Meaning of finance Finance may be defined as the art or science of management or managing money it includes financial services & financial management.

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Presentation transcript:

Meaning of finance Finance may be defined as the art or science of management or managing money it includes financial services & financial management .

Meaning of finance management It is the process of management applied to finance or it is a maximization of shareholder.

Defination of financial management According to joseph & mass “ it is the operational activity of business that is the responsible for obtaining & effectively utilizing the funds necessary for efficient operation .

Objectives of financial management Profit maximization approach Wealth maximization approach

Advantages of Profit maximization It is rational as well as natural objective It help to face adverse contingency It helps for proper utilization of resource It help for growth & development of organization Maximizing social welfare

Disadvantages of profit maximization It is vague or ambiguity Ignores time value of money Ignores risk factor Dividend policy

Factors effecting wealth maximization Avoid high level risk Pay dividends Maintain growth in sales Maintain the market price of equity shares

Advantages of wealth maximization Exactness or avoiding the ambiguity Time value of money It promotes the economic welfare of the shareholders It helps for achieving the other objectives Payment of regular dividend It is useful in taking investment decisions Quality of benefits

Disadvantages of wealth maximization Govt. restriction Reduce the profit ability Most of the shares are held by few people Firms wealth is not considered Wealth maximization is a prescriptive idea

Scope of financial management Anticipation Acquisition Allocation Appropriation Assessment Estimating financial required Deciding capital structure Selecting the source of finance

Functions of financial management Estimation of capital requirement Determination of capital composition Choice of source of funds Investment of funds Disposal & surplus

Multiple flow & annuity The future value of an annuity is calculated at the end of the period in which the end of the period in which the last annuity payment accurse.

ETHICS OF FINANCIAL MANAGEMENT Conduct Disclosure Compliance Reporting Accountability

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