This document provides an overview of a presentation by the team "CURSORS of BUSINESS" on the topic of financial management. The presentation covers definitions of finance and financial management, the functions of finance including investment, financing, dividend, and liquidity decisions, basic areas of finance like corporate finance and investment, agency problems and costs, the role of the financial manager, and the goals of financial management. It also lists the team members and provides an outline of the topics that will be discussed.

1. WELCOME
TO VIEWERS

2. A PRESENTATION
On Behalf Of Team
‘‘CURSORS of BUSINESS’’

3. We are the members of team
‘CURSORS of BUSINESS’
1. Jabed Hossain (L,52)
2. Anjan Kumar Das (54)
3. Md. Nazmul Haque (33)
4. Salma Islam (24)
5. Tamanna Nigar Tuli (29)
6. Md. Waqim Hossain (75)
7. Farjana Yasmin (78)

4. Presentation Title:
Nature of Financial Management

5. Presentation Contents:
 What is Finance ?
 What is Financial Management ?
 Real & Financial Assets.
 What are the Functions of Finance ?

6. Contents (continue) :
 What are the Basic Area of Finance ?
What is Agency Problem ? Why do they
exist within a corporation ?
 What is Agency Cost ?
 How to Remove Agency Problem from a
Corporation ?

7. Contents(continue):
 Who is a Financial Manager ?
 What are the Role of Financial Manager ?
What are the Goal of Financial Management?
 Why Wealth Maximization is the main Goal of
a firm ?
 Why Profit Maximization isn’t the main Goal
of a firm?

8.  FINANCE:
• Finance is the process of collection of
fund from different sources at minimum
cost, invest this fund different profitable
sector, distribute this fund among
effective users, and controlling this fund
efficiently.

9.  Finance is the art and science of
managing wealth.
The main objectives of finance is to
make individuals & their businesses
better-off.

10.  FINANCIAL MANAGEMENT:
• Financial management is an effect of
applied economics, because it is
concerned with the allocation of a
company’s scarce financial resources
among competitive choices.

11.  Real & Financial Assets:
• A firm requires real assets to carry on its
business.
Tangible real assets are physical assets that
include plant, machinery, office, factory,
furniture and building.
Intangible real assets technical know- how,
technical collaborations, patents and
copyrights.

12. • Financial assets, also called
securities, are financial papers or
instruments such as shares and
bonds or debentures.

13. Function of Finance:
• The main function of finance are to
raise capital to operate a business; to
make the best use of resources; to
manage the cash flow of the
company; to perform good financial
management etc.

14. Function of
Finance
2. Financing
Decision
1. Investment
Decision
4. Liquidity
Decision
3. Dividend
Decision

15. 1. Investment Decision:
• A firm’s investment decisions involve
capital expenditures. They are referred as
capital budgeting decisions.
A capital budgeting decision involves the
capital or commitment of funds to long-
run assets that would yield benefit in the
future.

16. • Two important aspects of Investment
Decisions are :
(a) the evaluation of the prospective
profitability of new investment &;
(b) the measurement of a cut-off rate against
that the prospective return of new
investments could be compared.

17. 2. Financing Decisions:
• Financing decision is the 2nd
important function to be performed
by the financial manager.
• Financial manager must decide
when, where from and how to
acquire funds to meet the firm’s
investment needs.

18. • There are two central issues in Financing
Decision following :
1. Capital Structure
2. Optimum Capital Structure

19. 3. Dividend Decisions:
• Financial manager must decide
whether the firm should distribute
all profits, or retain them, or
distribute a portion and retain the
balance.

20. The proportion of profits distributed
as dividends is called the dividend-
payout ratio.
And the retained portion of profits is
known as the retention ratio.

21. 4. Liquidity Decisions:
• Investment in current assets affects
the firm’s profitability and liquidity.
Current assets management that
affects a firm’s liquidity is yet
another important finance function.

22. • Lack of liquidity in extreme situations can
lead to the firm’s insolvency.
At last, finance functions may
affect the size, growth, profitability &
the risk of the firm, and ultimately,
the value of the firm.

23.  BASIC AREA of FINANCE:
• There are four basic area of finance. They are
following :
Corporate Finance
Investment
Financial Institution
International Finance

24. 1. Corporate Finance:
The area of corporate finance within a
business firm are budgeting, capital,
managing working, financial analysis,
financial statement development and
more.
It is the fundamental area of finance.

25. 2. Investment:
• The another area of finance is investment
within a business particularly a large business.
• A business firm invest in assets ranging form
short term securities to long term securities
the stocks and bonds.
• The business invests for the same reason of
individuals invest to earn and return.

26. 3. Financial Institution:
Financial institution woks on hand to hand,
with the financial markets regarding financial
transactions.
Financial institutions are actually financial
intermediaries which help to transfer of funds
between business and servers.
It helps to ensure about all of transaction
which are already include or predictably
include in a firm to make info.

27. 4. International Finance:
• International finance concerned
with studying global capital
markets and might involve
monitoring movements in foreign
exchanging rate’s.

28.  Agency Problem:
• The conflict of opinions & decisions
between the shareholders and managing
boards is referred to as agency problem.
The agency problem is also known
as the ‘‘ principal-agent problems ’’.

29.  Causing of Existing Agency
Problems in Large Corporations:
• Agency problems exist in large corporation.
There are several reasons for agency
problems. They are following :
 Conflicts of interests
 Conflicts of investment
 Conflicts of distributing profits
 Conflicts to manage the financial wealth

30.  Agency Cost:
• The cost borne by stockholder to
maintain a corporate governments
structure that minimize agency
problems and contribute to the
maximization of owners wealth.

31.  Way of Removing Agency
Problems from a Corporation:
There are several way to remove agency
problems from a corporation, they are
following :
 Giving the ownership rights to manager
 Monitoring by the shareholders

32.  Reducing communication gap
between owners and managers
 Increasing meeting and conference,
 Fulfill applied rules and regulation.

33. • Financial manager is a person who is
responsible in a significant way, to carry out
the finance functions.
Financial manager occupies a key
position.
His or her position in top management
team.
 Financial Manager:

34.  Financial Manager’s Role:
• The financial manager has not always been in
the dynamic role of decision making.
Financial managers roles are following:
 Funds raising.
 Funds allocation.
 Profit planning.
 Understanding capital market.

35. Funds Raising
• The traditional approach dominating the
scope of financial management and limited
the role of the financial manager simply to
funds raising.
• It was during the major events such as
promotion, reorganization, expansion, or
diversification in the firm that the financial
manager was called upon to raise funds.

36. Funds Allocation
• In modern enterprise, the basic function is to
decide about the expenditure decisions and to
determine the demand for capital for these
expenditures.
• Financial manager is concerned with the
efficient allocation of funds. The allocation of
funds is considered important enough in
achieving the firm’s long run objectives.

37. Profit Planning
• Profit planning refers to the operating decisions
in the area of pricing, cost, volume of output and
the firm selection of product lines, profit planning
is therefore financing decisions.
• The mix of fixed and variable cost has a
significant influence on a firm profitability. Fixed
cost remain constant while variable costs change
in direct proportion to volume change. It helps to
anticipate the relationship between cost and
profits.

38. Understanding Capital Market
• Capital market bring investors and firm
together. Hence the financial manager has to
deal with the capital markets. They would fully
understand the operations of capital markets
and the way in which the capital markets
value securities. They would also know how is
measured and how to cope with it in
investment and financing decision.