What is called financial management?

Simply, financial management known as those managerial activities that is required to procure funds at the least cost and their effective deployment. For an organization finance is known as blood. No business can ignore the role of finance.

On the understanding of its branch it is known as science which manages the money of a company. Traditionally, it was known as a branch of knowledge with focus on the procurement of funds. In the modern approach it is known as the procurement of the least cost funds and its effective utilization for maximization of share holder’s wealth. In the globalize world after the impact of information technology financial management have added new dimensions in the field of accounting and finance.

About the goal of financial management it is clear that financial management of a firm is maximization of economic welfare of its shareholders. Broadly, it fulfills two goals – profit maximization and wealth maximization. Profit maximization would be under perfect competition to allocate the resources. Wealth maximization is known as maximizing the net wealth of the company’s share holders.

Financial management has financial functions which are closely related to financial decisions. Finance functions are performed by financial managers. In this course finance manager can takes the following decisions:

Financing decision

Investment decision

Dividend decision

Liquidity decision

Latter, financial management cover the areas of accounting, marketing, productions and HR. In the accounting it works as computation, statements and decisions. In the marketing it works as formulation of policy, investment and working capital. In the production it works as technology selections, operations, plant size and capital budgeting. In the HR it works as paid salary, salary packages and capital productivity.

In this way, we can say financial management in the modern age has broader aspect which covers the necessary aspect of any organization. To grow or establish organization, finance is the blood as earlier.