Financial Management
Financial Management is concerned with the management of the flow of funds and involves decisions related to the acquisition and application of funds in long-term and short-term assets. It is concerned with two aspects: procurement of funds as well as usage of finance.
Procurement of funds
For optimum procurement, there are different sources available for finance. They are identified and compared by their cost and risk applied. The fund procured is to be used as a profitable investment. This means returns from the investment must be more than the cost at which funds have been procured.
Usage of finance
As financial management aims at ensuring the availability of enough funds whenever required. It also looks that the development of funds is effective. The funds invested should yield good returns for the business.
Role and Objectives of Financial Management
We all know that finance is essential for running a business. Business enterprises require careful financial planning and understanding of the resultant capital structure, risks, and profitability that they may have. All these have an effect on shareholders as well as the employees. They require an understanding of business finance, major financial decision areas, financial risk, and the business’s working capital requirements. The success of a business depends on how well finance is invested in assets and operations and how timely and cheaply the finance is arranged from different sources.
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