Finance function

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1. FINANCE
FUNCTION

2. FINANCE
FUNCTION
Finance function is the process of acquiring and
utilising funds by a business
The main finance function is the
procurement of necessary funds for the business.
Along with the procurement of funds ,the
effective utilisation and control of funds obtained
is also included in finance function

3. In order to understand finance
function properly it is essential to
understand the following two
approaches
Traditional Approach
Modern Approach

4. Traditional Approach
According to this approach the main function of
finance was confined to the procurement of
funds
In brief the main features of this approach were
are follows:
oRaising funds: The main function of finance
was to procure and manage required funds from
various sources for achieving the predetermined
objective of enterprise

5. Episodic Function: Finance function was not
related to day-by-day operations of the
enterprise but it was concerned with
procurement of funds to finance promotion,
expansion or diversification of activities
Outsiders-looking-in Approach: the function of
finance was to lay more emphasis on the
guidance of the investors rather than the
internal management of enterprise
Long-term Financing:This approach

6. Modern Approach
According to this approach, finance function it includes
both acquisition (source) of funds as well as the
effective utilisation of funds into productive use
In modern approach the proper utilisation of funds is
considered
The cost of raising funds and the return from their use
should be compared, the funds raise should b able to
give more returns then the cost involved in procuring
them

7. Emphasis more upon sources and problems of long
term financing .
Descriptive Nature :The treatment of different
aspects of finance was more of a descriptive nature
rather than analytical
According to this traditional approach the scope of
financial management or financial function was
confined to raising of funds from external sources

8. The raising cost of funds is always less than the return
from the invested funds
Now the most of the business follow the modern
approach

9. JAIPUR NATIONAL
UNIVERSITY
SEEDLING SCHOOL OF BUSINESS
AND MANAGEMENT
FINANCIAL MANAGEMENT
ASSIGNMENT
Naveen singh
Bcom honors
1 year (EAFM)