Wealth maximization is an appropriate and operationally feasible criterion to choose among the alternative financial actions. It provides an unambiguous measure of what finance should seek to maximize in making investment and financing decisions on behalf of owners (shareholders). Every firm has a goal to make the firm investment and financial decisions rational. The goal…
A dividend reinvestment plan (DRIP) allows each common stockholder to use dividends to buy full or fractional shares of the firm’s common stock. Thus, participating shareholders receive additional shares of company stock rather than getting cash. With a market plan, the firm uses the reinvested dividends to buy its outstanding shares in the open market…
Basic raw material and finished goods inventories represent reasonably liquid assets and are therefore suitable as security for short-term loans. There are several ways in which a lender can obtain a secured interest in inventories: floating lien, chattel mortgage, trust receipt, terminal warehouse receipt, and field warehouse receipt. In the first three methods, the inventory…
Commercial paper is a short-term, unsecured note used by corporations to raise funds and avoid bank borrowing. It’s also used for bridge financing and corporate takeovers.
Trade credit is a financial arrangement where businesses can purchase goods or services on credit, paying later. It helps with cash flow, and builds loyalty between buyers and suppliers.
The cash conversion cycle is the days a company requires to convert resources to cash flows. This measure calculates the period during which each input dollar is committed to production and sales processes before it is converted to cash through the accounts receivable process. The cash conversion process gives insight into the financial stability of…
![13 Functions of a Finance Manager [Most Crucial Tasks]](https://i0.wp.com/www.iedunote.com/img/24647/functions-of-finance-manager.jpg?resize=300%2C200&quality=100&ssl=1 "13 Functions of a Finance Manager [Most Crucial Tasks]")
Finance managers play a vital role in organizations by making financial decisions, managing assets and funds, planning, coordinating, and ensuring financial success. The role of finance managers is crucial for an organization’s success. Their sound financial decisions, effective asset management, and long-term growth strategies are essential for ensuring profitability and achieving organizational objectives. Without their…
Risk management weighs political, social, economic, and engineering factors, and risk assessments to address hazards. It aims to develop, analyze, and compare regulatory options for optimal safety response.