Financial Management- Meaning, Nature, Scope and Objectives. Profit V/S Wealth Maximistation and Organisation of Financial Function

3776 Words16 Pages
Meaning Financial management is broadly concerned with the acquisition and use of funds by a business firm. It deals with the situations that require selection of specific assets, or a combination of assets and the selection of specific problem of size and growth of an enterprise. In other words, FM is planning, directing, monitoring, organizing, and controlling of the monetary resources of an organization. By Financial Management we mean efficient use of economic resources namely capital funds. Financial management is concerned with the managerial decisions that result in the acquisition and financing of short term and long-term credits for the firm. a. Dividend for shareholders- Dividend and the rate of it has to be decided. b. Retained profits- Amount of retained profits has to be finalized which will depend upon expansion and diversification plans of the enterprise. More, precisely (Meaning of Financial Management) financial Management means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. It means applying general management principles to financial resources of the enterprise.Nature[FM is “concerned with the efficient use of an important economic resource viz., capital funds” - Ezra Solomon in ‘Theory of Financial Management’]Managerial finance (Financial Management) is the branch of finance that concerns itself with the managerial significance of finance techniques. It is focused on assessment rather than technique.The difference between a managerial and a technical approach can be seen in the questions one might ask of annual reports. The concern of a technical approach is primarily measurement. It asks: is money being assigned to the right categories? Were generally accepted accounting principles GAAP followed?The purpose of a managerial approach, however,

More about Financial Management- Meaning, Nature, Scope and Objectives. Profit V/S Wealth Maximistation and Organisation of Financial Function

Open Document