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Scope of Financial Management :

Scope of Financial Management Financial Management involves the application of general management principles to particular financial operation

Objectives of Financial Management :

Objectives of Financial Management Maximization of shareholders wealth

Financial Management Decisions:

Financial Management Decisions Financing Investment Dividend Working capital management

PowerPoint Presentation:

Difficulties Measurement problems Uncertainty Temporal spread

Investment decisions-Capital Expenditure decisions :

Investment decisions- Capital Expenditure decisions Importance Long term effects Irreversibility Substantial outlays

Investment decisions-Capital Expenditure decisions:

Investment decisions- Capital Expenditure decisions Difficulties Measurement problems Uncertainty Temporal spread

Phases of capital budgeting :

Phases of capital budgeting Planning Analysis Selection Implementation Review

SELECTION :

SELECTION Criterion Accept when Pay back period (PBP) PBP < target period Accounting rate of return(ARR) ARR > target rate Net present value (NPV) NPV > 0 Internal Rate of Return(IRR) IRR > cost of capital Benefit cost ratio (BCR) /Profitability Index BCR > 1

Various facets of project Analysis :

Various facets of project Analysis Market analysis Technical analysis Financial analysis Economic analysis Ecological analysis

Sources of finance :

Sources of finance Permanent sources Share capital Retained profits Long term sources Redeemable preference shares Debentures Long term loans Seed capital / venture capital

Sources of finance:

Sources of finance Medium term sources Medium term loans Deferred credit Public deposits Working capital term loans

Sources of finance:

Sources of finance Short term sources Cash credit Overdraft Bills discounting Commercial paper Trade credit

Study of financial Statements: :

Study of financial Statements: Financial Statements means Balance Sheet, P & L A/c and sources and uses of funds statement

Basic concepts underlying financial Accounting :

Basic concepts underlying financial Accounting Entity concept Money measurement concept Stable monetary unit concept Going concern concept Cost concept Conservatism concept Dual aspect concept

Finance topics- Balance Sheet :

Finance topics- Balance Sheet Share capital Equity/preference Reserves & Surplus Secured Loans Debentures Capital Structure Cost of capital Loans & Advances Unsecured loans Current Lia/provisions Trade creditors Provisions Working capital financial policy

Finance topics- Balance Sheet :

Finance topics- Balance Sheet Fixed Assets (Net) Capital budgeting decisions Investments Security Analysis Cash & Bank Cash Management Receivables Credit Management Inventories Inventory Management

Basics of Financial Statement analysis :

Basics of Financial Statement analysis Horizontal analysis- analysis involves the computation of amount changes and percentage changes Vertical Analysis- uses percentages to show the relationship of the different items to the total in a single statement. Sets a total figure equal to 100 % and compute the percentage of each component of that figure

Basics of Financial Statement analysis :

Basics of Financial Statement analysis Trend Analysis :Percentage changes are calculated for several successive years instead of between two years. Ratio Analysis: Represent meaningful relationship between two numbers

Common size statements :

Common size statements The numbers are brought to common base i.e. per cent. Make comparisons of business enterprises of different sizes more meaningful It can be prepared in vertical analysis format or horizontal analysis format

A CASH FLOW EXAMPLE:

A CASH FLOW EXAMPLE

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