Financial Management

(MBOF-912D)

Finance for Non-fnance

(19-08-23)

Dr. Kabir Sharma

Centre for Continuing Education, UPES
Key Learnings
Basics of Financial Management

Introduction to Financial Statements

Finance ????????????????????
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It is basically
Art & Science of managing money

Procurement & efectiie usage of funds

Proiision of funds when it is needed

Financial + Management

Basic functions are:

 Planning
 Organising
 Directing
 Controlling
¿ Economic Transactions

Pic Courtesy: pixabay.com

Objectives of Financial Management

Proft
Maximizati
on

Wealth
Maximizatio
n
Key Decisions – Financial
Management
Iniestment Decision

Financing Decision

Diiidend Decision
Investment Decision
Select the best iniestment aienue to maximize ROI

Make is buy

Which asset to acquire?

Which projects to be undertaken?

Financing Decision
Procuring funds with minimal cost

Best fnancing structure (Debt is Equity)

Combination b/w long-term & short-terms debts

Which projects to be undertaken?

Dividend Decision
Deciding payout ratio

Declare diiidend or not

Balance b/w future fnancing needs and existing requirement

Frequency
Financial decision making without understanding of
the Financial Statements is not possible.
Financial Statements
Systematized summary of the accounting of a business entity.
Major reports under Financial Statement includes:

Balance Sheet
Proft & Loss Account

Cashfow Statement
 Balance Sheet
(for the year ending …)
Liabilities Amt. (Rs.) Assets Amt. (Rs.)
Capital Fixed Assets
Add/Less: Net Proft/Loss XXXX Less: Depreciation XXX
Long Term Liabilities: Land
Long Term Loans Plant & Machinery
Motor Vehicle
Short Term Liabilities Current Assets Assets
Sundry Creditors Iniestments =
Short Term Loans Stock
Liabilities
Bills Payable Debtors
Bank – Cash Credit (CC) Bank & Cash
O/s Expenses P/P Expenses
Adiance Receiied Accrued Income
XXXX XXXX
 Trading A/c
(for the year ending …)
Particulars Amt. (Rs.) Particulars Amt. (Rs.)
To Opening Stock By Sales (Net)
To Purchases (Net) By Closing Stock
To Wages By Gross Loss
To Carriage Inward
To Fuel & Power
To Other Direct Expenses
To Gross Proft
XXXX XXXX

Gross Proft/Loss is the balancing fgure of the Trading A/c which is transferred to
Proft & Loss A/c
 Proft & Loss A/c
(for the year ending …)
Particulars Amt. (Rs.) Particulars Amt. (Rs.)
To Gross Loss By Gross Proft
To Salaries By Other Income
To Rent By Abnormal Gain
To Interest on Loan By Net Loss
To Selling & Distribution
Expenses
To Depreciation
To Bad Debts
To other Indirect Expenses
To Abnormal Losses
To Net Proft
XXXX XXXX
Net Proft/Loss transferred to Capital Account in Balance Sheet
 Statement of Cash Flow
Particular’s Details Amount
Opening Balance of Cash as on … XXXX
Add/Less: Income from Operating Actiiities XXXX
All Adjustments/Entries
Add/Less: Income from Iniesting Actiiities XXXX
All Adjustments/Entries
Add/Less: Income from Financing Actiiities XXXX
All Adjustments/Entries
Closing Balance of Cash as on …. XXXX