Introduction

Meaning

& definition Objectives of financial management Function of financial management Evolution of financial management Organization of financial management Financial analysis, planning & control

Finance: finance is provision of funds,(when required). Financial Management concerned with decision making is comes under the three decisions. Financial Decision Finance Investment Dividend Financial management = Raising of funds + proper utilization of funds.

Finance means the finance the terms of finance derived from Latin word Finis finance is the provision of funds [when required] is called as finance. Financial management is concerned with decision making is called as financial management .(finance decision making, investment decision making, dividend decision making)

Financial management comes under the two objectives there are: Profit maximization Wealth maximization

 Estimating

the requirement of funds Procuments of funds Effective utilization of funds Dividend decision

1.Traditional phase (1990 )4 decades

Focus on: Formation of a company Issue of capital Merger Reorganization liquidity

 Approaches:

Description & institution Dominance view point: Outsiders Investment Lenders etc Core of FM: Investments Procedures Legal aspect

Greater emphasis was given to day-to-day problem(funds analysis, planning & control) Focus shifted to working capital management

a. b. c. d. e. f.

g.
h. i.

Focus : Rational matching of funds to maximize the wealth of the shareholders. Approach :More analytical and quantitative Development : Capital budgeting Assets pricing theory Capital structure theory Efficient market theory Option pricing theory Agency theory Valuation of model Dividend policy Working capital management

Board of directors
Managing direction Production dept HR Finance Treasury Cash mgnt Credit Capital budgeting Fund raising Portfolio mgr

Marketing
Controller

Financial a/c mgr Cost a/c mgr Tax mgr Data process mgr.

Internal auditor

 Assessing

the financial performance & the condition of

the firms Forecasting & planning the financial future of the firm Estimating the financing needs of the firm Appropriate systems of control instituting

 Financial

types

Control:
Fund

Capitalization Leverage

analysis C-v-p analysis

flow & cash flow analysis Ratio analysis