Financial Management
FINANCIAL MANAGEMENT UNIT - 1
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Meaning of Financial Management
Financial Management means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. It means applying general management principles to financial resources of the enterprise.
Definition :
“Financial Management is the operational activity of a business that is responsible for obtaining and effectively utilizing the funds necessary for efficient operations”. – Joseph & Massie
Scope/Elements
Investment decisions
Financial decisions
Dividend decision
OBJECTIVES OF FINANCIAL MANAGEMENT
The financial management is generally concerned with procurement, allocation and control of financial resources of a concern. The objectives can be-
To ensure regular and adequate supply of funds to the concern.
To ensure adequate returns to the shareholders which will depend upon the earning capacity, market price of the share, expectations of the shareholders.
To ensure optimum funds utilization. Once the funds are procured, they should be utilized in maximum possible way at least cost.
To ensure safety on investment, i.e, funds should be invested in safe ventures so that adequate rate of return can be achieved.
To plan a sound capital structure-There should be sound and fair composition of capital so that a balance is maintained between debt and equity capital.
FUNCTIONS OF FINANCIAL MANAGEMENT
Estimation of capital requirements: A finance manager has to make estimation with regards to capital requirements of the company. This will depend upon expected costs and profits and future programmes and policies of a concern. Estimations have to be made in an adequate manner which increases earning capacity of enterprise.
Determination of capital composition: Once the estimation have been made, the capital structure have to be decided. This involves short-
___________________________________________________________________________
Meaning of Financial Management
Financial Management means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. It means applying general management principles to financial resources of the enterprise.
Definition :
“Financial Management is the operational activity of a business that is responsible for obtaining and effectively utilizing the funds necessary for efficient operations”. – Joseph & Massie
Scope/Elements
Investment decisions
Financial decisions
Dividend decision
OBJECTIVES OF FINANCIAL MANAGEMENT
The financial management is generally concerned with procurement, allocation and control of financial resources of a concern. The objectives can be-
To ensure regular and adequate supply of funds to the concern.
To ensure adequate returns to the shareholders which will depend upon the earning capacity, market price of the share, expectations of the shareholders.
To ensure optimum funds utilization. Once the funds are procured, they should be utilized in maximum possible way at least cost.
To ensure safety on investment, i.e, funds should be invested in safe ventures so that adequate rate of return can be achieved.
To plan a sound capital structure-There should be sound and fair composition of capital so that a balance is maintained between debt and equity capital.
FUNCTIONS OF FINANCIAL MANAGEMENT
Estimation of capital requirements: A finance manager has to make estimation with regards to capital requirements of the company. This will depend upon expected costs and profits and future programmes and policies of a concern. Estimations have to be made in an adequate manner which increases earning capacity of enterprise.
Determination of capital composition: Once the estimation have been made, the capital structure have to be decided. This involves short-