FINANCIAL MANAGEMENT {Dictionary or Glossary}

1. Financial Management:- Accruing and planning and allocation of financial resources

for a firm to enhance the value of an asset which will ultimately lead to the enhancing after value
of the firm.

2. Financial Accounting:- F.A. is the process of recording, classifying and summarizing

and interpretation of financial data.

3. Fund Flow Statement:- A Fund flow statement depicts or shows the uses and sources of
fund. Fund means total resource of a company.

4. Cash Flow Statement:- C.F.S. shows the cash inflow and outflow position of a company.

5. Fund Flow v/s Cash Flow:-

(a):- Fund flow takes into account all the resources of a company whether exchanged for
cash or other assets.

(a):- Cash flow takes into account only the cash flow item.

(b):- Fund flow is prepared on accrual basis.

(b):- Cash flow is prepared on actual cash basis.

6. Liquidity:- It is the firm ability to meet cash transaction during a year.

7. Leverage:- Leverage basically means to amount of borrowed funds in compare\son to

owners equity.

8. Trading on equity:- It involves raising of borrowed funds keeping equity as a base.

9. Owners equity:- It represents all the proportion of amount which should go to the ordinary
shareholders. It includes equity share capital+reserves and surplus+premium+profit&loss a/c.

10. Borrowed funds:- borrowed funds implies the outside liability on which mainly the
interest is paid and the principle amount is repaid at the time of maturity.

11. Financial Market:- Financial market is an arrangement where the surplus funds are
exchanged. Financial market deals with the trading of financial instrument or services. It consists
of capital market or money market.
12. Financial instruments:- F.I. are the tools provided to the organization for raising fund
from a financial market.

13. Financial Services:- Financial services are the offerings which are provided to the
investors.

14. Capital market:- It is a market for long term securities. Eg.- Equity shares, Pref. Shares,
Debentures.

15. Money market:- It is a market for short term trading. Eg.- Treasury bill, Commercial
paper, Commercial bill.

16. Equity Shares:- it is also known as ordinary shares which represents the right of the
share holders over a proportion of capital. It is a risky share.

17. Preference shares:- Pref. Share Capital is a hybrid security which has the characteristics
of ordinary shares and debenture or long term liabilities.

18. Debentures:- Debentures are the long term promissory note issued in the market to raise
capital.

19. Bonds:- Bonds are similar to debentures but they are issued by public limited companies or
highly rated companies.

20. Loans:- loans are the personal borrowing from different financial institutions like banks or
other bodies.

21. Mortgage:- is the process of obtaining loans through keeping an underline security.

22. Forward:- A forward is a contract to sale a particular security for a fix price in a future
date.

23. Option:- option provides the right to a particular party(that is a buyer or seller) to sell or
buy a particular security in a future date at a certain price.

24. Call Option:- right to purchase a particular security at a future period for a fix price.

25. Put:- sell a security for a fix price.

26. Warrants:- are the certificate issued to the current share holders to purchase a particular
security in a future date. It depends on the share holders whether to make use of warrants or note.

27. Capital Budgeting:- is the process of making long term capital expenditure decision.
28. Cost of Capital:- represents the cost of raising funds through various sources. It includes
cost of equity, cost of debt, cost of pref. shares and cost of retained earning.

29. Retained Earning:- is the portion of net profit which is not declared as a dividend and
has been kept as a reserves.

30. Earning Per Share:- is the amount to be paid to the share holder.
net profit after tax

no. of shares(outstanding).

31. Dividend per Share:- the actual amount paid to the share holders after the payment of
tax and the retention amount is knoiwn a s dividend per share.

Net profit after tax and after dividend

No. of common shares (outstanding)

32. Intrim Dividend:- It is declared in between the financial year.

33. Proposed Dividend:- is actually the dividend expected by the management to be paid to
the shareholders in the coming financial year.

34. Final Dividend:- is paid at the end of the financial year. Which can very with proposed
dividend.

35. Arbitreasures:- they are the person involved in selling and buying of securities for
making gain from a market.

36. Treasury Bill:- are the govt, securities which are issued at a discount and redemmed at a
face value.

37. Primary Market:- It is the market for the first time issued of security.

38. Secondary Market:- is the market where the trading of existing securities takes places.

39. Demat:- It is the process of converting physical identity into electronic form.

40. Derivatives:- Derivative instrument they are derived from the underline asset or main
assets having a future value. It is basically a contract between two or more person to buy or sale
a particular instrument in the future period.

41. Insider Trading:- is the trading done by the people who has access to all the confidential
data related to a particular security.
42. Amalagamation:- is a merger between two companies while keeping their identity as a
individual.

43. Acquisition:- means accuring the rights in the assets of the other company.