The document provides an introduction to financial management, including definitions of finance, financial intermediaries, and financial accounts. It discusses how finance deals with concepts like time, money, and risk. It also defines different types of financial intermediaries like insurance companies, mutual funds, investment brokers, and pension funds. Finally, it summarizes the key financial statements - the trading account, profit and loss account, and balance sheet - and explains the rules and objectives of financial accounting.
Indian financial system institution and marketpadma patil
The financial system comprises intermediaries, markets, and instruments that facilitate the transfer of funds from surplus units to deficit units. It includes formal institutions like banks, as well as informal arrangements like money lenders. An efficient financial system lowers transaction costs and provides adequate information to participants. Key components that make a system effective include financial institutions, instruments, and markets. India's financial system has both organized and unorganized sectors. A developed financial system is integrated, has low costs, is predominantly private, and supports the real economy through functions like providing liquidity and transforming risk.
This document provides an overview of finance and financial management. It defines finance as the study of how individuals allocate resources over time in an uncertain environment and how financial markets and institutions facilitate these allocations. The key aspects of corporate finance are discussed as investment decisions about what projects a firm should undertake and financing decisions about how to pay for investments. The financial objective of management is to maximize shareholder wealth by increasing share price over time. Some of the main principles of finance discussed include risk aversion, the time value of money, and the relation between risk and return. The document also briefly outlines the historic evolution of the field of finance and some of the major works and theories that have developed it into the modern approach used today.
This document provides an overview of international business and finance topics. It discusses the role of globalization, international trade theories, foreign direct investment, and international business strategies. The document also covers international financial management, determining exchange rates, and emerging topics in international e-commerce. Key books on international business and finance are recommended.
The document provides an introduction to financial systems, including definitions, key components, and functions. It discusses that a financial system consists of institutions, markets, instruments, and services that facilitate the transfer of funds. The main components are financial institutions like banks, markets where assets are traded, various financial services, and instruments/assets like stocks, bonds, and mutual funds. Financial systems play an important role in allocating resources and facilitating economic growth.
The document discusses the financial system and its role in the economy. It states that the financial system consists of financial institutions and markets that facilitate the flow of funds between economic units with surplus funds and those with deficits. It allows for efficient allocation of resources and risk sharing. Key functions of the financial system include intermediating between savers and borrowers, generating and distributing information, and facilitating trading and diversification.
The financial system easy explanation-atifAtif Hossain
The financial system is responsible for channeling funds from those with surplus money to those who need funds to invest in productive assets. It consists of formal and informal sectors. The formal sector includes financial institutions like banks and non-banking financial institutions, financial markets like money and capital markets, and financial instruments and services. Together, these components facilitate the flow of funds and enable money to grow over time, increasing the money in the economy.
The presentation discusses different ways that the financial sector can contribute to economic growth. It further discusses other dependencies to economic development.
The document discusses various topics related to finance including the meaning of finance, history of finance, types of finance (public, private, personal, corporate), and details about public finance, private finance, corporate finance and personal finance. Specifically, it notes that finance involves the study and process of acquiring funds and is separated into personal, corporate and public subcategories. It also provides histories and definitions for each type of finance.
Indian financial system institution and marketpadma patil
The financial system comprises intermediaries, markets, and instruments that facilitate the transfer of funds from surplus units to deficit units. It includes formal institutions like banks, as well as informal arrangements like money lenders. An efficient financial system lowers transaction costs and provides adequate information to participants. Key components that make a system effective include financial institutions, instruments, and markets. India's financial system has both organized and unorganized sectors. A developed financial system is integrated, has low costs, is predominantly private, and supports the real economy through functions like providing liquidity and transforming risk.
This document provides an overview of finance and financial management. It defines finance as the study of how individuals allocate resources over time in an uncertain environment and how financial markets and institutions facilitate these allocations. The key aspects of corporate finance are discussed as investment decisions about what projects a firm should undertake and financing decisions about how to pay for investments. The financial objective of management is to maximize shareholder wealth by increasing share price over time. Some of the main principles of finance discussed include risk aversion, the time value of money, and the relation between risk and return. The document also briefly outlines the historic evolution of the field of finance and some of the major works and theories that have developed it into the modern approach used today.
This document provides an overview of international business and finance topics. It discusses the role of globalization, international trade theories, foreign direct investment, and international business strategies. The document also covers international financial management, determining exchange rates, and emerging topics in international e-commerce. Key books on international business and finance are recommended.
The document provides an introduction to financial systems, including definitions, key components, and functions. It discusses that a financial system consists of institutions, markets, instruments, and services that facilitate the transfer of funds. The main components are financial institutions like banks, markets where assets are traded, various financial services, and instruments/assets like stocks, bonds, and mutual funds. Financial systems play an important role in allocating resources and facilitating economic growth.
The document discusses the financial system and its role in the economy. It states that the financial system consists of financial institutions and markets that facilitate the flow of funds between economic units with surplus funds and those with deficits. It allows for efficient allocation of resources and risk sharing. Key functions of the financial system include intermediating between savers and borrowers, generating and distributing information, and facilitating trading and diversification.
The financial system easy explanation-atifAtif Hossain
The financial system is responsible for channeling funds from those with surplus money to those who need funds to invest in productive assets. It consists of formal and informal sectors. The formal sector includes financial institutions like banks and non-banking financial institutions, financial markets like money and capital markets, and financial instruments and services. Together, these components facilitate the flow of funds and enable money to grow over time, increasing the money in the economy.
The presentation discusses different ways that the financial sector can contribute to economic growth. It further discusses other dependencies to economic development.
The document discusses various topics related to finance including the meaning of finance, history of finance, types of finance (public, private, personal, corporate), and details about public finance, private finance, corporate finance and personal finance. Specifically, it notes that finance involves the study and process of acquiring funds and is separated into personal, corporate and public subcategories. It also provides histories and definitions for each type of finance.
This 3-page document summarizes a report on the role of managerial finance. It includes an introduction, acknowledgements, table of contents, and sections on the definition of finance, primary areas of business finance including corporate finance, investments, financial markets and institutions, and international finance. It also discusses the importance of finance and differentiates between managerial finance and corporate finance. Managerial finance is interested in the internal and external significance of a firm's financial figures, while corporate finance aims to maximize shareholder value through financial decisions.
Chapter 02_Overview of the Financial SystemRusman Mukhlis
This chapter provides an overview of the financial system, including the functions of financial markets and intermediaries in channeling funds from lenders to borrowers. It describes the structure of markets, such as debt versus equity, and primary versus secondary markets. It also discusses the internationalization of markets and the role of regulation in ensuring stability and transparency.
This document provides an overview of the Indian financial system from 1950 to the present. It discusses the key features and developments during three periods:
1) 1950-1980: The financial system was characterized by government control and ownership of institutions to align with economic planning priorities. Specialized public institutions were established for agriculture, housing, exports, etc.
2) 1980s: More specialized development finance institutions were set up while liberalizing restrictions. The government draft on financial resources increased.
3) Post-1990s: Financial reforms accelerated liberalization and integration into the global economy. Public institutions were privatized, regulations reduced, and new private and foreign players entered the market. The role of capital markets expanded.
The document provides an overview of finance, including its origins and definitions. Finance is defined as the management of money and other assets/resources. It discusses how finance is essential for economic activities and business operations by providing necessary funds. The document then covers key aspects of finance like investment opportunities, profitable opportunities, optimal fund mix, internal controls, and future decision making. It concludes that finance is concerned with managing various sources of funds and allows companies to receive money needed to pay operating expenses.
The document discusses the structure and composition of the financial system. It is comprised of several key components:
1. Financial services which include banking, insurance, investment services, and more.
2. Financial instruments that are used to facilitate capital transfers such as debt, equity, and derivative instruments.
3. Financial institutions such as banks, non-banking financial corporations, stock exchanges, and depository participants.
4. Financial intermediaries that connect savers and borrowers like merchant banks, credit rating agencies, and mutual funds.
5. Financial markets for trading instruments including the capital, money, derivatives, and commodities markets.
6. Financial regulations set by bodies like the R
The document provides an overview of financial management and the role of financial managers. It discusses that financial managers oversee preparation of financial reports, direct investment activities, and implement cash management strategies. The duties of financial managers vary depending on their specific title, but may include directing financial goals and budgets, overseeing investments and cash flows, and minimizing risks. Financial managers play an important role in areas like mergers and global expansion by advising senior managers and reducing risks. Understanding financial management is important for all managers to make informed decisions and address financial concerns.
The document is a research report on the Indian financial system submitted for a Business Finance course. It discusses the key components of the Indian financial system including financial institutions, markets, instruments and services. It provides details on various types of banking and non-banking financial institutions, organized and unorganized financial markets, cash and derivative financial instruments, and fund-based and fee-based financial services. The report concludes that a well-developed financial system is important for economic growth in India and there is a need for effective management and regulation among different parts of the system.
Fm11 ch 01 overview of financial management and the financial environmentNhu Tuyet Tran
The document provides an overview of key concepts in corporate finance and financial markets. It discusses different forms of business organization a company may take, from a sole proprietorship to a public corporation. The primary objective of a firm is to maximize shareholder wealth by maximizing stock price over the long run. Stock price is determined by the expected cash flows of the firm, the timing of those cash flows, and the risk of the cash flows. Financial markets allow companies and individuals to exchange financial assets and capital.
This document discusses financial management systems and the types of financing available to businesses. It explains that financial management systems are used to input, analyze, and report financial data to help managers make decisions. The document then covers four main components of financial management systems: cash management, investment management, capital budgeting, and financial planning. It also discusses two major sources of financing for businesses - equity financing such as personal savings, home equity loans, venture capital, and IPOs, and debt financing like loans from banks, commercial lenders, bonds, and government programs.
This document provides information about derivative markets and the risks they cover. It defines derivative instruments and describes some common types, including futures, options, and swaps. It then explains how the derivative market covers foreign exchange risk, interest rate risk, and commodity/product input risk. Companies can use derivatives to hedge against losses from fluctuations in currency exchange rates, interest rates, and raw material prices. The document also contains topics on insurance services in the US, the primary market, investment banks, financial intermediaries, globalization of financial markets, and the Basel Committee.
This document provides an overview and introduction to managerial finance. It defines finance and identifies its three main areas as financial markets, financial services, and managerial finance. It also outlines seven key learning goals, such as defining finance and describing the role of the financial manager. The document discusses different business organizations, the relationship between finance, economics, and accounting. It emphasizes that the goal of a firm is to maximize shareholder wealth and examines ideas like EVA and stakeholder theory. The agency problem between managers and owners is also introduced.
This document provides an overview of a unit on managing financial resources and decisions. The unit is designed to give learners an understanding of finance management within businesses. It will cover sources of finance, implications of finance as a resource, making financial decisions based on information, and analyzing financial performance. Learners will explore finance sources, analyze impacts, make budgeting and pricing choices using tools like costing and investment appraisal, and interpret financial statements. Assessment may involve case studies and projects analyzing real or simulated company finances and decision-making.
This document discusses depository institutions such as commercial banks, savings and loan associations, savings banks, and credit unions. It describes their key characteristics and activities. Depository institutions obtain funds from deposits and use those funds to generate income through loans and investments. They face asset-liability problems in managing the mismatch between long-term assets and short-term liabilities. Regulators monitor various risks at these institutions including credit, liquidity, market, and operational risk. The document provides examples of major depository institutions in the Philippines within each category.
The document discusses various topics relating to financial management. It begins by defining financial management as activities concerned with obtaining and effectively using money. It then discusses the need for financing, covering short-term financing which is used for less than one year, such as for inventory, and long-term financing which is used for over one year. The document also discusses proper financial management during economic crises, careers in finance such as chief financial officers, developing financial plans by establishing goals and identifying funding sources, and sources of short-term and long-term debt financing as well as equity financing.
The document provides an overview of the financial system and its key components. It discusses how financial markets and institutions help channel funds from savers to borrowers, allowing for investment and economic growth. It then covers the major types of financial markets and instruments, including debt vs equity markets, primary vs secondary markets, money markets, capital markets, and derivatives. It also discusses the internationalization of financial markets through foreign bonds, Eurobonds, and Eurocurrencies.
The document discusses the financial aspect of enterprise management strategy. It aims to enlighten on the role of commercial banks in regional economic investment, understand the role of IMF/ADB/WB in global economy and venture capital, and be aware of "financial traffic lights" as an instrument of overcoming economic insolvency of business structures. It then provides details on the role of banks, functions of central banks like Bangko Sentral ng Pilipinas, and roles of IMF, World Bank, and ADB in global financing and development.
Financial intermediation is the process by which banks and other financial institutions channel funds from savers to borrowers. Banks accept deposits from savers and provide loans to borrowers, earning a spread between the lower interest rates paid on deposits and the higher rates charged on loans. This intermediation benefits both savers and borrowers - savers earn interest on deposits and borrowers are able to access funds for investments and economic activity. Financial intermediation also helps transform short-term deposits into long-term loans, allowing for maturity transformation that supports economic growth.
This document defines and describes various types of financial institutions. It discusses common financial institutions like banks, insurance companies, investment companies, and mutual funds. It also outlines specialized financial institutions including central banks, commercial banks, investment banks, savings banks, and Islamic banks. The functions of financial institutions are also summarized, which include facilitating the flow of cash between investors and those needing funds.
FINANCIAL SYSTEM- FORMAL AND INFORMAL - AND INTRODUCTION TO NBFC Mohammed Jasir PV
The document discusses non-banking financial companies (NBFCs) and microfinance in India. It provides definitions and explanations of key terms related to financial systems and institutions. Some of the main points covered include the evolution of India's financial system from a private sector-dominated system to a more regulated system with public sector institutions. The document also describes the components of India's formal financial system, including regulators, financial institutions, markets, instruments, and services. It discusses banks and the difference between banks and non-banking financial companies (NBFCs).
Finance involves the management of money and funds. It includes activities like originating, marketing, and managing cash and other financial instruments. There are three main areas of finance: personal finance concerning individuals' finances, corporate finance concerning for-profit organizations' finances, and public finance concerning governments' financial affairs. Financial systems provide capital from investors to other individuals, firms, and governments through various financial instruments and markets.
The document provides an overview of key concepts in finance including:
1) Finance can be defined as managing money at both the personal and business level, involving decisions about spending, saving, and investing.
2) There are two broad categories of finance careers - financial services which provide advice and products, and managerial finance which involves the duties of financial managers in businesses.
3) The three most common forms of business organization are sole proprietorships, partnerships, and corporations, each with different ownership structures and liabilities.
This 3-page document summarizes a report on the role of managerial finance. It includes an introduction, acknowledgements, table of contents, and sections on the definition of finance, primary areas of business finance including corporate finance, investments, financial markets and institutions, and international finance. It also discusses the importance of finance and differentiates between managerial finance and corporate finance. Managerial finance is interested in the internal and external significance of a firm's financial figures, while corporate finance aims to maximize shareholder value through financial decisions.
Chapter 02_Overview of the Financial SystemRusman Mukhlis
This chapter provides an overview of the financial system, including the functions of financial markets and intermediaries in channeling funds from lenders to borrowers. It describes the structure of markets, such as debt versus equity, and primary versus secondary markets. It also discusses the internationalization of markets and the role of regulation in ensuring stability and transparency.
This document provides an overview of the Indian financial system from 1950 to the present. It discusses the key features and developments during three periods:
1) 1950-1980: The financial system was characterized by government control and ownership of institutions to align with economic planning priorities. Specialized public institutions were established for agriculture, housing, exports, etc.
2) 1980s: More specialized development finance institutions were set up while liberalizing restrictions. The government draft on financial resources increased.
3) Post-1990s: Financial reforms accelerated liberalization and integration into the global economy. Public institutions were privatized, regulations reduced, and new private and foreign players entered the market. The role of capital markets expanded.
The document provides an overview of finance, including its origins and definitions. Finance is defined as the management of money and other assets/resources. It discusses how finance is essential for economic activities and business operations by providing necessary funds. The document then covers key aspects of finance like investment opportunities, profitable opportunities, optimal fund mix, internal controls, and future decision making. It concludes that finance is concerned with managing various sources of funds and allows companies to receive money needed to pay operating expenses.
The document discusses the structure and composition of the financial system. It is comprised of several key components:
1. Financial services which include banking, insurance, investment services, and more.
2. Financial instruments that are used to facilitate capital transfers such as debt, equity, and derivative instruments.
3. Financial institutions such as banks, non-banking financial corporations, stock exchanges, and depository participants.
4. Financial intermediaries that connect savers and borrowers like merchant banks, credit rating agencies, and mutual funds.
5. Financial markets for trading instruments including the capital, money, derivatives, and commodities markets.
6. Financial regulations set by bodies like the R
The document provides an overview of financial management and the role of financial managers. It discusses that financial managers oversee preparation of financial reports, direct investment activities, and implement cash management strategies. The duties of financial managers vary depending on their specific title, but may include directing financial goals and budgets, overseeing investments and cash flows, and minimizing risks. Financial managers play an important role in areas like mergers and global expansion by advising senior managers and reducing risks. Understanding financial management is important for all managers to make informed decisions and address financial concerns.
The document is a research report on the Indian financial system submitted for a Business Finance course. It discusses the key components of the Indian financial system including financial institutions, markets, instruments and services. It provides details on various types of banking and non-banking financial institutions, organized and unorganized financial markets, cash and derivative financial instruments, and fund-based and fee-based financial services. The report concludes that a well-developed financial system is important for economic growth in India and there is a need for effective management and regulation among different parts of the system.
Fm11 ch 01 overview of financial management and the financial environmentNhu Tuyet Tran
The document provides an overview of key concepts in corporate finance and financial markets. It discusses different forms of business organization a company may take, from a sole proprietorship to a public corporation. The primary objective of a firm is to maximize shareholder wealth by maximizing stock price over the long run. Stock price is determined by the expected cash flows of the firm, the timing of those cash flows, and the risk of the cash flows. Financial markets allow companies and individuals to exchange financial assets and capital.
This document discusses financial management systems and the types of financing available to businesses. It explains that financial management systems are used to input, analyze, and report financial data to help managers make decisions. The document then covers four main components of financial management systems: cash management, investment management, capital budgeting, and financial planning. It also discusses two major sources of financing for businesses - equity financing such as personal savings, home equity loans, venture capital, and IPOs, and debt financing like loans from banks, commercial lenders, bonds, and government programs.
This document provides information about derivative markets and the risks they cover. It defines derivative instruments and describes some common types, including futures, options, and swaps. It then explains how the derivative market covers foreign exchange risk, interest rate risk, and commodity/product input risk. Companies can use derivatives to hedge against losses from fluctuations in currency exchange rates, interest rates, and raw material prices. The document also contains topics on insurance services in the US, the primary market, investment banks, financial intermediaries, globalization of financial markets, and the Basel Committee.
This document provides an overview and introduction to managerial finance. It defines finance and identifies its three main areas as financial markets, financial services, and managerial finance. It also outlines seven key learning goals, such as defining finance and describing the role of the financial manager. The document discusses different business organizations, the relationship between finance, economics, and accounting. It emphasizes that the goal of a firm is to maximize shareholder wealth and examines ideas like EVA and stakeholder theory. The agency problem between managers and owners is also introduced.
This document provides an overview of a unit on managing financial resources and decisions. The unit is designed to give learners an understanding of finance management within businesses. It will cover sources of finance, implications of finance as a resource, making financial decisions based on information, and analyzing financial performance. Learners will explore finance sources, analyze impacts, make budgeting and pricing choices using tools like costing and investment appraisal, and interpret financial statements. Assessment may involve case studies and projects analyzing real or simulated company finances and decision-making.
This document discusses depository institutions such as commercial banks, savings and loan associations, savings banks, and credit unions. It describes their key characteristics and activities. Depository institutions obtain funds from deposits and use those funds to generate income through loans and investments. They face asset-liability problems in managing the mismatch between long-term assets and short-term liabilities. Regulators monitor various risks at these institutions including credit, liquidity, market, and operational risk. The document provides examples of major depository institutions in the Philippines within each category.
The document discusses various topics relating to financial management. It begins by defining financial management as activities concerned with obtaining and effectively using money. It then discusses the need for financing, covering short-term financing which is used for less than one year, such as for inventory, and long-term financing which is used for over one year. The document also discusses proper financial management during economic crises, careers in finance such as chief financial officers, developing financial plans by establishing goals and identifying funding sources, and sources of short-term and long-term debt financing as well as equity financing.
The document provides an overview of the financial system and its key components. It discusses how financial markets and institutions help channel funds from savers to borrowers, allowing for investment and economic growth. It then covers the major types of financial markets and instruments, including debt vs equity markets, primary vs secondary markets, money markets, capital markets, and derivatives. It also discusses the internationalization of financial markets through foreign bonds, Eurobonds, and Eurocurrencies.
The document discusses the financial aspect of enterprise management strategy. It aims to enlighten on the role of commercial banks in regional economic investment, understand the role of IMF/ADB/WB in global economy and venture capital, and be aware of "financial traffic lights" as an instrument of overcoming economic insolvency of business structures. It then provides details on the role of banks, functions of central banks like Bangko Sentral ng Pilipinas, and roles of IMF, World Bank, and ADB in global financing and development.
Financial intermediation is the process by which banks and other financial institutions channel funds from savers to borrowers. Banks accept deposits from savers and provide loans to borrowers, earning a spread between the lower interest rates paid on deposits and the higher rates charged on loans. This intermediation benefits both savers and borrowers - savers earn interest on deposits and borrowers are able to access funds for investments and economic activity. Financial intermediation also helps transform short-term deposits into long-term loans, allowing for maturity transformation that supports economic growth.
This document defines and describes various types of financial institutions. It discusses common financial institutions like banks, insurance companies, investment companies, and mutual funds. It also outlines specialized financial institutions including central banks, commercial banks, investment banks, savings banks, and Islamic banks. The functions of financial institutions are also summarized, which include facilitating the flow of cash between investors and those needing funds.
FINANCIAL SYSTEM- FORMAL AND INFORMAL - AND INTRODUCTION TO NBFC Mohammed Jasir PV
The document discusses non-banking financial companies (NBFCs) and microfinance in India. It provides definitions and explanations of key terms related to financial systems and institutions. Some of the main points covered include the evolution of India's financial system from a private sector-dominated system to a more regulated system with public sector institutions. The document also describes the components of India's formal financial system, including regulators, financial institutions, markets, instruments, and services. It discusses banks and the difference between banks and non-banking financial companies (NBFCs).
Finance involves the management of money and funds. It includes activities like originating, marketing, and managing cash and other financial instruments. There are three main areas of finance: personal finance concerning individuals' finances, corporate finance concerning for-profit organizations' finances, and public finance concerning governments' financial affairs. Financial systems provide capital from investors to other individuals, firms, and governments through various financial instruments and markets.
The document provides an overview of key concepts in finance including:
1) Finance can be defined as managing money at both the personal and business level, involving decisions about spending, saving, and investing.
2) There are two broad categories of finance careers - financial services which provide advice and products, and managerial finance which involves the duties of financial managers in businesses.
3) The three most common forms of business organization are sole proprietorships, partnerships, and corporations, each with different ownership structures and liabilities.
An introductory and beginner-friendly introduction to finance.
This includes Financial Planning, Key concepts of finance, financial markets, financial institutions, personal finance, corporate finance and public finance.
The document discusses different types of finance including public finance, private finance, personal finance, and corporate finance. Public finance deals with government revenues and expenditures and can be divided into public expenditure, public revenue, and public debt. Private finance involves raising funds outside of public markets. Personal finance encompasses budgeting, savings, taxes, insurance, investments and retirement for individuals. Corporate finance includes planning, raising, investing and monitoring the finances of a company.
Finance involves the management of money and the process of acquiring funds. It includes activities related to banking, leverage, credit, capital markets, and investments. There are three main types of finance: personal finance which plans individuals' financial needs, corporate finance which deals with running business financial activities, and public finance which involves government taxation, spending, and debt. A financial system allows the exchange of funds between borrowers, lenders, and investors through institutions like banks and stock exchanges. The Islamic financial system operates based on moral and ethical principles rather than interest, advocating risk-sharing and fulfillment of obligations.
Finance involves the management of money and the process of acquiring funds. It includes activities related to banking, leverage, credit, capital markets, and investments. There are three main types of finance: personal finance which plans individuals' financial needs, corporate finance which deals with running business financial activities, and public finance which involves government taxation, spending, and debt. A financial system allows the exchange of funds between borrowers, lenders, and investors through institutions like banks and stock exchanges. The Islamic financial system operates based on similar principles but prohibits interest and advocates risk-sharing and equitable distribution of wealth in accordance with Islamic teachings.
A financial system consists of financial institutions, markets, instruments, and services that facilitate the transfer of funds between savers and investors. It plays a key role in allocating resources in the economy by channeling funds from savers to borrowers. A sound financial system is essential for capital formation and steady economic growth by mobilizing savings and efficiently directing those savings towards productive investments. It links those who have capital but do not want to engage directly in business with those who need capital to start or expand their business.
The document provides an overview of key concepts in financial management. It discusses three main areas of finance: personal finance, corporate finance, and public finance. Corporate finance involves making investment, financing, and dividend decisions to maximize shareholder value. Financial management aims to maximize profit or shareholder wealth. It operates under assumptions of efficient financial markets and in the context of corporate business organizations. Key principles of financial management include the time value of money, risk-return tradeoff, diversification, and agency problems that arise from the separation of ownership and control of corporations.
Personal finance[edit]Main article Personal financeQues.docxbartholomeocoombs
Personal finance
[
edit
]
Main article:
Personal finance
Questions in personal finance revolve around:
Protection against unforeseen personal events, as well as events in the wider economies
Transference of family wealth across generations (bequests and inheritance)
Effects of tax policies (tax subsidies or penalties) on management of personal finances
Effects of credit on individual financial standing
Development of a savings plan or financing for large purchases (auto, education, home)
Planning a secure financial future in an environment of economic instability
Warren Buffett
is an American investor, business magnate, and philanthropist. He is considered by some to be one of the most successful investors in the world.
Personal finance may involve paying for education, financing
durable goods
such as
real estate
and cars, buying
insurance
, e.g. health and property insurance, investing and saving for
retirement
.
Personal finance may also involve paying for a loan, or debt obligations. The six key areas of personal financial planning, as suggested by the Financial Planning Standards Board, are:
[1]
Financial position
: is concerned with understanding the personal resources available by examining net worth and household cash flow. Net worth is a person's balance sheet, calculated by adding up all assets under that person's control, minus all liabilities of the household, at one point in time. Household cash flow totals up all the expected sources of income within a year, minus all expected expenses within the same year. From this analysis, the financial planner can determine to what degree and in what time the personal goals can be accomplished.
Adequate protection
: the analysis of how to protect a household from unforeseen risks. These risks can be divided into the following: liability, property, death, disability, health and long term care. Some of these risks may be self-insurable, while most will require the purchase of an insurance contract. Determining how much insurance to get, at the most cost effective terms requires knowledge of the market for personal insurance. Business owners, professionals, athletes and entertainers require specialized insurance professionals to adequately protect themselves. Since insurance also enjoys some tax benefits, utilizing insurance investment products may be a critical piece of the overall investment planning.
Tax planning
: typically the income tax is the single largest expense in a household. Managing taxes is not a question of if you will pay taxes, but when and how much. Government gives many incentives in the form of tax deductions and credits, which can be used to reduce the lifetime tax burden. Most modern governments use a progressive tax. Typically, as one's income grows, a higher
marginal rate of tax
must be paid. Understanding how to take advantage of the myriad tax breaks when planning one's personal finances can make a significant impact in which it can later save you money in .
introduction to financial management chapter oneDerejeUrgecha1
The document provides an introduction to financial management. It discusses that finance is essential for any business operation and outlines the three main areas of finance: personal, corporate, and public. Corporate finance involves making investment, financing, and dividend decisions to maximize shareholder value. Financial management aims to efficiently allocate resources and acquire and utilize funds. The main goals of financial management are profit maximization and wealth maximization. Financial management operates under key assumptions of existing financial markets and in the context of corporate business organizations, applying basic principles like time value of money and risk-return tradeoffs.
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
Finance is the study of how people allocate scarce resources over time. It involves evaluating uncertain cash flows probabilistically and making investment and financing decisions. The goal of corporate finance is to maximize shareholder wealth by making optimal investment and financing decisions. This involves choosing investments that earn returns above the cost of capital and using a mix of financing that minimizes risk and cost. Key measures include economic value added and net present value. The finance function exists to transform assets and create value through financial contracting and markets.
The document defines finance and describes who is responsible for financial management within an organization. It states that financial management deals with decisions that are meant to maximize shareholder wealth. Financial managers make planning, acquisition, and utilization of funds decisions that involve risk-return tradeoffs and can impact share prices. The roles of the finance manager include investing, financing, operating, and dividend decisions.
Financial management involves planning, utilizing, and controlling an organization's financial resources to achieve its goals. It includes estimating funding needs, choosing sources of finance like shareholders, debentures, banks, and investments, and managing cash flow. The finance department is also responsible for allocating surplus funds through dividends, bonuses, or reinvestment, and ensuring financial performance through controls. Sources of industrial finance include shares, public deposits, bank loans, development banks, and trade credit. Financial functions center around increasing and regulating fund inflows and outflows, utilizing funds effectively, coordinating finances, providing financial updates, and maintaining liquidity and control.
The document discusses the key components and functions of a financial system. It describes a financial system as a network that allows the exchange of funds between participants like lenders, borrowers, and investors. The main components include financial institutions, markets, instruments, services, and currency. Key functions of a financial system are to facilitate payments, savings, liquidity, risk management, and influence of government policies. Financial systems are important for economic development by channeling savings into investments.
The document discusses various topics related to finance including:
1. Finance deals with the study of investments and pricing of assets based on risk and return. It can be broken into public finance, corporate finance, and personal finance.
2. Financial services allow borrowers and lenders of different sizes to coordinate activity through banks and other intermediaries. Finance is used by individuals, governments, businesses, and other organizations.
3. Public finance describes finance related to sovereign states and concerns identification of expenditures, revenue sources, budgeting, and debt issuance for public projects. Central banks also play an important role in public finance.
Assignment 1 Discussion QuestionThe management of current asset.docxfredharris32
Assignment 1: Discussion Question
The management of current assets and current liabilities in the short run can lead to several challenges for the financial manager. What are some of the more common challenges or problems encountered by the firm in this regard, and what are the possible solutions? Explain your answers.
Assignment 2: Discussion Question
Financial mangers make decisions today that will affect the firm in the future. The dollars used for investment expenditures made today are different from the cash flows to be realized in the future. What are these differences? What are some of the techniques that can be used to adjust for these differences?
Assignment 3: Discussion Question
Valuation of a firm’s financial assets is said to be based on what is expected in the future, in terms of the future performance of the firm, the industry, and the economy. What types of value would you consider when assigning “value” to a firm’s stock or bond? What is the significance of each of the different types of value in the valuation process? Use examples to support your response.
Assignment 4: Discussion Question
The finance department of a large corporation has evaluated a possible capital project using the NPV method, the Payback Method, and the IRR method. The analysts are puzzled, since the NPV indicated rejection, but the IRR and Payback methods both indicated acceptance. Explain why this conflicting situation might occur and what conclusions the analyst should accept, indicating the shortcomings and the advantages of each method. Assuming the data is correct, which method will most likely provide the most accurate decisions and why?
Course Overview (1 of 3)
Defining Finance
Broadly defined, finance is the study of how people manage scarce resources in general, and money and other financial resources in particular. There are two important features that distinguish financial decisions from other types of decisions. The benefits and costs of financial decisions are spread out over time and usually shrouded in uncertainty.
These decisions are made in a financial environment that includes the financial system, institutions, markets, and participants such as individual households, businesses, and governments. It is important to note that a well developed and properly functioning financial system enables the economy to operate efficiently and contributes to the economic growth and development of the country.
Brief History of Finance
Finance emerged as a separate field of study in the U.S. in the early 1900s. At that time finance was taught primarily as a descriptive subject using anecdotes and rules of thumb. The focus at that time was on the formation of new firms, the various types of securities firms can issue to raise funds and the legal aspects of mergers and acquisitions. This continued to be the focus all through the 1920s.
However, during the 1930s the focus shifted to the study of bankruptcy and reorganization, corporate liqu ...
The financial system comprises intermediaries, markets, and instruments that transform savings into investments. It provides financial inputs that are crucial for economic development and improving standards of living. The system involves the activities of saving, financing, and investment. It includes various institutions like banks, non-banking financial companies, and financial markets that facilitate transactions and allocate resources. Financial instruments are traded in these markets to raise capital. The system also provides important financial services. However, the Indian financial system faces some weaknesses like a lack of coordination and inactive capital markets.
Financial management book @ bec doms baglkot mba Babasab Patil
Unit 1 provides an introduction to financial management, including its concept, nature, evolution, and significance. It discusses finance functions, risk-return tradeoffs, and maximizing vs. optimizing approaches.
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This document provides an introduction to financial management and analysis. It discusses three areas of finance: financial management, investments, and financial institutions. Financial management deals with financial decision making within a business, investments focuses on securities markets, and financial institutions manage the flow of funds between suppliers and users of capital. The document then describes the three main forms of business organization - sole proprietorships, partnerships, and corporations - and compares them in terms of taxation, ownership and control, liability, and ability to raise funds. Finally, it provides an overview of financial analysis and its role in evaluating performance and risk.
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1. Chapter 6: INTRODUCTION TO FINANCIAL MANAGEMENT
Contents
Introduction to Financial Management
Financial Intermediates
Financial Accounts (Trading ac, P&Lac and B/S)
1. INTRODUCTION:
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Finance is the science of funds management. The general areas of finance are business
finance, personal finance, and public finance. Finance includes saving money and often
includes lending money. The field of finance deals with the concepts of time, money, and
risk and how they are interrelated. It also deals with how money is spent and budgeted.
One aspect of finance is through individuals and business organizations, which deposit
money in a bank. The bank then lends the money out to other individuals or corporations
for consumption or investment, and charges interest on the loans.
Finance is the set of activities dealing with the management of funds. More specifically, it
is the decision of collection and use of funds. It is a branch of economics that studies the
management of money and other assets.
Finance is also the science and art of determining if the funds of an organization are being
used properly. Through financial analysis, companies and businesses can take decisions
and corrective actions towards the sources of income and the expenses and investments
that need to be made in order to stay competitive. Finance is the heart of organisation.
Finance it is regarded as blood of the organisation. Without finance the firm can‟t be
existing. It refers to the financial assets which r necessary for run the business smoothly.
The field of finance refers to the concepts of time, money and risk Finance is used by
individuals (personal finance), by governments (public finance), by businesses (corporate
Finance), as well as by a wide variety of organizations including schools and non-profit
organizations. In general, the goals of each of the above activities are achieved through the
use of appropriate financial instruments, with consideration to their institutional setting. The
company can issue the Equity shares, preference shares and debentures for getting the public
finance in the company.
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Finance is one of the most important aspects of business management. Without proper
financial planning a new enterprise is unlikely to be successful. Managing money (a
Liquid asset) is essential to ensure a secure future, both for the individual and an
organization.
And how they are interrelated.
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The procurement of finance is of 3 types :
1) Personal Finance: Personal finance is the application of the principles of finance to the
monetary decisions of an individual or family unit. It addresses the ways in which individuals
or families obtain, budget, save, and spend monetary resources over time, taking into account
various financial risks and future life events. Components of personal finance might include
checking and savings accounts, credit cards and consumer loans, investments in the stock
market, retirement plans, social security benefits, insurance policies, and income tax
management.
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2. Chapter 6: INTRODUCTION TO FINANCIAL MANAGEMENT
2) Business Finance:Corporate finance finance dealing with financial decisions business
enterprises make and the tools and analysis used to make these decisions. The primary goal of
corporate finance is to maximizecorporate value while managing the firm's financial risks.
Although it is in principle different from managerial finance which studies the financial
decisions of all firms, rather than corporations alone, the main concepts in the study of
corporate finance are applicable to the financial problems of all kinds of firms.
3) Public finance: Public finance is a field of economics concerned with paying for
collective or governmental activities, and with the administration and design of those
activities. The field is often divided into questions of what the government or collective
organizations should do or are doing, and questions of how to pay for those activities. The
broader term, public economics, and the narrower term, government finance, are also often
used. The company gets the finance from public by issuing equity shares, preference shares
and debentures.
2. FINANCIAL INTERMEDIARIES:
A financial intermediary is a financial institution that acts as the middleman or connects
surplus and deficit agents or investors and firms raising funds. An example of a financial
institution is a bank that transforms bank deposits into bank loans. Financial intermediaries
hold a very important role in the flow of money in the financial world. The assistance of a
financial intermediary is needed by companies who want somebody to act as a middle man in
raising money from the investors. Meeting up between these two parties are often very
difficult without the help of financial intermediaries.
2.1 TYPES OF FINANCIAL INTERMEDIARIES:
Money needs to be circulated for an economy to be productive. If all savings are hoarded, the
surpluses of the community will not be available for investments and this in turn would lead
to economic stagnation. Financial intermediaries play an important economic function by
facilitating a productive use of the community's surplus money. There are various types of
financial intermediaries and their structure comprises of both organized and unorganized
sectors.
1. INSURANCE COMPANIES:
Insurance companies concentrate on fulfilling the insurance needs of the community, both for
life and non life insurance. With the globalization of the Indian economy, a large number of
private players have entered into this field, offering products that allow investors to select the
kind of policies to suit their financial planning needs. Many of these organizations are formed
as subsidiaries of banks that enable the banks to cross sell insurance products to their existing
customers. Banks benefit by way of fee income through referrals and enhanced relationships
with insurance companies for their banking needs.
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3. Chapter 6: INTRODUCTION TO FINANCIAL MANAGEMENT
2. MUTUAL FUNDS:
These organizations satisfy the needs of individual investors through pooling resources from
a large number with similar investment goals and risk appetite. The resources collected are
invested in the capital market and money market securities and the returns generated are
distributed to investors. The fund managers of MFs are specialists in the fields of investment
analysis and are able to diversify and even out risks through portfolio mix. MFs offer a wide
variety of schemes, such as, growth funds, income funds, balanced funds, money market
funds and equity related funds designed to cater to the different needs of investors.
3. INVESTMENT BROKERS:
The main duty of investment brokers is to transact the security sales. There are discount
brokers and full-service brokers. They provide an opportunity online for some individuals to
promote their trades. Aside from that they can also solicit valuable investment advice to some
clients who may need it that time.
4. INVESTMENT BANKERS:
The main duty of this financial intermediary is to increase monetary amounts of companies
through stocks and bonds. Since conducting stock offerings and issuing bonds is so
expensive, investment bankers focuses on how they can help the firm to earn more capital.
5. PENSION FUNDS:
Pension funds are analysed as financial intermediaries using a functional approach to finance
whichencompasses traditional theories of intermediation. Funds fulfil a number of the
functions of the financial system more efficiently than banks or direct holdings. Their growth
complements that of capital markets and they have acted as major catalysts of change in the
financial landscape. Financial efficiency in this functional sense is not the only reason for
growth. It is also a consequence of fiscal incentives and benefits to employers, as well as
growing demand arising from the ageing of the population.
6. COLLECTIVE INVESTMENT SCHEMES:
A collective investment scheme is a way of investing money alongside other investors in
order to benefit from the inherent advantages of working as part of a group. These advantages
include an ability to hire a professional investment manager, which theoretically offers the
prospects of better returns and/or risk management benefit from economies of scale cost
sharing among others diversify more than would be feasible for most individual investors
which, theoretically, reduces risk.
Page 3
4. Chapter 6: INTRODUCTION TO FINANCIAL MANAGEMENT
3. FINANCIAL ACCOUNTING:
The process of recording, summarizing and reporting the myriad of transactions from a
business, so as to provide an accurate picture of its financial position and performance. The
primary objective of financial accounting is the preparation of financial statements including the balance sheet, income statement and cash flow statement - that encapsulates the
company's operating performance over a particular period, and financial position at a specific
point in time. These statements - which are generally prepared quarterly and annually, and in
accordance with Generally Accepted Accounting Principles (GAAP) - are aimed at external
parties including investors, creditors, regulators and tax authorities.
Financial accounting is a specialized branch of accounting that keeps track of a company's
financial transactions. Using standardized guidelines, the transactions are recorded,
summarized, and presented in a financial report or financial statement such as an income
statement or a balance sheet.
Companies issue financial statements on a routine schedule. The statements are considered
external because they are given to people outside of the company, with the primary recipients
being owners/stockholders, as well as certain lenders. If a corporation's stock is publicly
traded, however, its financial statements (and other financial reportings) tend to be widely
circulated, and information will likely reach secondary recipients such as competitors,
customers, employees, labor organizations, and investment analysts.
It's important to point out that the purpose of financial accounting is not to report the value of
a company. Rather, its purpose is to provide enough information for others to assess the value
of a company for themselves.
Financial accounting is required to follow the accrual basis of accounting (as opposed to the
"cash basis" of accounting). Under the accrual basis, revenues are reported when they are
earned, not when the money is received. Similarly, expenses are reported when they are
incurred, not when they are paid. For example, although a magazine publisher receives a $24
check from a customer for an annual subscription, the publisher reports as revenue a monthly
amount of $2 (one-twelfth of the annual subscription amount). In the same way, it reports its
property tax expense each month as one-twelfth of the annual property tax bill.
By following the accrual basis of accounting, a company's profitability, assets, liabilities and
other financial information is more in line with economic reality.
4. RULES OF FINANCIAL ACCOUNTING:
Debit and Credit are two actions of opposing nature that are relevant to the process of
accounting.
They are as fundamental to accounting as addition (+) and subtraction (−) are to mathematics.
It would not be appropriate to apply this mathematical analogy in all cases as it would give a
distorted meaning. Thus, it would not be appropriate to consider debit to be an equivalent of
addition and credit to be an equivalent of subtraction.
Page 4
5. Chapter 6: INTRODUCTION TO FINANCIAL MANAGEMENT
The rules are been followed for the trading account , profit and loss account and for the
balance sheet of the organisation. The rules say:
1. Dr. what Goes out
Cr. What Comes in
2. Dr. all the expenses
Cr. All the incomes
3. Dr. the assest
Cr. The liabilities
1. TRANDING ACCOUNT:
Trading refers buying and selling of goods. Trading A/c shows the result of buying and
selling of goods. This account is prepared to find out the difference between the Selling
prices and Cost price. If the selling price exceeds the cost price, it will bring Gross Profit. For
example, if the cost price of Rs. 50,000 worth of goods are sold for Rs. 60,000 that will bring
in Gross Profit of Rs. 10,000. If the cost price exceeds the selling price, the result will be
Gross Loss. For example, if the cost price Rs. 60,000 worth of goods are sold for Rs. 50,000
that will result in Gross Loss of Rs. 10,000.
Thus the Gross Profit or Gross Loss is indicated in Trading Account.
Dr.
PARTICULARS
To Opening Stock
TO GROSS PROFIT
(Transferred to P&L
A/C)
TOTAL
Cr.
AMT
XXX
XXX
XXX
PARTICULARS
By Closing Stock
By GROSS LOSS
(Transferred to P&L
A/C)
TOTAL
AMT
XXX
XXX
XXX
The difference between the two sides of the Trading Account indicates either Gross Profit
or Gross Loss. If the total on the credit side is more, the difference represents Gross Profit.
On the other hand, if the total of the debit side is high, the difference represents Gross Loss.
The Gross Profit or Gross Loss is transferred to Profit and Loss A/c.
Page 5
6. Chapter 6: INTRODUCTION TO FINANCIAL MANAGEMENT
2. PROFIT AND LOSS ACCOUNT:
Trading account reveals Gross Profit or Gross Loss. Gross Profit is transferred to credit side
of Profit and Loss A/c. Gross Loss is transferred to debit side of the Profit Loss Account.
Thus Profit and Loss A/c is commenced. This Profit & Loss A/c reveals Net Profit or Net loss
at a given time of accounting year.
The income statement reports a company's profitability during a specified period of time. The
period of time could be one year, one month, three months, 13 weeks, or any other time
interval chosen by the company.
The main components of the income statement are revenues, expenses, gains, and losses.
Revenues include such things as sales, service revenues, and interest revenue. Expenses
include the cost of goods sold, operating expenses (such as salaries, rent, utilities,
advertising), and non-operating expenses (such as interest expense). If a corporation's stock is
publicly traded, the earnings per share of its common stock are reported on the income
statement.
3. BALANCE SHEET:
The balance sheet is organized into three parts: (1) assets, (2) liabilities, and (3) stockholders'
equity at a specified date (typically, this date is the last day of an accounting period).
The first section of the balance sheet reports the company's assets and includes such things as
cash, accounts receivable, inventory, prepaid insurance, buildings, and equipment. The next
section reports the company's liabilities; these are obligations that are due at the date of the
balance sheet and often include the word "payable" in their title (Notes Payable, Accounts
Payable, Wages Payable, and Interest Payable). The final section is stockholders' equity,
defined as the difference between the amount of assets and the amount of liabilities.
The Word „Balance Sheet‟ is defined as “a Statement which sets out the Assets and
Liabilities of a business firm and which serves to ascertain the financial position of the same
on any particular date.”
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7. Chapter 6: INTRODUCTION TO FINANCIAL MANAGEMENT
On the left hand side of this statement, the liabilities and capital are shown. On the right hand
side, all the assets are shown. Therefore the two sides of the Balance sheet must always be
equal. Capital arrives Assets exceeds the liabilities.
OBJECTIVES OF BALANCE SHEET:
1. It shows accurate financial position of a firm.
2. It is a gist of various transactions at a given period.
3. It clearly indicates, whether the firm has sufficient assents to repay its liabilities.
4. The accuracy of final accounts is verified by this statement
5. It shows the profit or Loss arrived through Profit & Loss A/c.
Page 7