What is Financial Management?
Financial Management is all about planning, organizing, directing and controlling the financial pursuits such as acquisition and utilization of capital of the firm. To put it in other words, it is applying general management standards to financial resources of the firm.
Scope of Financial Management:
The financial management’s scope incorporates 3 classes. Namely :
- Associated to Finance
- Fund rising and administration
- Along with the fund rising pursuits, these are a part and parcel of the entire management
To put it in other words, it can be summed up as, ‘all the pursuits performed by the finance officer are placed under apprehension of the financial management. This type of management plays 2 vital roles, namely :
- Taking part in utilising the funds and controlling the productivity
- Recognising the requisites of capital (funds) and picking up the sources for that capital
- Investment accords incorporates investment in fixed assets known as capital budgeting. Investing in current assets are a part and parcel of investment decisions known as working capital decisions
- Financial decisions associate to the finance raising from different sources which would rely upon the accord on – the kind of resource, when is the financing done, cost incurred and the returns as well
- In the case of dividend decision, the finance manager is the who is responsible of the accord that is taken by him or her; regarding to the net profit distribution (NPD). However, Net profits are classified into 2 types:
- Dividend for shareholders : The rate of dividend and the amount of dividend has to be decided
- Retained profits : The amount of contained (retained) gains has to be ascertained which would rely upon the development and variety of strategies of the trading concern
The above mentioned is the concept, that is elucidated in detail about ‘Scope of Financial Management’ for the Commerce students. To know more, stay tuned to BYJU’S.