FINANCIAL MANAGEMENT Financial Management is a process of identifying management, accumulation, analysis, preparation, interpretation and communication of financial information

to plan evaluate and control. Financial management is an area of financial decision making harmonizing individual motives and enterprise goals. - Weston and Brighan Financial management concern with the effective use of an economic resource namely Capital fund. OBJECTIVES OF FINANCIAL MANAGEMENT The basic objectives of Financial Management are Maintenance of liquid Assets Maximisation of Profitability Maximisation of Wealth Ensuring fair return to share holders Building up reserves for growth and expansion. Ensuing maximum operation efficiency by efficient and effective utilization of funds Ensuring financial discipline in the organisation - Ezra Soloman an Pringle John

TYPES OF FINANCIAL DECISIONS: The following are the important following decisions Investment or Capital budgeting Decisions: Capital Budgeting Decisions Involved allocation of funds for fixed assets. Investment decisions concerned with selection of an investment proposals. Working capital Decisions: The working capital decision takes into account the management of current assets and current liabilities. Capital structure or Financing Decisions: The financing decision is concerned with the raising of funds that finance assets. Dividend Decisions: The dividend decision helps determine how much of profit is distributed as dividend and how much is retained with the firm. Capital Budgeting: Capital Budgeting refers to long term planning for proposed capital outlay and Their financing. Capital budgeting involves in allocation of funds to long term Investments or fixed assets. TECHNIQUES IN CAPITAL BUDGETING The following are the important techniques to evaluate capital budgeting decisions. TRADITIIONAL METHOD Pay back period method Accounting or Average of rate return Discounted Cash flow methods Net present value method Profitability Index method Internal Rate or Return method