CONCEPT OF FINANCIAL

MANAGEMENT

AFROZ ALI ANSARI

Meaning of financial management
• Financial management is managerial activities
concerned with planning and controlling of
firm financial resources to generate returns on
its invested funds.
 Scope of financial management
Investment decision
 It is selection of assets in which funds are
invested by firm.
Assets can be categorised by two groups:
 Long term assets
 Short term assets
 Financing decision
• Decisions as to how to raise the funds to pay
for investment in assets.
• A finance manager has to select source of
funds which will make optimal capital.
Objectives of financial management
 Dividend decision
• Decisions as to how much, how frequently in
what form to return cash to owners.
• It is part of profits of a company which
distributed by it, among its shareholders.
 Objectives of financial management
• Profit maximisation • Wealth maximisation
Primary objectives of Primary goal should be
any business. maximising wealth.
It cannot be a sole Increases the net
objective but a limited present value of
objective. economic profits of
firm.