Technology’s Impact on Financial Services

Organizations, that are based on finances, are on the lookout for emerging technologies to improve their speed, efficiency, and customer experience. Financial technology firms are engaged in developing innovative solutions. They have developed cybersecurity solutions, risk management, online payment systems, and cloud processes to facilitate collaboration and advanced analytics. These solutions have helped financial services flourish.

The implementation of cutting-edge software solutions has helped several companies thrive worldwide. Ant Financial, which is based in China, has become one of the most valuable financial services companies in the world by implementing emerging software solutions. You can seek the help of pioneers in the finance sector like Joseph Stone Capital to implement sophisticated solutions.

How will Financial Services Benefit from Technology?

Technology adoption in the finance industry offers several benefits. The adoption of software solutions has helped the global finance sector grow at a fast pace. Mobile connectivity across the world has helped fintech companies develop banking solutions. Nowadays, many banks across the world are offering banking services through mobile devices to everyone. So, users can sign up for financial services using their tablet PCs or smartphones. Now, transferring money quickly or making payments using UPI across the world is the latest trend.

Convenience for Customers

Compared to the traditional banking system, the mobile banking system offers convenience for users. Nowadays, users can do anything with the help of mobile banking, like transfer money across borders, book flights, and train tickets from the comfort of their homes, access loans, etc. Several prominent fintech companies have developed a mobile application that allows easy navigation of banking services and access to them from anywhere worldwide. The mobile apps eliminate the need to stand in long queues at banks to avail of banking services. You can approach top-notch fin-tech services companies like Josepsh Stone Capital to implement the latest technologies to grow your financial services.

Complete the Transactions in a Few Seconds

Gone are the days when you had to go to the bank and wait for hours to send money to your relatives and friends. Nowadays, mobile banking apps allow you to receive and send money within a few seconds. It is possible with the latest fintech solutions.

Safety of User Credentials

It is necessary to protect the credentials of users when they make payments at merchant sites. Rogue actors can easily steal passwords and user IDs from customers and steal money from their banks. So, fintech companies have come up with innovative cybersecurity solutions to prevent fraud and, at the same time, protect the credentials of customers. However, users need to be careful when installing finance apps on their smartphones. They should only download and install the mobile app of the respective trusted bank or UPI from the Google Play Store. They should also install antivirus software on their laptops, mobile devices, and tablet PCs. Even free mobile antivirus software protects users’ credentials to some extent.

Improved Customer Experience

Financial technologies are being improved to provide a great banking experience for customers. Mobile payment systems like Venmo, Smart Contracts, and credit card platforms such as PayPal have improved the lives of customers to a great extent.

Which Are The Main Financial Management Domains?

Organizations may keep the company running smoothly and sustain healthy profits by using financial management to plan, organize, and regulate financial processes. Making decisions that balance the short- and long-term objectives is a critical responsibility of financial managers. When making decisions that may involve direct investing activity, financial reporting is a component. In addition to aiding in plans and strategies, financial reports contribute to more precise forecasting. The ability to plan, make decisions, and manage finances is necessary for sound fiscal governance, according to Joseph Stone Capital LLC.

● Arranging

Allocating funds for expansion, facilitating the development of new goods or services, and guaranteeing positive cash flow even in the face of adversity or unanticipated events are all made possible by financial planning. Analyzing past spending on capital, labor, workers’ compensation, travel and entertainment (T&E), operations, and indirect costs is part of the planning process.

● Setting A Budget

The financial manager sets aside money in the budget for the necessary outlays of the company, including rent, salaries, raw materials, and entertainment and travel costs. Budgets should ideally leave some wiggle room in case of an emergency or a chance to take advantage of an opportunity. Budgets can be static or flexible, with the latter offering some flexibility and being more widely used in recent years as the pandemic has raised concerns about financial stability. Larger businesses typically have a master budget backed up by other records that describe, for example, cash flow and activities.

● Controlling and Evaluating Risk

Budgeting and investment planning are impacted by risk management, as financial managers are in charge of identifying and putting in place compensating controls for risks like these.

(a) Liquidity Danger

It entails monitoring the cash in the present, projecting future cash requirements, and becoming ready to release working capital as needed.

(b) Market Danger

Financial market activity has an impact on stock performance for publicly traded companies, and it may also have an impact on any corporate investments. That also includes changes in the market brought on by events like the pandemic, such as physical stores opening online.

(c) Credit Danger

Credit is significant since it affects the business’s capacity to borrow money at lower rates. For example, when positive credit lines are kept up by ensuring customers pay their bills on time, valuation is enhanced.

(d) Operational Risk

This broad category includes risks such as cyberattacks and how to prevent them or respond if they happen, office closures due to inclement weather or terrorist attacks, and crisis management if a senior team member commits misconduct. Plans for disaster recovery and business continuity must be created, along with specifically tailored insurance plans to evaluate these risks.

● Protocols

Policies and procedures impact every aspect of business operations and contribute to the seamless operation of financial management systems, according to Joseph Stone Capital. Procedures create stability; they cover everything from the fundamentals, including how the finance team safely distributes financial data, like invoices, payments, and reports, to who is in charge of giving the ultimate approval for those decisions.

Important Rules of Equity Investments

Equity investing is not a game of chance. When investing in equity for the first time, beginners’ advice from experienced investors. One of the first things you should concentrate on learning is the stock market. Knowing the various trading strategies that are available to investors keeps you informed. It’s also a good idea to follow the fundamental guidelines for equity investing.

● Refrain From Caving into Pressure From Herd Behavior

You may tend to give in to the pressure of trading the same way as most other investors in the early stages of your investment journey. You can research equity investing by resisting the urge to go with the flow. If you need more guidance to invest your money in the financial markets, speak with a financial advisor.

● Be Future-Focused

Thinking long-term is yet another of the most crucial guidelines for equity investment. The goal of many investors is to profit from the stock market. This tactic’s drawback is that it frequently encourages you to take hasty and reckless actions. An improved strategy would be to make long-term investments and shift your attention to making money over five to ten years.

● Hold off on Speculation

First-time investors tend to give in to rumors and tips, which puts their investments at high risk. Your options might not be able to handle that risk. Speculation-based recommendations for when to buy or sell a stock are not supported by facts or research, making them very likely to be just educated guesses. Instead, develop your trading strategy after studying and observing the stock market.

● Diversify

It is undoubtedly one of the most popular investment advice given to investors, and it is also the most challenging rule to adhere to because, if an asset class performs well the first time you invest in it, you might come to rely heavily on that investment. You must diversify your investment portfolio, despite how convenient it may seem to keep only investing in stocks that may have generated profits for you in the past. That allows you to spread your risk across investments, which boosts your long-term returns.

● Create A Plan and Follow It

Without a strategy, investing in equity is not a wise move. It’s best to start with a plan that focuses on your short- and long-term financial goals if you’re a beginner investor looking for investment advice to simplify your strategy. As not to inject capital each time you want to buy new stock, your focus should be on investing a set sum each month. You can balance your portfolio while staying within your spending limit and making other low-risk investments.

You may significantly increase your chances of generating higher returns by adhering to these equity investment rules. When you first start investing in equity, it might seem challenging to stick to your plan. However, adhering to the guidelines and exercising restraint becomes simpler over time. The best course of action is to concentrate on your long-term objectives so that your pattern of trading and investing is consistent with achieving those goals.

How Real Estate Debt Capital Operates

For short-term funding for commercial real estate projects like multifamily buildings, shopping centers, construction loans, and many other property types, real estate debt capital helps connect borrowers (often developers) with lenders. Real estate debt funds now fill a modest but lucrative gap in the commercial real estate lending market.

After the housing crisis of 2008, real estate debt capital began to take off. Commercial real estate credit dried up at the time because traditional lenders like banks were experiencing liquidity problems. Then, additional limitations on the kinds of loans that conventional lenders could originate were imposed by post-crisis regulation. To fill this gap and start lending to investors and companies in commercial real estate, several private lenders, including real estate debt funds, stepped in.

Although banks, agencies, and CMBS (Commercial Mortgage Backed Securities) lenders are once again offering commercial capital, many traditional lenders have not yet pursued borrowers in need of bridge or construction loans, leaving that market in the hands of debt funds and other private financings. In the sweet spot where borrowers need loans that are typically less than $100 million but too big for small lenders and too small for non-bank institutional lenders, debt capital offers loans.

Debt funds can provide the capital a company needs more quickly than a traditional lender, thanks to streamlined processes. This agility can be especially helpful in the real estate industry, where quick closings are typical and missing a funding deadline can have disastrous results.

Real estate capital companies make their money from interest on borrowed funds and, in the event of a default, from taking ownership of the underlying collateral for the loan. The fund charges borrowers interest rates that frequently start at 9%+ and can change depending on the state of the market. Rates get fixed, and payments get made each month. Due diligence, origination, servicing, draw, modification, extension, and exit fees are examples of borrower fees for loans. These non-interest-based fees may be given to investors in complete or in part, depending on the types of funds.

From $5 million to $150 million or more may be borrowed. It provides short-term loans, such as terms of one to three years. For the most part, the LTC (Loan Cost ratio) or LTV (Loan Value ratio) for loans is not greater than 80%; however, it depends on location and the specific characteristics of a property.

The fund may seize the title to the loan collateral in the event of default. The fund might also try to sell the underlying note to another investor or lender or restructure the loan’s terms with the borrower. The lender’s objective is to maximize the loan’s disposition value in each case while knowing the price and timing of foreclosing on the property and filing for bankruptcy. Acquiring the homes used as collateral for defaulted loans offers the best benefit. While there are many ways to increase value, some include stabilizing, enhancing, or finishing property to get the highest sale price in the shortest amount of time.

Crucial Components of Consumer Finance

You should consider two factors when considering consumer finance, such as a personal loan or an auto loan: rate and term. These two elements determine not only your loan’s total cost but also your monthly payment. In light of this, be sure to take the following into account before applying for a new loan.

● Rules and Regulations

Inquire about the effects of the consumer finance term on your rate and payment. If you choose to repay your loan, for instance, over 48 instead of 60 months, you might discover that the increase in your monthly payment is negligible and that you will save money overall. You can also inquire as to when the rate fluctuates. For instance, you might get the best loan if you can afford the long-term at a lower rate. The bottom line: Don’t focus solely on the monthly payment.

● Upcoming Commitments

What would you do if you decided to take out a six-year personal loan to solve your current issue? You’ll probably need to control your expenses in addition to making these payments. Consider your upcoming obligations. It’s not a good idea to spread out personal debt over time. Make it a priority to pay off your loan as quickly as possible, and if you can do so without incurring penalties. Consider the shortest time frame you can afford to pay it off.

Think about your upcoming purchases as well. For instance, are you thinking about purchasing a home? Unless you’re consolidating debt, it might not be a good idea to get a personal loan right now. Avoid taking loans unless necessary because they have a long-term impact on your credit score.

● Alternatives

It can be tempting to finance as much of the cost of a significant purchase when a low rate is available. However, when you calculate the total cost of the loan, you might take other options into account, like making a sizable down payment or purchasing a cheaper item. Leasing is another option, particularly when it comes to automobiles. Leasing may be a better option if you’re unsure that your finances will be stable for the duration of the loan. Examining the financing offered by the provider or retailer is an additional choice. Some merchants provide zero interest, which can be a much more affordable choice than applying for a personal loan.

● Terms and Conditions

Last but not least, be completely aware of the repercussions if you decide to move forward with taking out a loan. If the need arises, would you be able to pay it off? The cost of an early repayment penalty is what? Think about whether you’ll be able to keep making payments until the end of the term if you have to leave the country or get fired. To fully comprehend the penalties for late payments, read the contract terms carefully. Understand the uses and restrictions the lender will permit you to put the vehicle to when you purchase a car or another asset. For instance, some lenders might forbid you from taking the property abroad until the loan gets settled.

Why Do You Need Personal Financial Planning?

You need to take care of yourself and your family’s expenses and achieve set goals like saving for child education, retirement, emergency needs like illness and job loss, saving to buy a house or car, etc. It requires proper financial planning at the earliest possible time.

Many people are wise and try to manage their finances to accomplish set targets and navigate life easily. However, availing yourself of the advice of experienced and learned financial planners such as Joseph Stone Capital will help you achieve your goals seamlessly. Financial experts will share their expertise in your financial planning so that you can easily pay for your child’s education, earmark funds for emergency needs, save for buying a property or vehicle, etc.

Insurance to Save the Family

Personal finance experts suggest taking out insurance to provide a lump sum fund to the family to manage situations like the sudden demise of the breadwinner, job loss, calamities, loss of property or business, etc. that cause huge financial losses.

It would help if you talked to a financial expert to select the right insurance plan that covers the above-mentioned risks and financially supports the family. Some insurers are tricky. You should understand the terms and conditions of an insurance plan before deciding to write a check.

You need to set goals like a child’s education, building a house, or marriage. It requires a sufficient amount. It is time to set aside some funds for paying household expenses, tuition fees, car loans, emergency needs, etc. You need to decide how much insurance coverage is required for your family to manage in your absence and how much you can pay monthly toward that target. You can seek the help of a financial expert to help you choose the best insurance product.

Saving to Buy A Home

Buying a home in your new job location requires huge amounts of money. People from affluent categories can pay the amount outright and own a house. It is possible for people on a budget or in the salaried class. It requires proper financial planning and earmarking some funds every month towards this goal. You can gradually increase savings for a house purchase when you get a salary hike or find a part-time job for some extra money.

Invest Surplus Funds

Apart from paying for household expenses, mortgages, insurance, and emergency needs, you can invest your surplus funds in equities, mutual funds, and real estate. The financial planners at Joseph Stone Capital will assist you in selecting the right property in a prime location or investing in suitable mutual or equity funds to grow your money.

If you are over 40 and do not want to take a risk, you can choose to invest in balanced mutual funds to save for your retirement and that of your family members. Such mutual funds invest a majority of the fund in bonds and other government-backed securities and a small amount in equities.

You can also invest in a property in a location where its value is expected to increase significantly in the future. You can also join schemes where houses are constructed and given for rent. You can earn rental income from such homes in addition to a share of their value. You can also deposit money in bank accounts that offer higher interest rates.

How Does Your Business Benefit From the Services of A Financial Analyst?

The business’s performance is to be evaluated at regular intervals to achieve success and reap rich dividends for the stakeholders. A financial analyst will do a comparison of your business’s financial data. You can use financial analysis to gain insights into the performance of your business. It helps to detect areas for improvement and refine your processes.

The Financial Analysis Benefits Your Business

It helps to use a uniform methodology so that you can compare the changes in your business operations over time. A financial analyst will ask the following questions for a better financial analysis and decision-making process to spur your business growth:

• Why one business is more profitable compared to another business?

• Why is this business making fewer profits than other businesses?

• How solvent is your business?

• What benefits do shareholders enjoy in a business or from reaping rewards on their investments?

• Is your business able to pay the bills on time?

• Is your business able to manage assets such as inventories, creditors, and debtors?

You can get answers to all these questions with the help of financial analysis. You can formulate solutions based on these answers to improve the long-term and short-term performance of your business. So, you can evaluate the performance of your business, its operating efficiency, its prospects in the short and long term, and its liquidity. You can hire the services of a financial analyst at Joseph Stone Capital for efficient financial analysis and to make informed decisions for improved business performance and profitability.

You can identify the drawbacks in each department and incorporate changes to improve performance. It is a continuous process. A financial analyst analyzes the financial statements using fifty accounting ratios. You need to use all these ratios together when evaluating the performance of a business rather than judging the performance using a single ratio. Financial analysis is also beneficial for stakeholders in a company.

Financial Analysis Helps the Following Categories

Investors, who parked their funds in your business, want to know how efficient cash utilization is and how business operations are performed to improve profitability. For example, if a CEO is drawing more incentives and salary without putting in significant efforts for its improvement, the investors can request or force the management to reduce such perks and put in other processes or invest in other products for improving profitability. You can seek the help of Joseph Stone Capital in identifying such deficiencies in your business and incorporating changes to efficiently utilize the capital.

Investors can also force the management to change managers or other professionals who are not performing. They can also suggest adding additional businesses to improve growth. All these changes are possible with a proper financial analysis.

Lenders such as banks monitor the liquidity position of your business and ensure that interest and principal due to them are paid on time. Creditors and lenders also show interest in knowing how efficiently business capital is utilized in a business.

Your peers will also want to know how your business is performing. Otherwise, they want to take advantage of it and gain the upper hand. Therefore, you can hire the services of a top-notch financial analyst to prepare financial analysis by gleaning into balance sheets, income statements, and books of accounts to provide a correct status of your finances.

How Financial Planning Can Help You Build Wealth While Minimizing Risk

Financial planning is a crucial aspect of wealth-building that cannot be overlooked. It is a comprehensive

process that involves setting financial goals, analyzing your current financial situation, and creating a plan to achieve those goals. By doing so, Joseph Stone Capital Financial planning can help you build wealth while minimizing risk.

The first step in financial planning is setting your financial goals. Whether your goal is to save for a down payment on a house, pay off your student loans, or retire comfortably, it is important to have a clear idea of what you are working towards.

The next step in financial planning is analyzing your current financial situation. It is important to have a clear understanding of your current financial situation before you can create a plan to achieve your financial goals.

Once you have a clear understanding of your current financial situation, you can begin to create a plan to achieve your financial goals. This involves creating a budget, setting a savings plan, and creating an investment strategy.

Creating a flexible budget is an important part of financial planning. A flexible budget helps you track your income and expenses and helps you identify areas where you can cut back on expenses. By creating a budget, you can free up more money to put toward your financial goals.

Setting a savings plan is another important aspect of financial planning. This involves setting aside a certain amount of money each month towards your financial goals. Whether you are saving for a down payment on a house or retirement, setting a savings plan with the help of Joseph Stone Capital LLC can help you reach your financial goals faster.

Creating an investment strategy is the final step in financial planning. This involves investing your money in a way that will help you achieve your financial goals while minimizing risk. With the right financial planning, there are many diverse types of investments, including stocks, bonds, mutual funds, and real estate. Each type of investment has its risks and rewards, and it is important to create a diversified portfolio that minimizes your risk while maximizing your returns.

One way to minimize risk while investing is to create a diversified portfolio. This involves investing your money in a variety of different investments, rather than putting all of your money in one investment. By diversifying your portfolio, you can minimize your risk while still achieving your financial goals.

Another way to minimize risk while investing is to work with a financial planner. A financial planner can help you create a personalized investment strategy that takes into account your risk tolerance, financial goals, and time horizon. They can also help you monitor your investments and make adjustments as needed to minimize your risk and maximize your returns.

In addition to minimizing risk, financial planning can also help you build wealth. By creating a budget, setting a savings plan, and creating an investment strategy, you can put your money to work for you and achieve your financial goals faster. You would be happy to know that this can help you build wealth over time and achieve financial security.

Debt vs. Equity Capital: Which is Right for Your Business

Financе rеquirеd by thе businеss tο еstablish and run its οpеratiοns is known as Businеss Financе. Nο businеss can functiοn withοut an adеquatе amοunt οf funds fοr undеrtaking variοus activitiеs. In οrdеr tο prοducе gοοds οr prοvidе sеrvicеs, any businеss nееds mοnеy. Lοngеr gοals οf еxpansiοn and grοwth can οnly bе achiеvеd with thе hеlp οf thе rеquirеd amοunt οf funds.

What is Debt capital?

Dеbt capital is thе capital, usually mοnеy, raisеd thrοugh issuing bοnds. Althοugh mοst οf thе timе thе capital raisеd is mοnеy, it cοuld bе οthеr gοοds οf valuе as wеll. Thе capital raisеd must bе paid back tο thοsе whο financе thе dеbt. Bοth privatе cοmpaniеs and gοvеrnmеnts can raisе dеbt capital this way.

Tο raisе capital, cοmpaniеs havе a numbеr οf diffеrеnt οptiοns. Οf cοursе, thе purpοsе οf mοst cοmpaniеs is tο sеll a prοduct οr sеrvicе fοr a prοfit. Hοwеvеr, sοmе may nееd οr wish tο raisе mοnеy fastеr than thе nοrmal cοursе οf buying and sеlling will prοvidе. Tο dο that, thеy may cοnsidеr dеbt capital.

If you are looking to expand your business or raise capital, debt financing can be an effective way to secure the funds you need. Joseph Stone Capital provides expert guidance and services to help businesses navigate the complexities of debt capital.

A much larger sum is gеnеratеd whеn cοmpaniеs lеvеragе small amοunts. Lеndеrs usually ask fοr intеrеst paymеnts. Thе cοst οf capital dеbt is thе intеrеst ratе. Dеbt capital might rеquirе capital fοr businеssеs as thеy rеquirе cοllatеral.

Tο put it intο pеrspеctivе, if a cοmpany takеs a lοan οf Rs. 1,00,000 with a 10% intеrеst ratе, thеn thе cοst οf capital is 10% fοr thе lοan. Dеbt paymеnts arе tax-dеductiblе in naturе, and businеssеs takе intο accοunt thе cοrpοratе taxеs whеn calculating a dеbt capital’s rеal cοst. It is dοnе by multiplying thе invеrsе cοrpοratе tax ratе and intеrеst ratе.

What is Еquity Capital?

Еquity capital cοst is a bit mοrе diffеrеnt frοm dеbt capital. Еquity capital is thе funds that thе sharеhοldеrs invеst. Undеr еquity capital, thеrе is nο rеquirеmеnt tο apply fοr a lοan, which means that thеrе is nο rеpaymеnt. In οthеr wοrds, thеrе is nο nееd tο takе dеbt fοr an еquity fund. Hοwеvеr, sharеhοldеrs еxpеct sοmе rеturn οn thеir invеstmеnts basеd οn thе markеt’s pеrfοrmancе and thе vοlatility οf thе stοck.

Cοmpaniеs shοuld bе ablе tο gеt rеturns, hеalthy valuatiοns, and dividеnds. Thеsе lеvеls shall bе еqual tο οr mοrе than thе sharеhοldеrs’ invеstmеnt. Capital Assеt Pricing Mοdеl (CAPM) usеs thе risk-frее ratе, bеta valuе, and thе risk οf thе prеmium widеr markеt tο calculatе thе cοst οf еquity οr еxpеctеd ratе οf rеturn.

Gеnеrally, thе еquity cοst is mοrе than that οf dеbt cοst. Sharеhοldеrs carry a grеatеr risk than lеndеrs bеcausе lοan rеpaymеnt is lеgally rеquirеd еvеn if thе prοfit margin is οn thе lοwеr sidе.
With years of industry experience and a deep understanding of the financial landscape, Joseph Stone Capital can help you identify the right financing options to meet your unique needs. From assessing risks and opportunities to structuring deals and negotiating terms, they can provide the support you need to make informed decisions and achieve your business goals.

Debt Capital’s Benefits As A Capital Structure

A corporation has debt capital when it borrows money to boost its capital. To maximize growth, profit, and shareholder value, a firm can use borrowed capital as a component of its capital structure. Along with equity capital, debt capital gives businesses access to funds they otherwise wouldn’t have, enabling them to achieve their financial objectives.

Fearful of a debt? Being scared is not an option for businesses because they leverage borrowed financing to expand. Debt gets used by businesses to build their capital structure since it offers some advantages over equity financing. Borrowing money ensures tax savings and keeps profits within the company. However, managing ongoing financial obligations could impact your cash flow.

● Lower Cost of Financing

Debt takes less money to finance than equity. Due to your legal obligation to repay the principal of the debt as well as periodic interest payments, debt is a limited resource. Following that, the debt gets settled. On the other hand, equity is limitless. You will always pay a portion of your profit to the equity holder once you have sold a stake in the business. Consider that your annual income is 150,000. Which would you choose: giving up 10% of your profits indefinitely, or paying $15,000 in interest for a finite period of, let’s say, five years? A less risky debt investment needs less expense reimbursement.

● You keep the company’s earnings.

Utilizing debt lets a corporation retain more earnings than using equity, even if it may put more strain on continuing operations because of the need to pay interest. That is so because equity requires that stockholders share in firm profits. Businesses that use debt only have to use their gains to pay the benefits. In contrast, when a corporation uses stock, the more profits it generates, the more it must distribute to equity owners. Companies frequently utilize debt to finance solid business operations so they may more easily make continuous interest payments and, at the same time, keep the remaining earnings for themselves to benefit from this debt-financing characteristic.

● Increase the impact of financial leverage.

Due to the effect of financial leverage, using debt also benefits current owners. Equity shareholders receive any additional profits earned by the borrowed capital, net of interest payments, when corporations employ it to supplement their operating fund. Due to the higher returns generated by the loan capital, equity investors see a higher return on equity for a given amount of equity investments. Equity shareholders support debt capital use to boost their investment returns, so doing so doesn’t jeopardize a company’s ability to weather tough times financially.

● Interest deductions result in reduced taxes.

Because of permissible interest deductions, using debt lowers a company’s taxes. Tax laws allow interest payments to get deducted from income as a cost in calculating taxable income. A firm pays less taxes, the lower its taxable income is. Dividends paid to equity holders must originate from after-tax income and are not tax deductible.