Page 19 - Corporate Finance PDF Final new link

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BRILLIANT’S Conceptual Framework of Finance Functions 19

insurance, mortgages and various types of H$s IarX gpå_{bV H$aVm h¡& ~¢qH$J H$mo ^r ng©Zb \$m`Z|g
investments. Banking is also considered as a H$m EH$ ^mJ _mZm OmVm h¡ {Og_| MoqH$J VWm goqd½g
part of personal finance, including checking and
savings accounts as well as online or mobile AH$mC§Q²>g Ho$ gmW Am°ZbmBZ `m _mo~mBb no_|Q> g{d©gog
payment services like PayPal and Paytm. O¡go nonmb VWm noQ>rE_ gpå_{bV h¢&
(b) Corporate Finance: Corporate finance (b) H$m°nm}aoQ> \$m`Z|g… H$m°nm}aoQ \$m`Z|g EH$ H$m°nm}aoeZ
consists of the financial activities related to H$mo g§Mm{bV H$aZo go g§~§{YV \$m`Z|{e`b J{V{d{Y`m| go
running a corporation, usually with a division
or department set up to look the financial ~Zm h¡ {Og_| àm`… \$m`Z|{e¶b J{V{d{Y`m| H$mo XoIZo Ho$
activities. {bE EH$ {S>drOZ `m {S>nmQ>©_|Q> ~Zm`m OmVm h¡&
For example, a large company may have to CXmhaU Ho$ {bE EH$ ~‹S>r H§$nZr H$mo {ZU©` H$aZm
decide whether to raise additional funds through hmoVm h¡ {H$ Š`m EH$ ~m°ÝS> Bí`y `m ñQ>m°H$ Am°\$[a¨J Ûmam
a bond issue or stock offering. Investment banks A{V[aŠV YZ àmá {H$`m Om`o& B§doñQ>_oQ> ~¢Šg Eogo {dMmam|
may advise the firm on such considerations and na g§ñWm H$mo gwPmd Xo gH$Vo h¢ VWm {gŠ`mo[aQ>rO H$s
help them market the securities. IarX-’$amo»V H$aZo _| CZH$s ghm`Vm H$aVo h¢&
Another example could be of a company EH$ AÝ` CXmhaU EH$ H§$nZr hmo gH$Vm h¡ Omo CZHo$
that is trying to budget their capital and make H¡${nQ>b H$m ~OQ> ~ZmZo H$m à`mg H$a ahr h¡ VWm {ZU©`
decisions on what projects to finance and what H$aVr h¡ {H$ {H$g àmoOoŠQ> H$mo YZ XoZm h¡ VWm H§$nZr H$mo
projects to put on hold in order to grow the
company. These types of decisions fall under AmJo ~‹T>mZo Ho$ {bE {H$g àmoOoŠQ> H$mo amoH$Zm h¡& {ZU©` Ho$ `o
corporate finance. àH$ma H$m°nm}aoQ> \$m`Z|g Ho$ A§VJ©V AmVo h¢&
(c) Public Finance: Public finance includes (c) npãbH$ \$m`Z|g… npãbH$ \$m`Z|g _| Q>¡Šg, ñn|qS>J,
tax, spending, budgeting and debt issuance ~OqQ>J VWm S>oãQ> B§í`moaoÝg nm°{bgrO gpå_{bV hmoVr h¢
policies that all affect how a government pays Omo g^r à^m{dV H$aVr h¢ {H$ emgZ OZVm H$mo Xr J`r
for the services it provides to the public. godmAm| H$o {bE H¡$go ^wJVmZ H$aVm h¡&
In addition to managing money for its day- BgHo$ X¡{ZH$ H$m`m] Ho$ {bE YZ H$m à~§Y H$aZo Ho$
to-day operations, a government body also has A{V[aº$ EH$ emgH$s` {ZH$m` H$m ~‹S>m gm_m{OH$ Xm{`Ëd ^r
larger social responsibilities. Its goals include hmoVm h¡& BgH$m bú` BgHo$ ZmJ[aH$m| Ho$ {bE Am` H$m g_mZ
attaining an equitable distribution of income
for its citizens and enacting policies that lead {dVaU àmá H$aZm VWm Zr{V`m| H$mo bmJy H$aZm gpå_{bV h¡
to a stable economy. Omo EH$ ñWm`r AW©ì`dñWm H$m H$maU hmoVr h¢&
Scope of Financial Management \$m`ZopÝe`c _¡ZoO_|Q H$m úmoÌ

Financial management is concerned with \$m`ZopÝe`c _¡ZoO_|Q> _w»`V: Bg ~mV go gå~pÝYV
optimization of output from the given input of h¡ {H$ {H$gr {~OZog _| BZnwQ> Ho$ ê$n _| \§$S> cJmH$a
funds. It attempts to use the funds in the most A{YH$V_ AmCQ>nwQ> H¡$go àmßV {H$`m OmEŸ& BgHo$ {c`o
productive manner. Some people think that \§$S> H$m gd©loð> T>§J go Cn`moJ H$aZo H$m à`mg {H$`m OmVm
financial management is important only in h¡Ÿ& Hw$N> cmoJ gmoMVo h¢ {H$ \$m`ZopÝe`c _¡ZoO_|Q> Ho$dc
private enterprises but it is not a correct view. àmBdoQ> BÝQ>aàmBOog Ho$ {c`o hr _hËdnyU© h¡ {H$ÝVw `h
Financial management is essential in all types {dMmaYmam gË` Zht h¡Ÿ& \$m`ZopÝe`c _¡ZoO_|Q> g^r àH$ma