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A STUDY ON
FINANCIAL PLANNING AND FINANCIAL FORECASTING
IN
M/S YAHOO SOFTWARE DEVELOPMENT INDIA PVT LTD,
BANGALORE
PROJECT REPORT SUBMITTED TO
SCHOOL OF MANAGEMENT STUDIES
INDIRA GANDHI NATIONAL OPEN UNIVERSITY
MAIDAN GARHI, NEW DELHI
IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE DEGREE
OF MASTER OF BUSINESS ADMINISTRATITON- FINANCE
SUBMITTED BY
ANANTH KUMAR. D (MP 072373198)
UNDER THE GUIDANCE OF
Prof.K.M. MAHADEVAPPAA, MA, MBA (FIN), MBA (HR) LL.B. Pre-PhD ACADEMIC COUNSELOR, IGNOU, BANGALORE
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CERTIFICATE OF ORIGINALITY
This is to certify that the project titled A Study on Financial
Planning and Financial Forecasting in M/s Yahoo Software
Development India Pvt Ltd, Bangalore is a bona-fide and original
work of the student and is being submitted in partial fulfillment for the
award of the Masters degree in Business Administration of Indira Gandhi
Open University. This report has not been submitted earlier either to this
University or to any other University/Institution for the fulfillment of the
requirement of a course of study.
K.M.MAHADEVAPPAAANANTHKUMAR D Signature of ProjectGuide Signature of Student
Place: Bangalore Place:Bangalore Date: 26 March 2012
26 March 2012
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ACKNOWLEDGEMENT
I sincerely feel that the credit of the project work could not be
narrowed down to only one individual, as the work is the outcome of
wholehearted cooperation from many persons. With their guidance and
support, I was able to bring out this project report.
I am thankful to the management for providing me an
opportunity to do this project.
I heartily thank the Officers and employees of M/s Yahoo
Software Development India Pvt Ltd,Bangalore, for providing me
an opportunity to do the project in their company. I earnestly thankful
to Sri K.A.Upadhyaya, Senior Finance Manager and all the Departments
of the company for their constant support and cooperation during the
course of the project and for providing me their valuable time and
information for completing my project despite their busy schedules.
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Last but not the least, I would like to express my sincere thanks to
those known and unknown people who helped me by any means.
Place: BangaloreANANTHKUMAR DDate 13 February 2012
TABLE OF CONTENTS
Chapte
r
Particulars Page
No.
1
INTRODUCTION TO FINANCE MANAGEMENT
2
CONCEPTS OF FINANCE MANAGEMENT
3
ORGANISATION PROFILE
4
DATA ANALYSIS AND INTERPRETATION
5
CONCLUSION
6
SUGGESTIONS AND RECOMMENDATIONS
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7
ANNEXURE - QUESTIONNAIRE
8BIBLIOGRAPHY / WEB SITES REFERRED
1.1 Finance A concept
It would be worthwhile to recall what Henry Ford once remarked: "Money is an arm or a
leg. You either use it or lose it". This statement though apparently simple, is quite
meaningful. It brings home the significance of money or finance. In the modern money-
oriented economy finance is one of the basic foundations of all kinds of economic
activities. It is the master key which provides access to all the sources for being employed
in manufacturing and merchandising activities. The Sanskrit saying "arthah sachivah"
which means "finance reigns supreme", speaks volumes for the significance of the finance
function of an organization. It has rightly been said that business needs money to make
more money. However, it is also true that money begets more money, only when it is
properly managed. Hence, efficient management of every business enterprise is closely
linked with efficient management of its finances. In conclusion we can say that Finance is
regarded as "The life blood of a business enterprise". "Finance is the backbone of every
business".
1.2 Meaning of Business Finance
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Business Finance is that business activity which is concerned with the acquisition and
conservation of capital funds in meeting financial needs and overall objectives of a
business enterprise.
1.3 Meaning of Financial Management
Financial management is broadly concerned with the acquisition and use of funds by a
business firm. Its scope may be defined in terms of the following questions.
How large should the firm be and how fast should it grow?
What should be the composition of the firms assets?
What should be the mix of the firms financing?
How should the firm analyze, plan and control its financial affairs?
The entire gamut of managerial efforts concerned with raising of funds at optimum cost
and their effective utilization with a view to maximize the wealth of the shareholders.
Financial management is concerned with the efficient use of an important economic
resource; namely, capital funds.
Thus, Financial management includes Anticipating Financial Needs, Acquiring Financial
Resources and Allocating Funds in Business (i.e, Three As of financial management).
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Figure 1.1: Framework of Financial Management
1.4 Importance of Financial Management
Financial Management is indeed the key to successful business operations. Without proper
administration and effective utilization of finance, no business enterprise can utilize its
potentials for growth and expansion. The importance of financial management can be
ascertained from the study of the following points:
1. Successful promotion: Successful promotion of a business concern depends upon
efficient financial management. If the plan adopted fails to provide adequate capital to meet
the requirements of fixed and working capital and particularly the latter, the firm cannot
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carry on its business successfully. Therefore, sound financial planning is quite essential for
the success of a business firm.
2. Smooth Running: Since finance is required at each stage of the business such as
promotion, incorporation, development, expansion and management of day-to-day
expenses, proper financial administration becomes necessary for the smooth running of a
business enterprise.
3. Decision making: Financial management provides scientific analysis of all facts and
figures through various financial tools such as ratio analysis, variance analysis, budgets
etc., Such an analysis helps the management to evaluate the profitability of the plan in the
given circumstances so that a proper decision can be taken to minimize the risk.
4. Solutions to Financial Problems: The efficient Financial Management helps the top
management by providing solutions to the various financial problems faced by it.
5. Measure of performance: Financial Management is considered as a yard stick to
measure the performance of the firm.
The importance of Financial Management in an enterprise may very well be realized by the
following words: Financial Management is properly viewed as an integral part of overall
management rather than as a staff speciality concerned with fund raising operation. In
addition to raising funds, financial management is directly concerned with production,
marketing and other functions within an enterprise whenever decisions are made about the
acquisition or distribution of assets.
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Thus, financial management has attained a good deal of importance in modern business.
1.5 Scope and Functions of Financial Management
The approach to the scope and functions of financial management is divided, in order to
have a better exposition, into two broad categories.
a) Traditional Approach
b) Modern Approach
Traditional Approach: The traditional approach, which was popular in the early stage,
limited the role of financial manager to raising and administering of funds needed by the
corporate enterprises to meet their financial needs. It deals with the following aspects:
i) Arrangement of funds from financial institutions
ii) Arrangement of funds through financial instruments like share, bonds etc.,
iii) Looking after the legal and accounting relationship between a corporation and itssources of funds.
Thus, the finance manager had a limited role to perform. He was expected to keep accurate
financial records, prepare reports on the corporations status and performance and manage
cash in a way that the corporation was in a position to pay its bills in times.
The term Corporation Finance was used in place of the present term Financial
Management.
The traditional approach to the scope of the finance function evolved during the 1920s and
1930s dominated the academic thinking during the forties and through the early fifties. It
has now been discarded as it suffers from serious limitations. Following are the main
limitations.
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a) External Approach: The approach treated the subject of finance only from the view point
of suppliers of funds, i.e., outsiders, viz., bankers, investors etc., It followed an outsider-
looking-in approach and not the insider-looking-out approach. Since it completely ignored
the view point of those who had to take internal financing decisions.
b) Ignored routine problems: The subject of financial management was mainly confined to
the financial problems arising during the course of incorporation, mergers etc, and the
subject did not give any importance to day-to-day financial problems of business.
c) Ignored non-corporate enterprise: The approach focused mainly on the financial
problems of corporate enterprises.
d) Ignored working capital financing: The problems relating to financing short term or
working capital were ignored in the approach. The approach focused mainly on the
problems of long term financing.
e) No Emphasis on allocation of funds: The approach confined financial management only
to procurement of funds. It did not emphasis on allocation of funds.
The conceptual framework of the traditional treatment ignored what Solomon aptly
describes as the central issues of financial management. These are:
i) Should an enterprise commit capital funds to certain purposes?
ii) Do the expected returns meet financial standards of performance?
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iii) How should these standards be set and what is the cost of capital funds to the
enterprise?
iv) How does the cost vary with the mixture of financing methods used?
In the absence of the coverage of these crucial aspects, the traditional approach implied a
very narrow scope for financial management. The modern approach provides a solution to
these shortcomings.
Modern Approach: According to modern approach the term financial management
provides a conceptual and analytical framework for financial decision-making. That means,
the finance function covers both acquisition of funds as well as their allocation. The new
approach views the term financial management in a broader sense. It is viewed as an
integral part of over-all management.
The new approach is an analytical way of viewing the financial problems of a firm. The
main contents of the modern approach are as follows:
i) What is the total volume of funds an enterprise should commit?
ii) What specific assets should an enterprise acquire?
iii) How should the funds required be financed?
Thus, financial management, in the modern sense of the term, can be divided into four
major decisions as functions of finance. They are:
i) The investment decision
ii) The financing decision
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iii) The dividend policy decision
iv) The funds requirement decision.
The functions of financial management may be classified on the basis of Liquidity,
Profitability and Management.
1. Liquidity: It is ascertained on the basis of three important considerations.
a) Forecasting cash flows i.e., matching the inflows against cash outflows.
b) Raising funds i.e., financial manager will have to ascertain the sources from which
funds may be raised and the time when these funds are needed.
c) Managing the flow of internal funds
2. Profitability: While ascertaining profitability, the following factors are taken into
account.
a) Cost control
b) Pricing
c) Forecasting future profits
d) Measuring cost of capital
3. Management: Asset management has assumed an important role in financial
management. It includes: (a) The management of long term funds. (b) The management of
short term funds.
Apart from the above main functions, following subsidiary functions are also performed by
the finance.
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1.6 Functional Areas of Modern Financial Management
As Modern Financial Management performs several functions, it is difficult task to identify
the functional areas of modern financial management. However, we can list out the
following important functional areas of modern management.
Key Activities of Financial Management: The three broad activities of financial
management are: (a) financial analysis; planning and control (b) management of firms
asset structure and (c) management of the firms financial structure. Figure 1.2 shows how
these activities are related to the balance sheet of the firm.
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Figure 1.2: Key Activities of Financial Management
1.7 Organisation of the Finance Functions
Like any other functional management in a firm finance is a vital functional organ of the
firm. If finance function does not operate well, the whole organizational activity will be
ruined. So inefficient financial management paralyses the activity of the firm. That is why
every company will have a separate department to look after the financial aspects of the
company.
The finance function can be broadly classified into two parts.
Routine financial matters like custody of cash and bank accounts, collection or loans,
payment of cash etc.
Special financial functions like financial planning and budgeting, profit analysis,
investment decisions etc.
These two functions can be looked after by two executives and ultimately by the top
management.
Routine matters are looked after by the "Treasurer" and special matters are managed by the
"Controller of Finance". The following chart will give an idea about the finance
department.
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Figure 1.3: Organisation of the Finance Function
Table 1.1: Functions of the Treasurer and the Controller
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1.8 The Financial Management Process
A
Model of the financial management process is presented in Figure 1.4
1. Financial Analysis: This is the preliminary, diagnostic stage and will include: a
financial analysis and review to determine the current financial performance and condition
of the business; an identification of any particular financial problems, risks, constraints or
limitations; and an assessment of financial Strength, Weaknesses, Opportunities and
Threats (a financial SWOT analysis).
2. Financial Decision-Making: Based on the findings of the review stage, financial
decisions and choices will have to be made. These are likely to include strategic
investment decisions, such as investing in new production facilities or the acquisition of
another company and strategic financing decisions, for example, the decision to raise
additional long-term loans.
3. Financial Planning: The essence of financial planning is to ensure that the right
amount of funds is available at the right time and at the right cost for the level of risk
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involved to enable the firms objectives to be achieved. Budgeting will be a key financial
planning tool. The efficiency and effectiveness of the financial planning process will be
greatly aided by the application of computerized financial modeling.
4. Financial Control: The final stage of the process will require throughout the
organization. This is to ensure that plans are properly implemented, that progress is
continually reported to management, and that any deviations from plans are clearly
identified.
1.9 Financial Decisions
The important financial decisions to be taken by the manager are as follows:
1. Investment Decisions: This is concerned with the allocation of capital. It has to show
the funds can be invested in assets which would yield benefit in future. This is a decision
based on risk and uncertainty. Finance manager has to evaluate the investment in relation
to their expected return and risk to determine whether the investment is feasible or not.
Besides the financial manager is also entrusted with the management of existing assets. The
whole exercise is called "Capital Budgeting". This was the first technique developed in
financial management. This technique helps to know Net Present Value of assets. To
have a more profitable investment, the companies can think of amalgamations and mergers
internally and externally. That is why we have seen the emergence of multinational
companies.
2. Finance Decisions: This decision is concerned with the mobilization of finance for
investment. The finance manager has to take decisions regarding the acquisition of finance.
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Whether entire capital required should be raised in the form of equity capital, or the amount
should be borrowed totally or a balance should be struck between equity and borrowed
capital has to be decided. Even the timing of acquisition of capital should also be perfectly
made. While determining the ratio between debt and equity, the finance manager should
ascertain the risk involved in obtaining each type of capital. Thus determining the best
"Finance Mix" is another important task of the finance manager. The best capital structure
will always ensure wealth maximization.
3. Dividend Decision: This decision is concerned with the divisible profits of the
company.
i) How much profit is to be flown back by capitalization?
ii) How much cash dividend should be paid to the shareholders?
iii) Maintenance of stable dividend rate over the period, are some of the issues connected
with this decision.
The dividend decision involves the determination of the percentage of profit earned by the
enterprise which is to be paid to its shareholders. The dividend pay out ratio must be
evaluated in the light of the objective of maximizing shareholders wealth. Thus, the
dividend decision has become a vital aspect of financing decision.
4. Current Assets Management: The finance manager should also manage the current
assets to have liquidity in the business. Investment of funds in current assets reduces the
profitability of the firm. However the finance manager should also equally look after the
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current financial needs of the firm to maintain optimum production. While investing funds
in current assets, he must see that proper balance (trade off) is maintained between the
profitability and liquidity.
Every financial decision involves this trade off. At this level the market value of the
companys shares would be the maximum.The inter-relationship between market value,
financial decisions, risk-return and trade off is depicted in the chart.
Fig. 1.5: Decisions, Return, Risk and Trade off.
In conclusion we can say that to maximize the wealth of the owners, the finance manager
has to take carefully the decisions relating to (i) Investment (ii) Dividend (iii) Financing
and (iv) Current Assets.
1.10 Objectives of Financial Management
(Profit-Maximization V/s Wealth Maximization)
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The objectives of financial management can be broadly classified into two categories:
1. Basic Objectives 2. Other Objectives
1. Basic Objectives: Traditionally the basic objectives of financial management have been
(A) Maintenance of liquid assets and (B) Maximization of profitability of the firm.
However, these days there is a greater emphasis on (C) Shareholders wealth maximization
rather than on profit maximization.
(A) Maintenance of Liquid Assets: Financial management aims at maintenance of adequate
liquid assets with the firm to meet its obligations at all times. However investment in liquid
assets has to be adequate - neither too low nor too excessive. The finance manager has to
maintain a balance between liquidity and profitability.
(B) Maximization of Profit: "Profit maximization" is a term which denotes the maximum
profit to be earned by an organisation in a given time period. The profit -maximization goal
implies that the investment, financing and dividend policy decisions of the enterprise
should be oriented to profit maximization.
The term "Profit" can be used in two senses- one as the owner-oriented concept and the
other as the operational concept.
Profit as the owner-oriented concept, refers to the amount of net profit which goes in the
form of dividend to the shareholders. Profit as the operational concept means profitability
which is an indicator of economic efficiency of the enterprise.
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Profitability-maximization implies that the enterprise should select assets, projects and
decisions which are profitable and reject those which are not profitable. It is in this sense
that the term profit-maximization is used in financial management.
Merits of the Profit-Maximization:
1. Best Criterion of Decision-Making: The goal of profit maximization is regarded as the
best criterion of the decision making as it provides a yard-stick to judge the economic
performance of the enterprise.
2. Efficient Allocation of Resources: It leads to efficient allocation of scarce resources as
they tend to be diverted to those uses which, in terms of profitability, are the most
desirable.
3. Optimum Utilization: Optimum utilization of available resource is possible.
4. Maximum Social Welfare: It ensures maximum social welfare in the form of maximum
dividend to shareholders, timely payments to creditors, higher wages, better quality and
lower prices, more employment opportunities to the society and maximization of capital to
the owners.
However, the profit-maximization objective suffers from several drawbacks which are as
follows:
1. Time Factor Ignored: The term Profit does not speak anything about the period of
profit- whether it is short-term profit or long-term profit.
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2. It Is Vague: The term Profit is very vague. It is not clear in what exact sense the term
profit is used. Whether it is Accounting profit or Economic profit or profit after tax or
profit before tax.
3. The Term Maximum is also Ambiguous: The term maximum is also not clear. The
concept of profit is also not clear. It is therefore, not possible to maximize what cannot be
known.
4. It Ignores Time Value: The profit maximization objective fails to provide any idea
regarding the timing of expected cash earnings. The choice of a more worthy project lies in
the study of time value of future inflows of cash earnings. It ignores the fact that the rupee
earned to day is more valuable than a rupee earned later.
5. It Ignores the Risk Factor: According to economists, profit is a reward for risk and
uncertainty bearing. It is also a dynamic surplus or profit is a reward for innovation. But
when can the organization maximize profits ? Profit-maximization objective does not make
this clear.
B) Wealth Maximization: It is now widely and universally accepted that the objective of
the enterprise should be suitable and operationally feasible, precise and clear cut and
should give weightage to time value and risk factors. Owing to the various drawbacks of
the profit maximization objective, Professor Ezra Solomon rejected it as inappropriate and
unsuitable and suggested the adoption of wealth-maximization objective which removes all
the drawbacks of the profit maximization objective.
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Wealth-maximization is also called value-maximization. The wealth or net present worth
of a course of action is the difference between gross present worth and the amount of
capital investment required to achieve the benefits. Gross present-worth represents the
present value of expected cash benefits.
In simple, wealth-maximization means maximizing the present value of a course of action
(i.e. NPV= GPV of benefits -Investment). Any financial action which results in positive
NPV, creates and adds to the existing wealth of the organization and the course of action
which has a negative NPV, reduces the existing wealth and hence be given up. All positive
actions can be adopted as they add to the existing wealth and help in wealth maximization.
Significance of Wealth - Maximization:
The Company although it cares more for the economic welfare of the shareholders, it
cannot forget the others who directly or indirectly work for the overall development of the
company. Thus wealth -maximization takes care of
1. Lenders or creditors
2 Workers or Employees
3 Public or Society
4 Management or Employer
2. Other Objectives: Besides the above basic objectives, the following are the other
objectives of financial management.
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Ensuring a fair return to shareholders
Building up reserves for growth and expansion
Ensuring maximum operational efficiency by efficient and effective utilization of finance
Ensuring financial discipline in the management
1.11 Methods of Financial Management
The term Financial Method or Financial Tool refers to any logical method or technique
to be employed for the purpose of accomplishing the following two goals:
a. Measuring the effectiveness of firms action and decisions
b. Measuring the validity of the decisions regarding accepting or rejecting future projects
Following are the important financial tools or methods used by financial manager in
performance of his job:
1. Cost of Capital: Cost of capital helps the finance manager in deciding about the sources
from which the funds are to be raised. In case of different sources of finance viz, shares,
debentures, loans from financial institutions, banks, public deposits etc., the financial
manager takes into account the cost of capital and opts for that source which is the cheapest
to him. The cost of capital is also taken into account for determining the optimum capital
structure.
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2. Trading on Equity: Trading on equity is another tool which helps the finance manager
in increasing the return to equity shareholders.
3. Capital Budgeting Appraisal - method such as payback period, average rate of return,
internal rate of return, net present value, profitability index etc, help the finance manager in
selecting the best among alternative capital investment proposals.
4. Ratio Analysis-is another method for evaluating different aspects of the firm. Different
ratios serve different purposes.
5. Abc Analysis, cash management models, debtors turnover ratio etc, help the finance
manager in effective management of current assets.
6. Funds Flow Analysis and Cash Flow Analysis: This technique helps the financial
manager in determining whether the funds have been procured from the best available
source and they have been utilized in the best possible way. Projected funds flow analysis
and projected cash flow analysis help the finance manager in estimating or arranging for
the future working capital or cash needs.
1.12 Financial Management and other Disciplines
The study of financial management as a totally independent subject is relatively recent, its
roots tracing back to the turn of this century. It draws heavily on related disciplines and
fields of study. The most important of these are Accounting and Economics; in the latter
discipline, macro-economics and micro-economics are of special significance. Marketing,
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Production and the study of Quantitative methods also have an impact on the financial
management field.
Accounting: Financial managers play a game of managing a firms financial and real
assets and securing the funding needed to support these assets. Financial managers often
turn to accounting data to assist them in making decisions. Financial managers are
primarily concerned with a firms cash flows, because they often determine the feasibility
of certain investment and financing decisions.
Table 1.2 - Financial Management V/s Financial
Accounting
Economics: There are two areas of economics with which the financial manager must be
familiar: micro-economics and macro-economics. Micro-economic deals with the
economic decisions of individuals and firms, whereas macro-economics looks at the
economy as a whole.
Marketing, Production & Quantitative Methods:
Figure 1.6 depicts the relationship between financial management and its primary
supportive disciplines. Marketing, Production and Quantitative methods are indirectly
related to the key day-to-day decisions made by financial managers. For example, financial
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manager should consider the impact of new product development and promotion plans
made in the marketing area, because these plans will require capital outlay and have an
impact on the firms projected cash flows. Similarly, changes in the production process
may necessitate capital expenditures, which the firms financial managers must evaluate
and then finance. And, finally, the tools of analysis developed in the quantitative methods
area frequently are helpful in analyzing complex financial management problems.
Figure 1.6: Impact of other Disciplines on Financial Management
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CHAPTER 1
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INTRODUCTION
TO FINANCE MANAGEMENT
CHAPTER 1
Introduction to FINANCIAL MANAGEMENT
FINANCIAL MANAGEMENT
Financial Management is one of the key disciplines necessary for the
successful management of business corporations and other
organizations.
Financial Management practices allow students to understand and
explain the financial behaviors of corporations and other organizations.
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An understanding of the practices of Financial Management equips
students with the knowledge and understanding necessary to apply this
knowledge to real-life business situations.
In an organization financial management is split into its two principal
roles. These are the accounting function, usually under the direction of
the financial controller, and the corporate finance function directed by
the treasurer. Accounting is concerned with the provision and
interpretation of information for economic decision making. Accounting
is itself split between management accounting - the internal facing
function - which services the information needs of the organizations
management and financial accounting - the external facing, highly
regulated, function - which provides information for investors, the
general public, regulatory bodies etc. The corporate finance function is
concerned with managing the finances of the organization and is
involved in cash management, asset allocation, capital structuring and
financial risk management in areas such as interest rates, foreign
currency exchange rates and commodity trading.
The program is structured so that students specialize through courses
within choices including advanced corporate finance, advanced finance
theory, behavioral finance and market anomalies, derivatives,
investment management, public sector financial management.
2. THEORETICAL BACKGROUND
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Financial management is that managerial activity which is concern with
the planning and controlling of the firms financial resources. It was a
branch of Economics till 1980 and then separate decline or activity it is
of recent origin. The subject of the financial management and practicing
managers. It is of great interest to academic and because the subject is
still developing and then are still certain areas where a controversy
exists for which no unanimous solutions have been reached it. Practicing
managers are interested in this subject because among the most critical
decisions of the firm are those which relate to finance, and
understanding of the theory of financial management provides them
conceptual and analytical insights to make those decisions skillfully.
Financial management concerned with those managerial decisions
which results in acquisition and financing of long term assets of firm. If
specific, liabilities are also with the trouble of size and growth of an
enterprise. An analysis of these decisions is based upon expected inflow
and outflow of fund therein.
Financial Management can be defined as:
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The management of the finances of a business / organization in
order to achieve financial objectives
Taking a commercial business as the most common organizational
structure, the key objectives of financial management would be to:
Create wealth for the business
Generate cash, and
Provide an adequate return on investment bearing in mind the risks
that the business is taking and the resources invested
There are three key elements to the process of financial management:
(1) Financial Planning
Management need to ensure that enough funding is available at the
right time to meet the needs of the business. In the short term, funding
may be needed to invest in equipment and stocks, pay employees and
fund sales made on credit.
In the medium and long term, funding may be required for significant
additions to the productive capacity of the business or to make
acquisitions.
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(2) Financial Control
Financial control is a critically important activity to help the business
ensure that the business is meeting its objectives. Financial control
addresses questions such as:
Are assets being used efficiently?
Are the businesses assets secure?
Do management act in the best interest of shareholders and in
accordance with business rules?
(3) Financial Decision-making
The key aspects of financial decision-making relate to investment,
financing and dividends:
Investments must be financed in some way however there are
always financing alternatives that can be considered. For example it is
possible to raise finance from selling new shares, borrowing from banks
or taking credit from suppliers
A key financing decision is whether profits earned by the business
should be retained rather than distributed to shareholders via dividends.
If dividends are too high, the business may be starved of funding to
reinvest in growing revenues and profits further.
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FUNCTIONAL AREA OF FINANCIAL MANAGEMENT
Determining financial needs
Determining source of funds
Financial analysis
Optimal capital structure
Cost volume profit analysis
Profit planning and control
Fixed assets management
Profit planning evaluation
Capital budgeting
Working capital management
Dividend policy
Acquisition and Mergers
Corporate taxation
Financial Planning and Forecasting
Prepared by: Matt H. Evans, CPA, CMA, CFM
Introduction
Financial planning is a continuous process of directing and allocating
financial resources to meet strategic goals and objectives. The output from
financial planning takes the form of budgets. The most widely used form of
budgets is Pro Forma or Budgeted Financial Statements. The foundation for
Budgeted Financial Statements is Detail Budgets. Detail Budgets include
sales forecasts, production forecasts, and other estimates in support of the
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Financial Plan. Collectively, all of these budgets are referred to as the
Master Budget.
We can also break financial planning down into planning for operations and
planning for financing. Operating people focus on sales and production
while financial planners are interested in how to finance the operations.
Therefore, we can have an Operating Plan and a Financial Plan. However, to
keep things simple and to make sure we integrate the process fully, we will
consider financial planning as one single process that encompasses both
operations and financing.
Financial Planning starts at the top of the organization with strategic
planning. Since strategic decisions have financial implications, we must
start our budgeting process within the strategic planning process. Failure to
link and connect budgeting with strategic planning can result in budgets
that are "dead on arrival."
Strategic planning is a formal process for establishing goals and objectives
over the long run. Strategic planning involves developing a mission
statement that captures why the organization exists and plans for how the
organization will thrive in the future. Strategic objectives and corresponding
goals are developed based on a very thorough assessment of the
organization and the external environment. Finally, strategic plans are
implemented by developing an Operating or Action Plan. Within this
Operating Plan, we will include a complete set of financial plans or budgets.
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Financial Plans (Budgets) Operating Plan Strategic Plan
CHAPTER 2
CONCEPTS OF FINANCE
MANAGEMENT
To start a business or expand the existing business. We have a great
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idea, super attitude and the entrepreneurial spirit. So you head down to
your local
bank or financial institution; you sit down in front of the credit manager
and start
to explain this brilliant idea when she interrupts us: That sounds great,
but where
is our business plan?
This scenario is played out every day in Canada people with ideas who
want
to plunge into business without having done a business plan. The
purpose of this
guide is to explain in simple terms the business plan concept and to
show you how
to put your own plan together.
A Start-Up Guide leads entrepreneurs through the business planning
process.
By describing everything from Vision and Mission to Operational
Strategies, the
Guide provides an easy to read description of your new business
concept. The
affiliated Financial Planning Template helps entrepreneurs assemble
their Starting
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Balance Sheet, Pro-Forma Income Statement and first year Cash Flow
Forecast.
The Financial Plan
Introduction
The financial plan is critical to the success of your business plan
especially if it is
for the purpose of getting a bank loan. The Cash Flow Forecast is
arguably the most
important part of the plan, but each of the other documents is important
from a
planning perspective. There are three sections in a financial plan:
The Starting Balance Sheet
The Pro-Forma (or Forecast) Income Statement
The Cash Flow Forecast (each of these sections should have notes of
explanation
for the reader).
The Financial Planning Template
To assist you in this process, we have created a template written for
MS/Excel. Click
here to access the template. This will take you through seven
worksheets, each
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asking for financial information. This information is then assembled into
the three
statements described above. Information can be changed, and the
results of the
change are immediately calculated. This will take you to a reasonable
first draft
of your financials but you will have to make some final adjustments
for your
particular situation.
If you are using a printout of this guide you can find the Excel template
under
http://www.cse.gov.bc.ca/ReportsPublications/FinancialTemplate.XLT.
It is almost impossible to get things right the first time. In all business
planning, but
especially in the financial section, it is important to try different
scenarios. What
if I purchase used equipment instead of new equipment? What if I raise
or lower
prices? What if I reduce my personal draw? By trying different scenarios,
you will
soon determine what it will take to make your business financially
viable.
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With business planning, you must keep trying until you have a result
that is
reasonable and that you are convinced is achievable.
Five Tips on your Financial Plan
1. Be persistent! Most people do not have expertise in finance so
preparing a
financial plan is a journey into the unknown. Be patient.
2. Read the entire planning guide before starting on the plan. You
will learn
what information you require to assemble the financial part of the plan.
3. Get help in assembly, but not in research.These should be your
numbers
and assumptions. You will be responsible for achieving these objectives
so you
should believe in the numbers.
4. Be consistent. Make sure that your financial plan is consistent with
the rest
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of the business plan. For example, if your pricing section mentions a
margin of
40%, this should be reflected in your Income Statement.
5. Use the simple template provided. Although it will not provide a
final plan, it will get you well on your way in the journey
Calculating The Break-even
The break-even point in your business is the point at which your sales
revenue
equals your total expenses. At that point you neither make money, nor
do you lose
any. The break-even lets you know what it is going to take in sales just
to survive. It
provides a good indication of the viability of a business project.
The break-even can also be used to evaluate a business expansion or
any other
business expenditure. You are simply asking how much additional
revenue will be
required to cover the additional cost. There are some key definitions
necessary to
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determine the break-even for the business.
They are:
Fixed Costs (Overhead) are costs that do not vary directly with sales.
Utilities,
salaries, advertising, office supplies and telephone are just a few
examples. They
do not have to be the same every month. What is important is that you
pay
them regardless of sales made.
Variable Costs (Cost of Goods) are the actual costs of making the
product
or providing the service. They can include materials, shipping and
contract
labour.
Capacity governs your output. It can be measured in units of
production,
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billable hours, or sales volume. To calculate the break-even in units we
use the
following formula:
Fixed Cost = Break-even in Units
(Unit Price Unit Cost)
This method is known as Total Absorption Costing, because dividing the
total cost by
the units sold absorbs the fixed costs. Every business plan be it for
growth or for
start-up needs to establish project and business costs before
proceeding.
Note: For planning purposes treat the entire term loan payment, both
principal
Additional Concepts in Budgeting
So far, we have emphasized simple approaches to preparing budgets, such
as looking at relationships between account balances and sales. We also
should have a clear understanding of past financial performance to help us
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predict future financial performance. Extending past trends and adjusting
for what is expected is a common approach to preparing a forecast.
However, we can improve forecasting by using several techniques. The first
step is recognize certain fundamentals about forecasting:
1. Forecasting relies on past relationships and existing historical
information. If these relationships change, forecasting becomes
increasingly inaccurate.
2. Since forecasting can be inaccurate due to uncertainty, we should
consider developing several forecast under different scenarios. We can
assign probabilities to each scenario and arrive at our expected
forecast.
3. The longer the planning period, the more inaccurate the forecast. If we
need to increase reliability in forecasting, we should consider a shorter
planning period. The planning period depends upon how often existing
plans need to be evaluated. This will depend upon stability in sales,
business risk, financial conditions, etc.
4. Forecasting of large inter-related items is more accurate than
forecasting a specific itemized amount. When a large group of items are
forecast together, errors within the group tend to cancel out. For
example, an overall economic forecast will be more accurate than an
industry specific forecast.
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Quantitative and Qualitative Techniques
You should forecast for a specific reason - to help make better decisions.
Forecasting is extremely difficult and you must pull from all relevant
sources. We previously discussed the Percent of Sales Method and Trend
Analysis as a way of forecasting. These forecasting techniques are
quantitative. Quantitative techniques of forecasting are best used when
changes are infrequent. In today's world of rapid change, quantitative
techniques tend to be of little use.
We need to add more qualitative techniques into the budgeting process.
Qualitative techniques include surveys, interviews with people who are "in
the know", market reports, articles, and other information sources that
allow us to make a better judgment. Qualitative or Judgmental Forecasting
can help improve the budgeting process, especially if we are operating in a
rapidly changing environment.
The Delphi Method is an example of a qualitative technique where a group
of experts gets together and reaches a consensus on what will happen in
the future. A questionnaire is sometimes used to facilitate the process. Two
disadvantages of the Delphi Method are low reliability with the consensus
and inability to reach a clear consensus.
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Smoothing out the Numbers
One simple approach to forecasting is to setup a model that relies on
averages from past historical data. For example, we can take an average of
the last five years. As we move forward to the next planning period, a new
moving average is calculated and used as the forecast for the next planning
period. Exponential smoothing can be used whereby we place more weight
on the most recent set of actual numbers. This can be important where
changes have occurred, making older data less reliable.
Regression Analysis
A statistical approach can be used for forecasting. We can rely on the
average relationships between a dependent variable and an independent
variable. Simple regressions look at one independent variable (such as
sales pricing or advertising expenses) whereas multiple regressions
consider two or more variables (such as sales pricing and advertising
expenses together). Regression analysis is very popular for forecasting
sales since it helps us find the right fit over a range of observations. For
example, if we plot out the following observations, we can prepare a scatter
graph and find the right fit:
Advertising Expense Sales Dollars
$ 100 $ 1,500
150 1,560
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180 1,610
220 1,655
270 1,685
Sensitivity Analysis
We can measure how sensitive our forecast is to changes in certain
variables. We can develop a range of possibilities under different
assumptions and prepare alternative plans. If Plan A fails, we can quickly
move to Plan B. Sensitivity analysis also tells us which assumptions have
the biggest impact on the forecast. Managers can concentrate most of their
resources on the biggest impact areas for improving the forecast. The main
benefit of sensitivity analysis is to measure the possibility of errors in the
forecast.
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$1,450
$1,500
$1,550
$1,600
$1,650
$1,700
$0 $100 $200 $300
SalesDollars
Advertising Dollars
Scatter Graph for
Five Observations
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Financial Models
Budgets can be prepared with the use of formal models which take
advantage of techniques like regressions and sensitivity analysis. Models
are built around the collection of equations, logic, and data that flows
according to the relationships between operating variables and financial
outputs. Financial variables (costs, sales, investments, taxes, etc.) can be
manipulated by the user so that the user can see the outcome of a decision
before it is made. This can help facilitate strategic thinking within the
budgeting process. Two types of financial models are simulation and
optimization. Simulation attempts to duplicate the effects of a decision and
show its impact. Optimization seeks to optimize (maximize or minimize) a
forecast objective (revenues, production costs, etc.).
Financial models provide decision support services for improvements within
budgeting. Some of the benefits of financial models include:
Shows the results of planning under a variety of assumptions,
allowing the user to assess the impacts of estimates that have been
used.
Generates the Budgeted Income Statement and Budgeted Balance
Sheet as well as forecasted financials by business unit or
department.
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In order to build a financial model, we need to establish variables,
parameters, and relationships. Additionally, we can divide variables into
three types:
1. Control Variables : The inputs that the company can control, such as
the level of debt financing or the level of capital spending.
2. External Variables : Inputs that the company cannot control, such as
economic conditions, consumer spending, interest rates, etc.
3. Policy Variables : Goals and objectives of the company can impact the
expected outcomes. For example, management may set targets for
sales, profitability, and costs.
Parameters are the baselines or boundaries for the financial model. For
example, the level of debt may have a minimum and maximum value. We
also will set our beginning account balances within the financial model.
Relationships are the logic and specifications required for making things
work. For example, the Budgeted Balance Sheet will require that Assets =
Liabilities + Equity. Several equations will be used within the financial
model. Many of these equations will be relational; i.e. if we change sales
prices, total revenues will change. Equations are tested and added to the
financial model to make it complete. Equations can be expanded into
business and decision rules so that users do not have to worry about
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calculating things like return on equity. The financial model takes care of
critical rules for running the business or making decisions.
FINANCIAL MODEL FOR CASH
Relationships (Equations):
Cash(t) = Cash(t-1) + Cash Receipts(t) + Cash
Disbursements(t)
Cash Receipts(t) = (a) x Sales(t) + (b) x Sales(t-1) + (c) x
Sales(t-2) + Loan(t)
Cash Disbursements(t) = Accounts Payable(t+1) +
Interest(t) + Loan Payment(t)
Input Variables in Dollars:
Sales(t-1), Sales(t-2), Sales(t-3)
Loan(t), Loan Payment(t)
(a): Accounts Receivable Collection Pattern in current
period
(b): Accounts Receivable Collection Pattern one period
ago
(c): Accounts Receivable Collection Pattern two periods
ago
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(a) + (b) + (c) < 1.0
Parameters (Initial Values in Dollars):
Cash(t-1), Sales(t-1), Sales(t-2), Bank Loan(t-1), Accounts
Payable(t-1)
Making the Budgeting Process Work
Now that we understand what goes into financial planning, it is time to
focus on how to make the process into a value-added activity. Many
organizations are attempting to re-engineer budgeting practices since
budgeting is usually a non-value added activity; i.e. it does not add value to
the decision making process. The goal is to make the entire financial
planning process into a decision support service within the organization
whereby the benefits of the process exceed the costs.
In order to fully comprehend the problems associated with budgeting, let's
quickly list the top ten problems with budgeting according to Controller
Magazine:
1. Takes too long to prepare.
2. Doesn't help us run our business.
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3. Budgets are out-of-date by the time we get them.
4. Too much playing with the numbers.
5. Too many iterations / repetitive tasks within the process.
6. Budgets are cast in stone in a constantly changing business
environment.
7. Too many people are involved in the budgeting process.
8. Unable to control budget allocations.
9. By the time budgets are complete, I don't recognize the numbers.
10. Budgets do not match the strategic goals and objectives of the
organization.
We will now discuss several ways of making budgeting into a value-added
activity within the organization.
Automate the Process
In order for budgeting to be value-added, it must accept revisions quickly
and easily. A highly automated budgeting process can help streamline the
process for quick and easy updating. As a minimum, budgets should be
maintained on spreadsheets. A spreadsheet (such as Excel, Lotus 1-2-3,
etc.) can have an input panel for entering variables and automatic
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generation of budgets within a fully integrated set of spreadsheets. For
example, we can use a formula to calculate interest expense as:
Interest Rate x (Beginning Long Term Debt + Current Portion of Long Term
Debt + External Financing Using Long Term Debt)
Spreadsheets also allow us to perform sensitivity analysis. We can simply
enter new variables into the input panel and review the impact on our
budgets.
We can also use more formal software programs for budgeting. The best
software programs will give us the option of controlling the level of detail.
For example, do we want a cash budget by customer or do we want cash
budgets by account or can we simply enter the cash flow data ourselves? It
is very important that we have control over the detail since commercial
programs sometimes over-analyze transactions and provide way too much
detail. This is why many financial planners prefer spreadsheets over
commercial programs.
Ten Best Practices in Budgeting
Finally, here are some best practices that can transform budgeting into a
value-added activity:
1. Budgeting must be linked to strategic planning since strategic
decisions usually have financial implications.
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2. Make budgeting procedures part of strategic planning. For example,
strategic assessments should include historical trends, competitive
analysis, and other procedures that might otherwise take place
within the budgeting process.
3. The Budgeting Process should minimize the time spent collecting and
gathering data and spend more time generating information for
strategic decision making.
4. Get agreement on summary budgets before you spend time
preparing detail budgets.
5. Automate the collection and consolidation of budgets within the
entire organization. Users should have access to budgeting systems
for easy updating.
6. Budgets need to accept changes quickly and easily. Budgeting
should be a continuous process that encourages alternative thinking.
7. Line item detail in budgets should be based on material thresholds
and not rely on a system of general ledger accounts.
8. Budgets should give lower level managers some form of fiscal control
over what is going on.
9. Leverage your financial systems by establishing a data warehouse
that can be used for both financial reporting and budgeting.
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10. Multi-National Companies should have a budgeting system
that can handle inter-company elimination's and foreign currency
conversions.
Summary
Financial Planning is a continuous process that flows with strategic decision
making. The Operating Plan and the Financial Plan will both support the
Strategic Plan. The best place to start in preparing a budget is with sales
since this is a driving force behind much of our financial activity. However,
we have to take into account numerous factors before we can finalize our
budgets.
Budgeting should be flexible, allowing modification when something
changes. For example, the following will impact budgeting:
Life cycle of the business
Financial conditions of the business
General economic conditions
Competitive situation
Technology trends
Availability of resources
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Budgeting should be both top down and bottom up; i.e. upper level
management and middle level management will both work to finalize a
budget. We can streamline the budgeting process by developing a financial
model. Financial models can facilitate "what if" analysis so we can assess
decisions before they are made. This can dramatically improve the
budgeting process.
One of the biggest challenges within financial planning and budgeting is
how do we make it value-added. Budgeting requires clear channels of
communication, support from upper-level management, participation from
various personnel, and predictive characteristics. Budgeting should not
strive for accuracy, but should strive to support the decision making
process. If we focus too much on accuracy, we will end-up with a budgeting
process that incurs time and costs in excess of the benefits derived. The
challenge is to make financial planning a value-added activity that helps
the organization achieve its strategic goals and objectives.
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CHAPTER 3
ORGANISATION PROFILE
Chapter 3 : Organization Profile
The Beginning
Yahoo! began in 1994 as a hobby for Stanford Ph.D. students Jerry Yang
and David Filo. As David says, "The Internet was a great place to waste
time." David and Jerry spent hours upon hours surfing the web and
quickly became Internet aficionados. Their passion for locating,
identifying and editing material stored on the Internet resulted in "David
and Jerry's Guide to the World Wide Web". The categories they created
as part of their Guide proved useful not only to Jerry, David and their
friends, but thousands of others as well. It didn't take long for word of
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the Guide to get out and soon thousands of people were accessing their
Stanford trailer workstations.
Without really meaning to, David and Jerry had created an audience
and attracted the attention of corporations and financiers. Yahoo!
ultimately became an incorporated business in March 1995 and received
funding from Sequoia Capital, a venture capital firm, the following
month. At this point in the Company's explosive growth, David and Jerry
took a leave of absence from Stanford to work on Yahoo! full time. In
1995, Yahoo! hired 24 full-time employees and in April 1996, the
Company's stock was first sold publicly on the NASDAQ.
Yahoo! Profiles
Yahoo! Inc. (NASDAQ: YHOO) is an American multinational internet
corporation headquartered in Sunnyvale, California, United States. The
company is perhaps best known for its web portal, search engine
( Yahoo! Search), Yahoo! Directory, Yahoo! Mail, Yahoo! News,
advertising, online mapping ( Yahoo! Maps), video sharing (Yahoo!
Video), and social mediawebsites and services. It is one of the largest
websites in the United States.[2]
Yahoo! inclusive was founded byJerry Yang and David Filo in January
1994 and was incorporated on March 1, 1995. On January 13, 2009,
Yahoo! appointed Carol Bartz, former executive chairman ofAutodesk,
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as its new chief executive officer and a member of the board of
directors.[3] On September 6, 2011, Bartz was removed from her position
at Yahoo! by chairman Roy Bostock, over the phone; and CFOTim Morse
was named as Interim CEO of the company.[4][5]
Roughly 700 million people visit Yahoo websites every month.[6]
Contents
1 History and growth
2 Products and services
o 2.1 Storing personal information and tracking
usage
o 2.2 Communication
o 2.3 Content
o 2.4 Co-branded Internet services
o 2.5 Mobile Services
o 2.6 Commerce
o 2.7 Small business
o 2.8 Advertising
o 2.9 Yahoo! Next
o 2.10 Yahoo! BOSS
o 2.11 Yahoo! Meme
o 2.12 Yahoo! Koprol
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o 2.13 Y!Connect
o 2.14 Closed down services
2.14.1 Twitter slide leak on upcoming
changes to Yahoo
3 Revenue model
4 Criticism
5 Yahoo subject of cyber attacks originating in China
6 Financial data
o 6.1 Advertising Revenue
7 Yahoo! International
8 Logos and themes
9 See also
10 Notes and references
11 External links
Your profile on Yahoo! represents who you are and serves as a hub for
your identity on Yahoo!. From it, you can connect to friends, post
information about yourself, and manage your Updates.
Information Collection and Use Practices
To create a profile, you will need to create a display name. This is
a public name you will be known as on Yahoo! services.
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o By default, we suggest you use your first name and first
initial of your last name as your display name. You may use
any display name you like, within reason. You may change
your display name at any time.
You have the ability to post personal information about yourself on
your profile.
o Except for your display name, first name, and last name, all
of this information is optional. By default, your first and last
names are only shown to your connections.
Applications
o You can grant applications made by third-party developers
access to information within your profile.
When you do, you are granting the application and its
developer complete access to all of the information
within your profile. This means that the application
and its developer will be able to see and store who
you are and who you are connected to through
profiles.
Applications installed by your connections will have
access to the information about you that you have
permitted those connections to see.
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You may turn off the ability for your connections to
share your information with applications in your
profile settings.
o More information about applications, developers, and the
permissions you grant are available from a link that is
provided when you install an application, or inYahoo! Help
Pages.
Connection Suggestions
o Yahoo! uses different sources of information to determine
connection suggestions based on who you communicate
with frequently:
Yahoo! Messenger: contacts on your friend list
Yahoo! Contacts: contacts in your address book
Yahoo! Mail: email header information that identifies
who you send and receive emails from frequently.
o Yahoo! does not look at the content of the instant messages
or emails you send or receive in order to suggest
connections.
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Updates
o When you take certain actions, such as when you connect to
a friend, comment on a guestbook, add information to your
profile, or change your photo, those actions are shared as
updates that your connections and others can see,
depending on your Updates settings. Manage your Updates
settings.
Information Sharing and Disclosure Practices
o The display name, display photo, gender, location, and age
information you provide for your profile on Yahoo! are
always public. If you prefer not to disclose this information,
you may edit your profile information at any time and leave
those fields blank.
o By default, the remainder of the information on your profile
is shared only with your connections; however, you may
make some profile information public for anyone to view.
o Applications
You can grant applications developed by third-party
developers access to information within your profile.
When you do, you are granting the application and its
developer complete access to all of the information
within your profile. This means that the application
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and its developer will be able to see and store who
you are and who you are connected to through
profiles.
Applications installed by your connections will have
access to the information about you that you have
permitted those connections to see.
You may turn off the ability for your connections
to share your information with applications in
your Profile settings.
More information about applications, developers, and
the permissions you grant are available from a link
that is provided when you install an application.
o People Search
Your profile may be found by others who search for
you by your first name, last name, display name, or
email address.
You may opt out from being found in People
Search.
When you choose not to make an an email
address or Yahoo! ID searchable through People
Search, it will continue to be attached to your
Yahoo! Account. Other Yahoo! services may
identify those email addresses with your profile.
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If your profile is searchable by an email address, your
email address will act as a URL for your profile. For
example, if you make free2rhyme@altavista.com a
searchable email address, others who know your
email address can find your profile by going directly
to:
http://profiles.yahoo.com/free2rhyme@altavista.com.
o Updates
Certain actions you take from your profile on Yahoo!
are shared as updates that your connections and
others can see, depending on your Updates settings.
These actions include when you connect to a
friend, comment on a guestbook, add
information to your profile, or change your
photo,
You can manage your Updates settings and
control which updates you want to share with
others.
Your Ability to Update or Delete Information
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o Edit Your Profile
You can edit the content of your profile, and you can
set permissions regarding who can see which
information on your profile.
You may hide your profile. By hiding your profile,
people will not be able to search for you, contact you,
or invite you to connect. Your profile will not be shown
to others and only your display name and status
message will be visible.
o Applications
If you no longer want to allow your connections to
share your information with third-party applications
and developers, you may opt-out at any time from the
Permissions Settings within your profile on Yahoo!.
You may revoke permissions you granted to an
application at any time. For the Yahoo! Application
Platform, remove the application by choosing
"Remove" from the application's Settings menu. For
applications on third-party websites and other
applications, visit your Yahoo! Account Info.
o People Search
Although you may choose not make an email address
or Yahoo! ID searchable through People Search, it will
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continue to be attached to your Yahoo! Account. Other
Yahoo! services may identify those email addresses
with your profile.
o Notifications
Email notifications are sent to you when actions
related to your profile occur.
You may turn off these notifications at any time.
Manage which email address your notifications are
sent to.
Other
o When you use Yahoo!, you are subject to the Yahoo! Terms
of Service.
o Please see Profiles Help if you have questions about this
service.
This page describes current Yahoo! practices with respect to this
particular service. This information may change as Yahoo! revises this
service by adding or removing features or using different service
providers. To find out how Yahoo! treats your personal information,
please visit our Privacy Policy.
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CHAPTER 4
DATA ANALYSIS ANDINTERPRETATION
Job Title: Data Analysis and Interpretation of Financial Planning &
Forecasting in Yahoo Software & Development India Pvt Ltd.
Interest Category: Finance & Corporate Controlling
Description: The Manager will provide financial leadership to the
Budgeting & Forecasting department of Corporate Finance. Primary
responsibilities will include:
1. Process management of budgeting, forecasting tools, reporting, roles,
issue resolution, communications.
2. Interpretation of business requirements for projects, forecasts,
budgets.
3. Lead process improvement initiatives managing resources,
implementing change, communicating effectively.
4. Effectively work with MEDRAD and Bayer financial leadership teams.
5. Effective issue resolution, problem solving, and providing
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recommendations.
6. Significant data analysis.
7. Evaluating, validating requirements for, prioritizing and auctioning a
large number of requests.
8. Support of internal business partners located in multiple geographic
locations.
Technical & Behavioral Requirements:
1. Bachelors Degree (Accounting or Finance preferred) and Masters
Degree (MBA or Finance) required
2. Overall experience of 6+ years in finance/accounting/business
management is required.
3. Solid business sense to analyze budgets and forecasts as well as long
range planning.
4. Supervisory experience preferred.
5. Ability to lead projects managing resources effectively.
6. Proficient and knowledgeable about financial accounting policies and
procedures.
7. Demonstrated business acumen with a drive for results and sound
business judgment.
8. Strength in dealing with ambiguity and effective problem solving
skills.
9. The ability to determine root causes of complex issues that involve
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multiple internal contact points and IT systems.
10. The ability to recognize, develop and implement process
improvements to enable effectiveness or efficiency.
11.. Excellent oral, written, listening, persuasion and consensus building
and presentation skills.
3. DATA ANALYSIS AND TNTERPRETATION
RATIO ANALYSIS:-Ratio Analysis in relation to Working Capital
Ratio analysis is widely used tool of financial analysis. It is defined as,
the systematic uses of ratios to interpret the financial statements so
that the strength and weakness of firm as well as its historical
performance and financial position be determine. The term Ratio
refers to the numerical or quantities relation between two variables. The
ratio analysis of Working Capital can be used the management as a
means of checking a firm is improving or deteriorating over the years.
Over the years the significant trend analysis of ratios lies in the fact that
the analysis can know the direction of movement. For example, there
may be low as compared to the norms standard but trend may be
upward.
THE MOST IMPORTANT RATIO OF WORKING CAPITALMANAGEMENT:-
1. Current Ratio
2. Quick Ratio
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3. Cash Position Ratio
4. Working Capital Turnover Ratio
5. Inventory Turnover Ratio
6. Debtors Turnover Ratio
7. Average Collection Period
8. Fixed Asset Turnover Ratio
9. Capital Turnover Ratio
10. Inventory Turnover Period
11. Expense Ratio
12. Return on Investment
13. Gross profit Ratio
Budget 2011
Expenses
A. BLR HQ related
1. Headcount:
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Actual Head count at Q3 is $2511 & in Q4 expected net
addition is $165 with this expected Headcount at the end of the
year **
For 2011 the gross addition expected to be 10 & with the
average attrition of 9% the net addition expected to be $164.
The net addition in the product group is expected to be $251,
GBS 25, & SE&O 31.
2. Salaries:
At present Blr HQ has 24 employees in Bangalore, 1 at
Sunnyvale & 2 TBH. The TBH are positioned at M4 & M5. For
the plan purpose an increment of 10% is considered effective
from Q2 2011.
The retirement plan calculated 10.66%.
Bonus is calculated at 3% of the salary.
Retention bonus is calculated on the existing employees as per
the HR advice.
The cost per/head/month is expected to be 40 & with the
increase in the total Headcount expected to come down to 30
top related