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Published by maxminfast

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Published by: maxminfast on Jan 05, 2011
Copyright:Attribution Non-commercial


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Financial management, as an integral part of over all management is not atotally independent area. It draws heavily on related disciplines and field of study,such as Economics, Accounting there disciplines are in related, there are keyreferences among them.Financial management refers to its relationship with the closely relatedfields, its function, scope and objectives. Financial as academic discipline as under gone fundamental changes in its scope and coverage. In the early years of itsevolution it was treated synonymously with the rising of funds. In the currentliterature pertaining to financial management in addition to procurement of fundsefficient use of resources is universally recognized.
Definition of Financial management:
Ezra Solomon has defined “The Financial Function as the study of the problems involved in the use and acquisition of funds by a Business”.
Scope of financial management:
The approach to the scope and the functions of financial management isdivided for the purposes of expositions into two broad categories.
a)The traditional approach. b)The modern approach.
Traditional approach:
The traditional to the scope of financial management refers to its subjectmatter in academic literature in the stage its evolution as the separate branch of academic study. The term “Corporation Finance” was used to describe what isknown in the ac academic world as financial management.
Modern approach:
The modern approach views the term Financial Management in the broadsense and provider a conceptual and analytical framework for financial decisionmaking.
Objectives of Financial Management:
The objectives of financial management are1)Profit maximization approach.2)Wealth maximization approach.
1. Profit maximization approach:
According to this approach actions that increase profits should beundertaken and those that decrease profits are to be avoided. In specificoperational terms as applicable to Financial Management, the profit maximization
criterion implies that the investment, financing and dividend policy decisions of afirm should be oriented to the maximization of profits.
2. Wealth maximization:
This is also known as value maximization or net present worthmaximization. In current academic literature value maximization is almostuniversally accepted an appropriate operational criterion for FinancialManagement decisions as it removes the technical limitation which characterizesthe earlier profit maximization criterion. Its operational features satisfy all thethree requirements of a suitable operational objective of financial courses of actions namely exactness, quality of the benefits and the time value of money.The financial statements just provide the financial ingredients of a firm.One should analyze to identify where the strengths and weakness of the companyare hiding. So the study on ratio analysis have been taken by me in order o knowefficiency and liquidity of a firm.

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