Financial Mgt

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Financial Management:

Financial Management PODSCORB of Finance Planning Organizing Directing Staffing Controlling Recruiting Budgeting

Meaning of Financial Management:

Meaning of Financial Management Financial management is concerned with efficient use of an important economic resources namely capital funds.

Scope of Financial Management:

Scope of Financial Management Scope of Financial Management considers two approaches

Traditional Approach:

Traditional Approach It relates to the initial stages of its evolution It is confined only to procurement of funds The traditionalist considers Financial Institutions – Place where they get the finance Financial Instruments – Medium of Finance

CRITICISM:

CRITICISM It ignores internal decision making Ignored issue of working capital finance Ignored allocation of funds

MODERN APPROACH:

MODERN APPROACH It views Financial Planning Raising of funds Utilization of funds and Financial control It considers Investment decision Financial Decision Dividend Decision

INVESTMENT DECISION:

INVESTMENT DECISION Determination of total assets to be held in the firm Composition of the assets and Business risk complexions

INVESTMENT DECISION:

INVESTMENT DECISION Classified into two broad groups

LONG TERM INVESTMENT DECISION:

LONG TERM INVESTMENT DECISION Also called as Capital Budgeting Process of making investment decisions in capital Expenditure The benefits of Expenditure which are expected to received over a long period of time exceeding one year. Assess the profitability of the project before committing the funds. Proposals should be evaluated in terms of profitability, cost involved and the risks associated with the project.

SHORT TERM INVESTMENT DECISION:

SHORT TERM INVESTMENT DECISION Also called as Working Capital Management Fund necessary to cover the cost of operating the firm Working capital policy which ensures higher profitability, proper liquidity and sound structural health of the organisation.

FINANCIAL DECISION:

FINANCIAL DECISION Decide the best means of financing the commitments Concerned how best to finance new assets and best overall financial mix of the firm

DIVIDEND DECISION:

DIVIDEND DECISION How much paid to the shareholders as a dividend

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