Financial Management

Financial Management

Introduction

Finance is regarded as the scientific method of managing financial resources in most favorable pattern that is to effectively utilizing available financial resources and it consists of three interconnected areas; financial management which consider to be actual management of firms, money and capital which deals with financial institutions and securities markets, and, Investments which provides details about investment portfolio for an individual investors deciding in which to invest in overall portfolio. Financial management is consider to be one of the areas of finance which indicates ways of accessing best financing and investments opportunities in an continuously changing environment.

In this globalized world, every corporation regardless of its ownership and its size, required to manage its finances. In order to achieve it effectively, every organization required financial management. Financial management is crucial for all organizations either non-profit or profit organizations. In case of non-profit organization also the performance and effectiveness depends on their financial management resources.

Discussion

Financial management is related with the duties and functions of the financial manager in the business firm. It is very important to incorporate financial decision making as most of the business decisions finally involve financial considerations. It includes three decisions to be made by financial manager includes; investment decisions, financing decisions and asset management decisions (Block & Hirt, 2004)

Financial management is consider to be amongst that part of management which is primarily focused with raising funds in the most suitable and economic manner; allocating these funds appropriately as possible; planning and forecasting operations; and controlling prevailing performances and future developments through cost accounting, financial accounting, statistics, budgeting and several other means. It provides indication of where best possibly opportunities can be availed, producing uniformity of judging various firm's projects and operations, and is continually related with getting maximum rate of return on investment, as it is crucial for survival and generating new capital. Financial management plays a guiding role to firm in respect to their present and future allocation of resources of a firm. It provides uniformity over interpreting and judging most of the projects and operations. Financial management highlights the method of designing and implementation of particular plan. Financial plan are based over assumptions that it ensure effective utilizing of funds.

Financial management ensures that the fund flow to various activities is supported through some particular plan. It connotes responsibility for generating and successfully utilizing funds essential for the best operation of firm. Finance functions are also considered to be centered round fund management and using them appropriately. Planning is considered to be most vital activities of the financial manager. Financial management is implicated in various organizations, regardless to its size, ownership nature and control- whether it is a service or manufacturing organization. It is incorporated to any activity of firm which involves any financial implications. Financial management is not limited or restricted only to day-to-day management but it also includes management of various major and complex problems such as reorganizations, mergers and the like. It plays two diverse roles includes; safeguarding interests ...