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AppEco Lesson 4

1. I would carefully manage investments and control borrowing to reduce interest expenses during periods of higher rates. 2. Control rental costs by negotiating leases strategically or considering owned facilities. 3. Plan wage adjustments carefully to retain good employees amid minimum wage increases. 4. Improve efficiency and cut unnecessary spending to offset impacts of higher taxes.

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wendell john mediana
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50 views40 pages

AppEco Lesson 4

1. I would carefully manage investments and control borrowing to reduce interest expenses during periods of higher rates. 2. Control rental costs by negotiating leases strategically or considering owned facilities. 3. Plan wage adjustments carefully to retain good employees amid minimum wage increases. 4. Improve efficiency and cut unnecessary spending to offset impacts of higher taxes.

Uploaded by

wendell john mediana
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Applied Economics

CONTEMPORARY ECONOMIC ISSUES


FACING THE FILIPINO
ENTREPRENEURS
LESSON 4
What is Entrepreneurship?

Entrepreneurship is
the art of turning an
idea into a business.
What is Entrepreneurship?

Entrepreneurship is the ability to know what


products and services are needed by people and
to be able to provide these things at the right
time, at the right place and to the right people,
and at the right price.
What Entrepreneurs Do?
Entrepreneurs assemble and then integrate all the resources
needed –the money, the people, the business model, the
strategy—needed to transform an invention or an idea into
a viable business.
HENRY SY, SR.
Founder
SM Group
TONY TAN
CAKTIONG
Founder, Chairman &
CEO, Jollibee Foods
Corporation
CONTEMPORARY ECONOMIC ISSUES
FACING THE FILIPINO ENTREPRENEURS
 Investment and Interest Rate

 Rentals

 Minimum Wage

 Taxes
INVESTMENT AND INTEREST
RATES
INVESTMENT
Investment is an asset or item acquired with the goal
of generating income or appreciation.

Appreciation refers to an increase in the value of an


asset over time.
INVEST TO EARN A
RETURN
Investing includes the purchase of new plants,
new equipment, new homes and net increases in
inventories.
Investing generally refers to using one's savings in a way
that earns a return.
LONG-TERM
INVESTMENT
These are assets of the company which include
stocks, bonds and real estate. Long-term
investments are assets that a company intends to
hold for more than a year.
SHORT-TERM
INVESTMENT
This is an investment that will mature to cash
within a one-year time period and is considered
liquid. When someone invests in short-term stock
and bonds, the thinking is that these assets can be
cashed in quickly.
SHORT-TERM
INVESTMENT
An asset is liquid if the owner can readily access it,
and it has an established market where prices
cannot be manipulated by one buyer or seller.
SHORT-TERM
INVESTMENT
Short-term investments have two main
requirements.
1. These must readily be convertible to cash.
2. Management must intend to convert or sell the
investment within 3 to 12 months.
INTEREST RATES
The interest rate is the amount a lender charges for the use of
assets expressed as a percentage of the principal. The interest rate
is typically noted on an annual basis known as the annual
percentage rate (APR).
The assets borrowed could include cash, consumer goods, or large
assets such as a vehicle or building.
INTEREST RATES
A loan that is considered low risk by the lender will
have a lower interest rate.

A loan that is considered high risk will have a


higher interest rate.
When are interest rates
applied?
INTEREST RATES
Businesses take loans to fund capital projects and
expand their operations by purchasing fixed and long-
term assets such as land, buildings, and machinery.
Borrowed money is repaid either in a lump sum by a
pre-determined date or in periodic installments.
INTEREST RATES
The money to be repaid is usually more than the borrowed
amount since lenders require compensation for the loss of
use of the money during the loan period. The lender could
have invested the funds during that period instead of
providing a loan, which would have generated income from
the asset.
INTEREST RATES
The difference between the total repayment sum
and the original loan is the interest charged. The
interest charged is applied to the principal amount.
RENTALS
RENTALS
A property from which the owner receives
payment from the occupant(s), known as
tenants, in return for occupying or using the
property.
RENT CONTROL ACT IN THE
PHILIPPINES
Republic Act 9653, better known as the Rent Control Act
of 2009, is the law that protects housing tenants (especially
in the lower-income class) against unreasonable rent
increases. It also provides the eviction rules that both
landlords and tenants must observe.
MINIMUM WAGE
MINIMUM WAGE
This refers to the minimum amount of remuneration
that an employer is required to pay wage earners for the
work performed during a given period, which cannot be
reduced by collective agreement or an individual
contract.
MINIMUM WAGE LAW
This law establishes a minimum amount that
an employer can pay a worker for one day of
labor.
TAXES
TAXES
A tax is a mandatory financial charge or some other type
of levy imposed upon a taxpayer by a governmental
organization in order to fund various public
expenditures.
Failure to pay, along with evasion of or resistance to
taxation, is punishable by law.
TAXES
Taxes are considered inflows for the government
and outflows for firms.
The way a tax is imposed often is justified in the basis of
one of two general principles: the benefits received and
the ability to pay.
BENEFITS-RECEIVED TAX
PRINCIPLE
This principle relates taxes to the benefits
taxpayers receive from a public good.
For example, gasoline tax payments increase the more people
drive. The more people drive, the more they benefit from roads
that the gasoline tax finances.
ABILITY TO PAY TAX
PRINCIPLE
This approach to taxes relates that those with a
greater ability to pay are taxed more.
Income and property taxes usually rely on the
ability to pay tax approach.
TAXES
At the national level, taxes are imposed and collected pursuant to
the National Internal Revenue Code, the Tariff and Customs Code,
and several special laws.
There are four main types of national internal revenue taxes:
income, indirect (value-added and percentage taxes), excise and
documentary stamp taxes, all of which are administered by the
Bureau of Internal Revenue (BIR).
TAXES
At the local level, governments have some
autonomy to impose taxes on business and
ownership of real property.
WITHHOLDING TAXES
Most income is subject to withholding of taxes. If the payor is
classified as a top-20,000 corporation or a top-5000 individual
engaged in business, it is required to withhold on all payments for
the purchase of goods (1%) and services (2%). Withholding taxes on
income subject to the RCIT(regular corporate income tax) are
creditable against the calculated liability.
INDIRECT TAXES
A 12% VAT is imposed on the gross selling price on
the sale, barter or exchange of goods and
properties, as well as on the gross receipts from the
sale of services within the Philippines, including
the lease of properties.
EXCISE TAXES
In addition to VAT, excise taxes are imposed on the
following: alcohol, tobacco, petroleum products,
automobiles, mineral products, and non-essential goods
such as jewelry and precious stones, perfumes, yachts
and other sport vessels.
PERFORMANCE TASK

If you were a CEO of a business firm, how will you


strengthen your business operations when you are facing
contemporary economic issues?

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