Page 1 of 8
Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 03 Issue 12
November 2017
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 265
Financial Asset Management
Dr.I.Satyanarayana1
, N.B.C. Sidhu*2
, Agirishetty Bharath3 (15X31E0001)
Abstract:
Financial management is a service activity which is
concerned with providing quantitative information
which is of financial nature which may be needed for
making Economic decisions regarding the choice
among alternative course of actions. The financial
management is a process of identification
accumulation, analysis preparation interpretation
and communication of financial information to plan
evaluate and control a business firm. Financial
management is that specialized function of general
management which is related to the procurement of
finance and its effective utilization for the
achievement of the goals of an organization. Finance
may be defined as the provision of money at the time
where, it is required. Finance refers to the
management flews of money through an organization.
It concerns with the application of skills in the
manipulation, use and control of money. Different
authorities have interpreted the term “finance
“differently. However there are three main
approaches to finance.
The first approach views finance as to providing
of funds needed by a business on most suitable
terms this approach confines fiancés to the
raising of funds and to the study of financial
institutions & instruments from where funds can
be procured.
The second approach relates fiancé to cash.
The third approach views fiancé is being
concerned with raising funds & their effective
utilization
.
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1.Principal, Sri Indu institute of Engineering & Technology, Sheriguda, Ibrahimpatnam,Telangana, India.
2.Assoc. Prof & HOD, Dept. of Master of Business Administration, Sri Indu Institute of Engineering &
Technology, Sheriguda, Ibrahimpatnam, Telangna, India.
3.Student, Dept. of Master of Business Administration, Sri Indu Institute of Engineering & Technology,
Sheriguda, Ibrahimpatnam, Telangna, India.
Key words: Financial Markets and functions, financial Asset Policy, Asset Control , etc...
Introduction:
Financial management is a service activity which is
concerned with providing quantitative information
which is of financial nature which may be needed for
making Economic decisions regarding the choice
among alternative course of actions. The financial
management is a process of identification
accumulation, analysis preparation interpretation and
communication of financial information to plan
evaluate and control a business firm.
Financial management is that specialized function of
general management which is related to the
procurement of finance and its effective utilization
for the achievement of the goals of an
organization.Finance may be defined as the provision
of money at the time where, it is required. Finance
refers to the management flews of money through an
organization. It concerns with the application of skills
in the manipulation, use and control of money.
Different authorities have interpreted the term
“finance “differently. However there are three main
approaches to finance.
The first approach views finance as to providing of
funds needed by a business on most suitable terms
this approach confines fiancés to the raising of funds
and to the study of financial institutions &
instruments from where funds can be procured.
The second approach relates fiancé to cash.
The third approach views fiancé is being concerned
with raising funds & their effective utilization.
Fixed Assets play vary important role in realign
company’s objectives the firms to which capital
investment vested on fixed assets.
Theses fixed assets are not convertible or not liquid
able over a period of time the total owner finds and
long term liabilities are invested in fixed assets. Since
fixed assets playing dominant role in total business
the firms has realized the effective utilization of fixed
assets.
So ration contributes very much in analyzing and
utilized properly it effects long term sustainability of
the firms in analyzing and utilized properly it affect
long term sustainability of the firms which may effect
liquidity and solvency and profitability positions of
the company.
The idle of fixed assets lead a tremendous in financial
cost and intangible cost associate to it. So there needs
Page 2 of 8
Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 03 Issue 12
November 2017
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 266
lead a tremendous in financial cost and intangible
cost associate to it.
So there is need for the companies to evaluate fixed
assets performance analysis time to time by
comparing with pervious performance comparison
with similar company and comparison with industry
standards. So chose a study to conduct on the fixed
assets analysis of LG ELECTRONICS.
Using ratio in comparison with previous year
performance, the title of the project is analysis on
Fixed Assets management. The study is made to
known the amount of capital expenditure made by the
company during study period. The study is conducted
to evaluate depreciation and method of depreciation
adopted by LG.
Profit maximization is not considered as basic idea
for making investment and financing decision
through Fixed Asset Management. The study is
evaluate is giving adequate returns to the company.
Study is conducted to evaluate that if fixed assets are
liquidated. What is the proportion of fixed assets
amount will contribute for payment of owner fund
and long term liabilities. The immediate objective of
any business is to earn profit and maximize the profit
as much as possible. Wealth Maximization is better
criteria rather than profit maximization. Any financial
action which creates wealth. Study is conducted to
evaluate that if fixed assets are liquidated. What is
the proportion of fixed assets amount will contribute
for payment of owner funds and long term liabilities.
Intangible assets must be amortized over the period
benefited not to exceed 40 years. Amortization is a
term used to describe the systematic write-off to
expense of an intangible asset’s cost over its
economic life. The straight-line method of
amortization is used. The amortization entry is
Amortization expense Intangible asset The credit is
made directly to the given intangible asset account.
However, it would not be incorrect to credit an
accumulated amortization account, if desired. Some
intangibles have a limited legal life. An example is
patents, which have a legal life of 17 years. The
project is covered of fixed Assets of LG
ELECTRONICS. drawn form annual report of the
company. The fixed assets considered in the project
is which cam not be converted into cash with one
year. Ratio analysis is used for evaluating fixed assets
performance of LG ELECTRONICS.
The subject matter is limited to fixed assets it
analysis and its performance but not any other areas
of accounting, corporate marketing and financial
matters. The study is made to known the amount of
capital expenditure made by the company during
study period. The study is conducted to evaluate
depreciation and method of depreciation adopted by
LG.Profit maximization is not considered as basic
idea for making investment and financing decision
through Fixed Asset Management. The study is
evaluate is giving adequate returns to the company.
Study is conducted to evaluate that if fixed assets are
liquidated. What is the proportion of fixed assets
amount will contribute for payment of owner fund
and long term liabilities. The study period of 45 days
as prescribed by Osmania University. The study is
limited up to the date and information provided by
LG ELCTRONICS INDIA LTD and its reports. The
reports will not provide exact fixed Assets status and
position in LG ELECTRONICS. it may varying form
time to time and situation to situation. This report is
not helpful in investing in LG ELECTRONICS.
Either through disinvestments or capital market. The
accounting procedure and other accounting principles
are limited by the company changes in them may
vary the fixed assets performance.
Are those, which have physical existence
and generate goods and services. Included in this
category are land, building, plants, machinery,
furniture, and so on. They are shown in the balance
sheet, in accordance with the cost concept, at their
cost to the firm at the time they were purchased.
Their cost is allocated to/charged against/spread over
their useful life.
The yearly charge is referred to as
depreciation. As a result, the amount of such assets
shown in the balance sheet every year declines to the
extent of the amount of depreciation charged in that
year and by the end of the useful life of the asset it
equals the salvage value, if any. Salvage value
signifies the amount realized by the sale of the
discarded asset at the end of its useful life.
Do not generate goods and services directly.
In a way, they reflect the rights of the firm. This
category of assets comprises patents, copyrights,
trademarks and goodwill. They confer certain
exclusive rights to their owner’s patents conger
exclusive rights to use an invention, copyrights relate
to production and sale of literary, musical and artistic
works, trademarks represent exclusive right to use
certain names, symbols, labels, designs, and so on
intangible fixed assets are also written-off over a
period of time.
Intangible assets lack physical substance and
arise form a right granted by the government or
another company. Intangibles may be acquired or
developed internally. Examples of rights granted by
Page 3 of 8
Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 03 Issue 12
November 2017
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 267
the government are patents, copyrights, and
trademarks, while am example of a privilege granted
by another company is a franchise. Other types of
intangibles include organization costs, leasehold
improvements, and goodwill.
ACCOUNTING FOR INTANGIBLE ASSETS
APB Opinion 17 specifies the requirements for
accounting for intangible assts. Intangibles that have
been acquired, such as goodwill, should be recorded
at cost. In the event that an intangible is acquired for
other than cash, it should be reflected at either the fair
market value of the consideration given or the fair
market value of the right received, whichever is more
clearly evident. Intangibles should not be arbitrarily
written off if they still have value. When identifiable
intangibles are internally developed (e.g., patents),
they should be recorded as assets and reflected at
cost. If they are not identifiable, they should be
expensed. Intangible assets must be amortized over
the period benefited not to exceed 40 years.
Amortization is a term used to describe the
systematic write-off to expense of an intangible
asset’s cost over its economic life. The straight-line
method of amortization is used. The amortization
entry is Amortization expense Intangible asset The
credit is made directly to the given intangible asset
account. However, it would not be incorrect to credit
an accumulated amortization account, if desired.
Some intangibles have a limited legal life. An
example is patents, which have a legal life of 17
years. Deferred charges are of along-term,
nonrecurring nature. They are allocated to a number
of future periods. Examples are start-up costs and
plant rearrangement costs. Deferred charges are
customarily listed as the last asset category in the
balance sheet since their dollar value is usually
insignificant relative to total assets. When non- current assets cannot be properly placed into the asset
classifications already Discussed, they may be
included in the Other Assets category. Placement of
an item in this classification depends upon its nature
and dollar magnitude. However, this classification
should be used as a last resort.Not surprisingly,
periodic disenchantment with returns on marketable
securities has led some investors to examine a host of
tangible assets that are normally considered only by
“collectors”. The average returns on collectibles such
as Chinese ceramics, coins, diamonds, paintings, and
stamps have on occasion been quite high, but
generally such assets also experience periods of
negative returns.
This fluctuation is not surprising because if one (or
more) type of collectible had provided consistently
high returns, many investors would have been
attracted to it and would have bid its price up to a
level where high returns would no longer have been
possible.
In a sense, a collectible asset often provides
income to the owner in the form of consumption. For
example, an investor can admire a Roberto Clementre
rookie baseball card, sit on a Chippendale chair, gaze
upon a Georgia O’ Keefe painting, play a
Stradivarius violin, and drive a Stutz Bearcat
automobile. Value received in this manner is not
subject to income taxation and is thus likely to be
especially attractive for those in high tax brackets.
However, the value of such consumption depends
strongly on one’s preferences. If markets are
efficient, collectible assets will be priced so that those
who enjoy them most will find it desirable to hold
them in greater-than-market-value proportions,
whereas those who enjoy them least will find it
desirable to hold them in less-than-market-value
proportions (or, in many cases, not at all).
Institutional funds and investment pools have been
organized to own collectibles of one type or another.
These arrangements are subject to serious question if
they involve locking such objects in vaults where
they cannot be seen by those who derive pleasure
from this sort of consumption. On the other hand, if
the items are rented to others, the only loss may be
that associated with the transfer of a portion of the
consumption value to the government in the form of a
tax on income. Investors in collectibles should be
aware of two especially notable types of risk. The
first is that the bid-ask spread is often very large.
Thus an investor must see a large price increase just
to recoup the spread and break even. The second is
that collectibles are subject to fads (that risk has been
referred to as stylistic risk). For example, Chinese
ceramics may be actively sought by many investors
today, leading to high prices and big returns for
earlier purchasers. However, they may fall out of
favor later on and plunge in value. Unlike financial
assets, there is no such thing as fair value for
collectibles that can act as a kind of anchor for the
market price. In the United States, private holdings of
gold bullion were illegal before the 1970s. In other
countries, investment in gold has long been a
tradition. According tone estimate, at the end of 1984
