Financial Management - An Introduction
19
Financial Management July 2015 Dr. Dhirendra Gautam Ph.D., CA, CMA & CWA
-
Upload
dr-dhirendra-gautam -
Category
Documents
-
view
8 -
download
0
description
Financial Management - An Introductionor Corporate Finance, Part of MMS syllabus for Mumbai University, Good for Executives in Finance and Management
Transcript of Financial Management - An Introduction
Financial Management
July 2015
Dr. Dhirendra GautamPh.D., CA, CMA & CWA
Introduction
Course Content
What is Finance
Meaning of Financial Management
Objective of Financial Management
Understanding with Example…
Agenda
Introduction
You
Financial Management
Me
Let Me know all of you….
Introduction
Course Content:1. Objective of Financial Management
2. Financial Performance Appraisal using Ratio Analysis, Fund Flow Analysis & Cash Flow Analysis.
3. Sources of Finance – Short Term/Long Term, Domestic / Foreign, Equity / Borrowings/Mixed etc.
4. Cost of Capital & Capital – Structure Planning,
5. Capital Budgeting & Investment Decision Analysis (using Time Value for Money, Theory)
6. Working Capital Management – Estimation & Financing
• Inventory Management
• Receivable Management
• Cash Management
7. Divided Policy/ Bonus – Theory & Practice
8. Investment (Project) identification
9. Financial Benchmarking
10. Banking
Financial Management
What is Finance?
Finance
How to earn
How to Manage
How to Expend
Money Management
FinanceAccounts Economics
Two Old Theories
Recording Transactions in terms of MoneyOr Recording Financial Transaction
Resource Management for bothHouse hold and Government
Managing BOTH,Money and Resource
The New Subject
Finance Management
Managing BOTH,Money and Resource
CFO / CEO
Business Management
Decision Management
Managing the Finance of Any Business
Managing the Resource of Any Business
Deciding About the:• Cost• Benefit and • Risk
Financial Management is “Managing the Business”
Finance is called “The science of money”
Financial Management comprises of Forecasting, Planning, Organizing, Directing, Coordinating and Controlling all activities relating to acquisition and application of financial resources of an undertaking, in keeping with its financial objectives – Raymond Chambers
Financial Management is concerned with the managerial decisions that result in the acquisition and Financing of short term and long term credits for the firm - Phillippatus
Meaning of Financial Management
Objective of
Financial Management ?
Objective of Financial Management
1.Procurement of Fund
Objective of FM
2. Utilization of Fund
Equity
Debt
Public / Gov.
Private
Foreign
IPO
Angle InvestorPE – Private EquityVC – Venture Capitalist
DebenturesBondsBank LoanFDI
Fixed Assets
Working Capital
Dividend
Sources of Finance
Objective of Financial Management
3.Profit Maximization
Objective of FM
3. Wealth Maximization
Profit acts as a measure of efficiencyIt serves as a protection against risk.The main source of finance for growth of a business is profit profits act as a measure of efficiency and economic prosperity.
It leads to exploitation of workers and consumers.It Ignores the risk factors associated with profit.Profit in itself is a vague concept and means differently to different people.It is narrow concept at the cost of social and moral obligations.
Due to wealth maximization, the short term money lenders get their payments in time.The long time lenders too get a fixed rate of interest on their investments.The employees share in the wealth gets increased.The various resources are put to economical and efficient use..
It is socially undesirable.It is not a descriptive idea.Only stock holders wealth maximization does not lead to firm’s wealth maximization.The objective of wealth maximization is endangered when ownership and management are separated..
Profit maximization
as an objective of Financial
Management has been
considered inadequate.
Inspite of the arguments
against wealth maximization, it is the most appropriative objective of a
firm
+
+
-
-
Understanding the Financial Management.
With
Example…
A & B Started a Business with high potential of Success
An E- Commerce Portal for Selling Cosmetics Products Online
Not had enough Money so they got approach and convince Mr. C for initial funding
Still Not enough Money so they approach Mr. D , But D says I will not invest but I will Lend Money to your Business
Equi
ty H
olde
rLo
an H
olde
r
More Money
Priority Payment to Mr. D
Payment to A, B & C
Put Backs Money in Business
Financing Decision
Investing Decision
Dividend Decision
Money Machine
A & B Started a Business with high potential of Success
An E- Commerce Portal for Selling Cosmetics Products Online
Not had enough Money so they got approach and convince Mr. C for initial funding
Still Not enough Money so they approach Mr. D , But D says I will not invest but I will Lend Money to your Business
Equi
ty H
olde
rLo
an H
olde
r
More Money
Priority Payment to Mr. D
Payment to A, B & C
Put Backs Money in Business
Financing Decision
Investing Decision
Dividend Decision
Money Machine
5&6
3 & 4
7
Sources of FinanceCost of Capital & Capital Structure
Capital Budgeting & Working Capital Mgt. Dividend Policy &
Retained Earnings
Financial Management
Financing Decision
Financial Management
Dividend Decision
A. Capital BudgetingB. Working Capital Management
Investing Decision
A. Cost of Capital B. Capital Structure Decisions
A. Dividend Policy B. B. Retained - Earnings
