FINANCIAL MANAGEMENT

SCOPE/ELEMENTS
1. Investment in fixed assets (called as capital budgeting) are influenced by
investment decisions. Investment in current assets contributes to the part of
investment decisions. The collective decisions are called as working capital
decisions.
2. Financial decisions – They are part of the raising of finance. And, it is
done from various resources, which will depend upon decision on the type of
source. Moreover, the decision is influenced by the period of financing, cost of
financing, and the returns by this mean.
3. Dividend decision – The finance manager takes decision concerning the
net profit distribution. Net profits are generally discussed in two parts:
 Dividend for shareholders- Dividend and the dividend rate has to be
discussed.
 Retained profits- Amount of retained profits has to be decided. The
rate will be contingent on expansion and diversification plans of the
enterprise.

OBJECTIVES OF FINANCIAL MANAGEMENT 

The financial management is generally relevant with allocation, procurement,
and control of financial resources of a concern. The objectives of financial
management are discussed below:

1. To make sure regular and sufficient supply of funds to the concern.

2. To make sure sufficient returns to the shareholders, this will depend
upon the earning capacity, the market price of the share, expectations
of the shareholders.
3. To ensure utilization of funds to an optimum degree. Once the funds are
obtained, they should be utilized in a maximum way, spending the least
amount of cost.
4. Investment needs to be ensured with safety on, i.e., funds should be
invested with safe ventures, so that an adequate rate of return can be
ensured.
5. To prepare a sound capital structure, sound and fair distribution of
capital have to be ensured. Sound capital will make sure that a balance
is maintained between debt and equity capital.