Management of fixed assets

DepreciationDepreciation is the allocation of the cost of an asset over its useful life as determined at the time of purchase. It is calculated yearly to enforce the matching principleInsuranceInsurance is the undertaking of one party to indemnify another, in exchange for a premium, against a certain eventuality.Uninsured risksBad debtChanges in fashionTime lapses between ordering and delivery New machinery or technology Different prices at different placesRequirements of an insurance contract    * Insurable interest          o The insured must derive a real financial gain from that which he is insuring, or stand to lose if it is              destroyed or lost.         ...

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STOCK

Purpose of stock control Ensures that enough stock is on hand to satisfy demand. Protects and monitors theft. Safeguards against having to stockpile. Allows for control over selling and cost price.StockpilingThis refers to the purchase of stock at the right time, at the right price and in the right quantities.There are several advantages to the stockpiling, the following are some of the examples: Losses due to price fluctuations and stock loss kept to a minimum Ensures that goods reach customers timeously; better service Saves space and storage cost Investment of working capital kept to minimum No loss in production due to delaysThere are several disadvantages to the stockpiling, the following are some of the examples: Obsolescence Danger of fire...

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Management of current assets

Credit policyCredit gives the consumer the opportunity to buy, purchase or acquire goods and services, and pay for them at a later date. This has its advantages and disadvantages as follows:Advantages of credit tradeUsually results in more customers than cash trade. Can charge more for goods to cover the risk of bad debt. Gain goodwill and loyalty of customers. People can buy goods and pay for them at a later date. Farmers can buy seeds and implements, and pay for them only after the harvest. Stimulates agricultural and industrial production and commerce. Can be used as a promotional tool.  Increase the sales.  Modest rates to be filled.  can be a marketing toolDisadvantages of credit trade  Risk of bad debt.  High administration expenses. ...

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CAPITAL

Financial capitalCapital, in the financial sense, is the money that gives the business the power to buy goods to be used in the production of other goods or the offering of a service.The desirability of budgetingBudget is a document which documents the plan of the business. This may include the objective of business, targets set, and results in financial terms, e.g., the target set for sale, resulting cost, growth, required investment to achieve the planned sales, and financing source for the investment. Also budget may be long term or short term. Long term budgets have a time horizon of 5–10 years giving a vision to the company; short term is an annual budget which is drawn to control and operate in that particular year.Capital budgetThis concerns proposed fixed asset requirements and how...

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Corporate finance

Corporate financeManagerial or corporate finance is the task of providing the funds for a corporation's activities. For small business, this is referred to as SME finance (Small and Medium Enterprises). It generally involves balancing risk and profitability, while attempting to maximize an entity's wealth and the value of its stock.Long term funds are provided by ownership equity and long-term credit, often in the form of bonds. The balance between these elements forms the company's capital structure. Short-term funding or working capital is mostly provided by banks extending a line of credit.Another business decision concerning finance is investment, or fund management. An investment is an acquisition of an asset in the hope that it will maintain or increase its value. In investment management...

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Personal finance

Personal financeQuestions in personal finance revolve aroundHow much money will be needed by an individual (or by a family), and when?How can people protect themselves against unforeseen personal events, as well as those in the external economy?How can family assets best be transferred across generations (bequests and inheritance)?How does tax policy (tax subsidies or penalties) affect personal financial decisions?How does credit affect an individual's financial standing?How can one plan for a secure financial future in an environment of economic instability?Personal financial decisions may involve paying for education, financing durable goods such as real estate and cars, buying insurance, e.g. health and property insurance, investing and saving for retirement.Personal financial decisions...

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Overview of techniques and sectors of the financial industry

An entity whose income exceeds its expenditure can lend or invest the excess income. On the other hand, an entity whose income is less than its expenditure can raise capital by borrowing or selling equity claims, decreasing its expenses, or increasing its income. The lender can find a borrower, a financial intermediary such as a bank, or buy notes or bonds in the bond market. The lender receives interest, the borrower pays a higher interest than the lender receives, and the financial intermediary earns the difference for arranging the loan.A bank aggregates the activities of many borrowers and lenders. A bank accepts deposits from lenders, on which it pays interest. The bank then lends these deposits to borrowers. Banks allow borrowers and lenders, of different sizes, to coordinate their activity.Finance...

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Finance

Finance is the science of funds management. The general areas of finance are business finance, personal finance, and public finance. Finance includes saving money and often includes lending money. The field of finance deals with the concepts of time, money, and risk and how they are interrelated. It also deals with how money is spent and budgeted.One aspect of finance is through individuals and business organizations, which deposit money in a bank. The bank then lends the money out to other individuals or corporations for consumption or investment, and charges interest on the loans.Loans have become increasingly packaged for resale, meaning that an investor buys the loan (debt) from a bank or directly from a corporation. Bonds are debt instruments sold to investors for organizations such as...

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THE FINANCE

Finance is the science of funds manageme...

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