CBSE Class 12 Solutions for Financial Management
                     Financial Management
CLASS-12
Financial Management
Financial Management is concerned with optimal procurement as well as usage of finance. It 
involves identification of sources of finance, comparison of the sources with cost & associated 
risks and investment of the finance procured in most profitable avenues. Primary objective of 
financial management is to maximise shareholder’s wealth which means to maximize the market 
value of equity shares. Financial Planning refers to the process of estimating the fund requirement 
of a business and specifying the sources of funds. It includes both short term & long term 
planning. It is important as it helps to forecast the financial results in n different business 
situations, provides a link between investment & financing decisions, reduces wastage, 
duplication of efforts, etc. Financial management differs from financial planning. The three types 
of financing decisions are investment decisions that relates to how the firm’s funds are invested in 
different assets, financing decision which relates to the quantum of finance to be raised from 
various and dividend decision that relates to deciding how much of the profits earned by a 
company are to be distributed & how much are to be retained. Investment decision consists of 
two types of decisions that are capital budgeting decision and working capital decision. Capital 
Structure refers to the mix between-owner’s funds (equity) and borrowed funds (debt). Capital 
structure affects the profitability of firm and aims at increasing value of equity shares. Proportion 
of debt in the total capital of a company is called ‘Financial Leverage’. 
Extramarks’ Approach 
It is important to understand the concepts that are being taught in the 
subject instead of mugging up everything and putting a lot of hard 
work for the sake of only one examination. Extramarks makes the 
studying process more fun by providing the student with several 
worksheets and exercises. It also has animation videos discussing 
complex topics since visuals remain in the head for a longer period of 
time. It explains topics including financial management by making 
practical situation questions and engaging students. Get yourself 
registered at Extramarks for Financial Management Solution for CBSE 
class 12.
       https
://www.extramarks.com/ncert-solutions/CBSE-class-12/business-studie
s-financial-management
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