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Business Studies

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  1. Financial Management Business Studies

  2. Financial Management Contents CONTENTS Learning Objectives Capital Structure CONTENTS Concept and Objectives of Financial management Case Study Case Study CONTENTS CONTENTS Financial Decisions Financial Planning

  3. Financial Management Case Study Tata Motors - Financing the Acquisition of Jaguar and Land Rover • Tata Motors is a part of Tata Group, an India based business giant with a presence in over 80 countries and a work force of around 290,000 people. The Tata Group comprised 98 companies of which 27 were publicly listed.

  4. Financial Management Case Study Tata Motors - Financing the Acquisition of Jaguar and Land Rover In June 2008, Tata Motors acquired Jaguar and Land Rover (JLR) from the US-based Ford Motors for 2.3 billion U.S Dollar.

  5. Financial Management Case Study Tata Motors - Financing the Acquisition of Jaguar and Land Rover • Initially, Tata Motors had proposed to secure funds through three simultaneous rights issues, but when they announced the right issue the price of shares was reduced from 417.80 to 374.55

  6. Financial Management Case Study Tata Motors - Financing the Acquisition of Jaguar and Land Rover   Then to finance the acquisition, Tata Motors raised a bridge loan of 3 billion U S dollars from a consortium of banks.

  7. Financial Management Case Study Tata Motors - Financing the Acquisition of Jaguar and Land Rover   When JLR was acquired, Tata Motors was of the view that both Jaguar and Land Rover would be able to generate funds for the working capital internally. But it was in vain due to adverse market conditions.

  8. Financial Management Case Study Tata Motors - Financing the Acquisition of Jaguar and Land Rover Consequently, the company finds it difficult to repay the bridge loan and need to find additional source to keep the operations of JLR going.

  9. Financial Management Case Study Tata Motors - Financing the Acquisition of Jaguar and Land Rover Do you know how these can be managed in business? Owned Fund Borrowed Fund Loans and debentures Shares and Stock The following Discussion will take you there. To provide working capital, the company arranged funds through a rights issue, sales of stakes in other subsidiaries and raising some long-term debt.

  10. Financial Management Learning Objective After studying this chapter, you should be able to understand the meaning and Importance of: Concept and Objectives of Financial Management Financial decisions Fixed and Working Capital Fixed and Working Capital Capital Structure Financial Planning

  11. Financial Management Business Finance The requirements of funds by business to carry out its various activities are called business finance. No business can function unless its activities are financed properly in time. The key factor behind the success of every single process will depends on the free flow of Finance there for, is called the lifeblood of every business activity.

  12. Financial Management Concept and Importance Financial Management is concerned with optimal procurement as well as usage of finance. It aims at reducing the cost of funds procured, keeping the risk under control and achieving effective deployment of such funds. It also aims at ensuring availability of enough funds whenever required as well as avoiding idle finance.

  13. Financial Management Financial Decisions Financing Decisions Investment Decision Dividend Decision Financial Decisions In a financial context, it means the selection of best financing alternative or best investment alternative. Financial decision-making is concerned with three broad areas like Investment, Financing and Dividend decisions.

  14. Financial Decisions Investment Decisions Long Term Capital Budgeting Investment Decisions Influencing Factors Working Capital Management Short Term A firm’s resources are scarce in comparison to the uses to which they can be put. A firm, therefore, has to choose where to invest these resources. The investment decision, therefore, relates to how the firm’s funds are invested in different assets.

  15. Financial Decisions Factors influencing Investment Decisions Factors influencing Finance Decisions Cash flows of the project Rate of return Investment criteria