Introduction to Financial

Management

Bs Commerce
5th Semester

Presented by:
Ansa Nazir Ahmed
Finance:
Finance is the science and art of managing money.

Financial Management:
Financial Management deals with acquisition of assets, financing
of assets and management of assets with some certain goals in
mind.
 Finance and Related Disciplines

Financial Management and Accounting:

Accounting requires to report past financial transactions whereas,
financial management requires to plan about future transactions.

Financial Management and Economics:

Financial management focuses on the management of funds in order
to achieve a companies objectives. While economics focuses on the
creation, use and commodities.
 Scope of Finance:

Investment Decision:
The investment decision involves the evaluation of risk,
measurement of cost of capital and estimation of expected benefits
from a project.

• Capital Budgeting:
Capital budgeting is concerned with the allocation of capital and
commitment of funds in permanent assets which would yield
earnings in future. Capital budgeting is a very important
decision as it affects the long-term success and growth of a firm.
Working Capital Decision:
Decisions related to working capital is another crucial scope of
financial management. Decisions involving around working capital
and short term financing are known as working capital decision.

Dividend Decision:
The Dividend Decision plays a crucial role in today’s corporate era. It
determines the amount of taxation that stockholders pay. A good
dividend policy helps to achieve the objective of wealth maximization.

Financing Decision:
The main aim of financing decision is to cover expenses and
investments. The decision involves generating capitals by various
methods, from different sources, in relative proportion and
considering opportunity costs, with respect to time of flotation of
securities, etc.