Meaning of Financial Management & Indian Financial System
1. Meaning of Financial Management
Financial Management involves planning, organizing, directing, and controlling financial activities to maximize shareholder wealth.
- Decisions: Investment (Capital Budgeting), Financing (Capital Structure), and Dividend policies.
2. The Indian Financial System
The system comprises financial markets (money and capital markets), financial intermediaries (banks, insurance companies), financial assets, and regulatory bodies (RBI, SEBI).
3. Time Value of Money (TVM)
- Compounding (Future Value):
- $FV = PV \times (1 + r)^n$
- Discounting (Present Value):
- $PV = \frac{FV}{(1 + r)^n}$