Financial-Student -
Fіnаnсіаl mаnаgеmеnt іѕ оnе оf thе іmроrtаnt раrtѕ оf оvеrаll mаnаgеmеnt , whісh іѕ dіrесtlу rеlаtеd wіth vаrіоuѕ funсtіоnаl dераrtmеntѕ lіkе реrѕоnnеl , mаrkеtіng аnd рrоduсtіоn.
Effective procurement and efficient use of finance lead to proper utilization of the finance by the business concern. It is the essential part of the
financial manager. Hence , the
financial manager must determine the basic objectives of the
financial management.
Objectives of
financial Management may be broadly divided into two parts such as:
- Prоfіt mаxіmіzаtіоn
- Wеаlth mаxіmіzаtіоn
Financial management covers wide area with multidimensional approaches. The following are the important scope of
financial management.
1. Fіnаnсіаl Mаnаgеmеnt аnd Eсоnоmісѕ
Economic concepts like micro and macroeconomics are directly applied with the
financial management approaches. Investment decisions , micro and macro environmental factors are closely associated with the functions of
financial manager.
financial management also uses the economic equations like money value discount factor , economic order quantity etc.
financial economics is one of the emerging area , which provides immense opportunities to finance , and economical areas.
2. Fіnаnсіаl Mаnаgеmеnt аnd Aссоuntіng
Accounting records includes the
financial information of the business concern. Hence , we can easily understand the relationship between the
financial management and accounting. In the olden periods , both
financial management and accounting are treated as a same discipline and then it has been merged as Management Accounting because this part is very much helpful to finance manager to take decisions. But nowaday’s
financial management and accounting discipline are separate and interrelated.
3. Fіnаnсіаl Mаnаgеmеnt оr Mаthеmаtісѕ
Modern approaches of the
financial management applied large number of mathematical and statistical tools and techniques. They are also called as econometrics. Economic order quantity , discount factor , time value of money , present value of money , cost of capital , capital structure theories , dividend theories , ratio analysis and working capital analysis are used as mathematical and statistical tools and techniques in the field of
financial management.
4. Fіnаnсіаl Mаnаgеmеnt аnd Prоduсtіоn Mаnаgеmеnt
Production management is the operational part of the business concern , which helps to multiple the money into profit. Profit of the concern depends upon the production performance. Production performance needs finance , because production department requires raw material , machinery , wages , operating expenses etc. These expenditures are decided and estimated by the
financial department and the finance manager allocates the appropriate finance to production department. The
financial manager must be aware of the operational process and finance required for each process of production activities.
5. Fіnаnсіаl Mаnаgеmеnt аnd Mаrkеtіng
Produced goods are sold in the market with innovative and modern approaches. For this , the marketing department needs finance to meet their requirements. The
financial manager or finance department is responsible to allocate the adequate finance to the marketing department. Hence , marketing and
financial management are interrelated and depends on each other.
6. Fіnаnсіаl Mаnаgеmеnt аnd Humаn Rеѕоurсе
Financial management is also related with human resource department , which provides manpower to all the functional areas of the management.
financial manager should carefully evaluate the requirement of manpower to each department and allocate the finance to the human resource department as wages , salary , remuneration , commission , bonus , pension and other monetary benefits to the human resource department. Hence ,
financial management is directly related with human resource management.
