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Financial management
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Financial management focuses on ratios, equity and debt. Financial managers are the people
who will do research and based on the research, decide what sort of capital to obtain in order to
fund the company's assets as well as maximizing the value of the firm for all the stakeholders. It
also refers to the efficient and effective management of money (funds) in such a manner as to
accomplish the objectives of the organization. It is the specialized function directly associated
with the top management. The significance of this function is not seen in the 'Line' but also in the
capacity of the 'Staff' in overall of a company. It has been defined differently by different experts
in the field.

The term typically applies to an organization or company's financial strategy, while personal
finance or financial life management refers to an individual's management strategy. It includes
how to raise the capital and how to allocate capital, i.e. capital budgeting. Not only for long term
budgeting, but also how to allocate the short term resources like current liabilities. It also deals
with the dividend policies of the share holders.

Contents
 1 Concept
 2 Objectives of Financial Management
 3 Scope of Financial Management
 4 Financial Management for Start Up
 5 See also
 6 References

Concept
This section needs expansion. You can help by adding to it. (November 2018)
  “Financial management may be defined as that area or set of administrative function in an
organization which relate with arrangement of cash and credit so that organization may
have the means to carry out its objective as satisfactorily as possible." - by Howard &
Opton.[1]

Objectives of Financial Management

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article by adding citations to reliable sources. Unsourced material may be challenged
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 Profit maximization happens when marginal cost is equal to marginal revenue. This is the
main objective of Financial Management.
 Wealth maximization means maximization of shareholders' wealth. It is an advanced goal
compared to profit maximization.[2]
 Survival of company is an important consideration when the financial manager makes
any financial decisions. One incorrect decision may lead company to be bankrupt.
 Maintaining proper cash flow is a short run objective of financial management. It is
necessary for operations to pay the day-to-day expenses e.g. raw material, electricity
bills, wages, rent etc. A good cash flow ensures the survival of company.
 Minimization on capital cost in financial management can help operations gain more
profit.
 It is vague :- There are several types of profits before interest, depreciation and taxes,
profit before taxes, profit after taxes, cash profit etc

Scope of Financial Management

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 Estimating the Requirement of Funds: Businesses make forecast on funds needed in both
short run and long run, hence, they can improve the efficiency of funding. The estimation
is based on the budget e.g. sales budget, production budget.
 Determining the Capital Structure: Capital structure is how a firm finances its overall
operations and growth by using different sources of funds.[3] Once the requirement of
funds has estimated, the financial manager should decide the mix of debt and equity and
also types of debt.
 Investment Fund: A good investment plan can bring businesses huge returns.
 To ascertain maximum profit as well as maintain the core value of the organization

Financial Management for Start Up

For new enterprises, it is important to make a good estimation on costs, sales.[4] Consideration on
appropriate length sources of finances can help businesses avoid the cash flow problems even the
failure of setting up. There are fixed and current sides of assets balance sheet. Fixed assets refers
to assets that cannot be converted into cash easily, like plant, property, equipment etc.[5] A
current asset is an item on an entity's balance sheet that is either cash, a cash equivalent, or which
can be converted into cash within one year.[6] It is not easy for start ups to forecast the current
asset, because there are changes in receivables and payables.[7]

See also
 Investment management, closely related to financial management, is the professional
asset management of various securities (shares, bonds and other securities/assets)
 Managerial finance, a branch of finance concerned with the managerial significance of
financial techniques.
 Corporate finance, a branch of finance concerned with monetary resource allocations
made by corporations
 Financial management for IT services, financial management of IT assets and resources
 Financial Planning Association, an organization for finance and economics students and
professionals
 Financial Management Service, a bureau of the U.S. Treasury which provides financial
services for the government[8]
 Financial planner, or personal financial planner, is a professional who prepares financial
plans for people

References

Wikiquote has quotations related to: Financial management

1.

 "Business Finance and Financial Management". UpFina. Retrieved 2015-11-04.

  "Wealth Maximization". eFinanceManagement. Retrieved 2015-11-04.
  "Capital Structure Definition | Investopedia". Investopedia. Retrieved 2015-11-04.
  Nobanee, Haitham; Abraham, Jaya (2015). "Current assets management of small
enterprises". Journal of Economic Studie.
  "What are fixed assets? | The e-conomic Accounting Glossary". www.e-conomic.co.uk.
Retrieved 2015-11-04.
  "Current Asset Definition - AccountingTools". www.accountingtools.com. Retrieved 2015-
11-04.
  "The Top 4 Cash Flow Forecasting Mistakes". Entrepreneur. Retrieved 2015-11-04.

8.  faustin.G. karamage
Categories:

 Corporate finance
 Financial management

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