GOOD MORNING. PRESENTATION ON FINANCIAL MANAGEMENT. BY, A LPHONSE M ARY 110301. CONTENTS ARE AS FOLLOWS. INTRODUCTION MEANING OF FINANCE AND FINANCIAL MANAGEMENT IMPORTANCE AND SCOPE OF FINANCIAL MANAGEMENT. Introduction.
Finance: Is a French word which means “the management of money”. Finance is the life blood of any business organization., it is the management of money and other valuables, which can be easily converted into cash. Every business weather big or small needs finance to carry out its operations and achieve its goals.
Financial management: Is that part of the management activity that deals with planning and controlling the financial recourses of a firm. Financial management is responsible for raising funds and using them in an effective manner.
1.Financial planning and successful promotion of an enterprise: Financial management is responsible for planning the finances of an organization and promoting it in such a way that it can carry out its operations successfully in order to achieve its goals.
2.Acquisition of funds at minimum cost: Financial management is responsible for raising funds for the organization in such a way that the cost associated with it is minimum.
3. Allocation of funds: F.M is responsible for effectively allocating funds on various profitable business propositions.
4.Taking sound financial decisions: F.M is responsible for taking sound financial decisions that help the organization to increase its returns by taking the least possible risk.
5. Improving profitability through financial control: F.M is responsible for exercising financial control, it can be exercised through tools like budgetary control, cost control, break even analysis, ratio analysis, cost benefit analysis, and internal audit.
6.Increasing the wealth of the investors: F.M is responsible for increasing the wealth of the investors. Increase in the wealth of the investor community results in an increase in the overall wealth of the nation.
1. Estimating financial requirements: Financial management estimates the short-term and long-term financial requirements of a firm. For this purpose a financial plan is prepared for the present as well as the future.
2. Deciding the capital structure: Capital structure refers to the combination of different types of securities for raising finance. After deciding the total amount of finance to be raised, it should be decided that how much finance should be raised from which type of security.
3. Selecting a source of finance: After deciding the capital structure an appropriate source of finance is selected. Different sources from which finance may be raised includes equity shares, preference shares, debentures, bonds, commercial banks, financial institutions public deposits.
4. Proper cash management : Cash management is also an important function of F.M, cash management relates to the management of working capital in order to meet the operating expenses like payment to creditors payment of wages, and other day-to-day expenses.
5. Proper use of surplus: Proper utilization of surplus is very important. Surplus is required for growth and expansion of the organization as well as the protection of interests of the shareholders by way of payment of dividends.