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2 Financial Management According to Oxford dictionary, the word ‘finance’ connotes ‘management of money’. Webster’s Ninth New Collegiate Dictionary defines finance as “the Science on study of the management of funds’ and the management of fund as the system that includes the circulation of money, the granting of credit, the making of investments, and the provision of banking facilities. DEFINITION OF BUSINESS FINANCE According to the Wheeler, “Business finance is that business activity which concerns with the acquisition and conversation of capital funds in meeting financial needs and overall objectives of a business enterprise”. According to the Guthumann and Dougall, “Business finance can broadly be defined as the activity concerned with planning, raising, controlling, administering of the funds used in the business”. In the words of Parhter and Wert, “Business finance deals primarily with raising, administering and disbursing funds by privately owned business units operating in nonfinancial fields of industry”. Corporate finance is concerned with budgeting, financial forecasting, cash management, credit administration, investment analysis and fund procurement of the business concern and the business concern needs to adopt modern technology and application suitable to the global environment. According to the Encyclopedia of Social Sciences, “Corporation finance deals with the financial problems of corporate enterprises. These problems include the financial aspects of the promotion of new enterprises and their administration during early development, the accounting problems connected with the distinction between capital and income, the administrative questions created by growth and expansion, and finally, the financial adjustments required for the bolstering up or rehabilitation of a corporation which has come into financial difficulties”. TYPES OF FINANCE Finance is one of the important and integral part of business concerns, hence, it plays a major role in every part of the business activities. It is used in all the area of the activities under the different names. Finance can be classified into two major parts:
Introduction to Financial Management 3 Finance Private Finance Public Finance Individual Finance Partnership Finance Business Finance Central Government State Government Semi Government Fig. 1.1 Types of Finance Private Finance, which includes the Individual, Firms, Business or Corporate Financial activities to meet the requirements. Public Finance which concerns with revenue and disbursement of Government such as Central Government, State Government and Semi-Government Financial matters. DEFINITION OF FINANCIAL MANAGEMENT Financial management is an integral part of overall management. It is concerned with the duties of the financial managers in the business firm. The term financial management has been defined by Solomon, “It is concerned with the efficient use of an important economic resource namely, capital funds”. The most popular and acceptable definition of financial management as given by S.C. Kuchal is that “Financial Management deals with procurement of funds and their effective utilization in the business”. Howard and Upton : Financial management “as an application of general managerial principles to the area of financial decision-making. Weston and Brigham : Financial management “is an area of financial decision-making, harmonizing individual motives and enterprise goals”. Joshep and Massie : Financial management “is the operational activity of a business that is responsible for obtaining and effectively utilizing the funds necessary for efficient operations. Thus, Financial Management is mainly concerned with the effective funds management in the business. In simple words, Financial Management as practiced by business firms can be called as Corporation Finance or Business Finance.
Page 4 and 5: Preface Financial Management is an
Page 6 and 7: Contents • Increase the value of
Page 8 and 9: Contents • Effects of under capit
Page 10 and 11: Contents Modigliani and Miller’s
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Page 16 and 17: Contents Insurance Sector in India
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58 Financial Management where I = I
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64 Financial Management MODEL QUEST
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68 Financial Management Importance
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76 Financial Management = 1,60,000
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84 Financial Management Leverage Fi
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88 Financial Management Financial l
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90 Financial Management Where, DR=
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92 Financial Management Capital str
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94 Financial Management WCL = Perce
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96 Financial Management EBT 1,400 1
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100 Financial Management Dividend C
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110 Financial Management As per Wal
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112 Financial Management Gordon’s
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126 Financial Management 5 20,000 1
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130 Financial Management 3 65000 0.
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132 Financial Management Base facto
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134 Financial Management Project B
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136 Financial Management Solution I
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138 Financial Management Solution C
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140 Financial Management Cash inflo
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142 Financial Management = 2386500
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144 Financial Management As the pro
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146 Financial Management 12. From t
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150 Financial Management Capital Fi
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152 Financial Management Working Ca
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154 Financial Management NEEDS OF W
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156 Financial Management 5. Credit
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158 Financial Management Period Cov
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160 Financial Management 2. Moderat
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(A) First in First out Method FIFO
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182 Financial Management Percentage
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226 Financial Management Financial
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232 Financial Management Capital In
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234 Financial Management Subsidies
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238 Financial Management Functions
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248 Financial Management The second
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262 Financial Management Venture Ca
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