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.
Functions of Financial Management
1)Estimation of capital requirement. A
finance manager has to make estimation
with regards to capital requirement of
the company.
2)Determination of capital composition.
Once the estimation have been made, the
capital structure have to be decide.
3)Choice of sources of funds. A company
have many choice:
-issues of shares and debentures
-loans to be taken from banks and
financial institutions
-public deposits to be drawn like inform
of bonds
4)Investment of funds.The finance manager
has to decide to allocate funds into
profitable ventures so that there is
safety on investment and regular returns
is possible.
5)Disposal of surplus. This can be done in
two ways:
-dividend declaration; it includes
identifying the rate of dividends and
others benefits like bonus
-retained profits; the volume to be
decided which will depend upon
expansional,innovational,
diversification plans of the company
6)Management of cash.Finance manager has
to make decisions with regards to cash
management
7)Financial controls. The finance manager
has not only to plan, procure and
utilize the funds but he/she also has to
exercise control over finance.
Importance of Financial Management
*is very important or significant because
it's related to funds of company.
*guides to finance manager to make optimum
position of funds.
p/s: not finish yet !
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