2. •“Definitions”
•Financial management is the operational activity of a
business that is responsible for obtaining and effectively
utilizing the funds necessary for efficient operations".
•
Joseph and Massie.
•Financial management is an area of financial decision-
making, harmonizing individual motivesand enterprise
goals
• Weston
and Brigham.
•Financial management is the area of business
management devoted to a judicious used of capital and a
careful selection of sources of capital in order to enable
3. •Financial management is that part of management which is concerned
mainly with raising funds in the most economic and suitable manner .
•Using these funds as profitably (for a given risk level)as possible.
•Planning future operations.
• Controlling current performances
•Future developments through financial accounting, cost
accounting, budgeting, statistics and other means.
•It guides investment where opportunity is the greatest, producing
relatively uniform yardsticks for judging most of the firms operations
and projects, and is continually concerned with achieving an adequate
rate of return on investment .
•Management provides the best guide-ship for present and future
resource allocation of a firm. It provides relatively uniform
yardsticks for judging most of the operations and projects.Financial
What Financial Management
Means ???
4. Role & Functions of a
finance Manager …
Determining Financial
Needs
One of the most important functions
of the financial manager is to ensure
availability of adequate funds.
Financial needs have to be assessed
for different purposes. Money may be
required for initial promotional
expenses, fixed capital and working
capital needs. Promotional
5. Determining the Sources of Funds
The financial manager has to choose the various sources of funds. He may issue
different types of securities. He may borrow from a number of
financialinstitutions and the public. When a firm is new and small and little
known in financial circles, thefinancial manager faces a great challenge in
raising funds. Even when he has a choice inselecting sources of funds, he should
exercise it with great care and caution. A firm is committedto the lenders of
finance and has to meet various terms and conditions on which they offer
credit.To be precise, the financial manager must definitely know what he is
doing.
Financial Analysis
It is the evaluation and interpretation of a firms financial position and operations,
and involves the comparison and interpretation of accounting data. The financial
manager has to interpret different statements. He has to use a large number of
ratios to analyse the financial status and activities of his firm. He is required to
measure its liquidity, determine its profitability and assets and overall performance
in financial terms. This is often a challenging task, because he must understand the
importance of each one of these aspects to the firm and heshould be crystal clear
in his mind about the purposes for which liquidity, profitability and performance
are to be measured.
6. Optimal Capital Structure
The financial manager has to establish an optimum capital structure and
ensure the maximum rate of return on investment. The ratio between
equity and other liabilities carrying fixed charges has to be defined. In the
process, he has to consider the operating and financial leverages of his
firm. The operating leverage exists because of operating expenses, while
financial leverage exists because of the amount of debt involved in a firms
capital structure. The financial manager should have adequate knowledge of
different empirical studies on the optimum capital structure and find out
whether, and to what extent, he can apply their findings to the
advantage of the firm.
Profit Planning and Control
Profit planning and control have assumed great importance in the
financial activities of modern business. Economists have long before
considered the importance of profit maximization in influencing
business decisions. Profit planning ensures attainment of stability and
growth. In view of the fact that earnings are the most important
measure of corporate performance, the profit test is constantly used
to gauge success of a firms activities.
7. 1.Estimation of capital requirements
2.Choice of sources of funds
3.Investment of funds
4.Disposal of surplus
5.Management of cash
6.Financial controls
8. In few lines
A finance manager plays a very important
role in a organisation .As all the decisions
about finance are to be declared from
the table of finance manager and finance
is the basic thing of an organisation .It is
a basic need fror survival of an
organisation .And functions of a finance
manager are steps by which organisation
would grow and yield more & more profit
…
