What is Capital Budgeting? How to evaluate a project?

Capital budgeting can be explained to be a firm’s decision to invest its current funds most effectively in long term activities in anticipation of an expected flow of future benefits over a series of years.

The investment decisions could be in the form of additions, dispositions, replacements and modifications of activities or asset base that would ensure good returns on the utilization of the firm’s assets. Therefore, the manager has to give consideration to the following factors when capital budgeting decisions are involved viz.

(a)    The existence of huge expenditures or large cash exposure.

(b)    The involvement of long gestation period between initial expenditures and returns and

(c)    The expectation of higher returns because of factors (a) and (b) above.

Going by the factors above, the manager must not fail to make appropriate investment or selection of good projects because, the volume of fixed assets far exceed current assets and the owners of the company (shareholders) are long term investors, whose high expected returns can only be met with the higher returns from long term assets.

These assertions, call for the need to examine the different methods of selecting investments in long term assets. Following are the main tools used to evaluate the project:

 1. Non Discounted Cash flow Techniques :          

a.  Payback period (PBP):     

b.  Accounting Rate of Return (ARR)

            2. Discounted Cash flow Techniques

c.  Net Present Value (NPV):    

     d. Internal Rate of Return (IRR)

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 What are budgets and its-benefits?

What is an Operating Budget ?

Profit addition through CFO.

How to define Employee’s Goals and work standards? What is the main issue in Goal Definition?

Employees should know ahead of time the basis upon which you’re going to appraise them. The second basic approach is to appraise them relative to specific standards that you expect them to achieve. 

Employers usually write job descriptions not for specific jobs, but for groups of jobs, and the descriptions rarely include specific goals.

Setting motivational goals is an art. The most straightforward way to do this is to set measurable goals or standards for each duty.

· Set SMART goals. These are Specific, Measurable, Attainable, Relevant, and Timely.

·         Assign specific goals. Employees who have specific goal usually perform better than those who do not.

·         Assign measurable goals. Always try to express dates or deadlines along with goals.

· Assign challenging but doable goals. Make them challenging, but not so difficult that they appear impossible or unrealistic.

·         Encourage participation. Goals set through participation usually produce higher performance. 

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Barriers before Intrapreneurs

Salary Survey-2012.

Salary Survey 2012

Salary is something which has no satisfaction limit. Whatever be the number employees are always dis-satisfied.

The structure of Salary components is an area where today's HRM people have to work most to retain their employees and attract the new talent.  Here, we are making an effort to capture those elements which gives satisfaction to the employees.

You can help us developing a right salary model by clicking the following Link and filling up the survey.

Click for the Survey 2012 Form

Very soon on this blog we will put the outcome of this Survey.

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How to make effective management Communication?

Todays dynamic work place.

Does money only motivates?

Define Management Control System and explain its characterstics

 Definition   ::  Management Control System is defined a ‘set of policies and procedures designed to keep  operations going according to plan”

CHARACTERISTIC FEATURES OF MANAGEMENT CONTROL SYSTEM :

(a)    It focuses on ‘programmers’ and “responsibility centers’. Responsibility centre is an unit or sub unit or sub unit of an organization usually headed by a manager, who becomes responsible and accountable for the activities or that unit or sub unit.

(b)    For the purpose of control, managers use two types of data, viz. planned data and actual data. Planned data relate to estimate, budget, and standard and forecast details of future events or activities.

(c)  The control process is a set of actions such as programming, budgeting, monitoring, evaluating, analyzing and reporting. It is a continuous or an on going process. “Just as the navigator in an aircraft or sea voyage continually takes reading to ascertain whether or not he is relative to a planned course.

(d)  It is a ‘total system’ covering all aspects of a company’s operations. This is important because management function assures that all parts are balanced with one another. Unless management obtains information about each of them, coordination between all the activities is not possible.

(e)    The system is normally coordinated and integrated so that the same set of information can be used by other units for some other purpose. Management Control system is a set of interlocking sub systems generating a single system. While designing reporting format, this aspect is carefully considered by the systems manager.

(f)    The system is usually designed with financial figures and not with physical units of input and output. Because, monetary unit is the only common denominator which can be used to express heterogeneous input and resources, such as, kgs., pcs., litre, machine hour, labour hour, etc.

(g)    The system tends to be rhythmic, not ad hoc, one time or occasional. It follows a regular time table like daily, weekly, fortnightly, monthly, quarterly, half yearly and annual, year after year. All reports are prepared and forwarded to the persons mentioned in the circulation list at regular intervals.

(h)   Line and staff managers are equally involved in the control process. Line managers are, therefore, the focal points in management control.

(i)    G.W. Dalton and P.R. Lawrence added two other features in Management Control System:

(a)    Reciprocity. Every living being tries to control its environment as a mean of fulfilling its needs.

(b)  Expansibility. Control in an organization is a variable rather than a constant element, because it can expand or contract. The influence of an individual in the organization changes from time to time.

Finally, the purpose of a Management Control System is to encourage managers to take actions that are in the best interests of the company. Although systematic, the Management Control System is by no means mechanical. The process involves interactions among individuals.

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Handling Multinational Market on Web

When is a company is said to be born?

Ans.: The Companies Act, 1956, provides for registration of companies. Persons interested in forming a company need to submit a memorandum of association (MOA) and articles of association (AOA) of the proposed company to the Registrar of Companies. A company is ‘born’ when the Registrar issues the certificate of incorporation.

Before incorporation, the interested persons would need to settle on the type of company they wish to form. The Companies Act makes it possible to incorporate different kinds of companies.

Some companies companies are created by Statutes (Acts), these are called statutory companies. Examples of statutory companies are Unit Trust of India and State Bank of India. In contrast to the statutory companies are the companies registered under the Companies Act.

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Explain classification of Companies by liability of members

Explain classification of companies by. Ownership

Explain the classification of Companies by Liability of Members

The Companies Act, 1956 provides for registration of different kinds of companies in India.

The companies can be classified in terms of the liability of its members :

1.    Limited companies

                  2.    Unlimited liability of the members
                  3.    Limited by guarantee

Companies can have different degrees of liabilities for its members. Limited companies are companies where the liability of the members is limited to the share contribution. Limited liability companies are also called share companies.

A company, however, can be created with the memorandum of association providing for unlimited liability of the members. Even in these companies, creditors cannot approach the shareholders directly and claim from their assets, for the fulfillment of the company’s obligations.

The creditor only has a right to ask for the dissolution of the company and claim its assets towards the repayment of his loan. In such a situation, that is, winding up of the company, the company can lay claims to the personal assets of the shareholders to meet its liabilities.

Another from of company with respect to liability is a company limited by guarantee. In such companies, the subscribers to the memorandum of association undertake to contribute a specified amount to the company so as to meet its liabilities in the case of winding up.

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Explain classification of companies by ownership,



One of the Public Ltd Companies

The companies can be classified in terms of the ownership and numbers of its share holders. According to this classification a company can be :

1. A Private Limited or

2. A Public Limited

·         A private company can be formed by minimum two or maximum 50 people subscribing to the memorandum of association.

·         All the members put together need to pay a minimum capital of Rs. One lakh at the time of registration.

·         The articles of association of a private company should impose restriction on the selling of shares by its shareholders.

·         Further, the articles should prohibit any invitation to the public to subscribe to the shares or debentures of the company.

 As a private company cannot ask the public to subscribe to its capital and the total number of shareholders cannot exceed 50, the company necessarily raises share capital from people known to the founding members. After incorporation, a private company can allot shares to new members to raise capital and start its business.

·         For forming a public company, at least seven persons should subscribe their name to the memorandum of association.

·         Unlike a private company, there is no restriction on the number of members.

·         For incorporating a public company, a minimum paid up capital of Rs. Five lakhs is required.

·         A public limited company can seek share contribution form the public.

Most of the public companies raise capital by inviting the public to subscribe. This process of inviting public subscription is stringently regulated by the Companies Act, Securities Exchange Board of India(SEBI) Act and regulations of individual stock exchanges.

  

The key difference between a private company and a public company is that a public company can raise its capital from the public. Thus, it has been made subject to restrictions, scrutiny and supervision, so as to protect the public interest.

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List of Environmental Laws in India.