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    Lesson 4: Financial Management Finance

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    Dwight Jenna de Mesa
    Financial management involves planning, organizing, directing, and controlling a company's financial resources and activities. The key elements of financial management include making investment, financial, and dividend decisions. The objectives are to ensure adequate funding, returns to shareholders, investment safety, and a sound capital structure. Functions include estimating capital needs, determining the capital structure, choosing funding sources, investing funds, disposing of profits, managing cash flows, and exercising financial controls. Careers in financial management include financial services and managerial finance.

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    Lesson 4: Financial Management Finance

    Uploaded by

    Dwight Jenna de Mesa
    33 views2 pages
    Financial management involves planning, organizing, directing, and controlling a company's financial resources and activities. The key elements of financial management include making investment, financial, and dividend decisions. The objectives are to ensure adequate funding, returns to shareholders, investment safety, and a sound capital structure. Functions include estimating capital needs, determining the capital structure, choosing funding sources, investing funds, disposing of profits, managing cash flows, and exercising financial controls. Careers in financial management include financial services and managerial finance.

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    Financial Management

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    Financial Management

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    Financial management involves planning, organizing, directing, and controlling a company's financial resources and activities. The key elements of financial management include making investment, financial, and dividend decisions. The objectives are to ensure adequate funding, returns to shareholders, investment safety, and a sound capital structure. Functions include estimating capital needs, determining the capital structure, choosing funding sources, investing funds, disposing of profits, managing cash flows, and exercising financial controls. Careers in financial management include financial services and managerial finance.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    33 views2 pages

    Lesson 4: Financial Management Finance

    Uploaded by

    Dwight Jenna de Mesa
    Financial management involves planning, organizing, directing, and controlling a company's financial resources and activities. The key elements of financial management include making investment, financial, and dividend decisions. The objectives are to ensure adequate funding, returns to shareholders, investment safety, and a sound capital structure. Functions include estimating capital needs, determining the capital structure, choosing funding sources, investing funds, disposing of profits, managing cash flows, and exercising financial controls. Careers in financial management include financial services and managerial finance.

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    © All Rights Reserved
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    LESSON 4: FINANCIAL MANAGEMENT

    FINANCE
    - is the science and art of managing MONEY

    Financial Management Defined

    Financial Management means planning, organizing, directing and controlling the


    financial activities such as procurement and utilization of funds of the enterprise. It
    means applying general management principles to financial resources of the enterprise.

    Scope/Elements

    1. Investment decisions
    2. Financial decisions
    3. Dividend decision

    Net profits are generally divided into two:

    a. Dividend for shareholders- Dividend and the rate of it has to be decided.


    b. Retained profits- Amount of retained profits has to be finalized which will
    depend upon expansion and diversification plans of the enterprise.

    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-

    1. To ensure regular and adequate supply of funds


    2. To ensure adequate returns to the shareholders
    3. To ensure safety on investment
    4. To plan a sound capital structure

    Functions of Financial Management

    1. Estimation of capital requirements: A finance manager has to make estimation


    with regards to capital requirements of the company. This will depend upon
    expected costs and profits and future programmes and policies of a concern.
    Estimations have to be made in an adequate manner which increases earning
    capacity of enterprise.
    2. Determination of capital composition: Once the estimation have been made,
    the capital structure have to be decided. This involves short- term and long- term
    debt equity analysis. This will depend upon the proportion of equity capital a
    company is possessing and additional funds which have to be raised from
    outside parties.
    3. Choice of sources of funds: For additional funds to be procured, a company
    has many choices like-
    a. Issue of shares and debentures
    b. Loans to be taken from banks and financial institutions
    c. Public deposits to be drawn like in form of bonds.

    Choice of factor will depend on relative merits and demerits of each source and
    period of financing.

    4. Investment of funds: The finance manager has to decide to allocate funds into
    profitable ventures so that there is safety on investment and regular returns is
    possible.
    5. Disposal of surplus: The net profits decision have to be made by the finance
    manager. This can be done in two ways:
    a. Dividend declaration - It includes identifying the rate of dividends and
    other benefits like bonus.
    b. Retained profits - The volume has to be decided which will depend upon
    expansional, innovational, diversification plans of the company.
    6. Management of cash: Finance manager has to make decisions with regards to
    cash management. Cash is required for many purposes like payment of wages
    and salaries, payment of electricity and water bills, payment to creditors, meeting
    current liabilities, maintainance of enough stock, purchase of raw materials, etc.
    7. Financial controls: The finance manager has not only to plan, procure and
    utilize the funds but he also has to exercise control over finances. This can be
    done through many techniques like ratio analysis, financial forecasting, cost and
    profit control, etc.

    Careers in Financial Managaement


    1. Financial Service
    2. Managerial Finance

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