3rd Bac - Defining the investment needed

 Defining the investment needed

 

After the studies related with the market, the productive process and the resources needed to generate the good or service are done, the entrepreneur must transform this data and information into monetary terms. Among the fundamental elements, that take part of the total investment are the investment of working capital and the investment of fixed capital.

 

The Physical and Material Resources to start an Entrepreneurship

With the information about the estimate of physical and material resources, the entrepreneur is in the capacity to express them in monetary terms. This way we can know if the financial resources available are enough to finance the business that you want to begin. 

 

The estimate of the investment needed is an activity that helps to evaluate, at first the feasibility of what the entrepreneur wants to make, because it will be difficult to get funds for projects too ambitious in terms of investment. Also, the amount of the investment will focus in the increase of the risk that the entrepreneur will take. Specially if the entrepreneurship is financed through some type of financial loan.

 

In accounting terms, the investment is set under assets. This can be current or fixed, in the language of designing and evaluating of projects, they are known as working capital (current assets) and fixed capital (fixed assets).

 

ACTIVITY:

Choose an entrepreneurship and you will calculate the investment needed.

Working capital (for three months, think about the monthly payments you will need to make, like: rent, salaries, providers) and fixed capital (any machines or equipment you may need).

 

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