CASH BUDGET.pptx
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This document discusses how to create a cash budget. It explains that a cash budget estimates cash inflows and outflows over a period of time and is useful for both long and short-term planning. It provides steps for creating a cash budget including using accounting tools, assessing the timeframe, entering current cash balance, forecasting cash flows. Methods like receipt-payment, adjusted profit-loss, and balance sheet are covered. Advantages include usage monitoring and acquiring/allocating funds, while disadvantages are not reflecting changes in assets/liabilities or profitability.
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Discuss the concept of risk in investment decisions.
Understand some commonly used techniques, i.e., payback, certainty equivalent and risk-adjusted discount rate, of risk analysis in capital budgeting.
Focus on the need and mechanics of sensitivity analysis and scenario analysis.
Highlight the utility and methodology simulation analysis.
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Focus on the relationship between utility theory and capital budgeting decisions.
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The document discusses the concept of cost-benefit analysis (CBA) for evaluating information systems projects. CBA measures and compares the costs and benefits of a project to determine if its benefits outweigh its costs. The CBA process involves identifying the tangible and intangible costs and benefits of a project, evaluating them, and choosing the system with the lowest costs but highest benefits. CBA is useful for decision making by individuals, companies, and governments.
Ebit - Eps Analysis
This analysis is an important tool used to optimize the capital structure for highest earnings for shareholders
It helps in understanding the sensitivity of EPS at given level of Earning before Interest & Tax under different sources of financing
It helps in analyzing how capital structure decision is important to raise the value of firm
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Earning Per Share under different Capital structure plans
Plan 1 ( Only Equity Shares )
EPS = (EBIT (1−Tax rate))/(No. of Outstanding Shares)
Plan 2 ( Equity Shares & Debt )
EPS = ((EBIT −Interest) (1−Tax rate))/(No. of Outstanding Shares)
Plan 3 (Equity, Debt & Preference Shares)
EPS = ((EBIT −Interest) (1−Tax rate)−Pref. Dividend)/(No. of Outstanding Shares)
Plan 4 (Equity shares & Preference Shares)
EPS = (EBIT (1−Tax rate)−Pref. Dividend)/(No. of Outstanding Shares)
Thank You For Waching
Subscribe to DevTech Finance
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The document discusses capital structure, which refers to the mix of debt and equity used by a company to finance its long-term operations. It examines several factors that influence a company's capital structure choices as well as different theories about optimal capital structure. The Net Income Theory proposes that firms can maximize value and minimize cost of capital by using as much debt as possible. The Net Operating Income Theory argues capital structure is irrelevant to firm value and cost of capital. The Traditional Theory suggests an optimal debt-equity mix exists. Finally, the Modigliani-Miller Theory states that under certain assumptions, capital structure does not impact firm value or cost of capital, though when taxes are considered, more debt can increase value.
Financial planning
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Meaning of financial planning
Definition of financial planning
Meaning of Financial Plan
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Ratio analysis involves calculating and interpreting various financial ratios to evaluate a company's liquidity, solvency, operational efficiency, and profitability. Key ratios include current ratio, quick ratio, debt-to-equity ratio, inventory turnover, gross profit margin, return on equity, and earnings per share. Ratio analysis is used to analyze a company's financial health and performance over time as well as compare it to other companies.
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capitalbudgetingppt-160315055641 (1).pptx
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Basics of Accounting
Accounting is a comprehensive system to record, analyze, and communicate financial information according to certain principles. It has evolved over time as business transactions have increased. The accounting process involves collecting documents, journalizing transactions, posting to ledger accounts, preparing an adjusted trial balance, and ultimately generating financial statements. The objectives of accounting are to keep systematic records, ascertain profitability and financial position, assist in decision making, and ensure compliance with relevant laws.
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Financial Management for Entrepreneurs ~ Simplified
This document provides an overview of key aspects of financial management for entrepreneurs, including accounting and financial reporting, budgeting, collecting accounts receivable, and risk management. It discusses the importance of accounting systems and bookkeeping for tracking finances, as well as outsourcing to CPAs. Budgeting is described as essential for matching expenses to revenue and ensuring cash flow. Collecting accounts receivable involves following terms and aging receivables to focus collection efforts. Risk management involves identifying, measuring, and prioritizing risks to minimize their impact on the business.
Budget Management in Odoo
Budget management in Odoo help us to know our financial status against the planned financial details. Budget management plays an inevitable role in a successful business. It is the analysis, organization and oversight of costs and expenditures for a business or organization.
Accounting principles 1
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1 Creating A Successful Financial Plan
1. The document discusses the importance of preparing basic financial statements including the balance sheet, income statement, and statement of cash flows for managing a small business. It explains key components and terms related to each statement.
2. It emphasizes that entrepreneurs must understand and use the information in their financial statements to effectively manage their business and work towards profit objectives. Regular analysis can help owners identify trends, cut costs, and make strategic decisions.
3. The example of Development Counsellors International shows how having all employees present and discuss the company's monthly financial reports helps foster a shared understanding of finances and links the bottom line to employee compensation.
Cash flow
This document discusses managing cash flow for a business. It covers how cash flows into and out of a business through sales, loans, expenses and other sources. It emphasizes the importance of cash flow for operating and growing a business. The document recommends forecasting cash inflows and outflows, monitoring receipts and expenses, and establishing three cash management accounts: accounts receivable, accounts payable, and inventory. The goal is to determine a minimum cash balance needed and effectively manage cash coming in and going out of the business.
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- 2. MEANING A cash budget is an estimation of cash inflow and outflows over a specific period of time. Cash budgets are useful in that they can be produced for long-term and short-term goals.
- 3. How to create a cash budget Step1: use a specialized accounting tool or ms excel to create Step 2 : Assess the time frame suitable for your business cash budget . Step 3: keep as emergency fund for at least 3 months
- 4. Step 4: Enter the business current cash balance since this is the only certain amount. Step 5: create a monthly cash flow statement and analyse business expenditure. Step 6: forecast the business cash flow.
- 6. Methods of cash budget 1. Receipt and payment method A summary of cash payments and receipts of an organisation during an accounting period. This account does not include any non-cash transactions.
- 7. 2. Adjusted profit & loss method This method, net profit is adjusted by adding items of non-fund expenses and deducting non- fund income . This method is used to forecast long- term cash requirements. 3. Balance sheet method At the end of the budget period, a balance sheet forecast is prepared in which assets and liabilities are also shown. The difference on both sides of the balance sheet.
- 8. Advantages of cash budget Usage of cash Allocation of capital investment Provision of excess funds Pay-out policy Provision for acquiring funds Profitable usage of cash
- 9. Disadvantages Will not reflect changes in various current assets and liabilities. Will it give a clue whether a company is earning profit or not.