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(PDF) General concepts of Financial Management

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Added on  2021-02-20

(PDF) General concepts of Financial Management

   Added on 2021-02-20

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FINANCIAL MANAGEMENTASSESSMENT
(PDF) General concepts of Financial Management_1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................................3SOLUTION 2.................................................................................................................................................3Long term finance: Equity finance..........................................................................................................3SOLUTION 3.................................................................................................................................................7A) Calculation of investment appraisal techniques.................................................................................7B) The benefits and limitation of investment appraisal techniques......................................................10CONCLUSION.............................................................................................................................................13REFERENCES ..............................................................................................................................................14
(PDF) General concepts of Financial Management_2
INTRODUCTIONFinancial management are broad principles and rules of management. It deals with the propermanagement of the organisation's finance and ensures effective and efficient functioning ofbusiness. It is defines as analysing investments and money in the business which is used indecision making. Accounting department is responsible for managing the finance of thecompany. Present report is based on financial management assessment where long term financesuch as equities are explained. Further report also includes investment appraisal techniques suchas payback period, accounting rate of return, net present value and internal rate of return.Benefits and limitations of each technique is also mentioned in the report. SOLUTION 2Long term finance: Equity finance(b) Long Term FinanceS.No£1.8£1.60£1.40(I)Number ofshares to beissued180000/1.818000/1.6180000/1.4100000 Shares412500 Shares428750 Shares(ii)Theoreticalex- right priceMarket value beforeright issue =1.9*300001.9*3000001.9*300000570000570000570000theoretical exright price =market valuebefore right +funds raisedby right / totaloutstandingshares180000+570000/400000570000+180000/412500570000+180000/4287501.8751.821.75(iii) Expectedearning pershare = profitProfit = 700000*20%Profit = 700000*20%Profit = 700000*20%
(PDF) General concepts of Financial Management_3
after tax/totaloutstandingshares140000140000140000EPS =140000/400000140000/412500140000/4287500.350.340.32(iv) Form ofissue for eachright priceDirect issueDirect issueInsured issue(v) Evaluationcompany will not faceextra redundancy in thisissue as EPS is highthis option will also beacceptedbyshareholders as theirEPS is not changing atvery high rateall shares might not beaccepted as eps hasgone down
(PDF) General concepts of Financial Management_4

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