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Introduction to Financial Management

Presented By : Dhruv Acharya

From Where The Word “FINANCE” Derived ?

The origin of the word "finance" has a fascinating history.

Aristotle provided a canonical definition of the word over two thousand years ago:

"And statesmen as well ought to know these things; for a state is often as much in want of money and of such devices for obtaining it as a household, or even more so; hence some public men devote themselves

entirely to finance."

From : Aristotle, Politics, Book I .

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Contd…

If we travel back to c. 1200-1300, however, we see that that the word “fine” also had positive definitions as it still does today.

In Latin, French and English, it meant things like “perfected, of highest quality” ; “acme, peak, height” ; “the highest good” and “delicate, intricately skillful.”

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Contd…

It wasn’t until 1527 that the word fine began taking on the modern and more negative definition of “sum of money imposed as penalty for some offense,” and 1559 when assigned the verb meaning “to punish by a fine.”

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Contd….

After c. 1700 the “FINANCE” get its positive definition which is started from ENGLAND .

Than the whole world accept “FINANCE” as a positive definition in “ENGLISH” dictionary.

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Why Study Finance?

Marketing

Budgets, marketing research, marketing financial products

AccountingDual accounting and finance function, preparation of financial

statements.Management

Strategic thinking, job performance and profitabilityPersonal finance

Budgeting, retirement planning, college planning, day-to-day cash flow issues.

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FINANCE CASH

Finance is process of flowing or transfer the cash from one to another bank ,company , customer , consumer etc.

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Similarity of Electronics & Finance

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Contd…

Everybody engage in financial management one way or the other on a daily basis without knowing it- at best, they will call it economizing.

An average housewife will seek alternative ways of getting more value for the money she spends.

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F.M. œ TWhere ,

F.M. = = Financial Management

T = = Time11

Finance Management as Function of Time

TYPES OF FINANCE

1. LONG TERM 2. MEDIUM TERM 3. SHORT TERM

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LONG TERM FINANCE

For a longer period as More than 5 year Known as fixed capital Examples— The manufacture of steel Cement Chemicals & Heavy Engineering industry etc.

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MEDIUM TERM FINANCE

Funds for a period exceeding1 year & less than 5 year

Arises on account of changes in technology/increasing competition.

Modernization of Plant & Machinery or introduction of new product.

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SHORT TERM FINANCE

For a short period upto 1 year. Main purpose:- To meet or Finance the day to

day requirements of a business.. E.g. Tradding business.

Reffered to as Working Capital Resources. Short Term Market = Short Money Market

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What is the Financial management?

The efficient use of Economic resources viz Capital funds,….

Management of the Finance of a Business in order to achieve financial objectives & goals…

Cash Flow

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The Importance of Cash Flow

Financial management as a discipline sprung out from economics to become a stand alone profession. That is why we have people that call themselves financial manager and investment managers today.

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In Finance ,we can say that ,

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The Importance of Cash Flow

Accounting creates statements that are designed to portray what is physically occurring in numbers.

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Finance is concerned with current and future cash flow.

Financial ‘GURU’

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Mr. CYRUS MISTRY Mr. AMIT BAPNA

About Mr. Cyrus Mistry

Civil Engineer from Imperial College , UK .

MSc in Management from London Business School .

Start carrier with Shapooji Pallonji Group since 1994.

Director & Execute of TATA Industries.

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Contd…

He has worked on 93 board , 21 industries and 15 different organization .

At present ,

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About Mr. Amit Bapana Mr. Amit has started his carrier in

Realince at 1999 . He has been with Realinance capital

since 2004 . Chief Finance Officer of Realiance

Company.

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