NATURE OF FINANCIAL MANAGEMENT

Introduction:

Financial Management is that managerial activity, which is, concerned the planning
and controlling firm’s financial resources.

Scope of Finance:
Real Assets: Assets used to produce goods and services.
Financial Assets: Claims to the income generated by real assets.
Capital Budgeting Decision: Decision as to which real assets the firm should acquire.
Financial Decision: Decision as to how to raise the money to pay for investments in
real assets.
Today’s investments provide benefits in the future. Thus, the financial manager is
concerned not solely with the size of the benefits but also with how long the firm
must wait for them.

Capital refers to the firm’s sources of long-term financing.

Treasurer: The person mostly responsible for looking after firm’s cash, raising new
capitals and maintaining relationship with banks and other investors who hold the
firm’s securities.

Controller: The person, who prepares the financial statements, manages firm’s
internal accounting and look after its tax affairs.