Financial management “is the operational and financing activity of a business that is responsible for obtaining and utilizing the funds necessary for effective operations. Thus, Financial Management is concerned with the effective funds management in the business process.
Finance is interrelated functions which deals with marketing function, production function, Human Recourse function and Research & development activities of the business concern. Financial Management is concerned with the financing, acquisition and management of assets with some overall goal in minds. There are three major areas in Financial Management decision making.
1- Investment decision
2- Financing decision,
3- Assets Management decision.
1- Investment Decision
It is one of the most important decisions. Finance Management is
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It must be full fill the business concern’s requirement. Every organization must maintain adequate amount of finance for their smooth running of the business organizations and to achieve the business goals. Importance of Finance can’t be neglect in an organization. Some are the importance of financial management is as follows:
• Financial Planning
Financial planning is an essential part of the business organization. Financial management helps to determine the financial requirements of the organization and leads to take financial planning to the organization.
• Accomplishment of funds
Financial management involves the accomplishment of required fund to the business organization. Accomplishing needed funds play a major part of the financial management in an organization which involve possible source of finance at minimum cost.
• Proper Use of Funds
Financial management systems help to proper use and allocation of funds which leads to improve the operational activity of the business organization. If the funds use properly, so it helps to reduce the cost of capital and maximizing the value of the firm.
• Financial