| In the early period of development of finance as | | | | Now the investment manager is concerned with |
| a profession, i.e., until the early 1950s, investment | | | | the management of assets, raising and allocation |
| management was primarily concerned with the | | | | of capital, and valuation of the firm. Besides, he |
| procurement of funds. The subject matter was | | | | has to ensure the supply of funds to all parts of |
| mainly confined to financial problems arising during | | | | the organization, evaluate the financial |
| episodic events like incorporation, merger, | | | | performance, negotiate with bankers, financial |
| consolidation and reorganization. Thus, the | | | | institutions and other suppliers of credit, and keep |
| traditional role of the investment manager was to | | | | track of stock exchange quotations and the |
| raise externally the funds required by joint stock | | | | behavior of stock price. |
| companies. The internal administration of finance | | | | To play his role well the investment manager has |
| was either ignored or dealt with by the promoter | | | | different tools, such as cost of capital, leverage, |
| entrepreneur himself. | | | | capital budgeting, working capital management |
| With the passage of time, the role of investment | | | | techniques and fund flow analysis/cash flow |
| manager has undergone drastic changes. | | | | analysis. Cost of capital helps in deciding the |
| Presently, the investment manager is in charge of | | | | appropriate source of finance. Normally the |
| determining the total amount of capital required | | | | sources with minimum costs are selected, so that |
| for both the short-term (working capital) and | | | | the weighted average cost of capital can be kept |
| long-term (fixed capital). This is done by proper | | | | to a minimum. Capital budgeting helps in deciding |
| forecasting and planning of finance. Secondly, their | | | | the proper investment mix; the available |
| job profile includes investing the funds in assets | | | | resources should be used in the most profitable |
| and projects, with the aim of making profits. This | | | | way. For this purpose, suitable projects should be |
| is to be done in such a way that the earnings are | | | | selected from alternative courses by using capital |
| more than the cost so that there is a positive net | | | | budgeting techniques. |
| return to the concern. | | | | |