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free solved assignments of MB0045 Q1. Analyse the financial requirements of a FMCG company.

Fast Moving Consumer Goods (FMCG), are the products that are sold quickly at relatively low cost. Though the absolute profit made on FMCG products is relatively small, they generally sell in large quantities, so the cumulative profit on such products can be large. Examples of FMCG generally include a wide range of frequently purchased consumer products such as toiletries, soap, cosmetics, teeth cleaning products, shaving products and detergents, as well as other non-durables such as glassware, light bulbs, batteries, paper products and plastic goods. FMCG may also include pharmaceuticals, consumer electronics, packaged food products and
drinks, although these are often categorized separately.

A FMCG company should be properly capitalised and the actual capital should be neither more nor less than the amount which is needed and which can be gainfully employed. It is, therefore, necessary for a concern to estimate its requirements of funds properly for each brand. The financial requirements of a FMCG company may be outlined under the following heads:
·         Cost of fixed assets including land and buildings, plant and machinery, furniture, etc. The amount invested in these items is called fixed capital.
·         Cost of current assets including cash, stock of goods (also called inventory of merchandise), book debts, bills, etc.
·         Cost of promotion including the expenses on preliminary investigation in case of a new company, accounting, marketing, legal advice, etc.
·         Cost of establishing the business, i.e., the operating losses which have generally to be sustained in the initial periods of a company.
·         Cost of financing including brokerage on securities, commission on underwriting, etc.
·         Cost of intangible assets like goodwill, patents, etc.
Of the various items of financial requirements listed above, the first two deserve special consideration as the successes of any concern will depend largely on them.
The estimation of capital requirements of a firm involves a complex process. Even with expertise, managements of successful firms could not arrive at the optimum capital composition in terms of the quantum and the sources. As indicated above, capital requirements of a firm could be grouped into fixed capital and working capital.


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