1. 16BA624/FINANCIAL MANAGEMENT
Functions of Financial Management
P.Krishnaveni
16BA624/FINANCIAL MANAGEMENT

2. Interrelation of financial decision
Investment Decision
Financing Decision
Dividend Decision
P.Krishnaveni
16BA624/FINANCIAL MANAGEMENT

3. 16BA624/FINANCIAL MANAGEMENT
Finance Functions
Investment or Long Term Asset Mix Decision
Financing or Capital Mix Decision
Dividend or Profit Allocation Decision
Liquidity or Short Term Asset Mix Decision
P.Krishnaveni
16BA624/FINANCIAL MANAGEMENT

4. 16BA624/FINANCIAL MANAGEMENT
Investment Decision
Working Capital Mgt.
W.C = CA-CL
2:1
CA>CL unless the firm have to pay interest to the surplus amount and it increases the total cost.
Capital Budgeting
Non-Discounting Methods- Pay Back period, ARR
Discounting Methods- NPV, IRR PI
P.Krishnaveni
16BA624/FINANCIAL MANAGEMENT

5. 16BA624/FINANCIAL MANAGEMENT
Financing Decision
Optimum capital structure- reduces risk and cost
Cost of capital- minimum return expected by the investor.
P.Krishnaveni
16BA624/FINANCIAL MANAGEMENT

6. 16BA624/FINANCIAL MANAGEMENT
Dividend Decision
Issue Dividend
How much?
Entire amt-100% D/P ratio, Retention ratio=0%
A part of amt.
Not Issue
D/P ratio= 0%
Retention ratio=100%
P.Krishnaveni
16BA624/FINANCIAL MANAGEMENT