BADLANI CLASSES
Chapter : Introduction
Q ue st io n : W ha t do y o u mea n by f i na ncia l ma na g e me nt ?
An sw er : M ea ni ng o f F ina nc ia l M a na g e me nt :
Financial management deals with procurement of funds and their effective utilisation in the business..
T he p r i mar y t as k o f a C h ar te r ed Acco u nt a nt i s to d ea l wi t h fu nd s, 'Ma n a ge me n t o f F u nd s ' i s an i mp o rt a nt a sp ect o f f i na nc ia l ma na g e me n t i n a b u si n es s u nd er ta k i n g o r a n y o t her i n s tit u ti o n l i ke ho sp i ta l, art so c iet y, a n d so o n. T h e ter m 'F i n an cia l Ma n a ge me n t ' ha s b een d e fi ned d i ffere n tl y b y d i f fere n t a u t ho fr s.
Ac co rd i n g to So lo mo n " Fi n a nc ial M a na g e me n t is co n cer n ed wi t h t he e ffici e nt u se o f a n i mp o rt a nt e co no mic r e so ur c e, n a me l y cap it al fu nd s." P hi ll ip p a t us ha s gi v e n a mo re e la b o rate d ef i ni tio n o f t h e ter m, as , " Fi n a nci al Ma n a ge me n t, i s co n cer ned wi t h t he ma n a ge ria l d e ci s io n s t hat r es u lt s i n t he acq ui s it i o n a nd fi na n ci n g o f s ho rt a nd lo n g ter m cr ed i t s fo r t he fir m." T h u s, i t d eal s wi t h t h e si t ua tio n s t ha t r eq u ir e s el ect io n o f sp e ci fi c p ro b le m o f si ze a n d gro wt h o f a n e n terp r i s e. T he an al ys i s o f t he se d e ci sio n s i s b a sed o n t he e xp e c ted i n flo ws a nd o u t flo ws o f fu nd s a nd t he ir e ffe ct o n ma n a ger ia l o b j ect i ve s.
Th e mo st a ccep tab le d e f i ni tio n o f fi na nc ia l ma na g e me n t i s t h at gi v e n b y S. C.K u c h ha l as, " Fi n a nci al ma n a ge m en t d eal s w i t h p ro c ur e me n t o f fu nd s a nd t he i r effe ct i ve ut il is at io n i n t he b u si n es s." T h u s, t her e a r e 2 b a si c a sp e ct s o f fi n an cia l ma n a ge me n t :
1 ) Pro c ure me nt o f f un d s :
As fu nd s ca n b e o b tai n ed fr o m d i f fere nt so urc es t h
Q ue st io n : W ha t do y o u mea n by f i na ncia l ma na g e me nt ?
An sw er : M ea ni ng o f F ina nc ia l M a na g e me nt :
Financial management deals with procurement of funds and their effective utilisation in the business..
T he p r i mar y t as k o f a C h ar te r ed Acco u nt a nt i s to d ea l wi t h fu nd s, 'Ma n a ge me n t o f F u nd s ' i s an i mp o rt a nt a sp ect o f f i na nc ia l ma na g e me n t i n a b u si n es s u nd er ta k i n g o r a n y o t her i n s tit u ti o n l i ke ho sp i ta l, art so c iet y, a n d so o n. T h e ter m 'F i n an cia l Ma n a ge me n t ' ha s b een d e fi ned d i ffere n tl y b y d i f fere n t a u t ho fr s.
Ac co rd i n g to So lo mo n " Fi n a nc ial M a na g e me n t is co n cer n ed wi t h t he e ffici e nt u se o f a n i mp o rt a nt e co no mic r e so ur c e, n a me l y cap it al fu nd s." P hi ll ip p a t us ha s gi v e n a mo re e la b o rate d ef i ni tio n o f t h e ter m, as , " Fi n a nci al Ma n a ge me n t, i s co n cer ned wi t h t he ma n a ge ria l d e ci s io n s t hat r es u lt s i n t he acq ui s it i o n a nd fi na n ci n g o f s ho rt a nd lo n g ter m cr ed i t s fo r t he fir m." T h u s, i t d eal s wi t h t h e si t ua tio n s t ha t r eq u ir e s el ect io n o f sp e ci fi c p ro b le m o f si ze a n d gro wt h o f a n e n terp r i s e. T he an al ys i s o f t he se d e ci sio n s i s b a sed o n t he e xp e c ted i n flo ws a nd o u t flo ws o f fu nd s a nd t he ir e ffe ct o n ma n a ger ia l o b j ect i ve s.
Th e mo st a ccep tab le d e f i ni tio n o f fi na nc ia l ma na g e me n t i s t h at gi v e n b y S. C.K u c h ha l as, " Fi n a nci al ma n a ge m en t d eal s w i t h p ro c ur e me n t o f fu nd s a nd t he i r effe ct i ve ut il is at io n i n t he b u si n es s." T h u s, t her e a r e 2 b a si c a sp e ct s o f fi n an cia l ma n a ge me n t :
1 ) Pro c ure me nt o f f un d s :
As fu nd s ca n b e o b tai n ed fr o m d i f fere nt so urc es t h