INSTITUTE : University School of Business DEPARTMENT : Commerce Bachelor of Commerce Financial Management CMT-254 Finance Function DISCOVER . LEARN . EMPOWER Finance Function Course Outcome CO Number Title Level CO-1 The students with comprehend different areas of financial management related to financial planning, organizing and controlling Understanding CO-2 The students will be able to facilitate decision making relating to long term investments Understanding CO-3 The students will have an outlook of the working capital and dividend policy of an organization Understanding Source: https://d1whtlypfis84e.cloudfront.net/guides/wpcontent/uploads/2018/11/06102600/FM1.jpg 2 Definition of Finance Function According to R.C.Osborn : The Finance function is the process of acquiring and utilizing funds of a business. Financing consists of raising , providing , managing of all the money , capital or funds of any kind to be used in connection with the business . 3 Finance function has classified into two. • Long-term financial function (decision) • Short term financial function(decision) 4 Long-term finance function 1. Financing Decisions – These decisions basically deal with acquiring funds & deployment of funds 2. Investment Decisions – These decisions are related with selection of assets . Assets are classified into two types – Fixed Assets - Current Assets • The decisions regarding Fixed Assets are known as capital budgeting decisions • The decisions regarding current assets come under Working Capital Management 5 Capital budgeting decision involves of allocation of capital of funds to long term assets that would yield benefit in the future The evaluation of prospective profitability of new investment The measurements a cut off rate against which the prospective return of new investment could be compared 6 3 Dividend Policy Decisions – Whatever profit company earns , the owners are entitled to receive them. These decisions are related with distribution of dividends i e to decide how much profit we should distribute as dividend & how much should be retained in business 7 • Short-term finance function • Liquidity Decision Investment in current assets affects the firm’s profitability and liquidity. Current assets management that affect firms liquidity is yet another important finance function. Current asset should be managed efficiently for safe the firm against the risk of illiquidity 8 Concepts of finance function in relation to business 1) Provide funds needed by the enterprise in terms that are most favorable the light of its objectives. 2) Concerned with everything that take place in the context of a business directly or indirectly as mean in cash. 3) Concerned with procurement of funds and its effective utilization in the business. 9 Functions of Financial Management • • • • • • • Estimation of capital requirements Determination of capital composition Choice of sources of funds Investment of funds Disposal of surplus Management of cash Financial controls Financial Management and Other areas of management • • • • • Marketing-Finance Production-Finance Top Management-Finance Economics – Finance Accounting – Finance Summary • Finance functions • Other areas of management and financial management 12 Assessment Pattern 13 APPLICATIONS The student will be able to: • To have understanding about important financial concepts • The students with comprehend different areas of financial management related to financial planning, organizing and controlling 14 REFERENCES Books • Chandra, Prasanna “Financial Management”, Tata McGraw Hill, New Delhi • Khan M.Y. & Jain P.K, Financial Mangement, Tata McGraw Hill, New Delhi Reference Material • Maheshwari S.N. “Principles of Financial Management”, Sultan Chand & Sons, New Delhi • Kulkarni P.V. “Financial Management”, Himalaya Publishing House, Mumbai Pandey I.M “Financial Management”, Vikas Publishing House, New Delhi 15 THANK YOU For queries Email: pooja.sharma@cumail.in
