Importance of Financial Management
Helps in Financial Planning. Assists in acquiring and managing funds. Helps in funds allocation. Provides insights to make critical financial decisions.
What are key decisions of financial management?
- Cash flow of the project.
- Rate of return.
- Investment criteria involved.
Why is financial management so important in business?
- Helps organisations in financial planning
- Assists organisations in the planning and acquisition of funds
- Helps organisations in effectively utilising and allocating the funds received or acquired
- Assists organisations in making critical financial decisions
- Helps in improving the profitability of organisations
What are the basics of financial management?
- growth and profitability ratios (e.g. gross margin by product)
- liquidity ratios (e.g. sales to working capital ratio)
- activity ratios (e.g. average accounts receivable days outstanding)
What is financial management and its functions?
- Decisions And Control. Financial managers shoulder the primary responsibility of making decisions and controlling the finances.
- Financial Planning. Decision-making also spills into planning financial activities and resources. ...
- Resource Allocation. ...
- Cash Flow Management. ...
- Disposal Of Surplus. ...
- Acquisitions And Mergers. ...
- Capital Budgeting. ...
While ensuring a business is both successful and profitable are the main aims of financial management, it also seeks to: support compliance and regulation adherence. maximise profits, stakeholder returns and overall company value. track liquidity and cash flow.