When we say that CSR is something followed by a company or a firm in the social well being of the customers of the society in the name of brand and products, it becomes important to know the financial reasons for why this is a must for all the companies. Below listed are few of these important reasons and these are probably the major reason for why a company should follow the CSR concept.
- Cost savings – this is probably the most important and a major reason for why a company should follow CSR. As we know CSR is something to do with the society apart from the services and products offered by the company, where it becomes essential that they do something beyond their business goals. Yes and this needs to be in line with the services offered. For example, when a company is trying to comfort its customers with some of the sophisticated products, it should keep in mind the social responsibility it has on the society at the time of manufacture or designing of the same. This conscious effort would not only help the customers when they use the product but would also help the company in saving something in the name of energy and other additional costs. So this way it would not only be able to provide services at the best to the customers but would also be able to satisfy the society without harming or disturbing their normal and routine living.
- Profitability – as all of us know it is the increased demand and sales that lead to the profitability of a firm. And for this, it is important for a firm to prove its efficiency among its customers. Now here it is also important for the company to apply and follow the concept of CSR which is also an expectation from the customer’s side. When this is fulfilled, i.e., when a company is able to satisfy a customer satisfying the needs of the environment and the society, there is automatically an increase in the same leading to higher profits.
- Brand identification – a company that is known in the market to be selling and dealing in products and services following CSR will be able to achieve a brand name and identification among its customers automatically. This would help in increasing its market position thereby making its products and services a good and better one in the market.
Building a conservative investment portfolio and suddenly one witness that most of them have been eaten up by the Inflation bug leaves a bad taste on the investing fraternity which is very hard to contend with. Relying on external forces could make one heavily dependent on the numbers and downplay the portfolio and lose all the money, it is always imperative to have a detailed and keen eye during inflationary period is important so that one can track the movement in long-term bonds, securities, funds which could be overrated and hyped by external market forces.
Can we invest in inflation?
Investing during an inflationary period sounds weird but one has to play their decisions right, and with a detailed study can make a good back up to survive the jolts.
- the high-income sectors like telecommunication, utilities should be steered clear away from, investing in the real estate’s again could be good, only if the bank or mortgage rates are not increased, the commodity markets could be a tricky affair
- investing in sectors which are not highly impacted by inflation could be not many but they serve as viable options to survive in the auto mobile industry, energy, and financial products which are not only cheap way to invest , there are economical and price sensitive to yield good profits during inflation period too
- investing in municipal bonds which have been defaulted and up for buying are better options than investing in treasuries and bonds when one has affixed amount for investment
- Gold investment is again a better option as the demand for the yellow metal never falls; there are gold funds, jewelry, bullion and futures which are the best hedge funds to strive the inflation fears. As the interest rates are higher the strategy to invest in gold is a better way to be protected against all odds of the pressure of inflation.
- deep discount bonds, retail discounts are much-flocked investment area during the period of inflation to be protected against the weak investments, and discounted offers are always on demand as they get to buy more retail stock with the same amount, which would otherwise not have been possible.
Technically the investments are not based on the funds, but moving it to more profitable ventures to get a positive outcome during the inflationary period without losing out the core value of the portfolio.
Every act or process has some advantage s and some negative aspects. There is nothing in this world which has only positive aspects. So we can understand that one of the biggest events of business market is when any company issues an IPO. It may be a new entity or an already well-known company. But if and when an IPO is launched there is always much speculation around it and the market buzz helps it to reach more subscribers.
The money that comes from the primary and secondary offerings helps the company as it becomes the working capital that can easily be used for growth and debt management. The original investors who started the company can also sell their holding after a certain period of time for earning profits. But there are some stipulations of time before this can be done. The company can also offer more shares later once it is listed on the stock exchange. There are many advantages as mentioned below.
- The company becomes a public company instead of the previous status of private one. Thus it has a bigger and diverse share base. In other words, more money is available.
- It is accessible to more people and the company gets this capital without any interest. The same amount through a bank would have attracted a huge amount of interest. It has access to a huge amount of capital.
- When a company enters the stock market, its name becomes better known and the reputation also improves.
- With more money, a company can hire more employees and buy more and better equipment. The production, manufacturing processes will improve with more infusion of capital and both the quality and quantity of the output will increase.
- Once people know about the company, it is easy to sell the products and services also.
- People would like to join a company, that is well known and has a good amount of working capital. So the company can easily choose the best employees from a bigger pool of applicants.
- A company can choose many different types of financing prospects. They can easily get loans once they are listed on the stock market.
- If the company does well and pays dividend regularly then the stock price will improve and so will the reputation of the company.
As usual, there are always some benefits and disadvantages but an IPO usually helps a company to become bigger, better and stronger in terms of capital. It needs to have the essential support and follow all the regulations to succeed.
There are many factors and aspects that work together while we try to decide the values of past projects or forecast a value for any company. Analysts can use the mathematical tool of financial modeling to grasp the entire fiscal picture of a company. They can see the smallest details in these numerical details. This helps the experts to predict the viability of any project and the company as an entity.
Is it mathematics or accounting?
It is an amalgamation of the two complicated topics and uses tools from both the subjects. The financial planning and asset pricing and all the other related topics are based on quantitative calculations. So we can say that the entire past history and future predictions of market, products and the company functions related to these two are depicted in terms of mathematical equations, graphs, and charts.
It can be used in many other applications apart from the financial area
- Financial modeling requires very acute observation and research skills. Once you understand the financial model and hone the skill further, then your critical and analytical skills will also improve. You can use these skills to analyze the different options available to the company and terms of finance and other functions as well.
- A manager is required to look at various aspects of a company and his skills cannot be restricted to one function like finance. He has to use the financial model with relevance to other departments and understand how to create a business plan for any sector. The cost and profit reports and past historical models can help him to formulate the plan for various departments.
- Till now the financial modeling was created using the excel spreadsheets, now, of course, there are many new tools for this. However, if you learn financial modeling properly, then it helps to do the mathematical calculations using the excel worksheets and the related software program and this proficiency help in all management aspects by enhancing your skills.
- The properties of any evaluation can be understood easily when they are explained in mathematical terms. A manager has to make many decisions based on the available data using his analytical skills. The presented data, converted into a clear model, helps him to grasp the situation clearly and also forecast the future to a certain extent. This skill helps him to make better decisions.
We can see that this model of finance can be easily used in other areas of the corporate world as well. It is an important skill to be used in the practical aspects. The financial modeling helps to implement the theory learned about budgeting, statements, financial management and other sectors in practical terms.
I must be ancient:
When I started out with my business in confectionaries about two decades ago, one thought that kept troubling me all the time was how on earth I was going to be able to manage the working capital in the business. I had saved a little when I was working to be able to start a business but I had no means of keeping it alive. What I needed was a constant stream of working capital because I knew too well that the food industry is a fickle one. Things that click instantly go down the hall of fame and the rest either stagnate in mediocrity or are eliminate upfront say in the first six to eight months itself.
There was nothing that I wouldn’t do to save my business:
I looked up everywhere to get loans to sustain the business. I thought it was easy to think about avenues in the beginning than to search high and low for respite. Surely, this was one thing that I didn’t want to cross over only when I came to the lake! I wanted to be prepared for it even before any eventuality occurred.
So, I approached banks and realized that there was a long queue already. Add to that the processing fee was so high and the time frame that they quoted for processing seemed surreally long. How could I even think of keeping afloat for six months while the loan was being approved?
Here is a list of challenges I faced way back:
- The processing and approval time was too long:
Getting the papers ready and the credit score card checked along with the requisite formalities took exceptionally long time. I tried to explain to them that my business was mainly of perishable food items and by no means could I afford to have a longer incubation period but it all fell on deaf ears. I had to go through a really long period of downsizing stock and delaying my interior work which I think has affected my business in some major way.
- The interest rates were hiked periodically:
Much to my chagrin, the interest rates on my loan were hiked periodically albeit even after notice. But it was out of bounds to expect sales in my business to increase by leaps and bounds overnight or even at a short notice of time.
I managed to pay the loan in about two years with a grace period. It was a time that I understood that it was better than I improved my sales to be able to meet my working capital needs than stand in long queues to get a loan sanctioned!
When it comes to capital budgeting it can be done in various ways. There are various tools that are used to make better decisions. But not all investors might look at each investment prospective in the same perspective. The actual steps that lead to the capital budgeting decision being taken might differ. But here are some basic steps that are always part of every capital budgeting decision:
Hunt for the right window
Investment opportunities do not come seeking an investor. Every potential investment would have to be searched for and shortlisted. And the perfect timing is also important. Investing in an outdated piece of technology, for example, would not be a good decision. So the investor should be well aware of the market scenario and the trends to look out for. This would help the investor or the business to find the best available investment opportunities.
Analysis of the available choices
Once a list of the most relevant opportunities is picked there are various factors to be studied to find the ones that actually meet the requirements. Businesses often look for investments that are in line with their financial goals. For example, consider the capital investment on a new piece of machinery, a business would look for machines that help improve their production in the long run. If a business is investing in a new project it would be a project that would, in some way or the other, increase the value of the business as well.
The price quoted for the investment might not always be the same as the actual value of the investment. The investor would thus perform a cost analysis, a detailed one. Operation costs and overhead costs if involved would also be taken into account. This would help understand whether the capital being invested is justified.
Cash flow calculation
For the invested amount, the actual cash flow predicted would then be studied. Here is where the factors like payback period would be taken into account. Will the investment give quick profits and then saturate or will the investment grow slowly and steadily? Each of these situations might be favorable for different investors.
Every investment, no matter how carefully it is executed, comes with a little risk adhered to it. Risk analysis report might not always be available readily for the investor to study. So the investor would also perform a detailed analysis of the risks involved and the countermeasures and contingency plans to tackle such risks.
Do you know what keeps the economy humming?
You know that you are an entrepreneur when setting up a business is something that consumes you day and night even when you think it is fraught with insecurities. You have that big idea in your head and you know inside you that it will work; damn it has to!
You may have been offered the most tempting of jobs yet when you opt to chart your own course you know for sure that the bug has bit you!
Right after college, I was offered a job at Google with a plump salary package. Friends and classmates thought that this was a not to be missed opportunity, teachers et al. but who would have thought that the seed of setting up my own business had already germinated in my head?
The real problem, however, was getting the working capital. Being a first generation entrepreneur, it made more sense to borrow than put in everything that I had saved painstakingly for the rainy day. Not that I had any doubts but I knew that businesses world over are unpredictable. Sometimes, the best of the ideas also do not click while the most mundane of them all walk away with the biggest honors.
Failure is intimidating for everyone!
Banks were on my mind but the long drawn process of securing a loan threatened me. It would take weeks, months or even years before I could begin realizing my dream. I was looking out for an alternative to the banks that would not just provide me with a working balance at the moderate rate of interest but one that would double up as a financial consultant too. Was I asking for too much?
But life has a way of throwing up surprises!
Intense research using internet tools helped me understand that there are such institutions that not just promise a smaller rate of interest but that also only on the future earnings and not on the borrowed loan per se. How wonderful is that!
It felt like conquering my dreams already!
Across the country, today there are a lot of funding companies thanks to the revolution that Fintech has brought in were getting loans for working capital is only a cake walk. These financial agencies do not have the long drawn processes of banks nor do they have killing interest rates and terms that can overwhelm you.
So, what do we take home?
Banks have traditionally been funding businesses but there is a choice available to you. Scourge the market to find out what works best for you. The benefits of course:
- Lower rates of interest;
- Delayed repayment;
- Repayment terms on actual profit made and not on the loan borrowed;
- Cutting down on red-tapism;
- Fast and easy processing;
- No long drawn paperwork, and last but not the least
- A financial consultancy that you can opt for them.