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Financial Management ImportanceFinancial management importance can be explained as management of money matters. It deals with managing money in all areas of life. Financial management includes personal financial management and organizational financial management. Personal finance management will help you manage the finance of your home which includes budgeting, saving, investing, debt management and other aspects related to personal money where by an individual can achieve personal goals. Whereas organizational finance management means the management of finance of a business or organization in order to achieve financial objectives. In an organization the key objectives of financial management would be to create wealth for business, generate cash and gain maximum profits from the investments of the business considering the risks involved.Financial management is very important for both individuals and organizations because it deals with managing the funds. It guides a company and individual to make optimum use of money to achieve maximum returns. For an individual financial management will help to save more and thus invest more. Since in includes debt management, it will guide the individual to create a financial plan whereby all the debts are paid on time. It will help to spend less and earn more, this will lead to more savings and thus a secure future. Financial management will help in retirement and investment planning .Lack of financial management in business will lead to losses and closure of business. With the study of financial management we can protect the business from miss management of money. Without proper financial management debts will not be paid in time and may make the businessman insolvent. Financial management will study the balance sheet of the company and keeps a watch on all sensitive facts that can endanger business into loss. It teaches us that we should think about cost, risk and control in any business and borrowed money must be minimum. It also explains the importance of time, risk and returns on investment. The return on investment must always be more than the cost of capital, risk investment should be least. We should get our money within a short period of time, all these facts are important for success of any business.Financial management consists of several aspects of business where a finance manager makes decisions on the basis of the financial data with regards to allocating funds, financing business and to develop policies to achieve business goals. Different types of accounting tools are used to manage finance in any business. For example ratios are used to compare performance of the business periodically and also with other businesses. The profitability ratio measure the profit margin, return on assets and return on equity. The liquidity ratio measure the current ratio and quick ratio that provide information on the company's ability to pay off debts. This ratio analysis enables the organization to compare and measure its performance. Financial management evaluates the performance of the business and keeps a check on the profitability aspect of the business.The importance of financial management can be summarized as follows:It brings economic growth and development through investments , financing, dividend and risk management decision which help companies to undertake better projects.When there is good growth and development of the economy it will ultimately improve the standard of living of all people.Improved standard of living will lead to good health and financial stress will reduce considerably.It enables the individual to take better financial decision which will reduce poverty, reduce debts and increase savings and investments.Better financial ability will lead to profitability which will create new jobs and in turn lead to more development , expansion and will promote efficiency.In personal life, financial management helps us to create a comfortable life with an assurance of a secured future and freedom to spend money to make us happy. The importance of financial planning and management is reflected in all the areas of personal and business life , it must not be avoided. All individuals no matter what their financial capacity is, must learn and study financial management and adapt it to improve their life.
Financial statement analysis of a company.Loan procedure in a bankStudying the dividend policy of a companyRatio analysis of a company (although it is covered under Financial statement analysis)study of mutual fundscash management in an organization.
Financial management is very important or significant because it is related to funds ofcompany. Financial management guides to finance manager to make optimum position of funds. We can clearify its value in following 5 points.1. With study of financial management, we can protect our business from pre-carious mis-management of money. Suppose, you are small businessman and you took short-term loan and financed fixed assets with this loan. It means, you have to pay loan within one year but fixed assets can not be sold within one year. In the end of year, you have not enough money to pay this long term debt and this will create risk to your business's existence. You will become insolvent. This is the simple example of mismanagement of money in your small business, but we do large scale company business, importance of financial management is greater than small business. We should invest in fixed asset if there is any other source of funds. In financial management, we make optimum capital structure and we should buy all fixed assets out of share capital money because, it will reduce the risk of repayment.2. In financial management, we deeply study our balance sheet and all sensitive facts should be watched which can endanger our business into loss. For example, a closing balance sheet shows you, you have to pay large amount of debt in next year and you have blocked all the money by purchasing goods or inventory. Financial management teaches you that this is not good outflow of funds which is invested in inventory. Blocked inventory never generate earning and your balance sheet's stock value gives you idea that your company is not capable to sell products quickly. Financial manager can elucidate you that overstocking will increase godown expenses one side and it is also risky due to the danger of damage the stock. Moreover, it increases risk of liquidity. Inventory management is the part of financial management and merely using inventory management can be the best way to solve the problem of overstocking.3. Yesterday, I am searching on Google "who are getting high salary in the world" and it is quite startling for all of us that financial managers whose duty is to use the funds of company effectively, are getting salary more than $110,640 per year ( information which is given by Forbes Magazine). This fact obviously reveals the significance of financial management.4. An imprudent man never thinks return on investment but you are not imprudent. So, get some knowledge of financial management, you can not endanger your money.5. Financial management works under two theories. One theory reins bad sources of fund. This theory elucidates us that we should think cost, risk and control and these should be minimum when we get money from others. Only financial management makes good financial structure to minimize cost, risk and control of borrowed money. Second theory elucidates or clarifies us that we should think about time, risk and return before investing our money. Our ROI should be more than our cost of capital. Our risk of investment should be least. We should get our money with high return within very short-period. All above things can be possible only after study financial management.
I need help with this case study too...any info on this case please email me at fishingkenny@yahoo.com Thanks
There are not any answers available on the Internet for the personal finance MCI. It is best to contact the professor of the course to obtain study material that can be reviewed to prepare for the MCI.
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Strategic financial management is a study of finance. It will a study a company with its long term goals in mind for more reference.
With study of financial management, we can protect our business from pre-carious mis-management of money.
yes sir, i want to get a scholarship to study NGO management from international philanthropic organisations.
it is the branch of financial economics broadly concerned with monetary and microeconomics interrelation between two or more countries. we study for understanding the dynamics of the global system, international monetary system, balance of payment, exchange rate, foreign direct investment and how these topics relate with trade. thanks zahid mdzahid88@gmail.com
It's not important to me
Human resources management is an important area to study if someone want to be a manager. This area of study is also important if someone wants to work in a hotel.
diversity so important to the study of human relations
the study of how businesses work, especially the financial and management aspects
to manage our data
The major branches of management are financial management, marketing management, human resource management, strategic management, production management, operations management, service management and information technology management. The efficient and effective operation of a business, and study of this subject, is called management.
It is essential because it can save many life