Finance

Mergers & Acquisitions in Finance

Mergers  & Acquisitions Mergers and Acquisitions are important events in today’s business scenario. It is the phenomenon of either two or more companies coming together to form into one bigger organization or buyout of one company by another. These are business transactions in nature involving payment for each unit of...

Working Capital Management

Working Capital Management Working Capital is yet another important short-term concept. Working Capital, as the name suggests is that capital which is required to run the day to day activities of a firm. These include the day to day operations such as buying of raw materials, maintenance of stock, producing...

Debt Equity Ratio: How much Debt is to be Borrowed

How Much Debt should be Borrowed If a person wants to buy a car that costs $10000. He decides to make and down payment of 60% or $6000 and asks a bank to finance the remaining 40%. The bank is quite willing to enter into the deal, since it holds...

Risk-free Investment Model

Risk-free Investment  Suppose there is no risk or a problem that needs to be faced. By claiming that there is no risk, one can assume that if an amount is invested in order to receive a stream of benefits in the future, all those future benefits are certain to arrive....

Analyzing and Improving Financial Performance

Financial Performance Companies must be able to measure managerial performance if they are to control operations and achieve organizational goals. As companies grow or their activities become more complex, they often attempt to decentralize decision making as much as possible by restructuring into several divisions and treating each as an...

Finance Budgeting

Finance Budgeting A budget represents a company’s annual financial plan. A comprehensive budget is a formal statement of management’s expectation for sales, expenses, volume and other financial transactions for the coming period. It consists basically of a pro forma income statement, pro forma balance sheet and cash budget. A budget is...

Financial Forecasting

Financial Forecasting Financial forecastingis an essential element in planning. It is the basis for budgeting and for estimating future financing requirements. A company can make finance either from internal or external sources. Internal financing refers to cash flow generated by the company’s normal operating activities. External financing on the other...

Understanding Financial Statement Analysis

Financial Statement Analysis The basic limitation of traditional approach to financial statements comprising balance sheet and the profit and loss account is that they do not give all the information related to the financial operations of a firm. Nevertheless, they provide some extremely useful information to the extent that the...

Finance Working Capital

Finance Working Capital Working Capital policy involves decisions about a company’s current assets and current liabilities – what they consist of, how they are used and how their mix affects the risk versus return characteristics of a company. Both the terms working capital and net working capital normally denote the...