Finance is the major part in running a firm. Distribution of finance to each and every department is based upon the requirements of that department and the situation of the business. Requirement of finance can be broadly classified into following −Long term or fixed capital financial requirement.Short-term or working capital ... Read More

Funds require to meet day to day operations are called short term finance. It is also called working capital. Temporary working capital is termed as short term. Some of them are as follows −Trade creditThe credit, which extended by manufacturer in producing its product is called trade credit. In this ... Read More

Long term financial requirement is also called as fixed capital requirement. It is the capital required to purchase fixed assets like building, furniture, land, plant and machinery etc. These are also called as long term financial requirements of a firm. Repayable period in long term is more than five years. ... Read More

The two main regulatory authorities are Securities Exchange Board of India (SEBI) and Reserve Bank of India (RBI).Given below are the regulatory compliance −Raising finance through IPO or SPO.Capital structure changes.Credit rating.Foreign exchange transactions.Derivative transactions.Project financing.Raising finance through IPO or SPOIPO − Initial public offering (first time company comes to ... Read More

Finance plays an important role in economic and business of a country. System and effective flow is needed for effective management used for business concern. Indian financial system has developed constantly to infuse the new blood to the economic development of the country.If a country has to be economically strong ... Read More

Payback period allude to the amount of time it takes to reach the cost of an investment. In simple terms, it is time taken for a firm to reach breakeven point.AdvantagesA short payback period can improve the liquidity of the business quickly.Shorter paybacks mean more attractive investments.Payback is easy to ... Read More

Profitability index (PI) measures the ratio between the present value of future cash flow and the initial investment. This is used for ranking investment projects and value created per unit of investment. PI is also known as profit investment ratio (PIR) or the value investment ratio (VIR).PI >1 (project generates ... Read More

ARR stands for Accounting Rate of Return. It is one of the Non- Discounted cash flow techniques used for calculating capital budgeting.ARR is the average net income of an asset (anticipated) divided by its average capital cost. It is generally expressed as an annual percentage. ARR does not take in ... Read More

Net present value (NPV) is the value of all future cash flows over the entire life of an investment discounted to the present. It is one of the most reliable techniques used in capital budgeting, because it is based on discounted cash flow approach. It may be positive, zero or ... Read More

Capital budgeting is a process a business undertakes to evaluate potential major projects or investments. It is a planning process used to decide the company’s long term investments like new machinery, new plants, new products, research development projects etc. are worth the funding through firm capitalisation. Primary objective of investments ... Read More