March 14, 2019 by Assignment Help Firm
Financial Management - Meaning, Objectives, and Functions
Which means of Financial Management?
Financial Management implies arranging, sorting out, coordinating and controlling the financial exercises, for example, obtainment and usage of assets of the undertaking. It implies applying general management standards to the financial assets of the venture.
Get assignment related to this topic on AFIN253 Financial Management.
1. Investment choices incorporate an interest in fixed resources (called capital planning). Interest in current resources is likewise a piece of speculation choices called working capital choices.
2. Financial choices - They identify with the raising of account from different assets which will rely on the choice on the kind of source, a time of financing, cost of financing and the profits along these lines.
3. Dividend choice - The account director needs to take a choice with respect to the net benefit dissemination. Net benefits are commonly separated into two:
a. The profit for investors Dividend and its rate must be chosen.
b. Retained benefits Amount of held benefits must be settled which will rely on extension and expansion plans of the endeavor.
Targets of Financial Management
The financial management is commonly worried about the acquisition, distribution, and control of financial assets of concern. The targets can be-
1. To guarantee an ordinary and satisfactory supply of assets to the worry.
2. To guarantee sufficient comes back to the investors which will rely on the procuring limit, the market cost of the offer, desires for the investors.
3. To guarantee ideal supports use. When the assets are obtained, they ought to be used in the most extreme conceivable route at any rate cost.
4. To guarantee security on speculation, i.e, assets ought to be put resources into safe endeavors with the goal that a satisfactory rate of return can be accomplished.
5. To arrangement, a sound capital structure-There ought to be the sound and reasonable synthesis of capital with the goal that equalization is kept up among obligation and value capital.
Elements of Financial Management
1. Estimation of capital necessities: An account director needs to make estimation with respect to capital prerequisites of the organization. This will rely on anticipated expenses and benefits and future projects and strategies of concern. Estimations must be made in a satisfactory way which expands the winning limit of the undertaking.
2. Determination of capital organization: Once the estimation has been made, the capital structure must be chosen. This includes the present moment and long haul obligation value investigation. This will rely on the extent of value capital an organization is having an extra supports which host to be raised from outside gatherings.
3. Choice of wellsprings of assets: For extra assets to be secured, an organization has numerous options like-
a. The issue of offers and debentures
b. Loans to be taken from banks and financial organizations
c. Public stores to be attracted like the type of bonds.
The decision of a factor will rely upon relative benefits and faults of each source and time of financing.
4. Investment of assets: The account director needs to choose to allow assets into beneficial endeavors so that there is security on venture and standard returns are conceivable.
5. Disposal of excess: The net benefits choice must be made by the money director. This should be possible in two different ways:
a. Dividend statement - It incorporates recognizing the rate of profits and different advantages like a reward.
b. Retained benefits - The volume must be chosen which will rely on development, innovational, enhancement plans of the organization.
6. Management of money: Finance director needs to settle on choices with respect to money management. Money is required for some, reasons like an installment of wages and pay rates, installment of power and water charges, installment to loan bosses, meeting momentum liabilities.
7. Financial controls: The account chief has not exclusively to design, secure and use the assets however he likewise needs to practice command over funds. This should be possible through numerous systems like proportion investigation, financial determining, cost and benefit control, and so forth.