Promissory Note – Meaning, Types, Features and More
A promissory note is a financial instrument that comes into play at
Menu
Financial Management
Financial management is a technique for managing funds effectively whether it is a corporation or an individual. Financial management has different implications for corporations and individuals. For corporations, it is meant for effective procurement and utilization of funds. On the other hand, for individuals, it is meant to manage its earnings in order to have good financial health and stability in future.
The word ‘Financial Management’ is a combination of two crucial words in business environment viz. ‘Finance’ and ‘Management’. ‘Finance’ means funds and therefore, financial management refers to the management of funds. It is a technique of planning, sourcing and investing funds in most effective manner.
Broadly speaking, financial management is nothing but the planning of expenditures and incomes to ensure financial stability. Financial stability implies availability of sufficient money at the time of requirement. It is a key concern to be addressed for many entities. Entities may include corporations (for sourcing and investments of funds), individual (planning for future expenditures and incomes), government (utilizing the public money in most efficient manner), non-profit organizations (planning of funds required for activities to be undertaken) etc.
Financial management can be broadly classified into two levels –
Corporate Financial Managemen
Corporate finance deals with the financial decisions taken by a company to achieve its financial and other goals. Financial decisions involve procurement of funds and utilization of funds. The expected outcome of activity of ‘Procurement of Funds’ is not only limited to the acquisition of required funds for business but it should be ensured that it is acquired at the lowest possible costs (interest or dividends expectations etc), risks (repayment of funds creating bankruptcy risk) and dilution in control (dilution of shareholding and thereby control over the company).
[adsense]
On the other hand, ‘Utilization of Funds’ entails employment of funds at the right place to ensure highest returns possible which are at least more than the cost of funds. It also needs to ensure that there are no idle funds to incur cost unnecessarily.
Personal Financial Management
Personal finance deals with monetary decisions required at the individual level. It involves evaluating requirements of money in terms of ‘quantum’ and ‘time’ and then planning for earnings, expending, saving, budgeting and investing of money to achieve financial stability and health. It does not mean earning more money but it means utilizing the earned money to satisfy all the requirements in best possible manner. The ultimate aim of personal financial management is to ensure the balance between earnings and incomes. The main components of personal finance are insurance, tax planning, loans like home loans and personal loans, retirement planning, social security, banking etc.
Category: Financial Management
Asset Management Ratios: Types, Interpretations, Advantages, Disadvantages and More
Asset Management Ratios: Meaning A group of ratios that shows how efficiently
Keiretsu vs Chaebol – Differences, Advantages and More
Keiretsu and Chaebol, both are the terms basically used to refer to
Nash Equilibrium – Meaning, Examples, Applications, and More
Nash equilibrium is a very crucial concept of game theory. It helps to determine an optimal solution in a non-cooperative game where all players do not have any incentive to deviate from their initial move. In other words, this is the situation where everyone in the game is putting in their best, assuming and understanding clearly what the other players would be supposed to be doing.
Cooperative Game Theory
Cooperative Game theory (CGT), is a model of Game theory, wherein the participants (players or a set of players called coalitions) though in competition, will work with a cooperative behavior of an external force. It is also referred to as a Coalitional game. The coalition behavior of the participants is also ……..
Non Cooperative Game Theory
Non-cooperative Game theory is a model of Game theory, based on the assumption that individual players do what is profitable to them. So, the participants compete mainly because there is no external force (‘contracts’).
Price Floor and Ceiling – Meaning, Example, and More
One of the economic laws that market prices result from the product’s
Friedman Doctrine – Meaning, Importance, Criticism and More
Friedman Doctrine or the Shareholder Theory relates to business ethics. As per
Cycle Inventory – Meaning, Importance and How to Calculate
Cycle Inventory or Cycle stock or working stock or lot size stock
Take or Pay Contract – Meaning, Benefits, Example and More
What is Take or Pay Contract? A take or pay contract is
Corporate Structure
Meaning of Corporate StructureThe corporate structure is the basic structure of an
Related Posts
A non-deliverable forward contract is a financial derivative used to hedge foreign exchange risk. Some of the other foreign exchange risk hedging instruments are currency
The straddle is a trading strategy that involves the use of options. This strategy calls for taking a neutral stand on the market. And thus,
Straddle and Strangle are both options strategies that help an investor make a profit. These strategies are suggested/recommended when the trader and the investor are
Recent Comments