FINANCIAL MANAGEMENT AND ITS ASPECTS


Financial Management

The decision making on the basis of money is known as financial management.

Two basic aspects of financial management

1-      Procurement of funds
2-      Utilization of funds

PROCUREMENT FUNDS

Procurement of funds means from where we can get the money for the use or to run a business.
We can also say that from where we can get the money to fulfill our needs.
    
Sources of procurement of funds

1-      Debenture and bond: it is type of a certificate issues by the company in the form of bond.

Debenture: It is unsecured type of bond. If the company goes to corrupt then they have to first pay the debenture bonds.

BONDS: long term contract. Generally issues for the 20-30 years in long term period and for the 7-10 years in the in short term period. This is offered to general public through the advertised in the newspaper.

2-      Angel financing: it is that financing which is took from the brother sister or from your blood relations

3-      Venture capital:  they invest in that business in which the owners know how to do business and completely aware with the business conditions and market conditions. (venture means luck), they provide funds to new entrepreneurs or start-ups

4-      Commercial banks: we took the money from the bank  because bank  offers services to the general public and to companies


5-      Owner’s funds: It’s kind of equity funds. If the owners has not enough money then they issue their funds in the stock market

UTILIZATION OF FUNDS

Where we have to invest and what is the best way to use the money. We can invest in buying the K- goods (k= capital), like plant machinery, building and we can use to buy the consumer goods like household and all the things which we need to fulfill our daily need.

There are two types of utilization of funds

1-      Working capital budgeting
2-      K- budgeting



TO BE CONTINUED..................................

In next we will discuss the capital budgeting in details




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