Time Value Of Money LET US SUM UP - Accounts and Finance for Managers

The major part of the financial management is to raise the financial resource to the requirements. While raising the financial resources, the availability is subject to the macro economic influences. Accounting is mainly vested with the collection and presentation of data. But the finance is closely connected with the decision-making of the organization.

The objectives of the financial management are classified into two categories viz

  • Profit maximization
  • Wealth maximization

Profit is defined in two different angles viz. Owner's and Operational perspective.

Owners' perspective definition of profit is the share of national income paid to the owners. Operational perspective defines the term profit as when the output exceeds the inputs of the process. "The gross present worth of a course of action is equal to the capitalized value of the flow future expected benefit, discounted at a rate which reflects their certainty/uncertainty. Wealth or net present worth is the difference between gross present worth and the amount of capital investment required to achieve the benefits.

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