What exactly is CURRENT ACCOUNT ?

[cfa]

Investing.com - The euro zone’s current account fell less-than-expected last month, industry data showed on Thursday.

In a report, European Central Bank said that Euro zone current account fell to a seasonally adjusted 19.5B, from 25.9B in the preceding month.

Analysts had expected Euro zone current account to fall to 14.2B last month.
Investing.com - The euro zone’s current account fell less-than-expected last month, industry data showed on Thursday.



Please help to enlighten, many thanks.

[BlueKelah]

The Current Account tracks the trade balance (exports and imports for goods and services), income payments (such as interest, dividends and salaries) and unilateral transfers (aid, taxes, and one-way gifts). A positive value (current account surplus) indicates that the flow of capital from these components into the Euro-zone exceeds the capital leaving the Euro-zone. A negative value (current account deficit) means that there is a net capital outflow from the Euro-zone. Persistent Current Account deficits may lead to a depreciation of a currency, as trade, income and transfer payments usually reflect that Euros are leaving the Euro Area to make payments abroad. Conversely, underlying surpluses act as an appreciating weight on the Euro.

So I think it means whenever you buy a BMW or Mercedes, the money you pay from singapore will flow into the Eurozone's current account giving it more surplus


Googled the answer here.
http://fxwords.com/c/current-account-euro-zone.html

[Temperament]

What is "time interest earned"? Is there any company that don't have "TIE"? Is it possible even for net cash company?

[BlueKelah]

What is "time interest earned"? Is there any company that don't have "TIE"? Is it possible even for net cash company?

http://www.investopedia.com/terms/t/tie.asp

possible for net cash company i guess if they have some debt.

but if totally NIL debt like Yamada or Neratel or AsiaEntH then denominator would be 0 and if I divide EBIT by 0 on my computer i get error.

[CityFarmer]

The Current Account tracks the trade balance (exports and imports for goods and services), income payments (such as interest, dividends and salaries) and unilateral transfers (aid, taxes, and one-way gifts). A positive value (current account surplus) indicates that the flow of capital from these components into the Euro-zone exceeds the capital leaving the Euro-zone. A negative value (current account deficit) means that there is a net capital outflow from the Euro-zone. Persistent Current Account deficits may lead to a depreciation of a currency, as trade, income and transfer payments usually reflect that Euros are leaving the Euro Area to make payments abroad. Conversely, underlying surpluses act as an appreciating weight on the Euro.

So I think it means whenever you buy a BMW or Mercedes, the money you pay from singapore will flow into the Eurozone's current account giving it more surplus


Googled the answer here.
http://fxwords.com/c/current-account-euro-zone.html

To borrow Mr. Specuvestor's quote, current account is a similar concept as operating cash flow in accounting.

The other accounts are capital account and financial account. The three accounts constitute the balance of payment (BOP)

[specuvestor]

Thanks CityFarmer And Capital account is like Investing cashflow while Financial or govt account is like the Financing cashflow

The reference to the standard 3 segments of cashflow may help you understand roughly how it works. Countries that sells more than they make will have current account surplus, just like profits. The profits could flow out through the capital account as investments. OTOH current account deficit countries have to attract investment cashflow to fund for their shortfall ie debt. Failing which the govt will have to balance the numbers through the financing cashflow. Forumers that frequently do cashflow analysis of companies should catch the analogy easily.

The tricky part is of course fiat money which central banks can print, while companies can't, which affects these 3 cashflows. But if there is no national currency except say US$, then the dynamics will be less complex.