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FINANCIAL POLICY AND CORPORATE STRATEGYFINANCIAL POLICY AND CORPORATE STRATEGYFINANCIAL POLICY AND CORPORATE STRATEGYFINANCIAL POLICY AND CORPORATE STRATEGYChapter IndexChapter IndexChapter IndexChapter Index
Financial ManagementCorporate StrategyStrategic Financial ManagementFeatures of SFMBasic PremisesFinancial Policy & Corporate StrategyStrategic Decision Making FrameworkBalancing the Financial Goals Vis-À-Vis Sustainable Growth
FINANCIAL MANAGEMENTFINANCIAL MANAGEMENTFINANCIAL MANAGEMENTFINANCIAL MANAGEMENTFinancial Management is the process of financial-decisions. There are threetypes of financial decisions.
Financing Decisions : such decisions involve estimating the requirementof funds, deciding about leverage, evaluating various sources of financeand finally raising the finance in such a way that the cost of capital isminimum and the risk is at optimum level.
Investment Decisions : such decisions involve investments in workingcapital and fixed assets and evaluating the projects under consideration.The management should be guided by getting the maximum return bykeeping the risk at optimum level.
Dividend Decisions : such decisions involve the consideration of profit,liquidity, shareholder requirements, tax aspect and need of the funds forreinvestment purposes. The management has to decide about retaining thefunds for further investment plans without compromising the variousincome requirements of innumerable shareholders.The aim of a company is to create value for its shareholders. Although the otherstake holders are also important, the shareholder is the most importantstakeholder. The overall objective of the financial Management is to apply thefinancial management policies and principles for maximizing the wealth of theshareholders in the long run. This can be achieved by maximizing the EPS andkeeping the risk at optimum levels.