Financial management Aims & Objectives

Meaning of Financial Management

First, what is finance and what that what role play in our life that is important to know about it finance is the lifeblood of business? Without adequate finance, no business can survive and without efficient financial management, no business can proper grow. Finance is a support to the business and it depends upon the supply of finance and its efficient management. It does not only act but also we should use proper management and it’s administration control so that it could be properly utilized.

Two words “Financial” and “management”. Financial means procuring or raising of money supply (funds) The word „Management‟ means planning, organizing, coordinating and controlling human activities with reference to finance function for achieving goals/ objectives of an organization.

The term financial Management can be defined as the management of the flow of funds in a firm and it deals with the financial decision making of the firms. It encompasses the procurement of the funds in the most optimum ways to maximize the return for the owner. Since raising of funds and their best utilization is the key to the success of any business organization, financial management as a functional area has got a place of prime relevance.

Definition,

“Financial management is the application of the planning and control functions to the finance function”

Financial Management is

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Nature & Characteristics of Financial Management

1. Financial Management is a branch of Business

2. The essence of Managerial Decision

3. Important Position in the Organisation Structure

4. Financial Management

5. Continuous Administrative Function

6. Centralized Nature

7. The basis of the Managerial Process

8. A Measure of Performance

9. Forecasts of Cash Requirement

10. Borrowing Policy

Functions of Financial Management

1. Acquiring Sufficient Funds

2. Proper Utilization of Funds

3. Increasing Profitability

4. Maximizing Firm’s Value

Scope or Content of Financial Management

1. Estimating Financial Requirement

2. Deciding Capital Structure

3. Selecting a Source of Finance

4. Selecting a Pattern of investment

5. Proper Cash Management

6. Implementing Financial Controls

7. Proper Use of Surpluses

Objectives and Goals of Financial Management

Objectives and Goals

Profit Maximization:- Profit earing is the main aim of every economic activity. Profit maximization main aim that can make strong in a business competition that helps to make stand in the market Main aim of any kind of economic activity is earning a profit. A business concern is also functioning mainly for the purpose of earning a profit. Profit is the measuring techniques to understand the business efficiency of the concern. Profit maximization is also the traditional

and narrow approach, which aims at, maximizes the profit of the concern.

Profit maximization consists of the following important features.

Profit maximization is also called as cashing per share maximization. It leads to maximize the business operation for profit maximization.

The ultimate aim of the business concern is earning a profit, hence, it considers all the possible ways to increase the profitability of the concern.

Profit is the parameter of measuring the efficiency of the business concern.

Wealth maximization is one of the modern approaches, which involves the latest innovations and improvements in the field of business concern. The term wealth means shareholder wealth or the wealth of the persons those who are involved in the business concern. Wealth maximization is also known as value maximization or net present worth maximization. This objective is a universally accepted concept in the field of business.

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