This essay An Assignment on Principles of Finance has a total of 3131 words and 18 pages.
An Assignment on Principles of Finance
Topic - Basic Concepts of Finance
Subject - Principles of Finance
Course Code - FIN 2301
Submitted by - Tasmon Islam
Batch - BBA02
ID - 10215011
Submitted to - Dr . Fazle Elahi Mohammed Faisal
Department of Business Administration
Sahajalal University of Science & Technology
Date - 14 Nov, 2016
Finance is a simple task of providing the necessary funds (money) required by the business of entities like companies, firms, individuals and others on the terms that are most favorable to achieve their economic objectives.
Goal of Business Organizations
All businesses aim to maximize their profits, minimize their expenses and maximize their market share. Here is a look at each of these goals.
Maximize Profits - A company's most important goal is to make money and keep it. Profit-margin ratios are one way to measure how much money a company squeezes from its total revenue or total sales.
There are three key profit-margin ratios: gross profit margin, operating profit margin and net profit margin.
Sales volume indicate the quantity of different stock keeping units (SKUs) sold or the number of customers who have sought for the services offered by a firm in a given time period such a year or a fiscal quarter. Sales volume measurement is a vital part of the performance evaluation of the sales force who are responsible for selling the products of the firm.
Generally, Sales representatives are incentivized on the basis of their ability to meet their target. Since, a major part of the variable pay component depends on achieving the target, sales volume is an important metric in sales and marketing.
Increased sales volume helps company to acquire a healthy top line (revenue). Increased quantity sales mean increased production hence that also helps in increased contribution margin. Moreover, increased sales volume helps to reach break-even earlier which helps the company gain profits from their operation as early as possible.
Primary and Secondary Market
A primary market issues new securities on an exchange for companies, governments and other groups to obtain financing through debt-based or equity-based securities. Primary markets are facilitated by underwriting groups consisting of investment banks that set a beginning price range for a given security and oversee its sale to investors. Once the initial sale is complete, further trading is conducted on the secondary market, where the bulk of exchange trading occurs each day.
The secondary market is where investors buy and sell securities they already own. It is what most people typically think of as the "stock market," though stocks are also sold on the primary market when they are first issued. The national exchanges, such as the New York Stock Exchange (NYSE) and the NASDAQ, are secondary markets.
The ultimate and exclusive right conferred by a lawful claim or title, and subject to certain restrictions to enjoy, occupy, possess, rent, sell, use, give away, or even destroy an item of property.Ownership may be corporeal (title to a tangible object such as a house) or incorporeal (title to an intangible object, such as a copyright, or a right to recover debt). Possession (as in tenancy) does not necessarily mean ownership because it does not automatically transfer title.
A legal form of business operation between two or more individuals who share management and profits. In a general partnership, the partners manage the company and assume responsibility for the partnership's debts and other obligations. A limited partnership has both general and limited partners.
Share and Bond
Shares are units of ownership interest in a corporation or financial asset that provide for an equal distribution in any profits, if any are declared, in the form of dividends. The two main types of shares are common shares and preferred shares. Physical paper stock certificates have been replaced with electronic recording of stock shares, just as mutual fund shares are recorded electronically.
Most companies issue common stock. The stock may benefit shareholders through appreciation and dividends, making common stock riskier than preferred stock. Common stock also comes with voting rights, giving shareholders more control over the business. In addition, certain common stock comes with pre-emptive rights, ensuring that shareholders may buy new shares and retain their percentage of ownership when the corporation issues new stock.
A bond is a debt investment
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