Meaning, importance of Financial Management.pptx

Meaning, importance of Financial Management.pptx

1. Meaning of Financial Management Financial management refers to "efficient acquisition of finance, efficient utilisation of finance, efficient distribution and disposal of surplus for smooth working of company OR “Management relating to finance is called financial management". The main objective of financial management is to maximise the wealth of Shareholder's.

2. Equity shareholders get dividend only after the claim of suppliers, lenders, employees, creditors and other claimants. Therefore if the shareholder's are gaining. It automatically that all others claimant are also gaining

3. With the objective of wealth maximization of shareholder's Following objectives automatically get achieved. Profit maximisation Proper utilisation of funds Maintenance of liquidity Meeting of financial commitments with creditors

4. ROLE/ BENEFITS/ IMPORTANCE OF FINANCIAL MANAGEMENT Size and Composition of Fixed Assets Amount and Composition of Current Assets The Amount of Long-term and Short- term Funds Size of debt & equity in capital structure All Items in Profit and Loss Account

5. FINANCIAL PLANNING It means deciding in advance how much to spend, on what to spend according to the fund at your disposal. In general it includes Determine the amount of finance needed by an enterprise to carryout its operation smoothly . Determination of sources of fund. Make suitable policies for proper utilisation of funds.

6. IMPORTANCE OF FINANCIAL PLANNING It helps in collecting optimum funds It helps in fixing the most appropriate capital structure It helps in investing finance in right project It helps in proper utilisation of finance Helps in avoiding business shocks and surprises It links present with future

7. IMPORTANCE OF FINANCIAL PLANNING Financial planning is essential for success of any business enterprise. "finance is like blood of a business without it a business can't survive." It helps in collecting optimum funds:- The financial planning estimates the precise requirement of funds which means to avoid wastage and over- capitalisation situation. It helps in fixing the most appropriate capital structure:- funds can be arranged from various sources and are used for long term, medium term,& short term. Financial planning is necessary to identify the capital structure

8. iii . It helps in investing finance in right project:- it suggest how to fund are to be allocated for various purposes by comparing various investment proposals. iv. It helps in proper utilisation of finance :- finance is the life blood of the business. So financial planning decides how fund to be utilised . v . Helps in avoiding business shocks and surprises:- By anticipating the financial requirements financial planning helps to avoid shocks or surprises which otherwise firms have to face in uncertain situation. It helps the company in preparing for the future. vi . It links present with future:- financial planning relates present financial requirement with future requirement by anticipating the sales and growth plans of the company.