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Articles on Trending Technologies
Technical articles with clear explanations and examples
Types of Financing Decisions - Investment Decisions, Dividend Policy Decisions
The decisions taken by financial managers on behalf of an organization for the long term are known as financing decisions. These decisions are important because every department is related to the finance department in one way or the other. Therefore, care must be taken related to the nature of financial matters of the company.The nature of financing decisions is dynamic and there are some distinct differences among the major types of decisions.Investment DecisionsInvestment decisions are related to total assets to be held, the risk composition, and the mix of the total assets of the company.The nature of investment decisions depends ...
Read MoreWhat are the types of Finance Functions?
Finance functions are divided into two broad functions − Long-term decisions and Short-term decisions. Long-term decisions are applicable to a tenure of more than one year, while short-term decisions are meant for one year or less.Note − Finance functions or decisions are broadly divided into long-term and short-term decisions.Long-term DecisionsLong-term Decisions include: Investment Decision, Financing Decision, and Dividend Decision.Investment DecisionA company's investment decision must consider long-term budgeting or capital expenditure. This decision, therefore, is known as a capital budgeting decision. Capital budgeting consists of allocating the funds and investment decisions in general for future profits. The two major aspects of ...
Read MoreWhat are the functions of Treasurers and Controllers?
Treasurers and Controllers are designations essentially related to the US and the UK corporate. In those markets, the roles and responsibilities are clearly defined. Although some Indian companies also have them, the number of such companies is very limited.The duties in the US contextThe major responsibility of the treasurer usually is to manage and look after the funds of the company. the duties of the treasurer include managing the cash flow, credit management, forecasting financial needs, and maintaining relationships with financial institutions, etc. the treasurer also looks after protecting securities and cash, etc.The duties of controllers include management and supervision ...
Read MoreWhat is Required Rate of Return (RRR)?
The Time Value for Money is usually expressed by an interest rate that remains positive even without any risk. This rate is therefore called risk free rate. An individual or a company may agree to receive a payment if the risk-free rate is applied to his investment.For example, suppose an investor has invested INR 100 in a project and the risk-free rate is 5%. Now if he is offered INR 105 after one year, he may choose to receive the money later as he might consider the value of money received after one year equal to the money without a ...
Read MoreReal Assets and Financial Assets - What are the differences?
There are two types of assets associated with a company - Real Assets and Financial Assets. Real assets are needed to continue operations and financial assets are non-physical assets that can be converted to cash easily. Real assets are called real because they often have a real form that can be touched or felt. Financial assets on the other hand are mostly found only as records.Real Assets and Financial AssetsReal assets help companies to generate revenue and are important because they have an intrinsic value related to them. The intrinsic value depends on the substance and properties of the assets. ...
Read MoreWhat is Profit Planning and how is it related to Finance Function?
Planning the future profits is a good decision because it keeps organizations away from overspending. Moreover, as earning profits is the ultimate aim of all companies, being able to foresee the profit is very valuable for a firm. However, it is easier said than done.Managers often have no control over future shocks and natural disasters.There are other factors that affect the organization's decisions too.Financial managers' duty is to calculate the profits after deduction or paying insurance for these risk factors.Note − The financial managers must be able to find the rate of future profit for the betterment of the financials ...
Read MoreWhat is Perpetuity and how to calculate its Present Value?
Perpetuity is an annuity that lasts forever. It consists of several cash flows in a series where the period between two payments is equal. Moreover, in the case of perpetuity, the amount paid after each period remains the same. The periodic cash flows occurring in perpetuity are of utmost importance because they provide the structure of the perpetuity.Perpetuities are very common in finance. For example, if a government creates a fund for scholarships to girls paying INR 1 crore every quarter, it is perpetuity. Here the payments are fixed and will be made forever after a period of three months.Irredeemable ...
Read MoreHow to find the proportion of categories based on another categorical column in R's data.table object?
To find the proportion of categories based on another categorical column in R's data.table object, we can follow the below steps −First of all, create a data.table object.Finding the proportion based on categorical column.Create a data.table objectLoading data.table package and creating a data.table object with two categorical columns −library(data.table) Category1
Read MoreHow to divide the row values by row sum in data.table object in R?
To divide the row values by row sum in R’s data.table object, we can follow the below steps −First of all, create a data.table object.Then, use apply function to divide the data.table object row values by row sum.Create the data.table objectLet’s create a data.table object as shown below −library(data.table) x
Read MoreHow to remove only first row from a data.table object in R?
To remove only first row from a data.table object we can follow the below steps −First of all, creating the data.table object.Subsetting the data frame with single square brackets by negation of 1Example1Create the data frameLet's create a data frame as shown below −library(data.table) x1
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