Finance Made Easy Session-1 Introduction to Finance – By Rahul Jain Introduction to Finance – By...
Transcript of Finance Made Easy Session-1 Introduction to Finance – By Rahul Jain Introduction to Finance – By...
Finance Made EasyFinance Made EasySession-1 Session-1
Introduction to Introduction to Finance – Finance – By Rahul JainBy Rahul Jain
““Fun with Finance will help in making Fun with Finance will help in making us Fearless”us Fearless”
I. M. Pandey, Financial Management, I. M. Pandey, Financial Management, 9th ed., Vikas.9th ed., Vikas. 22
Apna Sapna Money-MoneyApna Sapna Money-Money
Welcome to the course whichWelcome to the course which
Will improve your confidenceWill improve your confidenceWill help in understanding finance in an easy Will help in understanding finance in an easy waywayWill make learning finance simple and fun Will make learning finance simple and fun Will challenge you and make you think out of Will challenge you and make you think out of the box.the box.Will help in executing your business ideaWill help in executing your business idea
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COURSE GUIDELINESCOURSE GUIDELINES
Introduction and Basics of Financial ManagementIntroduction and Basics of Financial Management
Sources of fundsSources of funds
Capital budgeting & structure Capital budgeting & structure
Marginal cost analysisMarginal cost analysis
Ratio analysisRatio analysis
Budgeting & Financial PlanningBudgeting & Financial Planning
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Aim of the ModuleAim of the Module
Identify different sources of raising funds Identify different sources of raising funds for an enterprise and methods of for an enterprise and methods of deploying themdeploying them
understand how capital structure is understand how capital structure is planned and executedplanned and executed
To Know about the viability of project.To Know about the viability of project.
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Our Strategy for achieving these Our Strategy for achieving these Objectives?Objectives?
Concepts, Cases and Class DiscussionConcepts, Cases and Class DiscussionPunctuality, Participation and PreparationPunctuality, Participation and PreparationJudgment challengeJudgment challengeLearning to communicate ideas Learning to communicate ideas Learning from each other Learning from each other Learning through discoveryLearning through discovery
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What is “Good” What is “Good” Participation?Participation?
Quality, not quantity. Quality, not quantity.
Analyzing and discussing course Analyzing and discussing course material.material.
Questioning the analysis of others. Questioning the analysis of others.
Seeking clarification.Seeking clarification.
Summarizing / synthesizing.Summarizing / synthesizing.
Adherence to guidelines for Adherence to guidelines for
professionalprofessional conduct.conduct.
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Learning objectives:Learning objectives:
What is financial management?What is financial management?
Difference between financial management Difference between financial management and financial accountingand financial accounting
The goals of financial management !The goals of financial management !
We all love money, but Are we passionate about what we are doing to earn money ??
Lets unlearn, go beyond our fears
Fun with Finance will help in making us Fearless
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Business ActivitiesBusiness Activities
Production Production
MarketingMarketing
FinanceFinance
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MeaningMeaning
Financial managementFinancial management is a systematic is a systematic process that provides the necessary process that provides the necessary financial information to help a business financial information to help a business produce and distribute goods and services produce and distribute goods and services in a way that will maximize wealth.in a way that will maximize wealth.
It also provides feedback about how well It also provides feedback about how well the organization is doing. the organization is doing.
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Manage Income & ExpensesManage Income & Expenses
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Having fun with resources ~ Having fun with resources ~ OptimizingOptimizing
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Finance FunctionsFinance Functions
Bollywood: To the next level
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Investing- Creating Win-Win Investing- Creating Win-Win OpportunityOpportunity
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Finance FunctionsFinance Functions
Investment or Long Term Asset Mix Investment or Long Term Asset Mix DecisionDecision
Financing or Capital Mix DecisionFinancing or Capital Mix Decision
Dividend or Profit Allocation DecisionDividend or Profit Allocation Decision
Liquidity or Short Term Asset Mix Liquidity or Short Term Asset Mix DecisionDecision
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Financial accounting and Financial Financial accounting and Financial ManagementManagement
Financial accounting gives the financial Financial accounting gives the financial status of the company to people outside status of the company to people outside the company. It is recording and reporting the company. It is recording and reporting the activities and events that lead to cash the activities and events that lead to cash inflow and outflow.inflow and outflow.
Financial management means efficiently Financial management means efficiently managing the various resources of the managing the various resources of the company.company.
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Finance GoalsFinance Goals
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All I care is about making profits !All I care is about making profits !
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Financial GoalsFinancial Goals
Profit maximization (profit after tax)Profit maximization (profit after tax)
Shareholder’s Wealth MaximizationShareholder’s Wealth Maximization
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Profit MaximizationProfit Maximization
Maximizing the Rupee Income of Firm Maximizing the Rupee Income of Firm – Resources are efficiently utilizedResources are efficiently utilized
– Appropriate measure of firm performanceAppropriate measure of firm performance
– Serves interest of society alsoServes interest of society also
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Objections to Profit Objections to Profit MaximizationMaximization
It is VagueIt is VagueIt Ignores the Timing of ReturnsIt Ignores the Timing of ReturnsIt Ignores RiskIt Ignores RiskIn new business environment profit In new business environment profit maximization is regarded as maximization is regarded as – Inappropriate and Immoral.Inappropriate and Immoral.
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Shareholders’ Wealth Shareholders’ Wealth MaximizationMaximization
Maximizes the cash flow.Maximizes the cash flow.
Accounts for the timing and risk of the Accounts for the timing and risk of the expected benefits.expected benefits.
Fundamental objective—maximize the Fundamental objective—maximize the market value of the firm’s shares.market value of the firm’s shares.
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Risk-return Trade-offRisk-return Trade-off
Risk and expected return move in tandem; Risk and expected return move in tandem; the greater the risk, the greater the expected the greater the risk, the greater the expected return. return.
Financial decisions of the firm are guided by Financial decisions of the firm are guided by the the risk-return trade-offrisk-return trade-off..
The return and risk relationship: The return and risk relationship: Return = Risk-free Return = Risk-free rate + Risk premiumrate + Risk premium
Risk-free rate is a compensation for time and Risk-free rate is a compensation for time and risk premium for risk. risk premium for risk.
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Managers Versus Managers Versus Shareholders’ GoalsShareholders’ Goals
A company has stakeholders such as employees, debt-A company has stakeholders such as employees, debt-holders, consumers, suppliers, government and society. holders, consumers, suppliers, government and society. Managers may perceive their role as reconciling conflicting Managers may perceive their role as reconciling conflicting objectives of stakeholders. This stakeholders’ view of objectives of stakeholders. This stakeholders’ view of managers’ role may compromise with the objective of SWM. managers’ role may compromise with the objective of SWM. Managers may pursue their own personal goals at the cost of Managers may pursue their own personal goals at the cost of shareholders, or may play safe and create satisfactory wealth shareholders, or may play safe and create satisfactory wealth for shareholders than the maximum. for shareholders than the maximum. Managers may avoid taking high investment and financing Managers may avoid taking high investment and financing risks that may otherwise be needed to maximize risks that may otherwise be needed to maximize shareholders’ wealth. Such “satisfying” behaviour of shareholders’ wealth. Such “satisfying” behaviour of managers will frustrate the objective of SWM as a managers will frustrate the objective of SWM as a normative normative guide.guide.
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Financial Goals and Firm’s Financial Goals and Firm’s Mission and ObjectivesMission and Objectives
Firms’ primary objective is maximizing the welfare of Firms’ primary objective is maximizing the welfare of owners, but, in operational terms, they focus on the owners, but, in operational terms, they focus on the satisfaction of its customers through the production of satisfaction of its customers through the production of goods and services needed by themgoods and services needed by them
Firms state their vision, mission and values in broad Firms state their vision, mission and values in broad termsterms
Wealth maximization is more appropriately a Wealth maximization is more appropriately a decision decision criterioncriterion, rather than an , rather than an objectiveobjective or a or a goalgoal. .
Goals or objectives are missions or basic purposes of a Goals or objectives are missions or basic purposes of a firm’s existencefirm’s existence
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Financial Goals and Firm’s Financial Goals and Firm’s Mission and ObjectivesMission and Objectives
The shareholders’ wealth maximization is The shareholders’ wealth maximization is the second-level criterion ensuring that the second-level criterion ensuring that the decision meets the minimum the decision meets the minimum standard of the economic performance. standard of the economic performance.
In the final decision-making, the In the final decision-making, the judgement of management plays the judgement of management plays the crucial role. The wealth maximization crucial role. The wealth maximization criterion would simply indicate whether criterion would simply indicate whether an action is economically viable or not.an action is economically viable or not.
Lets get personalLets get personal
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Interview ExerciseInterview Exercise
Meet Owner/Manager of an Organization:Meet Owner/Manager of an Organization:
Find following:Find following:
1)1)About the Organization and its USP. About the Organization and its USP.
2)2) Important financial decisions that his Important financial decisions that his organization is taking. organization is taking.
3)3)Challenges faced.Challenges faced.
4)4)Sources of Revenues and Top three costs.Sources of Revenues and Top three costs.
5)5)Future Plans of Expansion. Future Plans of Expansion. 3737
Learning ToolsLearning Tools
WebsiteWebsitehttp://bizwizlearning.com/programs/course_detail/finance-http://bizwizlearning.com/programs/course_detail/finance-
made-easymade-easy
Phone: 9811228852Phone: 9811228852
Email: [email protected]: [email protected]
Text Book:Text Book:
Financial Management , I.M. Pandey, Vikas Financial Management , I.M. Pandey, Vikas PublicationsPublications
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ReadingsReadings
• Bollywood: To the next level
http://www.ft.com/cms/s/0/735cc752-00c4-http://www.ft.com/cms/s/0/735cc752-00c4-11e1-8590-11e1-8590-00144feabdc0.html#axzz3gkoy74Lo00144feabdc0.html#axzz3gkoy74Lo
• How Bollywood makes moneyHow Bollywood makes money
http://www.rediff.com/money/2006/may/http://www.rediff.com/money/2006/may/27spec1.htm27spec1.htm
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• Zara becomes the first apparel brand in India to cross $100-million sales mark
Read more at:http://economictimes.indiatimes.com/articleshow/48011626.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
• http://economictimes.indiatimes.com/industry/cons-http://economictimes.indiatimes.com/industry/cons-products/garments-/-textiles/zara-becomes-the-first-products/garments-/-textiles/zara-becomes-the-first-apparel-brand-in-india-to-cross-100-million-sales-mark/apparel-brand-in-india-to-cross-100-million-sales-mark/articleshow/48011626.cmsarticleshow/48011626.cms
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AssignmentAssignment
Prepare an individual file having :Prepare an individual file having :
a) Key learnings of Class-1a) Key learnings of Class-1
b) Summary of any Business Newsb) Summary of any Business News
c) Interview c) Interview
Email your [email protected] your [email protected]
Read Chapter 1 of the Book. (I.M. Pandey)Read Chapter 1 of the Book. (I.M. Pandey)
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Go to the link given below:-Go to the link given below:-
SimVenture link: SimVenture link:
https://www.dropbox.com/sh/ngtoz9vwbbpahcm/https://www.dropbox.com/sh/ngtoz9vwbbpahcm/AAD6FI3DBbahIY3KHyFIVTKAaAAD6FI3DBbahIY3KHyFIVTKAa
Experience taking financial decisionsExperience taking financial decisions
ReferencesReferences
Pandey, I.M. ( Financial Management)Pandey, I.M. ( Financial Management)
www.freeimages.comwww.freeimages.com
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CONTACT DETAILS
Websitehttp://bizwizlearning.com/programs/course_detail/finance-made-easyEmail: [email protected], [email protected] Office: +919811228852Mumbai Office: +917738263926LinkedIn Profile: http://www.linkedin.com/company/globalexperts4uTwitter : https://twitter.com/globalexperts4uSkype: globalexperts4uBlogs: http://bizwizlearning.com/blogs/Facebook: https://www.facebook.com/bizwizlearningsYoutube: https://www.youtube.com/channel/UCvVzjnX4rphMCe7Sti6tGpQ