Some possible Revision Notes for the chapter "Financial Management " in Class 12 Business Studies are:
Financial management is a crucial aspect of managing a business, as it involves planning, organizing, controlling, and monitoring the financial resources of the organization. Below are the revision notes for business studies chapter financial management class 12:
1. Meaning of Financial Management:
Financial management refers to the process of managing the financial resources of an organization to achieve its objectives.
2. Objectives of Financial Management:
The objectives of financial management are as follows:
- Maximizing shareholder’s wealth
- Profit maximization
- Optimum fund utilization
- Ensuring financial stability and solvency
3. Financial Planning:
Financial planning involves forecasting the financial requirements of the organization and developing a plan to meet them. The following are the steps involved in financial planning:
- Determination of the financial objectives
- Developing a financial policy
- Formulating financial plans
- Implementing financial plans
- Periodic review of financial plans
4. Source of Finance:
The sources of finance can be classified into two categories: owner’s funds and borrowed funds. The following are the sources of finance:
- Owner’s funds: Equity shares, preference shares, retained earnings, and debentures.
- Borrowed funds: Loans from banks and financial institutions, debentures and bonds, and trade credit.
5. Capital Structure:
Capital structure refers to the mixture of debt and equity capital used by an organization to finance its operations. The optimal capital structure aims to maximize the organization's value. The following factors influence the capital structure:
- Cost of capital
- Risk perception of investors
- Nature of the industry
- Proportion of ownership
6. Working Capital Management:
Working capital management involves managing the current assets and current liabilities of the organization. A good working capital management strategy helps in maintaining sufficient liquidity and avoiding shortages of working capital. The following are the objectives of working capital management:
- Maintaining adequate liquidity
- Maximizing profitability
- Minimizing the cost of funds
- Managing credit policy
In conclusion, financial management is essential for the success of any organization. Financial planning, sources of finance, capital structure, and working capital management are some of the crucial aspects of financial management. Organizations need to adopt a suitable financial management strategy to ensure financial stability and growth.
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