Financial

Management
July 2015
Dr. Dhirendra Gautam
Ph.D., CA, CMA & CWA

Agenda

Introduction
Course Content
What is Finance
Meaning of Financial Management
Objective of Financial Management
Understanding with Example

Financial
Managem
ent

Me

You

Introduct
ion

Introduction

Let Me know all of you.

Introduction

Let Me Introduce My-self

I can be reached on Email: ceo@indiba.in

Financial Management
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

What is
Finance?

How
to
earn

How
to
Manag
e
Finan
ce
Money
Management

How
to
Expen
d

Two Old
Theories
Accounts

Finance

Recording Transactions in terms of

Money
Or Recording Financial Transaction

Economi
cs
Resource Management for both
House hold and Government

Managing BOTH,
Money and Resource

The New Subject

Managing BOTH,
Money and Resource
CFO / CEO

Finance
Management

Managing the
Finance of Any
Business

Decision
Management

Deciding About
the:
Cost
Benefit and
Risk

Financial Management is Managing the Business

Business
Management

Managing the
Resource of
Any Business

Meaning of Financial Management

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

Objective of
Financial Management ?

Objective of Financial Management

IPO

1.Procure
ment of
Fund

Equity

Debt

Objective of
FM
2.
Utilization
of Fund

Fixed
Assets
Working
Capital
Dividend

Angle Investor
PE Private Equity
VC Venture
Capitalist
Debentures
Bonds
Bank Loan
FDI
Sources of
Finance

Public /
Gov.
Private
Foreign

Objective of Financial Management

+
3.Profit
Maximizat
ion

Objecti
ve of
FM

+
3. Wealth
Maximizat
ion

Profit acts as a measure of efficiency

It 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 firms wealth maximization.
The objective of wealth maximization is endangered
when ownership and management are
separated..

Profit
maximizatio
n as an
objective of
Financial
Managemen
t has been
considere
d
inadequat
Inspite
e. of
the
arguments
against
wealth
maximizati
on, it is
the most
appropriat
ive
objective
of a firm

Understanding the Financial

Management.
With
Example

Loan Holder

Equity Holder

Financing Decision
A & B Started a
Business with
high potential
of Success
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

Money
Machine
An E- Commerce
Portal for Selling
Cosmetics
Products Online

Priority
Payme
nt to
Mr. D
More
Money

Investing Decision
Put Backs Money in Business

Dividend Decision

Paymen
t to A, B
&C

Loan Holder

Equity Holder

Financing Decision
A & B Started a
Business with
high potential
of Success
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
3&
4

Priority
Payme
nt to
Mr. D

Money
Machine
An E- Commerce
Portal for Selling
Cosmetics
Products Online

More
Money
Dividend Decision

Investing Decision
5&6

Sources of
Finance
Cost of Capital
& Capital
Structure

Put Backs Money in Business

Capital Budgeting
&
Working Capital
Mgt.

Paymen
t to A, B
&C

Dividend
Policy &
Retained
Earnings

Financial Management

Financi
al
Manage
ment

Financing
Decision

A. Cost of Capital
B. Capital Structure
Decisions

Investing
Decision

A. Capital Budgeting
B. Working Capital
Management

Dividend
Decision

A. Dividend Policy
B. B. Retained - Earnings

Thanks

I can be reached on Email: ceo@indiba.in