Created By:RISHABH MAONDIA

CRO:0524482
BATCH NO:40
SUBMITED TO: MR SANJAY KISHORE SIR

FINANCIAL
MANAGEMENT

*Introduction
*Component of financial

management
*Importance of financial
management
*Finance function
*Objective of financial
Contents
management
*Financial management
level

Financial management is an
integrated decision making
process, concerned with
acquiring, managing and financing
assets to accomplish overall goals
within a business entity.

What is Financial Management?

*Financial management capacity is a cornerstone of
organizational excellence.

*Financial management pervades the whole organization

as management decisions almost always have financial
implications.

Meaning of Financial Management

*Financial management entails planning

for the future of a person or a business

enterprise to ensure a positive cash flow,
including the administration and
maintenance of financial assets.

Components of Financial
Management
The five basic components of the Financial Management Framework
are:

* Planning and Analysis

* Asset and Liability Management
* Reporting
* Transaction Processing
* Control

Importance of Financial
Management
Financial management is concerned with procurement
and utilization of funds in a proper way. It is
important because of the following advantages:
1. Helps in obtaining sufficient funds at a minimum cost.
2. Ensures effective utilization of funds.
.

Finance function
The finance function relates to three major decisions
which the finance manager has to take:

*Investment decisions
*Finance decisions
*Dividend decisions

Investment decision:
This decision relates to the careful
selection of assets in which funds
will be invested by the firm. It
Involves buying, holding reducing,
replacing, selling & managing assets.

*Financing decisions:
Financing decisions involve
the acquisition of funds needed
to support long-term
investments.

*Dividend decisions:
*This decision relates to the appropriation
of profits earned. The two major
alternatives are to retain the profits
earned or to distribute these profits to
shareholders.

Investment decision

on

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Three Legged Tool Analogy: Broad Classification of Decision Activities

Objectives of Financial
Management
The objectives or goals of financial management are-

(a) Profit maximization,

(b) Return maximization, and
(c) Wealth maximization.

Financial Planning
Financial planning means deciding in advance how
much to spend, on what to spend, according to the
funds at your disposal.
Thus, there are two aspects of financial planning:

How much funds are required to finance current

and fixed assets and future expansion project?
From where will these funds come?

Capitalizatio
n

Capital
structure

Management
of capital

Capitalisation
Capital is the basis of all financial decisions and
the term capitalization has been derived from it .

*Capital means the total funds invested in the business

and includes owners funds , long term loans and other

reserves which are represented by assets.

Three possible situations of Capitalisation

Fair capitalization
Business employs
correct amount of
capital

Over
capitalization

Under
capitalization

Business employs
more capital than
warranted

Business employs
less capital than
warranted

Functions of Financial Management

Functions of financial management
can be divided into two groups:

*Executive (or managerial)functions

*Incidental or routine functions

* Understanding financial management: a

practical guide By Harold Kent Baker, Gary E.

Powell
* http://www.economywatch.com/finance/finan
cial-management.html
* http://managementhelp.org/finance/fp_fnce/
fp_fnce.htm
* Various other sources on the internet

BIBLIOGRAPHY

*Thank you