Defination of financial management

Financial management may be defined as planning, organising, directing and controlling the financial activities of an organisation. Management also includes recording and storing facts and information for later use or for others within the organization. Financial managements can be said a good guide for allotment of future resources of an organisation.

Ezra Solomon has advocated wealth maximisation as the goal of financial decision-making. While it is impossible that companies remove all risk from the organisation, it is important that Defination of financial management properly understand and manage the risks that they are willing to accept in the context of the overall corporate strategy.

Plan, execute, and measure. Risk can be managed in a number of ways: Risk Financing Techniques Retention of losses either by design or omission.

It is an advanced goal compared to profit maximization. Some writers on finance believe that it leads to efficient allocation of resources and optimum use of capital. It facilitates to protect the interests of various classes of people related to the firm. A finance manager has to make estimation with regards to capital requirements of the company.

Objections against the Profit Maximisation Objectives: Determination of capital composition: As the profit of the firm is directly related to cost of capital, each cost of capital should be measured. In the present business administration financial management is an important branch.

In this broader view, the central issue of financial policy is the wise use of funds and the central process involved is a rational matching of the advantage of potential uses against the cost of alternative potential sources so as to achieve the broad financial goals which an enterprise sets for itself.

Minimization on capital cost in financial management can help operations gain more profit. The process of getting activities completed efficiently with and through other people; 2.


In fact, achievement of wealth maximisation also maximises the achievement of the other objectives. It influences and limits the activities of marketing, production, purchasing and personnel management.

All these are facts. Risk Control Techniques Avoidance of activities which cause loss. November Learn how and when to remove this template message Estimating the Requirement of Funds: Please help improve this article by adding citations to reliable sources.

This is known as wealth maximisation. In order to maximise wealth, financial management must achieve the following specific objectives: Any one specific category may show an increase or decrease in cost when considered individually or by division in a specific time frame. While ascertaining the profitability the following aspects should be taken into consideration: See a history of social media in less than 10 minutes: Liquidity can be ascertained through the three important considerations.

Financial Management: Definition, Aims, Scope and Functions

Hence it can be said as an important one. This article simply takes an assortment of definitions and looks at what they say and what they imply about management. Any financial action which does not meet this test should be rejected. Second, management allocates resources to implement the plan.

On the other hand, a bank will be in a position to take risks in currencies and interest rates but will avoid operational and regulatory risks. This is why it is so important for business managers to have an employee manual. This will depend upon the proportion of equity capital a company is possessing and additional funds which have to be raised from outside parties.Definition of management: The group of individuals who make decisions about how a business is run.

The report and plan cover seven key areas of financial management: accountability standards, financial management organization, financial management personnel, financial systems, management controls, asset management and audited financial reporting.

Overview. Risk management is the continuing process to identify, analyze, evaluate, and treat loss exposures and monitor risk control and financial resources to mitigate the adverse effects of loss.

Loss may result from the following: financial risks such as cost of claims and liability judgments; operational risks such as labor strikes ; perimeter risks. Financial management focuses on ratios, equity and debt.

Financial managers are the people who will do research and based on the research, decide what sort of capital to obtain in order to fund the company's assets as well as maximizing the value of the firm for all the stakeholders.

Social networking is the practice of expanding the number of one's business and/or social contacts by making connections through individuals, often through social media sites such as Facebook, Twitter, LinkedIn and Google+.

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.

Defination of financial management
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