Monday, June 25, 2012

What is a Project ? Explain its starting and completion point?

A Project is a set of activities intended to accomplish a specified end result of sufficient importance to be of interest to the management. Thus, a project has limited purpose. Its object may or may not relate to the on going operations. Depending on the nature of the project, its durations may be a few weeks to a number of years.

Projects include improvement in plant, machinery, equipment and methods, substitutions of imported materials, setting up of a new factory or extension of a few bays in the existing structure, construction of building, bridge, etc.

A project starts when the management approves the project in principle, adopts it as a part of ongoing activities and allocates funds and other resources including appointing a Project Manager.

Normally, the execution of the project is done in phases unless the same is so small that it does not warrant detail planning by phases.

Thus, when a project is divided into several phases, evaluation is made at the end of each phase and necessary changes are incorporated in the next phase plan.

The project ends with either successful completion after final evaluation or cancellation at the point, when it is decided to abandon the project. Thus, a project always ends, unlike an ongoing organization where operations continue indefinitely.

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Friday, June 15, 2012

Admission in Post Graduate Diploma in Management

If you are a working executive  in or around Ahmedabad  and want to add a management qualification to your CV. There are three good colleges which you can look for :  B.K. School of Management, Som Lalit School of Management and Nirma.
Out of these three SLIMS  is most reasonable in terms of faculty and fees structure.



Wednesday, June 13, 2012

Define Financial System. Why should one study financial systems?

The word “System” is a set of inter-related components working together to achieve some purpose.

Financial System helps economic development of a country by acting as a bridge between savers and investors.

Financial system is set of inter-related institutions, instruments, and markets, that raise (saving) funds and channels them to their efficient use.

In other words, a financial system comprises individuals (savers), intermediaries (financial institutions), markets (money and capital markets), and users (borrowers of money). Hence, the financial system acts as a intermediary between the savers and users (investors).

Financial managers task is to provide sufficient funds to meet all the likely needs of a business undertaking. To provide sufficient funds, he/she needs to have a clear understanding of a financial system.   
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Friday, June 8, 2012

Explain Permanent and Temporary Working Capital

    Gerstenberg has conveniently classified the working capital into

(a) Regular or Permanent Working Capital and

(b) Temporary or Variable Working Capital.

1.   Permanent Working Capital:
It is the minimum working capital required for producing predetermined production

Permanent working is the minimum investment kept in the form of inventory of raw materials, work in process, finished goods, stores & spare, and book debts to facilitate uninterrupted operation of a firm.

Though this investment is stable in the short run, it certainly varies in the long run depending upon the expansion programmers undertaken by a firm. It may increase or decrease over a period of time.

The minimum level of current assets maintained in a firm is usually known as permanent or regular working capital.

2.   Temporary Working Capital:
It is the additional current assets required for temporary period, and it is above permanent WC

A firm is required to maintain an additional current asset temporarily over and above the permanent working capital to satisfy cyclical demands. Any additional working capital apart from permanent working capital required to support the changing production and sales activities is referred to as temporary or variable working capital.

In Other workds, an amount over and above the permanent level of working capital is temporary, fluctuating or variable working capital.

At times, additional working capital is required to meet the unforeseen events like floods, strikes, seasonal production and price hike tendencies contingencies.

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Sunday, June 3, 2012

What are the main purposes of Budgetary Controls and Standard Costing?

The main purpose of budgetary control is

1. Planning,

2. Coordination,

3. Responsibility and Performance evaluation.

A sound and efficient organization is essential for effective budgetary control.


Standard costing is a technique that uses standard for cost and revenue for the purpose of control through variance analysis. The purposes of standard costing are mainly :
(a) Measuring Performance

(b) Controlling and Reducing Costs,

(c) Valuing Inventory and

(d) Fixing Selling Price.


Other Posts :
What are budgets & its benefits ?

What is Operating Budget ?

What is capital budgeting? Name its criteria. & how to evaluate a project?

Profit Addition through CFO