MUSINGS

What is 'Risk Capital' Risk capital consists of investment funds  allocated to speculative activity  and refers to the funds used for high-risk, high-reward investments such as junior mining or emerging  biotechnology  stocks. Such capital can either earn spectacular returns over a period of time, or it may dwindle to a fraction of the initial amount invested if several ventures prove unsuccessful, so  diversification  is key for successful investment of risk capital. In the context of  venture capital , risk capital may also refer to funds invested in a promising startup. BREAKING DOWN 'Risk Capital' The more  risk averse  the investor, the lower the proportion of risk capital allocated in the total portfolio should be. While young investors, because of their lengthy  investment horizons , can have a very significant proportion of risk capital in their portfolios, retirees may not be comfortable with a high proportion of risk cap...

एक व्यवसाय उद्यम के लगभग प्रत्येक व्यवसाय चरण में वित्त की आवश्यकता होती है। एमएसएमई अपने परिचालन और साथ ही साथ विस्तार व संवृद्धि के लिए पर्याप्त वित्त की व्यवस्था करने में अक्सर कठिनाई का सामना करते हैं। ये उद्यम विभिन्न विधियों से वित्त जुटा सकते हैं। नीचे कुछ उपाय दिए गए हैं, जिनसे दीर्घावधि एवं अल्पावधि पूँजी जुटाई जा सकती है।  दीर्घावधि पूँजी के स्रोत लाभ का पुनर्निवेश लाभप्रद कंपनियाँ सामान्यत: अपने लाभ की पूरी राशि लाभांश के रूप में नहीं बाँटते हैं, बल्कि कुछ अंश आरक्षित निधि में अंतरित कर देते हैं। इसे लाभ का पुनर्निवेश माना जा सकता है। चूँकि लाभ की ऐसी प्रतिधारित राशि कंपनी के शेयरधारकों की होती है, अत: उसे स्वामित्व पूँजी का हिस्सा माना जाता है। लाभ का प्रतिधारण एक प्रकार से व्यवसाय का स्व-वित्तपोषण है। लाभ प्रतिधारित करते जाने से कुछ वर्षों के दौरान अच्छी आरक्षित निधि बन जाती है और कंपनी इसे निम्नलिखित प्रयोजनों के लिए उपयोग कर सकती है : उपक्रम का विस्तार पुरानी आस्तियों को प्रतिस्थापित करना और आधुनिकीकरण स्थायी या विशेष कार्यशील पूँजी आवश्यकताओं की पूर्ति ...

Sources Of Finance Advantages and Disadvantages of Leasing Leasing is becoming a preferred solution to resolve fixed asset requirements vs. purchasing the asset. While evaluating this investment, it is essential for the owner of the capital to understand whether leasing would yield better returns on capital or not. Let us have a look at Advantages and Disadvantages of Leasing: ADVANTAGES OF LEASING BALANCED CASH OUTFLOW The biggest advantage of leasing is that cash outflow or payments related to leasing are spread out over several years, hence saving the burden of one-time significant cash payment. This helps a business to maintain a steady cash-flow profile. QUALITY ASSETS While leasing an asset, the ownership of the asset still lies with the lessor whereas the lessee just pays the rental expense. Given this agreement, it becomes plausible for a business to invest in good quality assets which might look unaffordable or expensive otherwise. BETTER USAGE OF CAPITA...

Points of Difference between Venture Capitals and Angel Investors 1.    What they are: Angel Investors: Are the  High Net-Worth Individuals (HNIs) , who generally forms closed groups called angel network and collectively invests in a venture. Angel network helps them to make more informed investment and reduce the risk of an individual as pool of investors are investing small amount in multiple companies.. They do it in exchange of equity in the startup. Examples of Angel/Angel Networks active in India are- Mumbai Angels, The Chennai Angels, Indian Angel Network, Hyderabad Angels, The indus Entrepreneurs. Venture Capital Firm: These are the mostly the Limited Liability Partnership  firms/funds , which raises fund from different investors. As against Angel investment where the decision of investment rests with the individual, a Fund/ Portfolio Manager in Venture Capital firms is the one who hunts for promising deals to get the best returns for their i...

The major difference between allocation and apportionment methods are that allocation is used when the overhead can be directly related to one department and cost center, and apportionment is used when the overhead arises from a number of departments. Allocation:  Overhead Costs which are directly identifiable to a cost center are directly allocated to that cost centre.   Apportionment:  Overheads which are not directly identifiable are first charged to general overhead and then those general overheads are apportioned on appropriate bases i.e. area, machine hour etc, then service department apportioned cost are apportioned among production department and finally the production overhead both allocated and apportioned are absorbed using absorbing rate.

A manufacturing company has two producing departments, Department A and Depart­ment B, and three service departments—Stores, Power house and Repair shop. From the following information prepare a manufacturing expense budget and calculate overhead recovery rates for the two production departments as percentages of direct labour : Depreciation calculated as a% of original cost: Problem 5: You are supplied with the following information and required to work out the production hour rate of recovery of overhead for departments A, B and C: Ho

The following points highlight the top two methods of apportionment of overheads. The methods are:  1 .   Primary Distribution of Overhead 2. Secondary Distribution. Apportionment of Overhead:  Method # 1 . Primary Distribution of Overhead : Primary distribution involves apportionment or allocation of overhead to all departments in a factory on logical and rational basis. This process of apportionment is also known as departmentalisation of overhead. It is to be carefully noted that at the time of making primary distribution, the distinction between production and service departments is ignored. Following points should be considered for primary distribution of items of overheads: (i) Basis for distribution should be equitable and practicable; (ii) Method adopted for distribution should not be time-consuming; (iii) Overhead expenses should be distributed among different departments on the basis of benefits received by departments; For the purpose of prima...