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    Unit - 4: Managing Finance

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    Anshika Singh
    The document discusses various aspects of managing finance for entrepreneurs including: 1) The objectives of managing finance such as removing uncertainties, ensuring adequate funds, and maintaining a balance between profitability and liquidity. 2) The steps in preparing an operating budget which includes preparing sales, cost, and expense budgets and properly allocating finances. 3) The importance of operating budgets for tracking income/expenses, improving efficiency, and guidance for planning and investments. 4) Types of operating budgets such as cash budgets which estimate cash flows over a period to assess sufficient cash flow.

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    Unit - 4: Managing Finance

    Uploaded by

    Anshika Singh
    17 views27 pages
    The document discusses various aspects of managing finance for entrepreneurs including: 1) The objectives of managing finance such as removing uncertainties, ensuring adequate funds, and maintaining a balance between profitability and liquidity. 2) The steps in preparing an operating budget which includes preparing sales, cost, and expense budgets and properly allocating finances. 3) The importance of operating budgets for tracking income/expenses, improving efficiency, and guidance for planning and investments. 4) Types of operating budgets such as cash budgets which estimate cash flows over a period to assess sufficient cash flow.

    Original Description:

    Notes for DU students having Ge- Entrepreneurship. This file contains the notes for the 4th unit.

    Original Title

    ENTRE-UNIT 4

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    The document discusses various aspects of managing finance for entrepreneurs including: 1) The objectives of managing finance such as removing uncertainties, ensuring adequate funds, and maintaining a balance between profitability and liquidity. 2) The steps in preparing an operating budget which includes preparing sales, cost, and expense budgets and properly allocating finances. 3) The importance of operating budgets for tracking income/expenses, improving efficiency, and guidance for planning and investments. 4) Types of operating budgets such as cash budgets which estimate cash flows over a period to assess sufficient cash flow.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    17 views27 pages

    Unit - 4: Managing Finance

    Uploaded by

    Anshika Singh
    The document discusses various aspects of managing finance for entrepreneurs including: 1) The objectives of managing finance such as removing uncertainties, ensuring adequate funds, and maintaining a balance between profitability and liquidity. 2) The steps in preparing an operating budget which includes preparing sales, cost, and expense budgets and properly allocating finances. 3) The importance of operating budgets for tracking income/expenses, improving efficiency, and guidance for planning and investments. 4) Types of operating budgets such as cash budgets which estimate cash flows over a period to assess sufficient cash flow.

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    Download as pptx, pdf, or txt
    of 27

    UNIT - 4

    MANAGING FINANCE
    OBJECTIVES OF MANAGING FINANCE FOR ENTREPRENEUR

    • TO REMOVE UNCERTAINITIES
    • TO ELIMINATE WASTAGE
    • SERVES AS A GUIDE TO ACHIEVE OBJECTIVES
    • ENSURE AVAILABILITY OF ADEQUATE FUNDS AT ALL TIMES
    • TO MAINTAIN BALANCE BETWEEN PROFITABILITY AND LIQUIDITY
    • TO MAKE SURE THERE IS MINIMUM COST
    • TO PREDICT FUTURE REQUIREMENTS
    STEPS IN PREPARING AN OPERATING BUDGET

    • PREPARE SALES BUDGET


    • PREPARE COST/EXPENSE BUDGET
    • PROPER ATTENTION TO FINANCES
    • PREPARE THE OPERATING BUDGET

    SIGNIFINACE OF OPERATING BUDGET

    • HELPS IN TRACKING INCOME AND EXPENSES


    • IMPROVES OVERALL EFFICIENCY
    • GUIDANCE FOR EFFICIENT PLANNING
    • ALLOWS TO MAKE RIGHT INVESTMENTS
    • HELPS IN PREPARING FOR FINANCIAL OBLIGATIONS
    TYPES OF OPERATING BUDGETS
    A cash budget is an estimation of the cash flows of a business over a specific period of time. This could be for a
    weekly, monthly, quarterly, or annual budget. This budget is used to assess whether the entity has
    sufficient cash to continue operating over the given time frame.

    Parts of cash budget


    OBJECTIVES OF CASH BUDGET

    • Project firm’s cash position in future


    • Predict cash surplus or deficit in future
    • Permit proper utilization of idle cash
    • Exercise control over cash expenditure
    • Allow planning of financing if needed
    • Help in selection of source of funds

    SIGNIFICANCE OF CASH BUDGET

    • Important tool for planning fund requirements and controlling cash position
    • Helps in determining which months may have surplus and which may have deficit and by how much
    • Indicates the best time to undertake financing process
    • Cash budget is conducive to formulation of dividend policy
    • Can compare actual receipts and expenditures with the estimated figures
    • Finance manager can maintain high liquidity
    SHORT TERM CAPITAL

    Short term finance refers to financing needs for a small period


    normally less than a year. In businesses, it is also known as 
    working capital financing. This type of financing is normally needed
    because of uneven flow of cash into the business, the seasonal
    pattern of business, etc. In most cases, it is used to finance all types
    of inventory, accounts receivables etc.

    SOURCES OF SHORT TERM CAPITAL


    SOURCES OF LONG TERM FINANCE

    • EQUITY SHARES
    • PREFERENCE SHARES
    • BONDS & DEBENTURES
    • RETAINED EARNINGS
    • LONG TERM LOANS FROM FINANCIAL INSTITUTIONS
    • RAISING CAPITAL THROUGH PUBLIC DEPOSITS
    • LONG TERM LOAN FROM A BANK
    • INTERNAL SELF-FINANCE
    SIGNIFICANCE OF HR PLANNING
    • OPTIMUM UTILIZATION OF HUMAN RESOURCE
    • HELPS IN PROVIDING RIGHT EMPLOYEES AND ACCURATE NUMBER
    • HELPS IN DETERMINATION OF DEMAND AND SUPPLY
    Basic requirements of a contract
    Stages of Contract Management

    *continued on next page


    BENEFITS OF CONTRACT MANAGEMENT

    • Increased security
    • Increases control
    • Diminished Risk
    • Increased Visibility
    • Increased Compliance
    E. JEROME
    McCARTHY
    4 Ps of Entrepreneurship by Nick Jordan

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