1. Finance Made Easy Session-1 Introduction to Finance – By Rahul Jain Introduction to Finance – By Rahul Jain “Fun with Finance will help in making us Fearless”

2. I. M. Pandey, Financial Management, 9th ed., Vikas. 2 Apna Sapna Money-Money

3. Welcome to the course which Will improve your confidence Will help in understanding finance in an easy way Will make learning finance simple and fun Will challenge you and make you think out of the box. Will help in executing your business idea

4. 4 COURSE GUIDELINES Introduction and Basics of Financial Management Sources of funds Capital budgeting & structure Marginal cost analysis Ratio analysis Budgeting & Financial Planning

5. 5 Aim of the Module Identify different sources of raising funds for an enterprise and methods of deploying them understand how capital structure is planned and executed To Know about the viability of project.

6. 6 Our Strategy for achieving these Objectives? Concepts, Cases and Class Discussion Punctuality, Participation and Preparation Judgment challenge Learning to communicate ideas Learning from each other Learning through discovery

7. 7 What is “Good” Participation? Quality, not quantity. Analyzing and discussing course material. Questioning the analysis of others. Questioning the analysis of others. Seeking clarification. Summarizing / synthesizing. Adherence to guidelines for professional conduct.

8. 8 Learning objectives: What is financial management? Difference between financial management and financial accounting The goals of financial management !

13.  We all love money, but Are we passionate about what we are doing to earn money ??  Lets unlearn, go beyond our fears  Fun with Finance will help in making us Fearless

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15. 15 Business Activities ProductionMarketingFinance

16. 16 Meaning Financial management is a systematic process that provides the necessary financial information to help a business produce and distribute goods and services in a way that will maximize wealth. It also provides feedback about how well the organization is doing. It also provides feedback about how well the organization is doing.

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18. Manage Income & Expenses 18

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20. Having fun with resources ~ Optimizing 20

21. Finance Functions Finance Functions Bollywood: To the next level 21

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23. Investing- Creating Win-Win Opportunity 23

24. 24 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

25. 25 Financial accounting and Financial Management Financial accounting gives the financial status of the company to people outside the company. It is recording and reporting the activities and events that lead to cash inflow and outflow. Financial management means efficiently managing the various resources of the company.

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27. Finance Goals 27 All I care is about making profits !

28. 28 Financial Goals Profit maximization (profit after tax) Shareholder’s Wealth Maximization

29. 29 Profit Maximization Maximizing the Rupee Income of Firm –Resources are efficiently utilized –Appropriate measure of firm performance –Serves interest of society also

30. 30 Objections to Profit Maximization It is Vague It Ignores the Timing of Returns It Ignores Risk In new business environment profit maximization is regarded as –Inappropriate and Immoral.

31. 31 Shareholders’ Wealth Maximization Maximizes the cash flow. Accounts for the timing and risk of the expected benefits. Fundamental objective—maximize the market value of the firm’s shares.

32. 32 Risk-return Trade-off Risk and expected return move in tandem; the greater the risk, the greater the expected return. Financial decisions of the firm are guided by the risk-return trade-off. The return and risk relationship: Return = Risk-free rate + Risk premium Risk-free rate is a compensation for time and risk premium for risk.

33. 33 Managers Versus Shareholders’ Goals A company has stakeholders such as employees, debt- holders, consumers, suppliers, government and society. Managers may perceive their role as reconciling conflicting objectives of stakeholders. This stakeholders’ view of managers’ role may compromise with the objective of SWM. Managers may pursue their own personal goals at the cost of shareholders, or may play safe and create satisfactory wealth for shareholders than the maximum. Managers may avoid taking high investment and financing risks that may otherwise be needed to maximize shareholders’ wealth. Such “satisfying” behaviour of managers will frustrate the objective of SWM as a normative guide.

34. 34 Financial Goals and Firm’s Mission and Objectives Firms’ primary objective is maximizing the welfare of owners, but, in operational terms, they focus on the satisfaction of its customers through the production of goods and services needed by them Firms state their vision, mission and values in broad terms Wealth maximization is more appropriately a decision criterion, rather than an objective or a goal. Goals or objectives are missions or basic purposes of a firm’s existence

35. 35 Financial Goals and Firm’s Mission and Objectives The shareholders’ wealth maximization is the second-level criterion ensuring that the decision meets the minimum standard of the economic performance. In the final decision-making, the judgement of management plays the crucial role. The wealth maximization criterion would simply indicate whether an action is economically viable or not.

36. Lets get personal 36

37. Interview Exercise Meet Owner/Manager of an Organization: Find following: 1) About the Organization and its USP. 2) Important financial decisions that his organization is taking. 3) Challenges faced. 4) Sources of Revenues and Top three costs. 5) Future Plans of Expansion. 37

38. Learning Tools Website http://bizwizlearning.com/programs/course_detail/fi nance-made-easy Phone: 9811228852 Email: rahulkjain16@gmail.com Text Book: Financial Management, I.M. Pandey, Vikas Publications Financial Management, I.M. Pandey, Vikas Publications 38

39. Readings Bollywood: To the next level http://www.ft.com/cms/s/0/735cc752-00c4- 11e1-8590- 00144feabdc0.html#axzz3gkoy74Lo http://www.ft.com/cms/s/0/735cc752-00c4- 11e1-8590- 00144feabdc0.html#axzz3gkoy74Lo How Bollywood makes money How Bollywood makes money http://www.rediff.com/money/2006/may/27sp ec1.htm http://www.rediff.com/money/2006/may/27sp ec1.htm 39

40. Zara becomes the first apparel brand in India to cross $100-million sales mark Read more at: http://economictimes.indiatimes.com/articleshow/480116 26.cms?utm_source=contentofinterest&utm_medium=te xt&utm_campaign=cppst http://economictimes.indiatimes.com/articleshow/480116 26.cms?utm_source=contentofinterest&utm_medium=te xt&utm_campaign=cppst http://economictimes.indiatimes.com/industry/cons- products/garments-/-textiles/zara-becomes-the-first- apparel-brand-in-india-to-cross-100-million-sales- mark/articleshow/48011626.cms http://economictimes.indiatimes.com/industry/cons- products/garments-/-textiles/zara-becomes-the-first- apparel-brand-in-india-to-cross-100-million-sales- mark/articleshow/48011626.cms 40

41. Assignment Prepare an individual file having : a) Key learnings of Class-1 b) Summary of any Business News c) Interview Email your work-rahulkjain16@gmail.com Read Chapter 1 of the Book. (I.M. Pandey) 41

42. Download Simulation Go to the link given below:- SimVenture link: https://www.dropbox.com/sh/ngtoz9vwbbpahcm/ AAD6FI3DBbahIY3KHyFIVTKAa https://www.dropbox.com/sh/ngtoz9vwbbpahcm/ AAD6FI3DBbahIY3KHyFIVTKAa Experience taking financial decisions

43. References Pandey, I.M. ( Financial Management) www.freeimages.com 43

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