InvestorQ : what is financial management
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what is financial management

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priya Shah answered.
2 months ago
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Financial management involves planning, organizing, directing, and controlling the financial activities of an enterprise such as procurement and utilization of funds, etc. It is generally concerned with allocation, procurement, and controlling financial resources of a concern.

Various functions take place under the financial management, such as:

  1. Choice of sources of funds: This means deciding how do you want to procure funds for your organization like raising loans, issuing debentures, drawing public deposits.
  2. Determination of capital composition: This involves analyzing short-term and long-term debt-equity.
  3. Investment of funds: The finance manager has to decide a profitable allocation of funds so that they could earn a regular income and there can be safe on investment.
  4. Management of Cash: The finance manager will have to make decisions regarding the use and need of cash as it is needed for day-to-day expenses as well.
  5. Disposal of surplus funds: The finance manager has to take net profits decision and can do that in two ways:
  6. Retained Earnings: How much earning should be kept aside to be reinvested in the business for expansion, innovation, etc.
  7. Dividend declaration: It includes identifying dividend rates and several other monetary benefits to the owners and stakeholders.
  8. Financial controls: The finance manager not only has to plan, procure and utilize the funds but also has to exercise due care and control over those finances.
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