71. Reserve fund: the term reserve fund means such
reserve against which clearly investment etc.,
72. Undisclosed reserves: Sometimes a reserve is
created but its identity is merged with some other a/c or group of accounts so
that the existence of the reserve is not known such reserve is called an
undisclosed reserve.
73. finance management: financial management deals
with procurement of funds and their effective utilization in business.
74. Objectives of financial management: financial
management having two objectives that Is:
1. Profit
maximization: the finance manager has to make his decisions in a manner so that
the profits of the concern are maximized.
2. Wealth
maximization: wealth maximization means the objective of a firm should be to
maximize its value or wealth, or value of a firm is represented by the market
price of its common stock.
75. Functions of financial manager:
Investment decision Dividend
decision Finance
decision Cash
management decisions Performance
evaluation Market
impact analysis
76. Time value of money: the
time value of money means that worth of a rupee received today is different
from the worth of a rupee to be received in future.
77. Capital structure: it refers to the mix of sources from where
the long-term funds required in a business may be raised; in other words, it
refers to the proportion of debt, preference capital and equity capital.
78. Optimum capital structure:
capital structure is optimum when the firm has a combination of equity and debt
so that the wealth of the firm is maximum.
79. Wacc: it denotes weighted average
cost of capital. It is defined as the overall cost of capital computed by
reference to the proportion of each component of capital as weights.
80. Financial break even point: it
denotes the level at which a firm’s EBIT is just sufficient to cover interest
and preference dividend.
style=� t t 7 �_� �� es New Roman"'> Creation of reserve increase
proprietor’s fund while creation of provisions decreases his funds in the
business.
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