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Table Of Contents

Increase the Value of the Firm
MODEL QUESTIONS
MEANING AND DEFINITION
Statement of changes in Financial Position
Income Statement
Position Statement
Statement of Changes in Owner’s Equity
Statement of Changes in Financial Position
TYPES OF FINANCIAL STATEMENT ANALYSIS
Fig. 2.2 Types of Financial Statement Analysis
TECHNIQUES OF FINANCIAL STATEMENT ANALYSIS
Fig. 2.3 Techniques of Financial Statement Analysis
Comparative Statement Analysis
Comparative Balance Sheet Analysis
Comparative Profit and Loss Account Analysis
Trend Analysis
Common Size Analysis
FUNDS FLOW STATEMENT
CASH FLOW STATEMENT
Difference Between Funds Flow and Cash Flow Statement
RATIO ANALYSIS
●Liquidity Ratio
●Activity Ratio
Liquidity Ratio
Activity Ratio
Solvency Ratio
Profitability Ratio
INTRODUCTION
Long-term Financial Requirements or Fixed Capital Requirement
Short-term Financial Requirements or Working Capital Requirement
SOURCES OF FINANCE
SECURITY FINANCE
Characters of Security Finance
Types of Security Finance
Ownership Securities
●Equity Shares
EQUITY SHARES
Features of Equity Shares
Advantages of Equity Shares
Disadvantages of Equity Shares
PREFERENCE SHARES
Irredeemable Preference Shares
Remedies of Under Capitalization
Watered Capitalization
Causes of Watered Capital
Meaning of Capital Structure
Definition of Capital Structure
FINANCIAL STRUCTURE
OPTIMUM CAPITAL STRUCTURE
Objectives of Capital Structure
Forms of Capital Structure
FACTORS DETERMINING CAPITAL STRUCTURE
CAPITAL STRUCTURE THEORIES
Traditional Approach
Net Income (NI) Approach
Net Operating Income (NOI) Approach
Modigliani and Miller Approach
Meaning of Cost of Capital
Assumption of Cost of Capital
CLASSIFICATION OF COST OF CAPITAL
Explicit and Implicit Cost
Average and Marginal Cost
Historical and Future Cost
Specific and Combine Cost
IMPORTANCE OF COST OF CAPITAL
Importance to Capital Budgeting Decision
Importance to Structure Decision
Importance to Evolution of Financial Performance
Importance to Other Financial Decisions
COMPUTATION OF COST OF CAPITAL
Measurement of Cost of Capital
Dividend Price Approach
Dividend Price Plus Growth Approach
Earning Price Approach
Realized Yield Approach
Debt Issued at Par
Debt Issued at Premium or Discount
Cost of Perpetual Debt and Redeemable Debt
Cost of Preference Share Capital
Cost of Retained Earnings
Measurement of Overall Cost of Capital
Meaning of Leverage
Definition of Leverage
Types of Leverage
OPERATING LEVERAGE
OL=Operating Leverage
Degree of Operating Leverage
Uses of Operating Leverage
FINANCIAL LEVERAGE
FL = Financial leverage
Degree of Financial Leverage
Alternative Definition of Financial Leverage
Uses of Financial Leverage
DISTINGUISH BETWEEN OPERATING LEVERAGE AND FINANCIAL LEVERAGE
EBIT - EPS Break even chart for three different financing alternatives
COMBINED LEVERAGE
CL=Combined Leverage
Degree of Combined Leverage
WORKING CAPITAL LEVERAGE
Meaning of Dividend
TYPES OF DIVIDEND/FORM OF DIVIDEND
Stock Dividend
Property Dividend
DIVIDEND DECISION
Irrelevance of Dividend Relevance of Dividend
Irrelevance of Dividend
Modigliani and Miller’s Approach
RELEVANCE OF DIVIDEND
Walter’s Model
Gordon’s Model
FACTORS DETERMINING DIVIDEND POLICY
Profitable Position of the Firm
Uncertainty of Future Income
Legal Constrains
Liquidity Position
Sources of Finance
Growth Rate of the Firm
Capital Market Conditions
TYPES OF DIVIDEND POLICY
Regular Dividend Policy
Stable Dividend Policy
Irregular Dividend Policy
No Dividend Policy
Need and Importance of Capital Budgeting
CAPITAL BUDGETING PROCESS
KINDS OF CAPITAL BUDGETING DECISIONS
METHODS OF CAPITAL BUDGETING OF EVALUATION
Pay-back Period
Post Pay-back Profitability Method
Accounting Rate of Return or Average Rate of Return
Net Present Value
Internal Rate of Return
Excess Present Value Index
RISK AND UNCERTAINLY IN CAPITAL BUDGETING
(ii)Certainly equivalent method
(iii)Sensitivity technique
(iv)Probability technique
(v)Standard deviation method
(vi)Co-efficient of variation method
(vii)Decision tree analysis
Construction of Decision Tree
•Meaning of Working Capital
MEANING OF WORKING CAPITAL
CONCEPT OF WORKING CAPITAL
Gross Working Capital
Net Working Capital
Component of Working Capital
TYPES OF WORKING CAPITAL
Permanent Working Capital
Temporary Working Capital
Semi Variable Working Capital
NEEDS OF WORKING CAPITAL
Working Capital Position/ Balanced Working Capital Position
WORKING CAPITAL MANAGEMENT POLICY
SOURCES OF WORKING CAPITAL
Determining the Finance Mix
Conservative Approach
Aggressive Approach
WORKING CAPITAL AND BANKING COMMITTEE
INVENTORY MANAGEMENT
Introduction
Kinds of Inventories
Objectives of Inventory Management
Techniques of Inventory Management
Re-order Level
Average Stock Level
Economic Order Quantity (EOQ)
TECHNIQUES BASED ON THE CLASSIFICATION OF INVENTORIES
A-B-C analysis
Aging Schedule of Inventories
TECHNIQUES ON THE BASIS OF RECORDS
Valuation of Inventories
CASH MANAGEMENT
Motives for Holding Cash
Cash Management Techniques
A.Speedy Cash Collections
Speedy Cash Collections
Prompt Payment by Customers
Early Conversion of Payments into Cash
Concentration Banking
Slowing Disbursement
Cash Management Models
RECEIVABLE MANAGEMENT
A.Collection Cost
B.Capital Cost
C.Administrative Cost
D.Default Cost
Collection Cost
Administrative Cost
Factors Considering the Receivable Size
LEASE FINANCING
Definition of Leasing
Elements of Leasing
Type of Leasing
Advantages of Leasing
Leasing Finance Institutions in India
Leasing by Development Institutions
Leasing by Specialized Institutions
Private Sector Leasing Company
Private Sector Financial Company
VENTURE CAPITAL
Meaning of Venture Capital
Definition of Venture Capital
Features of Venture Capital
Venture Capital in India
FACTORING
Myths on Factoring
History of the Early Factoring in Roman
Factoring in United States
Factoring in India
Modus of Operations
Why Factoring?
Mechanics of Factoring
Types of factoring
FOREIGN DIRECT INVESTMENT
•Financial Institutions
P. 1
Financial Management

Financial Management

Ratings: (0)|Views: 8,941 |Likes:
Published by Pankaj Rawal

C. Paramsivan

T. Subramanian

C. Paramsivan

T. Subramanian

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Published by: Pankaj Rawal on Feb 04, 2012
Copyright:Attribution Non-commercial

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