Roadshows in Investment Banking
Roadshows are an important part of the investment banking process. This is because this is the stage where all the stakeholders i.e., the company issuing shares, the investment bankers, as well as potential investors, are all present at the same place. Roadshows are generally undertaken by private companies that are looking to list on a […]
How Money Market Impacts Other Markets?
In the previous articles, we have learned that the money market is a very important market in our financial system. However, it is also important to note that the money market can have an impact on almost all other financial markets. Central banks all over the world try to control the monetary policy of their […]
Common Restrictive Covenants in Fixed Income Securities
It is important for investors investing in fixed-income securities to be aware of restrictive covenants. This is because restrictive covenants can have a huge negative impact on the valuation as well as the liquidity of the debt. Bond indentures are detailed legal documents that can have many covenants which prove to be restrictive. However, there […]
Fin Tech: The Future of Banking
It’s hard to read a newspaper and not see any Fintech company being mentioned. The Fintech revolution has taken center stage with investors queuing up to get some action. If you were to look around for the most recent funding provided by Silicon Valley to startups, you would notice that Fintech is the unequivocal favorite! […]
Bielard, Biel and Kaiser (BBK) Model
The main criticism of the Barnewall model was that it only classified investors into two types. This created an oversimplification. Practitioners of behavioral finance wanted the classification to be more accurate and inclusive. This is the reason why they started creating another psychographic model. This model is called the Bielard, Biel, and Kaiser model, i.e., […]
Financial activities of a firm is one of the most important and complex activities of a firm. Therefore in order to take care of these activities a financial manager performs all the requisite financial activities.
A financial manger is a person who takes care of all the important financial functions of an organization. The person in charge should maintain a far sightedness in order to ensure that the funds are utilized in the most efficient manner.
His/Her actions directly affect the Profitability, growth and goodwill of the firm.
Following are the main functions of a Financial Manager:
In order to meet the obligation of the business it is important to have enough cash and liquidity. A firm can raise funds by the way of equity and debt.
It is the responsibility of a financial manager to decide the ratio between debt and equity. It is important to maintain a good balance between equity and debt.
Once the funds are raised through different channels the next important function is to allocate the funds.
The funds should be allocated in such a manner that they are optimally used. In order to allocate funds in the best possible manner the following point must be considered
These financial decisions directly and indirectly influence other managerial activities. Hence formation of a good asset mix and proper allocation of funds is one of the most important activity
Profit earning is one of the prime functions of any business organization.
Profit earning is important for survival and sustenance of any organization. Profit planning refers to proper usage of the profit generated by the firm.
Profit arises due to many factors such as pricing, industry competition, state of the economy, mechanism of demand and supply, cost and output.
A healthy mix of variable and fixed factors of production can lead to an increase in the profitability of the firm.
Fixed costs are incurred by the use of fixed factors of production such as land and machinery. In order to maintain a tandem it is important to continuously value the depreciation cost of fixed cost of production.
An opportunity cost must be calculated in order to replace those factors of production which has gone thrown wear and tear. If this is not noted then these fixed cost can cause huge fluctuations in profit.
Shares of a company are traded on stock exchange and there is a continuous sale and purchase of securities. Hence a clear understanding of capital market is an important function of a financial manager.
When securities are traded on stock market there involves a huge amount of risk involved. Therefore a financial manger understands and calculates the risk involved in this trading of shares and debentures.
Its on the discretion of a financial manager as to how to distribute the profits. Many investors do not like the firm to distribute the profits amongst share holders as dividend instead invest in the business itself to enhance growth.
The practices of a financial manager directly impact the operation in capital market.
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