Financial Management meaning

Financial Management meaning

Financial management is the concerned acquisition, financing, and management of assets with some overall goal in mind. It refers to the efficient and effective management of money in such a manner to accomplish the objectives of the organization. It is the specialized function directly associated with the top management. It includes how to raise capital and how to allocate capital. It also deals with the dividend policies of the shareholders.

Some definition of financial management are described below –

According to C.van Home – “Financial Management is the managerial activity which is concerned with the planning and controlling of the firm’s financial resources.”

According to James Van Mane – “Planning is an inextricable dimension of financial management. The term financial management connotes that funds flows are directed according to some plan.”

According to Joseph Massie – “It is the Operational Activity of a business that is responsible for obtaining and effectively utilizing the funds necessary for efficient operation.”

According to Weston and Brigham – “It is an area of financial decision making, harmonizing individual motives and enterprise goals.”

Lastly, we can conclude financial management is the act of taking investing, financing and dividend decisions.

Importance –

  • It helps to gain the ultimate result.
  • To knowledge about the process of this management.
  • For fixing price.
  • For decision making.
  • In the case of profit earning.
  • Financing planning.
  • Rising of the fund.
  • Investment of funds.
  • Financial control.
  • Protection of capital.
  • Distribution of profit.