Finance Management- 301

8/12/2019 Finance Management- 301

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ASSIGN MEN T BOOKLET

Identity No. : 10MB00123

Learner Name : I UMA DEVI

Mobile No : 9885624490

Program : M.B.. !"eneral#

"ro$% : &inan'e

Pa%er Name !($b)e't# : *a%ital In+e,tment and &inan'ial -e'i,ion,

(tation: i,a/a%atnam

-ate: 20.01.2013 Learner (ignat$re


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FM 3 0 1: C A PIT A L INVE S T M E N T A N D F IN A N C IA L D E C IS IO N S

ASS IGN M EN T - I

1. rite (ort Note, abo$t te olloing a,%e't,

a# Fu t u r e V alue of M o e !:

Future "alue i, te + a l$e o an a ,,e t at a ,%e'ii' date. It mea,$re, te

nominal $t$re ,$m o money tat a gi+en ,$m o money i, ort at a

,%e'iied time in te $t$re a,,$ming a 'ertain in t e r e, t r a te or more

generally r a t e o r e t $r n it i, te % r e,e nt + a l$ e m$lti%lied by te a ''$m$ la t ion

$n't ion 7e +al$e doe, not in'l$de 'orre'tion, or inlation or oter a'tor,

tat ae't te tr$e +al$e o money in te $t$re. 7i, i, $,ed in t ime + a l$e o

mon ey 'al'$lation,.

b# I " e #t$e t D e % &o #:

I"e#t$et 'e%&o# are made by in + e , t or, and in + e, t m e nt m a n a g e r ,.

In+e,tor, 'ommonly %erorm in + e, t m e nt a n a ly , i, by ma/ing $,e o

$ndament al analy,i , t e 'n i' a l a n a ly , i, , 'r e e n e r, and g $t e e l. In+e,tment

de'i,ion, are oten ,$%%orted by d e ' i,ion to o l,. 7e %ortolio teory i, oten

a%%lied to el% te in+e,tor a'ie+e a , a t i, a' t ory r e t $rn 'om%ared to te r i,/

ta/en.

'# Pr o(e%t L &fe C! %le

7e ,e$en'e o %a,e, tro$g i' te %ro)e't ill e+ol+e. It i,

ab,ol$tely $ndamental to te management o %ro)e't, . . . It ill ,ignii'antly

ae't o te %ro)e't i, ,tr$'t$red. 7e ba,i' lie 'y'le ollo, a 'ommon

generi' ,e$en'e: %%ort$nity -e,ign -e+elo%ment Prod$'tion ;and'l$de, intere,t and in'ome ta> e>%en,e,.

O+erat&) &%o$e i, te dieren'e beteen o%erating re+en$e, and

o%erating e>%en,e,. en a irm a, ?ero no n < o % e r a t ing in'om e ten

o+erat&) &%o$e i, ,ometime, $,ed a, a ,ynonym or EBIT and o % e r a t ing

% roit.

E B IT A e + e n $ e C % e r a t ing e > % e n , e , !P=D# E N on < o % e r a t ingin'ome

E B T

E le %tr o&% Be e f&t # T r a# fe r ,EBT

Ele%tro&% Beef&t# Tra#fer ,EBT# i, an ele'troni' ,y,tem tat allo, a

re'i%ient to a$tori?e tran,er o teir go+ernment beneit, rom a &ederal

a''o$nt to a retailer a''o$nt to %ay or %rod$'t, re'ei+ed. =B7 i, $,ed in all

50 (tate, te -i,tri't o *ol$mbia P$erto i'o te irgin I,land, and

"$am. =B7 a, been im%lemented in all (tate, ,in'e F$ne o 2004.

e# NI . NOI A++roa%/

Net I%o$e:

''ording to ti, a%%roa' 'a%ital ,tr$'t$re de'i,ion i, rele+ant to te

+al$ation o te irm in a, m$' a, 'ange in te %attern o 'a%itali?ation

bring, abo$t 'orre,%onding 'ange in te o+erall 'o,t o 'a%ital and total

+al$e o te irm. 7i, teory i, al,o /non a, i>ed /ey teory a,

%ro%o$nded by -a+id -$rand.

7e 'riti'al a,,$m%tion o te teory are

!1# 7ere are no 'or%orate ta>e,.

!2# 7e debit 'ontent doe, not 'ange ri,/ %er'e%tion o te in+e,tor,.

!3# 7e 'o,t o debt i, le,, tan 'o,t o e$ity.
http://en.wikipedia.org/wiki/Accountancyhttp://en.wikipedia.org/wiki/Accountancyhttp://en.wikipedia.org/wiki/Earningshttp://en.wikipedia.org/wiki/Profit_(accounting)http://en.wikipedia.org/wiki/Profit_(accounting)http://en.wikipedia.org/wiki/Non-operating_incomehttp://en.wikipedia.org/wiki/Profit_(accounting)http://en.wikipedia.org/wiki/Profit_(accounting)http://en.wikipedia.org/wiki/Profit_(accounting)http://en.wikipedia.org/wiki/Revenuehttp://en.wikipedia.org/wiki/Operating_expensehttp://en.wikipedia.org/wiki/Non-operating_incomehttp://en.wikipedia.org/wiki/Non-operating_incomehttp://en.wikipedia.org/wiki/Accountancyhttp://en.wikipedia.org/wiki/Earningshttp://en.wikipedia.org/wiki/Profit_(accounting)http://en.wikipedia.org/wiki/Non-operating_incomehttp://en.wikipedia.org/wiki/Profit_(accounting)http://en.wikipedia.org/wiki/Profit_(accounting)http://en.wikipedia.org/wiki/Profit_(accounting)http://en.wikipedia.org/wiki/Revenuehttp://en.wikipedia.org/wiki/Operating_expensehttp://en.wikipedia.org/wiki/Non-operating_incomehttp://en.wikipedia.org/wiki/Non-operating_income


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Net O+erat&) I%o$e ,NoI A++roa%/

7i, a%%roa' al,o %ro%o$nded by -$rand i, )$,t o%%o,ite o Net In'ome

!NI# a%%roa'. ''ording to ti, a%%roa' o+erall 'o,t o 'a%ital and +al$e o

te irm are inde%endent o 'a%ital ,tr$'t$re de'i,ion, and 'ange in degree

o inan'ial le+erage doe, not bring abo$t and 'ange in +al$e o te irm and

'o,t o 'a%ital.

7e a%%roa' i, ba,ed on te olloing a,,$m%tion,:

!i# 7e o+erall 'o,t o 'a%ital !/0# remain, 'on,tant or all degree, o debt

e$ity mi> or le+erage.

!ii# 7ere are no 'or%orate ta>e,.

!iii# 7e mar/et 'a%itali?ation te +al$e o te irm a, a ole.

!i+# 7e ad+antage debt i, ,et o e>a'tly by in'rea,e in te e$ity

'a%itali?ation rate.


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2. -eine &inan'ial Management and al,o e>%lain +ario$, ob)e'ti+e, o te

&inan'ialManagement.

n,: F& a % &al $ aa ) e$e t i, tat ,%e'iali?ed a'ti+ity i' i, re,%on,ible or

obtaining and ae'ti+ely $tili?ing te $nd, or te ei'ient $n'tioning o te

b$,ine,, and tereore it in'l$de, inan'ial %lanning inan'ial admini,tration

and inan'ial 'ontrol. &inan'ial management reer, to tat %art o te

management i' i, 'on'erned it te ei'ient %lanning and 'ontrolling

te inan'ial aair, o te enter%ri,e.

& in a n' ia l m a n a g e m e nt %lay, te olloing role. e d a ,,e t , :

&i>ed a,,et, a+e an im%ortant 'ontrib$tion in in'rea,ing te earning 'a%a'ity

o te b$,ine,,. Long term in+e,tment de'i,ion, al,o 'alled 'a%ital b$dgeting

de'i,ion rai,e te ,i?e o i>ed a,,et,.

b# - e t e rm in a t ion o '$rr e nt a ,,e t , : *$rrent a,,et, are needed to meet te

day to day tran,a'tion, o te b$,ine,,. 7e total in+e,tment in '$rrent a,,et,

i, to be determined and te ,%lit $% into it, element, i, re$ired. &or e.g. i it

i, de'ided to maintain '$rrent a,,et, o , 10 la/ $rter de'i,ion i, to be

made a, to o m$' 'a, i, re$ired o m$' amo$nt to be in+e,ted in

debtor, ,to'/ et'.

'# - e t e rm in a t ion o long t e rm a nd , ort t e rm in a n' e:

Gnder ti, a &inan'e manager a, to maintain a %ro%er ratio o ,ort term

and long term ,o$r'e, o inan'e ater e,timating it, re$irement.

d# -et erminat ion o *a% it al (t r$'t $re:

balan'ed de'i,ion related to 'a%ital ,tr$'t$re i, to be made. 7e %ro%ortion

o debt and e$ity i, to be determined.

e# - e t e rm in a t ion o + a r io$, it e m , in t e P roit a nd lo , ,a '' o $ n ted a,,et, intere,t on debt et'.


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b )e't i+e, o t e &inan'ia l M anag ement:

7e inan'ial management i, generally 'on'erned it %ro'$rement allo'ation

and 'ontrol o inan'ial re,o$r'e, o a 'on'ern.

7 e o b)e ' t i+ e , ' a n b e%e'tation, o te ,areolder,.

7o en,$re o%tim$m $nd, $tili?ation. n'e te $nd, are %ro'$red tey ,o$ld be

$tili?ed in ma>im$m %o,,ible ay at lea,t 'o,t.

7o en,$re ,aety on in+e,tment i.e $nd, ,o$ld be in+e,ted in ,ae +ent$re, ,o

tat ade$ate rate o ret$rn 'an be a'ie+ed.

7o %lan a ,o$nd 'a%ital ,tr$'t$re%e'ted 'o,t, and %roit, and $t$re

%rogramme, and %oli'ie, o a 'on'ern. =,timation, a+e to be made in an ade$ate

manner i' in'rea,e, earning 'a%a'ity o enter%ri,e.

-etermination o 'a%ital 'om%o,ition:

n'e te e,timation a+e been made te 'a%ital ,tr$'t$re a+e to be de'ided. 7i,

in+ol+e, ,ort< term and long< term debt e$ity analy,i,. 7i, ill de%end $%on te

%ro%ortion o e$ity 'a%ital a 'om%any i, %o,,e,,ing and additional $nd, i'

a+e to be rai,ed rom o$t,ide %artie,.

*oi'e o ,o$r'e, o $nd,:

&or additional $nd, to be %ro'$red a 'om%any a, many 'oi'e,

li/e< I,,$e o ,are, and debent$re,

Loan, to be ta/en rom ban/, and inan'ial in,tit$tion,

P$bli' de%o,it, to be dran li/e in orm o bond,.


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3 De#%r&e r&efl! t/e role of F&a%&al Maa)e$et & 'e%&o $a2&)

n,:

in+ol+e, %roe,,ional, o dierent genre. ile ,mall organi?ation in+ol+e, all le+el,

o manager, 'om%le> organi?ation, largely de%end on a team o %roe,,ional,

,%e'ially trained to ma/e all ,ort, o de'i,ion,. B$t remember ,$' a body

alone 'annot 'ome o$t it inal de'i,ion,. ;ere te %oint i, de'i,ion ma/ing

%ro'e,, i, '$m$lati+e and 'on,$ltati+e %ro'e,,. 7e %ro'e,, on te ole bear, it,

%ro, and 'on, and o$ld by and large emanate re,$lt, and 'on,e$en'e, in

te organi?ation,H o+erall grot and %ro,%e't,. -e'i,ion, are ta/en to ,$%%ortorgani?ational grot. 7e ole abri' o management i.e. it, day to day o%eration

i, rigtly b$ilt on managerial de'i,ion,. 7o% not' 'om%anie, a, e+iden'ed by teir

$n'tion, ee'ti+e 'omm$ni'ation tool, are $tili?ed in addition to normal

'on,$ltation %ro'e,, to ma/e de'i,ion, tat o$ld a+e large ,'ale im%li'ation,

on te 'om%anyH, %ro,%e't,.

-i,'$,,ion, and 'on,$ltation, are to main tool, tat ,$%%ort and e+ent$ally bring

o$t de'i,ion,. &or in,tan'e to ta/e a de'i,ion on o to embar/ on ne b$,ine,,

a'ti+ity ,$gge,ted by ,trategi' management team m$,t a+e de+elo%ed tro$g

,erie, o 'on,$ltati+e %ro'e,, i' i, no a+ailable it im%lementation team.

;ere e ,ee te '$m$lati+e ee't o de'i,ion ta/en at one %oint by a dierent body

o aair,. -e'i,ion ta/en by ,trategi' manager, i, to %$, ne and inno+ati+e

b$,ine,, line or initiati+e. t ti, %oint te de'i,ion ta/en by ,$' team be'ome,

'on,$ltati+e %oint or di,'$,,ion or im%lementation %roe,,ional,. 7ere i, lot to

debate re,ear' and inali?e. I, te ne %ro%o,al +iable I, it inno+ati+e eno$g

*an tere be grot ,tim$lant in te ,trategie, %ro%o,ed ;andle


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7$, te inal de'i,ion to roll o$t a %rod$'t or ,er+i'e i, tro$g '$m$lati+e interim

de'i,ion, ta/en by +ario$, internal and e>ternal %artie,. nd al,o te inal de'i,ion

i, rele'ti+e and o$nded on re,ear'e, and 'on,$ltation,. ole %ro'e,, i, a 'ain

aair ere one de'i,ion ta/en at one %oint and at one le+el ,all a+e ar rea'ing

im%li'ation, in te ay an organi?ation mo+e, orard.

, a matter o a't 'a%able o ta/ing 'riti'al de'i,ion, i, one o te many attrib$te,

tat e+ery manager ,o$ld a+e be it to% le+el or middle or entry le+el. By nat$re a

$man being d$ring i, e>i,ten'e and by +irt$e o i, in,tin't ma/e, de'i,ion, or

i, ,$r+i+al a, ,o'ial %,y'ologi,t, %$t it. By and large manager, are %oli,ed

indi+id$al, to ta/e de'i,ion, to ae't oter, ie te organi?ationH, e>i,ten'e and

grot t$, i, annotati+e it $man endea+or to li+e and ,$''eed. ($''e,,

,$''eed, on te de'i,ion, ta/en be it by an indi+id$al or an organi?ation.


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4 Def&e Co#t of Ca+&tal E*+la& &t# #&)&f&%a%e & F&a%&al De%&o#

Mar2et&)

n,:i,ting ,e'$ritie,.J 1K

It i, $,ed to e+al$ate ne %ro)e't, o a 'om%any a, it i, te

minim$m ret$rn tat in+e,tor, e>%e't or %ro+iding 'a%ital to te 'om%any t$,

,etting a ben'mar/ tat a ne %ro)e't a, to meet.

*ontent

1 ($mm ary

2 * o , t o d e bt

3 * o , t o e $ ity

4 = > % e ' t e d r e t$rn

5 . * o mm e n t,

6 . * o , t o r e t a in e d e a rn in g , ' o , t o in t e rn a l e $ ity

. eig t e d a + e r a g e ' o , t o ' a % it al

8 * a % it a l , t r$' t$re

9 M o d ig lia ni< M il le r t e or em

1 0 e e r e n' e,

1 0 &$r t e r r e a d ing

&or an in+e,tment to be ortile te e>%e'ted r e t $rn on ' a % it a l m$,t be greater

tan te 'o,t o 'a%ital. 7e 'o,t o 'a%ital i, te rate o ret$rn tat 'a%ital 'o$ld be

e>%e'ted to earn in an alternati+e in+e,tment o e$i+alent ri,/. I a %ro)e't i, o

,imilar ri,/ to a 'om%any@, a+erage b$,ine,, a'ti+itie, it i, rea,onable to $,e te

'om%any@, a+erage 'o,t o 'a%ital a, a ba,i, or te e+al$ation. 'om%any@,

,e'$ritie, ty%i'ally in'l$de bot debt and e$ity one m$,t tereore 'al'$late bot

te 'o,t o debt and te 'o,t o e$ity to determine a 'om%any@, 'o,t o 'a%ital.

;oe+er a rate o ret$rn larger tan te 'o,t o 'a%ital i, $,$ally re$ired.

7e 'o,t o debt i, relati+ely ,im%le to 'al'$late a, it i, 'om%o,ed o te rate o

intere,t %aid. In %ra'ti'e te intere,t


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%robable rate o dea$lt !and amo$nt o re'o+ery gi+en dea$lt#. &or 'om%anie, it

,imilar ri,/ or 'r e d it r a t in g, te intere,t rate i, largely e > o g e n o$, !not lin/ed to te

'om%any@, a'ti+itie,#.

7e 'o,t o e$ity i, more 'allenging to 'al'$late a, e$ity doe, not %ay a ,et

ret$rn to it, in+e,tor,. (imilar to te 'o,t o debt te 'o,t o e$ity i, broadly

deined a, te ri,/ % e n , e te 'o,t o debt i, 'om%$ted a, an ater ta>

'o,t to ma/e it 'om%arable it te 'o,t o e$ity !earning, are a t e r < t a > a, ell#.

7$, or %roitable irm, debt i, d i, ' o $ nte d by te ta> rate. 7e orm$la 'an be

ritten a, ! E 'redit ri,/ rate#!1imation o te 'o,t o debt.

Je d itK *o,t o e$ity

*o,t o e$ity A i,/ ree rate o ret$rn E Premi$m e>%e'ted or ri,/

*o,t o e$ity A i,/ ree rate o ret$rn E Beta > !mar/et rate o ret$rn< ri,/ ree

rate o ret$rn# ere BetaA ,en,iti+ity to mo+ement, in te rele+ant mar/et
http://en.wikipedia.org/wiki/Bond_credit_ratinghttp://en.wikipedia.org/wiki/Exogenoushttp://en.wikipedia.org/wiki/CAPMhttp://en.wikipedia.org/wiki/Discount_ratehttp://en.wikipedia.org/wiki/Discount_ratehttp://en.wikipedia.org/w/index.php?title=Cost_of_capital&action=edit&section=2http://en.wikipedia.org/wiki/Risk_free_bondhttp://en.wikipedia.org/wiki/Term_structurehttp://en.wikipedia.org/wiki/Risk_premiumhttp://en.wikipedia.org/wiki/Deductible_expensehttp://en.wikipedia.org/wiki/After_Taxeshttp://en.wikipedia.org/wiki/Discountedhttp://en.wikipedia.org/wiki/Discountedhttp://en.wikipedia.org/wiki/Yield_to_maturityhttp://en.wikipedia.org/w/index.php?title=Cost_of_capital&action=edit&section=3http://en.wikipedia.org/wiki/Bond_credit_ratinghttp://en.wikipedia.org/wiki/Exogenoushttp://en.wikipedia.org/wiki/CAPMhttp://en.wikipedia.org/wiki/Discount_ratehttp://en.wikipedia.org/w/index.php?title=Cost_of_capital&action=edit&section=2http://en.wikipedia.org/wiki/Risk_free_bondhttp://en.wikipedia.org/wiki/Term_structurehttp://en.wikipedia.org/wiki/Risk_premiumhttp://en.wikipedia.org/wiki/Deductible_expensehttp://en.wikipedia.org/wiki/After_Taxeshttp://en.wikipedia.org/wiki/Discountedhttp://en.wikipedia.org/wiki/Yield_to_maturityhttp://en.wikipedia.org/w/index.php?title=Cost_of_capital&action=edit&section=3


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5# Cal%ulate 4e&)/te' A"era)e Co#t of Ca+&tal fro$ t/e follo5&)

n,: eigted +erage *o,t o *a%ital

(o$r'e o &$nd, mo$nt

.

Pro%ortion ter 7a>

=$ity (are *a%ital 350000 10 3.50Preeren'e (are, 400000 8 3.20

-ebt 600000 6 3.60etained =arning, 150000 6 0.09

1500000 30 10.39

n te ba,i, o boo/ +al$e te 'o,t o e$ity 'a%ital ill be 'al'$lated a, ollo,.

7e eigt, to be em%loyed 'an be boo/ +al$e, mar/et +al$e, i,tori' target. Boo/

+al$e eigt, are ba,ed on te a''o$nting +al$e, to a,,e,, te %ro%ortion o ea' ty%e

o $nd in te irmH, 'a%ital ,tr$'t$re mar/et +al$e eigt, mea,$re, e %ro%ortion oea' ty%e inan'ing at it, mar/et +al$e. Mar/et al$e eigt, are %reerred be'a$,e

tey a%%ro>imate te '$rrent +al$e in,tr$ment, o rai,ing $nd em%loyed by te

'om%any.

(o$r'e o &$nd, Pro%ortion *o,t eigted

*o,t,

=$ity (are *a%ital 10 3.50 0.35Preeren'e (are, 8 3.20 0.256

-ebt 6 3.60 0.216

etained =arning, 6 0.09 0.0540.86

(o$r'e o &$nd, Boo/ al$e Mar/et al$e *$rrent Intere,tate

=$ity (are *a%ital 10 450000 0.45Preeren'e (are, 8 450000 036

-ebt 6 560000 0.336

24 1460000 1.146

=>%lanatory ate,: Intere,t rate, on te debent$re, are no mar/et +al$e. ter debt in'l$de, dierent ty%e, o loan, rom inan'ial in,tit$tion, and

oter %ri+ately debent$re,. Mar/et +al$e i, ba,ed on te intere,t rate, %ro+ided in te irm, ann$al

re%ort.

Preeren'e ,are i, .100 %er '$rrent mar/et %ri'e i, 50 %er ,are.


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Parti'$lar, mo$nt.

eigt *o,t eigt D*o,t

=$ity (are *a%ital 450000 0.35 3.50 1.225Preeren'e (are, 450000 0.256 3.20 0.8192

-ebt 450000 0.216 3.60 0.61460000 0.822 10.3 2.8218

7$, te 'o,t o *a%ital or $ality %rod$'t Ltd.

eigted +erage *o,t o *a%ital : 2.8218

E * + laa t&o :

Mar/et +al$e o debt %reeren'e and e$ity ,are, are $,ed. *$rrent %reeren'e di+idend rate o 4 i, $,ed.


14/22


15/22

7e re,%on,e i, li/ely to be a 'ontingen'y %lan de+elo%ed by te b$,ine,, to

$,e te e>i,ting ,y,tem or anoter year.

"eneri' ri,/, are ri,/, to all %ro)e't,. &or e>am%le te ri,/ tat b$,ine,, $,er migt

not be a+ailable and re$irement, may be in'om%lete. =a' organi,ation ill

de+elo% ,tandard re,%on,e, to generi' ri,/,. i,/, ,o$ld be deined in to

%art,. 7e ir,t i, te 'a$,e o te ,it$ation !endor not meeting deadline B$,ine,,

$,er, not a+ailable et'.#. 7e ,e'ond %art i, te im%a't !B$dget ill be

e>'eeded Mile,tone, not a'ie+ed et'.#. ;en'e a ri,/ migt be deined a, 7e

+endor not meeting deadline ill mean tat b$dget ill be e>'eeded. I ti, ormat

i, $,ed it i, ea,y to remo+e d$%li'ate, and $nder,tand te ri,/.

7 8 uat&f&%at &o

i,/ need to be $antiied in to dimen,ion,. 7e im%a't o te ri,/ need, to be

a,,e,,ed. 7e %robability o te ri,/ o''$rring need, to be a,,e,,ed. &or

,im%li'ity rate ea' on a 1 to 4 ,'ale. 7e larger te n$mber te larger te im%a't

or %robability

i, / e, % on , e

7ere are o$r ting, yo$ 'an do abo$t a ri,/.

7e ,trategie, are:

+oid te ri,/. -o ,ometing to remo+e it. G,e anoter ,$%%lier or e>am%le.

7ran,er te ri,/. Ma/e ,omeone el,e re,%on,ible. Pera%, a endor 'an be

made re,%on,ible or a %arti'$larly ri,/y %art o te %ro)e't.

Mitigate te ri,/. 7a/e a'tion, to le,,en te im%a't or 'an'e o te ri,/

o''$rring. I te ri,/ relate, to a+ailability o re,o$r'e, dra $% an

agreement and get ,ign


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i, / * o n t rol

7e inal ,te% i, to 'ontin$ally monitor ri,/, to identiy any 'ange in te ,tat$, or i

tey t$rn into an i,,$e. It i, be,t to old reg$lar ri,/ re+ie, to identiy a'tion,

o$t,tanding ri,/ %robability and im%a't remo+e ri,/, tat a+e %a,,ed and identiy

ne ri,/,.

($mm a ry

i,/ management i, not a 'om%le> ta,/. I yo$ ollo te o$r ,te%, yo$ 'an %$t

togeter a ri,/ management %lan or a %ro)e't in a ,ort ,%a'e o time. ito$t a

%lan te ,$''e,, o te %ro)e't and yo$r re%$tation a, a Pro)e't Manager are on

te

line.

&ollo te,e ,te%, and yo$ ill in'rea,e yo$r 'an'e, o ,$''e,,


17/22

. at are te 'ara'teri,ti', o *a%ital Mar/et ;o i, dierent rom money

mar/et.

n,:

* a % ita l m a r/ e t %lay, a +ery im%ortant role in te mobili?ation o $nd, or

In+e,tment. *a%ital mar/et 'an be 'la,,iied a, %rimary mar/et and ,e'ondary

mar/et i' are 'om%limentary to ea' oter. 7e 'a%ital mar/et a, e>%erien'ed

metamor%i' 'ange, o+er te la,t e year,. 7e 'om%etition in te mar/et a,

be'ome ,o inten,e ne'e,,itating te introd$'tion o ,e+eral /ind, o ,e'$ritie,. 7e

'or%orate in India mo,tly rai,e teir $nd, tro$g *a%ital mar/et by i,,$ing e$ity

,are, %reeren'e ,are, dent$re, bond, and ,e'$red %remi$m note,.

1. ent$re *a%ital

2. It i, long


18/22

8# 4/at +o#t #a%t&o $o&tor&) 9o5 $o&tor&) e*er%e' !

F&a%&al t&tut&o# & I'&a.

n,: Needle,, to ,ay tat %o,t ,an'tion 'redit monitoring i, +ery im%ortant toen,$re better ealt o 'redit %ortolio o any ban/ lending in,tit$tion,. Be'a$,e o

,$dden ma,,i+e grot o (M= ,egment 'redit %ortolio tere may be more need

to a+e 'on'entrated o'$,ed %re+enti+e a'tion,. G,$ally %o,t ,an'tion monitoring

'om%ri,e, o end $tili?ation o $nd, ro$tine ,$%er+i,ion ollo $% +i,it,

+erii'ation on %eriodi' ba,i, ,o a, to en,$re tat all a''o$nt, remain in ,tandard

'ategory. 7i, al,o 'all, or mat$rity e>%erien'e o %er,on intera'ting it

borroer. &e ban/, al,o are a'ing ,/ill ,ortage re$ired or ,$' online

monitoring in (M= ,egment. G,ing te ,er+i'e, o tr$,ted %artner, li/e $, ,all be a

'o,t ee'ti+e initiati+e ,all enable ban/ to 'ontin$e o'$, on e>%an,ion.

In ti, regard &inan'ial In,tit$tion, li/e I&*I I*I*I and I-BI a+e ado%ted a

rigoro$, ollo $% %ro'ed$re and a+e made a %ra'ti'e o 'arrying o$t reg$lar

in,%e'tion o te %ro)e't, inan'ed by tem. , a matter o a't I*I*I i, %$bli,ing

a re%ort entitled S&inan'ial Perorman'e o *om%anie,: I*I*I PortolioT almo,t orm

te year 191%ort %erorman'e and 'a%a'ity

$tili?ation. (imilar to ti, e>er'i,e I-BI a, al,o ,tarted 'om%iling and %$bli,ing

data on te %erorman'e o it, $nit,.

&$rter tere i, al,o te %ra'ti'e o nominating dire'tor, to te Board o te

a,,i,ted $nit,. ere te a,,i,tan'e i, large or ere te %ro)e't i, 'om%le> tere

i, te %ra'ti'e o a%%ointing nominee dire'tor, by te &I,.


19/22

Fro$ t/e follo5&) 'ata; a##u$&) a 16 +er %et re

I1A7otal amo$nt o in+e,tment, d$ring time %eriod 1

D1A7otal net %roit o te irm d$ring time %eriod 1


20/22

Pri'e o te ,are at te end o te '$rrent year 'an be determined it olloing

e$ation.

PoA-1EP11EQP1APo!1EQ#


21/22

10# It /a# 'e%&'e' to rae 7#>0;000 of a''&t&oal %a+&tal fu'# a' /a#&'et&f&e' t5o +la# T/e &for$at&o a# follo5#.

Pre#et Ca+&tal Stru%ture : 3; 00;00 e


22/22

De te r$ &at &o of I'&ffere %e +o&t# ! for$ ula:

# Indieren'e %oint, beteen ir,t and ,e'ond alternation.

B# Indieren'e %oint beteen ir,t and tird alternati+e,.

"ra%

1 A lternati+e 1

2 A lternati+e 2

3 A lternati+e 3

I1 A Indieren'e %oint beteen 1 2 at ,.40000< =BI7

I2 A Indieren'e %oint beteen 1 3 at ,.80000< =BI7

ere

N1 A No.o (are, in lternati+e 1



A =BI7

A Intere,t

-% A Preeren'e -i+idend

t A ta> rate

T/&r' Alterat&"e

. . . .

=BI7 2000 4000 6000 100000

Intere,t 0 0 0 0

=B7 2000 4000 6000 100000

7a>e, U 50 1000 2000 3000 50000

=7 1000 2000 3000 50000

Pre.-i+idend 2000 2000 2000 20000

=arning, or*ommon (are

;older,

!1000# 0 1000 30000

No.o (are, 2500 2500 2500 25000

=P( !,.0.40# ,.0 ,.0.40 ,.1.20

7e 'oi'e o te &inan'ial Plan ill de%end on ,ale, %erorman'e. I te

'om%any ,ale, are in'rea,ing te earning, %er ,are ill be ma>im$m $nder te

,e'ond inan'ial alternati+e. en ,ale, and =BI7 ri,e, debt inan'e i, more

ad+antage, be'a$,e intere,t ta> ded$'tible ere i, not ,o.

VV V

Documents

Finance Management- 301