Finance

Basics of Corporate Finance

Dr.M.Venkateshwarlu

Types of Business Organizations

Legal Classification

– Entrepreneurship/sole proprietorship – Partnership – Co-operatives/associations – Agencies – Trust – Corporate Bodies

Types of Business Organization (Nature of Business)

- Manufacturing

Organizations

-

Service Organizations

- Trading/Retail Organizations

Factors Considered in Forming a Business Organization

1. Legal Restrictions 2. Kind of Business Operations 3. Need for capital tax advantage or disadvantage. 4. Liabilities Assumed. 5. Decision Making 6. Intended Division of Earnings 7. Number of People Associated with the Venture 8. Perpetuation of the Business

Factors in the creation of a business organization

1. Cost associated with starting the form of business organization 2. Possibility of transferring the interest in the business organization. 3. Management and Control 4. Initial Capital Requirements. 5. Ability of the form of the organization to attract the required capital

The Forms of Business Enterprises in India – (Ownership)

Private Sector Company • Limited By Shares • Limited By Guarantee • Un Limited Public Sector Company • Limited By Shares • Limited By Guarantee • Un Limited Holding Company

• Subsidiary I • Subsidiary – II • Subsidiary - III

What is Financial Management?

• Financial Management is the management of resources – how to best find and use investments and financing opportunities in an ever changing and increasingly complex environment. • Finance consists of three interrelated areas:

– Money and Capital Markets – Investments which focuses on the decisions of both individual and institutional investors as they choose assets for their investment portfolios. – Financial Management which involves the actual management of firms.

Major Areas and Concepts of Financial Management

• • • • • Analysis of Financial Statements Investment Decisions and Capital Budgeting Risk and Return Analysis...