Small Business Finance

FINANCIAL MANAGEMENT AND PLANNING FINANCE:  A science that describe management of money, money, credit, investment, banking & asset. OR  A study of accusation and investment of cash of the purpose of enhancing valve and wealth Differentiate b/w finance and account? Finance:  It is a economic activity  It involved managing the fund  How to raise the fund it’s allocation in different department (marketing, hr, production etc,) Account: 

It is an art of keeping the record of all transaction took place in the business activities.

FIANCIAL MANAGEMENT:  It can be defined as the management of finance of an organization in order to achieve the financial objective of the organization. The objective of financial management of any in private sector is to maximized shareholder wealth.

FIANCIAL PLANNING: 

SHORT-TERM (ONLY ONE YEAR)



LONG-TERM (MORE THAN ONE YEARS)

SHORT-TERM ASSET :( COST –LIMITED)  CURRENT ASSET • CASH • A/C RECIEVABLE • INVENTORIES  CURRENT LIABILIES • A/C PAYABLE CASH OR ROTATE CYCLE:

Cash

Credit

Cred it

LONG-TERM ASSET :( COST –UNLIMITED)

FINANCILA MANAGEMENT DECISION: • INVESTMENT DECISION • FINANCING DECISION • DIVIDEND DECISION

1.

INVESTMENT DECISION:

Relates to the selection of asset in which fund will be invested by a firm. There are two types of asset 

SHORT-TERM ASSET (ONLY ONE YEAR)



LONG-TERM ASSET (MORE THAN ONE YEARS)

SHORT-TERM ASSET (ONLY ONE YEAR): 

Defined as those assets which are normal course of asset are converted to cash without decreasing in value usually with in a year.

LONG-TERM ASSET (MORE THAN ONE YEAR)  Which yield a return over a period of time in future

2. FINANCIAL DECISION:

The financing decision of a firm relates to the choices of proportion of source to finance that investment requirement .it is also called capital structure decision. 3.

DIVIDEND POLICY DECISION:

There are two alternatives available in dealing with the profit of a firm either they can be distributed to the share holders in a form of dividend or can be retained in the business itself. The decision has to which course of action should be followed depend on dividend policy decision.