Financial management can be referred to as planning, managing, leading, and regulating the enterprise’s financial activities, such as the acquisition and use of resources. The idea to entail and apply the basic management ideas to the company’s financial funds is given in financial management
Aims and motives of Financial management:
The purchase, allocation, and control of a concern’s financial resources are within the purview of financial management. The goals of imparting financial management in self can include
- To guarantee a consistent and sufficient flow of funding to the organization.
to make sure that shareholders receive acceptable returns, which will rely on their earning potential, the share’s market price, and their expectations.
- To guarantee optimal use of the budget. Once funds have been secured, they should be used as efficiently and effectively as feasible.
- To assure safety on investment, money should be put into safe endeavors to get a sufficient rate of return.
- To design a reliable capital structure.
- To maintain a balance between debt and equity capital, there should be a healthy and fair composition of capital
Principal of Financial management
The principles of financial management are summarized as follows:
- Ample funding must be secured.
- To preserve stability, financial planning assists in keeping a reasonable balance between cash inflow and outflow.
- Financial planning guarantees that fund providers can readily invest in businesses that use financial planning.
Making growth and expansion plans with the aid of financial planning aids in the company’s long-term existence.Financial planning lessens market trend worries, which may be readily managed with sufficient finances.