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CF - UM21MB641B Unit 1 Class 1-Financial Management-Introduction and Objectives

The document provides an overview of corporate finance including defining finance, explaining the meaning and types of finance, defining financial management and its objectives which include profit and wealth maximization as well as other objectives like estimating finance requirements, maintaining proper cash flow, and reducing costs.

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Prajwal
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32 views10 pages

CF - UM21MB641B Unit 1 Class 1-Financial Management-Introduction and Objectives

The document provides an overview of corporate finance including defining finance, explaining the meaning and types of finance, defining financial management and its objectives which include profit and wealth maximization as well as other objectives like estimating finance requirements, maintaining proper cash flow, and reducing costs.

Uploaded by

Prajwal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Corporate Finance

Prof. Krishna Kumar S


Department of Management Studies
UNIT 1- FINANCIAL MANAGEMENT

Unit 1 - Financial Management-


Class-1

Department of Management Studies


CORPORATE FINANCE
Agenda

Meaning Finance
Meaning of Financial Management
Objectives of Financial Management
CORPORATE FINANCE
Meaning of Finance

 Finance is called “The science of money”

 Finance is the process of conversion of accumulated funds to productive


use

 There are three main types of finance:


(1) Personal,
(2) Corporate
(3) Public/Government. 
CORPORATE FINANCE
Meaning of Finance

For any business, it is important that the finance it procures is


invested in a manner that the returns from the investment are
higher than the cost of finance. In a nutshell, financial
management –

• Endeavors to reduce the cost of finance

• Ensures sufficient availability of funds

• Deals with the financial activities like the procurement and utilization of
funds in terms of:

• Planning
• Organizing and
CORPORATE FINANCE
Financial Management- Meaning and Definition

• Meaning:
• Financial management is managerial activity which is concerned with the planning
and controlling of the firm’s financial resources.

• Definitions:
 “Financial Management is an area of financial decision making, harmonizing
individual motives and enterprise goals.” - Weston and Brigham
 “Financial management is the operational activity of a business that is responsible for
obtaining and effectively utilizing the funds necessary for efficient operations.”- Joseph
Massie
 “Financial management is concerned with the efficient use of an important economic
resource, namely capital funds” - Solomon Ezra & J. John Pringle
 Weston and Brighem define financial management “as an area of financial decision
making, harmonizing individual motives and enterprise goal”.
CORPORATE FINANCE
Financial management- Objectives

Objectives: Financial Management’s objective is to maximize the value of firm


and maximize shareholders wealth. This prime objective of Financial
Management is reflected in the EPS (Earning per Share) and the Market Price of
its Shares.

Main Objectives
1. Profit Maximization
Main aim of any kind of economic activity is earning profit. Any business
concern is also functioning mainly for the purpose of earning profit. Profit is
the measuring techniques to understand the business efficiency of the concern.
2. Wealth Maximization
• Wealth maximization (shareholders’ value maximization) is also a main
objective of financial management.
• Earn maximum wealth for the shareholders
• Maximum dividend to the shareholders
CORPORATE FINANCE
Financial management- Objectives

Other Objectives
1. Proper Estimation of Finance requirement

2. Proper Mobilization of Finance

3. Proper Utilization of Finance

4. Maintaining proper Cash Flow

5. Survival of Company

6. Creating Reserves

7. Proper Coordination
CORPORATE FINANCE
Financial management- Objectives

Other Objectives
7. Proper Coordination

8. Creating Goodwill

9. Increase Efficiency

10. Financial Discipline

11. Reduce Cost of Capital

12. Reduce Operating Risk

13. Prepare Capital Structure


THANK YOU

Department of Management Studies

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