Question

1.what is the difference between money and capital

2.why marketing and demand analysis is important for financial management?

3.beginning of better Financial management depend upon the best investment analysis? Explain with real world examples

Answer 1

1. Money vs Capital: Money and Capital are two different things. Capital is the real resources that producers use in order to make the goods that we all consume: things like factories, machine tools, trucks, and roads. All capital exists in a specific form. Money on the other hand is non-specific; it can be used to buy anything that is available in the marketplace, including capital goods.In Keynesian theory it is said that new money cannot cause inflation because economy is not at full employment or that we have excess capacity.

2. Marketing and Demand analysis: Demand analysis involves understanding of customer demand for a product or services in a particular market. These two concepts are very important for making a good investment decision.

Financial management involves around three decisions Procurement, Deployment and Dividend and in these three Procurement works as a base, we first need to understand from where we are arranging money and where we deploying is it right decision to invest in that product, is market ready to accept that product or not these decisions are very important in Financial Management.

That is the reason why marketing and demand analysis is important in financial management. Marketing brings awareness about the product that we are going to introduce in the market and it also costs to the company so right marketing decision with right compaign is must in order to reduce the overall cost of the company.

3. Investment Analysis decisions: There are many examples of that statement that best financial management means best investment analysis. When we under go any investment decision we first analyse that investment according to our required rate of return and also the time it will take to give that much amount of return. Analyst use many project evaluation technique to evaluate the best investment among the available opportunities like, NPV, IRR, Payback Period method, Profitability Index etc. These all methods are used as per the individuals expectation from the investment they made.