Financial Management Notes (MBA, BBA, B.Com, Management)

Capital Budgeting “Capital budgeting (also known as investment appraisal) is the process by which a company determines whether projects (such as investing in R&D, opening a new branch, replacing a machine) are worth pursuing. A project is worth pursuing if it increases the value of the company&rdq... read more

Short term finance refers to financing needs for a small period normally less than a year. In businesses, it is also known as working capital financing. This type of financing is normally needed because of uneven flow of cash into the business, the seasonal pattern of business, etc. In most cases, it is used to finance a... read more

Sources of Short Term Financing “Short term finance refers to financing needs for a small period normally less than a year. In businesses, it is also known as working capital financing. This type of financing is normally needed because of uneven flow of cash into the business, the seasonal pattern of business, ... read more

Financial Statements A financial statement is a statement consisting of financial records of an organization. These are made by the company in order to make the investors of the company aware of the financial health and position of the company. Financial statements are of three types mainly; Income Statem... read more

International Capital Budgeting Capital budgeting is a process of investigation and analysis that leads to a key financial decision for both purely domestic firms and MNCs. More broadly, capital budgeting is defined as the process of analyzing capital investment opportunities and deciding which, if any, to undertake.... read more

Capital budgeting Techniques Capital budgeting Techniques includes; Net Present Value (NPV) Internal Rate of Return (IRR) Profitability Index Payback Period Net Present Value NPV is the abbreviation of net present value and it’s the difference between the present value o... read more

What is Over The Counter (OTC)? The operations in the stock market are the result of opening an account in a brokerage house. These accounts are opened in two forms i.e. Cash account and margin account. In cash account you purchase or sell share in your account as per the balance in your account. In margin Account yo... read more

Companies by Guarantee Definition A form of firm planned to guard members from liability, but which naturally does not distribute profits to its members and does not divide assets into shares.  Members of a guarantee company are obliged to pay a definite sum of money (a guarantee) if the company is wound up.... read more

Member An individual whose name is in the register of members of a firm becomes a member of that corporation. The register contains every single aspect about the member like name, address, occupation, date of becoming a member, etc. It also contains every person who holds company’s shares and who is the support... read more

Creditors / Accounts Payable Turnover Ratio The Account payable turnover ratio ( A/P Turnover ratio ) or Creditors turnover ratio is basically a short term Liquidity. This type of turnover ratio shows , tells or quantify and measure the rate at which Company Paysoff its supplier or vendors. This turnover ratio qu... read more

Finance is a broad term basically used for two concepts; the study of  to how effectively manage the money and the acquisition of money. Previously   finance was only divided into three categories that are Corporate Finance, Public Finance and Personal finance but recently it is divided into five categorie... read more

A financial statement is an authorized document of the company, which explores the whole financial information of the company.  The aim of the financial statement is to deliver information and understand the financial aspects of the company.  Hence, preparation of the financial statement is very important as mu... read more

The market value of land and buildings usually represents fair value, assuming existing use and line of business. Such valuations are usually carried out by professionally qualified valuers.   Most importantly, when an item of property, plant and equipment is revalued, the whole class of assets to which it ... read more

The scope and significance of financial management can be discussed from the following angles:   Importance to Organizations 1. Business organizations Financial management is important to all types of business organization i.e. Small size, medium size or a large size organization. As the size grows,... read more

Financial manager is the individual who performs the financial management in the firm. A finance manager of a large organization has a very critical responsibility to shoulder as he has to take all decision about raising and utilization of resources have been taken efficiently and at no time resources should remain idle.... read more

There are two main objectives of financial management; Profit maximization  Shareholders wealth maximization  There are two schools of thought in this favour  Traditional Approach Modern Approach The modern scholars favours shareholders wealth maximization as key obj... read more

Introduction to Financial Management: Financial management is as emerged as an interesting and stimulating area for academic studies as well as for the real-world finance managers. Financial management covers all decisions, taken by an individual or a company, which have financial implications. In our simple understa... read more

Objectives of Capital Budgeting   Following are the objectives of capital budgeting;1. Shareholder’s wealth maximization: In tune with objectives of financial management, its aim is selecting those projects that maximize shareholder’s wealth. The decision should avoid over/under investment in ... read more

Introduction: A firm incurs two types of expenses i.e.  1. Revenue Expenditure:The benefits of which are supposed to be exhausted within the year concerned and their planning and control is done through various functional departments.2. Capital Expenditure:The benefits of which are expected to be received over long ... read more

Introduction:Every profit seeking corporations has its own risk return characteristics. Each group of investors in the corporation-bond holders, preferred stock holders, and common stock holders needs a minimum rate of return commensurate with the risks it accepts by investing in the firm. The minimum rate of return that... read more