Module 1 Financial Management in Business I.pptx

Introduction to financial management

1. Module 1: Financial Management I Prof Pranav Indulkar Prof Pranav Indulkar

2. Introduction to financial management Finance is derived from French word finer which means to pay settle or finish. Business finance can be defined as the activity concerned with raising and administering of funds used in business. According to FW Parish can be put in first group. According to thim , “ In a modern money – using economy, finance may be defined as the provision of money at the time it is wanted. 3 functions of finance Investment Financing Dividend Prof Pranav Indulkar

3. Scope of Financial Management Estimating requirement of funds Decision regarding capital structure Investment decision Dividend decision Cash management Evaluation of financial performance Negotiation for additional funds Analysing trend in stock market Prof Pranav Indulkar

4. Executive Functions Establishing Asset management policies Determining the allocation of net profits Estimating and controlling cash flows and requirements Deciding upon needs and sources of new outside financing Carrying on negotiation for new outside financing Checking upon financial performance Prof Pranav Indulkar

5. Routine Function Supervision of cash receipt Custody and safeguarding of securities Taking care of mechanical details of financing Record keeping and reporting Investment, Financing and Dividend decision Prof Pranav Indulkar

6. Role of Finance Managers In traditional days In Modern days Prof Pranav Indulkar

7. Goals of financial management Proper utilization of funds Maximisation of Return on Investment Survival Cash Flows Break Even point Minimum profits Ensure co-ordination Good Image for the organization Prof Pranav Indulkar

8. Financial Management Objectives Maximising sales/ Revenue / Earnings Maximising Profit Maximising Return on Sales/ on Investments Maximising Corporate Wealth Maximising Shareholder value Social Acceptability and Recognition Maximising Social wealth Prof Pranav Indulkar

9. Qualities a Finance Manager Good personality Intelligence Initiative Innovative Self confidence Communication Skills Decision Maker Human Skills Administrative Skills Positive thinker Vision and Foresight Technical Knowledge Prof Pranav Indulkar

10. Inter Relationship between Finance and other functional areas Production Marketing Advertising Accounting Purchase Customercare & After Sales service Human Resource Function R&D Function Prof Pranav Indulkar

11. Trading on Equity Trading on Equity means using borrowed funds carrying a fixed charge in the expectations of a higher return to the equity shareholders. Prof Pranav Indulkar

12. Types of Risks Credit Risk Interest Rate Risk Business Risk Inflation Risk Industry Risk Liquidity Risk Systematic Risk Unsystematic Risk Prof Pranav Indulkar

13. Objectives of Financial Management Maximising Sales Maximising Profit Maximising Returns Maximising Corporate wealth Maximising shareholder value Social Acceptibility and Recognition Social Wealth Prof Pranav Indulkar

14. Qualities of Finance Manager Good Personality Intelligence Initiatives Innovative Self confidence Communication skills Decision maker Human skills Administration skills Positive thinker Vision and foresight Technical knowledge Prof Pranav Indulkar

15. Thank You