Financial Management - The Spring Group Assignment Essay

Financial Management - The edge Group Assignment - Essay ExampleThe time value of cash can also be referred to as time preference for money.this, then, constitutes the rationale of considering time value of money in financial ending-making. The briny reason for time preference for money is to be found in the re-investment opportunities for finances, which are received early. The funds so invested will earn a rate of progeny which or more popularly as a discount rate. The expected rate of return as also the time value of money will vary from individual to individual depending on his perception, among other things1.The investment decisiveness relates to the selection of assets in which can be acquired fall into two broad groups (i) long-term assets which will yield a return over a period of time in future, (ii) short-term or flow assets defined as those assets which in the normal course of business are convertible into cash usually within a year.accordingly, the asset selection de cision of a firm is of two types. The first of these involving the first category of assets is popularly known in the financial literature as chapiter bugeting.the aspect of financial decision-making with reference to current assets or short-term assets is popularly designed as working gravid management 2.Working detonator management is concerned with... One aspect of the working capital management is the trade-off mingled with advantageousness and fortune (liquidity). There is a conflict between profitability and liquidity. If a firm does not dupe adequate working capital, i.e. it does not invest sufficient funds in current assets, it may become illiquid and consequently may not have the ability to meet its current obligations and thus invite the risk of bankruptcy. If the current assets are too large, the profitability is adversely affected. The key strategies and considerations in ensuring a trade-off between profitability and liquidity is one major dimension of working c apital management. In addition, the neither short nor unnecessary funds are locked up. To summarise, the management of working has two basic ingredients, namely (i) an overview of working capital management as a whole, and (ii) efficient management of the individual current assets such as cash, receivables and strain 3.The second major decision involved in financial management is the pay decision. The investment decision is broadly concerned with the asset-mix or the composition of the assets of a firm. The concern of the financing decision is with the financing-mix or capital structure or leverage. The term capital structure refers to the proportion of debt (fixed-interest sources of financing) and equity capital (variable-dividend securities/sources of funds). The financing decision of a firm relates to the choice of the proportion of these sources to finance the investment requirements. There are two aspects of the financing decision. First, the theory of capital structure whi ch shows the theoretical relationship between the employment of debt and the return to the shareholders. The use of debt