Category Archives: Financial Management

Types of working capital

The working capital can be classified on the basis of concept and on the basis of time.  Types of working capital On the basis of concept Generally there are two concepts of working capital. They are gross working capital and … Continue reading

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Working capital management and its concepts

Working capital management 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 … Continue reading

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4 forms of dividend

When dividend is paid out of profit it is called “profit dividend” and when it is paid out of capital it is called “liquidation”. Usually there are 4 forms of dividend. a) Cash dividend: it is the common method to … Continue reading

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4 types of dividend policy

There are basically 4 types of dividend policy. Let us discuss them on by one: 1.) Regular dividend policy: in this type of dividend policy the investors get dividend at usual rate. Here the investors are generally retired persons or … Continue reading

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Divident policy, dividend decisions and valuation of shares

Dividend policy: Dividend is the part of company’s profit which is given by company to its shareholders. As the shareholders invest their valuable money in the company, so they want to get the maximum return out of it. But in … Continue reading

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Significance of cost of capital

The cost of capital is significant or important due to following reasons 1) Helps in evaluating financial performance: if the actual profit of the project is more than the expectation and the actual cost of capital than the performance is … Continue reading

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Computation or methods of calculating cost of capital

The cost of capital can be calculated by different methods these are discussed as below:  (I) Computation of cost by specific source of finance 1) Cost of debt: cost of debt means the interest payable on the debentures. For example, … Continue reading

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Classification of cost

In last article, I have discussed the concept of cost of capital. In this article, we will discuss the classification of cost: 1.) Historical or book or past cost and future cost: historical cost is related to past. It helps … Continue reading

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Cost of capital

The cost of capital is also called hurdle rate or cut off rate. It is the minimum rate of return expected by the investors. The investor’s decision to invest in a particular firm depends upon the cost of capital or … Continue reading

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Leverage analysis and types

A lever is a force in a car or in any machine which helps in doing more work with lesser labor. In financial management leverage analysis means arranging fixed assets in such a way that fixed return is ensured. The … Continue reading

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