The Importance Of Money Management

Question 1

Importance of Money Management

Answer 1

Ability to attain an optimum return from money.

Essential for making strategic financial decisions in a business context.

Question 2

Entrepreneur’s Financial Decisions

Answer 2

Withdrawing profit for personal use.

Withdrawing profit to invest elsewhere.

Reinvesting profit back into the business.

Question 3

Investing for Monthly Income

Answer 3

Invest money to achieve a healthy profit.

Example: Selling large volumes on credit to debtors.

Question 4

Investing for Capital Growth

Answer 4

Focus on maximizing the return on investment (ROI).

ROI = (Additional money generated / Original amount invested).

Question 5

Evaluating ROI

Answer 5

Measures the profitability of an investment.

Compare ROI with other options, like bank interest rates.

Evaluate ROI considering risks and effort invested in the business.

Question 6

Bottom Line and Business Success

Answer 6

Refers to the net profit of the business.

Investors seek businesses that generate good profits.

Question 7

Criteria for Evaluating Investments

Answer 7

Industry type and future prospects.

Brand strength and customer support.

Management team’s experience and capability.

Liquidity: Ease of exiting the investment and accessing money