Article Categories
- All Categories
-
Data Structure
-
Networking
-
RDBMS
-
Operating System
-
Java
-
MS Excel
-
iOS
-
HTML
-
CSS
-
Android
-
Python
-
C Programming
-
C++
-
C#
-
MongoDB
-
MySQL
-
Javascript
-
PHP
-
Economics & Finance
Articles by Mandalika
Page 33 of 41
Explain the importance of financial management.
Financial management provides pathways to attain goals and objectives in an organisation. The main duty of a financial manager is to measure organisational efficiency through proper allocation, acquisition and management.The importance of financial management is explained below −It provides guidance in financial planning.It assists in acquiring funds from different sources.It helps in investing an appropriate amount of funds.It increases organisational efficiency.It reduces delay production.It cut down financial costs.It reduces cost of fund.It ensures proper use of fund.It helps business firm to take financial decisions.It prepares guideline for earning maximum profits with minimum cost.It increases shareholders’ wealth.It can control the financial ...
Read MoreWhat is financial management? Define objectives and scope of financial management.
Financial management is the set of activities concerned with planning, organising, directing and controlling the financial activities. Financial management accepts the general management principles for financial performances. Financial management acts like a guidance, where more investment opportunities are available.Scope of financial managementThe scope of financial management is given below −Estimating the requirement of funds.Determining the capital structure.Investment fund.Maximise profits.Maintain core value of organisation.Dividend for shareholders.Retain profits.Objectives of financial managementThe objectives of financial management include −Profit maximisation.Wealth maximisation.Optimum funds utilisation.Ensure safety on investment.Sound capital structure.Functions of financial managementThe functions of financial management are as follows −Estimation of capital requirements.Determination of capital ...
Read MoreWhat is definition of business finance and explain its types?
Finance represents the money management and the process of acquiring the funds. Finance is a board term that describes the activities related to banking, leverage or debt, credit, capital markets, money and investments.Business finance tells about the funds and credit employed in the business. It also helps to manage the funds/money to make your business more profitable by considering financial statements (profit and loss accounts, balance sheets and cash flow statements).Types of Business financesThe types of business finances are explained below −Short term financeFinancing the business for a short period of time (less than 1 year) is short term finance. ...
Read MoreDistinguish between contribution margin and gross margin.
The major differences between contribution margin and gross margin are as follows −Contribution MarginIt is used by pricing decision (whether product line is making profits or not).Contribution margin = difference between sales and variable costs divides by sales.It analyses profit metric per item.Only variable cost is considered for calculations.It determines the margin for production, where only variable costs are present.It detects variable costs and its percentage included in margin.It is useful for multiple scenario analysis.Gross MarginWhether production cost is covered by its sales or not.Gross margin = difference between revenue and Cost of goods sale/revenue.It analyses total profit metric.It considers ...
Read MoreDifferentiate between share outstanding and float.
The major differences between share outstanding and float are as follows −Share OutstandingThese are shares held by stakeholders, company officials and investors in public domain.Contains both stock float and restricted shares.Contains all shares of company held by its investors.It is used to calculate market capitalisation and earnings per share (EPS).It provides voting right and ownership right.Private or public limited company will issue these kinds.It has low risk.FloatIt is share issued by company to public and available to investors for trading in stock market.Contains only float stock.It is available for public.It acts as determinant of financial calculations.Won’t provide voting right and ...
Read MoreWrite the difference between discount rate and interest rate.
The major differences between discount rate and interest rate are as follows −Discount RateFederal reserve banks charges to depository institution/commercial banks on its overnight loans.Central banks decide the rate.It is not determined by market rate of interest.It determines present value of future cash flows.It focuses on investors view.The demand and supply has no effect on discount rate.Interest RateIt is an amount charged by lender to a borrower for use of assets.Commercial banks decide the rate.It depends on market rate of interest, creditworthiness etc.It can’t determine present value.It focuses on lender’s view.The demand and supply has effect on interest rate.
Read MoreCompare between Return on invested capital (ROIC) and Return on capital employed (ROCE).
The major differences between ROIC and ROCE are as follows −ROICROIC refers to Return on invested capital.It aims to find the return relative to capital which is invested in business.It evaluates profitability by considers only capital invested in the business.ROIC = Net operating profit/invested capital.Company said to be profitable, if ROIC is greater than zero.Measures after tax.It is more important for an investor.ROCEROCE refers to Return on capital Employed.Its main aim is to find return relative to total capital employed.It had very broad scope.ROCE = net operating profit/capital employed.Company said to be profitable, if ROCE greater than cost of capital.Measures ...
Read MoreWrite the difference between licensing and franchising.
The major differences between licensing and franchising are as follows −LicensingFranchisingBusiness model deals with products and goods.Ownership is with licensee.Governed by contracts law between partiesWithout investing huge capital licensor will get vertical integration in market.Licensor don’t have control over intellectual property rights.Registration is not mandatory.No training and support is provided.One-time property/rights transfer.Negotiable fee structure.Royalties are commonly used term.Covers single product/products.Generally, established business will go licensing.Business models deals with providing services.Ownership is with franchisee.Governed by companies’ laws and other federal laws (international business)Franchisor get access to diversified market geographically.High initial investment is required.Registration is mandatory.Training and support is provided.Ongoing assistance is ...
Read MoreCompare budget and forecast.
The major differences between budget and forecast are as follows −BudgetIt’s a business plan made by management for future with quantitative.It shows what a company want to achieve during a period of time.Generally, it is short term.It is static in nature.It is used as tool to manage operational performance in short term.It sets the targets.It is updated annually.There is variance analysis.Covers large areas like costs, revenue, profits etc.Almost everyone will aware of budget.ForecastIt is based on historical data; future trends can be estimated.It tells about what a company will achieve in a specified period.Generally, it is long term.It is more ...
Read MoreDistinguish between active and passive investment.
The major differences between active and passive investment are as follows &mius;Active InvestmentIt is an investment invested after doing independent analysis on value of each investment.The main objective is to beat market performance.It focuses on absolute terms.In view of investor perception, market may be inefficientIt has higher transaction frequency.It has high returns and more risk.It has high operating cost.It includes short term price fluctuations.High skills are required to make decisions.It is highly flexible in investing.Passive InvestmentIt is invested after investor portfolio is matched with market portfolio.The main objective is to match tracked index.It focuses on relative returns.In the view of ...
Read More