Dr.R.SRINIVASAN is a Post graduate in commerce and Management. He received his doctoral degree from Alagappa University in 1997. He currently teaches financial management and Research Methodology Subjects in Post graduate and Research Department of Corporate Secretaryship at Bharathidasan Government College for Women (Autonomous), Pondicherry University, Puducherry. Before Joining BGCW, he was teaching in SNR College, Coimbatore, Sindhi college, Chennai& T.S.Narayanasamy College, Chennai for eight years. He was with the industry for a short term at Salzar Electronics Pvt. Ltd, Coimbatore. He has about 20 years of teaching experience and having research experience of 15 years. His interests are in Accounting and finance, Capital Market, Quantitative Methods. He underwent the Faculty Development Programme at Indian Institute of Management Ahmedabad during 2000-01. He has presented 20 papers in national and international conferences and has published twenty papers in the areas of Finance and Human resource Management in National Journals. Co-authored a book titled, ‘Investors Protection, published by Raj Publications, New Delhi He has delivered lectures in contemporary finance topics at Pondicherry University. He is involved in consultancy projects for Godrej Saralee, Chennai in the areas of Statistical Applications. He has supervised a number of research projects in the area of corporate finance and Human Resource Management. He is the Board of examiner in corporate Secretaryship and Management for the past two decades.
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Posts Tagged ‘ECONOMIC’
Personal Finance: Get Economic Assistance for your Needs
Posted by admin in Personal Finance on January 25th, 2010
It is quite unnerving to realize that when confronted with financial needs, you are not able to fulfill them. Arranging finance can prove to be difficult as the choice between the available options is difficult. Through Personal Finance, the borrower can take up the money easily for his needs without much difficulty and hassle.
When the need arises for arranging finance, the borrowers are suggested to look online and research. This will help him in getting lower rate deals as competition is very stiff through the online mode. The borrowers can compare the deals that are available to them and can choose the one with the lowest rates.
Any personal needs of the borrower can be fulfilled with the help of these loans. Debt consolidation, home improvement, car purchase, wedding expenses, educational expenses, travel expenses, holidaying expense etc can all be dealt with using the borrowed money.
This finance is available to the borrowers through the secured and the unsecured form. The borrower can take up the secured form of this finance by pledging an asset with the lender and borrowing money in the range of £5000-£75000 for a term of 5-25 years. Rates are lower for these loans. The borrowers can also take up the unsecured form of these loans without the need of pledging collateral. The amount that can be approved through these loans varies between £1000 and £25000 and has to be repaid in 6 months to 10 years.
Research and comparison between the loans quotes offered to the borrowers can help him in getting knowledge as to which loan deal is the best for him. This research is very beneficial when conducted through the online mode. The borrowers do not have to meet every lender personally to get the loan deals. The processing is faster and competition is stiff in the online financial market.
With personal finance, the borrowers will never face any financial difficulties. Their needs will be easily solved with the borrowed money.
Easy Ways to Protect Your Personal Finances From Further Economic Contraction
Posted by admin in Personal Finance on January 4th, 2010
While the economy has already certainly softened, there may be further economic contraction for American consumers to face. Increasing job losses, higher inflation rates, and the growing food and energy costs are making personal finance budgeting difficult for most American families to achieve. The variable interest rate of recent mortgages makes critical, and the prospects for personal finance do not look bright for the next several years.
However, an ounce of personal finance planning is certainly worth more than a pound of monetary cure. It is not too late to start preparing your personal finance budgeting efforts to brace yourself for further economic contraction – ensuring that when America does recover from its economic weakness, your personal finance will be intact and still healthy.
Debt management strategy: watch your interest rates
When economic uncertainty is on the horizon, interest rates are the first to react – making debt management critical. Powered by both the Federal Reserve rate and each banking institution’s tolerance, interest rates can either soar or plummet, depending upon several factors.
Whereas our interest rates were at historical lows, the Fed Chairman Bernanke made adjustments to the rate in order to curb inflation, while attempting to simultaneously stimulate economic investment. What does this mean for your debt management? In essence, banks will now offer you great interest rates if you have good credit, making your debt management easy. If you have bad credit, then banks will increase your interest rates, as the risk of a default grows greater during an economic contraction.
Therefore, for debt management that will prepare for further economic contraction, you want to lock in low interest rates, which will be easy for those who already have good credit. You can refinance your credit cards by consolidating your debts, or you can even renegotiate your interest rates with your existing credit card company.
For those who have less than stellar credit, you want to carefully watch your mortgages, loans, and credit cards to ensure that they are not raising your interest rates. You may be particular susceptible to interest rate hikes in further economic contraction.
Smart personal finance budgeting
Keep in mind that regardless of how much income you earn, the key to maintaining financial stability is through intelligent debt management and personal finance budgeting. Even if you earn millions, your spending habits and debt are what determine your financial stability. In preparing for a further economic contraction, it is important that you take several personal finance budgeting steps:
• Tally all of your required expenses including your mortgage or rent payment, car payment, health insurance, and utilities. There are the bills you must pay each month, and therefore, are part of your mandatory personal finance budgeting process.
• Allocate a set amount each month for groceries. Keep in mind that you should try to purchase everything “on sale” for smart personal finance budgeting. Research shows that simply by purchasing the brand that is on sale, you can save approximately 20% each time you go to the supermarket.
• Minimize your entertainment expenses. Smart personal finance budgeting means limiting how frequently you eat out, or spend money on entertainment. For example, if you have a four-person family and you typically watch a movie at the theater each week, cutting this expense out could save up nearly $200 each month. Or, brown bag your lunch instead of eating at the local sandwich shop. This small change in your personal finance budgeting can save you conservatively $150 per month. Just these two small changes alone in your entertainment expenses can give you an extra $350 per month for your personal finance budgeting.
• Set money aside for your savings. In a further economic contraction, the greatest, yet most probably fear, is losing your job. Therefore, by taking conservative approaches with your personal finance budgeting now, you can still set aside emergency funds that will help your family if times are difficult. Saving 10% of your income each month is a healthy, yet reasonable, amount to save in your personal finance budgeting.
The key to protecting your personal finance against any additional economic contraction is through smart debt management and intelligent personal finance budgeting. By taking several preventative measures now, you can ensure that your financial situation will remain healthy – regardless of what happens to the economy.
ECONOMIC VALUE ADDED- A NEW DIMENSION IN FINANCIAL MANAGEMENT
Posted by admin in Financial Management on November 3rd, 2009
Financial management structure refers to financial measures, policies, methods, and procedures that guide the strategy and operations of a firm. It includes setting up of financial goals, developing long term strategic plans and short term profit plans, making capital investment and disinvestment decisions, measuring operating performance, determining incentive compensation, and communicating with investors. Companies often do not do these things in a unified, systematic, and unified manner. Corporate financial goals are defined in terms of earnings per share and return on net worth; individuals lines of business are evaluated in terms of return on assets; capital investment is analyzed in terms of discounted cash flow; acquisitions are judged on the basis of contribution to earnings growth; department are evaluated with reference to budgeted cost or profit figures; incentive reward schemes are based on capriciously determined targets; and investor communication is for the most part in terms of earnings per share and divided policy.
The EVA is based on the argument that provides a single, unified, and accurate measure of performance. It thinks well forward looking valuation and capital budgeting analysis with actual performance measurement. For these reasons and more EVA may be used for goal setting and business planning, performance evaluation, bonus determination, investor communication, capital budgeting ands valuation.
EVA is an admirable bed rock on which an integrated financial management system can be constructed as it has the following features or distinctiveness:
1. It is a recital measure that ties directly, theoretically as well as empirically, to shareholders wealth creation.
2. It converts accounting in sequence into economic reality that is readily grasped by non-financial managers. It is a simple yet effective way of teaching business literacy to everyone.
3. It serves as a guide to every decision from strategic planning to capital budgeting acquisitions to operating decisions.
4. As the basis for creative compensation, it truly aligns the attention of managers with that of shareholders and makes management think and act like owners.
5. It is an effective tool for investor communication.
6. It serves as an anchor for an internal system of corporate governance that motivates everyone to work co-operatively and enthusiastically to achieve the best attainable performance.
EVA and incentive compensation:
The purpose of an incentive compensation plan (bonus plan) is to motivate employees to work harder and smarter so that the organizational performance is maximized. Unfortunately, the incentive compensation plans used by most companies fail to accomplish these objectives. These plans induce managers to be more conservative than the shareholders; they diminish incentive and motivation by paying too little for outstanding performance or too much for inferior performance they encourage managers to negotiate easily achievable targets, by gaming the system finally they give managers an additional incentive to lower performance when there are signs that the actual recital may turn out to be significantly higher than the un-ambitious targets. The centerpiece of the EVA is a inimitable bonus plan that overcomes these limitations and aligns the interest of managers with shareholders. The Key elements of the EVA bonus plan are:
1. Bonus is linked to increase in EVA
2. There is no floor or ceiling on the bonus
3. The target bonus is generous
4. A bonus bank is established
Finally, from the aforesaid discussions, it is felt that, Financial decisions result in the commitment and recommitments of funds in business operations enabling the management to discharge efficiently numerous functions related to production, marketing and personnel areas which in turn affect the extent of risk, profitability, , size and growth of the firm and ultimately the value-added or net worth of the firm.