Business Management

The earnings per share and maximizing the value of a company

Maximizing the value of a company depends upon the level of earnings per share that is achieved. Companies achieve this by, for example: a. Minimizing capital investment to reduce depreciation charges. b. Increasing wages and salaries by less than the level of inflation and for example, sell the land that is currently used as a Read More…

Business Management

What is strategic financial management?

Strategic financial management is the identification of the possible strategies capable of maximizing an organization’s market value. It involves the allocation of scarce capital resources among competing opportunities. It also encompasses the implementation and monitoring of the chosen strategy so as to achieve agreed objectives. The key decisions falling within the scope of financial strategy Read More…

Business Management

Is it important to know who are the current shareholders of a company before you invest?

Ascertaining exactly who owns a company’s shares and what, if any, are their particular preference’s and objectives is a basic piece of information needed by management, if it is to ensure that, as far as possible, it is acting in the shareholders’ interest. These are some of the main advantages of knowing who are the Read More…

Investing

Project evaluation cash flows and their timing

In project evaluation, the sign conventions which apply are cash outflows or expenditure being represented by negative figures, and cash inflows or income being represented by positive figures. The timing of cash flows is very important in investment appraisal; for convenience an annual time scale is normally used where: • Year 0: represents the date Read More…

Financial Planning

How to do financial planning the right way

Financial objectives will not be achieved, except by luck, unless the members of management know what they are trying to achieve. and plan how to achieve the objectives. Quantified targets for the achievement of financial objectives should therefore be set out in a financial plan. The financial plan should cover a number of years, perhaps Read More…

International Finance

How to evaluate international projects

Multinational capital budgeting can be based on similar concepts to those used in the purely domestic case using the net present value (NPV) analysis, in which project cash flows are discounted using the firm’s weighted average cost of capital, or the internal rate of return method which finds the rate of return equating project cash Read More…

Corporate Finance

The capital market

A capital market is a financial market in which long-term capital is bought and sold, or lent and borrowed. A stock market is a capital market for stocks and shares. A financial market where short term capital is borrowed and lent is a money market. The role of a stock market for companies is to Read More…