INTRODUCTION TO FINANCIAL
MANAGEMENT
Shared by:- Adarsh
abhishek
aditya
akanchha
sec .C
year(08-10)
MEANING AND AREAS OF
FINANCE
Finance means ‘money’ or ‘the acts of providing the
means of payment’. It may deal with the ways in
which businessmen, investors, Govt. Financial
institutions and individuals handle their money. Thus
finance is the study of money management.
Public finance.
Business finance
Institutional finance
International finance
Financial management
Public finance:- Public finance deals with the transactions
relating to public revenue, expenditure and debt.
Business finance :- It deals with the procurement and
management of funds needed for business activities.
{When finance is managed for corporations , it is called
‘corporation finance.’}
Institutional finance:- institutional finance is related to
capital formation and meets the financial requirements of
the economy.
International finance :- The study of flows of funds
between individual and organizations across national
borders and the development of methods of handling the
flows more efficiently is the subject matter of international
finance.
Financial management:- In the present competitive
markets, funds should be properly utilized in order to
achieve enterprise goals . In this respect, many tools
and techniques have been developed for the assistance
of financial manager to recommend proper course of
action. Financial management deals with all these tools
and techniques and this F. M. proposes to discuss all of
them.
Financial management
(meaning and definition)
Financial management
Financial means The word ‘management’
procuring sources of refers to planning,
money supply and organization, co-ordination
allocation of these and control of human
sources on the bases activities and physical
of forecasting resources for achieving the
monetary objectives of an enterprise.
requirements of the
business.
DEFINITIONS OF F.M.
Financial management is the ways and means of managing
money. i.e. the determination, acquisition, allocation and
utilization of financial resources usually with the aim of
achieving some particular goals or objectives.
Financial management is the planning, organizing ,
directing and controlling of the procurement and utilization
of funds and safe disposal of profit to the end that
individual, organizational and social objectives are
accomplished.
Nature or characteristic of financial management
These are as follows:-
Essential part of business management
Continuous administrative function
Scientific and analytical
Centralized nature
Different from accounting function
Wide scope
Applicable to all types of organizations.
Goals or objectives of F.M.
Profit maximisation.
Wealth maximisation:-W.M. Means to maximise the net
present value ( or wealth )of a course of action.
Helpful to know about any org. status & capacity with
which it can work.
SCOPE OR FUNCTIONS OF FINANCIAL
MANAGEMENT
Function of financial management
Primary or subsidiary Incidental or
executive routine
Financial planning Liquidity function Clerical or routine
Financial control Profitability nature required for
Acquisition of funds function the execution of
Allocation of funds Evaluation of decisions taking by
Distribution of income financial performance the executives.
Co-ordination with
other departments
MODERN APPROACH FINANCE FUNCTION
FINANCIAL
FUNCTION
Financial decisions Investment decisions Dividend decisions
Capital structure Working capital Capital expenditure Current assets
decisions (longs financing decisions or
term sources) ( short-term sources) Working capital
management
Cost of capital
LIMITATIONS OF F.M.
Based on accounting records
Lack of knowledge of related subjects
No alternate of administration
Lack of objectivity
Evolutionary stage
Expensive or uneconomical
Thank
You !!
