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Crisle PPT Mba225
Crisle PPT Mba225
Crisle PPT Mba225
MANAGEMENT, STOCK
VALUATION, CASH FLOW
VALUATION, PROJECT
EVALUATION CRITERIA
CRISLE CARDENAS
REPORTER
FINANCE
WHAT IS FINANCE?
1. Active Portfolio Management: As the name suggests, in an active portfolio management service, the portfolio managers
are actively involved in buying and selling of securities to ensure maximum profits to individuals.
2. Passive Portfolio Management: In a passive portfolio management, the portfolio manager deals with a fixed portfolio
designed to match the current market scenario.
3. Discretionary Portfolio management services: In Discretionary portfolio management services, an individual authorizes a
portfolio manager to take care of his financial needs on his behalf. The individual issues money to the portfolio manager
who in turn takes care of all his investment needs, paper work, documentation, filing and so on. In discretionary portfolio
management, the portfolio manager has full rights to take decisions on his client’s behalf.
4. Non-Discretionary Portfolio management services: In non discretionary portfolio management services, the portfolio
manager can merely advise the client what is good and bad for him but the client reserves full right to take his own
decisions.
Who is a Portfolio Manager ?
◦ An individual who understands the client’s financial needs and designs a suitable
investment plan as per his income and risk taking abilities is called a portfolio
manager. A portfolio manager is one who invests on behalf of the client.
◦ A portfolio manager counsels the clients and advises him the best possible
investment plan which would guarantee maximum returns to the individual.
◦ A portfolio manager must understand the client’s financial goals and objectives
and offer a tailor made investment solution to him. No two clients can have the
same financial needs.
STOCK VALUATION
What is stock valuation?
◦ the placing of an appropriate money value upon a firm's STOCKS of raw materials, WORK IN PROGRESS
and finished GOODS. Where INFLATION causes the price of several different batches of finished-
goods stock bought during a trading period to differ, the firm has the problems of deciding:
A. what money value to place upon the period-end physical stock in the BALANCE SHEET;
B. what cost to attach to the units sold in the PROFIT-AND-LOSS ACCOUNT.
◦ Various formulas can be used for this purpose. For example, the first-in, first-
out (FIFO) method assumes that goods are withdrawn from stock in the order in which they are received, so the cost of goods
sold is based on the cost of the oldest goods in stock, while the value of stock is based on the prices of the most recent purchas
es. By contrast, the last-in, first-
out (LIFO) method assumes that the most recently purchased goods are (theoretically) withdrawn from stock first, so the cost
of goods sold is based on the costs of the most recent purchases, while the value of stock is based on the oldest goods availabl
e. See INFLATION ACCOUNTING.
CASH FLOW
VALUATION
What is cash flow valuation?
◦ Valuation based on what the company can generate in the future is the most common method of valuation. As in the analysis
of investment/financing projects, these methodologies analyze the financial flows that the company can generate in the future
and which can be made available to the holders of the capital of the company (equity and debt). There are quite large array of
methodologies within cash-flow base methods; some of the most widespread are:
◦ Dividend Discounted Model – DDM.
◦ Discounted Cash Flow – DCF:
◦ Free Cash Flow to the Firm – FCFF.
◦ Free Cash Flow to Equity – FCFE.