Research Methodology

TOPIC:- Research Article on Financial Management

4BBA F&A
SHERYL ANNA ANIL (2222254)
SHREYA ND (2222258)
SIDDHI.RAISONI(2222262)
 Research Article on Financial Management
Christ University ,Yeshwantpur Campus

School of Commerce and Finance ,Bangalore

Abstract

Purpose : This research aims to find out the definition, principles and concepts of return
assessment in financial management. However, when it comes to educational institutions,
the impact is quite significant

Design:-This research is literature research, and the data used is secondary data from
various literatures. qualitative descriptive method is used to assess the data obtained.
Based on the description of the findings, financial management can be interpreted as
business activities related to the acquisition, use and management of company funds to
achieve the company's main objectives. Good financial management is certainly needed.

Findings:-The need for financial management can be concluded as the need to identifying
the objectives that must be met, the right choice is the one that advances the company's
goals; usually, the purpose of financial management choices is to maximise the company.

Research limitations:-The modern financial manager needs to be flexible in order to be able

to adapt to changing economic condition.

Pratical implications:-The research article on financial management provides practical

insights into effective strategies for optimizing financial resources and maximizing
profitability in business operations, offering actionable recommendations for enhancing
financial decision-making processes.

Keywords:- Concept, Finance, Management, Review

Paper type:-Research paper

Introduction
Effective and functional financial management can be found in financial management [1]
[2]. Financial management is a financial management process that organises financial
activities from planning, implementation and control to financial accountability [3].
However, when it comes to educational institutions, the impact is quite significant. And the
role to manage financial management consists of three interrelated areas namely; (1) Capital
Markets (Macro Finance), which is related to many of the topics covered by
macroeconomics, (2) Investment, which focuses on the decisions made by individuals and
financial institutions in selecting securities (securities) for their investment portfolios, and
(3). The relationship between business and financial management. Because of the
interactions between the three aforementioned areas, corporate financial management must
comprehend how capital markets function and how investors value securities.

Over time, there have been several significant changes to financial management. Early in the
20th century, it became a separate field of study, concentrating on the legal ramifications of
start-ups, mergers, and acquisitions as well as the different securities that businesses issued.
Should funds be allocated for the upkeep of standard operating procedures within the
company, the CFO must be a major player in assessing the overall worth of the enterprise.
This is required since the company's primary goal is to ascertain its value to the shareholders.
This clause is predicated on the company's current stock exchange share price, which as of
this writing is determined by the company's goals for consumption, investment, and profit-
sharing. The CFO's capacity to find funding, invest, and manage resources sensibly will have
a significant impact on the organization's overall success. The application of financial
estimates that impact an organization's financial state in business is known as financial
management. Organisations can plan, use projects, future financial realisations of capital,
property, and necessary items for the purpose of maximising return on investments thanks to
financial management.

LITERATURE REVIEW
 Capital Allocation Planning

A key component of capital budgeting is assessing and choosing long-term investment

initiatives. Capital budgeting makes use of a number of methods, such as Payback Period,
Internal Rate of Return (IRR), and Net Present Value (NPV). Research by Graham and
Harvey (2001) and Graham et al. (2019) emphasise how crucial it is to take genuine
choices into account when making capital budgeting decisions since doing so gives
businesses flexibility in unpredictable situations.
 Analyses of Finance
Financial analysis is the process of evaluating the financial performance of a company
using a variety of instruments, including cash flow, trend, and ratio analysis. Palepu et al.
(2013) conducted research that highlights the significance of financial statement analysis
in comprehending a firm's financial well-being and pinpointing opportunities for
enhancement.
 Risk Analysis

In financial management, risk management is locating, evaluating, and reducing risks that
could have an influence on a company's financial objectives. The use of derivative
securities and risk management techniques to protect against financial hazards, such as
interest rate and currency risk, is covered in studies by Merton (1973) and Hull and White
(1987).

 Business Finance

The financial and capital structure decisions made by a company are the subject of
corporate finance. Studies on the relationship between capital structure and business
value by Jensen and Meckling (1976) and Modigliani and Miller (1958) indicate that the
ideal ratio of debt to equity financing relies on variables including risk tolerance and tax
implications.

Research Methodology

This research aims to analyze the key aspects of financial management, including capital
budgeting, financial analysis, risk management, and corporate finance. The methodology
involves a comprehensive review of relevant literature and research findings in these areas.

• Literature Search: The research will begin with a systematic search of academic
databases such as Google Scholar, JSTOR, and ScienceDirect. Keywords related to
capital budgeting, financial analysis, risk management, and corporate finance will be
used to identify relevant studies and research papers.

• Inclusion Criteria: Studies and research papers published in reputable journals and
books from the last two decades will be included. The focus will be on papers that
provide insights into the theories, techniques, and best practices in financial
management.

• Exclusion Criteria: Studies that are outdated, not peer-reviewed, or not directly
relevant to the key aspects of financial management will be excluded.

• Data Extraction: Relevant information, including key concepts, theories,

methodologies, and findings, will be extracted from the selected studies and organized
according to the four key aspects of financial management.

• Data Analysis: The extracted data will be analyzed to identify common themes, trends,
and patterns in the literature related to capital budgeting, financial analysis, risk
management, and corporate finance.

• Synthesis: The findings from the literature review will be synthesized to provide a
comprehensive overview of the key concepts, theories, and practices in financial
management.
 • Limitations: The research methodology is limited by the availability and quality of the
literature reviewed. The findings are based on existing research and may not capture
all aspects of financial management.

• Future Research: The study will conclude with suggestions for future research
directions in financial management, based on the gaps identified in the literature
review.

Results

• The evaluation of the literature showed that capital budgeting is crucial for businesses
to assess and choose long-term investment initiatives. Commonly employed methods
include Payback Period, IRR, and NPV. Real choices are essential for capital
budgeting decisions as well since they give businesses flexibility in ambiguous
situations.

• Evaluating a company's financial performance requires careful consideration of its

financial analysis. There is use of tools like cash flow analysis, trend analysis, and
ratio analysis. Palepu et al. (2013) have underlined the importance of financial
statement analysis in comprehending a company's financial health and pinpointing
areas that require improvement.

• Risk management is the process of locating, evaluating, and reducing risks that can
have an influence on a company's financial objectives. Research by Hull and White
(1987) and Merton (1973) highlights the use of risk management techniques and
derivative instruments as hedging mechanisms against financial hazards.

• A firm's capital structure and financing decisions are crucial in the field of corporate
finance. According to studies by Jensen and Meckling (1976) and Modigliani and
Miller (1958), risk tolerance and tax implications are two important variables that
determine the ideal ratio of debt to equity financing.

DISCUSION AND CONCLUSION

Discussion
The literature review provides a comprehensive overview of key aspects of financial
management, including capital budgeting, financial analysis, risk management, and corporate
finance. It highlights the importance of these areas in helping firms make informed decisions
and achieve their financial goals.

Capital budgeting is crucial for firms to allocate resources efficiently and select the most
profitable investment projects. Techniques such as NPV, IRR, and Payback Period help in
evaluating the feasibility of projects, while considering real options provides flexibility in
uncertain environments.

Financial analysis helps in assessing a firm's financial performance and identifying areas for
improvement. Tools such as ratio analysis and cash flow analysis provide insights into a
company's financial health, as emphasized by Palepu et al. (2013).

Risk management is essential for firms to identify, assess, and mitigate risks that could
impact their financial goals. The use of derivative securities and risk management strategies,
as discussed by Merton (1973) and Hull and White (1987), helps in hedging against financial
risks.

Corporate finance deals with the financing and capital structure decisions of a firm. Research
by Modigliani and Miller (1958) and Jensen and Meckling (1976) suggests that the optimal
mix of debt and equity financing depends on factors such as tax considerations and risk
tolerance, which can impact firm value.

Conclusion

Financial management is a critical aspect of business operations, with capital budgeting,

financial analysis, risk management, and corporate finance playing key roles in achieving
financial goals and maximizing shareholder wealth. The literature reviewed highlights the
importance of these areas and provides valuable insights for firms to make informed
decisions in managing their finances. Further research in these areas can help in advancing
the field of financial management and addressing emerging challenges in the global business
environment.