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Entrepreneurship Cell IIT Bhubaneswar



Equity • The money a company is started with • The amount the company owes to its shareholders • Defined as Assets – Liabilities • The total assets after all liabilities have been paid • Part of equity is what is called STOCK

Assets Economic Resources owned by the company Tangible and Intangible Fixed Assets and Current Assets Gross Fixed Assets and Net Fixed Assets : Depreciation • Current Assets=Inventories + Debtors • • • •

Liability • Obligation of a company, a settlement of which may result in the transfer or use of assets • The amount which the company is due • Loans, tax, creditor accounts

Accounting Equation

Working Capital • Total Current Assets – Total Current Liabilities • Positive Number, generally • The amount a company needs to keep its business running • Operating liquidity of a company

Manufacturing Cycle Raw Materials

Money to Creditors



Payment Debtors



Current Assets = Inventory + Debtors Current Liabilities = Creditors Working Capital = Current Assets- Current Liabilities

Share- A paper ? A bond ? • • • • •

Part of Ownership Document of the company A share of the EQUITY Not a Bond Certificate Rights of Shareholders Shareholders, directors, promoters.

Shares • • • • • •

Equity – Going Public : Funds Face Value, Premium, Discount Market Value IPO Price Determination : Role of Company Market Sentiments

• • • • • •

Buying and Selling Short Selling Squaring Share Bonus Stock Split Dividend

• Negotiable instrument representing financial value • Two types- Debt security and equity security • Debt – Banknotes, bonds, debentures • Equity- Derivatives : Futures, forwards,options • Futures vs. Options


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