Determine the limitations of the traditional approach, Financial Management

Determine the Limitations of the traditional approach

Limitations of the traditional approach were not entirely based on treatment or emphasis of different aspects. In other words it's weaknesses were more fundamental. Conceptual and analytical shortcoming of this approach arose from the fact that it confined financial management to issues involved in procurement of external funds, it didn't consider the important dimension of allocation of capital. Conceptual framework of the traditional treatment ignored what Solomon aptly defines as the central issues of financial management. These issues are reflected in following fundamental questions which a finance manager must address. Should an enterprise commit capital funds to certain purposes do the expected returns meet financial standards of performance? How must these standards be set and what is the cost of capital funds to enterprise? How does the cost vary with mixture of financing methods used? In the absence of coverage of these crucial aspects, traditional approach implied a very narrow scope for financial management. Modern approach provides a solution to these shortcomings.


Posted Date: 9/4/2013 2:15:56 AM | Location : United States

Related Discussions:- Determine the limitations of the traditional approach, Assignment Help, Ask Question on Determine the limitations of the traditional approach, Get Answer, Expert's Help, Determine the limitations of the traditional approach Discussions

Write discussion on Determine the limitations of the traditional approach
Your posts are moderated
Related Questions
what is the traditional gold standard? and how does it differ from our current monetary system.

Explain Speculator - Market Participants A speculator attempts to profit from a modification in the futures price. For doing this, the speculator will take a long or short posi

Q. What do you mean by Treasury Bills? Treasury bills (TBs) are short-term government securities. The usual practice in India is to sell treasury bills at a discount and redeem

The salaries paid in 2004 is Rs.500000; salaries outstanding Rs.20000; salaries paid in advance for 2001 is Rs.30000. What is the actual salary expenditure for 2004?

(a) Let's presume that the firm may default only on last coupon payment date and that when this take place stock price would be less than some predetermined price K at the expira

Types of Warrants The warrants can be classified into different types. They are: Detachable Warrants These warrants are issued with most debentures, like convertible o

Collecting Information and Forecasting: All budgets must be based on accurate and reasonable information. A budget derived from information which is irrelevant to the actual or

evaluation and maintenance of MIS

Question 1 There are several elements which you can take into consideration, while budgeting a project. Describe these elements Question 2 Explain the different methods/source

briefly discuss the three approaches to the short-term financing problems and examples of each