NCERT Class 12 Business Studies Chapter 9: Financial Management PDF – Concepts, Decisions and Importance

Chapter 9 of Class 12 Business Studies is all about Financial Management, which is a core part of any business operation. This chapter talks about how finance is managed in a business, how decisions are taken related to funds, and what impact those decisions have on the overall performance. It covers key areas like financial

Chapter 9 of Class 12 Business Studies is all about Financial Management, which is a core part of any business operation. This chapter talks about how finance is managed in a business, how decisions are taken related to funds, and what impact those decisions have on the overall performance. It covers key areas like financial planning, capital structure, investment decisions, and more. Understanding this chapter gives you a good idea of how money works in the business world and why finance is called the lifeblood of any organisation.

The reason I’m writing about this topic is that many students either skip it or just mug up the theory without actually grasping the logic behind financial terms and decisions. But trust me, if you understand this chapter properly, you will be more confident not just for your board exam, but also for future commerce-related courses and real-life financial planning. Whether you want to run a business or manage your personal finances better, the concepts taught here are highly practical. Having the NCERT PDF version is a great help because it gives clear explanations, simple diagrams and plenty of examples to revise from.

What is Financial Management?

Financial management refers to the planning, organising, directing and controlling of financial activities such as procurement and utilisation of funds in a business. In simple words, it deals with how money is raised, how it is used, and how efficiently it can be managed to achieve business goals.

In real life, if a company wants to expand its operations, it will need funds. So, financial management helps the manager decide how much to borrow, how much to invest, and how much to retain in the business. This process involves key decision-making which directly affects the success and growth of the business.

Objectives of Financial Management

The main aim of financial management is to maximise the shareholder’s wealth. This is done by increasing the value of the company in the market. Some other key objectives are:

Ensuring regular and adequate supply of funds
Ensuring optimum use of funds
Maintaining a good balance between risk and profitability
Reducing the cost of capital
Ensuring liquidity and proper cash flow

Key Financial Decisions Covered in the Chapter

Chapter 9 focuses on three major financial decisions that every business has to take. These are:

1. Investment Decision (Capital Budgeting)

This decision relates to how a business invests its money in long-term assets like machines, buildings, or new projects. The aim is to get maximum returns from the investment.

Example: Deciding whether to invest in a new factory or upgrade the existing one.

2. Financing Decision

This decision is about where the money will come from. It can be from equity shares, loans, debentures, etc. The goal is to choose a source which costs less but gives more control and flexibility.

Example: A business might choose a bank loan if it wants to avoid giving ownership to others.

3. Dividend Decision

Once the company earns profit, the decision is whether to give it to shareholders as dividends or keep it for future growth. A balance needs to be maintained between rewarding shareholders and strengthening the business.

Example: A fast-growing tech company might keep profits for expansion rather than paying high dividends.

Factors Affecting Financial Decisions

There are many factors that affect financial decisions, like:

Cost of source of funds
Risk involved
Control considerations
Cash flow position
Return expectations

These factors help managers decide the best financial route based on current business needs and future goals.

Importance of Financial Management

Here are some key points that show why financial management is important:

Helps in the smooth running of business operations
Ensures effective use of financial resources
Helps in business expansion and growth
Supports decision-making and financial control
Builds investor confidence

Even in small businesses or households, good financial management helps control expenses, save money and plan for the future.

Download PDF – NCERT Class 12 Business Studies Chapter 9

NCERT Class 12 Business Studies Chapter 9: Financial Management PDF

NCERT Class 12 Geography (Fundamental of Human Geography) Chapter 8: International Trade – Free PDF Download and Full Chapter Summary

Chapter 8 of the NCERT Class 12 Geography (Fundamentals of Human Geography) book focuses on International Trade, which is one of the most crucial aspects of a country’s economic and political relations. This chapter explains how countries exchange goods and services across borders, the patterns of trade, the role of organisations like WTO, and India’s

Chapter 8 of the NCERT Class 12 Geography (Fundamentals of Human Geography) book focuses on International Trade, which is one of the most crucial aspects of a country’s economic and political relations. This chapter explains how countries exchange goods and services across borders, the patterns of trade, the role of organisations like WTO, and India’s position in the global trade network. It also talks about different trade routes, major exports and imports, and recent changes in global trade systems.

I chose to write about this chapter because it helps students understand not just bookish definitions but also how the world’s economies are connected. In today’s time, when prices of onions in India are affected by export bans or crude oil rates are driven by international conflicts, this chapter becomes very relatable. I strongly believe students should learn how international decisions impact their own country’s economy. Whether someone is preparing for board exams or competitive ones like UPSC, understanding the basics of trade is a must. That’s why I’ve included a PDF download link also, so students can directly study from the source material.

What is International Trade?

International trade refers to the exchange of goods and services between countries. It helps nations earn foreign exchange, create jobs, and promote economic growth.

There are two main types:

Bilateral Trade: Between two countries (e.g., India and Bangladesh)
Multilateral Trade: Involves many countries (e.g., through WTO)

This chapter also discusses the difference between free trade and protectionism. While free trade supports open markets, protectionism involves tariffs and restrictions to protect domestic industries.

Importance of International Trade

Helps countries get access to goods they cannot produce locally
Promotes cooperation among nations
Brings in foreign exchange
Boosts industrial and agricultural sectors

Major Trade Routes and Patterns

Trade routes are the paths through which goods travel across the globe. These can be land, sea or air routes.

Major Sea Routes

North Atlantic Route (between North America and Europe)
Suez Canal Route (connecting Europe to Asia)
Cape of Good Hope Route (used when Suez Canal is blocked)

Factors Affecting Trade Routes

Physical barriers like mountains and deserts
Political relations between countries
Development of transport and communication

India’s Role in Global Trade

India plays a growing role in world trade, especially in services and IT. The chapter highlights:

India exports textiles, gems and jewellery, software, petroleum products
Imports include crude oil, gold, machinery, electronics
India’s trade partners: USA, China, UAE, Saudi Arabia, and European countries

The chapter also explains government initiatives like:

Make in India
Foreign Trade Policy
Special Economic Zones (SEZs)

These are designed to increase India’s share in international trade.

Role of International Organisations

The World Trade Organization (WTO) is an important part of the chapter. It regulates international trade laws and resolves trade disputes. The chapter explains the pros and cons of WTO’s role in developing nations like India.