Financial Management
FINANCIAL MANAGEMENT
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Introduction
·
A process that involves the
o
Planning
o
Directing
o
& Controlling the financial activities of
an organization
·
It deals with the financial resources in
terms of
o
Procurement
o
Allocation
o
& their Control
·
It helps to achieve the goals of an
organization by effectively and efficiently managing the funds
Scope
and Objectives of FM
·
Scope
o
Investment decision
§ Capital Budgeting
§ Working Capital Management
o
Financial decision
§ Cost of Capital
§ Capital structure decision
§ Leverages
o
Dividend decision
§ Dividend Policy
§ Retained Earnings
·
Objectives
o
Basic
§ Profit maximization
§ Wealth maximization
o
Operational
§ Timely availability of finances
§ Effective utilization of finances
§ Investment safety
§ Enterprises growth
o
Social
§ Payment of interest on time
§ Reasonable dividend
§ Payment of wages on time
§ Fair settlement with suppliers
§ Timely payment of taxes
o
Research
§ Finding better sources of finances
Functions
& Importance
·
Functions
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Allocate & control funds
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Evaluate & select sources of funds
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Determine capital structure
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Estimate required capital
o
Monitoring financial activities
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Distribute profits or surplus
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Importance
o
It helps in financial planning
o
Helps in effective utilizing and allocating
the funds
o
Provide assistance in making critical
financial decisions
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Provide economic stability
o
Encourage employees to save money
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