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Finance Functions

The document outlines traditional and modern concepts of finance functions. Traditionally, the primary responsibility was raising necessary funds, but this was criticized for being narrow. Modern concepts view finance managers as responsible for all financial activities like planning, raising, allocating, and controlling funds. Recurring finance functions include planning funds by estimating requirements, raising funds through security issues or borrowing, allocating funds considering needs and managing assets/cash, and allocating income between reinvestment or dividends. Non-recurring functions refer to infrequent activities like incorporation, liquidation, or reorganization.

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1K views19 pages

Finance Functions

The document outlines traditional and modern concepts of finance functions. Traditionally, the primary responsibility was raising necessary funds, but this was criticized for being narrow. Modern concepts view finance managers as responsible for all financial activities like planning, raising, allocating, and controlling funds. Recurring finance functions include planning funds by estimating requirements, raising funds through security issues or borrowing, allocating funds considering needs and managing assets/cash, and allocating income between reinvestment or dividends. Non-recurring functions refer to infrequent activities like incorporation, liquidation, or reorganization.

Uploaded by

Ram_Revankar_5970
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

FINANCE FUNCTIONS

FINANCE FUNCTIONS

TRADITIONA MODERN
L CONCEPTS CONCEPTS
Traditional Concept Of Finance Function
Primary responsibility of a finance manager is to raise
necessary funds to meet operating requirements of the
business

Criticisms
i. Narrow approach
ii. Over emphasized on non recurring problems
iii. Concentrated attention to problems of corporation
finance
iv. Laid more stress on problems of long term financing
MODERN CONCEPT OF FINANCE
CONCEPT
Procurement of funds as well as application of funds
Finance manager is concerned with
i. All financial activities like planning, raising,
allocating and controlling funds and
ii. Problems of incorporation, liquidation,
consolidation, re organisation.
MODERN CONCEPT OF FINANCE FUNCTION

RECURRING FINANCE NON RECURRING FINANCE


FUNCTION FUNCTION
RECURRING FINANCE FUNCTION

ALLOCATIO ALLOCATIO
PLANNING RAISING OF CONTROL
N OF N OF
FOR FUNDS FUNDS OF FUNDS
FUNDS INCOME
i. Planning for funds
Task of finance manager in a new or going concern is
to formulate financial plan for the firm
He has to aim at synchronizing the cash inflows and
cash outflows
Two methods of estimating funds requirements
i. Balance sheet method
ii. Cash budget method
ii. Raising of funds
Procurement of capital
i. Security Issues or
ii. Borrow money from financial institutions
iii. Allocation of Funds
In allocating the funds consideration must be given to
the factors such as Competing use, immediate
requirements, managements of assets etc
While managing cash the finance manager should
profitability and liquidity of the corporation
Managing fixed assets, inventories
iv. Allocation of Income
Allocation of annual earnings
Retaining the income for financing expansion of
business or distribution to the owners as dividend as a
return of capital
NON-RECURRING FINANCE
FUNCTION
Refers to those financial activities that a
finance executive has to perform very
infrequently

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