Financial Management
Part A
There are three main areas of decision making for the corporate financial manager:
Investment: The choice of projects or assets in which to invest company funds. Competing alternatives have to be assessed using a number of techniques. This type of decision will also be of concern to the private individual when making choices about which shares to buy.
Finance: How these investments should be financed. It is necessary to evaluate the possible sources, external and internal, and the effect they will have on the capital structure of the company.
Dividend: Whether corporate earnings should be retained or paid out in the form of dividends, and if the latter, when the dividends should be paid.
Otherwise, we will cover the risk management as well as the management of a company's assets and liabilities in its working capital cycle. Assets must be managed effectively so that they generate income and profits, and so that funds are available to pay creditors and take up opportunities for investment.
In summary ,therefore, we can say that financial management involves the following areas as investment decisions, funding decisions, including the capital structure of the company, dividend decisions, risk management.
This implies that dividend payments and gains made when selling a shareholding are better indicators of shareholder wealth than profits. However, if the dividend payments are not consistent over a period of time, this will not increase confidence in the company shares, and their market price will reflect the variability of dividend payments. When the shareholder sells their investment, they may lose money. The prime objective of the company therefore needs to be adjusted slightly to the maximization of long-term shareholder wealth.
This will be indicated by maximisation of dividends over time and reflected in the market value of the ordinary shares.
If the share price reflects shareholder wealth, then we can say that any financial decision
There are three main areas of decision making for the corporate financial manager:
Investment: The choice of projects or assets in which to invest company funds. Competing alternatives have to be assessed using a number of techniques. This type of decision will also be of concern to the private individual when making choices about which shares to buy.
Finance: How these investments should be financed. It is necessary to evaluate the possible sources, external and internal, and the effect they will have on the capital structure of the company.
Dividend: Whether corporate earnings should be retained or paid out in the form of dividends, and if the latter, when the dividends should be paid.
Otherwise, we will cover the risk management as well as the management of a company's assets and liabilities in its working capital cycle. Assets must be managed effectively so that they generate income and profits, and so that funds are available to pay creditors and take up opportunities for investment.
In summary ,therefore, we can say that financial management involves the following areas as investment decisions, funding decisions, including the capital structure of the company, dividend decisions, risk management.
This implies that dividend payments and gains made when selling a shareholding are better indicators of shareholder wealth than profits. However, if the dividend payments are not consistent over a period of time, this will not increase confidence in the company shares, and their market price will reflect the variability of dividend payments. When the shareholder sells their investment, they may lose money. The prime objective of the company therefore needs to be adjusted slightly to the maximization of long-term shareholder wealth.
This will be indicated by maximisation of dividends over time and reflected in the market value of the ordinary shares.
If the share price reflects shareholder wealth, then we can say that any financial decision