What is Capital Market and Source of Fund to Raise Capital

Capital markets involve two parties on either end of a financial transaction. On one side, there are investors with capital who want to earn a return on their money. On the other, there are the companies, governments, or individuals who need to raise money.The capital market, allow these two groups to come together so that both can meet their goals. Capital markets are an essential part of many countries’ economies,making it...

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Capital Structure in Financial Management

What is a capital structure? Capital means funds employed in business for a period of twelve months and above. Capital excludes short-term funds employed in funds, i.e., working capital. Working capital is employed for a short time and hence ignored. Capital structure gives us the various components of capital both debt capital and share capital. In short, capital structure tells us about how much funds have been brought into business and in what form? It gives us the relationship between debt and equity, known as debt to...

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Correlation between the returns of two different securities in Portfolio

We should not ignore the relationship or correlation between the returns of two different securities in Portfolio. This correlation however has no impact on the portfolios expected return. The portfolio expected return is a straightforward weighted average of returns on the individual securities; the portfolio standard deviation is not the weighted average of individual security standard deviations. Let's understand correlation...

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What is Cash Budget and its Purpose,Objectives and Need

What is Cash Budget and its Purpose,Objectives and Need : The net cash position of a firm as it moves from one budgeting sub period to another is highlighted by the cash budget. Cash budget is a statement showing the estimated cash inflows and cash outflows over the planning horizon. The various purpose of cash budget are: To coordinate the timing of cash need. It pinpoints the period when there is likely to be excess cash. It enables the firm which has sufficient cash to take the advantage of cash discount on its account...

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Ratio Analysis : Advantages and Limitations in Financial Management

Ratio Analysis : Advantages and Limitations in Financial Management What is Ratio Analysis : Ratio analysis is the method or process by which the relationship of items or groups of items in the financial statements are computed, determined and presented. Ratio analysis is an attempt to derive quantitative measures or guides concerning the financial health and profitability of the business enterprise. Ratio analysis can be used both in trend and static analysis. There are several ratios at the disposal of the analyst but...

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