FINANCE<br />NEED:<br />To run a business.<br />For input operations.<br />For managerial activities.<br />DEFINITION:<br />“ Finance may be defined as the position of money at the time it is wanted”<br /> -----according to F.W. Paish.<br />
FINANCIAL MANAGEMENT<br /> FINANCIAL + MANAGEMENT<br />Financial means procuring sources of money supply and allocation of these sources on the basis of forecasting monetary requirements of the business.<br />Management refers to planning , organization , coordination and control of human activities and physical resources for achieving the objectives of an enterprise. <br />
APPROACHES TO FINANCE FUNCTIONS<br />The traditional approach.<br />The modern approach.<br />
SCOPE OF FINANCIAL MANAGEMENT<br />SCOPE<br />Estimating financial requirements.<br />Deciding capital structure.<br />Selecting a source of finance.<br />Selecting a pattern of investment.<br />Proper cash management.<br />Implementing financial control.<br />Proper use of surpluses.<br />
TRADITIONAL APPROACH<br />Under this approach financial management was consider as corporation finance. The following three things were to be studied for procurement of finances:-<br />institutional sources of finance.<br /> issue of financial instrument to collect necessary funds from capital market.<br /> legal and accounting relationship between business and sources of finance. <br />
MODERN APPROACH<br />The focus of this approach is on the following questions:-<br /><ul><li>What is the total amount of funds an enterprise should commit?
What specific assets an enterprise should acquire?
How should the funds required to raised?</li></li></ul><li>Contd......<br /> Questions relate to four broad decisions of financial management.<br /><ul><li>Fund requirement decision.