unit 1 financial management-gfsu-mba-forensic accounting

CA Vikram S. Mathur (GFSU - MBA - Forensic Accounting lecture series)

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Financial Management & Homeland SecurityLecture Series Unit No. 1:Topic: Financial Management

(Course: MBA – Forensic Accounting, GFSU)

CA Vikram Shankar MathurBA (Eco) Hons, FCA, DISA (ICAI), FAFP (ICAI)

Contact No: +91-9998090111 or +91-8460890111.

Email: [email protected] or [email protected]

Website: http://vsmathur.co.in and http://ahmedabadfca.com

FB Profile(s): http://fb.me/vsmathurco or http://fb.me/vsm.ahmfca

FB Page: http://fb.me/fcavsmathur.faculty

Fri, 29th July, 2016


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• Am a qualified Chartered Accountant (CA) since last 26 years (1990-2016) in the city of Ahmedabad. Initial 5 years in the Industry (1990-1995), thereafter (1995-2016) in private practice in the name and style of M/s Vikram S. Mathur & Co., Chartered Accountants.

• Qualified as a CA in May, 1989. Became Associate Member of the Institute of Chartered Accountants of India (ICAI) in August, 1989. Certificate of Practice awarded in April, 1990. Became Fellow Chartered Accountant (FCA) in 2002.

• Completed Articled Training of 2 years with M/s Lovelock & Lewes, Chartered Accountants, Mumbai-Delhi from September 1984 to August 1986. Did 1 year’s Industrial Training with American Express Bank Limited, New Delhi from September 1986-August 1987. Continued thereafter as Summer Trainee till February 1988.

• From March 1988 worked for7 months with M/s S. B. Billimoria & Co, Chartered Accountants, New Delhi as Senior Audit Assistant– Handled the Documentation Audit independently of the Housing Development Finance Corporation (HDFC), Lucknow Branch, UP during that time. Received Best Audit File Award.

• While in the Industry, worked with companies like Ingersoll-Rand (I) Ltd, Crompton Greaves Limited, Cadila Laboratories Ltd and Gujarat Telephone Cables Ltd.

• Notable companies thereafter are (a) Cip Machineries Pvt Ltd (Financial Controller from 2002-2010) and Gokul Refoils Limited (Deputy GM, 2007-2008).

• Successfully completed the Diploma in Informations Systems Audit (DISA) from the ICAI in April, 2006.

• Successfully completed the certification in Forensic Accounting and Fraud Prevention (FAFP) course from ICAI in April’2016.

• Successfully completed the certification in Concurrent Audit course from ICAI in June’2016.



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rity Financial Management – Syllabus

(Unit 1)• An Overview of Financial Management • Financial Markets and Institution • Financial Statements• Cash Flow and Taxation • Analysis of Financial Statements • Accounting and Audit



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(FM)• Some definitions of Financial Management (FM).• Meaning of FM.• Relationship between FM and other supportive disciplines.• Why do you need FM, where can you use it and when would you

require it?• What are the historical approaches to FM?• What are the functions of FM?• What are the objectives of FM?• Summary of our learning in this overview.



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Some Definition(s) of FM (1/2)“financial management is concerned with the management

decisions that result in the acquisition and financing of the long term and short term of a firm”

-Phillippatuo“financial management is the application of the planning and

control functions to the finance functions, financial management involves the application of general management principles to a particular financial operation”

-Howard and UptonFri, 29th July, 2016


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Some definition(s) of FM (2/2)• According to Solomon, “Financial management is concerned with the efficient use of an

important economic resource, namely, capital funds.”• According to J. L. Massie, “Financial management is the operational activity of a business that

is responsible for obtaining and effectively utilizing the funds necessary for efficient operation.”

• According to Weston & Brigham, “Financial management is an area of financial decision making harmonizing individual motives & enterprise goals.”

• According to Howard & Upton, “Financial management is the application of the planning & control functions of the finance function.”

• According to J. F. Bradley, “Financial management is the area of business management devoted to the judicious use of capital & careful selection of sources of capital in order to enable a spending unit to move in the direction of reaching its goals.”

• (Source: http://www.mbaknol.com/category/financial-management/)



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Meaning of FMCapital

Budgeting Decisions

Capital Structure Decisions

Dividend Decisions

Working Capital

Decisions


MARKET VALUE OF THE FIRM

Return

Risk


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disciplines


Shareholder wealth maximization

Support

Support

Resulting in

Financial Decision Areas

1.Investment analysis2.Working Capital Management3.Sources and cost of funds4.Determination of capital structure5.Dividend Policy6.Analysis of risk and returns

Primary Disciplines1.Accounting2.Macroeconomics3.Microeconomics

Other Related Disciplines1.Marketing 2.Production3.Quantitative methods


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(Important)• WHY? : There are basically two approaches to DM (a) Traditional,

and (b) Modern• WHERE? : Is required in any/most organisation(s), especially a

manufacturing/processing organisation, it can become a critical component of the decision-making process of the top management

• WHEN? : The usual practice is that the financial management concepts, rules and regulations are formed at the time of initiating the organisation (say, for example, incorporating a company) itself.



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Historical Approaches to FM• TRADITIONAL APPROACH: Separate branch of academic study – Corporation

Finance – Only “procurement” of funds dealt with – assumed firms need finance only on episodic events like merger, liquidation, re-organisation, etc. – evolved during the 1920’s and 1930’s – Weaknesses (a) Treatment of various topics and emphasis attached; (b) Basic conceptual and analytical framework of definition and scope of finance function.

• MODERN APPROACH: FM viewed in broad sense and provides a conceptual and analytical framework for financial decision-making – main concern, includes traditional approach, emphasis more on efficient and wise allocation of funds for various uses. Principal contents can be summarized as (i) How large an enterprise should be and how fast should it grow? (ii) In what form assets should be held? And (iii) What should be the composition of it’s liabilities?



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Functions of Financial Management



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Modern Approach to FM• Effective Funds Utilization• Concentration only on:

• Investment Decision• Financing Decision• Dividend Policy Decision

• Other Important considerations• Capital Budgeting• Working Capital Management• Risk Management• Profitability Management



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Investment Decision•Relates to the selection of “Assets” in which funds will be invested by the firm – broadly falling into two categories:

a) Long-Term Assets: yield a return over a period of time in future; ( leads to Capital Budgeting).

b) Short-Term Assets: in the normal course of business are convertible into cash (or it’s kind) usually within a year; (leads to Working Capital Management).



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Financing Decision• Capital Structure: Also known as “leverage” or “financing-

mix” – refers to the proportion of debt (fixed interest sources of financing) and equity/own capital (variable dividend securities / sources of finance). Theories of Capital Structure discuss the Risk (of Interest) vs Return (to stakeholders / shareholders).

• Composition of Capital: An OPTIMUM capital structure would be one that properly balances debt with equity in proportion to the needs of the organization.



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Dividend Policy Decision• Should be analysed in relation to the financing decision of a

firm.• Two alternatives are available in dealing with the profits of a

firm:a) They can be paid to stakeholders in the form of dividend; orb) The can be retained as accumulated earnings of the firm.

• Dividend-Payout Ratio – what proportion of net profits should be paid out to the stakeholders.

• Factors determining dividend policy of a firm in practice.Fri, 29th July, 2016


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Budgeting



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Management



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Management



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Management



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Financial Management & Homeland Security

Thank you for your patience!!

CA Vikram Shankar Mathur+91-9998090111 / +91-8460890111

[email protected] [email protected] Page: http://fb.me/fcavsmathur.faculty


unit 1 financial management-gfsu-mba-forensic accounting

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