Using excel to simulate a mathematical function

Monte Carlo Simulation for Gambling

Insurance for Start-Ups

	Claim Examples	Approximate Pricing
General Liability Insurance	Your sales rep spills coffee on a client when meeting at a coffee shop, causing severe burns. A child chokes on the connected wearable device you’ve designed and marketed. A competitor sues for defamation, libel, or even copyright infringement based on the content of your website or your advertising campaign.	$1M per occurrence and $2M aggregate is the standard starting point for any startup. Approximate pricing: $500-2,000 per year
Worker’s Compensation Insurance / Disability Insurance	Employees injuring themselves on the job, whether at the job or not. Think slips, falls, and spills. A programmer suffers from carpal tunnel from all the code he’s writing.	A good starting point is usually $1M in coverage Approximate pricing: $300-500 per salaried employee per year
Errors and Omissions Insurance	An actual bug in your SaaS marketing/sales platform that causes users to lose money—payments aren’t processed, leads aren’t recorded, etc.—that leads to a class action lawsuit. Your product/service doesn’t live up to your customer’s expectations; the customer alleges you haven’t honored company policies or contractual obligations. Your customer claims you’ve violated the terms of the user agreement and sues for misrepresentation or violation of contract. Even if the allegation is borderline frivolous, you’ll still have to pay a lawyer to deal with it. These costs are covered by E&O policies.	$1M is a good starting point Approximate pricing: $1,500-4,000 per year
Cyber Liability Insurance	Your AWS databases are hacked and your users sue you for leaking information. An employee leaves a laptop or phone in a cab that’s picked up by someone who leaks private user data. You suspect there may have been a breach and you have to notify your users to comply with individual state laws regarding breach notification procedures. You’re hit with a DDoS attack and you have to shut down your site for a few days, causing lost profits and expenses to build up.	Approximate pricing: $1,500-4,000 per year
Employment Practices Liability Insurance	Lawsuits for violating employment laws around race/gender/age discrimination and/or discriminatory hiring/firing practices. Sexual harassment or hostile work environment lawsuits. Wrongful termination lawsuits.	Approximate pricing: $3,000-8,000 per year

HP BYOD

Peripheral Ring Road

Few Ways Companies Cook the Books

A software service provider receives upfront payment for a four-year service contract but records the full payment as sales of only the period that the payment is received. The correct, more accurate, way is to amortize the revenue over the life of the service contract.

A second revenue-acceleration tactic is called "channel stuffing." Here, a manufacturer makes a large shipment to a distributor at the end of a quarter and records the shipment as sales; however, the distributor has the right to return any unsold merchandise. Because the goods can be returned and are not guaranteed as a sale, the manufacturer should keep the products classified as a type of inventory until the distributor has sold the product.

Before a merger is completed, the company that is being acquired will pay, possibly prepay, as many expenses as possible. Then, after the merger, the EPS(Earnings per Share) growth rate of the combined entity will be easily boosted when compared to past quarters.

A company can create separate legal entities that can house liabilities or incur expenses that the parent company does not want to have on its financial statements. Because the subsidiaries are separate legal entities that are not wholly owned by the parent, they do not have to be recorded on the parent's financial statements and are thus hidden from investors.

Another widely used manipulation is called “cookie jar” method involves improperly storing revenue off the balance sheet and then releasing the stored funds at strategic times in order to boost lagging earnings for a particular quarter.

Improper asset valuation exaggerates a company’s assets and portrays the assets in a more positive financial light. It may involve creating fictitious receivables, not writing down obsolete inventory on a company’s balance sheet, manipulating the estimates of an asset’s useful life and overstating the residual value.

Why carry out these manipulations when the extra money earned in one year would have to be subtracted from future years? This was necessary because corporations are under enormous pressure from investors to keep up short-term earnings. Otherwise, their share values will drop, which not only threatens companies heavily reliant on share values to finance debt, but also has financial consequences for top executives, whose astronomical incomes are bound up with stock options.

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