In order to achieve the objectives of the financial management, the financial manager of the business concern, has to manage various aspects of finance function which lay down the scope of his duty. These aspects are discussed as under:
1. Estimating the financial requirement.
2. Determining the structure of capitalization.
3. Selecting a source of finance.
1. Estimating the financial requirement.
2. Determining the structure of capitalization.
3. Selecting a source of finance.
4. Selecting a pattern of investment.
5. Management of cash flow.
6.Implementingfinancial control.
7. Proper use of surplus.
1. Estimating the financial requirement: on the basis of their forecast of the volume of business operations of the company, the finance executives have to estimate the amount of fixed capital and working capital required in a given period of time
2. Determining the structure of capitalization: after estimating the requirement of capital, the finance executives have to decide about the composition of capital. They have to determine the relative proportion of owner’s risk, capital and borrowed capital. These decisions have to be taken in the light of cost of raising form different resources, period for which funds are needed and several others factors.
3. Investment decision: the funds raised from different resources are to be intelligently invested in various assets so as to optimize their return of investment. While making investment decision, management should be guided by three important principles-safety, liquidity and profitability.
4. Management of cash flows: - Cash is needed to pay off creditors, for purchase of materials, pay labor and to meet everyday expenses. These should not be shortage of cash at any time as it will damage credit- worthiness of the company. These should not be access cash them required because money has
time value.
5. Management of earnings: - The finance executive has to decide about the allocation of earnings among several competitive needs. A certain amount of total earnings may be kept as reserve or a portion of earnings may be distributed among and ordinary and preference share holders, yet another portion may be ploughed back or re-invested. The finance executives must consider the merits and de-merits of alternative schemes of utilizing the funds generating from the companies own earnings.
6. Choice of sources of finance: - The management can raise finance from various sources like share holders, banks and others financial distributors finance executives has to evaluate each source over method of finance and choose the best source. Financial management is the new branch of accounting that deals with the acquisition of financial resources & management of them.
5. Management of cash flow.
6.Implementingfinancial control.
7. Proper use of surplus.
1. Estimating the financial requirement: on the basis of their forecast of the volume of business operations of the company, the finance executives have to estimate the amount of fixed capital and working capital required in a given period of time
2. Determining the structure of capitalization: after estimating the requirement of capital, the finance executives have to decide about the composition of capital. They have to determine the relative proportion of owner’s risk, capital and borrowed capital. These decisions have to be taken in the light of cost of raising form different resources, period for which funds are needed and several others factors.
3. Investment decision: the funds raised from different resources are to be intelligently invested in various assets so as to optimize their return of investment. While making investment decision, management should be guided by three important principles-safety, liquidity and profitability.
4. Management of cash flows: - Cash is needed to pay off creditors, for purchase of materials, pay labor and to meet everyday expenses. These should not be shortage of cash at any time as it will damage credit- worthiness of the company. These should not be access cash them required because money has
time value.
5. Management of earnings: - The finance executive has to decide about the allocation of earnings among several competitive needs. A certain amount of total earnings may be kept as reserve or a portion of earnings may be distributed among and ordinary and preference share holders, yet another portion may be ploughed back or re-invested. The finance executives must consider the merits and de-merits of alternative schemes of utilizing the funds generating from the companies own earnings.
6. Choice of sources of finance: - The management can raise finance from various sources like share holders, banks and others financial distributors finance executives has to evaluate each source over method of finance and choose the best source. Financial management is the new branch of accounting that deals with the acquisition of financial resources & management of them.
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