finmar huhuhu

• concerned with planning, directing, monitoring, organizing and controlling monetary resources of an organization

  Financial Management
• management of money matters

  Financial Management
• the lifeblood of any business enterprise

  Finance
• provision of money at the time, it is required

  Finance
• ‘finance’ comes directly from the Latin word

  ‘finis’
• procurement of funds and their effective utilization.

  Finance
• expressed in currency

  Money
• -- can be any country’s currency, which is in the hands of any person or organization. -- is also (1), any country’s currency, which is owned by any person or organization, but lent to others, used to buy an asset or make investment opportunities.

  Money, Finance
• Financial Management had been a branch of --- till --

  Economics, 1890
• is concerned with overall institutional and international environment in which the firm must operate

  Macroeconomics
• -- is the the environment in which an industry operates, which is not controllable by any individual firm

  macroeconomics
• Business firms operate in the -- environment

  macroeconomic
• is firm’s specific environment and also controllable

  Microeconomics
• Microeconomic Factors

  Firms vary in size and activities, influencing their capital structure and financing methods. Large firms, like manufacturing or public utilities, need substantial fixed assets and often own their buildings and plants. In contrast, small firms can lease fixed assets and rely more on internal finances due to less goodwill in the capital market.


  Nature and Size of Enterprise
• Microeconomic Factors

  Risk affects a firm's financial decisions. Higher risk leads to retaining more profits and a conservative dividend policy. Firms with stable earnings prefer fixed-cost capital like preference shares and debentures. Firms with unstable earnings rely on equity financing to avoid fixed payment commitments.

  Level of Risk and Stability in Earnings
• Microeconomic Factors

  Dividend, normally, is paid out of cash. Firms with a sound liquidity position can adopt liberal dividend policy. If there is illiquidity in the firm, it affects nature of financing and dividend decisions.

  Liquidity Position
• Microeconomic Factors

  In a closely-held company, ownership lies in a few hands. It is easier to convince them that a conservative dividend policy is good to them, if the policy is in the interests of the company. Where there are many shareholders, their wishes matter the most in decision-making. Their preferences cannot be ignored, while designing dividend policy.

  Pattern of Ownership
• Microeconomic Factors

  The management's attitude greatly impacts financial decisions. Conservative firms prioritize liquidity over profitability, investing more in current assets and avoiding debt. Conversely, aggressive firms focus on profitability, willing to sacrifice liquidity and take on debt to raise capital and maximize returns.

  Attitude of Management
• -- is a source of most information, which management uses for decision-making. Management is heavily dependant on -- for operating facts

  Accounting
• -- is the data collection process, dealing with accurate reporting, while finance is a managerial or decision-making process. -- provides the input for finance.

  Accounting
• • -- of accounting is the backbone of accounting, which forms the basis for the determination of operating results. Revenue is recognized at the point of sale, irrespective of its realization of sale proceeds. In other words, collection of cash has no significance. Similarly, expenses are recognized when they are incurred, not at the time of payment.

  Accrual system
• For treatment of funds, finance is based on --.

  cash flows
• mean inflow and outflow of cash.

  Funds
• ability to maintain cash obligations as and when they fall due for payment

  solvency
• The purpose of -- is collection and presentation of data. The data so made available is used by the finance manager for decision-making.

  accounting
• In a way, -- begins where -- ends.

  finance, accounting
• a service function to meet the needs of production and marketing

  Finance
• -- deals with the study of procuring funds and its effective and judicious utilization, in terms of the overall objectives of the firm, and expectations of the providers of funds.

  Financial management
• The basic objective is to --------.

  maximize the value of the firm
• The purpose is to achieve ---- of share value to the owners, i.e. equity shareholders.

  maximization
• Financial Management


  Concerned with three activities:
• Anticipating financial needs

  Estimating requirements of the firm in terms of long-term and short-term needs or investment in fixed and current assets
• Acquiring financial resources


  From different sources to meet the financial needs
• Allocating funds


  To maximize shareholders' wealth
• two basic aspects of financial management:

  Procurement of funds.

  Effective and judicious utilization of funds
• --- deals with raising of funds from various sources, dependent on the availability and existing capital structure of the organization

  Financial management
• The scope of finance function was treated in the narrow sense as procurement or arrangement of funds.

  Traditional Approach
• • started mid 1950s
  • its scope is wider, as it covers both procurement of funds and its efficient allocation.

  Modern Approach
• A strong financial system is vitally important—not for Wall Street, not for bankers, but for working Americans
• When our markets work, people throughout our economy benefit-Americans seeking to buy a car or buy a home, families borrowing to pay for college, innovators borrowing on the strength of a good idea for a new product or technology, and businesses financing investments that create new jobs