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Finance
This document provides an introduction to finance and financial services. It discusses that finance is concerned with resource allocation and management. It notes some key features of finance including investment and profitability opportunities. It also outlines several sub-categories and functions of finance. The document then describes various financial services such as those provided by banks, investment banks, and insurance companies. It discusses the scope and features of financial services and management. Finally, it outlines some objectives and activities of financial managers.
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Finance
- 1. P R ES E N T E D B Y S I M R A N K A U R FINANCE
- 2. INTRODUCTION TO FINANCE •It is originally a French word • It is a branch of economics concerned with resource allocation as well as resource management • It is the art and science of managing money • Managing funds and making optimal use of it • It includes the dynamics of assets and liabilities over time under conditions of different degrees of uncertainty and risk
- 3. FEATURES OF FINANCE •Investment opportunity • Profitability opportunity • Optimal mix of funds • System of internal controls • Future decision making
- 4. SUB-CATEGORIES OF FINANCE •Public finance • Corporate finance • Personal finance
- 5. FINANCIAL SERVICES • Itis concerned with design and delivery of advice and financial products to individuals, businesses and government • It performs best in low interest rate environments • Some examples include banks, investment banks, insurance companies, credit card companies, stock brokerages
- 6. As per Section65(10) of the Finance Act, 1994, “banking and financial services” means the following services provided by a banking company or a financial institution including non-banking financial company, namely, i) Financial leasing services ii) Credit card services iii) Merchant banking services iv) Securities and foreign exchange broking v) Asset management vi) Advisory and other auxiliary financial services vii) Provision and transfer of information and data processing
- 7. FUNCTIONS OF FINANCIALSERVICES • Facilitating transactions • Mobilizing saving • Allocating capital funds • Monitoring managers • Transforming risk
- 8. FEATURES OF FINANCIALSERVICES • Customer-specific • Intangibility • Concomitant • Tendency to perish • People based services • Market dynamics
- 9. SCOPE OF FINANCIALSERVICES A) Traditional activities • Shares, bonds, debentures of new issues • Secondary market activities • Issue management • Underwriting • Portfolio management • Foreign exchange market activities • Stock broking • Mergers and acquisitions • Capital restructuring
- 10. SCOPE OF FINANCIALSERVICES B) Modern activities • Merchant banking • Loan syndication • Leasing • Mutual funds • Factoring • Forfeiting • Venture capital • Securitisation • Custodian and Corporate Advisory Services
- 11. FINANCIAL MANAGEMENT • Itis the part of the management activity which is concerned with planning and controlling of firm’s resources • It is specialized function directly associated with the top management • It deals with finding out various resources for raising funds for the firm • It is applicable to every type of organization, irrespective of its size, kinding or nature.
- 12. NATURE OF FINANCIALMANAGEMENT • Essential port of management • less descriptive and more analytical • Continuous function • Different from accounting function • Wide scope • Centralized nature • Measurement of performance • Inseparable relationship between finance and other activities • Applicable to all types of organizations
- 13. OBJECTIVES OF FINANCIAL MANAGEMENT •Provide maximum return to the owners on their investment in the long-run • Ensure financial control • Liquidity of funds • Minimization of risk • Minimize cost of capital • Useful criterion to judge a specific set of mutually interrelated business decisions, namely, investment, financing and dividend policy
- 14. SCOPE OF FINANCIALMANAGEMENT A) Traditional approach • Arrangement of funds from financial institutions • Arrangement of funds through financial instruments like share, bond, etc • Legal and accounting relationship between a business and its source of funds B) Modern approach • Investment decision • Financing decision • Dividend policy decision
- 15. KEY ACTIVITIES OFFINANCIAL MANAGERS • Performing financial analysis and planning • Making investment decisions • Making financing decisions
- 16. CHALLENGES BEFORE FINANCIAL MANAGERSIN INDIA • Financial structure • Foreign exchange management • Treasury operations • Investor communication • Management control • Investment planning
- 17.