Financial management its importance and objectives
-
Upload
robert-smith -
Category
Documents
-
view
221 -
download
2
description
Transcript of Financial management its importance and objectives
Financial Management : Importance and Objectives
Robert Smith Finance
Consultant
Contents
Introduction
Importance of Financial Management
Objectives of Financial Management
Conclusion
Introduction
It is the art and science of managing money. It is the duties of financial managers in a business firm.
Financial management is all about obtaining funds and how to use that fund.
Financial Management is a careful selection of the source of working capital.
It includes financial planning, financial administration and financial control.
Importance of Financial Management
Development and Economic Growth
Improved Standard of Living
Improved Health
Contd..
Creates Job
Alleviation of Poverty
Better Financial Decisions
Objectives of Financial Management
Two main objectives of financial management are: 1. Profit Maximization 2. Wealth Maximization
It provides a framework for optimum financial decision
making.
It operates internal investment and financing of the firm.
Contd..Profit Maximization
Profit/EPS maximization should be taken and those that decrease profit/EPS should be avoided.
It deals with the allocation of resources. Here resources are working capital for business funding.
Financial Management (FM) mainly depends on efficient economic resource i.e. capital.
The technical flaws of Profit Maximization are: 1. Ambiguity 2 . Timing Benefits 3. Quality Benefits
Contd..Wealth Maximization
Wealth maximization is also known as value or net present worth maximization. It should satisfy all three requirement, i.e. exactness, quality and money value of time.
The technical flaws of Wealth Maximization are: 1. Focus on Stakeholders : Stakeholders include groups of employees, investors and stakeholders which are directly related to the firm. 2. EVA (Economic Value Added) : EVA is equal to after tax operating benefits of a firm less the cost of the firm
Conclusion
Financial Management is the mixture of
financial planning, administration and control.
Financial corporation deals with how
corporation obtains the funds and how
corporation allocates that funds.
References
http://
en.wikipedia.org/wiki/Financial_management
https://
48factoring.com/working-capital-financing
http://www.managementstudyguide.com/
financial-management.htm
http://www.slideshare.net/anurag_toby/
objectives-of-financial-management-26656656
Thank You !!!