Efficient management of every business enterprise is closely linked with efficient management of its finances. Every organization faces with a problem of
managing its expanding and ambitious plans with its limited financial resources.
The financial management has, therefore been assigned the task of planning and controlling the long and short-term financial needs of the firm. Financial management is the 'activity concerned with planning, raising, controlling and administering of the funds used in the business'.
Financial Management is a function related to the procurement of finance and its effective utilization for the achievement of common goal of the organization.
Financial Manager is concerned with the following aspects:
1. Identifying the present strengths and weakness of an organization, and the scope of improvement, by conducting the financial analysis.
2. Planning the financial strategies. This involves the consideration of methods and levels of funds rising, profitability and the financing of expansion plan of the organization.
3. Arranging the funds when required, in the form needed in the most economical way.
4. Conducting financial appraisal of the possible courses of action. The appraisals are needed in respect of possible take over's and mergers, analysis of capital projects, or alternative methods of funding.
5. Advising about capital structure.
6. Consideration of an appropriate level for drawing by dividends to the owners/shareholders.
7. Ensuring that assets are controlled and used in an efficient manner.
8. Cash management. Preparation of detailed cash budgets and/or forecasts funds flow statement so that future problems can be foreseen and remedial measures taken in advance. These take care of both shortage and excess of cash. Finance managers must find ways of raising more funds needed, or investing excess funds for an appropriate length of time.
9. Finance manager are likely to draw attention on other disciplines also, like accounting and budgeting.
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