BUSINESS Finance

PROFIT MAXIMIZATION
WEALTH MAXIMIZATION
 REALITY>>>>>
 Money required to carry out business activities is
called Business Finance.
 Finance
is required to establish, run, modernize,
expand and diversify a business.
FINANCIAL MANAGEMENT

 Financialmanagement is concerned with

the proper management of funds and
involves decisions relating to efficient
acquisition and allocation of funds.
MAJOR DECISIONS

 Investment decisions
 Financing Decisions
 Dividend Decisions
Investment decisions

 This decision is about

how much fixed and
working capital will be
needs to acquire fixed
assets and to meet day-
to-day requirements of
funds.
Financing Decisions
 This decisions is about how
to raise or procure the
necessary capital funds. The
main sources of funds are
shares, debentures, public
deposits or loans, loans from
financial institutions, etc.
Dividend Decisions

 It involves deciding how

much of the net profit of
the firm will be distributed
as dividend and the
extent to which it will be
retained in the business to
meet the future
requirements.
OBJECTIVES

 Profit Maximization
 Wealth Maximization
Financial planning

 Financial planning refers to the process

and functions of determining capital
requirements of a business and deciding
the various sources from which it can be
procured. • It is required to tackle the
uncertainty in respect of availability and
timings of funds.
Importance
 Itseeks to eliminate waste of funds and provide
better financial control.
 Ittakes care of inflow and outflow of funds and
ensures liquidity throughout the year.
 Itaims at efficient and optimum utilization of surplus
funds for the benefit of business.
 It
ensures increased profitability through cost-benefit
analysis and by avoiding wasteful operations
Capital structure

 Itrefers to the make-up or composition of

the total funds raised by the company,
also known as Capital Mix.
 In other words , it refers to the mix
between Owners and Borrowed funds i.e.
Debt and Equity.