Financial management- Overview: Acquisition and use of funds by a business firmo Optimally. o Profitably.

. Scope is broadly defined by : o Largeness of t e firm. o Fastness of growt . o !omposition of firm"s asset. o #i$ of firms finance. o Analy%e&plan&control. o 'nvironment.

Poser: (ow does t e composition of firm"s asset c allenge a treasury manager) Poser: *ould you be appy as a treasury manager in a less capital intensive firm) -debate Main divisions of financial management: Financing activities: o Deciding the capital structure. o Finding the suitable sources for funds. Investing of funds: o Deciding the mix: Fixed Assets. Current Assets. o Appraisal of the assets Technical. Economical Financial. Creating financial opportunities through non financial interventions.

Financial planning: o rofit planning. o Financial forecasting. o Financial control. o !is" Assessment. Financing function is managed b#: Treasurer. Controller.

Treasurer:$ %is tas" is mainl# concerned &ith the financing ' investment functions ta"ing into account the ris" profiles of such activities for the forecasted financial position of the firm. %is basic functions include: !aising (ong term capital. )orro&ing short term. Investment in fixed and current assets. Investment ' portfolio management. Credit administration. )an"ing relationships. ro*ect management. +or"ing capital Management. Currenc# Management and forecasting. Foreign exchange management. Maintaining relationship &ith others to manage the above mentioned functions.

Controller: %e is an information handler, provider and interpreter mainl# concerned &ith accounting and control. %is functions include: roviding accounting and financial information. reparation of budgets ' other information for the management. reparation of financial statements. !eporting to External and internal auditors-statutor# bodies. Asset control. Taxation. .ecretarial &or". Custod# of records.

oser: Treasurer ' Controller complement each others *ob: rovide fe& instances to substantiate this statement. oser: Do #ou thin" of an# attitudinal difference bet&een the t&o/ If so &hat/ +hich function #ou thin" #ou are better suited to/ $ Debate Influences on the treasur# manager: Changes in the financial environment. Financial innovation. Changes in interest rates -structure-pattern. Changes in technolog#-methodolog#-policies. oser: 0ive one contemporar# example for each of the influences. olic# Frame &or" of Treasur# manager:

Finali1ation of Financial ob*ectives. 2pting for financial structuring and .electing the investment opportunities based on: o 3ield: 4i5 6uantum. 4ii5 attern. o Cost 4i5 .tatutor#. 4ii5Transaction. o 2perational convenience. o (i7uidit# factors. o Maturit# rofile. o %olding: 4i5 attern. 4ii5 eriod. 4iii5 Complexities. o Dealings &ith financial intermediaries. o Dealing in securities. 4i5.tri"ing deal. 4ii5Accounting. o Initiating non fund interventions. o !is" Management interventions. o Forecasting the financial needs.

Factors involved in the deciding of a suitable treasur# organi1ation: 0roup structure and .i1e. Management philosoph# and culture. Extent of ris" ta"ing. Mar"et environmental potential. Economies of scale. oser: 0et a specimen of a treasur# organi1ational structure from an# of the big companies. resent .cenario: Turbulence in the capital mar"ets. Fe&er instruments for financing. Complex instruments. 8olatile credit availabilit#. !estrictions-ris"s in investing opportunities. %ighl# volatile and less professionall# developed and supported securities mar"et. Complex ' tard# statutor# s#stem. (ac" of efficient manpo&er and technolog#. Close integration &ith global fortunes and misfortunes.

oser: Choose an# of the points mentioned above and provide a contemporar# example.

Treasurer

Fund manager

Treasur# 2perations Manager

Cash management Forecasting

.hort term financing

(i7uidit# management

Currenc# Manager $reporting $!is" management $dealing

ortfolio Manager $Investment $Monitoring the mar"ets

Treasur# Information .#stem: Essential re7uisites: o 6uic". o Accurate. o 9nambiguous. Comprises of : o Internal (in"s. 4Co$ordination bet&een various offices5 o External lin"s. 4Co$ordination &ith )an"s,FI5

o Creation and Maintaining Decision .upport .#stems. o Transaction support. o !eport generation. Treasur# Manager needs constant updating in: Current Economic Development' economic policies. International developments and international economies and their impact on the national econom#. Monitor# policies. Fiscal and budgetar# policies and its implications to the econom# in general to the firm in particular. Foreign trade and foreign exchange policies. Trends in financial mar"ets both under mone# and capital mar"ets. Current financial practices and the li"el# changes in the near future. ;no&ledge of the competitors functioning. .trategic needs in financial management.