Definition of Financial Management:

According and to Joseph Massie. Financial management is the operation acting of a business that is responsible for obtaining and effectively utilizing the necessary for efficient operation.

According to Weston and Brigham. Financial management is an area of financial decision making Harmonizing individual Motives and Enterprise Goals.

Objectives of Financial management.

The objectives of financial management are

Primary objectives. Secondary objectives. Primary objectives they are:

a) Maintenance of liquid assets:

They are two types of assets, Current assets or liquid assets:

There are those assets which are convertible into cash immediately without any loss of time and money. Fixed assets: There are those assets which cannot be converted into cash immediately.

b) Profit maximization:

Financial management concerned with efficient use of improved sources, mainly capital funds, profit maximization should serve as a basic criterion for decision arrived by the financial managers of privately owned and controlled firms and profit maximum is the firm because of the following reasons.

It is reflects on the earning per share. Maximum of earning per share over not includes risk of streams of alternative earning.

c) Wealth Maximization:

The goal of financial management may be such that then should be beneficial to owners, management, Employees and customers, their goals achieved only by maximizing the value of the firm.

In other words it is increase in the market value of shares of a company.

 Wealth Maximization is a clear term the present values of cash flows are consideration. Wealth Maximization is reducing the risk. Increased profit.

taken into

Secondary objectives are:

a) Ensuring a fair return to shareholders b) Building up reserves to growth and expansion. Ensuring efficiency by the efficient and effective utilization of finance. c) Ensuring financial discipline in the organization. d) To maintain liquidity to meet debt obligation. e) To ensure wealth Maximization. f) To archive profit maximization. g) It should give way for maintaining balanced assets structure. maximum operational

Scope of Financial Management.

The Primary objective of finance manager is to arrange sufficient finance in order to meet the short term and long term needs. The funds are procured at minimum costs. So that the profitability of business is maximized.

The finance manager should basically concentrate on the following areas.

1) Financial estimation:

As stated earlier the prime task of a finance executive is to estimate the short term and long term financial requirement of the business.

2) Planning of the capital structure:

The process of planning of the capital structure includes selection of right proportion of securities for raising funds. The process involves deciding about the quantum of fonder and also the type of securities to raise the funds. The organization should choose long term debts for financing fixed assets and overdrafts and cash credits should be selected for financing working capital requirements.

3) Selecting right source of funds:

In market finance is available in different forms like shares, debentures, financial institution, commercial banks, public deposits etc.

4) Investment of funds:

After the mobilization of funds. It is the responsibility of the finance manager to allocate or invest the funds towards capital expenditure and revenue expenditure before making a final decision the profitability of each project has to be evaluated by the finance manager. The proposal is selected based on the fair returns it promises.

5) Analyzing the financial performance:

After the investment of funds in different investment proposals, the performance of each proposal has to be measured in other words. The profit generating capacity of each proposal has to be analyzed.

Financial statements:

Financial statements as used corporate business houses. It refers to a set of report and schedules, which accountant prepares at end of a period of time for a business enterprise. The financial statements are the means with the help of which the accounting