Introduction To Financial Management
Introduction To Financial Management
Introduction To Financial Management
financial
Management
IMPORTANCE OF FINANCE
• It is Life Blood of any Business Enterprise
• Lays the Basic Foundation for all Economic
Activities
• Holds the Master Key for all Manufacturing
and Merchandizing Activity
• Efficiency of Business of any size has to be
closely linked to Management of Finance
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Financial Management
• To Maximize Profit
• To Minimize Cost
Sources of Fund
Application of Fund
(Financing
(Investing Decision)
Decision)
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Organization Chart
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Interface Between Finance and
Other Functions
Marketing- Finance
Significant impact on profitability of firm.
Impact of credit extended to customers
Eagerness to meet sales target with liberal credit
terms
Cost of maintaining large inventory
Product Pricing
Sales promotion and advertisement
Choice of product mix and
Distribution policy
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Production - Finance
Controls major part of investment in
◦ Equipment, material and man power
◦ Effective use of equipment and man power
◦ Inventory of working process, stores and
spares
◦ Cost of output
◦ Make, Buy or Lease decisions.
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Top Management and finance
• Interested in ensuring achievement of overall
objectives
–Use of financial statements as means
for information and effectiveness
– Strong linkage with finance for strategic planning,
management control and other relevant basic
inputs for effective and efficient management.
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Financial System
• Financial system comprises of "a set of
complex and closely interconnected financial
institutions, markets, instruments, services,
practices, and transactions”.
• The financial system includes a complex of
institutions and mechanisms which affect the
generation of savings and their transfer to
those who will invest