Best Study Notes » Financial Mgmt
Explain the relevance of time value of money in financial decisions
Best Coaching Class Notes by shruti (#2) 216 days ago (Article)
As the saying goes, a bird in hand is worth 2 in the bush. It means that what we have available now is of more value as compared to what we expect to get in future, at-least when the nominal value of both is same. Time value of money means that worth of a rupee received today is different from the worth of a rupee to be received in future. The preference of money now as compared to future money i
Why is profit maximization objective not the best objective?
Best Coaching Class Notes by shruti (#2) 216 days ago (Article)
1. It leads to exploitation of workers and consumers
2. It ignores the risk factor associated with profit
3. Profit in itself is a vague concept and means differently to different people
4. It is a narrow concept at the cost of social and moral obligations.
5. It ignores the risk factor as well as timings of returns
6. It emphasizes the short‐run profitability and short‐term projects
7. It
2. It ignores the risk factor associated with profit
3. Profit in itself is a vague concept and means differently to different people
4. It is a narrow concept at the cost of social and moral obligations.
5. It ignores the risk factor as well as timings of returns
6. It emphasizes the short‐run profitability and short‐term projects
7. It
Explain briefly the limitations of Financial ratios.
Best Coaching Class Notes by shruti (#2) 216 days ago (Article)
1. Concept of Ideal Ratio : The concept of ideal ratio is vague and there is no uniformity as to what an ideal ratio is
2. Thin line of difference between good and bad ratio : The line of difference between good and bad ratio is so thin that they are hardly separable
3. Financial ratios are not independent : but are inter-dependent. Thus, decision cannot be taken on the basis of one ratio a
2. Thin line of difference between good and bad ratio : The line of difference between good and bad ratio is so thin that they are hardly separable
3. Financial ratios are not independent : but are inter-dependent. Thus, decision cannot be taken on the basis of one ratio a
What is Debt-service coverage ratio?
Best Coaching Class Notes by shruti (#2) 216 days ago (Article)
It shows whether the business is earning sufficient profits to pay not only the interest charges, but also the installment due of the principal amount. It is obtained as below:
(Earning available for debt service) / (interest on loan + Installment of the principal amount)
Earning available for debt service = Profit after tax + Depreciation + Interest on loan
Debt services coverage ratio o
(Earning available for debt service) / (interest on loan + Installment of the principal amount)
Earning available for debt service = Profit after tax + Depreciation + Interest on loan
Debt services coverage ratio o
Profit maximization or Wealth maximization - Which is a better goal for the firm?
Best Coaching Class Notes by shruti (#2) 216 days ago (Article)
The primary objective of a company is to earn profit; hence the objective of financial management is also profit maximization. This implies that the finance manager has to make decisions in a manner so that the profits of the concern are maximized. Each alternative, therefore, is to be seen as to whether
or not it gives maximum profit. Profit maximization may not necessarily mean that the shareh
or not it gives maximum profit. Profit maximization may not necessarily mean that the shareh
What is the difference between Financial Management and Financial Accounting?
Best Coaching Class Notes by shruti (#2) 216 days ago (Article)
Financial Accounting focuses on collecting data and presenting the data while Financial Management’s primary responsibility relates to financial planning, controlling and decision‐making. In financial Accounting, the measurement of funds is based on the accrual principle of funds, in financial management is based on cash flows.
« previous 1 next »
MyCoachingHub is an e-learning site powered by students and teachers. We aggregate the best online learning content, coaching notes, videos, tests etc at one place to offer them to you for FREE. Share Knowledge - Share Links - for FREE @ www.MyCoachingHub.com