Q 1. Write down the Objectives of Financial Management and Corporate Finance?

Objectives of Financial Management: 1. To ensure regular and adequate supply of funds to the concern. 2. Assurance of availability of timely, appropriate and dependable financial and non-financial information. 3. Use resources competently, effectively and economically. 4. Strengthen accountability. 5. Provide a helpful control environment 6. Conform to authorities and preserve assets. 7. To ensure safety on investment 8. To ensure optimum funds utilization. 9. To ensure adequate returns to the shareholders. Objectives of Corporate Finance: 1. The first is the objective function, where we define what exactly the objective in decision making should be. 2. The second is the investment decision, where we look at how a business should allocate of resources across competing uses. 3. The third is the financing decision, where we examine the sources of financing and whether there is an optimal mix of financing. 4. The fourth is the dividend decision, which relates to how much a business should reinvest back into operations and how much should be returned to the owners. 5. Finally, there is valuation, where all of the decisions made by a firm are traced through to a final value

Q.2: Roles of Finance Manager, explain briefly?

Raising of Funds: In order to meet the obligation of the business it is important to have enough cash and liquidity. A firm can raise funds by the way of equity and debt. It is the responsibility of a financial manager to decide the ratio between debt and equity. It is important to maintain a good balance between equity and debt. Allocation of Funds: Once the funds are raised through different channels the next important function is to allocate the funds. The funds should be allocated in such a manner that they are optimally used. In order to allocate funds in the best possible manner the following point must be considered

The size of the firm and its growth capability Status of assets whether they are long term or short tem

Mode by which the funds are raised.

Profit Planning: Profit earning is one of the prime functions of any business organization. Profit earning is important for survival and sustenance of any organization. Profit planning refers to proper usage of the profit generated by the firm. Profit arises due to many factors such as pricing, industry competition, state of the economy, mechanism of demand and supply, cost and output. Taking Maximum Benefits from Leverage Finance manager uses both operating and financial leverage and try to use it for taking maximum benefit from leverage. International Financial Decision Finance manager finds opportunities in international financial decision. In these opportunities, he does the contracts of credit default swap, interest rate swap and currency. Investment Decisions

Finance manager checks the net present value of each investment project before actual investment in it.

Risk Management

Happening of risks means facing different losses. Finance manager is very serious on risk and its management. He plays important role to find new and new ways to control risk of company. Like other parts of management, he estimates all his risks, he organize the employees who are responsible to control risk.

Q.3: Write down the various forms of Business Organizations?

The various forms of Business Organizations are as follow: Sole proprietorship Partnership Companies Sole proprietorship A sole proprietorship is a business owned by one person. The owner may operate on his or her own or may employ others. The owner of the business has total and unlimited personal liability of the debts incurred by the business.

Partnership A partnership is a form of business in which two or more people operate for the common goal of making profit. Each partner has total and unlimited personal liability of the debts incurred by the partnership. The partnership is divided into three types:a) General partnerships b) Limited partnerships. c) Limited liability partnership. Companies A company, chartered by the state in which it is headquartered, is considered by law to be a unique entity, separate and apart from those who own it. A Company can be taxed; it can be sued; it can enter into contractual agreements. The owners of a corporation are its shareholders. The shareholders elect a board of directors to oversee the major policies and decisions. The company has a life of its own and does not dissolve when ownership changes.

Q.4: What do you understand by the Agency Problem?

Agency Problem Agency problem is a conflict of interest arises in any relationship where one party is expected to act in another's best interests. This problem is arises where an agent who is supposed to make the decisions that would best serve the principal is naturally motivated by self-interest, and the agent's own best interests may differ from the principal's best interests. The agency problem is also known as the "principalagent problem.

Q.5: Define in detail The Financial Market?

Financial Market A financial market is a market in which people and entities can trade financial securities, commodities, and other fungible items of value at low transaction costs and at prices that reflect supply and demand. Securities include stocks and bonds, and commodities. There are both general markets (where many commodities are traded) and specialized markets (where only one commodity is traded). A financial market consists of Capital markets in which bonds, stocks and equities are traded. Capital market is divided into two types of market 1. Primary market 2. Secondary market In primary market newly issued bonds and stocks are exchanged and in secondary market buying and selling of already existing bonds and stock take place. So the capital market can be divided into Bond market and Stock market. Bond Market provides financing by bond issuance and bond trading. Stock Market provides financing by shares or stock issuance and by share trading as a whole Capital Market Facilitates rising of capital.

Q.6: What do you know about the various stakeholders of the Business?
Stakeholders of the Business: Stakeholders are all those persons or entities which are directly and indirectly connected with the company. These are:1. Employees 2. Shareholders 3. Governments 4. Communities 5. Customers 6. Banks and other financial institutions. 7. Suppliers 8. Contractors 9. General public 10. BODs 11. Creditors 12. Society

Q.7: Differentiate Between Financial Accounting and Cost Accounting?

FINANCIAL MANAGEMENT T /COST ACCOUNTING/MANAGEMENT ACCOUNTING It deals with financial as well as non-financial terms It deals with the events which are the past as well as for the events of future There is no legal requirement for any company to maintain its cost accounting record In cost and management accounting there is no legal requirement to have the cost accounting record audited for any company In cost and management accounting there is no such rule or standard available for guideline. Although there are many commonly used In cost and management accounting techniques available all over the world In cost and management accounting records are secretly maintained so that these records might be available for internal management decision making only

FINANCIAL ACCOUNTING / FINANCIAL REPORTING It deals in financial terms only It deals the events which are the past It is legal requirement for every company to prepare financial records For every public limited company audit of financial records is compulsory by law For financial Accounting the is a guideline available at worldwide level to be followed. These guidelines are known as international standards on accounting (ISA) that is why financial accounting produces a standardized reports all over the world Financial accounting records are used not only for internal management decisions but also these records are published and made available externally

Q.8: list down various questions which are faced by Corporate Finance or Financial management?
Following are the various questions which are faced by Corporate Finance or Financial management: a) What long term investment should the firm take? b) Where will we get the long term financing to pay for the investment? c) How will we manage the everyday financial activities of the firm? d) What is the capital budgeting decision? e) What do you call the specific mixture of long term debt and equity that a

firm chooses to use?

Q.9: In which kind of financial management decision corporate finance / financial management deals? Financial management decision is based on following: a) Capital budgeting b) Capital structure c) Working capital management.

a). Capital budgeting:

Capital budgeting is the process of planning and managing a firm's long-term investments. The key to capital budgeting is size, timing, and risk of future cash flows is the essence of capital budgeting.
b). Capital structure:

Capital Structure refers to the specific mixture of long-term debt and equity the firm uses to finance its operations.
c). Working capital management:

Working Capital Management refers to a firm's short-term assets, such as inventory, and its short-term liabilities, such as money owed to suppliers. It is used to manage or meet day-to-day expenses of the firm. Q.10: Differentiate the roles of Treasurer and Controller? The Chief Financial Officer (CFO) may have many officers under him to carry out his function. Broadly his functions are divided into two types: 1. Treasury function 2. Control functions
1). Treasury function:

The main role of Treasurer is that he refers to the financial officer and then looks at the task of financing and its related activities. Treasury always deals with liquid assets and so the main role of treasurer is to look at the cash and its other liquid assets. Some important tasks of Treasurer are as follows:

a) He formulate the whole capital structure of the organization in accordance to goals of the organization and then to implement it to the organization. b) He also manages the amount of liquid assets and all type of cash. c) He basically acts as a cashier. d) He plays the role of an authority signatory on payment cheques including the authority to approve such cheques.
2). Control functions:

As we have already seen that the treasurer deals with liquid assets, the controller of the organization has to record the transactions of these liquid assets. It is the combined and effective working of both the departments that give rise to an effective system of internal controls. Controller is a financial officer responsible for accounting and control. He does the following functions:
a) Records all the transactions in the general ledger, the accounts receivables

and the accounts payables, sub-ledger, transaction with respect to fixed assets such as depreciation, inventory control, etc. b) He looks into the aspects of taxes and insurance. c) He also keeps track of company's short term investments by recording and reconciling the transaction with those of the brokerage firms.