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Non Trade Investment

02 September 2008

What are non trade investments? How we classify non trade investment & trade investment? Please give examples of trade & non trade investments.

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11 Replies

CA Mohit Mohan (c.a. profession) (557 Points)
Replied 02 September 2008

Let us take an example. You deal in cloth . For taking Raymond agency you have to give Rs. 1 Cr as security and Raymonds will give u 4% as interest. This Investment iS Trade Investment.... While dealing in cloth business you invest in some other shares and bonds which are not related to business thats NON TRADE INVESTMENT

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CA Nitin Wadhwani (Chartered Accountant) (4469 Points)
Replied 03 September 2008

But that Deposit Will Be Treated as Deposits Under 'Loans & Advances'.

CA Naveen Kumar Agrawal (Chartered Accountant / MBA) (939 Points)
Replied 03 September 2008

one more interesting thing about Trade n non Trade Investments is that Trade Investments can not be traded in open market Generally, but Non Trade Investments are generally traded in open market.

CA Vineet Goel (CA) (118 Points)
Replied 04 September 2008

There may be the suitable example in case of trade investment:

In case of construction company, there may be the requirement of the contract to deposit some risk free govt. securities in pursuance to security margin. Company will take such risk free securities for the purpose of business hence classified as an trade investment.

Do you have more differentiated examples.

Abhinav (student) (564 Points)
Replied 17 May 2012

While calculating current ratio, trade investments should not be included in current assets & non trade, short term, marketable, listed invt. should be. Am I right ?

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Abhinav (student) (564 Points)
Replied 17 May 2012

E.g. of trade invt. Shares held by a co. in its subsidiary.

sarfraz (ca) (22 Points)
Replied 31 August 2012

suppose if we invest in a co. which is holding or subsidiary of our co, or owner is same for both co then the investment would be trad or non trad ?

Ankit (Fort) (21 Points)
Replied 12 September 2014

Sir... is for the calculation of capital employed... Non Trade investment is considered...???

Prachi Srivastava (Finance) (368 Points)
Replied 01 December 2014

Non trade investment is not considered for calculation of capital employed.

rohit (Student CA Final ) (117 Points)
Replied 05 December 2014

Money which are invested for other than operational purpose of business. e.g. purchase of sahres or securities, called non trade investment

Trade investments are necessary to operate business or there is vital role of that investment in operation e.g. security deposit for rent or electricity etc.