SCOPE OF FINANCIAL MANAGEMENT
SULOCHANABA S. CHUDASAMA
(M.Com., B.Ed., Ph.D.)
OMVVIM COLLEGE MORBI – 363641
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I Chudasama Sulochanaba Sahdevsinh, here by declare that this paper is my research paper and about that its my responsibility not auditor and the academic article journal
Chudasama. sulochanaba .s
Financial Management can be defined as:The management of the finances of a business / organisation in order to achieve financial objectives.Taking a commercial business as the most common organisational structure, the key objectives of financial management would be tocreate wealth for the business ,generate cash, andprovide an adequate return on investment bearing in mind the risks that the business is taking and the resources invested.There are three key elements to the process of financial management:
Meaning and Defination
Meaning of Financial Management Financial Management is that specialised function of general management which is related to the procurement of finance and its effective utilisation for the achievement of common goal of the organisation.
It includes each and every aspect of financial activity in the business. Financial Management has been defined differently by different scholars. A few of the definitions are being reproduced below:-
“Financial Management is an area of financial decision making harmonizing individual motives and enterprise goals.”- Weston and Brigam.
“Financial Management is the application of the planning and control functions to the finance function.”- Howard and Upton.
“Financial Management is the operational activity of a business that is responsible for obtaining and effectively, utilizing the funds necessary for efficient operations.”- Joseph and Massie.
From the above definitions, it is clear that financial management is that specialised activity which is responsible for obtaining and affectively utilizing the funds for the efficient functioning of the business and, therefor, it includes financial planning, financial administration and financial control. According to me, “ Financial Management is a system in which rotate planning , control and decision making.”-chudasama sulochanaba Objectives of Finance Function
For optimum financial decisions, the objectives of financial management shall be clearly defined. They should be so laid down that they contribute directly towards the achievement of overall business objectives. Objectives provide a normative framework within which a firm is to take decisions. Financing is the functional area of objective of the business and contribute directly towards it. The main objectives of a business are survival and growth. In order to survive ups and downs in the business, the business must earn sufficient profits and it should also maintain proper relations with shareholders, customers, suppliers and other social groups. The financial management of an organisation must seek to achieve the following objectives: •To ensure adequate and regular supply of funds.
•To provide a fair rate of return to the suppliers of capital viz. shareholders. •To ensure effective utilization of funds by maintaining proper balance between profitability, liquidity and safety. •to generate and build up sufficient surplus for expansion and growth through ploughing back of profits. •To minimize cost of capital by developing a sound capital between various securities issued by the company. •To coordinate the activities of the finance department with the activities of other departments in the organisation. Scope of Functions of Financial Management