1. A Presentation
by
ANKIT PORWAL

4. Meaning and Definition
Financial Management is the operational activity of a
business that is responsible for obtaining and
effectively utilizing the funds necessary for efficient
operation.
- Joseph and Massie
Financial management is an area of financial decision
making, harmonizing individual motives and
enterprise goals.
-Weston and Brigham

5. Meaning and Definition
Business Finance can be broadly defined as the
activity concerned with planning, raising, controlling
and administering of funds in the business.
-H G Gathman & H E Dougall
Financial management may be defined as the area or
set of administrative functions in an organisation
which relate with arrangement of cash and credit so
that the organisation may have the means to carry
out its objective as satisfactorily as possible.
-Howard & Opton

6. Goals of Financial Management
Profit Maximization
Wealth Maximization
Balanced Asset Structure
Liquidity
Judicious Planning of Funds
Innovate
Financial Discipline

7. Decisions of Finance Manager
1. Investment decisions-costing, capital budgeting and
CVP analysis.
2. Financing decisions-Equity, Preference and Debt.
3. Dividend decisions.
4. Current Asset Management/Working Capital
decisions.

8. Role of Finance Manager
Traditional Role
Primary market- Secondary market- Financial
Institutions- Leverages- Capital Structure –
Deployment of funds- capital budgeting- CVP
Analysis- Working capital management- Dividend
decisions.
New Role
Mergers- Tax planning- Cost Reduction strategies-
Access to foreign investment- Forex management-
Information technology- Communication network-
Learning attitude

9. Organisation chart for finance
function
 Cash and bank
 Investments
 Tax and Insurance
 Credit collection
 Relation with banke
I
Chief Finance
Officer
Treasurer
Controller
Cash and bank
Investments
Tax and insurance
Credit collecton
Relation with
bankers
Accounting
Budgeting
Financial
planning
Investment
decisions
Economic
appraisal
Cost accounts
Internal audit
Profit planning
Protection of
assets
Annual Reports

10. Indian Financial System
Financial
Institutions
Financial
Instruments
Financial
Markets
Suppliers of
funds
Individuals
Businesses
Suppliers-
Individuals,
Businesses,
Government
government
Government
Commercial,
Development
Banks,NBFC
Term
Loans,Leasing,
H.P, C.C, O/D
Shares,
Debentures,
Public deposits
Capital market,
Money market
Demanders-
Individuals,
Businesses,
Government
RBI
SEBI

11. Profit Maximisation vs wealth
maximisation
Arguments in favour of profit maximization
1. It is rational as well as natural objective.
2.It helps to face the unfavorable situations.
3. It helps for proper utilization of resources.
4.It helps for growth and development of organization.
5.It helps for maximizing social welfare.

12. Objections against profit maximisation
1. It is vague.
2. It ignores time value of money.
3. It neglects social responsibilities of business.

13. Arguments in favour of wealth maximisation
1. It is clear and unambiguous.
2. It considers time value of money.
3. It ensures regular payment of dividend.
4. It protects the economic welfare of the
shareholders.
5. It helps for growth and development of the
organisation.

14. Objections against wealth maximisation.
1. Equality of wealth is not maintained.
2. Govt. restrictions.
3. Reduce the profitability.