All about Financial Management

Complete Assignment on financial management is available for you. Types, definition, goals and nature of  financial management, scope, objectives and approaches of financial management, characteristics, importance, financial decision making, advantages and disadvantages of financial management are the key features of the assignment.

Overview of All about Financial Management Assignment:

DEFINITION

Financial management is an integral part of overall management. It is concerned with the duties of the financial managers in the business firm.

According to Solomon:

“It is concerned with the efficient use of an important economic resource namely, capital funds”.

According to S.C. Kuchal :

“Financial Management deals with procurement of funds and their effective utilization in the business”.

Financial management is   concerned with the acquisition, financing and management of assets with some overall goal in mind.

TYPES

Thus the decision function of financial management can be broken down into three major areas: the investment, financing, and assets management decisions.

  • Investment decision:

The investment decision is the most important of the firm’s three major decisions. It begins with a determination of the total amount of assets needed to be held the firm’s.

  • Financing decision:

The second major decision of the firm is the financial decision. Here the financial manager is concern with the make-up of the right – hand side of the balance sheet.

Dividend policy must be viewed as an integral part of the firm’s financing decision. The dividend –payout ratio determines the amount of earnings that can be retain in the firm.

  • Asset management decision

The third important decision of the firm is the assets management decision. Once assets have been acquired and appropriate financing provided, these assets must still be managed efficiently. The financial manager is charged with varying degrees of operating responsibility over existing assets. These responsibilities require that the financial manager be more concerned with the management of current assets than with that of fixed assets.

All about Financial Management

All about Financial Management

CHARACTERISTICS

This factor is concerned with the evaluation of the responsibility and difficulty involved in managing and directing the subordinate staff and subordinate functions (accounting, budgeting, reporting, etc.) which go toward making up the financial management program. In a sense, this factor is most concerned with the kind and value of the management responsibility with which each financial manager is vested over his own subordinate staff.

  • This factor is divided into three sub factors:
  • Volume of Special Staff Management Problems
  • Nature of the Staff Management Responsibility
  • Scope of Functional Coverage

THE NATURE OF FINANCIAL MANAGEMENT 

Financial management is that part of total management which is concerned primarily with the financial affairs of an organization and the translation of actions, both past and proposed, into meaningful and relevant information for use in the management process.  It includes the functions of budgeting, accounting, reporting, and the analysis and interpretation of the financial significance of past events and future plans.  It sometimes also includes other related functions such as internal auditing, management analysis, and others.  It is not primarily concerned with the technical procedures and methodology of those individual functions.  Rather, it is characterized by the coordination and correlation of those functions into an effective and broad system of financial control that will assure that they, collectively more than individually, become an integral part of the management of the organization.

Financial management involves the art of interrelating data to obtain a perspective of the total financial situation that will assist managers1 in program planning and decision-making.  A very simple operating program2 may require only a minimum of financial management, and this, in some cases, can be provided by the manager himself.

However, many Federal agencies with complex programs have a need for broad financial advice and know-how — advice that can only be furnished following a synthesis, analysis, and interrelating of meaningful financial data with programming and planning information by an organization and officials particularly adept and capable in financial matters.

More fully, financial management may be described as —

Designing, establishing, and maintaining an integrated financial management system, including at least budgeting, accounting, and managerial-financial reporting, which will furnish timely data that are used in the direction, evaluation, and control of operations at the various levels of management.

Such a system must be compatible with the requirements of the Bureau of the Budget, the General Accounting Office, and the Treasury Department, and should provide accountability for agency funds and assets and full disclosure of the financial results of agency operations.  This involves responsibility for proper and economic management of all financial resources under jurisdiction of the agency, in accordance with a wide variety of laws and regulations.

To accomplish this, a suitable financial management organization must be established and maintained, and must be staffed with appropriate, competent personnel.  Rather than being limited to supervision of separate entities such as the budgetary system, the accounting system, the financial reporting system, etc., financial management consists of the integration and coordination of those operations into a comprehensive financial system that is compatible with management needs.

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