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Published by: Krishna Chandran on Jan 22, 2013
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Financial management

What is Finance?  Finance is basically a field of study which deals with money. and assets. . stocks. and savings of an individual while Corporate finance deals with the financial strategies of a business and with portfolio management for a business.  Personal finance deals with the credit.  The two main areas of finance are corporate finance and personal finance and both of these have different characteristics.  Finance is the art and science of managing money. borrowings.

Financing decisions 2. Dividend policy decision 4.Finance Functions 1. Investment decisions 3. Liquidity Decision .

Financing Decisions are decisions regarding process of raising the funds. This function of finance is concerned with providing answers to various questions like • What should be the amount of funds to be raised. A. it is required to comply with various legal & procedural formalities.  What kinds of changes have taken place recently affecting capital market in the country? . wants to raise funds from different sources. • What are the various sources available to organization for raising the required amount of funds? • If organization.

 The central issue before him is to determine the appropriate proportion of equity and debt.  The mix of equity and debt is known as firm’s capital structure. where from and how to acquire funds to meet the firm’s investment needs. A financial manager must decide when. .

. B.  These relate to selection of the assets in which funds should be invested. Investment decisions:.  It is referred as capital budgeting.are decisions regarding application of funds raised by organization.  A capital budgeting decisions involves the decisions of allocation of capital.

 C . Dividend Policy Decisions:.Such decisions include  * What are forms in which dividend can be paid to shareholders?  * What are legal & procedural formalities to be completed while paying dividend different forms?  The proportion of profits distributed as dividend is called dividend-payout ratio and the ratained portion of profits is known as the retention ratio. .

 In order to ensure that neither insufficient nor unnecessary funds are invested in current assets. Liquidity Decisions:. . the financial manager should develop sound technique of managing current assets. D .Current assets should be managed efficiently for safe guarding firm against of liquidity & insolvency.

organizing. directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. .Financial Management  Financial Management means planning. It means applying general management principles to financial resources of the enterprise.  It is concerned with the duties of the financial managers in the business firm.

Definitions  “Financial Management is the application of the planning and control functions to the finance function.”.Joseph and Massie.Howard and Upton. .”. “Financial Management is the operational activity of a business that is responsible for obtaining and effectively. utilizing the funds necessary for efficient operations.

2. Profit maximization. Wealth Maximization. . Return Maximization.Objectives of Financial Management 1. 3.

Thank you .

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