Financial Management

Financial Management

Finance department is considered as the circulatory system of any organization. As the requirement of blood is must for all the other system of our body, same the finance  plays a crucial role because every activity: be it procurement, production, marketing, hiring or managing the work force (directly or indirectly) depends on availability of financial resources.

Finance may be defined as the position of money at the time it is needed. The Financial Management is concerned with applying strategies of financial resource of an organization to achieve its objectives. The primary objective of any business enterprise is to maximize it's value so that the wealth of shareholders increases.

 Financial management is the process of planning decisions in order to maximize the owners wealth. The Financial managers have a major role in cash management, in the acquisition of funds, and in all aspects of raising and allocating financial capital, taking into account the trade-off between risk and return.

 What is Financial Management ? 

According to Phillippatus, Financial Management is concerned with the the managerial decisions that result in the acquisition and financing of long term and short term credits for the firm. As such it deals with the situation that require selection of specific assets or combination of assets, the selection of specific liability or combination of liabilities as well as the problem of size and growth of an enterprise. The analysis of these decisions is based on the expected outflows of funds and their effects upon managerial objectives.

Financial Management influences all segments of corporate activity, for both profit- oriented firms and non profit firms. It is involved in a range of activities like acquisition of funds, the allocation of resources, and analysing financial performance. Therefore, it has acquired a vital role in every type of organisation.

 Financial Management Definitions 

"The activity concerned with the planning, raising, controlling and administering of funds used in the business."

                        -- by Harry Guthumann and Dougal

                                              (Or)

"Financial Management is an area of financial decision making, harmonizing individual motives and enterprise goals"

                               -- by Weston and Brigham

                                             (Or)

"Financial management is to review and control decisions to commit or recommit funds to new or ongoing uses"

                              -- by Solomon and Ezra

                                            (Or)

"Financial Management is the operational activity of a business that is responsible for obtaining and effectively utilising the funds necessary for efficient operations."

                             -- by Joseph and Massie 

The term "Finance" can be used to describe the activities of a firm that attempts to raise capital through the issuance of shares, bonds, debentures or other Financial instruments. This helps any business to expand and diversify globally.