seminar on money


Presented By:

-Pritesh N. Chavhan

What is Money?
A medium of exchange!!!

Still the only thing for which entrepreneurs work
Importance of Money
Money forms the capital of the company.
Capital is of two types:
1. Fixed Capital
Capital required for establishing of the organization.
2. Working Capital
Capital required for running the organization.
Importance of Money
Fixed Capital:
2.Investment in factory building, furniture, tools, etc.
3.Investment in Machinery.
Importance of Money
Working Capital:
1.Raw material
2.Electricity and Water Bills
3.Transportation & Communication
4.Wages to employees

Importance of Money

Other Expenses:
2.Show rooms
3.Sales Representatives
Tips for New Entrepreneurs
No need of huge initial investments¦..
Help provided by government
Savings in investments
wise use of resources
Estimate the capital required
Income statements:
Sets out entrepreneurâ„¢s projected revenues and expenses to determine a ventureâ„¢s profits per year.
Cash flow:
Difference between money taken in and spent over a
specified period of time.
Sources of Money
Own Source
Self owned asset
Friends and Family
Credit Cards
Banks and financial institutions
Provide money in the form of:
1. Secured Loans.
2. Cash Credit.
4.Clean Advances.

Sources of Money

Shares and debentures:
Part of the company sold in market in order to raise fixed capital.
Bond of indebtedness issued by the company for a specific period.

Sources of Money

Money Market
Provides short term capital
Capital Market
Provides long term capital
Venture Capital
Angel Investors
Money Management
In order to be sure that as an entrepreneur, one is not incurring any kind of loss.

1.Efficient use of capital and other resources.
2.Estimating the exact amount of funds required
3.Helps in wealth maximization.

Money Management

Elements of Cost:
1. Material Cost
2. Labour Cost
3. Expenses.
4. Overheads.
Explicit Cost.
Implicit Cost.
Explicit Cost + Implicit Cost+ Normal Profit= Production Cost.
Market Value depends upon the demand and supply.

Money Management
Detail Accounting:

To keep a detailed record of expenditure and income of an organization.
1.Presents a financial picture of the organization before the businessman.
2.Helps in preparing the budget.
3.Helps to fix the selling price of goods.
4.Helps in reducing losses.
5.Helps to explore the possibility of giving sub-contracts.
6.Helps in using resources economically.

Money Management

Deals with recording, classifying and summarizing business transactions in a systematic manner and in terms of money.
1.Helps to find out profits or losses in the business.
2.Gives exact knowledge about the business transactions that have taken place during a given period of time.
3.Shows cash on hand and bank balance at a given point of time.

Money Management

Forms a part of fixed capital.
But is optional.
Payments and Collections

Accepting Payments:
1. Promissory Notes.
2. Bills of Exchange.
3. Cheques.
4. Drafts.


1.Excise duties
Production Tax
2.Tariff Duties
Import Duties
Export Duties
4.Income tax


Money is the life-line of the corporate world.
Money generates more money¦..Invest it¦.


Presented By:
Pritesh Namdeo Chavhan
What is money???
Money is nothing more than a medium of exchange which one gives away in order to gain some thing of higher utility. ËœUtilityâ„¢ is the power of an object or service to satisfy wants of a human. In the corporate world, exchange of money for any commodity takes place only when both the parties are satisfied about the fact that the exchange which they are gaining in the transaction has a higher utility to them.
E.g.: Consider a stockiest having a huge stock of say carpentry tools and a carpenter who wants to buy a saw from him. The carpenter needs the saw in order to carry on his work and earn his living; while the stockiest needs the money as he has a lot of saws and wants to sell them to gain money and satisfy his other needs. In this case both the parties are satisfied that the exchange received from the transaction of buying and selling has a greater utility to them than the commodity they have with them at present and hence exchange of money for another commodity takes place.
However in the modern civilization, money has come up as the most sophisticated means of exchange as it has the power to replace any commodity or utility or services available in the world by itself. And hence, money is considered as a factor of prime importance in the corporate world, since no transaction is possible without money. The corporate world lives for money and its ultimate aim is wealth maximization. Hence, even though money is just a medium of exchange, but still it is every thing in the corporate world.
Importance of Money
As stated earlier money is every thing for which the corporate world lives and functions. Its importance in the world of entrepreneurs is as follows:
¢ It forms the capital of the company.
In order to start any firm or business or any other commercial activity, you need money that forms the capital of the concern. The money available with the entrepreneur is invested in factors of production, machinery, tools, implements, raw material and thus is converted into Ëœcapitalâ„¢. Capital is the wealth which yields income. Thus in the corporate world, money is invested and spent only with the aim to gain more of it.
Capital is of two types:
1. Fixed capital
2. Working capital.
1. Fixed Capital:
Fixed Capital is the capital required for establishing an organization. For example the capital invested in factory building, machinery, furniture, tools, etc. Fixed capital requires a major portion of the money gathered by the entrepreneur. It is invested in such assets that cannot be easily converted into liquid money and is to be recovered gradually over a long period of operation of the concern.
2. Working Capital:
Working Capital is the capital required for running an organization. This part of the capital is spent for the purchase of the raw material, paying the labour forces, payment of electricity and water bills, expenditure on transport, rent of the land and building, interest on loans secured, etc. Working capital is usually spent for the production of a particular quantity of goods and recovered from the sell of the same goods. Thus, is invested, recovered and re-invested repeatedly during the life-time of the concern.
3. Other Expenses:
Now that the money is spent on establishment and production purposes, it is also necessary to sell the finished goods and this is possible only when the consumers know about your product. For this reason money also has to spent on publicity of the product and the organization through advertisements, sales representatives, etc. Attractive showrooms can very well attract the customers towards the product and hence, money also has to be spent on establishment and maintenance of such showrooms. After all, today is the world of marketing. Jo dikhta hai, wahi bikta hai. Hence one has to adopt the best possible way to attract the customers and display his product.
Tips for new entrepreneurs
No need of huge initial investments....
Of course after reviewing the need of money in the corporate world, you might feel this point to be a little violation to your concept of initial investment. But if you are new in the field with no background about the same, it is always advisable to take a slow start rather that entering with a bang. First be extra cautious about your initial investment and take into consideration all the risk factors involved in it. Gradually gain experience and learn from your mistakes. Then think about expanding your business. World has witnessed many examples of people taking a slow start and then ruling the corporate world. The most famous one of them is of the Late Dhirubhai Ambani, who started his business with literally nothing in hand but now the business empire he started is one of the biggest in the world placing the Ambani brothers among the richest people in the world. Bill Gates the founder of Microsoft and Steve Jobs who established Apple Inc. are no exception. It would be quiet astonishing that Steve Jobs started Apple Inc. with just $1,300 which he amassed by selling a Volkswagen minibus and a scientific calculator.
Reach out for the help provided by the government
At times even government is ready to provide help you in your business provided your plan would interest it. Government provides land, electricity, water, etc. on lease thereby
Savings in Investment:
This step can be a most useful one if the sources of money are limited. Investment must be made very carefully and with a view to get maximum returns out of the minimum possible expenditure. Initially working out at oneâ„¢s home rather than leasing or hiring an office can save much of the initial investment. Similarly, instead of buying office equipments, looking out for such equipments on lease can also reduce expenditure. Slowly as the business starts to take momentum, you can go for further investments.
Estimation of Capital requirement:
Before starting any new business or project, one must have a clear idea about the capital required for starting it. This needs initial work out and study. One needs to estimate how much cash he needs to cover expenses until the business begins to make profit.
This can be achieved with the help of Income statements and Cash flow.
1. Income Statement:
An income statement sets out the entrepreneurâ„¢s projected revenue and expenses to determine a ventureâ„¢s profits per month or year. This helps to decide the investment required in order to achieve an expected amount of profit.
2. Cash Flow:
It estimates the expected cash sales as well as the expected cash payments of bills. This estimate can be done on weekly, monthly or yearly basis. But experts recommend performing such estimation once a month for first year or two of a new business. Cash flow is the difference between the money taken in and spent over a specified period of time. At first the cash flow is surely negative, but gradually it increases and becomes positive. The minimum value reached by the Cash Flow can determine the capital required to start a business.
Sources of Money
Now that we have understood the importance of money, we would be keen to know what all are the available sources for obtaining the money for an entrepreneur.
1. Own Sources:
The first source of money that any entrepreneur can tap is his own source.
Self owned asset such as land can be utilized as a site for business or can be sold to purchase any other suitable site. Your initial savings and deposits can be very useful in such situation. Friends and family are more willing to invest in your business because they love and trust you. Often they wonâ„¢t even demand for a high rate of interest and detail scrutiny of your business plan. However, borrowing from friends and family creates personal and emotional issues that can create a lot of complications. One can also raise some amount of money through credit cards, but the rate of interest charged on such money is the highest and hence credit card should always be considered as the last source.
2. Banks and Financial Institutes:
Banks and financial institutes are the best sources of money for any entrepreneur. However unless you have some self owned asset and an impressive business plan, you wonâ„¢t be entertained by any bank, because bank needs security for the money they lend. It is rightly said that banks like to lend money only to those who already have money. Banks provide money in the following form:
I. Secured Loans:
This is the advance granted against the borrowerâ„¢s securities, finished goods, raw material, real estates, etc. This means that the articles remain in the possession of the bank, and can be disposed off only with the consent of the bank.
II. Cash Credit:
In this case the borrower is permitted to draw from the bank amounts which are agreed upon as the maximum upper limit. Bank charges interest on the amount actually utilized by the customer, and not on the amount actually sanctioned.
III. Overdrafts:
Here the bank allows the customer to withdraw excess money from the bank against the available balance in the account. Interest is charged on the excess amount drawn from the account.
IV. Clean Advances:
In this case the customer opens an account in the bank to deposit the loan amount sanctioned by the bank and can withdraw money from this account as per his requirement. Interest is charged on the total amount of loan irrespective of the amount being withdrawn from the account.
3. Shares and Debentures:
It is a method of capital collection for public limited companies. In order to collect the Fixed Capital the companies sell out a share in the ownership of the company to the interested share traders. This method makes the share holder a proportionate profit enjoyer or loss bearer depending on the financial state of the company. Thus through shares a share holder can become a proportionate owner of the concern and enjoys rights in the concern depending on the extent of his investment.
Debentures are the bonds of indebtedness issued by the company for a specific period. Depending on the present financial state of the company, the owner can demand certain amount of money from any interested investor promising him to pay a certain rate of interest along with the money borrowed after a specified period of time through debentures. Debentures help in raising the Working Capital for the concern.
4. Money Market:
Money market is the medium that canalizes the savings of the society to the entrepreneurs and makes it available for them as capital for usually a short duration of period ranging from 15 days to one year. Commercial banks, brokers are the main lenders in the money market. It deals with short term instruments such as bills of exchange, treasure bills, etc.
5. Capital Market:
Capital market canalizes the bulk of savings done by household sector and makes it available as capital for a longer duration of period. It deals with long term instruments such as shares, bonds, debentures, etc. The main lenders of money in this market are the stock exchanges, insurance companies, etc. Money raised from the Capital Market thus forms the Capital of the entrepreneur in true sense.
6. Venture Capital:
Venture Capital is usually raised from a group of wealthy and potential investors, investment banks and other financial institutes. This form of funding is the most popular form of raisin capital for new companies. However for this you need a good business plan and also an ability to repay back the raised funds along with its interest.
7. Angel Investor:
An angel investor is someone who invests in a business venture by providing capital for startup or expansion. Angel investors usually seek a higher rate of return than other traditional investors. Angel investors are often retired entrepreneurs or executives, who may be interested in angel investing for reasons that sometimes go beyond pure monetary return. Angels tend to be more involved in the businesses that they invest in and provide assistance in business and help in progress of the business thereby increasing their chances of higher returns.
Money Management:
Even though the necessary amount of money has been raised for the functioning of the organization through various mediums, an entrepreneur must keep a track of the proper utilization of the money. Only then can he be sure about maximum returns from his business. The main aim of money management is to be sure that as an entrepreneur, one is not incurring any kind of loss. It involves keeping an account of the expenditure of the company and calculating the returns by selling of the goods so as to know about the profit generated by the concern. The main advantage of money management is that we can know about the areas of utilization of money and thereby find an economical way of utilization of money in that particular area. Thus it helps in efficient use of capital and other resources. Since we already have an idea about the utilization of money and resources, it helps to estimate the exact amount of funds required for further operations. Thus, this procedure helps in wealth maximization.
Under this section first comes the pricing procedure.
1. Pricing:
Usually the production process is a costly affair and the expenditure for that has to be done by the entrepreneur himself. The various elements of cost of production are:
I. Material Cost:
It is the money spent on the purchase and transportation of the raw material.
II. Labour Cost:
It is the cost of wages, salaries, commissions, etc. of the employees.
III. Expenses:
During the production process, some part of money is expended on water and electricity bills, interest on loans, rent, etc. and this has to be considered as production cost
IV. Overheads:
These are the expenses on the factors other than those directly involved in the production process such as wages of watchmen, insurance of plant, maintenance cost, auditing charges, etc.
All the above costs can be categorized as Explicit Cost and Implicit Costs. The money raised from external sources and spent on any of the above purposes forms the explicit cost, while the money from self sources such as profits, bank balance, etc. utilized forms the implicit cost.
However the production cost does not include only these two factors. Part of the investment made in Capital has to be recovered from each commodity so that the initial investment can be recovered in the specified period of time. This forms the Normal Profit which has to be included in the production cast in order to keep the organization running at least on no-profit, no-loss basis.
The selling price of the product is decided by considering the market condition in such a way that at least the production cast is recovered along with some additional profit, the sole aim for which the entrepreneur works.
2. Detail Accounting:
While pricing is concerned with the calculation of expenditure and fixing the selling price, accounting is concerned with keeping a detailed record of expenditure and income of an organization. Here every transaction is viewed only from the entrepreneurâ„¢s side and necessary record of cash flow in or flow out is made. The possible benefits of keeping accounts are:
1. Presents a financial picture of the organization before the businessman.
2. Helps in preparing the budget.
3. Helps to fix the selling price of goods.
4. Helps in reducing losses.
5. Helps to explore the possibility of giving sub-contracts.
6. Helps in using resources economically.
3. Book Keeping:
Book keeping is another form of accounting. It deals with recording, classifying and summarizing business transactions in a systematic manner and in terms of money.
However the approach is different. In book keeping, every transaction is recorded in such a way that it becomes easy to check the arithmetic accuracy of the accounts. Book keeping is based on the principle that every transaction involves at least two parties. Every transaction results in the exchange of money for a commodity. From the sellerâ„¢s point of view, there is increase in his money balance, while from the buyerâ„¢s point of view; there is reduction in his balance. Thus every transaction has a double effect and both the aspects are recorded in the book.
Its advantages are:
1. Helps to find out profits or losses in the business.
2. Gives exact knowledge about the business transactions that have taken place during a given period of time.
3. Shows cash on hand and bank balance at a given point of time.
4. Depreciation:
Due to prolonged use of machinery and equipments, with time the cost of their maintenance increases. And after a certain period of time, life of the same comes to an end. Thus with the use of this capital, their value and utility decreases. Hence some part of the profit has to be kept aside during the lifetime of the machinery that would be sufficient to re-purchase the same or even advanced machinery in future. This part of profit kept aside is termed as ËœDepreciationâ„¢. It reduces the profit of the organization and hence the best way to recover it would be to consider it as a part of Fixed Capital and then fix the selling price of the commodity. However this is optional but is surely helpful for making provisions for future expansion and progress.
Payment and Collections:
Selling of commodity by an entrepreneur involves payment to him by the customer. This is the most important part in any transaction since it is the means of raising money. Usually the payment is of a large amount of money and hence cash payment mode is least preferred. Instead, payments in the corporate world are accepted through the following means:
I. Promissory Notes:
It is the simplest mode of payment. It contains the buyerâ„¢s promise to pay the seller a certain amount of money for value received. Full payment is done after a specific period of time.
II. Bills of Exchange:
It is an order written by seller of goods asking the buyer to pay a certain sum of money on account of the value of the goods sold.
III. Cheques:
It is the most important credit instrument today. It is an order written by an individual to a bank to pay the bearer of the cheque certain amount of money from his account.
IV. Drafts:
A draft is a cheque drawn by one bank upon another.
Taxes are perhaps the unavoidable part for any entrepreneur. Taxes are the amount of money paid by an individual to the government so as to keep his level of income in control. This is something necessary for equal distribution of wealth in the country and avoid accumulation of wealth in the hands of a very few people. It helps in maintaining economic stability in the country. The various taxes that an entrepreneur may have to pay are:
1. Excise Duties:
These are the taxes paid on the production of goods and commodities. As the level of production increases, the excise duties increase.
2. Tariff Duties:
Tariff duties are in the form of import duties and export duties. The commodities and goods imported or exported by an entrepreneur make him liable for payment of these duties. Again the tariff duty depends upon the extent of import or export.
3. V.A.T.:
It is the tax paid by an entrepreneur on the sell of goods produced. Generally an entrepreneur has to pay 4% of the total sales as V.A.T. to the government.
4. Income Tax:
Finally is the income tax. The amount of profit earned by an entrepreneur forms his income and is liable to pay the taxes on the wealth amassed by him as the policies of the government.
Finally when over viewing the complete topic, it brings to our notice that without money, any entrepreneur canâ„¢t do any thing. It is only because of this reason that even though money is a mere means of exchange, it has become the life-line of the corporate world. To be a successful entrepreneur, one has to learn the proper utilization and maximization of money. Money itself generates more money. This is possible by investing the money. Wise investment of money in the corporate world can give high returns and lead to wealth maximization. Donâ„¢t forget that the only aim of entrepreneurship is wealth maximization through fair and just means. Hence invest your money and let it work for you to increase your wealth so that money would be available when needed.
Thanks for provding this useful information here.

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