Nature Of Financial Management-B.V.Raghunandan

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conceptual framework of financial management like objectives, scope and recent trends

conceptual framework of financial management like objectives, scope and recent trends

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  • 1. Financial Management
    Final B.Com., V Semester
  • 2. Chapter I-Nature of Financial Management
    Introduction
    Meaning & Definition:
    FM is “concerned with the efficient use of an important economic resource viz., capital funds”
    - Ezra Solomon in ‘Theory of Financial Management’
  • 3. Definition.. Continued
    FM is concerned with, ”the managerial decisions that result in the acquisition and financing of long-term and short-term credits for the firm. As such, it deals with the situations that require the selection of specific assets (or combination of assets), the selection of specific liability (or combination of liabilities) as well as the problem of size and growth of an enterprise”
    -Phillipatus
  • 4. Scope of Financial Management
    Scope UNDER Traditional Approach
    -Raising Funds
    -External Reporting
    -Institutions & Instruments
  • 5. Scope Under Modern Approach
    Financing Decisions: Estimation of Fund Requirement, Procurement of Fund, Planning the Capital Structure, Negotiating with Funding Agencies
    Investment Decisions: Cash Management, Working Capital Management, Capital Budgeting, Portfolio Management, Risk Management, Evaluation of Performance
    Dividend Policy Decisions: Profit Allocation and Framing Dividend policies
  • 6. Objectives of Financial Management
    Profit Maximisation: Need for Profit and Criticisms in the form of Ignorance of Time Value of Money, Vagueness, Ignoring Risk and Uncertainties and the role of Growth
    Wealth Maximisation: Gross Present Value, Net Present Value and Wealth
    Imparting Sufficient Liquidity
    Adding to Shareholder Value
    Corporate Governance
  • 7. Growing Importance of Financial Management
    Risk-Return Trade-Off
    Financial Restructuring
    Portfolio Management
    Designing Innovative Instruments
    Novel Ways of Rewarding Shareholders
    Legal Compliance
    Monitoring Share Price Movement
    Searching for Investment Opportunities
    Facilitating Organic Growth
    Enabling Inorganic Growth
  • 8. THANK YOU