our promising practices for increasing saving at tax time : hold special events to encourage saving.

The CASH Campaign of Maryland promotes economic advancement for low-to-moderate income individuals and families in Baltimore and across Maryland. Its strategies include free tax-return preparation services, financial education and coaching, and connections to high-quality financial services and products. CASH serves approximately 20,000 taxpayers annually.

The 15th annual Money Power Day® in 2020 would normally have occurred in late March or early April, but CASH had to postpone it due to the COVID-19 pandemic lockdown. Knowing they couldn’t replicate an event that relied on people gathering in person, they needed a new plan.

CASH Campaign of Maryland had experienced virtual conferences and seen the demand for virtual services. To make the event fit the new approach’s capabilities, they prioritized access to financial education services, exhibitors, and a virtual financial planning zone.

The virtual Money Power Day® was held on October 17, 2020, with 57 exhibitors and 607 registered attendees. The day included several workshops, which were pre-recorded, with 40 minutes of content and 20 minutes for questions and answers via a live chat box.

A total of 235 people participated on the day of the event, and 164 of those attended one or more of the financial education workshops. The most-attended workshop, with 96 participants, was Credit Check-Up. Follow-up e-mails focused on those who registered but didn’t attend. Anyone who had registered was able to access the event’s content online for 30 days after the event.

CASH Campaign’s staff was happy with the online conferencing platform they chose. Exhibitors had a range of options: text with links, a chat box, pre-recorded videos, live video conferencing, and scheduled one-on-one video chats. Some stayed all day, and the platform featured red and green lights to show if a “booth” was currently staffed.

Staff knew the format would present obstacles in serving the most vulnerable populations. This was certainly true for community members without smartphones or with limited access to or comfort with technology.

A positive aspect of attendance was participation by residents from 21 of Maryland’s 24 counties, underscoring the role of virtual technologies in reaching widespread regions. Money Power Day® is typically held at a high school in Baltimore.

Applying the lessons learned from the 2020 event, CASH Campaign of Maryland is increasing their use of social media platforms for distanced participation in its service offerings, including live-streaming content. Maryland CASH Academy has also increased its online financial education. CASH is also looking for ways to provide content through other organizations’ virtual events.

CASH Campaign’s director of financial capability reflected: “It was a really great event. While we don’t see ourselves trying to do another fully virtual financial fair, we’ve learned some new ways of doing things that we’ll be taking forward beyond the pandemic.”

South Texas’s cdcb | come dream. come build (cdcb) operates a Volunteer Income Tax Assistance (VITA) program that typically prepares returns for more than 600 families each year. The organization also participates in the CFPB’s Tax-Time Savings Initiative to promote the use of tax returns to build savings and financial stability.

cdcb (formerly Community Development Corporation of Brownsville) provides safe, sanitary affordable housing to residents of South Texas. Since 2009, cdcb has provided affordable housing for over 1,600 families and educated 10,000 additional families with financial and housing counseling. Its financial security program provides access to financial services including free tax return preparation and opportunities to save.

cdcb partners with GetYourRefund, the national program of Code for America that provides organizations that operate VITA sites with tools for preparing returns virtually. cdcb provides its virtual services in both Spanish and English.

In a socially distanced world, virtual VITA creates opportunities, but it can also limit tax preparers’ opportunities to talk about the importance of saving refunds. For example, cdcb found that conversations with taxpayers were limited to the very end of the virtual VITA process when they reviewed tax returns together. “And at that point, they want to get off the phone quickly, making it much more challenging than meeting in person,” reflected cdcb’s VITA program manager.

To reach taxpayers at more receptive moments, social media provided a valuable alternative communication channel. Cdcb regularly posted short videos to provide information on the 2021 tax season, including the new process for preparing online returns, economic stimulus payments, and the extension of the filing season in Texas due to winter storms.

Digital marketing strategies expanded the reach of the program, which typically has just one paid staff member and two unpaid volunteers. The staff has a considerable amount of information to convey, but this was especially true in 2021. Social media provided a channel to reach new audiences and to provide timely tax and financial information to cdcb’s followers.

Social media will continue to serve as an important resource to communicate with those they serve. Posting short videos can remind taxpayers about the opportunity to use their tax return to save some of their refund, reinforcing one of our promising practices for increasing saving at tax time : communicate with taxpayers about saving before they come to the tax site.

Many tax programs rely on the interaction between taxpayers and return preparers to promote saving at tax time. The Boston Tax Help Coalition and CA$H Maine also use dedicated savings volunteers—called financial guides and opportunity guides, respectively—who have been present at tax sites to assist with savings and other financial capability interventions.

CA$H Maine is a statewide collaboration of ten coalitions, comprised of 50 non- and for-profit partners, working together to help empower Maine individuals and families to achieve long-term financial stability.

Boston Tax Help Coalition is a partnership of nonprofits, businesses, and community organizations that has been promoting the economic independence of working individuals and families since 2001.

CA$H Maine opportunity guides are trained to have extended conversations with taxpayers. They make referrals to local saving opportunities, such as New Ventures Maine’s Rainy Day Savings Account program. For several years, opportunity guides have also provided the Scan and Go drop-off option at tax sites and the offices of local community partners.

Boston Tax Help’s financial guides provide taxpayers with one of the most extensive financial well-being consultations in the VITA field, administering the Financial Check-Up to screen taxpayers for various financial challenges. The Financial Check-Up includes a credit review and is an integral part of the Boston Builds Credit campaign. Financial guides have traditionally been an integrated component of in-person tax services.

In response to the COVID-19 pandemic, VITA programs dramatically shifted operations to “Virtual VITA,” a term the IRS uses to describe both fully virtual service delivery, where the taxpayer is not physically present at any point and transmits documents electronically, and drop-off, where taxpayers deliver documents to a tax program location but are not present when returns are prepared. Virtual VITA eliminates face-to-face interactions, but it can often reduce communication with taxpayers.

For example, taxpayers using Virtual VITA don’t always know which documents they need to provide and often struggle with uploading and transferring files. The volunteer preparing the return can have difficulty reaching the taxpayer for missing information and obtaining additional information can create delays and burdens for the taxpayers.

Through our Tax-Time Savings initiative, CA$H Maine and Boston Tax Help were in regular dialogue about how to use their respective savings volunteer programs to address the service delivery challenges created by COVID-19.

CA$H Maine built on its opportunity guides’ experience with savings outreach as part of Scan and Go drop-off tax assistance. This year they expanded their role to deliver both saving interventions and intake assistance through video conferences or over the phone. Boston Tax Help’s financial guides began offering the Financial Check-Up via video conference, over the phone, and at drop-off locations. They also assisted drop-off taxpayers with intake and virtual filers with tax document uploads.

Boston Tax Help and CA$H Maine found that their dedicated savings volunteers could successfully promote savings at drop-off, over the phone, or by video conference, but the pandemic did create unique challenges. The rapid expansion of drop-offs and virtual return preparations forced volunteers to make things work on the fly, and as a result, savings volunteers weren’t always available at intake or able to consistently engage about savings.

Even with CA$H Maine’s previous success using opportunity guides at drop-off sites, engaging taxpayers about saving proved extremely difficult. The conversations were less effective at a six-foot distance wearing masks, and there was less time for those conversations. Even when taxpayers were allowed in facilities, there were no large waiting areas and intake needed to be completed quickly. CA$H Maine offered taxpayers, who dropped off tax information, the option of discussing savings by phone but few took advantage of that opportunity.

Savings volunteers were able to improve the intake process by working with taxpayers to provide complete information. This could be a challenge, however, when taxpayers had more complex circumstances, even when the savings volunteers were also certified as return preparers, and tax law changes in December and March also exacerbated intake challenges. Many savings volunteers completed training before these laws were enacted and had to quickly adjust to the changes. As intake then took more time, it was harder to be engaged around the importance of saving.

Both organizations learned from their dedicated savings volunteer programs during the challenging 2021 filing season. Although savings volunteers didn’t achieve all of their objectives, using them at intake proved it could be effective in engaging clients on both return preparation and savings promotion. Having savings volunteers work remotely also opens up opportunities to utilize them in new ways. For example, it may help expand services, like the Financial Check-Up, beyond the tax site. Initiating intake and savings outreach over video or phone before taxpayers arrive at a tax site can also facilitate a more effective in-person engagement around the importance of saving.

Both CA$H Maine and Boston Tax Help are committed to continuing to use savings volunteers in the future with Virtual VITA for intake and for in-person tax assistance services. Because Virtual VITA requires more time, the ratio of savings volunteers to tax preparers may need to increase to ensure sufficient time for savings interactions.

The City of Boston offers a wide array of services that can help people recover from economic hardship. Residents need a quick and convenient way to assess their financial needs and get referrals to available resources. The Boston Tax Help Coalition has worked for years to provide the Financial Check-Up, an interview that screens taxpayers for various financial challenges, at its Volunteer Income Tax Assistance (VITA) sites. An integral part of the Boston Builds Credit campaign, the check-up serves as a comprehensive version of the kinds of tools VITA programs use to help taxpayers improve their financial well-being, especially those who are not typically in contact with social service networks.

The Financial Check-Up is a pre-filing interview conducted by Boston Tax Help volunteers serving as financial guides. The check-up form is a set of tick boxes that help guide the interview and track outcomes, and the data from the form is generally entered directly into a Customer Relationship Management System. Financial guides discuss options for saving at tax time, and they make referrals to other supporting services, such as legal, debt management, immigration, housing, health care, and employment. Guides can also request and review credit reports and recommend steps to build positive credit histories, improve credit scores, and improve economic well-being. The Financial Check-Up has helped thousands of Bostonians improve their financial situation at tax time.

The COVID-19 pandemic exacerbated economic disparities in the Boston area and highlighted the need for access to services and opportunities that empower residents and make savings possible. Many residents, who had never been unemployed, found themselves unable to work to do COVID restrictions or the related economic recession, and in Boston and other cities with high housing costs, a sudden loss of income can be particularly devastating.

The pandemic shift to Virtual VITA, which allowed taxpayers to not be physically present at the tax site, dramatically reduced communication between return preparers and taxpayers. The Financial Check-Up had almost always been conducted in person, and the pandemic disrupted not only tax assistance but also this assessment and referral tool.

Boston Tax Help quickly created a financial check-up process via phone or video conference. This included establishing a virtual Private Branch Exchange (PBX) phone system, so financial guides could conduct the Financial Check-Up from anywhere without sharing their personal telephone numbers. Because social distancing required an enhanced process at intake, financial guides augmented the Financial Check-Up to include an assessment of taxpayer qualification for VITA services and the sufficiency of the documentation needed for return preparation.

Boston Tax Help successfully delivered the Financial Check-Ups remotely. The augmented process to encompass intake also helped ensure that return preparers had all the required documents. Although Boston Tax Help overcame many challenges and completed several hundred Financial Check-Ups, it fell short of its initial goal of 1,000 financial assessments.

The rapid expansion of Virtual VITA proved to be a capacity challenge for the financial guides. Tax law changes during the 2021 filing season required a more extensive intake interview, forcing several process changes. The constant adjustments implemented as a result of the tax law changes caused tax-site coordinators to adapt in order to keep return preparation systems working effectively. This often limited the ability to deliver the assessment.

Completing the Financial Check-Up by phone or video conference opens new possibilities. Because it can now be done from anywhere or at any time, it can be a viable stand-alone service or one that complements other social service programs offered by coalition members. In the process, financial guides can also deliver other interventions that encourage savings. Equipped with Virtual PBX, guides can also serve as the first point of contact to respond to taxpayer inquiries, helping tax sites to follow up quickly with taxpayers having filing issues. Foreseeing increased service demands, Boston Tax Help plans to increase the number of available financial guides.

Wayne Metro's Volunteer Income Tax Assistance (VITA) program has a long history of encouraging taxpayers to save a portion of their tax refunds. The organization has used a mix of incentives to encourage tax-time saving, including a SaveYourRefund sweepstakes and prepaid gift cards for taxpayers, which is one of our promising practice for increasing saving at tax time : offering saving options more than once at the tax site.

Wayne Metropolitan Community Action Agency (Wayne Metro) is a 501(c)(3) non-profit organization serving approximately 35,000 low-and moderate-income residents throughout Wayne County, Michigan. Wayne Metro empowers people and communities to be strong, healthy, and thriving in its pursuit to eliminate poverty.

With the COVID-19 pandemic, Wayne Metro had to switch from its traditional in-person model to a combination of fully virtual tax preparation, where the taxpayer is never physically present at the tax site, as well as drive-up/drop-off assistance. This strategy kept taxpayers, volunteers, and staff members safe, but it dramatically reduced interaction between taxpayers and VITA volunteers. This eliminated many opportunities to offer savings options, including at the critical moment when taxpayers enter direct deposit information into their tax returns and could allocate some of their refund to savings. As a result, Wayne Metro needed to redefine what ‘multiple offers to save’ meant in this new service model.

Wayne Metro identified two critical opportunities within its Virtual VITA process to encourage savings and promote their saving incentives. The first opportunity was the intake appointment, when staff or volunteers could talk with taxpayers about the amount they wanted to save and the special incentives available. The second was when staff and volunteers review the completed tax returns with taxpayers to ensure accuracy. Wayne Metro's seized those opportunities to share information about savings incentives and ask whether taxpayers wanted to split their refunds. The volunteer return preparers, who were trained on the importance of savings at tax time and the program's savings incentives, were also prepared to take advantage of any other opportunities to encourage savings if they had any communication with taxpayers.

Despite the challenges of the pandemic and the limited opportunities for taxpayers and preparers to communicate, Wayne Metro helped taxpayers maintained the same level of savings in the 2021 filing season as they had in prior tax seasons. The program identified six reasons for this success:

• Establishing taxpayer expectations around saving. Based on their experiences in previous years, returning customers expected to be offered savings incentives. They planned to save so they could again receive those rewards.
• Forwarding direct deposit instructions to return preparers. At intake, taxpayers elected to save a specific amount and provided their direct deposit information so preparers already knew what portion of the refund to direct to savings.
• If the taxpayer had used Form 8888 the year before to split direct deposits, suggest saving the same amount this year.
• If the taxpayer claimed children as dependents and could anticipate a larger refund, but had not previously used Form 8888, suggest saving $500.
• If the taxpayer didn’t claim children and could anticipate a smaller refund, suggesting $50.
• Reassessing at quality review. Taxpayers who wanted to postpone a savings decision until knowing the size of their refund would learn the amount and decide whether to use Form 8888. Those who had decided at intake to save could adjust the allocation if the refund was smaller or larger than anticipated. Knowing there would be an opportunity to change their mind before the return was filed made taxpayers more comfortable making a saving plan at intake.
• Training all volunteers on tax-time savings. All volunteers received training on the benefits of saving and Wayne Metro's savings incentives. Even though the pandemic li4mited direct conversations between preparers and taxpayers, the return preparers understood the savings options and could engage taxpayers when opportunities arose.
• Offering an incentive. A $30 gift card for saving is a proven motivator. Wayne Metro secured private funding from financial institution partners to provide gift cards, and at the close of the reporting period, 150 gift cards were issued to savers.

Intake and review will remain critical moments to encourage tax-time savings, even as more tax assistance is delivered in person. The lessons learned during the pandemic will help leverage those moments. In addition, as in-person assistance resumes and Virtual VITA methods evolve, the 2021 experience will enhance the quality of increased direct communications between return preparers and taxpayers.

The Prince George’s Community College (PGCC) Volunteer Income Tax Assistance (VITA) program is a reliable source of quality and free tax assistance. During the COVID-19 pandemic, the program needed to find a solution for operating safely in a socially distanced environment. Most VITA programs switched to Virtual VITA, providing fully virtual services, in which the taxpayer weren’t required to be present, and drop-off locations were provided for delivering documents.

The Financial Empowerment Center at Prince George’s Community College believes a strong local economy and financially stable households benefit the entire community. PGCC’s expert volunteers provide financial coaching, financial workshops, tax preparation, small business coaching, and credit improvement solutions.

Although Virtual VITA was a viable option for many programs, PGCC VITA had several concerns. Taxpayers sometimes didn’t know what documents they needed to provide and often struggle with uploading documents in a fully virtual process. Volunteer return preparers also often encountered difficulties reaching taxpayers to obtain missing information. Because PGCC was unable to provide a large space to gather safely, volunteers needed to work from home, which raised additional concerns about the security of home computers and internet connections

To utilize its strong base of experienced volunteers, avoid requiring taxpayers to upload information, and address the security challenges of volunteers working from home, the PGCC VITA program decided to use Facilitated Self-Assistance (FSA) as the primary service method. With FSA, taxpayers prepare and file their own returns using self-preparation software, and a VITA volunteer is available to answer questions in a timely manner via phone, e-mail, or text. Tax programs generally use FSA as an additional option for taxpayers who need no or minimal assistance with their returns. Taxpayers who participate in FSA sometimes don’t need any assistance in future years.

Although some VITA programs have offered FSA at workstations at local tax sites, it has more commonly been an at-home option. However, unlike the usual FSA clientele, PGCC needed to figure out how to use this mode of service delivery with taxpayers who have more complicated returns and little experience preparing them.

PGCC decided to structure its FSA similar to a traditional in-person process. Taxpayers seeking assistance were given an appointment when a volunteer would meet them in an online video conference to provide step-by-step assistance with the online tax filing software. Because the taxpayer entered their own information, there was no need to upload or drop off documents. This reduced information security risks by limiting data sharing. Both the taxpayer and volunteer were safely working from home.

Taxpayers needed a computer or laptop with a microphone and reliable internet service. The PGCC program suggested taxpayers could have a trusted friend or family member join them on the call from home to help prepare the return. It also offered a drop-off option for taxpayers without computer access or reliable internet connection where taxpayers delivered documents to a PGCC staff member or volunteer on campus, and those returns were prepared in the usual tax site space.

PGCC VITA’s experienced volunteers provided step-by-step assistance, and they were able to respond when things didn’t go as planned. These volunteers know the importance of savings and financial empowerment, so they found moments during their engagement with taxpayers to talk about the other services of the Financial Empowerment Center.

The PGCC VITA program was pleased with serving taxpayers using the remote FSA strategy and keeping everyone safe. Many taxpayers easily completed their returns with just a little instruction. The experienced volunteers were skilled in recognizing when a taxpayer might be struggling. The drop-off service option was a critical component because not every taxpayer was successful with FSA. For example, some taxpayers’ home computer setups ended up not being suited for video conferencing.

Although taxpayers were exposed to the opportunities of the Financial Empowerment Center when signing up for appointments and in conversations with the volunteers, the savings interventions didn’t work as effectively as in person. This was partly a product of having to develop a new return preparation process quickly. The program had to trust volunteers to find their moments rather than having a formal plan.

PGCC VITA, like other tax programs, is looking forward to returning to in-person services so it will likely lower the profile of its FSA model next tax season. But, FSA will remain a reliable method for serving taxpayers who are homebound or unable to travel to atax site. FSA also offers a post-season option when tax sites are closed, and assistance resources are limited. FSA also represents an excellent opportunity to retain experienced volunteers looking for a more convenient volunteering option. With more lead time for training and planning, PGCC VITA anticipates being able to train FSA coaches more effectively in encouraging savings during the video interaction.

Goodwill Industries of Tulsa is committed to promoting tax time as an opportunity for taxpayers to build savings. It utilizes many promising practices for increasing saving at tax time , including building commitment among staff and volunteers to encourage saving, making sure tax preparers know how to help consumers save while filing, and offering savings choices more than once at the tax site.

Goodwill Industries of Tulsa offers job training and support services throughout Eastern Oklahoma. Goodwill’s VITA program provides free tax return preparation services in the Tulsa area, typically serving around 500 tax filers annually.

Goodwill Industries of Tulsa is also an innovator. It was an early partner of GetYourRefund.org , the non-profit service built by Code for America in partnership with VITA sites nationwide. GetYourRefund provides a technology platform for preparing tax returns remotely when taxpayers are unable to be physically present at a site. Goodwill Tulsa also offers facilitated self-assistance for taxpayers filing their own returns using OnLine Taxes (OLT) , one of the IRS Free File commercial preparer partners.

The 2021 tax filing season was a challenge for all VITA programs, and this extended to tax-time savings work. The return preparation process – from intake to review – was more complicated, placing additional strains on volunteers’ time. Because taxpayer demand for tax preparation services typically exceeded organizational service capacity, there was understandable pressure to complete returns as quickly as possible. This left much less time for the personal engagement throughout the process, which is valuable in successfully promoting savings options.

The Virtual VITA process, facilitated by GetYourRefund and other similar tools, was of great assistance to programs including Goodwill in Tulsa during a period of social distancing, but the remote nature of the interactions with taxpayers limited opportunities to engage with potential savers.

Despite the challenges, Goodwill Industries of Tulsa remained committed to tax-time savings. It worked with GetYourRefund to include savings messaging in the platform. This provided an additional avenue for communications before and during the return preparation process.

Recognizing the tremendous economic strains caused by the COVID-19 pandemic, Goodwill in Tulsa reached into the community to find residents in need of assistance. This included visits to homeless shelters and community meal programs. People served by these programs are often not a good match for VITA because required documents, including photo identification and Social Security cards, are often among the first things lost or stolen when someone is living on the streets. The additional benefit of the federal Economic Impact Payments (EIPs), however, had the potential to address critical financial needs during the pandemic.

Using the OLT software, Goodwill in Tulsa was able to help taxpayers experiencing or at risk of homelessness. Most had memorized their Social Security numbers, had smart phones, and quite a few had bank accounts. Not only were they able to file returns to receive EIPs, but those with wage income could get withheld taxes refunded and sometimes claim an Earned Income Tax Credit. The tax program created new relationships with people who may benefit from financial support to gain some economic security.

The immediate results of using savings messaging in the virtual return preparation software were disappointing, but the experience clarified the promising practices of encouraging savings.

Programs promoting tax-time savings tend to see growing success over time because taxpayers hear a consistent message, year after year, that can become part of their personal financial planning. The pandemic service disruption complicated this process but also underscored the value of taking a long-term view.

Goodwill Industries of Tulsa established new relationships with people experiencing homelessness, planting seeds for financial empowerment. Through its virtual services, the program realized the value of maintaining consistent communication as well as the great benefits from reinforcing text and email messaging with direct taxpayer contact. In the words of program staff: “It is considerably harder to ignore someone who looks like your mother or grandmother saying, face-to-face, ‘you should think about saving some of your refund’.”

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Indian judge says billion-dollar ayurvedic company has taken the public 'for a ride'

Omkar Khandekar

Yoga guru Baba Ramdev, the brand ambassador for the billion dollar company Patanjali Ayurved, addresses the media during a launch of "premium products" in New Delhi. Rahul Singh/ANI via Reuters Connect hide caption

Yoga guru Baba Ramdev, the brand ambassador for the billion dollar company Patanjali Ayurved, addresses the media during a launch of "premium products" in New Delhi.

MUMBAI – Imagine if there were a magic pill to ward off COVID-19. Or if you could cure diabetes with vegetable juices and herbal pills instead of controlling it with insulin medication. Or if yoga and breathing exercises were all you need to do to get rid of asthma.

These are all claims made by Patanjali Ayurved, one of India's biggest manufacturers of traditional ayurvedic products – reflecting the beliefs of a 3,000-year-old tradition of Hindu healing practices. The word "ayurveda" comes from the Sanskrit terms "ayur" (life) and "veda" (science or knowledge.) Its practitioners use herbs, animal extracts and minerals, processed according to centuries-old texts.

Many scientists have expressed concerns over the lack of research into the safety and efficacy of ayurvedic products. The United States, for example, categorizes these products as dietary supplements and not as medicinal drugs that can cure or prevent illness.

Nonetheless, Ayurveda enjoys widespread acceptance among Indians. And under India's Hindu-nationalist government that took power in 2014, ayurveda and other alternative systems of medicine have received unprecedented government support. India's ministry of alternative medicine gets nearly $500 million a year. The government also promotes ayurveda through its international trade and diplomatic channels. All this set Patanjali's fortunes soaring.

Supreme Court weighs in

But now the Supreme Court of India has temporarily banned Patanjali – named after a Hindu mystic best known for his writings on yoga – from advertising some of its products. This is an interim order, which means Patanjali can challenge it – but so far they have not.

In fact, neither Patanjali nor the government have commented on the case .

"The entire country has been taken for a ride," Ahsanuddin Amanullah, one of the two judges conducting the court hearing, told the lawyer representing the government, according to an article in livelaw.com, a news website that covers courts in India. "You shut your eyes!"

The Indian Medical Association had brought the case to court in August 2022, claiming that Patanjali and its brand ambassador Baba Ramdev made a series of false claims against evidence-backed modern medicine and its practitioners, and spread misinformation about COVID-19 vaccines. Their petition also referred to instances where Ramdev lambasted modern medicine as a "stupid and bankrupt science" at a yoga session.

The trigger was a series of Patanjali advertisements in Indian newspapers in July 2022 claiming that ayurvedic products could cure chronic conditions like diabetes, high blood pressure, heart diseases and autoimmune conditions. The Indian Medical Association's petition alleged that such claims were in violation of India's Drugs and Magic Remedies (Objectionable Advertisements) Act.

Politics of medicine

There's a political angle to this story as well. The company's public face – yoga guru Baba Ramdev – is a vocal supporter of India's ruling party, the BJP, and Prime Minister Narendra Modi. Modi even inaugurated Patanjali's ayurvedic research facility in 2017.

The supreme court's order, although temporary, is a blow to advocates of ayurvedic medicines, including the prime minister and his Hindu nationalist party. Some scientists have accused their government of promoting these alternative medicines at the expense of modern medicine, partly as a way to glorify India's culture and history.

"One of the political ideas of this government is to glorify the Hindu tradition," says Dhrubajyoti Mukherjee, president of the Breakthrough Science Society , an organization that promotes scientific thinking. "But in the name of our glorious past, the government is propagating obscure, unscientific ideas."

Consider the Modi government's own relationship to Patanjali.

A 2017 investigation by the news agency Reuters found the company has received more than an estimated $46 million in discounts for land acquisitions in states controlled by the BJP.

Millions in sales, a billion in income

A few months after the outbreak of the COVID-19 pandemic in 2020, India's health minister at the time, Harsh Vardhan participated in the company's launch of pills, where Ramdev, the yoga guru, claimed the pills showed "100 percent favorable results" during clinical trials on patients.

Despite experts flagging the lack of evidence, the company said it sold 2.5 million kits in six months, consisting of the tablets to ward off COVID-19 and bottled oils that would allegedly boost immunity.

And the company is making an enormous amount of money: Its income was over $1.3 billion in the financial year 2021-22, with profits of $74 million before taxes.

A previous court order in November 2023 forbade the company from issuing advertisements with misleading claims. The very next day, Ramdev held a press conference about remedies for high blood pressure and referred to "lies spread by allopathy," a reference to science-based medicine, according to the lawyer for the Indian Medical Association.

Critics have long alleged that the company's defiance of court orders is likely because of its proximity with India's ruling party, the BJP. The company has received multiple notices and warnings from regulatory agencies and advertising watchdogs in the past.

A spokesperson for Patanjali did not respond to an interview request from NPR.

Addressing the overall impact of misinformation about ayurvedic treatments, Dr . Jayesh Lele , vice president of the Indian Medical Association, says "Our worry is people are being misguided. We have got people who've left our treatment saying their kidneys will be able to function properly [using ayurvedic medicines] and ended up with renal failure. The same happened with patients suffering from hepatitis, who've got the wrong medicine and ended up with further problems. And if you say every day that modern medicine is bad, that is not acceptable."

Government cash promotes traditional treatments

The action against Patanjali comes at a time there's been a culture shift in the government's approach toward health care. India has a dire shortage of qualified health-care personnel and infrastructure gaps. Yet, it spends less than 3% of its GDP (gross domestic product) on health care.

After Modi was sworn in as prime minister in 2014, he ordered the creation of a separate ministry for traditional medicines. Despite continuing doubts over such systems' efficacy, the ministry's budgetary allocation has increased three-fold: from nearly $160 million to around $500 million. In 2020, the Modi government also allowed ayurvedic practitioners to perform some surgeries in public hospitals. The Indian medical association called for a nationwide strike soon after, protesting what it said was a "retrograde step of mixing the systems."

Kishor Patwardhan, professor of ayurveda at the Banaras Hindu University in the city of Varanasi, disagrees with this form of state support. "Ayurveda can only be promoted using good evidence," he says.

The Modi government has also been accused of diluting scientific education, cutting back on research and teaching mythology as history. One ruling party politician, former minister for higher education Satyapal Singh, dismissed Darwin's theory of evolution; one Hindu nationalist academic claimed test-tube babies originated in ancient India. In 2015, the prime minister pointed to Hindu scriptures as proof that plastic surgery existed in ancient India.

"These ideas are coming from important political people, sometimes even the PM," says Mukherjee of the Breakthrough Science Society . "People have faith in leaders. If something comes from them, it damages the society."

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Reporting by Nathan Layne in Wilton, Connecticut, Tim Reid in Washington and Jack Queen in New York Editing by Colleen Jenkins and Bill Berkrot

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LIBF UNIT 2 MARCH 2024 CASE STUDY 1 QUIZ - 'Hugo and Sarah' | FINANCIAL STUDIES CeFS U2 CS1 70x Q&A

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18 March 2024

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LIBF Certificate in Financial Studies Unit 2 (FCML) April 2024 Part B Exam - 70x ‘Hugo and Sarah’ Case Study Questions

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