What Are The Important Functions Of Financial Management Financial management is the application of general management concepts to a company s financial resources It helps the firm achieve its objectives by budgeting managing and applying financial instruments In all markets obtaining credit from banks and associated financial institutions is simple for investing or financing an expansion
Functions of Financial Management Determine the Capital Requirement The first function of a financial manager is to estimate the total capital required by the business to fulfil its mission and objectives The amount of capital required is determined by several factors including the size of the business expected profits company programmes Definition of Financial Management These are the following definition of financial management by authors su quote cite Hoagland Financial management deals with how corporations obtain funds and how it uses them su quote su quote cite Archer and Ambrosio Financial Management is the application of planning and control functions to the finance function su quote
What Are The Important Functions Of Financial Management
What Are The Important Functions Of Financial Management
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The people who perform financial management tasks are called financial managers Here are some daily functions financial managers perform Estimating costs and sales Monitoring the fixed plant property and equipment and current cash or cash equivalent sides of the balance sheet Observing the performance of investments such as shares and Functions of Financial Management More practically a financial manager s activities in the above areas revolve around planning and forecasting and controlling expenditures The FP A function includes issuing P L statements analysing which product lines or services have the highest profit margin or contribute the most to net profitability
Hence it is important to have the right mix of current assets and current liabilities Examples Example 1 Let s look into a finance function scenario and the application of technological evolutions like business intelligence into the functions of an organization Tax deadline extensions are usually beneficial to financial functions They Here are some of the reasons why financial management is essential in a business Helps in Financial Planning Assists in acquiring and managing funds Helps in funds allocation Provides insights to make critical financial decisions Cuts down financial costs Improves profitability and value of the organization
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Finance management is the strategic planning and managing of an individual or organization s finances to better align their financial status to their goals and objectives Depending on the size of a company finance management seeks to optimize shareholder value generate profit mitigate risk and safeguard the company s financial health in 1 Crucial Functions of Financial Management a Assessing the required capital b Defining the capital structure c Selecting funding sources d Acquiring financial resources e Efficient use of funds f Handling surplus funds or profits g Cash management h Financial oversight
The financial management is generally concerned with procurement allocation and control of financial resources of a concern The objectives can be To ensure regular and adequate supply of funds to the concern To ensure adequate returns to the shareholders which will depend upon the earning capacity market price of the share expectations Financial management is all about monitoring controlling protecting and reporting on a company s financial resources Companies have accountants or finance teams responsible for managing their finances including all bank transactions loans debts investments and other sources of funding Finance teams are also responsible for ensuring
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What Are The Important Functions Of Financial Management - Financial management functions are critical for fund procurement allocation of financial resources and utilization of funds among others The responsibility typically lies with financial or fiscal managers Let s navigate the financial management functions through the roles of a manager 1 Decisions And Control