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Financial Management: Tybms Sem - 5

This document discusses the evolution and goals of financial management. It describes how financial management has evolved from a traditional focus on capital formation and financing to a more analytical and quantitative modern approach aimed at maximizing shareholder wealth. The key activities of a financial manager are then outlined, including making investment and financing decisions, performing financial analysis and planning, and addressing issues like capital budgeting, capital structure, and working capital management.

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Vinayak Bhardwaj
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77 views

Financial Management: Tybms Sem - 5

This document discusses the evolution and goals of financial management. It describes how financial management has evolved from a traditional focus on capital formation and financing to a more analytical and quantitative modern approach aimed at maximizing shareholder wealth. The key activities of a financial manager are then outlined, including making investment and financing decisions, performing financial analysis and planning, and addressing issues like capital budgeting, capital structure, and working capital management.

Uploaded by

Vinayak Bhardwaj
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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FINANCIAL MANAGEMENT

TYBMS SEM - 5
EVOLUTION OF FINANCIAL
MANAGEMENT
 TRADITIONAL PHASE  MODERN PHASE
 THE FOCUS OF  THE APPROACH HAS
FINANCIAL BECOME MORE
MANAGEMENT WAS ANALYTICAL &
MAINLY ON QUANTITATIVE WITH
FORMATION, THE INFUSION OF
ISSUANCE OF CAPITAL, IDEAS FROM
EXPANSION, MERGER, ECONOMIC THEORY &
REORGANISATION, APPLICATION OF
LIQUIDATION. QUANTITATIVE
METHODS OF
ANALYSIS
CONTINUED..

 THE INSTRUMENTS OF  THE CENTRAL


FINANCING THE CONCERN IS
INSTITUTIONS & CONSIDERED TO BE A
PROCEDURES USED IN RATIONAL MATCHING
CAPITAL MARKETS & OF FUNDS TO THE
LEGAL ASPECTS OF USES SO AS TO
FINANCIAL EVENTS MAXIMISE THE
FORMED THE CORE OF WEALTH OF CURRENT
FINANCIAL SHAREHOLDERS.
MANAGEMENT.
CONTINUED…

 FINANCIAL • TODAY FINANCIAL


MANAGEMENT WAS MANAGEMENT HAS
VIEWED FROM THE BECOME AN INTEGRAL
POINT OF VIEW OF PART OF EVERY
INVESTMENT FINANCE
BANKERS, LENDERS & DEPARTMENT IN ALL
OTHER OUTSIDE ORGANISATIONS.
INTERESTS.
GOAL OF FINANCIAL MANAGEMENT

THE MAIN AIM OF FINANCIAL


MANAGEMENT IS TO MAXIMISE
SHAREHOLDERS WEALTH WHO ARE THE
REAL OWNERS OF THE COMPANY & THEY
DETERMINE THE MANAGEMENTS FINANCIAL
POWER.
THUS THE SHAREHOLDERS SHOULD BE
GURANTEED HIGHER RETURNS .
FINANCIAL DECISIONS IN A FIRM

1. CAPITAL BUDGETING :
IT IS THE PROCESS IN WHICH MANAGERS
CHOOSE TO INVEST THEIR FUNDS INTO
LONG-LIVED (FIXED) ASSETS.CONSIDERABLE
MANAGERIAL TIME , ATTENTION AND ENERGY
IS DEVOTED TO IDENTIFY, EVALUATE AND
IMPLEMENT INVESTMENT PROJECTS.
2. CAPITAL STRUCTURE :
CAPITAL STRUCTURE & DIVIDEND
DECISIONS SHOULD BE GUIDED BY
CONSIDERATIONS OF COST AND
FLEXIBILITY . THE OBJECTIVE SHOULD BE
TO MINIMISE THE COST OF FINANCING
WITHOUT IMPAIRING THE ABILITY OF THE
FIRM TO RAISE FINANCES REQUIRED FOR
VALUE CREATING INVESTMENT PROJECTS.
3. WORKING CAPITAL
MANGEMENT :
IT REFERS TO THE DAY TO DAY
FINANCIAL ACTIVITIES OF THE FIRM THAT
DEAL WITH CURRENT ASSETS AND
CURRENT LIABILITIES .
(BASICALLY SHORT TERM)
ROLE OF THE FINANCIAL
MANAGER
The key challenges for the manager in the
areas specified are as follows :
• Financial structure
• Foreign exchange management
• Treasury operations
• Investor communication
• Management control
• Investment planning .
KEY ACTIVITIES OF
FINANCIAL MANAGER

• Performing financial analysis and planning


• Making investment decisions
• Making financing decisions

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