Tag Archives: Business, Commerce and Economy

Business and Management

CAPITAL STRUCTURE

Capital structure signifies the composition of the amount of long-term financing and according to Gerstenberg, “Capital structure means the types of securities to be issued and the proportionate amounts that makeup capitalization”. Long term finds can be obtained from owners and borrowers. The owner’s fund consists of equity shares, preference shares, and retained earnings. Borrower’s fund (debt capital) includes debentures and other long term borrowings and the ratio between the owner’s fund (equity) and borrower’s fund is decided under the capital structure.

DETERMINANTS OF CAPITAL STRUCTURE

As stated earlier capital structure decision is highly individualistic and the capital structure of a company is planned initially when the company is floated. The initial capital structure must be designed very carefully since it will have long-term implications. However, the capital structure decision is a continuous one and has to be taken every time whenever a firm needs additional finances. Several factors affect the capital structure of a firm. Some of the important factors which must be kept in mind while determining the capital structure are discussed as follows:

1. Cash flow position

While choosing if capital structure the future cash flow position must be considered before issuing debt. Cash flow must not only cover fixed cash payment obligations but there must be sufficient buffer also, it must be kept in mind that a company has cash payments obligations for (i) Normal business operations; (ii) for investment in fixed assets; and (iii) for meeting the debt service commitments i.e. payment of interest and repayment of principal.

2. Interest Coverage Ratio

By the use of this ratio, it can ascertain whether the company can pay interest or not. The greater this ratio, the more will be the capacity of the company to use debt. The ratio can be calculated as under:

 Interest coverage ratio= Earnings before interest & Taxes/ Interest

3. Debt Service coverage ratio- DSCR:

 The debt service coverage ratio takes care of the weaknesses referred to in the interest coverage ratio-ICR. A higher DSCR indicated better ability to meet cash commitments and consequently, the company’s potential to increase debt components in its capital structure.

4.Cost of Debt

The capacity of a company to take depends on the cost of debt. In case the firm arranges borrowed funds at a low rate of interest then it will prefer more debt as compared to equity and vice versa.

5. Tax rate

High tax rate makes debt cheaper as the interest paid to debt security holder is subtracted from income before calculating tax whereas companies have to pay tax on dividend paid to shareholders. So high-end tax rate means prefer debt whereas at low rate tax the company can prefer equity in the capital structure.

6. Cost of equity capital

 The cost of a source of finance is the minimum rate of return expected by its Suppliers. Equity shareholders bear the maximum risk because no rate of dividend is fixed. To pay interest on debentures is a statutory liability of the company whether the company earns a profit or not. Thus, debt is cheaper as compared to ordinary share capital. The cost of debt becomes lesser because interest is a charge on the taxable income.

Research Paper

DIGITAL MARKETING: A WAY FORWARD

COVID-19 pandemic is a Humongous problem for companies everywhere, and it’s practically impossible to ignore the issue – it has changed the way business is executed everywhere.

Many owners and work managers are failing to shift the regular marketing strategies to a digital marketing (The new normal)

They are overlooking the situation because perhaps they have hope that some sudden turn of events towards normalcy will occur in the times of chaos. 

 Whatever may be the cause but this inability to adapt will cause grave concerns to the economic survival of the company.

Whereas, many organizations that have shown great adaptability by appointing digital marketing.

·       The impact – COVID: 19 on Businesses

There is no business which lies unaffected by the pandemic, worst sufferers are startups that do not have the capital or reserves to keep the struggle on and companies that relied completely on physical interactions, like salons, clothing stores, and yoga studios.

Accustomed to growth incitation by customer referrals and their awesome service reputations, they have experienced a very high revenue loss that their impulse reaction has been to cut marketing costs rather than exploring new and more effective options.

In turn, this unaccustomed reaction has had a detrimental ‘trickle’ effect on larger B2B companies work as providers to these smaller businesses.

Every business, be it your neighborhood departmental store or an enormous multinational firm, can benefit from digital marketing. Customers still need the products and services as much as ever—what these companies need to do is change the way they reach their target audiences. Even if a small enterprise doesn’t have an online page or portal (one in four do not have), it’s not very late to join in the businesses that are thriving online.

  1. Coming to – HOW TO?

It’s time for the affected businesses to make the transition from a fortress store to a digital provider by contacting their customers, reviving unused online assets like websites and social media profiles, and pedaling full speed ahead.

 

Contacting customers

The first step is to commence a dialogue between business and customers and carrying it forward. For companies that never collected email addresses, created a database, or engaged on a regular basis to their followers, it’s time now to do so.

Announce COVID-19 changes in an existing newsletter. 

Companies with an existing newsletter can convey to its subscribers about any corona virus-related changes in the next edition. Send out a newsletter to let your customers know how your business is reacting to the pandemic 

Boosting the company website Sorting businesses with SEO marketing

Coronavirus is changing the way that consumers shop. Approximately 47% of shoppers have stated that they are avoiding malls and shopping centers.

On the contrary note, SEO is undergoing a strong rise, with many brands reporting a significant hike in their organic search visibility from January to March 2020. 

It is evident it’s time to invest in, not to cut back on, SEO. It is one of the most cost-effective digital marketing strategies, it’s also delivering results.

 

Shifting daily operations online

There are very few organizations that cannot make the transition of their daily operations. Credit to video conferencing applications like Zoom, Skype, and many other executives and managers can communicate and impart instructions to staff and hold client meetings from anywhere. 

· Sales teams can take orders and reservations and provide services to customers via email, chat, or video. They no longer have to commute; they can even start work early leaving customers with longer support hours.

· Services that were previously delivered in person are surprisingly amenable to video presentations. Clients can pay online and receive a video link to live sessions.

Staff education also plays an important role in a successful transition—and this is time to enhance your team’s skills?

Online courses are highly cost-efficient, and teams can learn new skills that enable them to support each other whenever one department is down or facing issues. Courses on digital marketing are available on how it works and how to make the most out of all the opportunities.

·       The biggest question-What are my business benefits?

Many businesses are cutting costs on their marketing efforts due to COVID-19, but what they should really be doing is grabbing advantage of the new opportunities that are rising.

This emphasis on digital marketing is not something that they’ll want to slow down on once the lockdown ends. Online shopping is going to stop no-time soon, and most companies will find those web-based interactions to be convenient than in-person meetings.

Stores will reopen but alongside newly adopted ways of selling and engaging with customers.

While digital marketing may be regarded right now as an emergency plan, but by the time this is over, everyone will likely realize that it’s more than a temporary measure rather than a sustainable one. So GO DIGITAL AND BE FUTURE READY

Uncategorized

Interim Budget 2014- Government of India

The minister, Shri P. Chidambaram aforesaid, that the govt. has turbulently espoused the reason for science, promoted research and supported scientific applications and inventions. Now, a ‘Research Funding Organization’ is to be originated to fund analysis comes hand-picked through a competitive method. This was planned by the minister, Shri P. Chidambaram whereas presenting Interim Budget 2014-15 in Parliament here these days. He aforesaid, that contribution thereto organization is eligible for tax edges. This can need legislative changes which may be introduced at the time of the regular Budget.

In his last Budget speech as minister within the UPA-II government, P Chidambaram had plenty to mention, however abundant of it absolutely was high on intent and low on content. His vote-on-account, being a budget with none major new proposals, is very important just for one reason: it tells US, however honest the minister has been in showing a real and honest image of the state of the government’s finances.

As markets and rating agencies thirstily are careful for financial  consolidation administrated before the approaching elections, the minister rumored a financial  deficit of 4.6% of the gross domestic product (GDP), under his initial target of 4.8%, helped by a colossal cut in expenditure and gains from medium spectrum auction. He has conjointly pegged the next year’s financial deficit at 4.1%. accounting deficit (CAD) will be contained at US $45 bn. However, once the main points of the financial  deficit range ar out then solely the quality of the economic policy statements are often observed. this is often as a result of the govt. has used several accounting tricks to bring the deficit range down.

The FM actually deserves credit for not presenting a proponent budget. The FM didn’t roll out freebies however the grant bill of Rs a pair of.4 trillion is probably going to be another underestimate – for it’s nearly constant as this year, once Rs 350 bn has been rolled over. The FM has conjointly cut excise duty on capital product, bikes, cars and SUV. this can facilitate consumption to select up.

The FM has courageously tried to color a American centaury image of the economy. this is often at the same time as the key bottlenecks for growth stay. Chidambaram may win praise for meeting the dual deficit target this year, however, he has left a deep hole for successive government to fail. Successive government has to target key sectors that kind an indispensable a part of our economy and overall growth of the country.

As a way as stock markets are involved, a budget with none major selections on reforms is unlikely to own any result on long run fundamentals of the economy. Hence, one would be more contented not specializing in it an excessive amount of investment. Attention ought to instead be paid to the basics of the corporate and also the valuations that it’s commercialism that is engulfing the country. There must be promotion of small scale industries and the there must be financial support for the entrepreneurs who are doing good in their enterprise. Country is now bound to move on the path of development.

Urban and Regional Planning

Renewable Energy (Power) Generation in India

India is a very large country not only in terms of population but also in terms of area and the gross domestic product (GDP) which is increasing at around 7-8% in spite of the global economic slow-down. The increasing share of tertiary and secondary sectors of economy in the GDP will really need increasing amount of power supply and for this there will be need for upgradation of the existing power grid and development of new sources of electricity production based on nuclear power and hydel power which will be more sustainable keeping in
view the shortage of conventional sources of energy like coal and petroleum.

India has a large reserve of thorium which can be converted into useful fuel with the improvement in the nuclear fuel technology. It should be remembered that India’s domestic uranium reserves are small and the country is dependent on uranium imports to fuel its nuclear power industry. Since 1990s, Russia former USSR has been a major supplier of nuclear fuel to India. In recent years we, have tried to make deal for fuel with Australia and we are exploring other venues of buying uranium from other countries. There is need for investing in the technology development for thorium enrichment and development of reactors reactors capable of using thorium as a fuel.

Another bright and promising option is hydro-electricity generation which can be expedite in the states like Himachal Pradesh, Jammu & Kashmir and other hilly states. The scope of development of hedel power is immense in these states.

There is small but some scope for development of wind mills in the states of Gujrat, Maharastra, Rajasthan and other coatal states of India.

The ministry for renewable energy must take initiative to harness these existing sources of energy and promote the technology development for the use of solar energy in for the streetlighting and water heating. This can be promoted through the development controls devised by urban planners and policy makers.
We are steadily but slowly moving towards the optimum utilisation of the available sources of energy.

Shashikant Nishant Sharma