Financial Managment
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Accounting and Financial Management for Bankers — JAIIB.
One-liners from this chapter
Free sample — 8 of 65 rapid-fire Q&A cards.
What is the primary objective of Financial Management in a banking firm?
The primary objective is to maximise shareholder wealth by ensuring optimal utilisation of funds, maintaining liquidity, and achieving profitability while managing risk.
What is 'Financial Management' as a discipline?
Planning, organizing, directing, and controlling financial activities of a firm.
What does the term 'Capital Structure' refer to in Financial Management?
Capital structure refers to the mix of long-term debt and equity used to finance a firm's assets, determining the proportion of owners' funds versus borrowed funds.
What is the 'Profit Maximization' objective in financial management?
Maximizing net profit after tax for the firm's owners.
What is the 'Time Value of Money' concept?
Time Value of Money states that a rupee received today is worth more than a rupee received in the future, because today's rupee can be invested to earn a return.
What is 'Wealth Maximization' and why is it preferred over profit maximization?
Maximizing shareholders' wealth by considering time value and risk.
What is Net Present Value (NPV) in capital budgeting?
NPV is the difference between the present value of cash inflows and cash outflows of a project; a positive NPV indicates the project adds value and should be accepted.
What is the 'Accounting Rate of Return' (ARR) method?
ARR is average net profit divided by average investment, expressed as percentage.
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