This is the first unit of Financial Management in the second semester of Master of Business Administration. Here, we can collect the meaning, definition, scope, objectives, functions, importance and every concepts of Financial Management.
1.1 identify the type of accounting
1.2 difference between Cost Accounting , Cost Accountancy and Costing
1.3 understand the Management information needs
1.4 identify the objectives of cost accounting
1.5 difference between Cost Accounting Vs. Financial Accounting
1.6 identify the role of cost accountant
This document provides an overview of basic accounting principles for an 11th grade class. It defines accounting as recording, summarizing, reporting and analyzing financial transactions. Generally Accepted Accounting Principles (GAAP) establish uniform rules for recording transactions to bring consistency to financial statements. Key principles discussed include the business entity, money measurement, going concern, accounting period concepts as well as revenue recognition, matching, accrual, full disclosure, consistency and conservatism. The objectives are for students to understand and apply these principles when recording business transactions.
Responsibility accounting is a system that assigns revenues and costs to responsibility centers based on who has responsibility over that area. It collects both planned and actual accounting information for these centers. Key features include identifying responsibility centers, assigning controllable costs, setting targets, comparing actual to planned performance, and reporting deviations. Responsibility centers can be cost centers, profit centers, or investment centers depending on if they are responsible for costs, revenues, or both. This system aims to improve performance by assigning responsibility and enabling better planning, control, decision-making, and management by exception. However, it requires proper organizational structure and delegation for successful implementation.
Accounting involves recording, classifying, and summarizing financial transactions and interpreting results. It provides information on money coming into and going out of a business. There are three main types of accounts: personal accounts for individuals and organizations, real accounts for tangible and intangible assets, and nominal accounts for income, expenses, gains, and losses. Accounting helps maintain business records, prepare financial statements, compare results over time, assist in decision making, provide evidence for legal matters, aid with taxation, value businesses, and replace memory of transactions.
The document discusses GAAP (Generally Accepted Accounting Principles). [1] GAAP are the common set of accounting standards, procedures and rules that govern financial accounting practices. [2] They provide guidelines for proper revenue recognition, balance sheet classifications, and share measurements to provide a fair representation of a company's financial status. [3] GAAP principles are divided into accounting concepts like the money measurement concept and dual aspect concept, and accounting conventions like full disclosure and materiality.
This document provides an introduction and overview of auditing. It discusses the origin and development of auditing from ancient times to the modern era where computers are used. It also defines auditing, outlines the syllabus which includes the meaning, characteristics, scope, principles, functions, limitations and advantages of auditing. The purpose of an audit is to provide reliable information to decision makers by having an independent verification of accounts.
This document discusses the management of cash. It begins by defining cash and its importance as the most liquid asset. It then discusses determining the optimal cash balance, collecting cash efficiently from receivables, and disbursing cash payments in a timely manner. The document outlines various motives for holding cash like transaction, precautionary and speculative motives. It also discusses objectives of cash management like maintaining an optimal cash balance.
This document discusses key accounting concepts and conventions. It explains the separate entity, money measurement, going concern, accounting period, accounting cost, matching, dual aspect, realization, conservatism, full disclosure, consistency, and materiality concepts/conventions. These concepts and conventions provide the basic assumptions and guidelines for preparing financial statements according to accounting principles.
1.1 identify the type of accounting
1.2 difference between Cost Accounting , Cost Accountancy and Costing
1.3 understand the Management information needs
1.4 identify the objectives of cost accounting
1.5 difference between Cost Accounting Vs. Financial Accounting
1.6 identify the role of cost accountant
This document provides an overview of basic accounting principles for an 11th grade class. It defines accounting as recording, summarizing, reporting and analyzing financial transactions. Generally Accepted Accounting Principles (GAAP) establish uniform rules for recording transactions to bring consistency to financial statements. Key principles discussed include the business entity, money measurement, going concern, accounting period concepts as well as revenue recognition, matching, accrual, full disclosure, consistency and conservatism. The objectives are for students to understand and apply these principles when recording business transactions.
Responsibility accounting is a system that assigns revenues and costs to responsibility centers based on who has responsibility over that area. It collects both planned and actual accounting information for these centers. Key features include identifying responsibility centers, assigning controllable costs, setting targets, comparing actual to planned performance, and reporting deviations. Responsibility centers can be cost centers, profit centers, or investment centers depending on if they are responsible for costs, revenues, or both. This system aims to improve performance by assigning responsibility and enabling better planning, control, decision-making, and management by exception. However, it requires proper organizational structure and delegation for successful implementation.
Accounting involves recording, classifying, and summarizing financial transactions and interpreting results. It provides information on money coming into and going out of a business. There are three main types of accounts: personal accounts for individuals and organizations, real accounts for tangible and intangible assets, and nominal accounts for income, expenses, gains, and losses. Accounting helps maintain business records, prepare financial statements, compare results over time, assist in decision making, provide evidence for legal matters, aid with taxation, value businesses, and replace memory of transactions.
The document discusses GAAP (Generally Accepted Accounting Principles). [1] GAAP are the common set of accounting standards, procedures and rules that govern financial accounting practices. [2] They provide guidelines for proper revenue recognition, balance sheet classifications, and share measurements to provide a fair representation of a company's financial status. [3] GAAP principles are divided into accounting concepts like the money measurement concept and dual aspect concept, and accounting conventions like full disclosure and materiality.
This document provides an introduction and overview of auditing. It discusses the origin and development of auditing from ancient times to the modern era where computers are used. It also defines auditing, outlines the syllabus which includes the meaning, characteristics, scope, principles, functions, limitations and advantages of auditing. The purpose of an audit is to provide reliable information to decision makers by having an independent verification of accounts.
This document discusses the management of cash. It begins by defining cash and its importance as the most liquid asset. It then discusses determining the optimal cash balance, collecting cash efficiently from receivables, and disbursing cash payments in a timely manner. The document outlines various motives for holding cash like transaction, precautionary and speculative motives. It also discusses objectives of cash management like maintaining an optimal cash balance.
This document discusses key accounting concepts and conventions. It explains the separate entity, money measurement, going concern, accounting period, accounting cost, matching, dual aspect, realization, conservatism, full disclosure, consistency, and materiality concepts/conventions. These concepts and conventions provide the basic assumptions and guidelines for preparing financial statements according to accounting principles.
Management accounting is the process of analyzing business costs and operations to prepare internal reports and records to aid managers' decision-making. It involves collecting accounting information using financial and cost accounting and translating it into useful information for management. The objectives of management accounting include measuring performance, assessing risk, allocating resources, and presenting financial statements. It uses tools like budgeting, variance analysis, and cash flow analysis to help managers with planning, decision-making, and control.
This document is a presentation on cost accounting given by Rahat from the Creative Crew at Metropolitan University, Sylhet. It includes definitions and calculations for key cost accounting terms like maximum level, minimum level, reordering level, direct and indirect costs, job costing, and batch costing. It also discusses accounting tools like bin cards, stores ledgers, and purchase requisitions. The presentation acknowledges the teacher Mohammad Shahidul Haque and answers questions on cost accounting elements and classifications.
This document discusses key accounting concepts and conventions. It describes 12 major concepts: business entity, going concern, money measurement, accounting period, cost, dual aspect, realization, matching, materiality, full disclosure, conservatism, and consistency. It provides examples and explanations of how each concept is applied in accounting practices and financial reporting.
The document discusses the various types of business objectives including organic objectives, economic objectives, social objectives, human objectives, national objectives, and global objectives. Organic objectives include survival, growth, and goodwill/image. Economic objectives focus on profit earning, customer creation, innovation, and resource use. Social objectives involve quality product/service provision, fair trade practices, and societal contribution. Human objectives pertain to employee well-being, satisfaction, development and support for disadvantaged groups. National objectives center around employment, justice, production priorities, and country revenue/self-sufficiency. Global objectives relate to living standards, disparity reduction, and competitive international goods/services.
It is the system in which both the aspects i.e. debit as well as credit are recorded in the books of accounts .It records transactions relating to all the accounts i.e. personal, real and nominal.
The document discusses budgetary control and flexible budgets. It defines budgetary control as the establishment of budgets relating to executive responsibilities and requirements of policy, with the continuous comparison of actual to budgeted results to ensure objectives are met or require revision. Flexible budgets vary based on activity levels, like preparing budgets for production of 7,000 and 9,000 units based on variable and fixed cost schedules. Budgetary control involves planning, coordination, communication, and control to improve overall efficiency.
This document provides information on cost accounting, cost-effectiveness analysis, and auditing in nursing. It defines cost accounting as collecting, recording, and analyzing costs to help management with decision making. Cost-effectiveness analysis compares the costs and outcomes of different programs or interventions. The key steps in a cost-effectiveness analysis are identifying alternatives, determining costs and outcomes, and comparing cost-outcome ratios. Auditing ensures adequate cost accounting information for nurses to perform administrative and managerial roles effectively.
This document discusses the key concepts of financial management including its meaning, scope, objectives and related disciplines. Financial management aims to maximize shareholder wealth through investment analysis, working capital management, capital structure decisions, and dividend policy. The scope of financial management has evolved from a traditional approach focused on capital markets to a modern approach providing a framework for strategic financial decision-making. The objectives of financial management are typically profit maximization or wealth/shareholder value maximization. A case study on Reliance Industries outlines its strategic vision to reinforce its existing businesses and pursue new opportunities in industries like petroleum, retail, telecommunications and education.
This document provides an overview of cost and management accounting. It defines cost accounting as a system for recording costs and producing cost information for products. It also discusses why organizations need costing systems to provide actual unit costs, actual department costs, and forecast costs for planning, decision making, and cost control. The document then covers key terms in cost accounting such as cost, cost units, cost centers, cost objects, and classifications of costs by nature, function, behavior, and changes in activity or volume.
This document provides an introduction to the concepts of accounting. It defines accounting as a system that collects and processes financial information to allow informed decisions by users. It discusses the need for accounting to determine results of business transactions and the financial position. It outlines the key functions of accounting like identifying, recording, classifying, summarizing, analyzing, interpreting and communicating financial information. It also discusses the accounting cycle and different branches and users of accounting information. Finally, it provides definitions of some basic accounting terms.
This document discusses key accounting concepts and principles, including:
- Business entity, which treats a business and its owners as separate entities
- Money measurement, which records all transactions in monetary terms
- Going concern, which assumes a business will continue operating indefinitely
It also outlines principles such as historical cost, conservatism, consistency, and disclosure, and how they guide financial reporting. Challenges in revenue and expense recognition are addressed, along with users of financial statements and limitations of conventional reports.
The document discusses management accounting, including its definition, objectives, functions, scope, and limitations. It defines management accounting as the presentation of accounting information to assist management in policymaking and day-to-day operations. The objectives include promoting efficiency, interpreting financial statements, and allocating responsibility. The functions of management accounting include forecasting, organizing, controlling, analysis, and communication. A management accountant assists management by preparing budgets and reports, interpreting financial data, and ensuring compliance.
This presentation talks about Meaning, of accounting, distinction between book keeping and accounting, Branches of accounting, Objectives of accounting, Uses and users of accounting information, Advantages of Accounting, Is accounting a science or an art, double entry system of financial accounting, limitations of financial accounting, important terms, journal entry, accounting concepts and conventions
Financial statement analysis involves analyzing a company's financial statements to assess its performance and financial position. It is used to evaluate factors like profitability, solvency, liquidity, and efficiency. Key tools for financial statement analysis include financial ratios, common size analysis, trend analysis, and comparisons to industry standards and past performance. The purpose is to provide useful information to decision makers about a company's historical performance, current condition, and future prospects.
This document discusses key accounting concepts and conventions. It defines 8 accounting concepts: business entity, money measurement, accounting period, accounting cost, going concern, dual aspect, realization, and matching. It also discusses 4 accounting conventions: consistency, materiality, conservatism, and full disclosure. The concepts and conventions establish standard principles and practices for preparing accurate financial statements and reports.
The document discusses the goals and scope of financial management. The two main goals are profit maximization and wealth maximization. Profit maximization aims to earn the highest profits possible to satisfy shareholders and ensure the company's financial health. Wealth maximization means maximizing the net present value or value of the company to benefit all stakeholders over time. The scope of financial management includes procuring short and long-term funds, mobilizing funds through financial instruments, and complying with legal regulations regarding financial activities while coordinating with accounting.
The document discusses three key accounting concepts - the going concern concept, money measurement concept, and accounting period concept. The going concern concept assumes that a company will continue to operate indefinitely. The money measurement concept provides that financial statements are more meaningful when assets and liabilities are quantified in monetary terms rather than just listing items. The accounting period concept recognizes that financial statements are prepared for a specific period of time.
unit 1-1.pdf eco and finance pdf for the studentsishika1995rao
The document discusses various topics related to finance including definitions of finance, features of finance, time value of money, sources of finance, objectives of financial management, and profit maximization vs wealth maximization. Some key points:
- Finance is defined in multiple ways but broadly relates to the management of money and other assets. It allows for investment opportunities, profitable opportunities, and optimal fund mixes.
- Sources of finance can be long-term like equity/debt, or short-term like bank loans. Objectives of financial management include profit maximization and wealth maximization for shareholders.
- Profit maximization aims to increase profits but has limitations, while wealth maximization considers net present value and long-term
conceptual learning for FM Unit-1-1.pptxssusera156cd
This document provides an overview of essential concepts in financial management. It begins by defining key terms like finance, financial management, and objectives of financial management such as maximizing profits, returns, and wealth.
It then covers major functions of financial management like investment decisions, financing decisions, dividend decisions, and liquidity decisions. Specific topics discussed include risk-return tradeoff, time value of money concepts like present and future values, and discounting and compounding.
The roles and responsibilities of a financial manager are also summarized, which include raising funds, allocating funds, profit planning, and understanding capital markets. Finally, the document outlines the scope of financial management and its relationship to disciplines like economics, accounting, and mathematics
Management accounting is the process of analyzing business costs and operations to prepare internal reports and records to aid managers' decision-making. It involves collecting accounting information using financial and cost accounting and translating it into useful information for management. The objectives of management accounting include measuring performance, assessing risk, allocating resources, and presenting financial statements. It uses tools like budgeting, variance analysis, and cash flow analysis to help managers with planning, decision-making, and control.
This document is a presentation on cost accounting given by Rahat from the Creative Crew at Metropolitan University, Sylhet. It includes definitions and calculations for key cost accounting terms like maximum level, minimum level, reordering level, direct and indirect costs, job costing, and batch costing. It also discusses accounting tools like bin cards, stores ledgers, and purchase requisitions. The presentation acknowledges the teacher Mohammad Shahidul Haque and answers questions on cost accounting elements and classifications.
This document discusses key accounting concepts and conventions. It describes 12 major concepts: business entity, going concern, money measurement, accounting period, cost, dual aspect, realization, matching, materiality, full disclosure, conservatism, and consistency. It provides examples and explanations of how each concept is applied in accounting practices and financial reporting.
The document discusses the various types of business objectives including organic objectives, economic objectives, social objectives, human objectives, national objectives, and global objectives. Organic objectives include survival, growth, and goodwill/image. Economic objectives focus on profit earning, customer creation, innovation, and resource use. Social objectives involve quality product/service provision, fair trade practices, and societal contribution. Human objectives pertain to employee well-being, satisfaction, development and support for disadvantaged groups. National objectives center around employment, justice, production priorities, and country revenue/self-sufficiency. Global objectives relate to living standards, disparity reduction, and competitive international goods/services.
It is the system in which both the aspects i.e. debit as well as credit are recorded in the books of accounts .It records transactions relating to all the accounts i.e. personal, real and nominal.
The document discusses budgetary control and flexible budgets. It defines budgetary control as the establishment of budgets relating to executive responsibilities and requirements of policy, with the continuous comparison of actual to budgeted results to ensure objectives are met or require revision. Flexible budgets vary based on activity levels, like preparing budgets for production of 7,000 and 9,000 units based on variable and fixed cost schedules. Budgetary control involves planning, coordination, communication, and control to improve overall efficiency.
This document provides information on cost accounting, cost-effectiveness analysis, and auditing in nursing. It defines cost accounting as collecting, recording, and analyzing costs to help management with decision making. Cost-effectiveness analysis compares the costs and outcomes of different programs or interventions. The key steps in a cost-effectiveness analysis are identifying alternatives, determining costs and outcomes, and comparing cost-outcome ratios. Auditing ensures adequate cost accounting information for nurses to perform administrative and managerial roles effectively.
This document discusses the key concepts of financial management including its meaning, scope, objectives and related disciplines. Financial management aims to maximize shareholder wealth through investment analysis, working capital management, capital structure decisions, and dividend policy. The scope of financial management has evolved from a traditional approach focused on capital markets to a modern approach providing a framework for strategic financial decision-making. The objectives of financial management are typically profit maximization or wealth/shareholder value maximization. A case study on Reliance Industries outlines its strategic vision to reinforce its existing businesses and pursue new opportunities in industries like petroleum, retail, telecommunications and education.
This document provides an overview of cost and management accounting. It defines cost accounting as a system for recording costs and producing cost information for products. It also discusses why organizations need costing systems to provide actual unit costs, actual department costs, and forecast costs for planning, decision making, and cost control. The document then covers key terms in cost accounting such as cost, cost units, cost centers, cost objects, and classifications of costs by nature, function, behavior, and changes in activity or volume.
This document provides an introduction to the concepts of accounting. It defines accounting as a system that collects and processes financial information to allow informed decisions by users. It discusses the need for accounting to determine results of business transactions and the financial position. It outlines the key functions of accounting like identifying, recording, classifying, summarizing, analyzing, interpreting and communicating financial information. It also discusses the accounting cycle and different branches and users of accounting information. Finally, it provides definitions of some basic accounting terms.
This document discusses key accounting concepts and principles, including:
- Business entity, which treats a business and its owners as separate entities
- Money measurement, which records all transactions in monetary terms
- Going concern, which assumes a business will continue operating indefinitely
It also outlines principles such as historical cost, conservatism, consistency, and disclosure, and how they guide financial reporting. Challenges in revenue and expense recognition are addressed, along with users of financial statements and limitations of conventional reports.
The document discusses management accounting, including its definition, objectives, functions, scope, and limitations. It defines management accounting as the presentation of accounting information to assist management in policymaking and day-to-day operations. The objectives include promoting efficiency, interpreting financial statements, and allocating responsibility. The functions of management accounting include forecasting, organizing, controlling, analysis, and communication. A management accountant assists management by preparing budgets and reports, interpreting financial data, and ensuring compliance.
This presentation talks about Meaning, of accounting, distinction between book keeping and accounting, Branches of accounting, Objectives of accounting, Uses and users of accounting information, Advantages of Accounting, Is accounting a science or an art, double entry system of financial accounting, limitations of financial accounting, important terms, journal entry, accounting concepts and conventions
Financial statement analysis involves analyzing a company's financial statements to assess its performance and financial position. It is used to evaluate factors like profitability, solvency, liquidity, and efficiency. Key tools for financial statement analysis include financial ratios, common size analysis, trend analysis, and comparisons to industry standards and past performance. The purpose is to provide useful information to decision makers about a company's historical performance, current condition, and future prospects.
This document discusses key accounting concepts and conventions. It defines 8 accounting concepts: business entity, money measurement, accounting period, accounting cost, going concern, dual aspect, realization, and matching. It also discusses 4 accounting conventions: consistency, materiality, conservatism, and full disclosure. The concepts and conventions establish standard principles and practices for preparing accurate financial statements and reports.
The document discusses the goals and scope of financial management. The two main goals are profit maximization and wealth maximization. Profit maximization aims to earn the highest profits possible to satisfy shareholders and ensure the company's financial health. Wealth maximization means maximizing the net present value or value of the company to benefit all stakeholders over time. The scope of financial management includes procuring short and long-term funds, mobilizing funds through financial instruments, and complying with legal regulations regarding financial activities while coordinating with accounting.
The document discusses three key accounting concepts - the going concern concept, money measurement concept, and accounting period concept. The going concern concept assumes that a company will continue to operate indefinitely. The money measurement concept provides that financial statements are more meaningful when assets and liabilities are quantified in monetary terms rather than just listing items. The accounting period concept recognizes that financial statements are prepared for a specific period of time.
unit 1-1.pdf eco and finance pdf for the studentsishika1995rao
The document discusses various topics related to finance including definitions of finance, features of finance, time value of money, sources of finance, objectives of financial management, and profit maximization vs wealth maximization. Some key points:
- Finance is defined in multiple ways but broadly relates to the management of money and other assets. It allows for investment opportunities, profitable opportunities, and optimal fund mixes.
- Sources of finance can be long-term like equity/debt, or short-term like bank loans. Objectives of financial management include profit maximization and wealth maximization for shareholders.
- Profit maximization aims to increase profits but has limitations, while wealth maximization considers net present value and long-term
conceptual learning for FM Unit-1-1.pptxssusera156cd
This document provides an overview of essential concepts in financial management. It begins by defining key terms like finance, financial management, and objectives of financial management such as maximizing profits, returns, and wealth.
It then covers major functions of financial management like investment decisions, financing decisions, dividend decisions, and liquidity decisions. Specific topics discussed include risk-return tradeoff, time value of money concepts like present and future values, and discounting and compounding.
The roles and responsibilities of a financial manager are also summarized, which include raising funds, allocating funds, profit planning, and understanding capital markets. Finally, the document outlines the scope of financial management and its relationship to disciplines like economics, accounting, and mathematics
This document outlines the course objectives and content for a financial management course. The course aims to build on basic financial knowledge and looks at how firms organize and report financial information. It covers topics such as the definition of finance, financial management, financial planning, control and decision making. It also discusses three key areas of financial management: capital budgeting, capital structure, and working capital management. Methods of capital budgeting like discounted cash flow analysis and capital structure are defined. The purpose of working capital management to maintain sufficient cash flow is also mentioned.
This document provides an introduction to financial management. It discusses key topics like the meaning and scope of financial management, the goals of profit maximization versus wealth maximization, finance functions, and organizational structure. It also covers the relationship between finance and accounting, interfaces with other functions, and different forms of business organization. The overall summary is that financial management involves acquiring and using funds to achieve organizational goals in the most profitable way by making decisions around investing, financing, and dividends.
Financial management involves planning, directing, monitoring, and controlling the monetary resources of an organization. The key objectives are to create wealth, generate cash flows, and provide an adequate return on investment while considering risks. Financial managers obtain funds internally and externally, make investment and financing decisions, and connect the organization to financial markets. The overall goal is to maximize shareholder value over the long-term by setting objectives around liquidity, profitability, efficiency, growth, and return on capital. Ten core principles like risk-return tradeoffs and time value of money form the foundation of effective financial decision making.
This document discusses key concepts in financial management. It begins by defining finance and its importance in economic activities. It then discusses different types of finance including private, public, individual, partnership and business finance. The main topics covered include financial management, its objectives like profit maximization and wealth maximization, liquidity management, approaches to financial management including traditional and modern approaches, and the main functions of finance like investment, financing, liquidity and dividend decisions. Criticisms of profit and wealth maximization objectives are also provided. The document provides an overview of fundamental concepts in the field of financial management.
Finance is concerned with the management of assets and liabilities and planning for future growth, while accounting focuses on day-to-day financial transactions. The key functions of financial management include investment decisions about allocating funds, financing decisions around obtaining funds, and dividend decisions about distributing profits. The objectives of financial management are to maintain liquidity and profitability, maximize shareholder wealth over the long run, and ensure the efficient utilization of financial resources.
This document discusses various key concepts in financial management. It begins by defining financial management and its scope/elements, which include investment decisions, financial decisions, and dividend decisions. It then discusses three elements of financial management: financial planning, financial control, and financial decision-making. Other topics covered include functions of financial management, importance of financial management, types of finance, financial goals of organizations, financial forecasting, financial planning, break-even analysis, fixed costs, and variable costs.
This document provides an overview of key concepts in financial management including:
- The meaning and definitions of finance, business finance, financial management, and their objectives.
- The traditional and modern approaches to financial management, including the functions of finance managers.
- The importance of concepts like agency theory, corporate governance, and corporate social responsibility in modern corporations where ownership is separated from management.
- Key investment, financing, and asset management decisions that financial managers are responsible for.
This document provides an overview of financial management. It defines finance as the art and science of managing money and financial management as the activity concerned with planning and controlling a firm's financial resources. The document outlines the scope of finance management, including production, marketing, and finance as important business activities. It also describes the objectives of financial management as maximizing shareholders' wealth by accounting for the timing and risk of returns. Overall, the document introduces some key concepts in financial management such as the roles of different financial managers, goals of financial management, and the organization of finance functions within a company.
Slides of financial Management in MBA ExecutiveMustafa580017
The document provides an introduction to financial management. It discusses how the role of financial managers has evolved over time to take on responsibilities for capital investment decisions in addition to raising funds and managing cash positions. Today, financial managers must adapt to changing external forces such as taxes, inflation, and competition. The three main decision areas of financial management are investment decisions, financing decisions, and asset management. The overall goal is typically to maximize shareholder wealth or the market price of the firm's common stock.
Chapter 1 Introduction to Financial ManagementSafeer Raza
Chapter 1 of Financial Management by Van horn
Introduction to Financial management
Topics
Introduction
What is Financial Management
Investment Decision
Financing decision
Asset management Decision
Goal of the firm
Value creation or profit maximization
wealth maximization
Agency problems
Corporate Social Responsibility
Corporate governance
Organization of the financial management function
This document provides an introduction to corporate finance. It begins with learning objectives that focus on developing an understanding of corporate financial management fundamentals, applying financial statement analysis, comparing financing sources, and evaluating capital budgeting decisions. It then defines finance, discusses the traditional and modern approaches to the finance function, and outlines the objectives of financial management including profit maximization and wealth/shareholder maximization. Key differences between profit maximization and wealth maximization are also highlighted.
This document provides an overview of financial management. It defines financial management as the activity concerned with planning, raising, administering and controlling funds used in a business. The document outlines the traditional and modern approaches to financial management. Under the traditional approach, financial management focused on raising funds through banks/institutions and issuing financial instruments, while the modern approach involves investment decisions, financing decisions, and dividend decisions. The objectives of financial management are discussed as profit maximization and wealth maximization. Key functions of a financial manager are also summarized such as financial planning, fund raising, investment of funds, and financial control.
Overview of Corporate Finance in India a presentationfootydigarse
Slide 1: Introduction
Welcome to the presentation on Corporate Finance in India.
Overview of the financial landscape and key aspects of corporate finance.
Slide 2: Importance of Corporate Finance
Explanation of why corporate finance is vital for businesses.
Role in maximizing shareholder value, strategic decision-making, and capital allocation.
Slide 3: Financial Markets in India
Overview of India's financial markets: stock exchanges, bond markets, money markets.
Regulatory bodies such as SEBI (Securities and Exchange Board of India).
Slide 4: Sources of Corporate Finance
Equity financing: IPOs, rights issues, private placements.
Debt financing: bank loans, corporate bonds, debentures.
Hybrid instruments: convertible bonds, preference shares.
Slide 5: Capital Structure Decisions
Explanation of capital structure and its importance.
Factors influencing capital structure decisions.
Trade-off between debt and equity financing.
Slide 6: Valuation Methods
Common valuation methods in India: Discounted Cash Flow (DCF), Comparable Company Analysis (CCA), Precedent Transactions Analysis.
Importance of accurate valuation for investment decisions.
Slide 7: Corporate Governance
Overview of corporate governance principles in India.
Role of the board of directors, transparency, and accountability.
Slide 8: Risk Management
Types of financial risks faced by Indian corporations: market risk, credit risk, operational risk.
Risk management strategies: hedging, diversification, insurance.
Slide 9: Mergers and Acquisitions (M&A)
Trends in M&A activity in India.
Motivations behind M&A transactions.
Regulatory framework and approval process.
Slide 10: Case Studies
Analysis of notable corporate finance transactions in India.
Learnings from successful and unsuccessful deals.
Slide 11: Future Outlook
Emerging trends and opportunities in Indian corporate finance.
Potential challenges and how to address them.
Slide 12: Conclusion
Recap of key points covered in the presentation.
Importance of effective corporate finance management for sustainable growth.
Slide 13: Questions and Discussion
Open the floor for questions and discussion.
The document provides an overview of financial management concepts including the meaning, nature, scope and objectives of financial management. It discusses the organizational structure of a finance department and key responsibilities of a financial manager such as capital budgeting, investment decisions, and cash management. The document also covers understanding capital markets, related disciplines like finance and accounting, components and major differences between the old and new formats of a balance sheet as per Indian accounting standards. In summary, the document serves as an introductory guide to basic concepts in the field of financial management.
Introduction of Financial management.pdfniranjanregmi
This document discusses various topics related to finance including what finance is, domains of finance, objectives of finance functions, importance of financial management, profit maximization vs wealth maximization, and careers in finance. Finance is defined as the art and science of managing money, involving decisions around assets, funding, and managing day-to-day operations. The three domains of finance are personal, business, and public finance. Financial management aims to effectively plan, direct, and control financial resources. While profit maximization was traditionally the goal, wealth maximization which considers shareholder value over time is now more commonly accepted. Careers in finance are wide-ranging in fields like investment, banking, corporations, and government.
Financial management is pivotal for the smooth functioning of an organization. It involves planning, organizing, directing, and controlling financial activities such as procuring and utilizing funds. The key functions of financial management include financial planning and forecasting, determining the optimal capital structure, investing funds productively, maintaining proper liquidity, disposing of surplus assets, and establishing financial controls. Effective financial management helps ensure operational efficiency, build adequate reserves, maximize profitability, and fulfill the goals and vision of the organization.
This document outlines an introductory session on applied business finance. It discusses key topics such as the goals of financial management, the role of financial managers, and agency problems. Financial management aims to maximize shareholder value and profit through strategic planning and allocation of funds. Financial managers are responsible for analysis, investment decisions, financing, and risk management. They aim to balance risk and return to maximize long-term shareholder wealth rather than just short-term profit. Agency problems can arise between shareholders and managers or creditors and shareholders if their interests are not aligned. Financial decisions always involve considering the trade-off between risk and expected return.
Corporate finance deals with how corporations raise funding, structure their capital, increase shareholder value, and allocate financial resources. The primary goals of corporate finance are to maximize shareholder value and effectively invest capital budgeting funds while maintaining adequate working capital. A corporate financial manager's roles include making decisions around raising capital, investing funds, and distributing dividends to optimize allocation of scarce resources and increase shareholder value.
Similar to Unit-1 INTRODUCTION TO FINANCIAL MANAGEMENT.pdf (20)
The Evolution and Impact of OTT Platforms: A Deep Dive into the Future of Ent...ABHILASH DUTTA
This presentation provides a thorough examination of Over-the-Top (OTT) platforms, focusing on their development and substantial influence on the entertainment industry, with a particular emphasis on the Indian market.We begin with an introduction to OTT platforms, defining them as streaming services that deliver content directly over the internet, bypassing traditional broadcast channels. These platforms offer a variety of content, including movies, TV shows, and original productions, allowing users to access content on-demand across multiple devices.The historical context covers the early days of streaming, starting with Netflix's inception in 1997 as a DVD rental service and its transition to streaming in 2007. The presentation also highlights India's television journey, from the launch of Doordarshan in 1959 to the introduction of Direct-to-Home (DTH) satellite television in 2000, which expanded viewing choices and set the stage for the rise of OTT platforms like Big Flix, Ditto TV, Sony LIV, Hotstar, and Netflix. The business models of OTT platforms are explored in detail. Subscription Video on Demand (SVOD) models, exemplified by Netflix and Amazon Prime Video, offer unlimited content access for a monthly fee. Transactional Video on Demand (TVOD) models, like iTunes and Sky Box Office, allow users to pay for individual pieces of content. Advertising-Based Video on Demand (AVOD) models, such as YouTube and Facebook Watch, provide free content supported by advertisements. Hybrid models combine elements of SVOD and AVOD, offering flexibility to cater to diverse audience preferences.
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2. MEANING OF FINANCIAL MANAGEMENT
• Finance may be defined as the art and science of managing money.
• It includes financial service and financial instruments.
• Finance function is the procurement of funds and their effective utilization
in business concerns.
3. DEFINITION OF FINANCIAL MANAGEMENT
• The term financial management has been defined by Solomon, “It is
concerned with the efficient use of an important economic resource
namely, capital funds”. The most popular and acceptable definition of
financial management as given by S.C. Kuchal is that “Financial
Management deals with procurement of funds and their effective
utilization in the business”.
4. • Weston and Brigham : Financial management “is an area of financial
decision-making, harmonizing individual motives and enterprise goals”.
5. FINANCIAL MANAGEMENT IS CONCERNED
WITH
• Financing Decisions
• Investment Decisions
• Dividend decisions
6. SCOPE OF FINANCIAL MANAGEMENT
• 1. Financial Management and Economics: Economic concepts like micro
and macroeconomics are directly applied with the financial management
approaches. Investment decisions, micro and macro environmental factors
are closely associated with the functions of financial manager.
• 2. Financial Management and Accounting: Accounting records includes
the financial information of the business concern. Hence, we can easily
understand the relationship between the financial management and
accounting.
7. • 3. Financial Planning
• 4.Deciding the Capital Structure
• 5. Selection of source of Finance
• 6. Selection of pattern of investment.
8. OBJECTIVES OF FINANCIAL MANAGEMENT
• 1. Profit maximization 2. Wealth maximization.
• Profit Maximization
• Main aim of any kind of economic activity is earning profit. A business concern is
also functioning mainly for the purpose of earning profit. Profit is the measuring
techniques to understand the business efficiency of the concern.
• Profit maximization consists of the following important features.
• 1. Profit maximization is also called as cashing per share maximization. It leads to
maximize the business operation for profit maximization.
• 2. Ultimate aim of the business concern is earning profit, hence, it considers all the
possible ways to increase the profitability of the concern.
9. Wealth Maximization
• Wealth maximization is one of the modern approaches, which involves
latest innovations and improvements in the field of the business concern.
The term wealth means shareholder wealth or the wealth of the persons
those who are involved in the business concern. Wealth maximization is
also known as value maximization or net present worth maximization.
This objective is an universally accepted concept in the field of business.
10. FUNCTIONS OF FINANCE MANAGER
• 1. Forecasting Financial Requirements
• It is the primary function of the Finance Manager. He is responsible to
estimate the financial requirement of the business concern. He should
estimate, how much finances required to acquire fixed assets and forecast
the amount needed to meet the working capital requirements in future.
• 2. Acquiring Necessary Capital
• After deciding the financial requirement, the finance manager should
concentrate how the finance is mobilized and where it will be available. It is
also highly critical in nature.
11. • 3. Investment Decision
• The finance manager must carefully select best investment alternatives and
consider the reasonable and stable return from the investment.
• 4. Cash Management
• Present days cash management plays a major role in the area of finance
because proper cash management is not only essential for effective
utilization of cash but it also helps to meet the short-term liquidity position
of the concern.
• 5. Interrelation with Other Departments
• Finance manager deals with various functional departments such as
marketing, production, personnel, system, research, development, etc.
12. IMPORTANCE OF FINANCIAL MANAGEMENT
• Financial Planning
• Financial management helps to determine the financial requirement of the
business concern and leads to take financial planning of the concern.
Financial planning is an important part of the business concern, which helps
to promotion of an enterprise.
• Acquisition of Funds
• Financial management involves the acquisition of required finance to the
business concern. Acquiring needed funds play a major part of the financial
management, which involve possible source of finance at minimum cost.
13. • Proper Use of Funds
• Proper use and allocation of funds leads to improve the operational efficiency of
the business concern. When the finance manager uses the funds properly, they can
reduce the cost of capital and increase the value of the firm.
• Financial Decision
• Financial management helps to take sound financial decision in the business
concern. Financial decision will affect the entire business operation of the concern.
14. • Improve Profitability
• Profitability of the concern purely depends on the effectiveness and proper
utilization of funds by the business concern.
• Increase theValue of the Firm
• Financial management is very important in the field of increasing the
wealth of the investors and the business concern. Ultimate aim of any
business concern will achieve the maximum profit and higher profitability
leads to maximize the wealth of the investors as well as the nation.
• Promoting Savings
• Savings are possible only when the business concern earns higher
profitability and maximizing wealth.
15.
16. • The chief financial officer often distributes the financial management responsibilities
between the controller and the treasurer. The controller normally has responsibility for all
accounting-related activities.These include such functions as:
• FinancialAccounting This function involves the preparation of the financial statements for
the firm, such as the balance sheet, income statement, and the statement of cash flows.
• Cost Accounting This department often has responsibility for preparing the firm’s
operating budgets and monitoring the performance of the departments and divisions
within the firm.
17. • Taxes This unit prepares the reports that the company must file with the various
government (local, state, and federal) agencies.
• Data Processing Given its responsibilities involving corporate accounting and payroll
activities, the controller may also have management responsibility for the company’s data -
processing operations.
• The treasurer is normally concerned with the acquisition, custody, and expenditure of
funds.These duties often include:
• Cash and Marketable Securities Management This group monitors the firm’s short -term
finances forecasting its cash needs, obtaining funds from bankers and other sources when
needed, and investing any excess funds in short-term interest -earning securities.
18. • Capital Budgeting Analysis This department is responsible for analyzing
capital expenditures that is, the purchase of long -term assets, such as new
facilities and equipment.
• Financial Planning This department is responsible for analyzing the
alternative sources of long-term funds, such as the issuance of bonds or
common stock, that the firm will need to maintain and expand its
operations.
19. • Credit Analysis Most companies have a department that is responsible for
determining the amount of credit that the firm will extend to each of its
customers. Although this group is responsible for performing financial
analysis, it may sometimes be located in the marketing area of the firm
because of its close relationship to sales.
• Investor Relations Many large companies have a unit responsible for
working with institutional investors (for example, mutual funds), bond
rating agencies, stockholders, and the general financial community.
20. • Pension Fund Management The treasurer may also have responsibility for
the investment of employee pension fund contributions. The investment
analysis and portfolio management functions may be performed either
within the firm or through outside investment advisors.
• It should be emphasized that the specific functions of the controller and
treasurer shown in Figure are illustrative only and that the actual functions
performed vary from company to company. For example, in some
companies, the treasurer may have responsibility for tax matters. Also,
the board of directors of the company may establish a finance
committee, consisting of a number of directors and officers of the firm
with substantial financial expertise, to make recommendations on broad
financial policy issues.