JANUARY 2022

SANTA ISABEL COLLEGE S.Y 2022-2022

FINANCIAL MANAGEMENT

Inside the paper

WHAT IS WHAT IS ITS WHAT ARE THE

FINANCIAL
MANAGEMENT?
is the effective handling of money
through planning, organizing,
directing and controlling funds in
a corporation or for an individual.
ROLE IN A
BUSINESS?
is to plan, organize and govern all
the financial activities of a
company. It applies management
ethics to the financial resources of
a company.
BENEFITS OF
FINANCIAL
MANAGEMENT?
helps to determine the financial
requirement of the business
concern and leads to take
financial planning of the concern.

FINANCIAL MANAGEMENT
According to Sudarsana Reddy of Himalaya Publishing
House, Financial Management is concerned with three activities:
(i) anticipating financial needs, which means estimation of funds
required for investment in fixed and current assets or long-term
and short-term assets. (ii) acquiring financial resources–once the
required amount of capital is anticipated the next task is acquiring
financial resources, where and how to obtain the funds to finance
the anticipated financial needs and (iii) allocating funds in
business – means allocation of available funds among the best
plans of assets, which are able to maximize shareholders’ wealth.
Thus, the decisions of financial management can be divided into
three (investment, financing and dividend decisions).
 Thus some of the importance of
the financial management are
financial planning, acquisition of
funds, proper use of funds, financial
decision, improve profitability,
increase the value of the firm and
promote savings. There are also
some of the main functions of the
financial management and these
are the following:

Estimating costs and sales

Monitoring the fixed (plant,
property and equipment) and
current (cash or cash equivalent)
sides of the balance sheet
Observing the performance of
investments such as shares and
bonds
Drafting and providing input
into financial policies
WHAT IS FINANCIAL Advising on matters of
compliance with financial

MANAGEMENT? regulations
Producing accurate financial
reporting for the company's
Finance is the lifeblood of business organization. It needs to meet the management team
requirement of the business concern. Each and every business concern Planning appropriately for taxes
must maintain adequate amount of finance for their smooth running of to ensure that the company
the business concern and also maintain the business carefully to achieve doesn't pay any more than
the goal of the business concern. The business goal can be achieved necessary
only with the help of effective management of finance.
“Everything is in
According to the information I have gathered. Financial management
involves analyzing money and investments to make the right decisions for excess except money,
the long and short term. The goals differ depending on whether you are
working with a business or an individual. More so, financial
thereof, it should be
management involves planning and budgeting, resource allocation, well managed.”
operating, monitoring, safeguarding and evaluation and reporting. In
addition, Financial management is the effective handling of money ― Lailah Gifty Akita
through planning, organizing, directing and controlling funds in a
corporation or for an individual. Financial management uses ratios, Lastly, financial management
equities and debts to reach investment goals. provides the foundation for three
pillars these are:
Strategizing, or identifying what
needs to happen financially for
the company to achieve its short-
and long-term goals.
Decision-making, or helping
business leaders decide the best
way to execute on plans by
providing up-to-date financial
reports and data.
Controlling, or ensuring each
department is contributing to the
vision and operating within
budget and in alignment with
strategy.

January 2022
January 2022

Financial
Management "Opportunities
don't happen. You
create them." —
WHAT IS ITS ROLE Chris Grosser
IN A BUSINESS?
The Financial Management main role is to plan,
organize and govern all the financial activities
of a company. It applies management ethics to
the financial resources of a business or a
company. This practice controls all the
economic operations of an enterprise like
utilization of funds, procurement of funds,
payment, accounting, risk assessment and
everything related to the cash. We have 5 key
roles of Financial Management that governs the
financial activities of a business. These include
the following:
Bookkeeping and Accounting: It is essential to
identify, take appropriate measures and
record all the financial details of a company.
Whatever funds are debited or credited
from a company’s account, the financial
management efficient accounting system
gives an overview. Also, the bookkeeping
records the everyday transaction of a
company and forms a base for the
accounting system.
Reporting: Most of the stakeholders depend
on the organization's financial statement
before making any decision.

Receivables and Payables: Managing what your

company owes to the vendors, and what the
customer owes to the company is essential.
Investment Opportunities: The Financial report gives
the opportunity to invest in the right stock and at
the right time.
Risk: A robust financial management system is
mandatory to maximize the profit and minimize
the risk and liabilities. An efficient financial team
should incorporate sufficient insurance to all the
essential elements of a company.

More so, Finance is the backbone of any business.

Without accurate and timely information from the
financial management system, the business is bound to
fall to pieces.
 January 2022

FINANCIAL
MANAGEMENT

What are the benefits of financial management?

Finance is important in almost each business decision. From planning, budgeting, and income procedures to the
financial framework and even within the management of costs and risks related to the business. These are the
following benefits of financial management:

1.Handling Inevitable Risks

Managing a business enterprise is often risky. A businessperson has a lot of worries like interest rates,
instabilities in currency, fluctuations in product costs, and threats of non-payment because of countless
reasons. Financial records keep an eye on these aspects and provide records of the business as a whole.
2. Tactical Planning and Cost Management
Financial planning is very crucial in every business. Planning not only helps you decide the goals of your
business but also the budgets needed to get there.
3. Equity or Loan
Apart from the strategic plan creation, the financial management department looks for sources to fund business
functions. What is the best source to fund your business? You can raise equity capital from shareholders or get
financial loans from financial institutions.
4. Formation of Capital Structure
When you decided the source of your fund, it’s time to create a capital structure for your company. This includes
debt-equity analysis in the short-term and the long-term.
5. Cost Control and Profit Planning
It’s no surprise that the objective of your business is to form profits. Therefore, finance plays a very important
part to find ways to spice up your earnings.
6. Cash Flow Management
It is the task of the finance department to make sure the company has lots of liquidity to compensate its
suppliers as well as their staff promptly.
7. Preparation and Execution of Budgets
The perfect financial management system should support the planning and implementation of budgets within
the business.

In addition, the advantages of financial management include having professional advice on managing a person's
finances and investments. Some of the others are accountability, knowledge, confidence, and an offset of the
cost of services.

Thus, good financial management can help a person create a plan and reach his financial goals.
The whole idea of financial management is to integrate all the financial functions of the business. This will help
companies move along more smoothly, and the business enjoys massive profits as a result.