An ordinary annuity is a financial product involving a series of equal payments made at the end of each period over a fixed time frame. These payments can be scheduled monthly, quarterly, semi-annually, or annually. In contrast, an annuity due features payments made at the beginning of each period. A common example of an annuity…
A financial manager plays a pivotal role in overseeing the financial health of an organization. Their responsibilities encompass a wide array of tasks aimed at ensuring the efficient utilization of funds while maintaining long-term financial stability. This article explores the key roles and responsibilities of financial managers in India. Key Responsibilities of a Financial Manager…
Finance, economics, and accounting are deeply interconnected disciplines that influence one another. A thorough understanding of any one of these fields often necessitates at least a foundational grasp of the other two. Core Definitions Finance: The study of how to allocate assets optimally, focusing on the future value of assets. Finance is fundamentally forward-looking. Economics:…
Business ethics involves managing values and resolving conflicts. It refers to the moral principles, policies, and values that govern the way companies and individuals engage in business activities. These principles go beyond legal requirements to establish a code of conduct that drives employee behavior at all levels and helps build trust between a business and…
An agency problem in financial management refers to a conflict of interest between a company’s management and its stockholders. This issue arises when the goals of the principal (owner) and the actions of the agent (manager) are not aligned, leading to potential inefficiencies or unethical behaviors. The principal-agent problem specifically highlights the situation where the…
The risk-return trade-off is an essential investment principle that states that higher risk often comes with the potential for higher rewards. This concept asserts that the potential return on an investment rises with an increase in risk. By this principle, investments with low levels of uncertainty typically offer lower returns, while those with high uncertainty…
Based on ownership and structure, we have different forms of business organisation like a proprietary concern, a partnership firm, or a corporate. Here are some common forms of business organizations: Partnership: A partnership business is a business structure where a formal agreement between two or more people who agree to be the co-owners and distribute…
Limited Liability Partnership (LLP) is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. It shall be a registered body corporate and a legal entity separate from its partners. It will have perpetual succession. Unlike a “traditional partnership firm”, wherein every partner is…
Banks in India with a net worth of `100 crore and above can undertake credit card business either departmentally or through a subsidiary company set up for the purpose. They can also undertake domestic credit card business by entering into tie-up arrangements with one of the banks already having arrangements for the issue of credit…
A Credit card holder is the customer, or consumer, who is using the card for payment or cash withdrawal. Credit card holders can also add authorized users to their account. The authorized user can make purchases, but the primary holder is still responsible for the debt. Credit card issuer: Financial institutions, usually banks and NBFCs,…