Financial markets are continuously being developed throughout the world to improve the transfer of funds from surplus units to deficit units. In some countries, the financial markets are just starting to be developed. In others, such as the United States, the financial markets are being transformed to remove inefficiencies. Because the financial markets are much …
Category Archive: Financial Management
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Nov 17
Fully Diluted Earnings Per Share
Fully diluted EPS is designed to show the maximum potential dilution of current EPS on a prospective basis. Fully diluted EPS is the amount of current EPS reflecting the maximum dilution that would have resulted from conversions of all convertible securities whether they are CSEs or not, as long as they are dilutive. Fully diluted …
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Nov 17
Advantages and Disadvantages of Standard Costing
Advantages: Standard Costing provides a valuable guidance to management in several management functions for example, formulating policies and determining prices. The standards set act as yardsticks against which actual costs are compared. Thus, standard costing facilitates effective cost control and provides the information required for cost reduction. Measurement and analysis of variances help detecting mistakes and …
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Nov 16
Concept of Cost of Capital
Cost of Capital: Cost of Capital may be defined as the minimum rate of return an investor would be willing to accept for investing funds in a particular project. In other words, the cost of capital is the minimum rate of return required on investment projects to keep the market value per share unchanged. It …
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Nov 14
Factors Affecting Working Capital Requirement
Organizations that are seasonal in nature their operations often require more working capital to stay running during the off season. Although every company may require more than enough to pay all its obligations and therefore organizations must ensure enough working capital at any one time to meet short term obligations. However, the organization must have …
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Nov 14
Why Companies Go For Initial Public Offering
Initial Public Offering (IPO) is the public offering of shares of a company that are not publicly traded. The most common examples of initial public offering are equity securities and fixed-income securities, and sometimes it may be a combination of equity shares and warrants. The term initial public offering is completely different to a seasoned …
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Nov 10
Difference between Primary and Secondary Market
Primary Market: primary market is not organized stock exchanges like Wall Street or any other capital market. A primary market refers to any market where new shares of stock are sold. The primary market is the entry market for companies and investors, where a company or institution that requires initial or additional capital sells its …
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Nov 10
Types of Dividend Policy
When companies make profit from its operation, management has to take decision with those business earnings. They may retain the profits within the company for making further large scale investment in a new project, or they may pay out the profits to the shareholders of the business in the form of dividends and this may be …
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Nov 10
Types of Dividend Payment
Companies pay dividend regularly to its shareholders. A company may retain some portion of its profit for the purpose of re-investment for further expansion in the business operations. This retain portion is also known as retained earnings. The usual practice is to pay dividends in cash. Other option is stock dividend instead of paying cash dividend. …
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Nov 09
Sources of Long Term Financing
Long-term financing refers to funding from within the organization and not from any outside sources. Hence, long-term financing is confined to the organization itself. The common sources of long-term financing include provision of retained earnings; depreciation; general reserves; equity share; debentures, bond, notes and term loans. Sources of Long Term Financing Retained Earnings: Retained earnings …
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