Finacial Management
CHAPTER
Financial Management An Overview
1.1 INTRODUCTION
1
Financial Management is concerned with planning, directing, monitoring, organizing and controlling monetary resources of an organization. Financial Management simply deals with management of money matters. Management of funds is a critical aspect of financial management. The process of financial management takes place: at the individual as well as organization levels. Our area of dealing is from the view- point of organization. ‘Financial Management’ is a combination of two words, ‘Finance’ and ‘Management’. Finance is the lifeblood of any business enterprise. No business activity can be imagined, without finance. It has been rightly said that business needs money to make more money. However, money begets money, when it is properly managed. Efficient management of business is closely linked with efficient management of its finances. 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 common goal of the organization.
1.2 MEANING OF FINANCE
Finance is defined as the provision of money at the time, it is required. Finance is the art and science of managing money. There is no human being, without blood. Similarly, there is no organization that does not require finance, irrespective of the activity, it is engaged in. The way blood is needed for a person to live, so is the requirement of finance to any firm for its survival and growth. Without adequate finance, no organization can possibly achieve its objectives.
2
Financial Management and Management Accounting
Ray G. Jones and Dean Dudley observe that the word ‘finance’ comes directly from the Latin word ‘finis’. As a management function, finance has special meaning. Finance function may be defined as the procurement of funds and their effective utilization. Howard and Uption (1952) defined finance as “the
Financial Management An Overview
1.1 INTRODUCTION
1
Financial Management is concerned with planning, directing, monitoring, organizing and controlling monetary resources of an organization. Financial Management simply deals with management of money matters. Management of funds is a critical aspect of financial management. The process of financial management takes place: at the individual as well as organization levels. Our area of dealing is from the view- point of organization. ‘Financial Management’ is a combination of two words, ‘Finance’ and ‘Management’. Finance is the lifeblood of any business enterprise. No business activity can be imagined, without finance. It has been rightly said that business needs money to make more money. However, money begets money, when it is properly managed. Efficient management of business is closely linked with efficient management of its finances. 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 common goal of the organization.
1.2 MEANING OF FINANCE
Finance is defined as the provision of money at the time, it is required. Finance is the art and science of managing money. There is no human being, without blood. Similarly, there is no organization that does not require finance, irrespective of the activity, it is engaged in. The way blood is needed for a person to live, so is the requirement of finance to any firm for its survival and growth. Without adequate finance, no organization can possibly achieve its objectives.
2
Financial Management and Management Accounting
Ray G. Jones and Dean Dudley observe that the word ‘finance’ comes directly from the Latin word ‘finis’. As a management function, finance has special meaning. Finance function may be defined as the procurement of funds and their effective utilization. Howard and Uption (1952) defined finance as “the