1. ENTREPRENEURSHIP Lecture No: 41 BY CH. SHAHZAD ANSAR

2. PREPARING FOR THE NEW VENTURE LAUNCH: EARLY MANAGEMENT DECISIONS Contd…

3. LONG-TERM VS SHORT-TERM DEBT
LONG-TERM DEBT
Loans and obligations with a maturity of longer than one year; usually accompanied by interest payments, also called funded debt.
SHORT-TERM DEBT
Debt with a short maturity, usually one year or less.

4. MANAGING COSTS AND PROFITS
Costs are budgeted based on percentages of net sales.
Comparison of actual and budgeted expenses can be misleading for ventures with multiple products or services.
Allocating expenses over product lines be done as effectively as possible to avoid arbitrary allocation of costs.
To look back on the first year of operation and make comparisons month-to-month 4

5. Ratio Analysis Liquidity Ratio It includes two ratios Current ratio
Current ratio = current assets current liabilities
2:1 is generally considered favorable
Acid test ratio
Acid test = current assets - inventory ratio current liabilities
1:1 ratio would be considered favorable.

6. Ratio Analysis Contd… Activity Ratios:
Average collection = accounts receivable period average daily sales
Inventory = cost of goods sold
turnover inventory
Debt ratio = total liabilities total assets
Debt to = total liabilities
equity ratio stockholder’s equity

7. Ratio Analysis Contd… Profitability Ratios:
Net profit = net profit margin net sales
Return on = net profit investment total assets
These all ratios shows the performance of firm

8. CREATING AWARENESS OF THE NEW VENTURE
Publicity
Internet Advertising
Trade Shows
Selecting an Advertising Agency