The document provides an overview of financial management. It discusses key concepts including:
1. Financial management involves raising and managing money for assets and operations. This includes borrowing, stock sales, and retained earnings.
2. Financial management areas include investment, financing, and dividend decisions. The financial manager evaluates investment proposals, determines financing sources, and sets dividend policy.
3. Modern financial management is concerned with both acquiring and allocating funds across the investment, financing, funds required, and dividend decisions. The financial manager ensures adequate profit planning and cash flow.
Financial management - its importance and objectivesRobert Smith
This Presentation gives us information about Financial Management. It gives us details about importance and objectives of Financial Management. Financial Management is all about obtaining funds and how to use that fund.
Chapter 1 Introduction to Financial ManagementSafeer Raza
Chapter 1 of Financial Management by Van horn
Introduction to Financial management
Topics
Introduction
What is Financial Management
Investment Decision
Financing decision
Asset management Decision
Goal of the firm
Value creation or profit maximization
wealth maximization
Agency problems
Corporate Social Responsibility
Corporate governance
Organization of the financial management function
Defination of Financial Management
Major Areas
Corporates
Corporate Structure
Corporate Objectives & Strategy
Factors influencing Corporate Objectives
Primary vs Secondary Objectives
Strategies(Corporate) / Tactical (Functional)
Role Of a Financial Manager
Financial management - its importance and objectivesRobert Smith
This Presentation gives us information about Financial Management. It gives us details about importance and objectives of Financial Management. Financial Management is all about obtaining funds and how to use that fund.
Chapter 1 Introduction to Financial ManagementSafeer Raza
Chapter 1 of Financial Management by Van horn
Introduction to Financial management
Topics
Introduction
What is Financial Management
Investment Decision
Financing decision
Asset management Decision
Goal of the firm
Value creation or profit maximization
wealth maximization
Agency problems
Corporate Social Responsibility
Corporate governance
Organization of the financial management function
Defination of Financial Management
Major Areas
Corporates
Corporate Structure
Corporate Objectives & Strategy
Factors influencing Corporate Objectives
Primary vs Secondary Objectives
Strategies(Corporate) / Tactical (Functional)
Role Of a Financial Manager
A comprehensive evaluation of an investor's current and future financial state by using currently known variables to predict future cash flows, asset values and withdrawal plans.
Most individuals work in conjunction with an investment or tax professional and use current net worth, tax liabilities, asset allocation, and future retirement and estate plans in developing the plan. These will be used along with estimates of asset growth to determine if a person's financial goals can be met in the future, or what steps need to be taken to ensure that they are.
,
cost of capital
,
bond
,
preferred stock
,
factors influencing cost of capital determination
,
cost of new common stock
,
cost of debt components
,
cost of preferred stock
,
components of cost of capital
What is Finance, Approaches to finance function, Traditional approach, Modern approach, Limitations Of Traditional Approach, Profit maximization approach, Wealth Maximisation approach,
Financial Management — objectives — profit maximization, wealth maximization — finance function — role of finance manager — strategic financial management — economic value added — time value of money.
A comprehensive evaluation of an investor's current and future financial state by using currently known variables to predict future cash flows, asset values and withdrawal plans.
Most individuals work in conjunction with an investment or tax professional and use current net worth, tax liabilities, asset allocation, and future retirement and estate plans in developing the plan. These will be used along with estimates of asset growth to determine if a person's financial goals can be met in the future, or what steps need to be taken to ensure that they are.
,
cost of capital
,
bond
,
preferred stock
,
factors influencing cost of capital determination
,
cost of new common stock
,
cost of debt components
,
cost of preferred stock
,
components of cost of capital
What is Finance, Approaches to finance function, Traditional approach, Modern approach, Limitations Of Traditional Approach, Profit maximization approach, Wealth Maximisation approach,
Financial Management — objectives — profit maximization, wealth maximization — finance function — role of finance manager — strategic financial management — economic value added — time value of money.
meaning of financial management, objectives of financial management. basic concept of financial management role of finance manager key functions of finance
Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
June 3, 2024 Anti-Semitism Letter Sent to MIT President Kornbluth and MIT Cor...Levi Shapiro
Letter from the Congress of the United States regarding Anti-Semitism sent June 3rd to MIT President Sally Kornbluth, MIT Corp Chair, Mark Gorenberg
Dear Dr. Kornbluth and Mr. Gorenberg,
The US House of Representatives is deeply concerned by ongoing and pervasive acts of antisemitic
harassment and intimidation at the Massachusetts Institute of Technology (MIT). Failing to act decisively to ensure a safe learning environment for all students would be a grave dereliction of your responsibilities as President of MIT and Chair of the MIT Corporation.
This Congress will not stand idly by and allow an environment hostile to Jewish students to persist. The House believes that your institution is in violation of Title VI of the Civil Rights Act, and the inability or
unwillingness to rectify this violation through action requires accountability.
Postsecondary education is a unique opportunity for students to learn and have their ideas and beliefs challenged. However, universities receiving hundreds of millions of federal funds annually have denied
students that opportunity and have been hijacked to become venues for the promotion of terrorism, antisemitic harassment and intimidation, unlawful encampments, and in some cases, assaults and riots.
The House of Representatives will not countenance the use of federal funds to indoctrinate students into hateful, antisemitic, anti-American supporters of terrorism. Investigations into campus antisemitism by the Committee on Education and the Workforce and the Committee on Ways and Means have been expanded into a Congress-wide probe across all relevant jurisdictions to address this national crisis. The undersigned Committees will conduct oversight into the use of federal funds at MIT and its learning environment under authorities granted to each Committee.
• The Committee on Education and the Workforce has been investigating your institution since December 7, 2023. The Committee has broad jurisdiction over postsecondary education, including its compliance with Title VI of the Civil Rights Act, campus safety concerns over disruptions to the learning environment, and the awarding of federal student aid under the Higher Education Act.
• The Committee on Oversight and Accountability is investigating the sources of funding and other support flowing to groups espousing pro-Hamas propaganda and engaged in antisemitic harassment and intimidation of students. The Committee on Oversight and Accountability is the principal oversight committee of the US House of Representatives and has broad authority to investigate “any matter” at “any time” under House Rule X.
• The Committee on Ways and Means has been investigating several universities since November 15, 2023, when the Committee held a hearing entitled From Ivory Towers to Dark Corners: Investigating the Nexus Between Antisemitism, Tax-Exempt Universities, and Terror Financing. The Committee followed the hearing with letters to those institutions on January 10, 202
The French Revolution, which began in 1789, was a period of radical social and political upheaval in France. It marked the decline of absolute monarchies, the rise of secular and democratic republics, and the eventual rise of Napoleon Bonaparte. This revolutionary period is crucial in understanding the transition from feudalism to modernity in Europe.
For more information, visit-www.vavaclasses.com
Unit 8 - Information and Communication Technology (Paper I).pdfThiyagu K
This slides describes the basic concepts of ICT, basics of Email, Emerging Technology and Digital Initiatives in Education. This presentations aligns with the UGC Paper I syllabus.
Embracing GenAI - A Strategic ImperativePeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
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Synthetic fiber production is a fascinating and complex field that blends chemistry, engineering, and environmental science. By understanding these aspects, students can gain a comprehensive view of synthetic fiber production, its impact on society and the environment, and the potential for future innovations. Synthetic fibers play a crucial role in modern society, impacting various aspects of daily life, industry, and the environment. ynthetic fibers are integral to modern life, offering a range of benefits from cost-effectiveness and versatility to innovative applications and performance characteristics. While they pose environmental challenges, ongoing research and development aim to create more sustainable and eco-friendly alternatives. Understanding the importance of synthetic fibers helps in appreciating their role in the economy, industry, and daily life, while also emphasizing the need for sustainable practices and innovation.
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Read| The latest issue of The Challenger is here! We are thrilled to announce that our school paper has qualified for the NATIONAL SCHOOLS PRESS CONFERENCE (NSPC) 2024. Thank you for your unwavering support and trust. Dive into the stories that made us stand out!
2. In the modern world virtually every organization, public
and private, runs on money.
The most common application of the term ‘finance’
involves raising money to acquire assets.
Companies finance assets when they raise money to
acquire those assets. They do that by borrowing, selling
stock, or using money they have earned.
Financial management means the management and control
of money and money-related operations within a business.
3. Meaning: Financial management is that administrative
area or set of administrative functions which relate to the
management of finance, both its sources and
uses/application.
Definition: “Financial management is an application of
general managerial principles to the area of financial
decision making” – Howard and Upton.
4. Decision Areas of Financial Management
A. The Investment Decision:
It is concerned with the effective utilization of funds in one
activity or the other. This comprises decisions relating to
investment in both capital and current assets.
The finance manger has to evaluate different capital
investment proposals and select the best keeping in view
the overall objective of the enterprise.
5. B. The Financing Decision:
This determines as to how the total funds required by the
firm will be made available through the issue of different
type of securities.
A company cannot depend upon only one source of capital.
Hence, before using any particular source of capital, the
relative cost of capital, degree of risk control etc. have to be
carefully examined by the finance manager.
6. C. The Dividend Decision:
Dividend decision helps the management in the
declaration and payment of dividend to the
shareholders.
It decides how much of the earnings should be
distributed among the shareholders and how much
should be retained in the business for future
expansion.
7. Roles of the Financial Manager
I. Traditional Approach:
Financial manager was called upon to raise funds during
the major events such as promotion, reorganization,
expansion etc.
His only significant duty was to see that the firm had
enough cash to meet its obligations.
He is required to raise the needed funds from the
combination of various resources such as:
Arrangement of funds from financial institutions
8. Arrangement of funds from financial instruments such as
shares, bonds etc…
Looking after the legal and accounting relationship
between a corporation and its sources of funds.
Criticism of Traditional Approach
It treated the subject of finance from the view point of
suppliers of funds and ignored the view point of
management of funds i.e, uses/application of funds.
The approach focused attention only on the financial
problems of corporate enterprises. Non-corporate industrial
organizations remained outside its scope.
9. The problems relating to short term working capital
financing were ignored.
It did not emphasize on allocation of funds.
II. Modern Approach:
According to modern concept, financial management is
concerned with both acquisitions of funds and their
allocation. The four broad decision areas of financial
management are:
Funds required decision Financing decision
Investment decision Dividend decision
10. Besides his traditional function of raising money, financial
manager will be determining the size and technology,
setting the pace and direction of growth and shaping the
profitability and risk complexion of the firm by selecting
the best asset mix and by obtaining the optimum financing
mix.
The finance manager has to look after profit planning
which means operating decisions in the areas of pricing,
volume of output and the firms selection of product lines.
Profit planning is a prerequisite for optimizing investment
and financing decisions.
11. Finance, production and marketing are the three important
activities of a business firm. A firm secures capital for its
need through finance activity and employs it through
production and marketing activities.
Thus business firm is an entity that engages in activities to
perform the functions of finance, production and marketing.
It acquires funds from the sources called investors when
invested, the funds are called investments.
12. The firm expects to receive returns on investments over time,
and periodically distributes returns to investors. These
processes are not sequential, but simultaneous and
continuous.
13. The functions of financial management can be divided into
two viz.,
A. Executive Functions and B. Routine Functions
A) EXECUTIVE FUNCTIONS
i) Financial Forecasting:
He has to see that an adequate supply of cash is on hand
at the proper time for smooth flow of firms activities.
Since both cash inflows and outflows are closely related
to the volume of sales, it requires financial forecasting.
14. Thus the estimation of the prospective inflow and outflow
of cash in the next year is necessary to maintain the
liquidity in the funds.
ii) Investment Decisions:
It is the most important aspect of executive functions of
financial manager.
In this, the allocation of capital to various investment
proposals is made in order of their profitability.
Each investment decision necessarily involves risk and a
financial help in evaluating the various proposals under
uncertainty with the process of capital budgeting.
15. iii) Management Policy:
The formulation of sound asset management policies is an
essential requirement to successful financial management.
The fixed and current assets of the firm must be changed
efficiently to ensure success.
The financial manager is charged with varying degrees of
operating responsibility over existing assets.
He is more concerned with the management of current
assets than with fixed assets.
16. iv) Management of Income:
It includes the allocation of net earnings among
shareholders.
He tries to get an optimal dividend payout ratio that
maximize shareholders value in the long run.
v) Management of Cash:
Estimating and controlling cash flow is also an important
function of financial management.
17. All cash must be managed for the benefit of the owners.
He should try for two things:
a. To choose the best among the alternatives uses of
funds; and
b. To ascertain the best use that shareholders could find
outside the company.
vi) Assessment of Attitude:
Assessing the capital markets attitude towards the
company and its shares.
18. vii) Decision about New Sources of Finance:
A business firm is always in need of funds. So he is on the
basis of forecast of the volume of operations, should
decide upon needs and prepare the detailed financial plan
for the procurement of funds – both short term and long
term.
He is to evaluate the prospective cost of funds as against
the anticipated profit from the use of these funds by the
operating units to which they are to be allocated.
viii) Contract and carry Negotiations for New Financing:
He has to decide upon the needs and finding out a suitable
source first.
19. Then he has to contact the sources and carry on the
negotiations to finalize the terms and conditions of the
contract.
ix) Analyze and Appraisal of Financial Performance:
To carry out finance functions smoothly proper analyses
like checking and appraisal of financial performance are
very essential.
For this purpose various financial statements are prepared,
analysed and then the necessary guidelines are set for
future.
20. x) Advising the Top Management:
It is an expert duty of financial manager to advise the top
management in respect of financial matters, to suggest
various alternative solutions for any financial difficulty
and to make steady efforts to increase the profitability of
capital invested in the firm.
21. B) INCIDENT / ROUTINE FUNCTIONS
Record keeping and reporting
Preparation of various financial statements
Cash planning and supervision
Credit management
Custody and safeguarding the different financial
securities and the like.
Providing the top management with necessary and
accurate information on current an prospective financial
conditions of the business as a basis for policy decisions
on purchases, marketing and pricing.
22. 1. Profit Maximization:
Maximization of profits is the basic objectives of a
business enterprise. Investors purchase the shares of the
company with the hope getting maximum profits from the
company as dividend.
Financial management aims to safeguard the economic
interest of the persons who are directly or indirectly
concerned with the company. They must get the
maximum return for their contribution.
This is possible only when the company earns higher /
sufficient profits to discharge its obligations to them.
23. 2. Wealth Maximization:
Another main objective of the business enterprise is to
maximize the value of the company in the long run. This
is also known as wealth maximization.
The wealth maximization objective is consistent with the
objective of maximizing the owners economic welfare.
Its implies the fundamental principle to maximize the
market value of its shares in the long run in order to work
out a normalized market price.
24. The wealth maximization criterion is based on the concept
of cash flows generated by the decision.
Besides the above main objectives, the following are the
other objectives:
To ensure a fair return to shareholders
To build up the reserves for adequate growth and
expansion
To ensure effective funds operation by efficient and
effective utilization of finances
To ensure financial discipline in the organization
25. An agency relationship arises when the principal appoint an
agent to perform some services or the decision-making
authority is delegated to the agent.
However, the agent is not fully responsible for the decision
that is made.
Within the financial management context, the primary
agency relationships are those:
Between shareholders (the principal) and managers (the
agent).
Between debt-holders (the principal) and managers (the
agent).
26. A. Stockholders Vs Managers
A company's shareholders (the principal) delegate decision-
making authority to the managers (the agent).
Since the managers typically do not own 100% of the firm,
they will neither gain all the benefits created nor bear all
the costs and risks of their decisions.
The Shareholders goal is to maximize shareholder value
while the manager's goals is job security, power, status, and
compensation etc.
Thus, managers may have the incentive to take actions that
are not in the best interest of the shareholders. Because
managers usually own only a small interest in most large
corporations, potential agency conflicts are significant.
27. B. Shareholders (Through Managers) Vs. Creditors
Managers are the agent of both shareholders and creditors.
Shareholders empower managers to manage the
firm. Creditors empower managers to use the loan.
Being employed by the firm, managers are more likely to
act in the best interest of shareholders, not creditors.
Through their managers/agents, shareholders may
maximize their wealth at the expense of creditors by taking
riskier projects.
Creditors lend money to a firm based on its perceived
business and financial risk.
28. If shareholders take riskier investments, the shareholders
receive the full benefit of success, but the creditors may
share the losses in case of failure.
The firm becomes riskier because of increased
leverage. Creditors are hurt because more debt will claim
against the firm's cash flows and assets.
To protect themselves against shareholders, creditors often
include restrictive covenant in debt agreements. In the
long-run, a firm that deals unfairly with creditors may
impair the shareholders' interest.
Thus, as agents of both shareholders and creditors,
managers must treat the two classes of security holders
fairly.
29. A. Financial Management and Cost Accounting:
The finance manager is concerned with proper utilization
of funds and he is rightly concerned with operational
costs of the firm.
For this purpose the information's supplied by the cost
accounting department is used by him to keep costs under
control.
B. Financial Management and Marketing:
In determining the appropriate price for the products, the
finance manager has to take a joint decision with
marketing manager.
30. The marketing manager provides information as to how
different prices will affect the demand for the company's
products in the market.
The finance manager supplies information about costs,
change in cost at different levels of production and the
profit margins required to carry on the business.
C. Financial Management and Production:
The acquisition of assets and their effective utilization
affects the firms finances. Hence, he has to take a joint
decision regarding current and future utilization of the
firms assets with production manager.
31. D. Financial Management and Personnel Management:
The recruitment, training and replacement of staff are all
the functions of the personnel department. However all
these require finance and therefore it is a joint decision
of both.
E. Financial Management and Financial Accounting:
Financial manager has to take various managerial
decisions to help the organization in achieving its
objectives.
To take this decision the information are provided by the
financial accounting.
32. A financial market is a broad term describing any
marketplace where buyers and sellers participate in the
trade of assets such as equities, bonds, currencies and
derivatives.
Financial markets are typically defined by having
transparent pricing, basic regulations on trading, costs and
fees, and market forces determining the prices of securities
that trade.
Financial markets can be found in nearly every nation in
the world. Some are very small, with only a few
participants, while others - like the New York Stock
Exchange (NYSE) and the forex markets - trade trillions of
dollars daily.
33. Investors have access to a large number of financial
markets and exchanges representing a vast array of
financial products.
A. Capital Markets:
A capital market is one in which individuals and
institutions trade financial securities.
Organizations and institutions in the public and private
sectors also often sell securities on the capital markets in
order to raise funds.
Thus, this type of market is composed of both the
primary and secondary markets.
34. Any government or corporation requires capital (funds)
to finance its operations and to engage in its own long-
term investments.
To do this, a company raises money through the sale of
securities - stocks and bonds in the company's name.
These are bought and sold in the capital markets.
i. Stock Markets:
Stock markets allow investors to buy and sell shares in
publicly traded companies. They are one of the most vital
areas of a market economy.
35. They provide companies with access to capital and
investors with a slice of ownership in the company and
the potential of gains based on the company's future
performance.
This market can be split into two main sections: the
primary market and the secondary market.
A Primary Market issues new securities on an
exchange. Companies, governments and other groups
obtain financing through debt or equity based securities.
It is also known as "new issue markets”, are facilitated by
underwriting groups, which consist of investment banks
that will set a beginning price range for a given security
and then oversee its sale directly to investors.
36. The primary markets are where investors have their first
chance to participate in a new security issuance. The
issuing company or group receives cash proceeds from
the sale, which is then used to fund operations or expand
the business.
The Secondary Market is where investors purchase
securities or assets from other investors, rather than from
issuing companies themselves. The Securities and
Exchange Commission (SEC) registers securities prior to
their primary issuance, then they start trading in the
secondary market on the New York Stock Exchange,
NASDAQ or other venue where the securities have been
accepted for listing and trading.
37. ii. Bond Markets:
A bond is a debt investment in which an investor lends
money to a corporate or government, which borrows the
funds for a defined period of time at a fixed interest rate.
Bonds are used by companies, municipalities, states and
U.S. and foreign governments to finance a variety of
projects and activities.
Bonds can be bought and sold by investors on credit
markets around the world. This market is alternatively
referred to as the debt, credit or fixed-income market.
The main categories are Corporate bonds, Municipal
bonds, and U.S Treasury bonds, Notes and Bills, which
are collectively referred to as simply "Treasuries”.
38. B. Money Markets:
The money market is a segment of the financial market in
which financial instruments with high liquidity and very
short maturities are traded. Money market investments
are also called cash investments.
The money market is used by participants as a means for
borrowing and lending in the short term, from several
days to just under a year.
Money market securities consist of negotiable
Certificates of Deposits (CDs), Banker's Acceptances,
U.S. Treasury Bills, Commercial Paper, Municipal Notes
etc.,
39. C. Derivatives Market:
The derivative is named so for a reason: its value is derived
from its underlying asset or assets.
A derivative is a contract, but in this case the contract price
is determined by the market price of the core asset.
The derivatives market adds yet another layer of
complexity and is therefore not ideal for inexperienced
traders looking to speculate.
40. D. Forex and the Interbank Market:
The interbank market is the financial system and trading of
currencies among banks and financial institutions,
excluding retail investors and smaller trading parties. While
some interbank trading is performed by banks on behalf of
large customers, most interbank trading takes place from
the banks' own accounts.
The forex market is where currencies are traded. The forex
market is the largest, most liquid market in the world with
an average traded value that exceeds $ 2 trillion per day and
includes all of the currencies in the world. The forex is the
largest market in the world in terms of the total cash value
traded, and any person, firm or country may participate in
this market.
41. E. The OTC Market:
The over-the-counter (OTC) market is a type of secondary
market also referred to as a dealer market. It refers to stocks
that are not trading on a stock exchange such as the
NASDAQ, NYSE or American Stock Exchange (AMEX).
This generally means that the stock trades either on the
over-the-counter bulletin board (OTCBB) or the pink
sheets.
OTCBB and pink sheet companies have far fewer
regulations to comply with than those that trade shares on a
stock exchange. Most securities that trade this way are
penny stocks or from very small companies.
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