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Nature and Main Areas of Financial Management

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Nature and Main Areas of Financial Management
Introduction:
Financial management is basically makes plans, organize, direct and control the financial activities in an organization. Applying general management principle to financial resources of the organization is part of financial management activity. Financial management is concern with the efficient and effective management of the financial resources of the organization.
Nature and Main areas of financial management:
Financial management is broadly concerned with the mobilization and development of funds by a business organization. To run the operations of company efficiently, it is important to raise and handle the funds effectively. Financial management performs this job. Financial management works on the following areas:
1. Finding financial necessities: -

A financial manager must know financial necessities of the company. He should find out financial needs of the company. Financial manager must focus on available funds which are needed to meet promotional expenses, fixed and working capital needs. The necessity of non-current assets is related to types of company. Working capital needs mainly depends on the range of business operation. If the range or scale of business operation is large then the requirement of working capital will be high. If the financial manager makes wrong assessment about financial necessities, it may cause huge damage to the company.

2. Selecting the sources of funds:-

Financial management works on how to raise funds from various sources for the company. Various sources may be available for raising funds. To issue of share capital and debentures proper steps should be taken. Financial management should ask various financial institutions to provide long-term funds. Equity capital necessities may be met by getting cash credit or overdraft facilities from commercial banks. A financial manager should be very cautious in approaching different sources to raise funds. Financial management should analyze the sources
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