Professional Documents
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Presentation 2
Presentation 2
PRODUCTIO
MARKETING FINANCE
N
EVOLUTION OF FM
Changing role of Financial managers
• Traditional
• Transitional
Wealth Maximization
Maximize value of its shares
Value maximization or net present worth
Maximization
W= V-C
Share Holder Orientation In
India
Dependence on Capital Market
Foreign Exposure
Finance function
Liabilities Assets
Net fixed asset
Equity
Financing investment
Debt Net working capital
dividen
d
Principle of Finance
Provides
initial cash
to finance
Investors The business proposal
-Shareholders
-Lenders
Generates
cash return
Financial Decisions & Risk-Return
trade off
Dividend Return
Working Capital
Emerging Role of Finance Managers in
India
MANAGERS Vs Shareholders
Principal agent relationship
Agency problem
Scope of Financial Management
Financial Management
involves the application of
general management
principles to particular
financial operation
Role of Financial Manager
Formulating objectives
Forecasting and estimating capital requirement
Designing capital structure
Determining suitable sources of finance
Dispersal of ratio
Maintaining proper liquidity
Preserving stakeholders wealth
Risk Return Trade Off
Expected return
Risk Premium
risk