RELEVANCE OF WEALTH MAXIMISATION

This objective is relevant in the case of limited liability companies.

NATIONALISED INDUSTRIES:

The objective is concerned with owner's interests. In the case of nationalized and public sector units, the objectives are determined by non-value terms i.e., employment, minimum service etc.

NON-PROFIT MAKING ORGANISATIONS :

It is difficult to identity owner group, in the case of hospitals, charities, schools, colleges and local government. In such organisations, primary objective is non-financial i.e., service.

Functional Aspects of Finance Relationship with Other Functional Areas

Functions of Financial Management

Financial Decisions

Responsibilities of Financial Management in the Firm Tasks of Financial Management

Challenges of Financial Management in India

RELATIONSHIP WITH OTHER FUNCTIONAL AREAS

The three important activities rof the business are Finance, ProductiOn and Marketing. The firm secures capital (finance activity) and generates returns on the invested capital (Production and marketing activities).

The firm acquires funds from the sources called investors. The funds so secured, when invested, are called investments. The—k—iii expects returns on investments over time, and periodically distributes returns to investors. These processes are not, infact, sequential; they are performed simultaneously and continuously.

The raising of capital funds and using them for generating returns and paying returns to the suppliers of funds are called the finance functions of the firm. There are two types of capital that a firm raises: equity capital and borrowed capital. A firms has to sell shares to acquire equity Shares represent ownership rights of their holders. The buyers of shares are called shareholders and are the legal owners of the firm. Shareholders invest their money in the shares—of a companyin the expectation of returns on their invested capital. The return on the shareholders' capital is called dividend, Shareholders can be of two types: common and preference. Preference shareholders receive dividends at a fixed rate and have a priority over common shareholders in receiving dividends. The dividends rate for common shareholders is not fixed and can vary from year to year depending on the prdfits.

Another important source of securing capital is creditors or lenders. They make money available to the firm on lending basis and retain title to the funds lent. The return on loans or borrowed funds is called interest. Loans are furnished for a specified period at a fixed rate of interest. Payment of interest is a legal obligation. The amount, of interest is allowed to be treated as expense for computing corporate income taxes. A firm may borrow fund_s from banks, financial institutions, debenture.

LIQUIDITY vs PROFITABILITY | MAXIMISATION OF RETURN | WEALTH MAXIMISATION | Constraints - Policy Decisions - Profitability | IMPLICATIONS OF WEALTH MAXIMISATION | Suppliers of Loan Capital | RELEVANCE OF WEALTH MAXIMISATION | Retaining earning and Undistributed profits | Managerial finance function | Functions of Financial Management | FINANCIAL FORECASTING | MANAGEMENT OF CORPORATION ASSET STRUCTURE | THE MANAGEMENT OF INCOME | MANAGEMENT OF CASH | DECIDING OUT NEW SOURCES OF FINANCE | CONTACT AND CARRY NEGOTIATIONS FOR NEW FINANCING | ANALYSIS AND APPRAISAL OF FINANCIAL PERFORMANCE | INCIDENTAL OR ROUTINE FUNCTIONS | CAPITAL BUDGETING DECISION | CURRENT ASSET MANAGEMENT | Maximisation of Share Value | RESPONSIBILITIES OF FINANCIAL MANAGEMENT IN THE FIRM | Functions of the Treasurer and Controller | TASKS OF FINANCIAL MANAGEMENT | CHALLENGES OF FINANCIAL MANAGEMENT | Gross and Net Savings | Household Savings | How to politely win when credit disputes and problems arise