Financial Management

Meaning of Finance

Finance is being considered to be an essential element of modern economic life and it works towards occupying crucial position in economic activities to be carried out by an organization. Finance helps the organizations to make sure that the tasks are being carried out well and there are no issues in terms of smooth functioning of the organizational tasks at a particular point of time. Finance is considered to be lifeline of businesses and should be taken into consideration in a proper way so that; best results are being generated in the area of doing the working.

Meaning of Financial Management

It is related to management of finance related operations of the organization. It is not regarding theory but the things are required to be adopted practically by the organization in the area of doing its working at a particular point of time. Financial management can be identified in the homes of the people to the offices where the people carry out their tasks (Foster, 2015). At homes, financial management is useful in the course of retirement planning. On the other hand, in business enterprise, future growth and expansion related tasks are carried out by financial planning.

Definition of financial management

It is a branch of management which works towards utilization of funds in a particular way wherein, the organization carries out its activities in a proper and appropriate way without any kind of issue or trouble arising.

Features of Financial Management

a.         Financial management is a kind of function which is being considered to be a continuous administrative function.

b.         It is a crucial function for management and it is being identified to be more analytical in comparison to being descriptive.

c.         It makes influence on profitability and riskiness of the firm and it is a measure of performance.

d.         If financial management is not present then, a particular business cannot prosper in any way.

Finance as a Function

In the course of finance, one of the tasks is financial management. Apart from financial management, there are certain other tasks also. The tasks include the following:

a.         Financial Planner: A financial planner works with individuals for ensuring that their short term and long term goals are being met. These people have good knowledge about investment, real estate operations and tax planning among other things.

b.         Financial Analyst: This person works towards analyzing budgets, forecasting models, and recommending areas to have reduction in the level of costs and improvement in performance to a certain extent.

c.         Financial advisor: This person is involved in identifying the issues and accordingly providing advice to the investor. The role of financial advisor is like that of a mentor who works towards providing necessary advice.

d.         Financial Consultant: Financial consultant prepares options regarding the manner in which problems are being resolved. The pros and cons are also being discussed with the sponsors. The work starts after the problem is being identified by the person.

e.         Investment Banker: Investment banker deals with private equity and at certain stages, acts are being carried out with mergers and acquisitions. They also work towards preparation of detailed venture capital based information.

f.          Insurance manager: An insurance manager works towards coordinating with stakeholders and works towards negotiating with vendors for optimum rates and terms.

Goals of Financial Management

The main goal of financial management is to make sure that, there is increase in the profits of the organization. It works towards enhancement in the level of wealth of a particular person in the area of working. One of the major objectives of financial management is wealth maximization (Cartright, 2010). The areas being considered by it include time value of money and risk and uncertainty. These factors provide maximum net present worth or value to the owners of corporate body.

Financial Analysis

Financial analysis is a method which is being used for finding out viability, durability and profitability of a particular business. Financial analysis of a business is carried out by methods such as common size financial statements, ratio analysis and other kinds of ratios which are being used for the purpose of doing analysis in a proper and appropriate way for avoiding any kind of issue which are likely to arise at a particular point of time.

References

Cartright, C. (2010). Financial Management. Routledge.

Foster, T. ( 2015). Analysis of Financial Management. Cengage Learning.

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