Basic Business Finance

Management education in our country has recently experienced a sea-change in its curriculum, wherein electives in finance and marketing have been enlarged. In fact, finance has assumed greater significance for all those pursuing a Commerce course or its ally. It is now a well-established fact that the success of any business concern depends inter-alia upon the efficiency with which funds are being managed. That is why there is a separate paper/subject of ‘Basic Business Finance’ almost in every curriculum of B.Com. IInd Year. As a teacher of Accounting and Finance, I have gathered from the student’s interaction that there is a need for a text which must provide a comprehensive understanding of principles, problems, techniques of financial management, i.e., of financing, investment, and dividend decisions. It is this need that prompted me to write a text in a very simple style in a native context. The result is before the readers.

Some pedagogical features of the book Basic Business Finance are:

• Thoroughly revised on the basis of the Companies Act, 2013;
• A comprehensive presentation of the concepts and relevant theories;
• Several new Illustrative problems have been included in every chapter for a better understanding of the principles and techniques;
• In each chapter, besides Long Answer and Short Answer Type Questions. Multiple Choice Questions with answers have been given a large number of.
• Use of charts and figures to bring more clarity;
• Many new exercises and problems have been included in each chapter to help the students in better learning and understanding.

Basic Business Finance Syllabus For B.com. II Year of Kumaun University, Nainital

Unit – I Introduction: Meaning of Finance, Functions, Scope of Financial Management, financial goal profit vs. wealth maximization.

Unit – II Capitalization: Over Capitalization, Under Capitalization, Capital Structure, Dividends Policy.

Unit – III Cost of Capital: Meaning, Types of Capital Cost of Debt Capital, Preference Shares, Equity Capital and Retained Earnings, Weightage Average Cost of Capital. Capital Budgeting: meaning, Method of Capital Budgeting – Payback, Average Rate of Return, Discounted cash flow techniques.

Unit – IV Ratio Analysis: Meaning, Type, Liquidity, Activity and Profitability Ratios, Limitation of Ratio Analysis, Leverage: Kinds of Leverages – Financial, Operating, and Combined.

Unit – V Fund Flow Analysis: Concept, Schedule of changes in working capital, Statement of Sources and Application of Funds, Cash Flow Statement.

Basic Business Finance Book Contents

1. Financial Management
2. Financial Planning
3. Capitalization
4. Capital Budgeting
5. Cost of Capital
6. Leverage Analysis
7. Capital Structure (Concept and Planning)
8. Capital Structure (Theories and Determinants)
9. Dividend Policy
10. Ratio Analysis
11. Funds Flow Statement
12. Cash Flow Statement (As Per Accounting Standard-3)
13. Management of Working Capital
14. Financing of Working Capital (Including Factoring)