FINANCE AS A CAREERFIRDAUS KHAN

ASSOC. PROFESSOR – ICBM-SCHOOL OF BUSINESS EXCELLENCE

WHAT IS FINANCE?

• The science that describes the management, creation and study of money, banking, credit, investments, assets and liabilities.

• It is the language of business and consists of Financial Systems and Financial Instruments

FINANCE DECISIONS• INVESTMENT / LONG-TERM ASSET - MIX DEC.• FINANCING / CAPITAL – MIX DEC.• DIVIDEND / PROFIT ALLOCATION DEC.• LIQUIDITY / SHORT – TERM ASSET - MIX DEC.

INVESTMENT DECISION

• Evaluate & measure profitability of new investment (expected risk & return)

• Recommit funds when asset becomes less productive or non-profitable

• Set a std. or hurdle rate against which the expected return of new investment can be compared. (required rate of return or opportunity cost of capital)

FINANCING DECISION

• Determine proportion of debt and equity (Capital Structure). Objective is to maximize shareholder’s return.

• Consider other factors such as control, flexibility, loan covenants, legal aspects, etc.

• Decide when, where and how to acquire funds to meet the firm’s needs.

DIVIDEND DECISION• Decide whether to distribute all the profit or

none or a certain percentage to shareholders and retain the rest.

• Decision will be based on -Preference of shareholders-Investment opportunities available• Consider issues such as dividend stability,

bonus shares to existing shareholders, cash dividends, etc.

LIQUIDITY DECISION

• Estimate current asset needs and make appropriate arrangements for funds

• Consider profitability – liquidity trade-off• Make efficient use of current assets

FINANCE AS A CAREER

FINANCE FUNCTION IN A FIRM

TREASURER• Capital expenditure• Financial planning &

fund raising• Cash management• Credit management• Foreign-exchange mgt.• Pension fund mgt.

CONTROLLER• Tax management• Corporate account mgt.• Cost-accounting• Financial Accounting

VICE-PRESIDENT FINANCE / CFO

MAJOR FIELDS OF FINANCE

• CORPORATE FINANCE• INVESTMENT FINANCE• PERSONAL FINANCE / WEALTH MGT.• PUBLIC FINANCE• BFSI

MEDIAN SALARY

WHAT SORT OF EMPLOYERS ARE THERE FOR FINANCE JOBS?

INVESTMENT BANK• An investment bank assists governments,

corporations and even individuals in raising assets by underwriting or acting as an agent of the client for issuing securities.

• It even assists companies in undertaking Mergers and Acquisitions

• It offers ancillary services like market-making, foreign exchange, trading of derivatives, commodities, equity, etc.

INVESTMENT BANKS

• ABN-AMRO• ANZ BANK• GOLDMAN SACHS• CITIBANK• DEUTSCHE BANK• JP MORGAN• DSP MERRILL LYNCH • MORGAN STANLEY

MONEY / WEALTH MGT. FIRMS

• Specialize in managing investments for individuals or institutions.

• Very large firms might manage a wide variety of asset classes while smaller boutique firms might focus on a particular market niche, such as small – cap stocks or high-yield bonds.

• Common roles at a money management firm include portfolio manager or security analyst.

MONEY MGT. / WEALTH MGT FIRMS

• BANK OF AMERICA• MORGAN STANLEY• WELLS FARGO• GOLDMAN SACHS]• FIDELITY• CREDIT SUISSE• BARCLAYS WEALTH

HEDGE FUNDS• They are similar to money management firms

in that they also manage money for institutions and wealthy individuals.

• However, they are often known for taking more risk and are focused upon providing very high returns.

• Common roles at hedge funds include portfolio manager or security analyst.

HEDGE FUNDS

• JP MORGAN ASSET MGT.• BALCKROCK ADVISORS• D E SHAW & CO.• CANYON PARTNERS• INDIA DEEP VALUE FUND• FAIR VALUE CAPITAL

PRIVATE EQUITY FUNDS• Usually manage money for institutions & wealthy individuals. • While hedge funds and money management firms usually

buy and sell public securities, private equity firms usually purchase entire corporations.

• When a private equity firm purchases a public co. it "takes it private," which gives the industry its name. Eventually the private equity firm seeks to either resell the companies they own after improving its performance or to take them public again in order to make a profit.

• Most employees at private equity firms are investment bankers & their functions can include analyzing potential purchases, negotiating deals, raising financing, or attempting to improve portfolio companies' operations and profitability.

PRIVATE EQUITY FIRMS

• IDFC – PRIVATE EQUITY• NEW SILK ROUTE• CHRYS-CAPITAL• INCOFIN• ICICI VENTURES• UTI VENTURES• JM FINANCIAL• KOTAK PRIVATE EQUITY GROUP

REAL ESTATE FIRMS

• Real estate firms attempt to either develop new real estate projects or purchase existing projects in an effort to better manage them and increase the returns.

• Common finance jobs at a real estate firm include financing specialist, analyst or deal manager.

REAL ESTATE FIRMS

• DLF LTD.• JAYPEE INFRATECH LTD.• DB REALTY• INDIABULLS REAL ESTATE• DUFF & PHELPS• CUSHMAN & WAKEFIELD

VENTURE CAPITAL FIRMS • Financial capital is provided to early-stage,

high-growth potential, start-up companies. • VC earns money by owning equity in the

companies it invests in, which usually have a novel technology or business model, usually in high technology industries, such as biotech / IT applications / software.

• Through an IPO or trade sale, VC exits the company.

• Venture capital is a type of private equity.

VENTURE CAPITAL FIRMS

• CATAMARAN VENTURES• CANBANK VENTURE FUNDS• INVENTUS CAPITAL• SEQUOIA CAPITAL• INTEL CAPITAL• HELION VENTURE PARTNERS• ACCEL PARTNERS• KHOSLA VENTURES

BFSI – BANKING, FINANCIAL SERVICES AND INSURANCE

• Banking includes core banking, retail / private / corporate / investment banking

• Financial Services may include stock-broking, payment gateways, mutual funds, credit rating, etc.

• Insurance includes Life and non Life insurance

CFO ROADMAP

COMPANIES FOR PLACEMENTS• Ernst & Young• Thomson Reuters• Factset• Crisil• CARE• ICRA• Wells Fargo• Invesco• JP Morgan Chase• Wipro

• Bercadia• Cognizant• ADP• Genpact• Accenture• BroadRidge• Capital IQ• Capgemini• Deloitte• Banks – HSBC, HDFC,

ICICI, Kotak, etc.

WISH YOU A SUCCESSFUL CAREER & I HOPE TO SOON SAY…

BEST OF LUCK!