Scribd
Upload
56 views2 pages

Research: Introduction To Financial Management

The primary objectives of financial management are reducing financing costs, ensuring sufficient funds availability, and planning, organizing and controlling financial activities like procuring and using funds. Financial management involves planning, organizing, directing and controlling a company's financial resources and activities. The objectives of financial management are to ensure regular funding, adequate shareholder returns, optimal fund utilization, investment safety, and a sound capital structure balancing debt and equity. Key functions include estimating capital needs, determining capital composition, choosing funding sources, investing funds, distributing profits, managing cash, and exercising financial controls.

Uploaded by

klife
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
56 views2 pages

Research: Introduction To Financial Management

The primary objectives of financial management are reducing financing costs, ensuring sufficient funds availability, and planning, organizing and controlling financial activities like procuring and using funds. Financial management involves planning, organizing, directing and controlling a company's financial resources and activities. The objectives of financial management are to ensure regular funding, adequate shareholder returns, optimal fund utilization, investment safety, and a sound capital structure balancing debt and equity. Key functions include estimating capital needs, determining capital composition, choosing funding sources, investing funds, distributing profits, managing cash, and exercising financial controls.

Uploaded by

klife
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

Research: Introduction to Financial Management

Q1. What are the primary objectives of financial management?


Answer: (https://www.toppr.com/guides/business-environment/business-functions/financial-
management/#:~:text=The%20primary%20objectives%20of%20financial%20management
%20are%3A,procurement%20and%20utilization%20of%20funds. )

The primary objectives of financial management are:

● Attempting to reduce the cost of finance


● Ensuring sufficient availability of funds
● Also, dealing with the planning, organizing, and controlling of financial activities like the
procurement and utilization of funds.

Financial Management - Meaning, Objectives and Functions


Source: https://www.managementstudyguide.com/financial-management.htm

Meaning of 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.

Scope/Elements
1. Investment decisions includes investment in fixed assets (called as capital budgeting).
Investment in current assets are also a part of investment decisions called as working
capital decisions.
2. Financial decisions - They relate to the raising of finance from various resources which
will depend upon decision on type of source, period of financing, cost of financing and
the returns thereby.
3. Dividend decision - The finance manager has to take decision with regards to the net
profit distribution. Net profits are generally divided into two:
a. Dividend for shareholders- Dividend and the rate of it has to be decided.
b. Retained profits- Amount of retained profits has to be finalized which will depend
upon expansion and diversification plans of the enterprise.

Objectives of Financial Management


The financial management is generally concerned with procurement, allocation and control of
financial resources of a concern. The objectives can be-

1. To ensure regular and adequate supply of funds to the concern.


2. To ensure adequate returns to the shareholders which will depend upon the earning
capacity, market price of the share, expectations of the shareholders.
3. To ensure optimum funds utilization. Once the funds are procured, they should be
utilized in maximum possible way at least cost.
4. To ensure safety on investment, i.e, funds should be invested in safe ventures so that
adequate rate of return can be achieved.
5. To plan a sound capital structure-There should be sound and fair composition of capital
so that a balance is maintained between debt and equity capital.

Functions of Financial Management


1. Estimation of capital requirements: A finance manager has to make estimation with
regards to capital requirements of the company. This will depend upon expected costs
and profits and future programmes and policies of a concern. Estimations have to be
made in an adequate manner which increases earning capacity of enterprise.
2. Determination of capital composition: Once the estimation have been made, the
capital structure have to be decided. This involves short- term and long- term debt equity
analysis. This will depend upon the proportion of equity capital a company is possessing
and additional funds which have to be raised from outside parties.
3. Choice of sources of funds: For additional funds to be procured, a company has many
choices like-
a. Issue of shares and debentures
b. Loans to be taken from banks and financial institutions
c. Public deposits to be drawn like in form of bonds.
Choice of factor will depend on relative merits and demerits of each source and period of
financing.
4. Investment of funds: The finance manager has to decide to allocate funds into
profitable ventures so that there is safety on investment and regular returns is possible.
5. Disposal of surplus: The net profits decision have to be made by the finance manager.
This can be done in two ways:
a. Dividend declaration - It includes identifying the rate of dividends and other
benefits like bonus.
b. Retained profits - The volume has to be decided which will depend upon
expansional, innovational, diversification plans of the company.
6. Management of cash: Finance manager has to make decisions with regards to cash
management. Cash is required for many purposes like payment of wages and salaries,
payment of electricity and water bills, payment to creditors, meeting current liabilities,
maintainance of enough stock, purchase of raw materials, etc.
7. Financial controls: The finance manager has not only to plan, procure and utilize the
funds but he also has to exercise control over finances. This can be done through many
techniques like ratio analysis, financial forecasting, cost and profit control, etc.

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy