A cash manager, among other tasks, has to collect customers’ payments and concentrate them as well as managing the disbursements related to payments becoming due. In other words he manages the time line of short term cash flows and there under also those related to receivables. Connected with these activities there are often delays. In general a float represents a delay on the collection or on the disbursement of cash flow processes. Obviously, a cash manager’s target is to reduce delays in collections. Furthermore it is common practice that cash manager try also to maximize the float on disbursements within the credit terms agreed while exceeding these terms is, from an ethical point of view, questionable. In relation to either collections or disbursements these delays can be divided into four types or components. While a payment is made by check and sent by mail we know there is a time Continue reading
Financial Management
Financial management entails planning for the future of a person or a business enterprise to ensure a positive cash flow, including the administration and maintenance of financial assets. The primary concern of financial management is the assessment rather than the techniques of financial quantification. Some experts refer to financial management as the science of money management. The five basic components of the Financial Management Framework are: Planning and Analysis, Asset and Liability Management, Reporting, Transaction Processing and Control.
Initial Public Offering (IPO)
A good capital market is an essential prerequisite for the industrial and commercial development of a country. Capital market is a central coordinating and directing mechanism for free and balanced flow of financial resources into the economic system operating in a country. It helps the companies who require capital to expand, modernize or diversify their business. To get the capital that is required by the company it usually goes for the issue of shares and the process of issuing of shares is done in the primary market. The primary market in the simplest terms can be defined as a market where the securities are sold in order to raise the funds or the capital required by the company. It is a market for new issues i.e. a market for fresh capital. It provides the channel for sale of new securities. The securities can be in many forms such as equity Continue reading
Government Accounting – Meaning, Objectives and Features
Accounting is concerned with the processing of financial transactions of an entity. It generates and communicates necessary financial information to its users. It is, therefore, a process of recording, classifying and summarizing the financial transactions and communicating the results of its operations. There are different branches of accounting. One of its branches is government accounting. Government accounting is that branch of accounting, which is used in government institution. The government accounting is different from other branches of accounting such as commercial accounting. The accounting system used in government offices to record and report their financial transactions is known as government accounting. Government accounting is concerned with systematic and scientific recording of government revenues and expenditures. It is the systematic process of collecting, recording, classifying, summarizing and interpreting the financial transactions relating to the revenues and expenditures of government offices. It reveals how public funds have been generated and utilized for the Continue reading
Value Creation – Definition, Implementation and Principles
The idea of value creation is to capitalise on what, as an organisation, you already possess. The organisation may be a business, a school, a corporation, a government department — anywhere, in fact, where the main asset of the company is the people within it. Establishing value creation as a way of life for both managers and workers can help define the role of each more precisely, whilst simultaneously making both feel more integrated and involved within the day to day running of a place of work. Making everyone within an organisation feel that they are more than just ‘cogs in a wheel’ establishes a new feeling of unity and cooperation in organisations and can be a great asset in moving a company or other organisation forward because if everyone feels that they are part of the decision-making process then carrying out the aftermath of those decisions is more likely Continue reading
Factors Determining Financial Structure of a Company
Capital structure refers to the mixture of long term funds represented by equity share capital, preference share capital and long term debts. As a matter of fact, capital structure planning is one of the major tasks which involve determination of the right proportion of different securities. Each Corporate security has its own merits and demerits. Too much inclusion of any one kind of security in the capital structure of a company may prove unprofitable or subsequently risky. Therefore, a prudent financial decision should be taken after considering all the factors in view. Capital structure should always be made in the interest of equity shareholders because they are the ultimate owners of the company. However, the interest of other groups, including employees, customers, creditors, society and government should also be duly considered. In this way, efforts should be made to have capital structure most advantageous. Within the constraints, maximum use should Continue reading
Importance of Price to Earnings Ratio (P/E Ratio)
Price to Earnings Ratio The most popular ratio used to assess the value of the equity is the company’s price equity ratio abbreviated as P/E ratio. It is calculated as the ratio of the firm’s current stock price divided by the earnings per share (EPS). The inverse of the P/E ratio is referred to as the earnings yield. Clearly the price earning and the earnings yield are required to measure the same thing. In practice earnings yield less commonly stated and used than P/E ratios. P/E Ratio = Market Value per Share/ Earnings per Share (EPS) Since most companies report earnings each quarter annual earnings per share can be calculated as the most recently quarterly earnings per share times four or as the sum of the last four quarterly earnings per share figures. Most analysts prefer the first method of multiplying the latest quarterly earnings per share value Continue reading