FINANCIAL

MANAGEMENT
Presented by:
KIRITHIGA. S
CONTENTS:-
Meaning of financial management

Definition of financial management

Scopes of financial management

Objectives of financial management
MEANING:-
Finance may be defined as the art and science of managing
money.

Financial management means planning, organizing, directing
and controlling the financial activities and utilization of funds.

Financial management means the management of finance of a
business / organisation in order to achieve financial objectives.

Financial management covers both acquisition of funds and
efficient and wise allocation of these funds to various uses.

Experts refers financial management as the science of money
management.
DEFINITION:-
Financial Management is concerned with raising financial
resources and their effective utilisation towards achieving the
organisational goals.
- Dr. S. N. Maheshwari.

Financial Management is concerned with the efficient use of
an important economic resource namely, capital funds.
- Solomon.

Financial Management as an application of general
managerial principles to the area of financial decision
making.
- Howard & Upton.
SCOPES:-
Financial Management and Economics
Financial Management is associated with investment decisions, micro
and macro environmental factors.
It also uses economic equations like money value discount factor,
EOQ, etc.

Financial Management and Accounting
Accounting records includes financial informations.
In olden period both management and accounting are treated same.

Financial Management and Mathematics
Financial Management applies large mathematical and statistical tools
and techniques like EOQ, PV, etc.
This is also known as econometrics.

SCOPES:-
Financial Management and Production Management
Production Management is the operational part of the business.
Financial manager must know the operational process and finance
required for each process.

Financial Management and Marketing Management
Marketing activities needs finance.
Financial Management needs marketing activity to induce sales.

Financial Management and Human Resource Management
Manpower is very essential for any business.
It has to be carefully evaluated and allocate required finance.

OBJECTIVE OF
FINANCIAL
MANAGEMENT
PROFIT
MAXIMIZATION
WEALTH
MAXIMIZATION
PROFIT MAXIMIZATION:-
The primary objective of any business concern is to earn
profit.

Profit maximization is the traditional and narrow approach
which aims at maximizing the profit of the concern.

Its important features:
It is also called as cashing per share maximization.
It is the ultimate aim of the business.
It is the parameter of measuring the efficiency of the business.
It helps to reduce the risk of the business.

Its drawbacks:
Profit is not clearly defined which creates some unnecessary
opinion regarding earnings of the business.
It does not consider the time value of money.
It does not consider the risk of the business.
WEALTH MAXIMIZATION:-
Wealth maximization is one of the modern approaches which
involves latest innovations and improvements.

The wealth here refers to shareholders wealth.

It is also known as value maximization or net present worth
maximization.

This objective is an universally accepted concept.

It considers both time and risk of the business.

It ensures the economic interest of the society.

Its unfavourable arguments;
It creates ownership management controversy.
Its ultimate aim is to maximize the profit.
It can be active only with the profitable position of the business.