Due to ongoing advancements in technology, new legislation, and other innovation, the field of finance is rapidly changing. Introduction to finance develops the three components of finance in an interactive framework that is consistent with the responsibilities of all- financial professionals, managers, intermediaries, and investors in today's economy. In the last decade, the academic study of finance has experienced an infusion of new concept and quantitative methodologies that pace it among the most sophisticated and growing areas of business and economics.
New developments in the traditional areas of the financial theory of rational investors portfolio choice, interpretation and determination of security prices, efficient corporate decision making has been approached from the perspective of a single integrating paradigm derived from the economic theory.
In our present day economy, finance is defined as the provision of money at a time when it is required. Every enterprise whether it is big, medium or small needs finance to carry out its operation and to achieve its target. In fact finance is so indispensable today that it is rightly said to be the lifeblood of an enterprise. Without adequate finance no enterprise can possibly accomplish it objectives.
Business finance is the activity, which is concerned with the acquisition and conservation of capital funds in meeting the financial requirements and overall objectives of the firm. Business finance deals primarily with raising, administering and dispersing funds by privately owned business units operating in non- financial fields of the industry. To sum up in simple words we can say that financial management as practiced by business firms can be called corporation finance or business finance.
[...] A sound understanding of financial statements helps you: Identify unfavorable trends and tendencies in your business's operations (for example, the unhealthy buildup of inventory or accounts receivable) before the situation becomes critical. Monitor your cash flow requirements on a timely basis, and identify financing needs early. Monitor important indicators of financial health (for example, liquidity ratios, efficiency ratios, profitability ratios, and solvency ratios). Monitor periodic increases and decreases in wealth (specifically, owners' or stockholders' equity). Monitor your performance against your financial plan, if you have developed one. [...]
[...] The supplier of goods on credit, banks, financial institutions, investors, shareholders and management all make use of ratio analysis as a tool in evaluating the financial position and performance of a firm for granting credit, providing loans or making investments in the firm. With the use of ratio analysis one can point out whether the condition of the firm is strong, good, questionable or poor. The conclusions can also be drawn as to whether the performance of the firm is improving or deteriorating. [...]
[...] There are two aspects of long term solvency of a firm: Ability to repay the principal amount when due. Regular payment of interest. Important Capital Structure ratios are: Debt-Equity Ratio This ratio attempts to measure the relationship between long term debts and shareholders' funds. In other words, this ratio measures the relative claims of long term creditors on the one hand and owners on the other hand, on the assets of the company. Formula: Debt Equity ratio = Long term debts/Shareholders' funds Long term debts include debentures, long term loans, say from financial institutions. [...]
[...] The elements of financial position are shown in a comparative form so as to give an idea of financial position at two or more periods. The statements of two or more periods are prepared to show absolute data of two or more years, increases or decreases in absolute data in value and in terms of percentages. The two comparative statements are: Comparative Balance Sheet: the comparative balance sheet analysis is the study of the trend of the same items, group of items and computed items in two or more balance sheets of the same business enterprise on different dates. [...]
[...] Summary of Findings: By analyzing the financial performance of a property developer group, the following findings are made: The current ratio of the company is decreasing year after year. This is due to the decrease in the investment in working capital. The current assets of the company decreased drastically during the year 2006. The liquid assets of the company are sufficient to meet its liquid liabilities. This is visible in the quick ratio of the company. The company's absolute liquid ratio is satisfactory for the year 2006. [...]
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