Contents
Introduction
Importance of Financial Management
Objectives of Financial Management
Conclusion
Introduction
It is the art and science of managing money. It is
the duties of financial managers in a business
firm.
Financial management is all about obtaining
funds and how to use that fund.
Financial Management is a careful selection of the
source of working capital.
It includes financial planning, financial
administration and financial control.
Importance of Financial Management
Development and Economic Growth
Improved Standard of Living
Improved Health
Objectives of Financial Management
Two main objectives of financial management are:
1. Profit Maximization
2. Wealth Maximization
It provides a framework for optimum financial decision
making.
It operates internal investment and financing of the firm.
Contd..
Profit Maximization Profit/EPS maximization should be taken and
those that decrease profit/EPS should be avoided.
It deals with the allocation of resources. Here resources are working capital for business funding.
Financial Management (FM) mainly depends on efficient economic resource i.e. capital.
The technical flaws of Profit Maximization are: 1. Ambiguity 2 . Timing Benefits 3. Quality Benefits
Contd..
Wealth Maximization Wealth maximization is also known as value or net
present worth maximization. It should satisfy all three
requirement, i.e. exactness, quality and money value of
time.
The technical flaws of Wealth Maximization are:
1. Focus on Stakeholders : Stakeholders include
groups of employees, investors and stakeholders which are
directly related to the firm.
2. EVA (Economic Value Added) : EVA is equal to
after tax operating benefits of a firm less the cost of the firm
Conclusion
Financial Management is the mixture of
financial planning, administration and control.
Financial corporation deals with how
corporation obtains the funds and how
corporation allocates that funds.
References
http://
en.wikipedia.org/wiki/Financial_management
https://
48factoring.com/working-capital-financing
http://www.managementstudyguide.com/
financial-management.htm
http://www.slideshare.net/anurag_toby/
objectives-of-financial-management-26656656