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FINANCIALFINANCIALMANAGEMENTMANAGEMENT- -II

INTRODUCTIONINTRODUCTION

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NATURE OF FINANCIALNATURE OF FINANCIALMANAGEMENTMANAGEMENT

It is like a common thread running through allIt is like a common thread running through allthe decisions taken by various managersthe decisions taken by various managers

It is like the flowing blood in the human bodyIt is like the flowing blood in the human bodywhich is necessary for lifewhich is necessary for life

It is parameter of measuring strength of theIt is parameter of measuring strength of thebusinessbusiness

It is an important element required forIt is an important element required forestablishment, survival and expansion of theestablishment, survival and expansion of thebusinessbusiness

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IMPORTANCE OF FINANCIALIMPORTANCE OF FINANCIAL

INFORMATIONINFORMATION

In Production and OperationsIn Production and Operations

In MarketingIn MarketingIn PersonnelIn Personnel

In Research & DevelopmentIn Research & Development

For Legal FormalitiesFor Legal Formalities

Policy Decision MakingPolicy Decision Making

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USES OF FINANCIAL DATAUSES OF FINANCIAL DATA

Calculating and controlling cost of productionCalculating and controlling cost of production

Finding liquidity profitability trade off ofFinding liquidity profitability trade off of

businessbusinessManaging working capitalManaging working capital

Decisions related to managing resources ofDecisions related to managing resources of

fundsfundsDesignating various heads of expenditureDesignating various heads of expenditure

Managing overall funds of businessManaging overall funds of business

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W here to invest?W here to invest?

How much to invest?How much to invest?

W hat is the risk and return profile of availableW hat is the risk and return profile of availableoffers?offers?

How much is the profit earned?How much is the profit earned?

How this profit is utilized in the business?How this profit is utilized in the business?

Assessing the value of the business and itsAssessing the value of the business and itsinvestments in side and out side the business.investments in side and out side the business.

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Generation of fundsGeneration of funds

Investment of fundsInvestment of funds(suitable and acceptable cost)(suitable and acceptable cost)

Generating profitsGenerating profits

Utilizing profits productivelyUtilizing profits productively

DistributingDistributing ReinvestingReinvesting

CONTROL ON FINANCECONTROL ON FINANCE

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ROLE OF FINANCE MANAGERROLE OF FINANCE MANAGER

1. Mobilization of funds (Taking Financial decisions)

Sources

of

funds

Heads

of

expenditure

FinanceManager

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2 . DEPLOYMENT OF FUNDS2 . DEPLOYMENT OF FUNDS

D istributing funds

P roductionMaterials

Investment outside the business

Infrastructure D evelopment

Repayment of Loans

Investment in Assets

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3 . Control over the use of funds3 . Control over the use of funds

ThroughThrough continuouscontinuous monitoringmonitoring ofof thetheprojectsprojects wherewhere fundsfunds areare investedinvested withwith thethe

helphelp ofof controlcontrol reportsreports ..

TheseThese reportsreports helpshelps thethe managementmanagement tototaketake timelytimely correctivecorrective actionsactions toto ensureensurethatthat plannedplanned resultsresults areare achievedachieved

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4 . RISK AND RETURN TRADE OFF4 . RISK AND RETURN TRADE OFF

W hileW hile takingtaking decisionsdecisions regardingregardinginvestmentinvestment andand financingfinancing thethe financefinancemanagermanager needsneeds toto ensureensure aboutabout thethebalancebalance betweenbetween riskrisk (interest/(interest/ costcost ofofmoney)money) andand returnreturn (profit(profit earnedearned ))

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INTERFACE OF FINANCE W ITH OTHERINTERFACE OF FINANCE W ITH OTHERFUNCTIONSFUNCTIONS

M arketing M arketing F inanceF inance

P roduction P roduction F inanceF inance

Top M anagement Top M anagement F inanceF inance

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V arious challenges beforeV arious challenges before

corporate financecorporate financeGlobalizationGlobalizationFinance operationsFinance operationsForeign ExchangeForeign ExchangeFinancial StructuringFinancial StructuringMaintaining Share PricesMaintaining Share PricesEnsuring Management ControlEnsuring Management Control

Pressure of Government Policies andPressure of Government Policies andRestrictionsRestrictions

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V arious challenges beforeV arious challenges before

corporate financecorporate financeRegulations and specifications ofRegulations and specifications of

Companies Act.Companies Act.Involvement of SEBIInvolvement of SEBI

Interference of Banks and other FinancialInterference of Banks and other FinancialInstitutionsInstitutions

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Intervening Environmental V ariables in the job ofIntervening Environmental V ariables in the job ofA Finance ManagerA Finance Manager

Forms of Business OrganizationForms of Business OrganizationSole ProprietorshipSole ProprietorshipPartnershipPartnershipCompaniesCompanies

Regulatory Framework (SEBI)Regulatory Framework (SEBI)

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Intervening Environmental V ariables in the job ofIntervening Environmental V ariables in the job ofA Finance ManagerA Finance Manager

Industrial PolicyIndustrial PolicyIndustrial policy resolution 1956Industrial policy resolution 1956

Establishment of the central advisory council andEstablishment of the central advisory council anddevelopment councildevelopment council

Industrial Licensing Policy 197 3Industrial Licensing Policy 197 3

Regulation of Foreign Collaborations and InvestmentsRegulation of Foreign Collaborations and Investments

Foreign Exchange Management Act. (FEMA)Foreign Exchange Management Act. (FEMA)Monopolies and Restrictive Trade Practices Act. (MRTP)Monopolies and Restrictive Trade Practices Act. (MRTP)

Companies Act. 1956Companies Act. 1956

Securities Exchange Board of IndiaSecurities Exchange Board of India