FINANCIAL MANAGEMENT AND PLANNING

FINANCE:

 A science that describe management of money, money, credit, investment,

banking & asset.

OR

 A study of accusation and investment of cash of the purpose of enhancing

valve and wealth

Differentiate b/w finance and account?

Finance:

 It is a economic activity

 It involved managing the fund

 How to raise the fund it’s allocation in different department (marketing, hr,
production etc,)

Account:

 It is an art of keeping the record of all transaction took place in the business
activities.

FIANCIAL MANAGEMENT:

 It can be defined as the management of finance of an organization in order to

achieve the financial objective of the organization.

The objective of financial management of any in private sector is to

maximized shareholder wealth.

FIANCIAL PLANNING:

 SHORT-TERM (ONLY ONE YEAR)

 LONG-TERM (MORE THAN ONE YEARS)

SHORT-TERM ASSET :( COST –LIMITED)

 CURRENT ASSET

• CASH

• A/C RECIEVABLE

• INVENTORIES

 CURRENT LIABILIES

• A/C PAYABLE

CASH OR ROTATE CYCLE:

Cash

Credit

Cred
it
LONG-TERM ASSET :( COST –UNLIMITED)

FINANCILA MANAGEMENT DECISION:

• INVESTMENT DECISION

• FINANCING DECISION

• DIVIDEND DECISION

1. INVESTMENT DECISION:

Relates to the selection of asset in which fund will be invested by a firm. There are
two types of asset

 SHORT-TERM ASSET (ONLY ONE YEAR)

 LONG-TERM ASSET (MORE THAN ONE YEARS)

SHORT-TERM ASSET (ONLY ONE YEAR):

 Defined as those assets which are normal course of asset are converted to
cash without decreasing in value usually with in a year.

LONG-TERM ASSET (MORE THAN ONE YEAR)

 Which yield a return over a period of time in future

2. FINANCIAL DECISION:
 The financing decision of a firm relates to the choices of proportion of
source to finance that investment requirement .it is also called capital
structure decision.

3. DIVIDEND POLICY DECISION:

There are two alternatives available in dealing with the profit of a firm
either they can be distributed to the share holders in a form of dividend or can
be retained in the business itself. The decision has to which course of action
should be followed depend on dividend policy decision.