What is Financial Management?

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 the financial resources of the enterprise. Financial management refers to the efficient and effective management of money (funds) in such a manner as to accomplish the objectives of the organization. It is the specializing function directly associates with the top management. The significance of this function is not seen in the ‘line’. But in the overall capacity of the company ‘staff’ is also in capacity. So, what is the question; What is Financial Management?

Here are explain; What is Financial Management? with Meaning and Definition.

The term typically applies to an organization or company’s financial strategy. While personal finance or financial life management refers to an individual’s management strategy. It includes how to raise the capital and how to allocate capital, i.e. capital budgeting. Not only for long-term budgeting but also how to allocate the short term resources like current liabilities. It also deals with the dividend policies of the shareholders. Customer Relationship Management.

Definition of Financial Management:

One needs money to make money. Finance is the life-blood of business and there must a continuous flow of funds in and out of a business enterprise. Money makes the wheels of business run smoothly. Sound plans, efficient production system and excellent. Marketing network is all hampered in the absence of an adequate and timely supply of funds.

According to Dr. S. N. Maheshwari,

“Financial management is concerned with raising financial resources and their effective utilization towards achieving the organizational goals.”

According to Richard A. Brealey,

“Financial management is the process of putting the available funds to the best advantage from the long-term point of view of business objectives.”

Sound financial management is as important in Business like production and marketing. A business firm requires finance to commence its operations, to continue operations and for expansion or growth. Finance is, therefore, an important operative function of the business. A large business firm has to raise funds from several sources and has to utilize those funds in alternative investment opportunities. In order to ensure the most prudent use of funds and to give proper returns on investment, sound financial policies and programs are requiring. Unwise financing can drive a business into bankruptcy just as easily as a poor product, inept marketing or high production costs.

On the other hand, adequate and economical financing can provide the firm with a differential advantage in the marketplace. The success of a business enterprise is largely determined by the way its capital funds is raising, utilized and disbursed. In the modern money-using economy, the importance of finance has increased further due to the increasing scale of operations and capital-intensive techniques of production and distribution.

In fact, finance is the bright thread running through all business activity. It influences and limits the activities of marketing, production, purchasing and personnel management. The success of a business is broadly measured financially. The efficient organization and administration of the finance function are thus vital to the successful functioning of every business enterprise. Sales Management, What You Do Know?

Meaning of Financial Management:

Financial management maybe defines as planning, organizing, directing and controlling the financial activities of an organization. According to Guthman and Dougal, the financial management means, “the activity concerned with the planning, raising, controlling and administering of funds used in the business.” It is concerned with the procurement and utilization of funds in the proper manner.

Financial activities happen not only with the purchase and use of money. However, along with assessing the needs of funding, capital budgeting, distribution of surplus, financial control etc. for funds, Ezra Solan has described the nature of financial management as follows: “Financial management is properly defined as an integral part As is seen, overall management, especially as an employee, concerns with the establishment of operations. ”

“In this broad perspective, the central issue of financial-policy is the wise use of money. The central process, there is a logical match for the benefit of the potential use of the cost of alternative potential sources, so that for any broad financial goals. Order to establish an enterprise, in addition to raising funds, financial management directly produces marketing and marketing within an enterprise. Concerns regarding actions, when done in the decision to acquire or distribution decisions. ”

Reference:

1. Financial-Management.