Financial statements provide summary of the accounting of an organisation. The balance sheet reflects the assets and liabilities and capital as on certain data and the income statements tells about the results of operation in a certain period.Financial statements consist of the following −Income statements or Profit and loss accountIt ... Read More

Decision making helps to utilise the available resources for achieving the objectives of the organisation, unless minimum financial performance levels are achieved. Financial management provides both conceptual and analytical framework for financial decision making. The key aspects of financial decision making relate to financing, investment, dividends and working capital management.The ... Read More

Let us first understand the nature of financial management and then study about its scope.Nature of financial managementThe nature of financial management includes the following −Estimates capital requirementsFinancial management helps in anticipation of funds by estimating working capital and fixed capital requirements for carrying business activities.Decides capital structureProper balance between ... Read More

Financial management provides pathways to attain goals and objectives in an organisation. The main duty of a financial manager is to measure organisational efficiency through proper allocation, acquisition and management.The importance of financial management is explained below −It provides guidance in financial planning.It assists in acquiring funds from different sources.It ... Read More

Financial management is the set of activities concerned with planning, organising, directing and controlling the financial activities. Financial management accepts the general management principles for financial performances. Financial management acts like a guidance, where more investment opportunities are available.Scope of financial managementThe scope of financial management is given below −Estimating ... Read More

Finance represents the money management and the process of acquiring the funds. Finance is a board term that describes the activities related to banking, leverage or debt, credit, capital markets, money and investments.Business finance tells about the funds and credit employed in the business. It also helps to manage the ... Read More

The major differences between contribution margin and gross margin are as follows −Contribution MarginIt is used by pricing decision (whether product line is making profits or not).Contribution margin = difference between sales and variable costs divides by sales.It analyses profit metric per item.Only variable cost is considered for calculations.It determines ... Read More

The major differences between share outstanding and float are as follows −Share OutstandingThese are shares held by stakeholders, company officials and investors in public domain.Contains both stock float and restricted shares.Contains all shares of company held by its investors.It is used to calculate market capitalisation and earnings per share (EPS).It ... Read More

The major differences between discount rate and interest rate are as follows −Discount RateFederal reserve banks charges to depository institution/commercial banks on its overnight loans.Central banks decide the rate.It is not determined by market rate of interest.It determines present value of future cash flows.It focuses on investors view.The demand and ... Read More

The major differences between ROIC and ROCE are as follows −ROICROIC refers to Return on invested capital.It aims to find the return relative to capital which is invested in business.It evaluates profitability by considers only capital invested in the business.ROIC = Net operating profit/invested capital.Company said to be profitable, if ... Read More