* FINANCIAL MANAGEMENT

Created By:RISHABH MAONDIA

CRO:0524482

BATCH NO:40

SUBMITED TO: MR SANJAY KISHORE SIR

* Contents

*Introduction

*Component of financial management

*Importance of financial management

*Finance function

*Objective of financial management

*Financial management level

*Main aspect of financial planning

Financial management is an integrated decision making process, concerned with acquiring, managing and financing assets to accomplish overall goals within a business entity.

What is Financial Management?

*Financial management capacity is a cornerstone of organizational excellence.

*Financial management pervades the whole organization as management decisions almost always have financial implications.

Meaning of Financial Management

*Financial management entails planning for the future of a person or a business enterprise to ensure a positive cash flow, including the administration and maintenance of financial assets.

Components of Financial Management

The five basic components of the Financial Management Framework are:

*  Planning and Analysis

* Asset and Liability Management

* Reporting

* Transaction Processing

* Control

Importance of Financial Management

Financial management is concerned with procurement and utilization of funds in a proper way. It is important because of the following advantages:

1. Helps in obtaining sufficient funds at a minimum cost.

2. Ensures effective utilization of funds.

.

Finance function The finance function relates to three major decisions which the finance manager has to take:

*Investment decisions

*Finance decisions

*Dividend decisions

Investment decision:

This decision relates to the careful selection of assets in which funds will be invested by the firm. It Involves buying, holding reducing, replacing, selling & managing assets.

*Financing decisions:

Financing decisions involve the acquisition of funds needed to support long-term investments.

*Dividend decisions:

*This decision relates to the appropriation of profits earned. The two major alternatives are to retain the profits earned or to distribute these profits to shareholders.

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Invest

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Divid

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Three Legged Tool Analogy: Broad Classification of Decision Activities

Objectives of Financial Management

The objectives or goals of financial management are-

(a) Profit maximization,

(b) Return maximization, and

(c) Wealth maximization.

Financial Planning Financial planning means deciding in advance how much to spend, on what to spend, according to the funds at your disposal.

Thus, there are two aspects of financial planning:

How much funds are required to finance current and fixed assets and future expansion project?

From where will these funds come?

Capitalization

Capital structure

Management

of capital

Capitalisation

Capital is the basis of all financial decisions and

the term capitalization has been derived from it .

*Capital means the total funds invested in the business and includes owners’ funds , long term loans and other reserves which are represented by assets.

Three possible situations of Capitalisation

Fair capitalization

�Business employs correct amount of capital

Over capitalization

Business employs more capital than warranted

Under capitalization

Business employs less capital than warranted

Functions of Financial Management

Functions of financial management can be divided into two groups:

*Executive (or managerial)functions

*Incidental or routine functions

*BIBLIOGRAPHY

*Understanding financial management: a practical guide By Harold Kent Baker, Gary E. Powell

*http://www.economywatch.com/finance/financial-management.html

*http://managementhelp.org/finance/fp_fnce/fp_fnce.htm

*Various other sources on the internet

*Thank you