Question

Explain the term 'Financial Management'.

Briefly explain any three of its objectives?

Answer 1

Financial management may be defined as planning, organizing, directing and controlling the financial activities of an organisation. According to Guthman and Dougal, financial management means, “the activity concerned with the planning, raising, controlling and administering of funds used in the business.” It is concerned with the procurement and utilization of funds in the proper manner.

Objectives of Financial Management

The financial management is generally concerned with procurement, allocation and control of financial resources of a concern. The objectives can be-

• To ensure regular and adequate supply of funds to the concern.
  
• To ensure adequate returns to the shareholders which will depend upon the earning capacity, market price of the share, expectations of the shareholders.
  
• To ensure optimum funds utilization. Once the funds are procured, they should be utilized in maximum possible way at least cost.