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UNIT-1 FINANCE FUNCTIONS
Concept, definitions and nature of financial management; Role of financial strategy in business; Finance functions Investment, financing and dividend policy decisions, Goals of financial management, meaning of time value of money, risk and return. explain full unit with examples?
Concept, definitions and nature of financial management; Role of financial strategy in business; Finance functions Investment, financing and dividend policy decisions, Goals of financial management, meaning of time value of money, risk and return. explain full unit with examples?
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UNIT-1 FINANCE FUNCTIONSConcept, definitions and nature of financial m...
Concept of Financial Management
Financial management involves the planning, organizing, directing, and controlling of financial activities, such as procurement and utilization of funds. It is crucial for businesses to achieve their objectives efficiently.
Role of Financial Strategy in Business
A financial strategy outlines how a company will manage its financial resources to achieve its goals. It aligns financial decisions with business objectives, ensuring sustainability and growth.
Finance Functions
- Investment Decisions: Selecting where to invest resources to generate returns. For example, a company may decide to invest in new technology to enhance production efficiency.
- Financing Decisions: Determining how to raise capital. This could involve issuing shares, taking loans, or reinvesting profits. For instance, a startup might seek venture capital to fund its operations.
- Dividend Policy Decisions: Establishing how much profit to distribute to shareholders versus reinvesting in the business. For example, a mature company might pay higher dividends, while a growing company may retain earnings for expansion.
Goals of Financial Management
The primary goals include:
- Maximizing shareholder wealth.
- Ensuring financial stability and sustainability.
- Achieving an optimal capital structure.
Time Value of Money
The time value of money concept suggests that a sum of money today is worth more than the same amount in the future due to its potential earning capacity. For instance, receiving $100 today is preferable to receiving $100 a year from now.
Risk and Return
Investments carry varying levels of risk and potential returns. Generally, higher risk investments offer the possibility of higher returns. For example, stocks tend to be riskier but can yield greater returns compared to government bonds.
Understanding these fundamental aspects of financial management equips businesses to make informed financial decisions, ultimately leading to better performance and growth.
Financial management involves the planning, organizing, directing, and controlling of financial activities, such as procurement and utilization of funds. It is crucial for businesses to achieve their objectives efficiently.
Role of Financial Strategy in Business
A financial strategy outlines how a company will manage its financial resources to achieve its goals. It aligns financial decisions with business objectives, ensuring sustainability and growth.
Finance Functions
- Investment Decisions: Selecting where to invest resources to generate returns. For example, a company may decide to invest in new technology to enhance production efficiency.
- Financing Decisions: Determining how to raise capital. This could involve issuing shares, taking loans, or reinvesting profits. For instance, a startup might seek venture capital to fund its operations.
- Dividend Policy Decisions: Establishing how much profit to distribute to shareholders versus reinvesting in the business. For example, a mature company might pay higher dividends, while a growing company may retain earnings for expansion.
Goals of Financial Management
The primary goals include:
- Maximizing shareholder wealth.
- Ensuring financial stability and sustainability.
- Achieving an optimal capital structure.
Time Value of Money
The time value of money concept suggests that a sum of money today is worth more than the same amount in the future due to its potential earning capacity. For instance, receiving $100 today is preferable to receiving $100 a year from now.
Risk and Return
Investments carry varying levels of risk and potential returns. Generally, higher risk investments offer the possibility of higher returns. For example, stocks tend to be riskier but can yield greater returns compared to government bonds.
Understanding these fundamental aspects of financial management equips businesses to make informed financial decisions, ultimately leading to better performance and growth.
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UNIT-1 FINANCE FUNCTIONSConcept, definitions and nature of financial management; Role of financial strategy in business; Finance functions Investment, financing and dividend policy decisions, Goals of financial management, meaning of time value of money, risk and return. explain full unit with examples?
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UNIT-1 FINANCE FUNCTIONSConcept, definitions and nature of financial management; Role of financial strategy in business; Finance functions Investment, financing and dividend policy decisions, Goals of financial management, meaning of time value of money, risk and return. explain full unit with examples? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about UNIT-1 FINANCE FUNCTIONSConcept, definitions and nature of financial management; Role of financial strategy in business; Finance functions Investment, financing and dividend policy decisions, Goals of financial management, meaning of time value of money, risk and return. explain full unit with examples? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for UNIT-1 FINANCE FUNCTIONSConcept, definitions and nature of financial management; Role of financial strategy in business; Finance functions Investment, financing and dividend policy decisions, Goals of financial management, meaning of time value of money, risk and return. explain full unit with examples?.
UNIT-1 FINANCE FUNCTIONSConcept, definitions and nature of financial management; Role of financial strategy in business; Finance functions Investment, financing and dividend policy decisions, Goals of financial management, meaning of time value of money, risk and return. explain full unit with examples? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about UNIT-1 FINANCE FUNCTIONSConcept, definitions and nature of financial management; Role of financial strategy in business; Finance functions Investment, financing and dividend policy decisions, Goals of financial management, meaning of time value of money, risk and return. explain full unit with examples? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for UNIT-1 FINANCE FUNCTIONSConcept, definitions and nature of financial management; Role of financial strategy in business; Finance functions Investment, financing and dividend policy decisions, Goals of financial management, meaning of time value of money, risk and return. explain full unit with examples?.
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