UNIT V : FINANCING DECISION AND WORKING CAPITAL MANAGEMENT ________________________________________________________________________ 1.

INTRODUCTION The financing decision and working capital decisions of a firm are very crucial for its survival and growth. The financing decision of a firm refers to those activities which revolve around the finding of the cost of various sources of finance such as Equity shares, Preference shares, Debentures etc and selecting those sources where the overall cost of the funds is the minimum. This is because, each source of finance has its own risk characteristics and depending on it, structures its cost. Similarly, working capital decision of a firm is also very important as it decides the quantum of investment in current assets and current liabilities. 2. LEARNING OBJECTIVES After going through this chapter, the reader is expected to Understand the meaning of capital structure Also gain an awareness about the various factors that must be considered while deciding the capital structure decision of a firm Understand an appreciate the features of a sound capital structure Get exposed to the various factors Influencing Capital Structure Know the meaning of Dividend Policy Understand the various forms Of Dividend Get an idea of the various types Of Dividend Policy Understand the various factors that determine the Dividend Policy Understand the meaning of Working Capital Management Get an idea about the various concepts Of Working Capital Know about the various types Of Working Capital Get exposed to the various factors Effecting the Working Capital Needs Of Firms Estimate the Working Capital Requirements 3. CAPITAL STRUCTURE DEFINTITION According to Gerstenberg, Capital structure refers to the make up of a firms capitalisation. In other words, it represents the mix of different sources of long term funds (such as equity shares, preference shares, long term loans, retained earnings, etc). Optional Capital Structure may be defined as that of Capital structure or Combination of debt and equity that leads to the maximum value of the firm. Capital structure planning aims at maximization of profits and the wealth of the shareholders, ensures the maximum value of a firm or minimum Cost of capital.

4. ESSENTIAL FEATURES OF A SOUND CAPITAL MIX A sound or an appropriate Capital structure should have the following essential features : Maximum possible use of leverage Capital structure should be flexible To avoid undue financial/business risk with the increase of debt The use of debt should be within the capacity of a firm. The firm should be in a position to meet its obligations in paying the loan and interest charges as and when due. It should involve minimum possible risk of loss of control It must avoid undue restrictions in agreement of debt

5. FACTORS INFLUENCING CAPITAL STRUCTURE/DETERMINANTS OF THE CAPITAL STRUCTURE 1. Financial leverage (or) Trading on equity

It is the use of long term fixed interest bearing debt and Preference shares along with equity share capital. The use of long term debt increases and magnifies the EPS if the firm yields a return higher than the cost of debt. This is positive leverage. However, if the firm yields a lower return than the cost of debt, it is Adverse leverage. EPS also increases with the use of preference share capital also, but due to the fact that interest is allowed to be deducted while computing the tax, the leverage impact of debt is more. 2. Growth & Stability of Sales If the sales of a firm are expected to remain fairly stable, it can raise a higher level of debt, as the firm may not face any difficulty in meeting its fixed commitments of interest repayment of debt. Usually, greater the rate of growth of sales, greater can be the use of debt in the financing of a firm. 3. Cost of Capital The capital structure should provide for minimum overall cost of capital depending upon the risk involved, out of the three sources of capital (equity, preference and debt capital), debt usually is a cheaper source because of (1) fixed rate of interest (2) legal obligation to pay interest (3) priority in payment at the time of winding up of the company and (4) tax advantage. Preference capital is also cheaper than equity because of lesser risk involved and fixed rate of dividend.

4. Cash flow ability to service debt A firm which can generate higher and stable cash inflows can employ more debt in its capital structure as compared to one which has unstable and lesser ability to generate cash inflows 5. Nature and size of firm Public utility concerns may employ more of debt due to their regular earnings. Small companies due to their inability to raise long term loans at reasonable rate of interest depend on own capital. A large company can arrange for long term loans and also can issue equity or preference shares to be public. 6. Control Issue of equity shares implies dilution of control of existing equity shareholders. Hence either debt or preference capital is issued. 7. Flexibility Capital structure of the firm should be flexible and must be able to substitute one form of financing by another. 8. Requirement of Investors The risk profile of the investors institutional as well as private (risk averse, indifferent and adventurous investors) should be matched with the risk characteristics of the capital instruments i.e. issue of equity shares to adventurous investors, issue of preference shares to indifferent investors and issue of debt to risk averse investors. 9. Capital market conditions If the share market is depressed the company should not issue equity shares. If there is boom period, it should issue equity shares. 10. Assets structure

If major portion of the total assets of a company comprises of fixed assets, the company can borrow long term debts. 11. Purpose of financing

If funds are required for productive purpose, debt financing is suitable. But if funds are required for unproductive purposes such as general development on permanent basis, equity capital should be preferred.

12. Period of finance : If funds are required for a limited period Redeemable debentures or Preference shares should be issued. Otherwise, if funds are needed on permanent basis, equity shares or Irredeemable debt or preference shares must be issued. 13. Cost of floatation : Usually the cost of floating a debt is lower than the cost of floating equity. 14. Personal consideration : When management is experienced and enterprising debt financing may be used. If management is less experienced or less enterprising they may go for equity. 15. Corporate tax rate : If corporate tax rate is high Companies prefer debt financing due to the tax advantage on interest payment. 16. Legal requirements :

The Government issued certain guidelines for the issue of shares and debentures and has let down a frame work within which the capital structure decision has to be made.

6. DIVIDEND POLICY Dividends refer to that portion of a firms net earnings which are paid out to the shareholders. Given the objective of financial management of maximizing the shareholders wealth, the firm would be well advised to use the net profits for paying dividends to shareholders if it will lead to the maximization of the wealth of the owners. If not, the firm should rather retain them to finance investment programs. But, there are conflicting opinions regarding the impact of dividends on the valuation of the firm. According to one school of thought, dividends are irrelevant so that the amount of dividends paid has no effect on the valuation of a firm. On the other hand, certain theories consider the dividend decision as relevant to the value of the firm measured in terms of the market price of the shares.

7. FORMS OF DIVIDEND Cash Divided Most Companies pay dividend in cash. Sometimes cash dividend may be supplemented by a bonus issue (stock dividend). When the company follows a stable dividend policy it should prepare a cash budget for the coming period to indicate the necessary funds to meet regular dividend payments of the company. The cash account and the reserves account of a company will be reduced when the cash dividend is paid. Thus, both the total assets and the net worth of the company are reduced when cash dividend is distributed. The market price of the share drops in most cases by the amount of cash dividend distributed.

Stock Dividend (Bonus Shares) A stock dividend represents a distribution of shares in lieu of or in addition to the cash dividend to the existing shareholders. The declaration of stock dividend will increase the equity share capital and reduces the reserves and surplus (retained earnings) of the company. The declaration of stock dividend does not effect the total net worth or the wealth of shareholders. The EPS and market price per share will fall proportionately to the bonus issue. But the proportionate earnings of shareholders will remain unchanged. Stock splits A stock split is a method to increase the no. of outstanding shares through a proportional reduction in the par value of the shares. With stock split, the total networth does not change and the no. of outstanding shares increases with dilutions in EPS and a proportionate fall in the market price of a share. This method is commonly used to lower the market price of a firms stock by increasing the number of shares belonging to each shareholders in the order to increase the trading of the shares.

Reverse split Under the situation of falling price of a companys share, the company may want to reduce the number of outstanding shares to improve the market price per share. The reduction of the number of outstanding shares by increasing per share par value is known as Reverse split.

Stock Re-purchase It is the Repurchasing by the firm of outstanding shares of its common stock in the market place.

8. TYPES OF DIVIDEND POLICY 1. Regular dividend policy: Payment of dividend at usual rate is known as regular dividend policy. 2. Stable dividend policy: Payment of certain minimum amount of dividend regularly is known as stable dividend policy. This may take the form of any of the following forms Constant dividend per share: Fixed dividend per share is paid irrespective of earnings year after year and a reserve for dividend equalization is created to cover the fluctuations in earnings Constant Payout Ratio (P/O): Under this policy, a fixed percentage of earnings are paid as dividend every year. Stable rupee dividends plus extra dividend: Under this method, a constant low dividend per share is paid, with and extra dividend in years of high profits. 3. Irregular dividend policy Under this policy, dividend payment is not regular. The dividend policy depends on many other factors which may have a direct impact on the availability of funds in the company. 4. No dividend policy Under this policy, the company has a policy of not paying dividend to any share holder. 9. DETERMINANTS OF DIVIDEND POLICY 1) Legal Restrictions : Legal provisions relating to dividends as laid down in Sections 93, 205, 205 A, 206 and 207 of The Companies Act, 1956 are significant as they lay down a frame work within which dividend policy is framed. They imply that dividends can be paid only out of current profits or past profits after depreciation or out of funds provided by the government for the payment of dividends in pursuance of a guarantee given by the Government. Under the Companies (transfer of profits to reserves) Rules of 1975, a Company providing more than 10% dividend has to transfer a certain percentage of its current year profits to reserves. The Companies Act, 1956 provides that, dividends cannot be paid out of capital.

2)

Magnitude and trend of Earnings : Dividend payments directly depend on the quantum of profits of a firm as they can be paid only out of present or past years profits of a company.

3) Desire and type of shareholders : The company has to pay regular dividends to the shareholders if they are retired, widowed or belong to economically weaker section, as they view dividends as a source of income to meet their daily expenses. In case majority of shareholders are wealthy, they may be interested in lower dividends and higher capital gains. 4) Nature of industry: Industries with a steady demand for their products may follow a higher dividend policy compared to cyclical industries, which should follow a lower dividend policy 5) Age of the company: A newly started company may have to opt for a lower dividend policy and concentrate on retaining a substantial part of earnings for financing its future growth opportunities. An established company might have enough reserves to meet its growth needs, may opt for a higher dividend policy 6) Governments economic policy: The governments economic policy also might lay certain conditionalities on the payment of dividend. 7) Future financial requirements The company has to balance the expectations of the shareholders and the future requirements of funds while taking a dividend decision 8) Taxation policy A high or low corporate tax rate affects the net earnings of a company, and thereby, its dividend policy 9) Inflation: When prices rise due to mounting inflation, the funds generated by depreciation may not be enough to replace the fixed assets. Hence, to

maintain the same assets and capital, substantial portion of earnings may be retained. 10) Control objectives A high dividend payout ratio implies dilution of control as it might involve issue of new shares 11) Requirements of institutional investors: Usually, institutional investors prefer a regular payment of cash dividend and may stipulate their own demands on dividend payments to equity share holders 12) Stability of dividends: Stability of dividends refer to regular payment of dividend. This dividend may be fixed amount rate, low dividend payout with extra dividend during high earning periods 13) Liquid resources: If a companys liquidity position is poor, it is not advisable to go for cash dividend. Instead, it can opt for stock dividend

10. WORKING CAPITAL MANAGEMENT Working capital refers to the capital required for day-to-day operations of a business enterprise. The need for Working Capital is omnipresent for all types and sizes of businesses, and as such cannot be overstressed. 11. CONCEPTS OF WORKING CAPITAL There are two concepts of Working Capital Gross Working capital and Net Working capital. 1. Gross Working Capital Gross Working capital refers to the firms investment in current assets (Cash, Short Term Securities, Debtors, Bills Receivable and Inventory). Current assets are those assets which can be converted into cash within a period of one year. This concept focuses on how to optimize investment in current assets and how should they be financed? In this instance, both excessive and inadequate investment in current assets should be avoided.

2. Net Working Capital Net Working capital refers to the difference between current assets and current liabilities. It may be positive or negative. This concept is a qualitative concept. It indicates the liquidity position of the firm and suggests the extent to which working capital needs may be financed by permanent sources of capital. Current assets should be sufficiently in excess of current liabilities to constitute a margin for maturing obligations within the ordinary operating cycle of a business. This concept also covers the question of judicious mix of long-term and short-term funds for financing current assets. The two concepts of Working Capital are not exclusive, rather, they have equal significance from managements view point. 12. TYPES OF WORKING CAPITAL Working capital can be divided into two categories on the basis of time. They are Permanent Working Capital and Temporary or Variable Working capital Permanent Working Capital refers to that minimum amount of investment in current assets which is required at all times to carry on minimum level of business activities. It represents the current assets required on a continuing basis over the entire year, and hence should be financed out of long term funds. Tandon Committee has referred to this type of Working capital as Core Current Assets. Temporary Working capital represents the additional current assets required at different times during the operating year.

13. FACTORS AFFECTING WORKING CAPITAL NEEDS OF FIRMS A large no of factors influence the working capital requirements of firms. Some of them are as follows: 1. Nature of business Working capital needs of a firm are basically influenced by the nature of its business. Trading and financial firms have a small investment in fixed assets, but require a large sum of money to be invested in working capital. Some manufacturing businesses also require working capital substantially, whereas public utilities will require very limited investment in working capital. 2. Production policies The working capital requirements of a business vary with various production related decisions such as automation Vs labor intensive process, maintenance of

steady production policy Vs varying production policy etc. Where automation may require limited working capital investment, labor intensive production process necessitates heavy investment in working capital. Similarly, where a steady production policy necessitates high level of working capital investment, a varying production policy may involve fluctuating investments in working capital. 3. Length of the manufacturing process The working capital requirement of a firm also depends on the length of the manufacturing process. If it is longer, it requires heavy investment in working capital and if it is shorter, it needs lower investment in working capital. 4. Credit policy If the credit policy (credit terms offered to the customers of the business) of the business is liberal, it may necessitate a heavy investment in working capital whereas if it is stringent, it may necessitate a lower investment in working capital. 5. Rapidity of turnover If the turnover rate of the firm is high, lower investment in working capital is implied and vice versa 6. Seasonal fluctuations Whenever the demand for the companys product is seasonal, during on season, the working capital investment is heavy and during off season, it is low. 7. Fluctuations of supply Higher levels of supply necessitate higher investment in working capital and vice versa 8. Economic conditions: During boom period, the working capital requirement of the firm grows along with the need to finance both fixed assets and current assets. And during depression, level of working capital requirements of a firm also will fall.

9. Availability of credit The working capital needs of a firm are also affected by the credit terms offered by the creditors. If they are lenient, the working capital requirement is limited and vice versa

10. Operating efficiency and performance The operating efficiency of the firm relates to the optimum utilization of resources at minimum costs. Better utilization of resources improves profitability and thus helps in releasing the pressure on working capital as a high net profit margin contributes towards the working capital. 11. Profits Profits are cash equivalents and as such, then profits are more, working capital is said to be more and vice versa.

14.

ESTIMATING WORKING CAPITAL REQUIREMENTS

In order to estimate the extent of working capital requirement of a firm, several factors are to be considered. There are several methods / techniques for estimating the working capital requirements of a firm. They include i) Estimation of components of working capital method, ii) Percent of sales method and iii) Operating cycle method 1. Estimation of components of working capital method As the concept of net working capital refers to the difference between current assets and current liabilities, estimation of both may give the potential working capital requirement of the firm. 2. Percent of sales method According to this method, based on the past data, the relationship between sales and working capital are found out and are expressed as a ratio. The application and calculation of this ratio on estimated future sales will give the extent of working capital needs of the firm. 3. Operating cycle method Operating cycle is the time duration required to convert sales, after the conversion of resources into inventories and cash. The operating cycle of a manufacturing co involves 3 phases i) acquisition of resources such as raw material, labor, power and fuel etc, ii) manufacture of the product that includes conversion of raw material into work in process and into finished goods, and iii) sales of the product either for cash or credit. Credit sales create book debts for collection (debtors). The length of the operating cycle of a manufacturing co is the sum of i) inventory conversion period (ICP) and ii) Book debts conversion period (BDCP). Together, they are sometimes called as gross operating cycle (GOC). GOC = ICP + DCP

The Inventory conversion period is the total time needed for producing and selling the product and includes (a) raw material conversion time (RMCP), (b) work in process conversion period (WIPCP) and (c) Finished good conversion period (FGCP). ICP = RMCP + WIPCP + FGCP The payables deferral period (PDP) is the length of time the firm is able to defer payments on various resource purchases. The difference between the gross operating cycle and payables deferrals period is the net operating cycle (NOC). NOC = GOC- Payables deferral period ILLUSTRATION

ILLUSTRATION 1 A pro forma cost sheet of a co provides the following data Costs (per unit) Raw material 52.00 Direct labor 19.50 Overheads 39.00 Total cost (per unit) 110.50 Profit 19.50 Selling price 130.00 The following is the additional information available Average raw material in stock: one month, average materials in process: half a month;. Credit allowed by suppliers : one month: credit allowed to debtors : two months. Time lag in payment of wages : one and a half weeks. Overheads : one month. One fourth of sales are on cash basis. Cash balance is expected to be Rs.1,20,000. You are required to prepare a statement showing the working capital needed to finance a level of activity of 70,000 units of output. You may assume that production is carried on evenly throughout the year and wages and overheads accrue similarly. SOLUTION Calculation of working capital needs A. Investment in Inventory 1. Raw material inventory: one month (30 days) (RMC/360) x RMCP = {(70,000 X 52) / 360} X 30 2. Work in progress inventory : Half a month (15 days) (COP/360)X WIPCP = {(70,000X 110.50)/360} X 15 3. Finished goods inventory: one month (30 days) (COS/360)XFGCP = {(70,000 x 110.50)/360} X 30

303,333.33 322,291.67 644,583.33 1,270,208.33

B. Investment in debtors: two months (60 days) (credit sale (cost)/360}X 60 C. Cash balance D. Investments in current assets (A+B+C) E. Current liabilities: deferred payment 1. Creditors: one month (30 days) (purchase of raw materials/360} X PDP = {(70,000x52)/360}x 30 2. Deferred wages : 1 weeks (10 days) = {(70,000x 19.50)/360}x 10 3. Deferred overheads : one month (30 days) = {(70,000x39)/360} x 30 F. Total deferred payment (spontaneous sources of working capital) = {E (1+2+3)} Net working capital

966,875.00 1,20,000.00 2,357,708.33 303,333.33 37,916.67 227,500.00 568,750.00 1,788,958.33

ILLUSTRATION 2 A pro forma cost sheet of a company provides the following data Costs (per unit) Raw Material Rs. 60 Direct Labor Rs. 20 Overheads Rs. 40 Total cost (per unit) Rs.120 Profit Rs. 30 Selling Price Rs.150 The following is the additional information available. Average raw material in stock : one month, average materials in process : half a month. Credit allowed by suppliers one month. Credit allowed to debtors two months. Time lag in payment of wages 2 weeks and for overhead one month. Half of the sales are on cash basis. Cash balance is expected to be Rs.2,00,000. You are required to prepare a statement showing the working capital needed to finance a level of activity of 50,000 units of output. You may assume that production is carried out on evenly throughout the year and wages and overheads accrue similarly SOLUTION: Calculation of working capital needs

A. Investment in Inventory 1. Raw material inventory: one month (30 days) (RMC/360) x RMCP = {(50,000 X 60) / 360} X 30 2. Work in progress inventory : Half a month (15 days) (COP/360)X WIPCP = {(50,000X 120)/360} X 15 3. Finished goods inventory: one month (30 days)

2,50,000 2,50,000

(COS/360)XFGCP = {(50,000 x 120)/360} X 30 B. Investment in debtors: two months (60 days) (credit sale (cost)/360}X 60 = (25,000 x 120)/360 x60 C. Cash balance D. Investments in current assets (A+B+C) E. Current liabilities: deferred payment 1. Creditors: one month (30 days) (purchase of raw materials/360} X PDP = {(50,000x60)/360}x 30 2. Deferred wages : 1 weeks (10 days) = {(50,000x 20)/360}x 10 3. Deferred overheads : one month (30 days) = {(50,000x40)/360} x 30 F. Total deferred payment (spontaneous sources of working capital) = {E (1+2+3)} Net working capital Summary

5,00,000 10,00,000 5,00,000 2,00,000 17,00,000 2,50,000 27,778 1,66,667 4,44,445 12,55,555

The financing decision and working capital decisions of a firm are very crucial for its survival and growth. The financing decision of a firm refers to those activities which revolve around the finding of the cost of various sources of finance such as Equity shares, Preference shares, Debentures etc and selecting those sources where the overall cost of the funds is the minimum. This is because, each source of finance has its own risk characteristics and depending on it, structures its cost. Similarly, working capital decision of a firm is also very important as it decides the quantum of investment in current assets and current liabilities. Optional Capital Structure may be defined as that of Capital structure or Combination of debt and equity that leads to the maximum value of the firm. Capital structure planning aims at maximization of profits and the wealth of the shareholders, ensures the maximum value of a firm or minimum Cost of capital. A sound or an appropriate Capital structure should have the following essential features :i) Maximum possible use of leverage, ii) Capital structure should be flexible, iii) To avoid undue financial/business risk with the increase of debt, iv) The use of debt should be within the capacity of a firm. The firm should be in a position to meet its obligations in paying the loan and interest charges as and when due, v) It should involve minimum possible risk of loss of control, vi) It must avoid undue restrictions in agreement of debt. Many factors influence the working capital needs of a firm. Some of them are i) Financial leverage (or) Trading on equity , ii) Growth & Stability of Sales, iii) Cost of Capital , iv) Cash flow ability to service debt, v) Nature and size of firm,

vi) Control, vii) Flexibility, viii) Requirement of Investors , ix) Capital market conditions, x) Assets structure, xi) Purpose of financing , xii) Period of finance, xiii) Cost of floatation, xiv) Usually the cost of floating a debt is lower than the cost of floating equity, xv) Personal consideration, xiv) Corporate tax rate, xv) Legal requirements, xiv) The Government issued certain guidelines for the issue of shares and debentures and has let down a frame work within which the capital structure decision has to be made. Dividends refer to that portion of a firms net earnings, which are paid out to the shareholders. Given the objective of financial management of maximizing the shareholders wealth, the firm would be well advised to use the net profits for paying dividends to shareholders if it will lead to the maximization of the wealth of the owners. If not, the firm should rather retain them to finance investment programs. But, there are conflicting opinions regarding the impact of dividends on the valuation of the firm. According to one school of thought, dividends are irrelevant so that the amount of dividends paid has no effect on the valuation of a firm. On the other hand, certain theories consider the dividend decision as relevant to the value of the firm measured in terms of the market price of the shares. The most popular forms of dividend are cash dividend, stock dividend or bonus share issue, stock split, reverse split and stock repurchase. There are popularly around four types of dividend policies. They are regular dividend policy, stable dividend policy irregular dividend policy and no dividend policy. The various determinants of dividend policy are legal restrictions, Magnitude and trend of Earnings, Desire and type of shareholders , Nature of industry, Age of the company, Governments economic policy, Future financial requirements, Taxation policy, Inflation, Control objectives, Stability of dividends, Liquid resources, etc. Working capital refers to the capital required for day-to-day operations of a business enterprise. The need for Working Capital is omnipresent for all types and sizes of businesses, and as such cannot be overstressed. There are two concepts of Working Capital Gross Working capital and Net Working capital. Working capital can be divided into two categories on the basis of time. They are Permanent Working Capital and Temporary or Variable Working capital.

A large no of factors influence the working capital requirements of firms. Some of them are - Nature of business, Production policies, Length of the manufacturing process, Credit policy, Rapidity of turnover, Seasonal fluctuations, Fluctuations of supply, Economic conditions, Availability of credit, Operating efficiency and performance, Profits, etc In order to estimate the extent of working capital requirement of a firm, several factors are to be considered. There are several methods / techniques for estimating the working capital requirements of a firm. They include i) Estimation of components of working capital method, ii) Percent of sales method and iii) Operating cycle method.

Short Questions 1. What do you mean by working capital? What are the various types of working capital? 2. What is the importance of working capital for a manufacturing firm? 3. Briefly explain the concepts of permanent and temporary working capital. 4. What is an operating cycle? 5. How do you estimate working capital needs of a firm? Long Questions 1. Explain the concept of working capital. Are gross and net concepts of working capital exclusive? Explain. 2. Explain the concepts of working capital. What are the determinants of working capital needs of a firm? 3. Briefly explain the factors that determine the working capital needs of a firm? 4. How is working capital affected by (a) sales (b) technology (c) production policy and (c) inflation? Explain. 5. Define working capital management. Why is it important to study the management of working capital as a separate area in financial management? Exercises 1. A pro forma cost sheet of a company provides the following data Costs (per unit) Raw Material Direct Labor Overheads Total cost (per unit) Profit Rs. 60 Rs. 20 Rs. 40 Rs.120 Rs. 30

Selling Price

Rs.150

The following is the additional information available. Average raw material in stock : one month, average materials in process : half a month. Credit allowed by suppliers one month. Credit allowed to debtors two months. Time lag in payment of wages 2 weeks and for overhead one month. Half of the sales are on cash basis. Cash balance is expected to be Rs.2,00,000. You are required to prepare a statement showing the working capital needed to finance a level of activity of 50,000 units of output. You may assume that production is carried out on evenly throughout the year and wages and overheads accrue similarly.

TEXT BOOKS FOR THE CHAPTER

1. 2. 3. I.M.Pandey, Financial Management, Vikas Publishing House pvt .Ltd, 2006. M.Y.Khan & P.K.Jain, Financial Management, Tata McGraw Hill Publishing Company Ltd, 2007. Dr.S.N.Maheshwari, Financial Management Principles and Practice, Sultan Chand & Sons, 2000.

REFERENCES FOR THE CHAPTER 1. I.M.Pandey, Elements of management accounting, Vikas Publishing House pvt .Ltd, 1993. 2. Eugene. F.Brigham, Michael.C.Ehrhardt, Financial Management theory and practice, Thomson Southwestern, 2006.