Types of Business

Business, Types of Business

Definition:
Any legal activity to earn profit is called business.

Types of Business:

Sole Proprietorship
Partnership
Company

Sole Proprietorship:

• Only one person owner run the business
• No profit and loss
• all power he have
• he is liabilities
• unlimited

Owner personal assets will be sold if business is going to loss (Limited or Unlimited)

Partnership:

• Capital more
• Profit and loss sharing
• Decision Sharing
• Liabilities (Unlimited) 
• 2-20 Members

Partnership dead or agreement:
All the term and condition are written about partnership in this agreement.

Company:

• Liabilities (limited)
• Owner assets will not be sold

Private Company:
Only the owner of the company can purchase share
Member numbers 2- 50

Public Company:
General public can purchase share
Member number 7- unlimited


FINANCIAL MANAGEMENT
DECISION AREA OF FINANCIAL MANAGEMENT
AGENCY PROBLEM
TYPES OF BUSINESS
FINANCIAL SYSTEM
FINANCIAL INTERMEDIARIES
TYPES OF FINANCIAL MARKETS
TIME VALUE OF MONEY
EXAMPLES AND FORMULA TIME VALUE OF MONEY
CASH FLOW,SUM,SERIES OF CASH, ANNUITY AND MIX STREAM
ANNUITY TYPES AND FORMULA
AMORTIZATION SCHEDULE OR TABLE WITH EXAMPLE
EFFECTIVE INTEREST RATE WITH EXAMPLE
VALUATION OF LONG TERM SECURITIES (BONDS)
TYPES OF BONDS
BONDS FORMULA,ZERO COUPON PERPETUAL
VALUATION OF LONG TERM SECURITIES (SHARE)
CASH AND MARKETABLE SECURITIES MANAGEMENT
MANAGING CASH INFLOW AND OUTFLOW
SECURITIES MANAGEMENT
SHORT TERM FINANCING
SPONTANEOUS LABILITIES
NEGOTIATED FINANCE
CAPITAL BUDGETING
CAPITAL BUDGETING TECHNIQUE
NET PRESENT VALUE TECHNIQUE
INTERNAL RATE OF RETURN TECHNIQUE
ACCOUNT RECEIVABLE MANAGEMENT
INVENTORY MANAGEMENT
FORCASTING

MBA NOTES FINANCIAL MANAGEMENT

Agency Problem

Agency Problem

When there is a conflict between the management and shareholder is called agency problem. This problem can be reduced not finished.

How to reduced the Agency Problem

Threat of Job loss
Stock offering
Monitoring
Centralized Decision

FINANCIAL MANAGEMENT
DECISION AREA OF FINANCIAL MANAGEMENT
AGENCY PROBLEM
TYPES OF BUSINESS
FINANCIAL SYSTEM
FINANCIAL INTERMEDIARIES
TYPES OF FINANCIAL MARKETS
TIME VALUE OF MONEY
EXAMPLES AND FORMULA TIME VALUE OF MONEY
CASH FLOW,SUM,SERIES OF CASH, ANNUITY AND MIX STREAM
ANNUITY TYPES AND FORMULA
AMORTIZATION SCHEDULE OR TABLE WITH EXAMPLE
EFFECTIVE INTEREST RATE WITH EXAMPLE
VALUATION OF LONG TERM SECURITIES (BONDS)
TYPES OF BONDS
BONDS FORMULA,ZERO COUPON PERPETUAL
VALUATION OF LONG TERM SECURITIES (SHARE)
CASH AND MARKETABLE SECURITIES MANAGEMENT
MANAGING CASH INFLOW AND OUTFLOW
SECURITIES MANAGEMENT
SHORT TERM FINANCING
SPONTANEOUS LABILITIES
NEGOTIATED FINANCE
CAPITAL BUDGETING
CAPITAL BUDGETING TECHNIQUE
NET PRESENT VALUE TECHNIQUE
INTERNAL RATE OF RETURN TECHNIQUE
ACCOUNT RECEIVABLE MANAGEMENT
INVENTORY MANAGEMENT
FORCASTING


MBA NOTES FINANCIAL MANAGEMENT

Decision area of financial management

Decision Area of Financial Management

Investment Decision:

In "investment decision" financial manager evaluate and select the best opportunity in available opportunities.

Financial Decision:

Which source of finance is most suitable resource either "debt finance" or "equity finance".

Assets Management Decision:

In this area the manager select which combination of assets are the most suitable combination for the company.

keyword: investment, financial, assets management decision

FINANCIAL MANAGEMENT
DECISION AREA OF FINANCIAL MANAGEMENT
AGENCY PROBLEM
TYPES OF BUSINESS
FINANCIAL SYSTEM
FINANCIAL INTERMEDIARIES
TYPES OF FINANCIAL MARKETS
TIME VALUE OF MONEY
EXAMPLES AND FORMULA TIME VALUE OF MONEY
CASH FLOW,SUM,SERIES OF CASH, ANNUITY AND MIX STREAM
ANNUITY TYPES AND FORMULA
AMORTIZATION SCHEDULE OR TABLE WITH EXAMPLE
EFFECTIVE INTEREST RATE WITH EXAMPLE
VALUATION OF LONG TERM SECURITIES (BONDS)
TYPES OF BONDS
BONDS FORMULA,ZERO COUPON PERPETUAL
VALUATION OF LONG TERM SECURITIES (SHARE)
CASH AND MARKETABLE SECURITIES MANAGEMENT
MANAGING CASH INFLOW AND OUTFLOW
SECURITIES MANAGEMENT
SHORT TERM FINANCING
SPONTANEOUS LABILITIES
NEGOTIATED FINANCE
CAPITAL BUDGETING
CAPITAL BUDGETING TECHNIQUE
NET PRESENT VALUE TECHNIQUE
INTERNAL RATE OF RETURN TECHNIQUE
ACCOUNT RECEIVABLE MANAGEMENT
INVENTORY MANAGEMENT
FORCASTING

MBA NOTES FINANCIAL MANAGEMENT

Financial Management: MBA NOTES

FINANCIAL MANAGEMENT

DEFINITION:

"Financial management" refers to managing the finances, analyze for-cost and plan the finances access risk, decide, when and where the finances are generated evaluate and select the investment oppertunites decide, how much money should be return to the investor, or shareholders.

OR
Managing the finances is called "financial management"

RETURN:
The extra amount which we received on principal amount is called return.

Return = Dividend + Capital Gain

RISK:
The fluctuation in return is called risk.

SHARE:
Share is a piece of paper on which the company acknowledge the funds.

SOURCES OF FINANCE:
1. DEBT FINANCE (LOAN FORM BANK)
2. EQUITY FINANCE (OWNER, SHAREHOLDER)

SHAREHOLDER:
The person who purchase the share is shareholder.

STAKEHOLDERS:
The person who directly or indirectly attached with the business is called stakeholders
Example:
suppliers, owner, buyer etc.

DIVIDEND:
That part of profit which is distributes among the shareholders

CAPITAL GAIN:
The increase in the price of share is called "capital gain".

Capital Gain = Sales price - Purchase price


FINANCIAL MANAGEMENT
DECISION AREA OF FINANCIAL MANAGEMENT
AGENCY PROBLEM
TYPES OF BUSINESS
FINANCIAL SYSTEM
FINANCIAL INTERMEDIARIES
TYPES OF FINANCIAL MARKETS
TIME VALUE OF MONEY
EXAMPLES AND FORMULA TIME VALUE OF MONEY
CASH FLOW,SUM,SERIES OF CASH, ANNUITY AND MIX STREAM
ANNUITY TYPES AND FORMULA
AMORTIZATION SCHEDULE OR TABLE WITH EXAMPLE
EFFECTIVE INTEREST RATE WITH EXAMPLE
VALUATION OF LONG TERM SECURITIES (BONDS)
TYPES OF BONDS
BONDS FORMULA,ZERO COUPON PERPETUAL
VALUATION OF LONG TERM SECURITIES (SHARE)
CASH AND MARKETABLE SECURITIES MANAGEMENT
MANAGING CASH INFLOW AND OUTFLOW
SECURITIES MANAGEMENT
SHORT TERM FINANCING
SPONTANEOUS LABILITIES
NEGOTIATED FINANCE
CAPITAL BUDGETING
CAPITAL BUDGETING TECHNIQUE
NET PRESENT VALUE TECHNIQUE
INTERNAL RATE OF RETURN TECHNIQUE
ACCOUNT RECEIVABLE MANAGEMENT
INVENTORY MANAGEMENT
FORCASTING



MBA NOTES FINANCIAL MANAGEMENT