1. Business Finance & Financial Management / ബിസിനസ്സ് ഫിനാൻസ് & സാമ്പത്തിക മാനേജ്മെന്റ്
Business Finance (ബിസിനസ്സ് ഫിനാൻസ്): Money required for carrying out business activities – ബിസിനസ് പ്രവർത്തനങ്ങൾ നടത്തുന്നതിന് ആവശ്യമായ പണം.
Financial Management (സാമ്പത്തിക മാനേജ്മെന്റ്): “Deals with procurement of funds and their effective utilization in the business.” – S.C. Kuchhal
മലയാളം: “ഫണ്ടുകളുടെ സമ്പാദനവും ബിസിനസ്സിൽ അവയുടെ ഫലപ്രദമായ വിനിയോഗവും കൈകാര്യം ചെയ്യുന്നു.”
2. Objectives / ലക്ഷ്യങ്ങൾ
- Profit Maximisation (ലാഭം പരമാവധിയാക്കൽ): Focus on short-term profits – ഹ്രസ്വകാല ലാഭത്തിൽ ശ്രദ്ധ കേന്ദ്രീകരിക്കുക.
- Wealth Maximisation (സമ്പത്ത് പരമാവധിയാക്കൽ): Increase market value of shares (long-term) – ഓഹരികളുടെ വിപണി മൂല്യം വർദ്ധിപ്പിക്കുക (ദീർഘകാല). Wealth = No. of shares × Market price.
3. Three Major Financial Decisions / മൂന്ന് പ്രധാന സാമ്പത്തിക തീരുമാനങ്ങൾ
A) Investment Decision / Capital Budgeting (നിക്ഷേപ തീരുമാനം)
Meaning: How funds are invested in assets (long-term & short-term) – ആസ്തികളിൽ ഫണ്ട് എങ്ങനെ നിക്ഷേപിക്കുന്നു.
Factors affecting (ഘടകങ്ങൾ): Cashflow of project, Rate of return, Investment criteria.
B) Financing Decision (ധനശേഖരണ തീരുമാനം)
Meaning: How to raise funds (shares, debentures, loans) – ഫണ്ട് എങ്ങനെ സമാഹരിക്കുന്നു.
Factors affecting (ഘടകങ്ങൾ): Cost, Risk, Flotation cost, Cash flow, Control, Capital market condition.
C) Dividend Decision (ഡിവിഡന്റ് തീരുമാനം)
Meaning: How much profit to distribute as dividend vs. retain – എത്ര ലാഭം ഡിവിഡന്റായി വിതരണം ചെയ്യണം, എത്രം കമ്പനിയിൽ നിലനിർത്തണം.
Factors affecting (ഘടകങ്ങൾ): Earnings amount & stability, Growth opportunities, Cash flow, Shareholders’ preference, Tax policy.
4. Financial Planning / സാമ്പത്തിക ആസൂത്രണം
Meaning: Estimating fund requirements and specifying sources – ഫണ്ട് ആവശ്യകതകൾ കണക്കാക്കുകയും ഉറവിടങ്ങൾ വ്യക്തമാക്കുകയും ചെയ്യുക.
Objectives (ലക്ഷ്യങ്ങൾ):
1. Ensure availability of funds when required – ആവശ്യമുള്ളപ്പോൾ ഫണ്ട് ലഭ്യത ഉറപ്പാക്കുക.
2. Ensure firm does not raise resources unnecessarily – കമ്പനി അനാവശ്യമായി ഫണ്ട് സമാഹരിക്കുന്നില്ലെന്ന് ഉറപ്പാക്കുക.
5. Capital Structure / മൂലധനഘടന
Meaning: Mix between owner's funds (equity) and borrowed funds (debt) – ഉടമസ്ഥരുടെ ഫണ്ടും (ഇക്വിറ്റി) വായ്പാ ഫണ്ടും (ഡെറ്റ്) തമ്മിലുള്ള മിശ്രിതം.
Trading on Equity / Financial Leverage (സാമ്പത്തിക പ്രയോജനം): Using fixed-cost funds (debt) to increase returns for equity shareholders – ഇക്വിറ്റി ഓഹരി ഉടമകളുടെ വരുമാനം വർദ്ധിപ്പിക്കുന്നതിന് നിശ്ചിത ചെലവുള്ള ഫണ്ട് (ഡെറ്റ്) ഉപയോഗിക്കുന്നു.
Factors Affecting Capital Structure (മൂലധനഘടനയെ ബാധിക്കുന്ന ഘടകങ്ങൾ): Cash flow position, Interest coverage ratio, Debt service coverage ratio, Return on Investment (ROI), Tax rate, Cost of capital, Risk, Flexibility, Control.
6. Fixed Capital & Working Capital / സ്ഥിര മൂലധനവും പ്രവർത്തന മൂലധനവും
A) Fixed Capital (സ്ഥിര മൂലധനം)
Meaning: Investment in long-term assets (land, machinery) – ദീർഘകാല ആസ്തികളിലെ നിക്ഷേപം.
Factors affecting (ഘടകങ്ങൾ): Nature of business, Scale of operations, Technology, Growth prospects.
B) Working Capital (പ്രവർത്തന മൂലധനം)
Meaning: Funds for day-to-day operations (Current Assets – Current Liabilities) – ദൈനംദിന പ്രവർത്തനങ്ങൾക്കുള്ള ഫണ്ട്.
Factors affecting (ഘടകങ്ങൾ): Nature of business, Operating cycle, Scale of operations, Business cycle, Credit policy.
7. Key Previous Year Questions (with answers)
- Hint: Long-term investment decision - Capital budgeting; Short-term investment decision - ? (2019 Mar) → Working capital decision.
- Correct equation relating to working capital? (2020 Mar) → Current Assets - Current Liabilities.
- Excess of current assets over current liabilities is known as? (2020 Say) → Net working capital.
- Term that denotes the mix between owner's fund and borrowed fund? (2022 Mar) → Capital structure.
- Find odd one: Sundry debtors, Furniture, Land & Building, Machinery? (2022 Say) → Sundry debtors (current asset, others are fixed assets).
- Quantum of finance to be raised from long-term sources is related to? (2023 Mar) → Financing Decisions.
- Full form of RoI? (2024 Mar) → Return on Investment.
- Decision to purchase a new machinery is? (2024 Say) → Investment decision.
- Assets expected to get converted into cash within one year are called? (2025 Mar) → Current assets.
- Cost involved in process of raising financial resources are called? (2025 Say) → Flotation cost.
- Briefly explain the meaning of financial planning? (2019 Mar) → Estimating fund requirements and specifying sources.
- Which capital: Investment in long-term securities? Investment in short-term securities? (2021 Mar) → Fixed capital; Working capital.
- What is fixed capital? (2021 Say) → Investment in long-term assets like land, building, machinery.
- Distinguish between Fixed Capital and Working Capital? (2024 Mar) → Fixed: long-term, for fixed assets; Working: short-term, for daily operations.
- Write the twin objectives of financial planning? (2024 Mar) → 1) Ensure fund availability; 2) Avoid unnecessary fund raising.
- What is capital structure? (2024 Say) → Mix of owner's funds and borrowed funds.
- Which decision determines amount of profit to be retained? Explain any two factors affecting it? (2019 Say) → Dividend decision; Factors: earnings, growth opportunities.
- Explain the concept of financial planning? (2020 Mar) → Process of estimating fund requirements and specifying sources.
- "Decision regarding investment in long-term assets are called capital budgeting decisions." Describe any three factors affecting such decisions? (2020 Say) → Cash flow, rate of return, investment criteria.
- Describe the term 'Trading on Equity'? (2023 Say) → Using debt to increase return on equity.
- Briefly explain the important financial decisions? → Investment, Financing, Dividend decisions.
- What is financial planning? List out its objectives? (2024 Mar) → As in section 4.
- What are the main objectives of financial management? Briefly explain? (2025 Mar) → Profit maximisation and Wealth maximisation.
- Distinguish between fixed and working capital? (2025 Say) → As in section 6.
- Capital structure refers to combination between owner's fund and borrowed fund. a) Do you agree? b) Write any Three factors affecting choice of capital structure? (2021 Mar) → a) Yes; b) Cash flow, ROI, Tax rate.
- Mention any two important decisions taken by financial management? (2021 Say) → Investment decision and Financing decision.
- Explain any four factors affecting the requirement of Fixed Capital? (2023 Mar) → Nature of business, scale, technology, growth.
- What is Financial Management? List out the three broad decisions concerned with finance function? (2023 Say) → Definition; Investment, Financing, Dividend decisions.
- Explain the term 'Trading on Equity'. Why, when and how it can be used by a Company? (2025 Mar) → Definition; When ROI > interest rate, use debt to increase EPS.
- Explain any four factors affecting dividend decisions? (2025 Say) → Earnings, growth opportunities, cash flow, shareholders' preference.
- Dividend decision is based on certain factors. Explain any five such factors? (2023 Mar) → Earnings amount, stability, growth, cash flow, tax policy.
- What you mean by working capital? List out any four factors affecting working capital? (2023 Say) → Working capital = CA - CL; Factors: nature of business, operating cycle, scale, credit policy.
- Discuss any five important determinants of working capital requirements? (2024 Mar) → As above.
- Explain five factors which affect the working capital requirements of a business? (2024 Say) → As above.
- Explain the factors affecting dividend decision? (any five) (2025 Mar) → As in section 3C.
- Briefly describe any five factors affecting the choice of capital structure of a business? (2025 Say) → Cash flow, ROI, tax rate, cost, risk.
- Every finance manager has to take three important decisions. Which are they? Explain? (2022 Mar) → Investment, Financing, Dividend decisions.
- Write short notes on: a) Dividend decision. b) Capital structure. c) Financial management? (2022 Say) → As in sections 3C, 5, and 1.
- One of the financial decisions relates to amount of profits to be retained. a) Identify. b) Explain any seven factors affecting this decision? (2019 Mar) → a) Dividend decision; b) Factors from section 3C.
- This concept refers to mix between owner's fund and borrowed fund. a) Identify. b) Explain the various factors that affect it? (2019 Say, 2020 Say) → a) Capital structure; b) Factors from section 5.
- Explain the factors affecting the working capital requirements of a company? (any Eight points) (2020 Mar) → Nature of business, scale, operating cycle, credit policy, etc.
📘 Micro Notes – +2 Business Studies (Chapter 9: Financial Management)
SimonMash.com
