Archive for the ‘Financial economy’ Category
One of the most difficult tasks for an entrepreneur is to prepare your business plan. However, this is one of the most important steps for structuring a business. A business plan has three primary functions.
The first is to develop different strategies of a company, whether it is operating or planned to be open. The second is to measure the actual state of the company and the third and perhaps the best known among employers is to attract investors and capitalists.
Who reads the business plans and seeking?
This document is read by providers of money, i.e. commercial and investment banks, financial corporations, investors and capitalists. Since both bankers and investors have different interests, they make their evaluations in different ways.
Banks are interested in determining the ability of the company to pay its debts; they make their decisions based on four arguments: moral character, credit history, collateral and cash flow. Investors seeking higher returns thus take more risks; they study primarily the Company’s ability to repay the investment.
We are getting dangerously close to the dreaded “financial plan” of our business plan. As we continue studying, the market should get to know some terms related to economic and financial performance of our future business.
This new section has become to some economists is not even trying to do a course in accounting and finance. I think the most successful is that eventually, we delegate these functions in personnel prepared for it (an advisory, for example).
However, it is essential to know and understand the financial economy of a company in order to make correct decisions.
I decided to start with the assets and liabilities because they are terms that we find very often. They are accounting terms that are used to determine the real estate business through the balance sheets.