Financial management

Financial managementfocuses 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
Concept
Objectives of Financial Management
Scope of Financial Management
Financial Management for Start Up
See also
References

Concept
“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
[1]
satisfactorily as possible." - by Howard & Opton.

Objectives of Financial Management

Profit maximization happens when marginal cost is equal to marginal revenue. This is the main objective ofFinancial
Management.
Wealth maximization means maximization ofshareholders' 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

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 thebudget 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 professionalasset 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
1. "Business Finance and Financial Management"(http://upscalingfinance.weebly.com/business-finance-and-financial-
management.html). UpFina. Retrieved 2015-11-04.
2. "Wealth Maximization" (http://www.efinancemanagement.com/financial-management/wealth-maximization).
eFinanceManagement. Retrieved 2015-11-04.
3. "Capital Structure Definition | Investopedia"(http://www.investopedia.com/terms/c/capitalstructure.asp).
Investopedia. Retrieved 2015-11-04.
4. Nobanee, Haitham; Abraham, Jaya (2015). "Current assets management of small enterprises".
Journal of Economic
Studie.
5. "What are fixed assets? | The e-conomic Accounting Glossary"(https://www.e-conomic.co.uk/accountingsystem/glos
sary/fixed-assets). www.e-conomic.co.uk. Retrieved 2015-11-04.
6. "Current Asset Definition - AccountingT
ools" (http://www.accountingtools.com/definition-current-asset).
www.accountingtools.com. Retrieved 2015-11-04.
7. "The Top 4 Cash Flow Forecasting Mistakes"(http://www.entrepreneur.com/article/244912). Entrepreneur. Retrieved
2015-11-04.
8. faustin.G. karamage

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