Category: Financial Management

What is Security Market Line? Security Market Line is the representation of capital asset pricing model (CAPM). Under Capital Asset Pricing model, risk of an individual risky security refers to the volatility of the security’s...

Walter Dividend Model Assumptions and Criticism Walter Dividend Model: The model states that firm’s rate of return and cost of capital determines the dividend policy that ultimately leads to maximization of shareholder’s wealth....

Turnover Ratios Meaning and Example Turnover Ratios Meaning It measures how efficiently the assets are employed by a firm. These ratios are based on the relationship between the level of activity, represented by sales or cost of...

What is Securities Premium? A share may be issued at an amount more than the face value. It is the case of issue of shares at premium. For Example – a share whose face value is Rs. 10 may be issued at Rs. 20. Here the premium is...

What is Standard Cost? A standard cost is a measure of how much the cost of an item should be in comparison to the record of how much it actually was. In other words, standard cost is used to describe what the cost of one unit...

Most financial decisions, such as the purchase of assets or procurement of funds, affect the firm’s cash flows in different time periods. For example, if fixed asset are purchased it will require immediate cash outlays sand will...

Preparation of Fund flow Statement Before preparing a Fund Flow Statement, it is essential to understand the following: Classification of Balance Sheet Meaning of Fund Meaning of Flow 1. Classification of Balance Sheet Items...

What is Receipts and Payments Account? Receipts and Payments Account is a classified summary of Cash book. It is prepared under appropriate heads alongwith cash and bank balances in the beginning and at the end of the accounting...

Miller Modigilani Dividend Model – Full Explanation Miller Modigilani Dividend Model – The model states that under the perfect market situation , the dividend policy of the firm is irrelevant as it does not affect the value of...

Operating Cycle Concept, computation of length of Operating Cycle Operating Cycle Definition – It is the time duration required to convert the sales after the conversion of resources into inventories, into cash. The operating...

Leverage Ratios Meaning and Example Leverage Ratios Meaning It refers to the use of debt finance. While debt capital is a cheaper source of finance, it is also a riskier source of finance. Leverage ratios help in assessing the...

Functions of Financial Management involves general management principles in the area of financial decision-making. It involves investment of funds, financing various activities, and disposal of profits. Business...