SHARDA .UNIVERSITY .

SCHOOL .OF .BUSINESS .STUDIES

Mid .Term .Examination
Programme:
.BBA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . .Maximum .Marks: .20 .
.............................................................................
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .SEM: .VI

.Subject: . . .Financing .For .Expansion .and .New .Ventures . . . . . . . . . . . . . . . . . . . . . . . . .

..............................................................................
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Paper .Code: .BBA022 . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Date: . . . . . . .17-06-
2020 . . . . . .1-2 .PM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
..............................................................................
..........
.Name
.of
.the
.Student: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . .Time: .1 .Hr.

Answer .any .four .questions. .Each .question .carry .equal .marks. . . . . . .5*4=20

Q1. .What . .do . .you . .understand . .by . .Working . .Capital . .Management .?

Q2. .What . .is . .the . .different .steps . .in . .Financial . .Planning .? .

Q3. .What . .do . .you . .understand . .by . .Venture . .Capitalist . .?

Q4
.Equity . .Market . .is . .the . .Barometer . .of . .Countries .Economic . .Growth . .Engine. .Explain
.in . . . . .Detail .?.

Q5. .ADR . .and . .GDR . .are . .Catalyst .to . .Fund .and .Grow . .Indian . .Businesses ., .How .?
..
 ABHISHEK MALIK

2017007369

170241015

BBA ENTREPRENEURSHIP
ANSWERS
.
A1.
.Working .capital .Management .refers .to .the .cash .a .business .requires .for .day-
to-
day
.operations,
.or
.more
.specifically,
.for .financing .the .conversion .of .raw .materials .into .finished .goods, .which .the
.company
.sells
.for
.payments. .Among .the .most .important .items .of .working .capital .are .levels .of
.inventory,
.debtors
.and
.creditors.
.These .items .are .looked .at .for .signs .of .a .company’s .efficiency .and .financial
.strength.

CHARACTERSTICS .

Short-
Term
.Needs:
.Working
.capital
.is .being .utilized .in .acquiring .current .assets .which .will .be .converted .to .cash
.for .a .short .period .only. .
Circular
.Movement:
.Working
.capital
.is
.being
.converted
.to
.cash
.constantly .which .will .just .be .turned .as .a .working .capital .all .over .again.

Element .of .Permanency: .Although .it .is .just .a .kind .of .short-
term .capital, .working .capital .is .needed .by .a .business .forever .and .always.

Element
.of
.Fluctuation:
.Working
.still .fluctuates .every .now .and .then .even .it .is .something .permanent.

Liquidity:
.It
.is
.very
.liquid .for .it .can .be .converted .as .cash .any .time .without .losing .anything.

TYPES .OF .WORKING .CAPITAL

Gross .working .capital

Net .working .capital

A2. .Steps .in .Financail .planning

1.Assessing .your .Financial .Situation
The
.first
.step
.of
.the
.financial
.planning
.process
.can
.be .free. .It .is .a .chance .for .the .financial .planner .to .understand .your .situation
.and .talk .about .the .services .they .offer.
During
.this .consultation, .the .financial .planner .will .seek .to .understand .your .financial
.needs,
.your .budget .and .perhaps .outline .some .of .the .common .types .of .strategies.

2. .Develop .Financial .Goals

During
.this .step, .the .planner .will .work .with .you .to .understand .your .needs, .and .set
.short .and .long-
term
.goals.
.Be
.prepared, .this .step .usually .requires .you .to .give .a .lot .of .information .to .your
.adviser.
.To
.give
.them
.the
.best .chance .of .preparing .a .great .plan, .do .some .homework .on .your .finances
.before
.you
.meet
.with
.them.
.This
.step
.may
.include
.an
.assessment
.of
.your
.tolerance
.for .risk. .You .may .be .asked .to .complete .a .‘risk .profile’ .or .‘fact .finder’
3. .Identify .the .Strategies
The
.adviser
.will
.develop
.strategies,
.given
.the .information .you .provided .in .step .two. .Depending .on .the .advice .you .are
.receiving,
.they
.may
.assess
.your
.budget,
.cash
.flow
.needs, .tax .situation, .savings, .insurance, .investments .and .goals, .to .arrive .at .a
.set .of .potential .strategies.

4. .Develop .the .Plan

The
.financial
.planner .will .present .to .you .his .or .her .strategy .in .a .Statement .of .Advice .
(SOA).
.This
.is .
a .chance .for .you .to .assess .the .strategy, .point .out .any .inaccuracies, .errors .or
.flaws,
.and
.get
.your .feedback. .The .SOA .takes .into .account .your .entire .financial .situation. .

5. .Implement .the .Plan

Typically,
.this
.is
.undertaken
.by
.the
.planner
.and
.their
.team.
.Often,
.it
.will
.mean
.opening
.and
.closing
.bank
.and
.investment
.accounts, .applying .for .new .products .like .insurance, .and .making .investments.
.It .may .cost .more .to .have .the .recommendations .implemented .for .you.

A3. .VENTURE .CAPITALIST

It
.is .
a
.form
.of
.financing
.that
.is
.provided
.by
.firms
.to .startups .that .show .growth .potential, .or .have .demonstrated .high .growth .
(perhaps
.in
.terms
.of
.number
.of
.employees
.or
.annual
.revenue).
.Venture
.capital .firms .or .funds .invest .in .these .startups .in .exchange .for .equity–
an .ownership .stake–in .the .companies .they .invest .in.
The
.startups
.that
.venture
.capitalists .seek .are .usually .based .on .innovative .technology .and .usually .from
.the .high .technology .industries, .such .as .Information .technology, .social .media
.or .biotechnology.
The
.first
.round
.of
.institutional
.venture
.capital
.to
.fund
.growth
.is
.called
.the
.Series .
A
.round.
.Venture
.capitalists
.provide .this .financing .to .generate .a .return .through .an .eventual ."exit" .event,
.such
.as
.the
.company
.selling .shares .to .the .public .for .the .first .time .in .an .Initial .public .offering .
(IPO) .or .there .being .a .merger/acquisition .of .the .company.
Venture
.capital
.is
.appealing
.for .new .companies .with .limited .operating .history .that .are .too .small .to .raise
.capital
.in
.the
.public
.markets
.and .have .not .reached .the .point .where .they .are .able .to .secure .a .bank .loan.
Venture
.capitalists
.usually
.get .significant .control .over .company .decisions .and .significant .portion .of .the
.companie’s .ownership .. .Venture .capitalists .contribute .more .than .financing .to
.these .early-stage .firms; .they .also .often .provide .strategic .advice .to .the .firm's
.executives .on .its .business .model .and .marketing .strategies
.......

A4.
.Equity
.market
.are
.not .only .used .as .a .platform .in .order .to .carry .business .transactions .but .they
.are
.the
.barometers
.that
.helps
.in
.indicating
.the
.general
.conditions
.of
.the
.business
.atmosphere.
.One
.can
.measure
.the
.economic
.and .business .conditions .with .the .help .of .Equity .market .as .they .provide .real
.and
.accurate
.information
.about
.the
.companies.
.Prices
.of
.securities
.rise
.during .economic .and .business .prosperity .periods. .When .economic .stagnation
.occurs
.or
.business
.activities
.slowdown
.due
.to
.depression
.in
.the
.markets,
.prices
.fall.
.Security
.prices .change .with .the .change .in .economic, .social .and .political .conditions .
Equity
.Markets
.are
.looked
.up
.as
.an
.effective
.barometer
.in
.depicting
.the
.mood
.or
.swings
.of .the .economic .activities .in .any .country. .With .economies .being .globalised,
.there
.exists
.every
.possibility
.of
.stock
.markets
.suffering
.setbacks
.and
.is
.evident
.from
.the
.random
.movement
.of
.stock
.market
.indices.
.The
.occurrences
.of
.toppling
.of
.an
.economy
.owing
.to .recession, .market .crash .etc .has .questioned .the .very .prima .facie .existence
.of
.the
.stock
.market
.whether
.stock .markets .are .wrongly .connoted .as .“barometer” .of .the .economy.. .
The .data .for .Gross .Domestic .Product .
(GDP)
.is
.imbibed
.in
.the
.study .as .a .cumulative .representation .of .economic .activity .and .the .returns .of
.S&P
.CNX
.Nifty
.are
.taken
.as .
a
.cumulative
.representation
.of .stock .exchanges .in .India. .The .empirical .results .pinpoint .that .stock .prices
.Granger .Cause .the .economic .activities. .
The
.occurrences
.of
.toppling
.of
.an
.economy
.owing
.to .recession, .market .crash .etc .has .questioned .the .very .prima .facie .existence
.of
.the
.stock
.market
.whether
.stock
.markets
.are
.wrongly
.connoted
.as .“barometer”
.of .the .economy. .The .present .paper .tries .to .evaluate .the .predictive .ability .of
.the
.stock
.market
.in
.context
.of
.India.
.The
.present
.paper
.deploys
.Granger
.Causality
.as .
a .tool .to .investigate .the .predictive .ability .of .stock .exchanges .with .respect .to
.economic .activities. .

A5. .
A
.popular
.path
.to
.globalisation
.of
.equities
.in .many .emerging .market .economies .has .been .through .issuing .of .depository
.receipts .
(DRs),
.which
.are
.essentially
.negotiable
.certificates
.representing
.shares
.in .
a
.foreign
.company.
.These
.DRs
.are
.traded
.on .
a
.local .stock .exchange .of .mostly .advanced .economies .and .are .issued .typically
.by .a .bank.

DRs
.act
.both
.as .
a
.signal
.as
.well
.as .
a
.source
.of
.funding
.for .
a
.corporate
.in
.an
.emerging
.market
.economy.
.Since
.the
.listing
.requirements .in .the .bourse .of .an .advanced .country .are .often .more .involved,
.listing
.in
.an
.advanced
.economy’s
.stock
.exchange
.would
.give
.certain
.positive .signals .about .the .quality .of .management .of .the .domestic .corporate.

On
.the
.other .hand, .given .the .phenomenon .of .home .bias .in .case .of .equity .holding .
(whereby .the .investors .tend .to .hold .stocks .of .domestic .companies), .the .DRs
.could
.provide
.the
.foreign
.investors
.with .the .alternative .of .holding .shares .in .the .equity .of .foreign .companies.

Rise .and .fall

Many
.Indian
.corporates,
.too,
.have
.followed
.this .route .of .tapping .the .global .market .via .global .depository .receipts .
(GDRs) .and .American .depository .receipts .(ADRs), .since .
1993.
.Issuing
.of .ADRs .by .companies .such .as .Infosys .in .NASDAQ .or .VSNL .in .the .New
.York .Stock .Exchange .(NYSE) .in .and .around .1999 .or .
2000 .had .attracted .widespread .attention.

While
.international
.investors .continue .to .look .for .global .avenues .for .portfolio .diversification .—
.something
.that
.the
.DRs
.issued
.by
.Indian
.companies .tapped .into .during .the .period .preceding .the .global .financial .crisis
.
—
.the
.Indian
.corporations’ .appetite .for .DR .issuances .seems .to .have .ebbed .in .more .recent
.years.
.So
.much
.so, .that .no .new .ADRs .or .GDRs .were .issued .by .Indian .companies .in .2016-
17 .and .2017-18 .(see .Chart).