Financial Management                   

Financial Management is worried with the acquisition, financing and control of property with some average goal in mind.


It is the process of planning decisions in an effort to maximize the owner’s wealth.[1]

Financial management approach the control and manipulate of cash and cash associated operations inside a enterprise.[2]

Companies have finance departments which might be responsible for money and cash associated operations. The executive in fee of these departments is Chief Financial Officer (CFO).


It is involved with the 3 essential regions

1. Acquisition or Investment Decision

2. Financing Decision

3. Asset Management Decision

1. Acquisition or Investment Decision:


It is the most crucial a part of the organization’s three primary choices while it’s miles approximately price introduction.

It starts with a dedication of the full quantity of belongings needed to be held via the employer.

For Example,

How a whole lot of the employer do overall belongings have to accept to cash or to inventory?

You have to keep in mind what is going to be the size of the corporation i.e. the assets side or the left hand aspect in Balance Sheet.





2. Financing Decision

 It is involved with the makeup of the proper hand aspect of the balance sheet.

On one facet some corporations have relatively massive quantity of debt, and on the alternative aspect some agencies are nearly debt loose. It may be now not an Ideal situation but on the opposite side a positive mix of financing may be idea of as first-class.



In Organization’s financing choice Dividend payout ratio is regarded as an essential component.


Dividend payout Ratio


It determines the quantity of earnings that can be retained within the company.

As a means of equity financing a stability is required between the values of the dividends paid to stockholders towards the possibility value of retained profits lost.

Once the financing mix has been decided, there’s nonetheless one more aspect required that how best to bodily collect the wished price range.

3. Asset Management Decision


Now after the belongings were received and suitable financing furnished, the next factor is the way to manage those property correctly.

It approach that now economic manager ought to be more concerned with the control of modern property than with that of fixed property.




through: Glen Mike Gonsalves










References:


[2]Practical Financial Management By William Lasher