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    This document provides an overview of financial management concepts. It discusses the forms of business organizations and how companies in India have shifted to a shareholder-oriented model. The key stakeholders in a company are identified as shareholders, banks/creditors, government. It outlines the typical organization of a company's finance function and the roles and responsibilities of the financial manager. The financial management process is described as involving investment, financing, and dividend decisions that impact the company's balance sheet and goal of value creation. Financial modeling and the relationship between decisions, return, risk and market value are also covered at a high level.

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    This document provides an overview of financial management concepts. It discusses the forms of business organizations and how companies in India have shifted to a shareholder-oriented model. The key stakeholders in a company are identified as shareholders, banks/creditors, government. It outlines the typical organization of a company's finance function and the roles and responsibilities of the financial manager. The financial management process is described as involving investment, financing, and dividend decisions that impact the company's balance sheet and goal of value creation. Financial modeling and the relationship between decisions, return, risk and market value are also covered at a high level.

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    4 views15 pages

    (Part 1)

    Uploaded by

    Shubh
    This document provides an overview of financial management concepts. It discusses the forms of business organizations and how companies in India have shifted to a shareholder-oriented model. The key stakeholders in a company are identified as shareholders, banks/creditors, government. It outlines the typical organization of a company's finance function and the roles and responsibilities of the financial manager. The financial management process is described as involving investment, financing, and dividend decisions that impact the company's balance sheet and goal of value creation. Financial modeling and the relationship between decisions, return, risk and market value are also covered at a high level.

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    of 15

    Financial Management

    MODULE-1
    CONCEPTUAL OVERVIEW

    Amarjeet S Khalsa

    ipermba 2023-amarjeet s khalsa


    WHAT’S ITS ALL ABOUT 🤔
    ITS ABOUT – VALUE 😊
    VALUE ? FOR WHOM 🤔
    FORMS OF BUSINESS ORGANISATIONS
    Sole Proprietorship
    • One owner
    • Very simple
    • Unlimited liability
    • The firm has no separate status from a legal and tax
    point of view
    Partnership
    • Two or more owners
    • Fairly simple
    • Unlimited liability
    • The firm has a separate status
    Private/Public Limited Company
    • Upto 50/unlimited owners
    • Not too complex/ Compliance and Governence
    • Limited liability
    • A distinct legal person
    SHAREHOLDER ORIENTATION IN INDIA
    In the wake of liberalisation, globalisation, and institutionalisation of the
    capital market, there is a greater incentive to focus on creating value for
    shareholders. The following observations are clear indications.

    Dhirubai Ambani : In everything that we do, we have only one supreme goal,
    that is to maximise your wealth as India's largest investor family.

    Anand Mahindra : All of us are beginning to look at companies as owned by


    shareholders. The key is to raise shareholder returns
    BANKS/FINANCIAL INSTITUTIONS-
    PRINCIPAL AND INTEREST

    DEBT SUPPLIERS/CREDITORS-
    PRINCIPAL , INTEREST & PRICE
    STAKEHOLDER’S VALUE

    SHAREHOLDERS- DIVIDEND, EARNINGS


    AND PRICE

    GOVERNMENT- TAXES & SOLVENCY


    MANAGEMENT VS PROMOTERS

    AGENCY

    PROMOTERS

    SHAREHOLDERS
    ORGANISATION OF FINANCE FUNCTION

    Chief Finance
    Officer

    Treasurer Controller

    Financial Cost
    Cash Credit
    Accounting Accounting
    Manager Manager
    Manager Manager

    Capital Fund Tax Data


    Budgeting Raising Manager Processing
    Manager Manager Manager

    Portfolio Internal
    Manager Auditor
    ROLE OF THE FINANCIAL MANAGER

    (2) (1)
    Firm's Financial
    (4a)
    operations manager

    Financial
    (3) (4b)
    markets
    (1) Cash raised from investors
    (2) Cash invested in firm
    (3) Cash generated by operations
    (4a) Cash reinvested
    (4b) Cash returned to investors
    FINANCIAL
    MANAGEMENT
    DECISIONS- Historic Balance Forward Balance
    Sheet Sheet- Growth
    IMPACT ON THE
    BALANCE SHEET
    PROCESS- VALUE
    CREATION

    • INVESMENT

    • FINANCING

    • DIVIDEND
    FINANCIAL MODEL

    WHAT ?
    STAKEHOLDERS-
    HOW ? DIVIDEND DECSIONS
    LIABILITIES-
    WHERE ? FINANCING
    DECISOINS
    ASSETS-
    INVESTMENT
    DECISONS
    DECISIONS, RETURN, RISK,
    AND MARKET VALUE

    Capital Budgeting
    Decisions

    Return
    Capital Structure
    Decisions
    Market Value of
    the Firm
    Dividend
    Decisions
    Risk

    Working Capital
    Decisions
    SO, 😊

    • Lets take it further from here now……

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