The idle cash with the enterprise will mean that it is not properly utilized. These finances are procured at minimum cost in order to maximize the profitability.
Finance Essays on financial management a course of action which avoids unnecessary risk and anticipates problem areas and ways of overcoming difficulties. Role of Financial Management in a Business: Approaches of Financial Management 3.
There are the Accounting Rate of Return and Payback. Nature of Financial Management: Nature of Financial Management: The value of a stream of future cash flows must consider not only the expected value of the flows, but also their degree of uncertainty.
After reading this essay you will learn about Financial Management: The scope and functions of financial management are divided into two following broad categories, viz.: The new approach to financial management may be broadened to include profit-planning function also.
It properly points out that the profit factor should be considered from a long-term point of view. But the important difference between them is that alternative-A provides a higher return in earlier years whereas alternative-B provides a higher return in the latter years, i. Generally, finance strives for a high level of long-term profit and, at the same time, a short-term profit.
Similarly, alternative A is better from the standpoint of uncertainty and risk. The same is due to the fact that there is a time value of money. A decision regarding various sources of funds should be linked with the cost of raising funds. The new approach to financial management may be broadened to include profit-planning function also.
For this purpose, two well-established and widely-discussed criteria are presented: The time scale also makes the consideration of uncertainty and inflation of ever greater importance than when considering short-term decisions.
Objectives of Financial Management: It is quite clear that net present value maximisation is, no doubt, superior than the profit maximisation criterion as an operational objective.
Introduction to Financial Management 2.
After deciding the quantum of funds needed it should be decided which type of securities should be raised. This kind of planning entails considering all the activities and initiatives of an organisations against the supposed value. While spending on various assets, management should be guided by three important principles of safety, liquidity and profitability.
The functions of finance thus involve three major decisions the firm must make: The functions and duties of the treasurer and controller are noted below: In order to know the cash requirements during different periods, the management should arrange for the preparation of cash flow statement in advance.
That is, there must be efficient use of resources. Similarly, the designation also differs from firm to firm, some are called financial controller, some are called financial manager or vice president for finance or director of finance etc. He should be accountable also for his role.
Generally, capitalisation rate is expressed in decimal notation, i.
Funds requirement is assessed for different purposes, namely for feasibility study of a project, detailed planning of a project, and for operation and expansion of the business. Therefore, the primary finance function is to take proper decision about the expenditure and the demand for capital for those expenditures, i.
The investment and the financial policies depend the above decisions. These forecast financial statements are based on the sales forecast and future strategies for expanding the business, and includes, forecast income statements, forecast assets, liabilities, shareholders, equity etc.
Since the capital is a scarce item, it follows that the profit maximisation should serve as the primary need for the decision taken by the financial managers of private firms which, in practice, it follows.
Responsibilities of the Financial Management in the Firm: In other words, the firm can pay all its bills as soon as they become due and have sufficient cash to take anticipated discounts for cash purchases along with a reserve in order to meet certain contingencies. Introduction to Financial Management: As we know, the top management viz.
The following illustration will make the principle clear:Principles of Financial Management – Essay Sample Financial management is a system of principles, means and forms of economic relations between companies, aimed at managing their financial and economic activities, which include development and implementation of financial policies, informational support, evaluation of investment projects and.
ADVERTISEMENTS: After reading this essay you will learn about Financial Management: 1.
Nature of Financial Management 2. Approaches of Financial Management 3. Objectives 4. Goals 5. Responsibilities. Contents: Essay on the Nature of Financial Management Essay on Approaches of Financial Management Essay on the Objectives of Financial Management Essay on the Goals of.
Financial management is related to the acquisition, financing and management of assets with a future goal and planning. Efficient financial management requires the laying down an objective or goal, because judgement whether a financial decision has been rightly taken or not must be in light of some.
Free Essay: Financial Management Introduction ===== Every organization, irrespective of its size or ownership pattern, has to manage its finances. The. - Financial Management Techniques The study of Financial Management techniques involves the assumption that the single objective of commercial entities is the maximization of firm valuation and shareholder wealth It could be argued that in financial management the single objective of commercial entities is the maximization of firm valuation and.
Financial Management Introduction ===== Every organization, irrespective of its size or ownership pattern, has to manage its finances. The overall objectives of an organization cannot be achieved in the absence of financial management.Download