Dividend Decision – Introduction

  According to the Institute of Chartered Accountant of India, dividend is defined as “a distribution to shareholders out of profits or reserves available for this purpose”. Dividend refers to that portion of profits after tax which is distributed among the owners/shareholders of the firm. It is the return that shareholders get on their investment. It may be in form […]

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Time Value of Money

Basic rule of Time value of Money  “Money received today is worth more than the same money received in the future” Time Value of Money – Shareholders of a business make sacrifices by investing funds into the business now, to reap its benefits in the future, either as dividend along the years or increase in share prices in the future. […]

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Profit Maximization Vs Shareholders Wealth Maximization

The two main Goals/Objectives of Financial Management are – Profit Maximization [Traditional] Shareholders wealth Maximization [Modern] Profit Maximization It is a traditional and narrow approach which aims at maximization of returns by the firm in terms of monetary resources and increasing the earning per share of the shareholders. Under such approach maximization of profit is the sole objective of a […]

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Various Decisions under Financial Management

The various decisions under financial management can be categorized under the following four heads – Investment Decision Finance Decision Dividend Decision Liquidity Decision Various Decisions under Financial Management are –   (1) Investment Decision: The investment decisions are concerned with identification of investment opportunities and efficient allocation and utilization of funds to maximize a company`s profitability in the long run. […]

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Introduction to Financial Management – Part 2

Go to Part 1 Goals/Objectives of Financial Management – Profit Maximization [Traditional] Shareholders wealth Maximization [Modern] Profit Maximization – It is a traditional and narrow approach which aims at maximization of returns by the firm in terms of monetary resources and increasing the earning per share of the shareholders. Under such approach maximization of profit is the sole objective of […]

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Financial Management Introduction – Part 1

Finance is the art and science of managing money. The discipline of finance is concerned with the procurement, allocation, application and disbursement of money by a business entity in order to maximize its return on invested capital. It includes financial services and financial instruments. The subject of finance is divided into two broad categories: Public Finance Private Finance While public […]

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Capital Budgeting & Various techniques of Capital Budgeting

According to G.C. Lyrich “Capital budgeting is concerned with the allocation of firm`s financial resources among the available opportunities.  The consideration of investment opportunities involves the comparison of the expected future streams of earnings from a project with the immediate and subsequent streams of earnings from a project, with the immediate and subsequent streams of expenditure.”  It is simply long […]

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