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WHAT IS FINANCE?
Finance is the science of money. It is the life
blood of any commercial undertaking and is
essential element of every king of business
activity. In a modern economy, Finance may
be defined as the provision of money at the
time it is wanted. Henry Ford once remarked
`Money is like an arm or leg. You either use it
or lose it. To Byron, the great poet a ready
money is Aladin`s lamp.
FINANCIAL MANAGEMENT:
Financial management means the entire
activities of managerial efforts devoted to
Functions performed
Relationships with other activities
Approaches to business finance
Financial planning
Financial control
Financing decisions
Investment decision
Management of income and dividend
decision
Liquidity decision
Financial planning:
Decision making function.It involves three
basic steps namely
LIQUIDITY DECISIONS:
and
safe
Measuring
the
effectiveness
decisions and actions:
of
firms
it
is
necessary
to
understand
its
objectives.Of the various financial objective
may be taught two of them are not able
because of wide support for them.
These are
Profit maximasation
Wealth maximasation
PROFIT MAXIMASATION:
The firm should always to be keen on the
decisions of financing, investment,
Dividend to maximization of profits.It implies
that a firm should select projects and
decisions which are profitable and reject
those which are not.
It acts as a guide to financial decision
making.It is a test of economic efficiency.It
provides the economic performance on based
of allocation of resources.
Finally, it ensures maximum social welfare
i.e, maximum dividend to share holders,
timely payments to creditors, more wages to
employees, better quality at cheaper rate to
consumer more employment to society and
maximization of capital to the owners.
Financial planning
Raising of necessary funds
Financial control
Disposition of profits
Other responsibilities:
Responsibilities to owners
Legal obligations
Responsibilities to employees
Responsibilities to customers
Wealth maximisation
The End