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Financial Management Assignment Sample PDF

   

Added on  2021-02-15

26 Pages2879 Words458 Views
Finance
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Financial ManagementLecture Power pointBy: Mekonnen KumlachewMSc. In Accounting and FinanceDepartment of Accounting and FinanceHaramaya UniversityE-mail: mekuman21@gmail.comAcademic year 2021
Financial Management Assignment Sample PDF_1

Chapter - OneOverview of Financial Management1.1. IntroductionTo start any business we need capital/finance.Capital is the amount of money required to start a business.Themobilizationoffinanceisanimportanttaskforanentrepreneur because;finance isone ofthe significantfactorswhich determine thenature and size of any enterprise.finance is required to acquire various fixed assets and currentassets.This is to be noted that;identification ofsources of finance is criticalas itavoids thefinancial hardships of an enterprise.
Financial Management Assignment Sample PDF_2

1.2. Meaning of FinanceFinance is the study/management/ of money.Finance is defined asthe managementofmoney and includesactivities such as investing,borrowing,lending,budgeting,saving,and forecasting.Finance isthe science ofmanaging financialresourcesi.e.theprocess ofacquiring needed funds and the bestuse ofavailablefinancial sources.Itis basically concerned with the nature,creation,regulation andstudy of money, banking, credit, investments, assets, and liabilitiesthat make up financial systems.Itfocusesonhow theindividuals,businessmen,investors,government and financial institutions deal with money.
Financial Management Assignment Sample PDF_3

1.3.Classification of FinanceFinance is classified into three categories1.Personalfinance:-Thisdealswith the planningand managingpersonalfinancialactivities such as income generation,spending,saving, investing, and protection.2.Public finance:-This deals with the administration/management ofa country’s revenue, expenditures, and debt.3.Business finance:- Business finance is pertaining to the mobilizationand management of funds by various business enterprises (banking,insurances, trade agencies, and manufacturing enterprises).Financial management actually concerned with business finance.The following are the basic forms of business organizations a)Sole proprietorshipb)Partnershipc)Corporation
Financial Management Assignment Sample PDF_4

1.4.Definition of Financial ManagementFinancialManagement is defined as the management of financialresourcesand usesofsuch resourcesto attain thedesiredobjective of a firm (mainly to maximize the Shareholder'swealth).FinancialManagementcomprises“theforecasting,planning,organizing,directing,coordinatingand controlling of allactivitiesrelating to acquisition and application of the financial resources inline with financial objectives.” (Raymond Chambers)Two aspects of financialmanagementare;procurementof fundsand an effective use of these funds to achieve business objectives.Financial resources of a business is obtained from two sources, i.e.resource owned and sacrificed by the firm (internal fund) andresource borrowed and invested (external funds) by the firm.
Financial Management Assignment Sample PDF_5

1.5. Financial Management DecisionsThese are decisions concerning financialmatters ofa businessfirm.Financial decisions are of three types:1.Financing decisions2.Investing decisions3.Dividend decisions1.Financing Decisions:A financialdecision which isconcerned with the amountoffinanceto beraised from internal(shareholdersfund)andexternal (borrowed capital like, bank loans) sources.Theremustbeaproperbalancebetweenvarioussources(optimum capital structure)
Financial Management Assignment Sample PDF_6

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