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LOGO FINANCIAL ACCOUNTING DUEL ASPECT CONSISTENCY CONSERVATISM ACCRUAL CONCEPT COST CONCEPT MONETARY CONCEPT SUPERVISE. FUNDS IN SUFFICIENT MANNER. DISBURSEMENT SHOULD BE ACCURATE.

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32 views

Ob Presentation

LOGO FINANCIAL ACCOUNTING DUEL ASPECT CONSISTENCY CONSERVATISM ACCRUAL CONCEPT COST CONCEPT MONETARY CONCEPT SUPERVISE. FUNDS IN SUFFICIENT MANNER. DISBURSEMENT SHOULD BE ACCURATE.

Uploaded by

tanmoy2
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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LOGO

LOGO

FINANCIAL ACCOUNTING
DUEL ASPECT CONSISTENCY
CONSERVATISM ACCRUAL CONCEPT

COST CONCEPT
MONETARY CONCEPT

GOALS OF FINANCIAL MANAGEMENT


PROFIT MAXIMISATION

WEALTH MAXIMISATION

SUPERVISE. FUNDS IN SUFFICIENT MANNER. DISBURSEMENT SHOULD BE ACCURATE. ANALYSIS PLAN & control ECONOMIZE. EFFICIENT ADMINISTER. ALLOWANCES FOR UNCERTAINTIES.

TIME & UNCERTAINTY UNDERSTAND OTHER FUCTIONS. UNDERSTAND VALUES. FINANCIAL MARKET eg; money market, capital market etc.

LOGO

WHAT IS FINANCIAL MARKET

LOGO

WHAT ARE FINANCIAL MARKETS

1. 2. 3. 4.

By Nature of the claim. By Maturity of the claim. By Seasoning of the claim. By Timing of delivery.

Debt instruments, which have a maturity of less than one year at the time of issue, are called MONEY MARKET INSTRUMENTS. These instruments are highly liquid have negligible risk.

Treasury Bills Certificate of Deposits Commercial paper Repos Capital Market

Restructuring of economic system & reforms:Policies related to foreign investment Industrial deregulation Public enterprise reforms Trade liberalization Financial sector reforms

LOGO

FUNDAMENTAL VALUATION-TIME VALUE OF MONEY

Which would you prefer -- `10,000 today or `10,000 in 5 years years? Obviously, `10,000 today today. You already recognize that there is TIME VALUE TO MONEY MONEY!!

 Why is TIME such an important element in your decision? TIME allows you the opportunity to postpone consumption and earn INTEREST. INTEREST

Translation of present value to the future value is termed as compounding

Translation of future value to the present value is termed as discounting




Simple Interest
Interest computed only on the original principal and not on the sum of the principal plus accrued interest. The amount of simple interest remains constant.

 Compound Interest
 Interest which is calculated not only on the initial principal but also the accumulated interest of prior periods. Compound interest differs from simple interest in that simple interest is calculated solely as a percentage of the principal sum.  compound interest is: P = C(1+ r/n)nt Where: P = future value , C = initial deposit r = interest rate, n = # of times per year interest is compounded t = number of years invested

Nominal or market rate of interest rate = real rate of interest + Expected rate of inflation + Risk of premiums to compensate uncertainty.

 Future Value is the value at some future time of a present amount of money, or a series of payments, evaluated at a given interest rate. Future value of single cash flow :
FV = PV(1+k)n Where Pv is present value K is rate of interest N is no of years

The future value of annuity FVAn = PV X (1=k)n-1 k Where FVAn = future value of annuty PV = present value K = rate of interest n = number of years

The timing of the cash flows is critical for determining the Project's value. below the line for cash investments or above the line for returns.

Rs.51 Lakh Year 1 Rs.102 lakh

Rs.51 Lakh Year 2

Rs.61 Lakh Year 3

Year 0

Translating a value to present referred to as discounting requires determining what a future amount or cash flow is worth today Discounting is used in valuation because we often want to determine the value today of future value or cash flows.

Present value = Pv =FV/(1+i)n


Where PV = present value = future value (a value or cash flow sometime in future), i = interest rate per period, and = number of compounding periods. [(1=i)n] is compound factor. Future value is sum of present value and interest .

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