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    Ceases Ceases Ceases

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    Soundarya Bhat
    Financial management B.com 4th sem as per karnataka university Dharwad

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    Ceases Ceases Ceases

    Uploaded by

    Soundarya Bhat
    4 views7 pages
    Financial management B.com 4th sem as per karnataka university Dharwad

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    FM

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    Financial management B.com 4th sem as per karnataka university Dharwad

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    4 views7 pages

    Ceases Ceases Ceases

    Uploaded by

    Soundarya Bhat
    Financial management B.com 4th sem as per karnataka university Dharwad

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    Ceases ceases ceases

    Significance of Financial management

    Significance of financial management is discussed

    as follows:

    1. Determination of Business success:

    Sound financial management leads to

    optimum utilization of resources which is the

    key factor for successful enterprises. If we

    analyze the factors which lead to an

    enterprise turning sick one of the main

    factors would be mismanagement of

    financial resources. Financial management

    helps in preparation of plans for growth,


    development, optimization, diversification

    and expansion and their successful execution.

    2. Optimum Utilization of Resources:

    One of the basic objectives of financial

    management is to measure the input and

    output in monetary terms. Since finance

    managers are responsible for the allocation

    of resources, they are also responsible to

    ensure that resources are used in an

    optimum manner. In fact, the failure of

    business enterprise is not due to inadequacy

    of financial resources, but is the result of

    defective management of financial resources.

    In a country like India, where capital is

    scarce effective utilization of financial

    resources is of great significance.


    3. Focal Point of Decision Making:

    Financial management is the focal point of

    decision-making as it provides various tools

    and techniques for scientific financial

    analysis. Some of the techniques of financial

    management are comparative financial

    statement, budgets, ratio analysis, variance

    analysis, cost- volume, profit analysis, etc.

    These tools help in evaluating the

    profitability of the project.

    4. Measurement of Performance:

    The performance of the firm is measured by

    its financial results. The value of the firm is

    determined by the quantum of earnings and

    the associated risk with these earnings.


    Financial decisions which increases earnings

    and reduces risk will enhance the value of

    the firm.

    5. Basis of Planning, Co-ordination and

    Control:

    Each and every activity of the firm requires

    resource outlays which are ultimately

    measured in monetary terms. The finance

    department being the nodal department is

    closely associated with the planning of most

    of the activities of the various departments.

    Since most of the activities of the firm

    require co-ordination among various

    departments, the finance department

    facilitates this co- ordination by supplying

    the requisite information. Since the result of


    various activities are measured in monetary

    terms, again the finance department is

    closely involved in control and monitoring

    activities.

    6. Advisory Role:

    The finance manager plays an important

    role in the success of any organizations.

    7. Information Generator for Various

    Stakeholders:

    In this modern era where business managers

    are trustees of public money, it is expected

    that the firm provides information to the

    various stakeholders about the functioning of

    the firm. One of the major objectives of


    financial management is to provide timely

    information to various stakeholders.

    Financial Management:

    INTRODUCTION

    Business concern needs finance to meet their

    requirements in the economic world. Any kind of

    business activity depends on the finance. Hence,

    Finance is called as lifeblood of business

    organization. Whether the business concerns are


    big or small, they need finance to fulfil their

    business activities.

    In the modern world, all the activities are

    concerned with the economic activities and very

    particular to earning profit through any venture

    or activities. The entire business activities are

    directly related with making profit. (According to

    the economics concept of factors of production,

    rent given to landlord, wage given to labour,

    interest given to capital and profit given to

    shareholders or proprietors), a business concern

    needs finance to meet all the requirements. Hence

    finance may be called as capital, investment, fund

    etc., but each term is having different meanings

    and unique

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