Financial Management Theory
BY :SUMIT JAIN
EMAIL:vaibhav4u38@rediffmail.com
CHAPTER ONE FINANCIAL MANAGEMENT : AN OVERVIEW
|Question : What do you mean by financial management ? |
Answer :
Meaning of Financial Management : The primary task of a Chartered Accountant is to deal with funds, 'Management of Funds' is an important aspect of financial management in a business undertaking or any other institution like hospital, art society, and so on. The term 'Financial Management' has been defined differently by different authors. According to Solomon "Financial Management is concerned with the efficient use of an important economic resource, namely capital funds." Phillippatus has given a more elaborate definition of the term, as , "Financial Management, is concerned with the managerial decisions that results in the acquisition and financing of short and long term credits for the firm." Thus, it deals with the situations that require selection of specific problem of size and growth of an enterprise. The analysis of these decisions is based on the expected inflows and outflows of funds and their effect on managerial objectives. The most acceptable definition of financial management is that given by S.C.Kuchhal as, "Financial management deals with procurement of funds and their effective utilisation in the business." Thus, there are 2 basic aspects of financial management : 1) procurement of funds : As funds can be obtained from different sources thus, their procurement is always considered as a complex problem by business concerns. These funds procured from different sources have different characteristics in terms of risk, cost and control that a manager must consider while procuring funds. The funds should be procured at minimum cost, at a balanced risk and control factors. Funds raised
EMAIL:vaibhav4u38@rediffmail.com
CHAPTER ONE FINANCIAL MANAGEMENT : AN OVERVIEW
|Question : What do you mean by financial management ? |
Answer :
Meaning of Financial Management : The primary task of a Chartered Accountant is to deal with funds, 'Management of Funds' is an important aspect of financial management in a business undertaking or any other institution like hospital, art society, and so on. The term 'Financial Management' has been defined differently by different authors. According to Solomon "Financial Management is concerned with the efficient use of an important economic resource, namely capital funds." Phillippatus has given a more elaborate definition of the term, as , "Financial Management, is concerned with the managerial decisions that results in the acquisition and financing of short and long term credits for the firm." Thus, it deals with the situations that require selection of specific problem of size and growth of an enterprise. The analysis of these decisions is based on the expected inflows and outflows of funds and their effect on managerial objectives. The most acceptable definition of financial management is that given by S.C.Kuchhal as, "Financial management deals with procurement of funds and their effective utilisation in the business." Thus, there are 2 basic aspects of financial management : 1) procurement of funds : As funds can be obtained from different sources thus, their procurement is always considered as a complex problem by business concerns. These funds procured from different sources have different characteristics in terms of risk, cost and control that a manager must consider while procuring funds. The funds should be procured at minimum cost, at a balanced risk and control factors. Funds raised