Finance

Definition: Capital structure refers to an arrangement of the different components of business funds, i.e. shareholder's funds and borrowed funds in proper proportion. A business organization utilizes the funds for meeting the everyday expenses and also for budgeting high-end future projects. Computation of capital structure involves a lot of analytical thinking and … [Read more...] about Capital Structure

Definition: Capital asset pricing model (CAPM) is a tool used by investors, financial analysts and economists to study the relationship between the expected return from the investment and the systematic risk involved (measured in terms of Beta coefficient), by taking into consideration the expected overall market return and the risk-free rate of interest. Whenever an … [Read more...] about Capital Asset Pricing Model (CAPM)

Definition: Cash Management refers to the collection, handling, control and investment of the organizational cash and cash equivalents, to ensure optimum utilization of the firm's liquid resources. Money is the lifeline of the business, and therefore it is essential to maintain a sound cash flow position in the organization. Receivables Cash Management Any amount which the … [Read more...] about Cash Management

Definition: Financial leverage refers to the utilization of borrowed funds to acquire new assets which are assumed to generate a higher capital gain or income as compared to the cost of borrowing. It is a liability for the borrowing business organization whereas, makes a source of income for the lender. The three ways in which the company can obtain funds are as follows: … [Read more...] about Financial Leverage

Definition: Financial intermediary is the organization which acts as a link between the investor and the borrower, to meet the financial objectives of both the parties. These can be seen as business entities which accept deposits from the depositors or investors (lenders) by allowing them low interest on their sum. Further, these organizations, lend this amount to the … [Read more...] about Financial Intermediaries