Category Archives: Financial Management

Objectives of performance appraisal

There are mainly two objectives or aims of performance appraisal they are: 1) Administrative objectives 2) Self improvement objectives 1) Administrative objectives: these objectives are further divided into five parts i) Promotion: it is one of the main aims of … Continue reading

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2 Methods of capital budgeting

In earlier articles, we have discussed the capital budgeting and its types. Today we will discuss the methods of capital budgeting: (I)Traditional methods i) Pay back period method: this method means the period in which the total investment in the … Continue reading

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Capital budgeting process

In earlier articles, we have discussed the types of capital budgeting. Today we will discuss capital budgeting process:   1) Identify investment proposals: the first step in capital budgeting process lies with identification of the investment proposal of the firm.

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3 Types or Kinds of Capital budgeting

Last time I have discussed the process of capital budgeting with its importance. Toady we will discuss the different types of capital budgeting:  1.) Accept reject decisions: all the investment decisions which give more return than the cost of capital … Continue reading

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Capital budgeting and its importance

Capital budgeting Capital budgeting means making investment decisions in capital expenditure. Capital expenditure means making expenditure at present but the benefit of which is going to be received over a period of time. For example when we buy the fixed … Continue reading

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Approaches to determine financing of working capital

There are mainly 3 approaches to determine financing of working capital. Let us discuss them one by one: 1) Hedging approach or matching approach: this approach means matching the maturities of debt with the maturity of financial needs. It means … Continue reading

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Financing of working capital

The firm has many options available for financing there permanent, fixed or long term working capital as well as for the temporary or variable working capital. These are discussed below: For financing permanent, fixed or long term working capital requirement:-

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Principle of working capital management policy

The following are the 4 principles of working capital management policy: 1) Principle of equity position: as per this principle every investment in the current assets should contribute to the net worth of the firm. The position of current assets … Continue reading

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Dimensions of working capital

Working capital is also called revolving, circulating or short term capital. Every business require the funds for its establishment which is called fixed capital and require funds to carry out its day to day operations like purchase of raw material, … Continue reading

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Advantages and disadvantages of adequate working capital

Advantages of adequate working capital  i) Helps in maintaining goodwill of the firm. ii) Helps in maintaining solvency of the firm. iii) Helps the firm in getting regular supply if raw material. iv) Helps the firm in getting regular return … Continue reading

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