This document provides an introduction to finance. It discusses what finance is and its main functions, which include analysis and decision making. The areas of finance covered are business/corporate finance, personal finance, and public finance. The document contrasts finance and accounting, noting their different focuses. It also outlines the main types of financial decisions in business - investment, financing, and asset management decisions. Finally, it provides a quick tour of the financial environment, discussing financial markets, intermediaries, and how risk and returns influence security prices.
Introduction to Finance and Financial ManagementSundar B N
This ppt includes Introduction to Finance and Financial Management which covers
Finance – Meaning, Sources of Finance
Financial Management – Meaning, Objectives & Scope
Profit Maximization Vs Wealth maximization
Key Decisions of Financial Management
Functional Areas of Financial Management
Time Value of Money – Meaning & Methods
1 the role of managerial finance(modified 4)Ahmed Elgazzar
1-The Role of Managerial Finance(Modified 4)
2-Time value of money(modified 1)
3-Capital Budgeting(Modified 1) [Repaired]
4-Stock Valuation(modified 1)
MBA Assignments
,
introduction to financial management
,
what is financial management
,
concept of financial management
,
areas of finance
,
scope/major areas of finance
,
agency theory
,
what is an agency problem
Introduction to Finance and Financial ManagementSundar B N
This ppt includes Introduction to Finance and Financial Management which covers
Finance – Meaning, Sources of Finance
Financial Management – Meaning, Objectives & Scope
Profit Maximization Vs Wealth maximization
Key Decisions of Financial Management
Functional Areas of Financial Management
Time Value of Money – Meaning & Methods
1 the role of managerial finance(modified 4)Ahmed Elgazzar
1-The Role of Managerial Finance(Modified 4)
2-Time value of money(modified 1)
3-Capital Budgeting(Modified 1) [Repaired]
4-Stock Valuation(modified 1)
MBA Assignments
,
introduction to financial management
,
what is financial management
,
concept of financial management
,
areas of finance
,
scope/major areas of finance
,
agency theory
,
what is an agency problem
Financial Management
http://www.wileybusinessupdates.com
Chapter
17
1
Define the role of the financial manager.
Describe financial planning.
Outline how organizations manage their assets.
Discuss the sources of funds and capital structure.
1
Learning Objectives
Identify short-term funding options.
Discuss sources of long-term financing.
Describe mergers, acquisitions, buyouts, and divestitures.
2
3
4
5
6
7
2
Finance– planning, obtaining, and managing the company’s funds in order to accomplish its objectives
Maximizing overall worth
Meeting expenses
Investing in assets
Increasing profits to shareholders
The Business Function of Finance
3
Implement the firm’s financial plan
Determine the most appropriate source of funds
Many CFOs are members of the board of directors
The Role of the Finance Manager
4
The process of maximizing the wealth of the firm’s shareholders by striking the optimal balance between risk and return.
Risk-Return Tradeoff
5
Financial Plan– the inflows and outflows and sources of funds.
Financial plans are built by answering the following questions:
What funds will the firm require during the planning period?
When will it need additional funds?
Where will it obtain the necessary funds?
Financial plans are based on the forecasts of costs and expected sales activities for a given period.
Financial Planning
6
Sound financial management requires assets to be managed and acquired.
What a firm owns
Use of funds
Managing Assets
7
Cash
Marketable Securities
Accounts Receivable
Inventory
Short-Term Assets
8
Long-lived assets
Produce economic benefit for more than one year
Substantial investments
Capital Investment Analysis
Expansion: new assets
Replacement: upgrading assets
Capital Investment Analysis
9
Debt Capital– funds obtained through borrowing.
Equity Capital– investment in the firm in exchange for ownership.
Sources of Funds and Capital Structure
10
Goal: increasing the rate of return on funds invested by borrowing funds
Leverage and Capital Structure
11
Short-term funds
Current liabilities
Less expensive
Volatile interest rates
Long-term funds
Long-term debt and equity
Used for long-term assets
Mixing Short and Long-Term Funds
12
Dividends are cash payments to shareholders.
Highest dividend yielding stocks
Financial managers must make decisions regarding their dividend policy.
Should we pay a dividend?
When should it be paid?
Dividend Policy
13
Trade Credit
Short-term Loans
Commercial Paper
Short-Term Funding Options
14
Public Sale of Stocks and Bonds
Private Placements
Private Equity Funds
Hedge Funds
Sources of Long-Term Financing
15
Financial managers evaluate mergers, acquisitions, and other opportunities.
Leveraged buyouts
Divestiture
Sell-off/Spin-off
Mergers, Acquisitions, Buyouts, and Divestitures
...
Joseph Fabiilli | Understand the major types, features, and costs of long-ter...Joseph Fabiilli
Joseph Fabiilli is telling the understand the major types, features, and costs of long-term debt. Joseph Fabiilli is a funding consultant for future-thinking entrepreneurs and agencies. Joseph helps people secure funding for their environmental projects and programs.
Financial Management
http://www.wileybusinessupdates.com
Chapter
17
1
Define the role of the financial manager.
Describe financial planning.
Outline how organizations manage their assets.
Discuss the sources of funds and capital structure.
1
Learning Objectives
Identify short-term funding options.
Discuss sources of long-term financing.
Describe mergers, acquisitions, buyouts, and divestitures.
2
3
4
5
6
7
2
Finance– planning, obtaining, and managing the company’s funds in order to accomplish its objectives
Maximizing overall worth
Meeting expenses
Investing in assets
Increasing profits to shareholders
The Business Function of Finance
3
Implement the firm’s financial plan
Determine the most appropriate source of funds
Many CFOs are members of the board of directors
The Role of the Finance Manager
4
The process of maximizing the wealth of the firm’s shareholders by striking the optimal balance between risk and return.
Risk-Return Tradeoff
5
Financial Plan– the inflows and outflows and sources of funds.
Financial plans are built by answering the following questions:
What funds will the firm require during the planning period?
When will it need additional funds?
Where will it obtain the necessary funds?
Financial plans are based on the forecasts of costs and expected sales activities for a given period.
Financial Planning
6
Sound financial management requires assets to be managed and acquired.
What a firm owns
Use of funds
Managing Assets
7
Cash
Marketable Securities
Accounts Receivable
Inventory
Short-Term Assets
8
Long-lived assets
Produce economic benefit for more than one year
Substantial investments
Capital Investment Analysis
Expansion: new assets
Replacement: upgrading assets
Capital Investment Analysis
9
Debt Capital– funds obtained through borrowing.
Equity Capital– investment in the firm in exchange for ownership.
Sources of Funds and Capital Structure
10
Goal: increasing the rate of return on funds invested by borrowing funds
Leverage and Capital Structure
11
Short-term funds
Current liabilities
Less expensive
Volatile interest rates
Long-term funds
Long-term debt and equity
Used for long-term assets
Mixing Short and Long-Term Funds
12
Dividends are cash payments to shareholders.
Highest dividend yielding stocks
Financial managers must make decisions regarding their dividend policy.
Should we pay a dividend?
When should it be paid?
Dividend Policy
13
Trade Credit
Short-term Loans
Commercial Paper
Short-Term Funding Options
14
Public Sale of Stocks and Bonds
Private Placements
Private Equity Funds
Hedge Funds
Sources of Long-Term Financing
15
Financial managers evaluate mergers, acquisitions, and other opportunities.
Leveraged buyouts
Divestiture
Sell-off/Spin-off
Mergers, Acquisitions, Buyouts, and Divestitures
...
Joseph Fabiilli | Understand the major types, features, and costs of long-ter...Joseph Fabiilli
Joseph Fabiilli is telling the understand the major types, features, and costs of long-term debt. Joseph Fabiilli is a funding consultant for future-thinking entrepreneurs and agencies. Joseph helps people secure funding for their environmental projects and programs.
Taurus Zodiac Sign_ Personality Traits and Sign Dates.pptxmy Pandit
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This insightful presentation is designed to equip entrepreneurs with the essential knowledge and tools needed to accurately value their businesses. Understanding business valuation is crucial for making informed decisions, whether you're seeking investment, planning to sell, or simply want to gauge your company's worth.
Memorandum Of Association Constitution of Company.pptseri bangash
www.seribangash.com
A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
Contents of Memorandum of Association:
Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
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Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
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Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
https://seribangash.com/promotors-is-person-conceived-formation-company/
Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
https://seribangash.com/difference-public-and-private-company-law/
Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
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As a business owner in Delaware, staying on top of your tax obligations is paramount, especially with the annual deadline for Delaware Franchise Tax looming on March 1. One such obligation is the annual Delaware Franchise Tax, which serves as a crucial requirement for maintaining your company’s legal standing within the state. While the prospect of handling tax matters may seem daunting, rest assured that the process can be straightforward with the right guidance. In this comprehensive guide, we’ll walk you through the steps of filing your Delaware Franchise Tax and provide insights to help you navigate the process effectively.
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5. The Areas of Finance
Business or Corporate Finance-the firm’s ability
to make good finance decisions;
Personal Finance-retirement provision, saving
plans etc.,;
Public Finance-income distribution, stability plans
etc.,;
5
6. Finance v
Accounting
Financial Accounting
concentrates on record keeping
and submitting of financial
statements;
Finance focuses on making
decisions and carrying out
analysis based on information
presented by accounting;
6
9. Business Finance
Types of Financial Decisions
Investment Decisions;
Financing Decisions;
Asset Management
Decisions;
9
10. Investment Decisions
Should we built this component or buy it?
What specific assets should be acquired?
Should we introduce a new product?
Which projects should be undertaken?
10
11. Financing Decisions
What is the best structure of
financing(debt versus equity)?
How much of our debt should be short-
term as opposite to long-term?
What is the best dividend policy?
How will the funds be physically acquired?
11
12. Asset-Management
Decision
How do we manage existing assets
efficiently?
Financial Manager has varying degrees of
operating responsibility over assets;
Greater emphasis on current asset
management than fixed asset
management; 12
13. The Goal of the Business
13
The target of business is
the maximize
shareholder’s wealth;
It’s measured as the
price of stocks;
Wealth maximization
concept adjusts for
deficiencies of previous
concept;
14. Profit Maximization
Short-Term Oriented;
Can not account for risk;
Can lead
mismanagement;
Wealth
Maximization
Long-term Oriented;
The risk factor is taken
account;
Recognizes the timing of
returns;
14
Comparison of Two
Concepts
16. Types of Businesses
Sole Proprietorships
A business that owned
and operated by one
individual;
The owner and the
business are legally
identical;
16
18. Partnerships
A business that owned
and controlled by two or
more persons who are
equally liable for losses;
Typically governed by
partnership agreement;
18
20. Company
• Business that owned by
shareholders;
• Shareholder liability is
limited to nominal value of
shares that they own;
• Business is legally
separate from it’s owners;
20
25. Role of Management
An agen
agent
t is an individual authorized by
another person, called the principal, to act
in the latter’s behalf;
Management acts as an agent
agent for the
owners (shareholders) of the firm;
25
26. Agency Theory
Principals must provide
incentives
incentives so that
management acts in the
principals’ best interests and
then monitor
monitor results;
Incentives include stock
stock
options, perquisites,
options, perquisites, and
bonuses
bonuses;
26
28. Financial Markets
Businesses interact continually with the
financial markets;
financial markets;
Composed of all institutions and
procedures for bringing buyers and sellers
of financial instruments together;
28
29. The Purpose of Financial
Markets
Mobilization of savings-uselessly lying fund is made to
flow the place where it is really needed;
Facilitate price discovery-the price is determined by the
forces of demand and supply;
Provide liquidity to financial assets-buyers or sellers of
securities are available all the times;
Reduce the cost of transaction-making all necessary
information available without any cost;
29
30. Flow of Funds
in the Economy
INVESTMENT SECTOR
FINANCIAL
INTERMEDIARIES
SAVINGS SECTOR
FINANCIAL BROKERS
SECONDARY MARKET
30
31. Types of Financial
Markets
Money Market-market for trading of short-term
securities(Repo, CDO, commercial paper, T-bills);
Capital Market-where the transaction of long-term
securities takes place(corporate bonds, government
bonds);
Primary Market-newly issued instruments are bid;
Secondary Market-already issued stocks are sold and
bought;
31
32. Financial Intermediaries
Come between
ultimate borrowers
and lenders by
transforming direct
claims to indirect
claims;
Commercial banks,
insurance
funds,mutual funds;
32
33. Efficient Allocation of
Funds
Funds will flow to economic units that are willing
to provide the greatest expected return;
The highest expected returns will be offered only
by those economic units with the most promising
investment opportunities;
Result:
Result: Savings tend to be allocated to the most
efficient uses;
33
34. What Influences Security
Expected Returns?
Default Risk-the failure to meet the terms of contract;
Default Risk-the failure to meet the terms of contract;
Marketability-
Marketability- is the ability to sell a significant volume of
securities in a short period of time in the secondary
market without significant price concession;
34
35. What Influences
Expected Security
Returns?
Maturity-
Maturity- is concerned with the life of the security; the
amount of time before the principal amount of a
security becomes due;
Embedded Options-
Embedded Options- provide the opportunity to
change specific attributes of the security;
Inflation
Inflation -the greater inflation expectations, then the
greater the expected return;
35
36. Risk-Expected Return
Profile
RISK
EXPECTED
RETURN
(%)
U.S. Treasury Bills (risk-free securities)
U.S. Treasury Bills (risk-free securities)
Prime-grade Commercial Paper
Prime-grade Commercial Paper
Long-term Government Bonds
Investment-grade Corporate Bonds
Medium-grade Corporate Bonds
Preferred Stocks
Conservative Common Stocks
Speculative Common Stocks
36
37. Term Structure of
Interest Rates
A yield curve is a graph of the relationship between yields
and term to maturity for particular securities.
Upward Sloping Yield Curve
Upward Sloping Yield Curve
Downward Sloping Yield Curve
0
2
4
6
8
10
YIELD
(%)
0 5 10 15 20 25 30
(Usual)
(Unusual)
YEARS TO MATURITY
37