DEFINITION OF FINANCIAL MANAGEMENT
Financial management is an integral part of overall management. It is concerned with the
duties of the financial managers in the business firm.
The term financial management has been defined by Solomon, “It is concerned with
the efficient use of an important economic resource namely, capital funds”.
The most popular and acceptable definition of financial management as given by S.C.
Kuchal is that “Financial Management deals with procurement of funds and their effective
utilization in the business”.
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Financial management is an integral part of overall management. It is concerned with the
duties of the financial managers in the business firm.
The term financial management has been defined by Solomon, “It is concerned with
the efficient use of an important economic resource namely, capital funds”.
The most popular and acceptable definition of financial management as given by S.C.
Kuchal is that “Financial Management deals with procurement of funds and their effective
utilization in the business”.
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SCOPE OF FINANCIAL MANAGEMENT
Financial management is one of the important parts of overall management, which is directly
related with various functional departments like personnel, marketing and production.
Financial management covers wide area with multidimensional approaches. The following
are the important scope of financial management.
1. Financial Management and Economics
Economic concepts like micro and macroeconomics are directly applied with the
financial management approaches. Investment decisions, micro and macro
environmental factors are closely associated with the functions of financial manager.
Financial management also uses the economic equations like money value discount
factor, economic order quantity etc. Financial economics is one of the emerging
area, which provides immense opportunities to finance, and economical areas.
2. Financial Management and Accounting
Accounting records includes the financial information of the business concern.
Hence, we can easily understand the relationship between the financial management
and accounting. In the olden periods, both financial management and accounting
are treated as a same discipline and then it has been merged as Management
Accounting because this part is very much helpful to finance manager to take
decisions. But nowaday’s financial management and accounting discipline are
separate and interrelated.
3. Financial Management or Mathematics
Modern approaches of the financial management applied large number of
mathematical and statistical tools and techniques. They are also called as
econometrics. Economic order quantity, discount factor, time value of money,
present value of money, cost of capital, capital structure theories, dividend theories,
ratio analysis and working capital analysis are used as mathematical and statistical
tools and techniques in the field of financial management.
4. Financial Management and Production Management
Production management is the operational part of the business concern, which
helps to multiple the money into profit. Profit of the concern depends upon the
production performance. Production performance needs finance, because
production department requires raw material, machinery, wages, operating expenses
etc. These expenditures are decided and estimated by the financial department
and the finance manager allocates the appropriate finance to production department.
The financial manager must be aware of the operational process and finance
required for each process of production activities.
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Financial management is one of the important parts of overall management, which is directly
related with various functional departments like personnel, marketing and production.
Financial management covers wide area with multidimensional approaches. The following
are the important scope of financial management.
1. Financial Management and Economics
Economic concepts like micro and macroeconomics are directly applied with the
financial management approaches. Investment decisions, micro and macro
environmental factors are closely associated with the functions of financial manager.
Financial management also uses the economic equations like money value discount
factor, economic order quantity etc. Financial economics is one of the emerging
area, which provides immense opportunities to finance, and economical areas.
2. Financial Management and Accounting
Accounting records includes the financial information of the business concern.
Hence, we can easily understand the relationship between the financial management
and accounting. In the olden periods, both financial management and accounting
are treated as a same discipline and then it has been merged as Management
Accounting because this part is very much helpful to finance manager to take
decisions. But nowaday’s financial management and accounting discipline are
separate and interrelated.
3. Financial Management or Mathematics
Modern approaches of the financial management applied large number of
mathematical and statistical tools and techniques. They are also called as
econometrics. Economic order quantity, discount factor, time value of money,
present value of money, cost of capital, capital structure theories, dividend theories,
ratio analysis and working capital analysis are used as mathematical and statistical
tools and techniques in the field of financial management.
4. Financial Management and Production Management
Production management is the operational part of the business concern, which
helps to multiple the money into profit. Profit of the concern depends upon the
production performance. Production performance needs finance, because
production department requires raw material, machinery, wages, operating expenses
etc. These expenditures are decided and estimated by the financial department
and the finance manager allocates the appropriate finance to production department.
The financial manager must be aware of the operational process and finance
required for each process of production activities.
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OBJECTIVES OF FINANCIAL MANAGEMENT
Effective procurement and efficient use of finance lead to proper utilization of the finance
by the business concern. It is the essential part of the financial manager. Hence, the financial
manager must determine the basic objectives of the financial management. Objectives of
Financial Management may be broadly divided into two parts such as:
1. Profit maximization
2. Wealth maximization.
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Effective procurement and efficient use of finance lead to proper utilization of the finance
by the business concern. It is the essential part of the financial manager. Hence, the financial
manager must determine the basic objectives of the financial management. Objectives of
Financial Management may be broadly divided into two parts such as:
1. Profit maximization
2. Wealth maximization.
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The International Labour Organization (ILO)
The International Labour Organization (ILO) is a United Nations agency whose mandate is to advance social justice and promote decent work by setting international labour standards.
The unique tripartite structure of the ILO gives an equal voice to workers, employers and governments to ensure that the views of the social partners are closely reflected in labour standards and in shaping policies and programmes.
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The main aims of the ILO are to promote rights at work, encourage decent employment opportunities, enhance social protection and strengthen dialogue on work-related issues.
The International Labour Organization (ILO) is a United Nations agency whose mandate is to advance social justice and promote decent work by setting international labour standards.
The unique tripartite structure of the ILO gives an equal voice to workers, employers and governments to ensure that the views of the social partners are closely reflected in labour standards and in shaping policies and programmes.
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The main aims of the ILO are to promote rights at work, encourage decent employment opportunities, enhance social protection and strengthen dialogue on work-related issues.
India is a founding member of the ILO and has been a permanent member of the ILO Governing Body since 1922. The ILO Office in
India was established in 1928 and is, at present, composed of two teams: The Decent Work Team (DWT) provides technical support
to India and other south Asian countries and the Country Office (CO) is responsible for ILO activities in India.
India was established in 1928 and is, at present, composed of two teams: The Decent Work Team (DWT) provides technical support
to India and other south Asian countries and the Country Office (CO) is responsible for ILO activities in India.
Current areas of work of ILO
The ILO’s work in India is carried out within the framework of the Decent
Work Country Programme (DWCP). India’s first DWCP covered the period
2007-12 and achieved satisfactory results, especially with regard to
promoting livelihoods, eliminating child labour, reducing the vulnerability
of bonded labourers, empowering women and informal economy workers,
and developing employment generation agendas.
In response to the fast changing socio-economic environment in India
(notably with its emergence as a middle-income country) and in line with
the country’s 12th Five Year Plan, the DWCP for 2013-2017 has set the
following four priorities:
• Promotion of international labour standards and fundamental principles and rights at work.
• Promotion of policies for job-rich and inclusive growth, especially for women, youth and disadvantaged groups.
• Building a national social protection floor and strengthening workplace compliance.
• Enhancing labour administration, tripartism and social dialogue at national and state levels.
The ILO’s work in India is carried out within the framework of the Decent
Work Country Programme (DWCP). India’s first DWCP covered the period
2007-12 and achieved satisfactory results, especially with regard to
promoting livelihoods, eliminating child labour, reducing the vulnerability
of bonded labourers, empowering women and informal economy workers,
and developing employment generation agendas.
In response to the fast changing socio-economic environment in India
(notably with its emergence as a middle-income country) and in line with
the country’s 12th Five Year Plan, the DWCP for 2013-2017 has set the
following four priorities:
• Promotion of international labour standards and fundamental principles and rights at work.
• Promotion of policies for job-rich and inclusive growth, especially for women, youth and disadvantaged groups.
• Building a national social protection floor and strengthening workplace compliance.
• Enhancing labour administration, tripartism and social dialogue at national and state levels.
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👆for kind information of students' belonging to bcom/mcom/ca/cs/cwa degree in educational qualification.
Above details mentioned in pic to be filled in cse form 2020.
If u find any difficulty ,pls contact @pragyaias
Above details mentioned in pic to be filled in cse form 2020.
If u find any difficulty ,pls contact @pragyaias
👆🏻Benefits of students for filling CSE Prelims 2020
Various forms of Orientation:-
Realistic Orientation
These people are attracted to occupations that involve physical activities requiring skill, strength, and cooperation. Examples include forestry, farming, and agriculture.
Investigative Orientation
Investigative people are attracted to careers that involve cognitive activities (thinking, organizing, and understanding) rather than affecting activities (feeling, acting or interpersonal and emotional tasks). Examples include biologist, chemist and college professor.
Social Orientation
These people are attracted to careers that involve interpersonal rather than intellectual or physical activities. Examples include clinical psychology, foreign Service and social work.
Conventional Orientation
A conventional orientation favors careers that involve structured, rule-regulated activities as well as careers in which it is expected that the employee subordinates his or her personal needs to those of the organization. Examples include accountants and bankers.
Enterprising Orientation
Verbal activities aimed at influencing others characterize enterprising personalities. Examples include managers, lawyers, and public relations executives.
Artistic Orientation
People here are attracted to careers that involve self-expression, artistic creation, expression of emotions and individualistic activities. Examples include artists, advertising executives, and musicians.
Most people have more than one occupational orientation (they might be realistic, social and investigative) and Holland believes that the more similar or compatible these orientations are, the less internal conflict or indecision a person will face in making a career choice.
Realistic Orientation
These people are attracted to occupations that involve physical activities requiring skill, strength, and cooperation. Examples include forestry, farming, and agriculture.
Investigative Orientation
Investigative people are attracted to careers that involve cognitive activities (thinking, organizing, and understanding) rather than affecting activities (feeling, acting or interpersonal and emotional tasks). Examples include biologist, chemist and college professor.
Social Orientation
These people are attracted to careers that involve interpersonal rather than intellectual or physical activities. Examples include clinical psychology, foreign Service and social work.
Conventional Orientation
A conventional orientation favors careers that involve structured, rule-regulated activities as well as careers in which it is expected that the employee subordinates his or her personal needs to those of the organization. Examples include accountants and bankers.
Enterprising Orientation
Verbal activities aimed at influencing others characterize enterprising personalities. Examples include managers, lawyers, and public relations executives.
Artistic Orientation
People here are attracted to careers that involve self-expression, artistic creation, expression of emotions and individualistic activities. Examples include artists, advertising executives, and musicians.
Most people have more than one occupational orientation (they might be realistic, social and investigative) and Holland believes that the more similar or compatible these orientations are, the less internal conflict or indecision a person will face in making a career choice.
Reforms in Capital Market of India
The major reforms undertaken in capital market of India includes:-
1. Establishment of SEBI : The Securities and Exchange Board of India (SEBI) was established in 1988. It got a legal status in 1992. SEBI was primarily set up to regulate the activities of the merchant banks, to control the operations of mutual funds, to work as a promoter of the stock exchange activities and to act as a regulatory authority of new issue activities of companies. The SEBI was set up with the fundamental objective, "to protect the interest of investors in securities market and for matters connected therewith or incidental thereto."
* The main functions of SEBI are:-
* To regulate the business of the stock market and other securities market.
* To promote and regulate the self regulatory organizations.
* To prohibit fraudulent and unfair trade practices in securities market.
* To promote awareness among investors and training of intermediaries about safety of market.
* To prohibit insider trading in securities market.
* To regulate huge acquisition of shares and takeover of companies.
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2. Establishment of Creditors Rating Agencies : Three creditors rating agencies viz. The Credit Rating Information Services of India Limited (CRISIL - 1988), the Investment Information and Credit Rating Agency of India Limited (ICRA - 1991) and Credit Analysis and Research Limited (CARE) were set up in order to assess the financial health of different financial institutions and agencies related to the stock market activities. It is a guide for the investors also in evaluating the risk of their investments.
3. Increasing of Merchant Banking Activities : Many Indian and foreign commercial banks have set up their merchant banking divisions in the last few years. These divisions provide financial services such as underwriting facilities, issue organising, consultancy services, etc. It has proved as a helping hand to factors related to the capital market.
4. Candid Performance of Indian Economy : In the last few years, Indian economy is growing at a good speed. It has attracted a huge inflow of Foreign Institutional Investments (FII). The massive entry of FIIs in the Indian capital market has given good appreciation for the Indian investors in recent times. Similarly many new companies are emerging on the horizon of the Indian capital market to raise capital for their expansions.
5. Rising Electronic Transactions : Due to technological development in the last few years. The physical transaction with more paper work is reduced. Now paperless transactions are increasing at a rapid rate. It saves money, time and energy of investors. Thus it has made investing safer and hassle free encouraging more people to join the capital market.
6. Growing Mutual Fund Industry : The growing of mutual funds in India has certainly helped the capital market to grow. Public sector banks, foreign banks, financial institutions and joint mutual funds between the Indian and foreign firms have launched many new funds. A big diversification in terms of schemes, maturity, etc. has taken place in mutual funds in India. It has given a wide choice for the common investors to enter the capital market.
7. Growing Stock Exchanges : The numbers of various Stock Exchanges in India are increasing. Initially the BSE was the main exchange, but now after the setting up of the NSE and the OTCEI, stock exchanges have spread across the country. Recently a new Inter-connected Stock Exchange of India has joined the existing stock exchanges.
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8. Investor's Protection : Under the purview of the SEBI the Central Government of India has set up the Investors Education and Protection Fund (IEPF) in 2001. It works in educating and guiding investors. It tries to protect the interest of the small investors from frauds and malpractices in the capital market.
The major reforms undertaken in capital market of India includes:-
1. Establishment of SEBI : The Securities and Exchange Board of India (SEBI) was established in 1988. It got a legal status in 1992. SEBI was primarily set up to regulate the activities of the merchant banks, to control the operations of mutual funds, to work as a promoter of the stock exchange activities and to act as a regulatory authority of new issue activities of companies. The SEBI was set up with the fundamental objective, "to protect the interest of investors in securities market and for matters connected therewith or incidental thereto."
* The main functions of SEBI are:-
* To regulate the business of the stock market and other securities market.
* To promote and regulate the self regulatory organizations.
* To prohibit fraudulent and unfair trade practices in securities market.
* To promote awareness among investors and training of intermediaries about safety of market.
* To prohibit insider trading in securities market.
* To regulate huge acquisition of shares and takeover of companies.
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2. Establishment of Creditors Rating Agencies : Three creditors rating agencies viz. The Credit Rating Information Services of India Limited (CRISIL - 1988), the Investment Information and Credit Rating Agency of India Limited (ICRA - 1991) and Credit Analysis and Research Limited (CARE) were set up in order to assess the financial health of different financial institutions and agencies related to the stock market activities. It is a guide for the investors also in evaluating the risk of their investments.
3. Increasing of Merchant Banking Activities : Many Indian and foreign commercial banks have set up their merchant banking divisions in the last few years. These divisions provide financial services such as underwriting facilities, issue organising, consultancy services, etc. It has proved as a helping hand to factors related to the capital market.
4. Candid Performance of Indian Economy : In the last few years, Indian economy is growing at a good speed. It has attracted a huge inflow of Foreign Institutional Investments (FII). The massive entry of FIIs in the Indian capital market has given good appreciation for the Indian investors in recent times. Similarly many new companies are emerging on the horizon of the Indian capital market to raise capital for their expansions.
5. Rising Electronic Transactions : Due to technological development in the last few years. The physical transaction with more paper work is reduced. Now paperless transactions are increasing at a rapid rate. It saves money, time and energy of investors. Thus it has made investing safer and hassle free encouraging more people to join the capital market.
6. Growing Mutual Fund Industry : The growing of mutual funds in India has certainly helped the capital market to grow. Public sector banks, foreign banks, financial institutions and joint mutual funds between the Indian and foreign firms have launched many new funds. A big diversification in terms of schemes, maturity, etc. has taken place in mutual funds in India. It has given a wide choice for the common investors to enter the capital market.
7. Growing Stock Exchanges : The numbers of various Stock Exchanges in India are increasing. Initially the BSE was the main exchange, but now after the setting up of the NSE and the OTCEI, stock exchanges have spread across the country. Recently a new Inter-connected Stock Exchange of India has joined the existing stock exchanges.
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8. Investor's Protection : Under the purview of the SEBI the Central Government of India has set up the Investors Education and Protection Fund (IEPF) in 2001. It works in educating and guiding investors. It tries to protect the interest of the small investors from frauds and malpractices in the capital market.