Download - Basics Finance
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What is the Difference between Finance and
Accounting? Functions of Finance: The finance function relates
to three major decisions which the finance
manager has to take.
1. Investment Decision
2. Financing Decision
3. Dividend Decision
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Working Capital Management
According to one study : Top Indian firms (chemicals and fertilizers, food
producers, information technology, oil and gas, steel, auto parts,
pharmaceuticals, and machinery makers) could have had Rs.5.3 trillion in
cash at their disposal in the last fiscal year (2012-13) if they had efficiently
managed their Working capital cycle.
Capital udgeting Decision
Once projects have been identified, management then begins the financial
process of determining whether or not the project should be pursued. The
three common capital budgeting decision tools are the payback period, netpresent value (NPV) method and the internal rate of return (IRR) method.
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Financing Decision
Under financing decision the financial manager are expected toidentify various sources of finance and determine which sourceis best for the project
While taking this decision, financial management weighs theadvantages and disadvantages of the different sources of finance.
The business can either finance from its shareholder fundswhich can be subdivided into equity share capital, preference
share capital and the accumulated profits.
Borrowings from outsiders include borrowed funds likedebentures and loans from financial institutions.
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Working
CapitalProducts
FB
Domestic
CC
OD
BD
ExportPre & PostShipment
NFB
BG
L/c
Structured
CommercialPaper
Buyer's Credit
Supplier'sCredit
CorporateLoans
Securitization
Factoring
Forfaiting
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Dividend Decision
Under financing decision the financial manager are expected toidentify various sources of finance and determine which sourceis best for the project
While taking this decision, financial management weighs theadvantages and disadvantages of the different sources of finance.
The business can either finance from its shareholder fundswhich can be subdivided into equity share capital, preference
share capital and the accumulated profits.
Borrowings from outsiders include borrowed funds likedebentures and loans from financial institutions.
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Financial Institution
FIs
Banks
Mutual Funds
Non banking
institutions
Insurance &Housing Finance
companies & Microfinance institutions
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Type of Banks
Scheduled
Co-operative
Rural Urban
Commercial
Nationalized BankRegional Rural
bankForeign Bank Private bank
Non-Scheduled
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NBFI
NBFC (Sundaramfinance, LIC housing
finance, TATA finance)
Development FinancialInstitutions (IDBI, SIDBI,
NABARD, SFC, ECGCetc)
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Financial Market
1. Capital Market
2. Money Market
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Capital Market
1. Equity Market
1. Primary market IPO , Private Investment Domestic/
international
2. Secondary market NSE, BSE, Regional Stock Exchanges
3. Derivatives Market- Forward, Future, Options, Swap
2. Debt Market Bond, Government Security
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Money Market
Treasury Bills
Commercial Bills
Certificate of Deposits
Call money market
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Financial Services
Credit rating
Factoring
Merchant Banking Leasing
Hire purchase
Portfolio Management
Underwriting
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