Month: February 2021

INTRODUCTION Given the capital budgeting decision of a firm, it has to decide the way in which the capital projects will be financed. Every time the firm makes an investment decision, it is at the same time making a financing Read More …

INTRODUCTION In Chapter 12, we discussed the effect of leverage on the shareholders’ earnings and risk. Under favourable economic conditions, the earnings per share increase with financial leverage. But leverage also increases the financial risk of shareholders. As a result, Read More …

INTRODUCTION Dividend decision of firm is yet another crucial area of financial management. The important aspect of dividend policy is to determine the amount of earnings to be distributed to shareholders and the amount to be retained in the firm. Read More …

INTRODUCTION So far we have discussed the management of fixed assets and long-term financing. In this part, issues relating to the management of current assets will be discussed. The management of current assets is similar to that of fixed assets Read More …

INTRODUCTION Cash is the important current asset for the operations of the business. It is the basic input needed to keep the business running on a continuous basis; it is also the ultimate output expected to be realized by selling Read More …

INTRODUCTION Trade credit happens when a firm sells its products or services on credit and does not receive cash immediately. It is an essential marketing tool, acting as a bridge for the movement of goods through the production and distribution Read More …

INTRODUCTION Inventories constitute the most significant part of current assets for a large majority of companies in India. On an average, inventories are approximately 60 per cent of current assets in public limited companies in India. Because of the large Read More …

INTRODUCTION External funds available for a period of one year or less are called short-term finance. In India, short-term funds are used to finance working capital. Two most significant short-term sources of finance for working capital are: trade credit and Read More …

INTRODUCTION A firm should be managed effectively and efficiently. This implies that the firm should be able to achieve its objectives by minimizing the use of resources. Thus managing implies coordination and control of the efforts of the firm for Read More …

INTRODUCTION The management, creditors, investors and others use the information contained in the statements of changes in financial position (funds and cash flow statements) to form judgment about the operating performance and financial position of the firm. Users of financial Read More …