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Business Entities

• Sole Proprietorship
• Partnership Firm
• Private Limited (Pvt. Ltd.)
• Limited Liability Partnership (LLP)
• One Person Company (OPC)

4.1 Insurance

• The life and property of an individual are surrounded by the risk of death, disability, or destruction.
• These risks may result in financial losses. Insurance is a prudent way to transfer such risks to an insurance company.
• Important point to know before buying insurance
  • Add Rider

    • Accidental disability
    • Critical illness

  • Check these ratios before buying an Insurance

3.1 Taxation Planning

• We should try to reduce the effective taxation amount by making proper Tax planning
• Try to avoid tax but don't evade tax
• Taxable Income = Salary - Exemption - Deduction

2.1 Inflation

• Inflation is the decline of purchasing power of a given currency over time
• Means purchasing power of same amount fo money 💰 decreases over time

What is Inflation? How does the printing of money 💰 affect Inflation?

• With high liquidity in the market the spending power of person increases
• That leads to the high demand for goods but supply remains the same.
• With high demand price of goods increases

1.1 Budgeting

What is Budgeting?

• Budgeting is simply balancing your expenses with your income.
• It’s a plan to spend your money 💰

Cash Flow(CF) statement

• It reveals how much cash the company is actually generating
• If sales is of RS 100, then
  • if is Rs 100 received –> CF is +ve
  • if some amount (Say 30) went as Credit(Udhari)
    • then CF is cal on 70
    • But P&L is cal on 100

Financial Ratio

General terms used

• Total Equity = Shareholders Equity
  • Equity Share Capital + Prefered Equity + Reserve
  • –> Book Value(BV)
• Capital = Total Equity + Debt
• Book value per share
  • –> Price to Book Ratio(P/B)
• Net Sales = Topline = Total Revenue
  • Total anount of sales made

Profit and loss (P&L)

• Financial performance calculated for one year
• 1st April - 31st March is mostly taken as Finalcial year
• P&L for year ended 31st March 2020
  • P&L for FY 2019-2020

Balance Sheet(BS)

• A statement of your position
• A statement that records Assets and Liability is called Balance sheet
• From business start till present.
  • Balance Sheet as on 31st March 2020
  • i.e statement from start till March 2020

Introduction to FA

• Fundamental analysis is a method of determining a stock’s real or fair market value.

Fundamantal Analysis types

• FA is mainly of two types
  • Qualitative –> Non-numeric aspects
  • Quantitative –> Number-crunching