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A COMPARATIVE STUDY ON FINANCIAL PERFORMANCE OF SELECT AUTOMOBILE INDUSTRIES IN INDIA” (four wheelers)

A COMPARATIVE STUDY ON FINANCIAL PERFORMANCE OF SELECT AUTOMOBILE INDUSTRIES IN INDIA” (four wheelers)

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Published by Prashanth Banu

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Published by: Prashanth Banu on Aug 29, 2012
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03/07/2015

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CHAPTER-1INTRODUCTION
 
 
INTRODUCTION
Meaning of Finance
Finance may be defined as the provision of money at the time when it is required. Financerefers to management of flows of money through an organization. It concerns with theapplication of skills in the manipulation, use and control of money. Different authorities have
interpreted the term „Finance‟ differently. However, there are three main approaches to
finance.1)
 
The first approach views finance to providing of funds needed by a business onmost suitable terms. This approach confines finance to the raising of funds and tothe study of financial institutions and instruments from where funds can beprocured.2)
 
The second approach relates to finance cash requirements.3)
 
The third approach views finance as being concerned with raising of funds andtheir effective utilization.
Definition of Finance
According to Guthmann and Dougall, Business finance can be broadly difined as the activityconcerned with the planning, raising, controlling, and administering the funds used inbusiness.
In the words of panther and wert, “Business finance deals primarily with raising,
administering and disbursing funds by privately owned business units operation in
nonfinancial fields of Industry”.
 Acc
ording to the encyclopedia of social Sciences, “Corporation finance deals with the
financial problems of corporate enterprises. These problems include the financial aspects
 
 
According to the encyclopedia of Social Sciences, “Corporation finance deals with
the financialproblems of corporate enterprises. These problems include the financial aspects of thepromotion of new enterprises and their administration during early development, the accountingproblems connected with the distinction between capital and income, the administrativequestions created by growing and expansion of a corporation which has come into financial
difficulties”.
 
Importance of Finance
Finance is the lifeblood and never center of business, just a circulation of blood is essential inthe human body for maintaining life, finance is a very essential to smooth running of thebusiness. It has been rightly termed as universal lubricant, which keeps the enterprise dynamic.No business, whether big, medium or small can be started without an adequate amount of finance. Right from the very beginning, i.e. conceiving an idea to business, finance is needed topromoter or establish the business, acquire fixed assets, make investigations such as marketsurveys, etc., develop product, keep men and machine at work, encourage management to makeprogress and create values. Even an existing concern may require further finance for makingimprovements or expanding the business. Thus the importance of finance cannot be over-emphasized and the subject of business finance has become utmost both to the academiciansand practicing managers.The importance of corporation finance (which is a constituent of business finance) has arisenbecause of the fact that present day business activities are predominantly carried on company orcorporate form of organization. The advent of corporate enterprises has resulted into:i.
 
The increase in size and influenced of the business enterprises.ii.
 
Wide distribution of corporate ownership, andiii.
 
Separation of ownership and management.

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