Concepts of Throughput Accounting and Theory of Constraints

Financial Management

Kaizen – Understanding the Japanese Business Philosophy of Continuous Improvement

Operations Management

Role of Leaders in Shaping Organizational Culture

Management Principles

Organizational Culture – Development and Importance

Management Principles

Five Important Organizational Cultural Models

Management Principles

Challenges of International Financial Management

Financial management of a company is a complex process, involving its own methods and procedures. It is made even more complex because of the globalization taking place, which is making the world’s financial and commodity markets more and more integrated. The integration is both across countries as well as markets. Not only the markets, but even the companies are becoming international in their operations and approach. Managers of international firms have to understand the environment in which they function if they are to achieve their objective in maximizing the value of their firms, or the rate of return from foreign operations. The environment consists of: The international financial system, which consists of two segments: the official part represented by the accepted code of behavior by governments comprising the international monetary system, and the private part, which consists of international banks and other multinational financial institutions that participate in the international Continue reading

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Dishonour of Cheques – Section 138 of Negotiable Instruments Act

A paying banker is under a legal obligation to honour his customer’s mandate. He  is bound to do so under his contractual relationship with his customer. A wrongful  dishonour will have the worse effect on the banker. However, under the following  circumstances, the payment of a cheque may be refused: Countermanding: Countermanding is the instruction given by the customer of a bank  requesting the bank not to honour a particular cheque issued by him. When such an  order is received, the banker must refuse to pay the cheque. Upon receipt of notice of death of a customer: When a banker receives written  information from an authoritative source, regarding the death of a particular  customer, he should not honour any cheque drawn by that deceased customer. Upon the receipt of notice of insolvency: Once a banker has knowledge of the  insolvency of a customer he must refuse to pay cheques drawn Continue reading

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Indian Perspective on Capital Account Convertibility

Just like in any other country, India’s foreign exchange transactions (transactions in dollars, pounds, or any other currency) are also broadly classified into two accounts, namely, the current account transactions and capital account transactions. A “current account transaction” could be exemplified where an Indian citizen needing foreign exchange of smaller amounts, say $3,000, for travelling abroad or for educational purposes, can obtain the same from a bank or a money-changer. On the other hand, a “capital account transaction” involves someone who wants to import plant and machinery or invest abroad, and needs a large amount of foreign exchange, say $1 million. But, the importer will have to first obtain the permission of the Reserve Bank of India (RBI) only then that the transaction becomes a “capital account transaction”. This means that any domestic or foreign investor has to seek the permission from a regulatory authority, like the RBI, before carrying Continue reading

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Seven Management and Planning Tools

Competition level within every industry is constantly growing and businesses try to find any possible ways to improve quality of products and services. However, quality is quite a complex concept that can be viewed as a measure of perfection. Quality improvement leads to a perfect product that is meant to satisfy the customer. In the early 1980s, the seven management and planning tools were designed as major tools for effective planning and management of processes, which are above the quality operation. They are as follows: 1. Affinity Diagrams The first of the tools in the list is Affinity diagrams. The affinity diagram is a visual brainstorming instrument that can be used to categorize various facts and data, ideas and opinions by a proximity factor. It is especially useful for the purpose of systematization of big data into groups and categories, according to some forms of affinity. In its own turn, Continue reading

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Mutual Fund Evaluation

The data for evaluating mutual fund can be found in its prospectus, quarterly and annual reports. The following financial parameters should be used in analyzing a mutual fund and its management: 1. Total Return Total Return indicates the impact of appreciation of its value and dividends (if any). It is becoming increasingly common to find total-return numbers published in newspapers, magazines or other sources. One can calculate total return using the following formula: Total Return (TR) =   [(Distributions + Change in NAV)/NAV at the beginning of the period] x 100 Distribution is the income received by the investors for having their money in the mutual fund. The components of dividends are stock dividends, bond interest etc. 2. Expense Ratio Expense Ratio is the ratio of total recurring expenses (fees, commission etc.) to average net assets. Lower numbers are desirable. Since the expense ratio fluctuates, it is better to compute Continue reading

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Trade Cycle or Business Cycle Concept in Managerial Economics

Definition of Trade Cycle or Business Cycle According to Keynes, “A trade cycle is composed of periods of good trade characterized by rising prices and low unemployment percentage, alternating with periods of bad trade characterized by falling prices and high unemployment percentage. “ Characteristics of Trade Cycles From the above definition, it should be clear that trade cycle is the rhythmic fluctuations of the economy, that is, periods of prosperity followed by periods of depression. However, the waves of prosperity and depression need not always be of the same length and amplitude. Further, trade cycles varied tremendously in magnitude. While some have smaller cyclical fluctuations in economic activity, others have great intensity of fluctuations. Expansion in some cycles reaches the full employment level and stays there. However, in some cycles, the peak is reached even before full employment. Sometimes, the cyclical fluctuations may be prolonged for one reason or the Continue reading

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