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Financial Management: Dr. Anjali Motwani

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23 views

Financial Management: Dr. Anjali Motwani

Uploaded by

dhhdhd dhdhdh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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FINANCIAL

MANAGEMENT
DR. ANJALI MOTWANI
MEANING
• Financial management is mainly concerned
with the proper management of funds. The
finance manager must see that funds are
procured in such a manner that risk, cost and
control considerations are properly balanced
and there is optimum utilization of funds. 
DEFINITION
• According to Soloman , “Financial
management is concerned with the efficient
use of economic resources”.
• According to Phillippatus , “Financial
management is concerned with management
decision that result in acquisition and
financing of long-term and short-term credits
for the firm”
OBJECTIVES
The BASIC OBJECTIVES are :

 Profit Maximization
 Maintenance of liquid assets
 Wealth Maximization
Other Objectives
• Ensuring a fair return to shareholders
• Building up reserves for growth and expansion
• Ensuring maximum operational efficiency by
efficient and effective utilization of finances.
• Ensuring financial discipline in the
organization 
FIXED
CAPITAL
MEANING
• Fixed capital refers to the investment made by the
business for acquiring long term assets. These long term
assets don’t directly produce anything, but help the
company with long-term benefits.
For example
• Land
• Building
• Machinery and equipment
• Intangible assets like Patents and Copyrights are also
classified as fixed capital investments.
DEFINITION
• According to Wheeler “Fixed capital is invested
in the fixed or long-run assets. The amount of
fixed capital need, therefore, varies directly
with the amount of fixed assets owned or used
by a business.”
• According to Hoagland “Fixed capital is
comparatively easily defined to include land,
buildings, machinery and other assets having a
relatively permanent existence.”
DETERMINANTS /FACTORS AFFECTING
FIXED CAPITAL
1. Nature of Business LARGE : MORE

LARGE :MORE
2. Scale of Operation
LABOUR: LESS
3. Technique of Production CAPITAL: MORE

MORE
4. Technology Up-gradation
MORE
5. Growth Prospects
MORE LESS
6. Diversification
7. Availability of Finance and Leasing Facility
8. Level of Collaboration/Joint
LESS
Ventures
WORKING
CAPITAL
MEANING
 Working capital typically means the firm’s
holding of current or short-term assets such as
cash, receivables, inventory and marketable
securities.
 These items are also referred to as circulating
capital.
R&D

PROCURE
SERVICES
MENT

FINANCE

PRODUC
SALES
TION

MARKETI
NG
PRODUCTION
1. PROCUREMENT
2. RAW MATERIALS INTO MACHINE (WC)
3. SEMI FINSHED GOODS (WC)
4. PROCEDURE (WC)
5. FINISHED GOODS (WC)
6. PACKAGING (WC)
7. BRANDING/LABELING (WC)
DEFINITION
• Working Capital refers to that part of the firm’s
capital, which is required for financing short-term or
current assets such a cash marketable securities,
debtors and inventories.
• Funds thus, invested in current assets keep revolving
fast and are constantly converted into cash and this
cash flow out again in exchange for other current
assets.
• Working Capital is also known as revolving or
circulating capital or short-term capital.
DETERMINANTS /FACTORS AFFECTING
WORKING CAPITAL
LABOUR :MORE
1. Nature or Character of business CAPITAL:LESS

2. Size of the business and scale of operation LARGE : MORE

3. Production policy MORE

4. Length of production cycle LONGER :MORE


SEASONAL : LESS
5. Seasonal variation
QUICK : LESS
6. Working capital cycle
HIGH : LESS
7. Rate of stock turnover
LONGER :LESS
8. Credit policy
9. Business cycles
GROWING : MORE
10. Rate of growth of business
INC : MORE
11. Price level changes 

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