This document outlines key topics in business finance including the three main finance functions of investment decision, finance decision, and dividend decision. It describes how investment decisions are made based on objectives, risk appetite, and the nature of the investor. It also defines financing decisions as related to raising long-term funds from shareholders or borrowing. Additionally, it explains the objectives of financial management as both profit maximization and wealth maximization for shareholders. Finally, it contrasts profit maximization which focuses on short-term earnings versus wealth maximization which emphasizes long-term growth and value.

1. Business Finance
Presentation

2. Index
 Finance Functions
 Objectives of financial management
 Profitability Vs. Shareholders wealth
maximization
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3. Finance functions
1.Investment decision
2.Finance decision
3.Dividend decision
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4. Investment decision
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 An investment decision is a well-planned action
that allocates financial resources to obtain the
highest possible return. The decision is made
based on investment objectives, risk appetites,
and the nature of the investor, i.e., whether they
are an individual or a firm.
 Investments are primarily classified into short-
term and long-term. Further, they are categorized
into a strategic investment, capital expenditure,
inventory, modernization, expansion,
replacement, or new venture investments.

5. Finance decision
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 Financing decision is concerned with raising funds
from which long-term sources, i.e., through
shareholders funds or borrowed funds. Shareholders
funds include share capital, reserves and surplus and
retained earnings, whereas borrowed funds include
share capital, reserves and surplus and retained
earnings, whereas, borrowed funds include
debentures, long-term loans and public deposits.

6. Dividend decision
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 According to the Institute of Chartered
Accountants of India, dividend is "a distribution
to shareholders out of profits or reserves
available for this purpose."
 "The term dividend refers to that portion of profit
(after tax) which is distributed among the owners
/ shareholders of the firm”.
 In other words, dividend is that part of the net
earnings of a corporation that is distributed to its
stockholders. It is a payment made to the equity
shareholders for their investment in the company
.

7. Objectives of financial
management
Effective procurement and efficient use of finance lead to proper utilization of the
finance by the business concern. It is the essential part of the financial manager.
Objectives of financial management may be broadly divided into two parts such as:
1. Profit Maximization
2. Wealth Maximization
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8. Profit Maximization
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 Profit maximization is the traditional
approach in this process companies
undergo to determine the best output and
price level in order to maximize its return .
 Profit is the main source of finance .
 Profit reduces the risk of business concern
.
 Main aim is earning profit

9. Wealth Maximization
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 Wealth maximization is almost universally
accepted and appropriate goal of a firm .
According to wealth maximization, the managers
should take decisions that maximize the net
present value of the shareholders or shareholder
's wealth .
 It ensures the economic interest of the society .
 Wealth maximization provides efficient allocation
of resources .

10. Profitability vs. shareholders
wealth maximization
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11. Profit maximization
 Profit is accomplished by raising the business’s earning
potential .
 The overall thing of maximizing profits does not include
taking on risks and avoiding uncertainties .
 Profit maximization is a short-term objective .
 Maximizing profits guarantees the company’s growth and
longevity .
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12. Wealth maximization
 Wealth maximization refers to using a company’s resources
to increase stock value for stakeholders and shareholders .
 Wealth maximization considers and acknowledges the
necessity of evaluating all potential risks and uncertainties.
 Wealth maximization is a long-term objective.
 Wealth maximization concentrates on a company’s long-
term rate of growth by growing its market share .
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13. Reference –Book ( Business
Finance)
by Singh H.K. , Internet
Submitted to – Dr. Pravin Agrawal
Submitted by –
Archi Gupta
(CSJMA22000013689)
Anushka Tiwari
(
CSJMA22000021546)

14. THANK YOU