Nama : Alpina Triana

NPM : 1910631030154
Financial Management

 Definition of financial management

Financial management is all activities of a company related to how to obtain working
capital funding, use or allocate funds, and manage assets owned to achieve the company’s
main goals.

 Financial management objectives

Financial management objectives is to maximize the value owned by the company or
provide added value to assets owned by shareholders. The management of the firm involves
many stakeholders, including owners, creditors, and various participants. As for the
objectives, namely :
1. Profit maximization
2. Wealth maximization
3. Proper estimasi of total financial requirements
4. Proper mobilization
5. Proper utilization of finance
6. Maintaining profer cash flow
7. Survival of company
8. Creating reserves
9. Proper coordination
10. Create goodwill
11. Increase efficiency
12. Financial discipline
13. Reduce cost of capital
14. Reduce operating risks
15. Prepare capital structure

 Types of financial management

1. Capital budget management
A capital budget or also known as a capital expenditure budget is a way for company
management to plan the sale and purchase of fixed assets. Usually this budget helps
management analyse various longterm strategies that the company can take to achieve
its expansion goals.
2. Capital structure management
capital structure management is a management balance or comparison between
foreign capital and own capital. Foreign capital in this case is long-term and short-
term debt. Meanwhile, capptal itself is divided into retained earnings and company
ownership
3. Working capital management
The purpose of working capital management is to manage current assets and current
liabilities and ensure the level of liquidity or strength of the company

 Financial management function

The main function of financial management are as follows:
1. Planning or financial planning, including cash flow planning and profit and loss
 2. Budgeting or budget, plnning revenue and allocating budget costs efficiently and
maximizing the funds owned
3. Controlling or financial control, evaluating and improving the company’s finances
and financial system
4. Audit or financial audit, conducts internal audits of existing company finances so that
they are in accordance with accounting standard principles and there is no deviation
5. Reporting or financial reporting, provides information reports about the company’s
financial condition and analysis of financial report rations.

 Financial management scopes

1. Investment decision, which includes investment in fixed assets which is usually
referred to as capital budgeting and investment in current assets which is usually
referred to as working capital.
2. Funding decisions (finance decision), namely decisions related to financial
improvement from various sources, financial decisions including types of financial
sources, financial period, funding costs and yields
3. Dividend decision (dividend decision), the financial manager must make decisions
related to the distribution of net income. The net income is usually divided into two,
namely dividends for shareholders (dividens for shareholders) and retained profits
In practise, financial managementis an action taken in order to maintain the
company’s financial stability. Carrying out financial management is certainly not an easy
thing, it takes principles that can underlie financial management.There are 7 principles of
financial management that you need to know, what are some?
1. Accountability
Accountability is a moral or legal obligation that is inherent in an individual, group, or
company to mention how the funds, tools, or authority granted by a third party, have
the funds been used and used? And what is it used for? The company must be able to
state how they used the origin of the funds and what it has achieved as a liability to
interested people and beneficiaries. All concerned have the right to know how funds
and authority are used
2. Consistency
The financial systems and policies of the organization must be consistent over time.
This does not mean that the financial system should not be adjusted if there is a
change in the organization. An inconsistent approach to financial management is a
sign that there is manipulation in financial management
3. Viability
In order for finances to be maintened, organizational spending at the strategic to
operational levels must be in line with or adjusted to the funds received. Viability is a
measure of the level of security and financial sustainability of an organization.
Organizational managers must prepare a financial plan that shows how the
organization can implement its strategy and meet financial needs
4. Transparency
Companies must beopen about their work, provide information relating to their plans
and activities to interested people. This includes preparing financial reports that are
accurate, complete, and timely, and can be accessed easily by interested management
and beneficiaries. If the company is not transparent, this indicates something is being
hidden.
5. Accounting standards
 The accounting and financial system used by company must be in accordance with the
accounting principles and standards applicable in Indonesia. This means that every
accountant around the world can understand and understand the system used.
6. Integrity
In carrying out its operational activities, the individuals involved must have good
integrity. In addition, the integrity of financial reports and records must also be
maintained through the completeness and accuracy of financial records
7. Stewardship
The company must be able to manage and use the funds that have been obtained
properly and ensure that these funds are used to achieve the goals set by the company