rishabh itt ppt on financial mangment
TRANSCRIPT
* FINANCIAL MANAGEMENT
Created By:RISHABH MAONDIA
CRO:0524482
BATCH NO:40
SUBMITED TO: MR SANJAY KISHORE SIR
* Contents
*Introduction
*Component of financial management
*Importance of financial management
*Finance function
*Objective of financial management
*Financial management level
*Main aspect of financial planning
Financial management is an integrated decision making process, concerned with acquiring, managing and financing assets to accomplish overall goals within a business entity.
What is Financial Management?
*Financial management capacity is a cornerstone of organizational excellence.
*Financial management pervades the whole organization as management decisions almost always have financial implications.
Meaning of Financial Management
*Financial management entails planning for the future of a person or a business enterprise to ensure a positive cash flow, including the administration and maintenance of financial assets.
Components of Financial Management
The five basic components of the Financial Management Framework are:
* Planning and Analysis
* Asset and Liability Management
* Reporting
* Transaction Processing
* Control
Importance of Financial Management
Financial management is concerned with procurement and utilization of funds in a proper way. It is important because of the following advantages:
1. Helps in obtaining sufficient funds at a minimum cost.
2. Ensures effective utilization of funds.
.
Finance function The finance function relates to three major decisions which the finance manager has to take:
*Investment decisions
*Finance decisions
*Dividend decisions
Investment decision:
This decision relates to the careful selection of assets in which funds will be invested by the firm. It Involves buying, holding reducing, replacing, selling & managing assets.
*Financing decisions:
Financing decisions involve the acquisition of funds needed to support long-term investments.
*Dividend decisions:
*This decision relates to the appropriation of profits earned. The two major alternatives are to retain the profits earned or to distribute these profits to shareholders.
Financi
ng d
eci
sion
Invest
ment
deci
sion
Divid
end
decisio
n
Three Legged Tool Analogy: Broad Classification of Decision Activities
Objectives of Financial Management
The objectives or goals of financial management are-
(a) Profit maximization,
(b) Return maximization, and
(c) Wealth maximization.
Financial Planning Financial planning means deciding in advance how much to spend, on what to spend, according to the funds at your disposal.
Thus, there are two aspects of financial planning:
How much funds are required to finance current and fixed assets and future expansion project?
From where will these funds come?
Capitalization
Capital structure
Management
of capital
Capitalisation
Capital is the basis of all financial decisions and
the term capitalization has been derived from it .
*Capital means the total funds invested in the business and includes owners’ funds , long term loans and other reserves which are represented by assets.
Three possible situations of Capitalisation
Fair capitalization
�Business employs correct amount of capital
Over capitalization
Business employs more capital than warranted
Under capitalization
Business employs less capital than warranted
Functions of Financial Management
Functions of financial management can be divided into two groups:
*Executive (or managerial)functions
*Incidental or routine functions
*BIBLIOGRAPHY
*Understanding financial management: a practical guide By Harold Kent Baker, Gary E. Powell
*http://www.economywatch.com/finance/financial-management.html
*http://managementhelp.org/finance/fp_fnce/fp_fnce.htm
*Various other sources on the internet
*Thank you