1 Course- CO/EJ/IF/CE/ME/AE Subject- Management Chapter- 05 FINANCIAL MANAGEMENT

Financial management

Finance Effective procurement of funds Effective utilization of fund Provision of money at the it is wanted Collection and maintenance of capital

Financial Management  Raising of funds  Effective utilization  Mgt of assets

Objective of Financial Mgt  Profit maximization  Wealth maximization  Maintenance of liquid assets  To raise funds

Functions  Allocation of funds  Investments of fund  Mgt of cash  Mgt of credit  Financial control

Types of capital  A) Fixed Capital Block capital Required in starting phase of industry Permanent asset

…  B) Working Capital Current capital or revolving capital Circulating capital Reqd to need day-to-day needs

Types of Working Capital  a) Gross W.C. Current Assets  b) Net W.C. Total current Assets-total current liability

…  c) Permanent W.C. obvious expenditure e.g. Payment, salary, wages, electric bills and telephone bills  d) Temporary W.C. seasonal W.C. e.g. bonus, sudden charges, accidental charges

Sources of finance A) Internal Sources B) External Sources a) Long term b) Medium term c) Short term d) Financial institutions

Budget  Budget is the financial plan of the next year  Financial requirements of various dept.

Types of budget A) Based on flexibility Fixed budget Variable budget B) Based on mechanism Appropriation budgeting Performance budgeting Zero base budgeting

… C) Based on functions Production budget Sales budget Cash budget Labor budget Material budget Financial budget

Types of account A) Profit n loss a/c  Step form  Account form B) Balance sheet  Account form  Report form

Introduction to taxes  1. Direct Tax Flat tax Income tax Excise tax Transfer tax Payroll tax Inheritance tax Estate tax

…  2. Indirect Tax Consumption tax Sales tax Wealth tax fuel tax Value added tax Dividend tax

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