Cheat sheet · Class 12 · CBSE · Commerce Business Studies
Financial Management cheat sheet
The whole chapter on one page: key formulas, facts and the points to remember, for quick revision before a test.
CBSE Class 12 · Business Studies
Cheat sheet
Chapter 9Financial Management
Three decisions: Investment, Financing, Dividend.
1. Objective
Wealth maximisation — maximise the market value of equity shares.
2. Financial Decisions
| Decision | About | Factors |
|---|---|---|
| Investment (capital budgeting) | where to invest long-term | cash flows, returns, risk |
| Financing | debt vs equity | cost, risk, cash flow, control |
| Dividend | pay out or retain | earnings, stability, growth, taxes |
3. Capital Structure
- Mix of debt and equity.
- Financial leverage: debt can raise EPS when ROI > interest rate (trading on equity).
- Factors: cash flow, interest coverage, cost of debt/equity, flotation costs, control.
4. Working Capital
- Gross = current assets; net = CA − CL.
- Factors: nature of business, scale, seasons, production cycle, credit, growth.
5. Key Points
- Financial planning ensures funds on time.
- Fixed capital: long-term assets.
- Higher risk needs higher return.
- Debt is cheaper but riskier.
Remember: Wealth max | 3 decisions | capital structure | working capital
Financial Management: questions and notes
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