OTE2601 Portfolio solutions 2025
DUE: 10 OCTOBER 2025
OTE2601 — Financial Management Portfolio
solutions 2025
Oct/Nov 2025
ORIENTATION TO TEACHING ECONOMIC AND
MANAGEMENT SCIENCES
100 marks
Module: Orientation to Teaching Economic and Management
Sciences (OTE2601)
, 1. Estimation of Capital Requirements
Explanation
Estimating capital requirements refers to determining the total financial resources a
business needs in order to establish operations and remain solvent until it becomes
self-sustaining. This involves calculating start-up expenses (once-off costs), working
capital (day-to-day operational funds), and a contingency reserve to handle
unforeseen circumstances. Many South African small enterprises collapse due to
underestimating these requirements (SEDA, 2023).
Application in a Startup
For a small logistics company in Limpopo:
• One-time costs would include delivery vehicles, office set-up, software, and
branding.
• Operating expenses would include petrol, wages, insurance, and marketing.
• Working capital is vital because clients may take 30 days to settle invoices.
• Contingency (10–15%) provides a safety net against petrol price hikes or
breakdowns.
Why It Matters
Adequate estimation protects the business from liquidity crises and allows realistic
funding applications to banks or the IDC. Overestimation wastes scarce resources,
while underestimation causes premature closure.
Diagram: Components of Capital Requirements
Tools
• Cash-flow forecasts (12–24 months)
• Break-even analysis to estimate the sales required to cover costs
• Sensitivity analysis for best- and worst-case scenarios
DUE: 10 OCTOBER 2025
OTE2601 — Financial Management Portfolio
solutions 2025
Oct/Nov 2025
ORIENTATION TO TEACHING ECONOMIC AND
MANAGEMENT SCIENCES
100 marks
Module: Orientation to Teaching Economic and Management
Sciences (OTE2601)
, 1. Estimation of Capital Requirements
Explanation
Estimating capital requirements refers to determining the total financial resources a
business needs in order to establish operations and remain solvent until it becomes
self-sustaining. This involves calculating start-up expenses (once-off costs), working
capital (day-to-day operational funds), and a contingency reserve to handle
unforeseen circumstances. Many South African small enterprises collapse due to
underestimating these requirements (SEDA, 2023).
Application in a Startup
For a small logistics company in Limpopo:
• One-time costs would include delivery vehicles, office set-up, software, and
branding.
• Operating expenses would include petrol, wages, insurance, and marketing.
• Working capital is vital because clients may take 30 days to settle invoices.
• Contingency (10–15%) provides a safety net against petrol price hikes or
breakdowns.
Why It Matters
Adequate estimation protects the business from liquidity crises and allows realistic
funding applications to banks or the IDC. Overestimation wastes scarce resources,
while underestimation causes premature closure.
Diagram: Components of Capital Requirements
Tools
• Cash-flow forecasts (12–24 months)
• Break-even analysis to estimate the sales required to cover costs
• Sensitivity analysis for best- and worst-case scenarios
