Private Equity

Definition: Private Equity firms are described as the investment fund companies that invest in the capital of the enterprise so as to acquire a strategic stake in it, once it is set up as a successful unit. The capital injected by private equity firms in a company which forms a part of their equity capital…

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Lease

Definition: Lease is a financial arrangement, wherein one party (lessor) allows another party (lessee) to use the capital asset or equipment for a definite period, in return for an adequate consideration, i.e. lease rental charges. In this contract, the lessee need not buy or own the asset in order to use it, because it is…

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Insurance

Definition: Insurance refers to a contractual arrangement in which one party, i.e. insurance company or the insurer, agrees to compensate the loss or damage sustained to another party, i.e. the insured, by paying a definite amount, in exchange for an adequate consideration called as premium. It is often represented by an insurance policy, wherein the…

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Promissory Note

Definition: A Promissory Note, as the name itself gives a brief description, is a legal financial instrument issued by one party, promising to pay the debt owed to another party. It is a written negotiable instrument duly signed by the maker that contains an unconditional promise to pay the stated sum of money to a…

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Financial Management

Definition: As the name itself gives a brief description, financial management is the management of firm’s financial resources, in relation to its acquisition and application. It is that branch of management, which deals with the procuring, financing and managing business assets, to achieve the objectives of the concern. Aspects of Financial Management The two aspects…

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Bill of Exchange

Definition: Bill of Exchange, can be understood as a written negotiable instrument, that carries an unconditional order to pay a specified sum of money to a designated person or the holder of the instrument, as directed in the instrument by the maker. The bill of exchange is either payable on demand, or after a specified…

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Portfolio Management

Definition: Portfolio Management, implies tactfully managing an investment portfolio, by selecting the best investment mix in the right proportion and continuously shifting them in the portfolio, to increase the return on investment and maximize the wealth of the investor. Here, portfolio refers to a range of financial products, i.e. stocks, bonds, mutual funds, and so…

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Cost of Capital

Definition: As it is evident from the name, cost of capital refers to the weighted average cost of various capital components, i.e. sources of finance, employed by the firm such as equity, preference or debt. In finer terms, it is the rate of return, that must be received by the firm on its investment projects,…

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Working Capital

Definition: Working capital can be understood as the capital needed by the firm to finance current assets. It represents the funds available to the enterprise to finance regular operations, i.e. day to day business activities, effectively. It is helpful in gauging the operating liquidity of the company, i.e. how efficiently the company is able to…

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Money Market

Definition: Money Market can be understood as the market for short term funds, wherein lending and borrowing of funds varies from overnight to a year. It is an important part of the financial system that helps in fulfilling the short term and very short term requirements of the companies, banks, financial institution, government agencies and…

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