1. MEANING OF FINANCE TYPES OF FINANCE
Finance is often defined simply as the management of money or “funds” so that money is available at the time when it is required .
TYPES OF FINANCE
PUBLIC FINANCE
PRIVATE FINANCE
Government institutions
State govt.
Local self govt.
Central govt.
Personal Finance
Business finance
Finance of non- profit Organisation.

2. BUSINESS FINANCE Business Finance Sole- Proprietary Finance
Business finance refers to money and credit employed in business. It involves procurement and utilization of funds so that business firms may be able to carry out their operations effectively and efficiently. Business finance involves estimation of funds. It is concerned with raising funds from different sources as well as investment of funds for different purposes.
Business Finance
Sole- Proprietary Finance
Partnership Firms Finance
Company or Corporation Finance

3. CORPORATE FINANCE / FINANCIAL MANAGEMENT
Wheeler defines business finance as “that business activity which is concerned with the acquision and conservation of capital funds in meeting the financial needs and overall objectives of business enterprise.
FINANCIAL MANAGEMENT refers to that part of management activity which is concerned with the planning and controlling of the firms financial resources. It deals with finding out various sources for raising funds for the firm.

4. EVOLUTION OF CORPORATE FINANCE
Corporate finance emerged as a distinct field of study only in the early part of this century as a result of consolidation movement and formation of large sized business undertakings. In the initial stages of the evolution, emphasis was placed on the study of sources and forms of financing the large sized business enterprise. Economic recession of 1930 rendered difficulties in raising finance from banks and other financial institutions. Thus, emphasis was laid upon improved methods of planning and control.

5. IMPORTANCE OF CORPORATION FINANCE/FINANCIAL MANAGEMENT
Finance is very essential for smooth running of business. It is the life blood and nerve centre of business. The importance of corporation finance has arisen because of the fact that present day business activities are predominantly carried on company or corporate form of business. The advent of corporate enterprises has resulted into:
the increase in size and influence of the business enterprises,
wide distribution of corporate ownership,
Separation of ownership and management.
As the owners in a corporate enterprise are widely scattered and the management is separated from the ownership, the management has to ensure the maximization of owner’s economic welfare. The success and growth of a firm depends upon adequate return on its investment.

6. The importance of financial management can well be described as the importance of corporate finance . Financial management is indispensable to any organization as it helps in:
financial planning and successful promotion of an enterprise,
acquisition of funds at minimum possible cost,
proper use and allocation of funds,
taking sound financial decisions,
increasing the wealth of the investors and the nation,
Improving the profitability through financial controls,
Promoting and mobilising individual and corporate savings.

7.   FINANCE FUNCTION
Finance function is the most important of all business functions. Business will close down because of absence of finance thus this function cannot be ignored. The need for money is continuous. The management should have an idea of using the money profitably. The inflows and outflows of cash should be properly matched

8. APPROACHES TO FINANCE FUNCTION
THE TRADITIONAL APPROACH:
According to this approach, the scope of finance function was confined to only procurement of funds needed by a business on most suitable terms. The utilization of funds was considered beyond the purview of finance function.
LIMITATIONS
The traditional approach to the scope and functions of finance has now been discarded as it suffers from many serious limitations
Ignores internal decisions making as to proper utilization of funds,
Focus on long term funds and ignores the important issue of working capital finance and management.
Allocation of funds is ignored.
Does not focus on day to day financial problems of organization.

9. THE MODERN APPROACH:
The modern approach views finance function in broader sense. It includes both raising of funds as well as their effective utilization of finance. The techniques models, mathematical programming, simulations and financial engineering are used in financial management to solve complex problems of present day finance. The modern approach considers the three basic management decisions, i.e. investment decisions, financing decisions and dividend decisions within the scope of finance function.

10. AIMS OF FINANCE FUNCTION
Acquiring sufficient finance: The main aim of finance is to assess the financial needs of an enterprise and then finding out suitable sources for raising them.
Proper utilization of funds: Effective utilization of funds is very important. It should be used in such a way that maximum benefit is derived from them.
Increasing Profitability: The planning and control of finance function aims at increasing profitability of the concern. Finance function should be so planned that the concern neither suffers from inadequacy of funds nor wastes more funds than required.
Maximizing Firm’s value: Finance function also aims at maximizing the value of the firm. Besides profits, the type of sources used for raising funds, the cost of funds, the condition of money market, the demand for products are some other considerations which also influence a firm’s value.

11. SCOPE OF FINANCE FUNCTION/FINANCIAL MANGEMENT
Estimating financial requirements
2. Deciding capital structure
3. Selecting a source of finance
4. Selecting a pattern of investment
5. Proper cash management
6. Implementing financial controls
7. Proper use of surpluses

12. Objectives of Business Finance
MAXIMIZE OWNER’S ECONOMIC WELFARE: It can be achieved by:
PROFIT MAXIMIZATION
WEALTH MAXIMIZATION

13. PROFIT MAXIMIZATION Main objective of business
Survival is not possible
Earn profit to cover its costs
Provide fund for growth
Measure of efficiency and economic prosperity of business
Fulfill social goals
Protection against risk.
CRITICISM
Exploitation of works and consumers
Ambiguity
Ignore time value of money
Ignores risk factor
Dividend policy

14. WEALTH MAXIMIZATION Appropriate objectives of business
Stock holders current wealth in a firm= Number of shares owned* Current stock price per share.
Helps in long run survival and growth of business
Leads towards maximizing stock holders utility
CRITICISM
Not necessarily socially desirable
Controversy
Possibility of conflict of interest

15. Measuring Shareholders Value Creation
The two new measures use to determine whether an investment positively contributes to the shareholders wealth :
Economic Value Added (EVA)
Market Value Added (MVA)
ECONOMIC VALUE ADDED (EVA):-
Economic value added is a measure of performance evaluation that was originally employed by Stern Stewart & Co. it is very popular measure today which is used to measure the surplus value created by an investment or a portfolio of investments.
EVA can be calculated as below:-
EVA = (Net Operating profit after tax - cost of capital x capital invested)
Or, EVA = (Return on Investment – cost of capital x capital employed)

16. MARKET VALUE ADDED (MVA):- The market value added (MVA) is the sum total of all the present values of future EVAs. MVA = EVA1 + EVA2 + EVA3 + ……………….. (1+C)1 (1+C)2 (1+C)3 The market value added (MVA) can also be defined as the difference between the current market value of the firm and the book of capital employed by the firm.

17. FINANCIAL DECISIONS
Financial decision refers to decision concerning financial matters of a business firm. There are many kinds of financial management decisions that the firm makes in pursuit of maximizing shareholder’s wealth, viz.., kind of assets to be acquired, pattern of capitalization, distribution of firms income etc. we can classify these decisions into three major groups:-
Investment decisions
Financing decisions
Dividend decisions

18. INVESTMENT DECISIONS
Investment decisions relates to the determination of total amount of assets to be held in the firm, the composition of these assets and the business risk complexions of the firm as perceived by its investors. It is the most important financial decision.
The investment decisions can be classified under to broad groups:-
Long-term investment decision
Short-term investment decision
The long-term investment decision is referred to as the capital budgeting and the short-term investment decision as working capital management .

19. DIVIDEND DECISION FINANCING DECISION
Once the firm has taken the investment decision and committed itself to new investment, it must decide the best means of financing these commitments. Since, firms regularly make new investments, the needs for financing and financial decisions are on going. Hence, a firm will be continuously planning for new financial needs. The third major financial decision relates to the disbursement of profits back to investors who supplied capital to the firm. The term dividend refers to that profits of a company which is distributed by it among its shareholders. It is the reward of shareholders for investments made by them in the share capital of the company.
DIVIDEND DECISION

20. INTER-RELATION OF FINANCIAL DECISIONS
We have studied above the three major groups of financial decisions. Although these are different kinds of financial management decisions yet these decisions are inter-related because the underlying objective of all these decisions is the same, i.e. maximization of shareholders wealth. All these decisions influence one another and are inter-dependent.
(INTER-RELATION OF FINANCIAL DECISION)
INVESTMENT DECISION
DIVIDEND DECISION
FINANCING DECISION

21. FACTORS INFLUENCING FINANCIAL DECISIONS
There are a number of factors that influence the financial decisions. A list of the important factors influencing the decisions is given below:
Cost
Risk
Cash flow position
Control considerations
Floatation cost
Fixed operating cost
State of capital market

22. RISK-RETURN TRADE OFF
Financial decisions of a firm often involve alternative courses of action. A finance manager has to select amongst the various alternatives available to him. For example, while making an investment decision, he has to decide whether, the firm should go in for a machinery having capacity of 50,000 units or 2,00,000 units. In the same manner the financing decision may involve a choice between a debt equity ratios of 1:1 or 2:1, the dividend decision may be concerned with the quantum of profits to be distributed.
The following figure shows the relationship between various financial decisions and the risk return trade off and market value of the firm.

23. RISK the risk return trade off and market value of the firm.
The following figure shows the relationship between various financial decisions and
the risk return trade off and market value of the firm.
INVESTMENT DECISIONS
CAPITAL BUDGETING
WORKING CAPITAL MANAGEMENT
RISK
MARKET VALUE OF THE FIRM
FINANCING DECSIONS
CAPITAL STRUCTURE
RETURN
DIVIDEND DECISIONS
DIVIDEND POLICY
(RISK- RETURN TRADE OFF)

24. FINANCIAL MANGEMENT PROCESS
Financial planning and control
FEED BACK
Financial Decision:
Investment decision
Dividend decision
Financing decision
Risk and Returns characteristics of the firm
Market price of shares
Shareholders wealth

25. FUNCTIONAL AREAS OF FINANCIAL MANAGEMENT
Determining financial needs
Selecting the source of funds
Financial analysis and interpretation
Cost Volume Profit analysis
Capital Budgeting
Working Capital Management
Profit Planning Control
Dividend Policy

26. FUNCTION OF FINANCE MANAGER
Financial Forecasting and Planning
Acquisition of funds
Investment of funds
Helping in valuation decisions
Maintain proper liquidity

27. Thank you ….