The slide talks about the theory of financial management, the pioneers and scholars in the field and contributions and ultimately concludes with business plan and feasibility study.

1. FINANCIAL MANAGEMENT
SCI 801

2. FINANCIAL MANAGEMENT
 Introduction​
 Definition
 Objective of Financial Management
 Scope of Financial Management
 Roles of Financial management/manager

3. INTRODUCTION
Generally, Companies interacts and transacts with the other entities present in the
economic environment. These entities include Government, Suppliers, Lenders,
Banks, Customers, Shareholders, etc. who deal with the organisation in several ways.
Most of these dealings result in either money flowing in or flowing out from the
company. This flow of money (or funds) has to be managed so as to result in maximum
gains to the company. Managing this flow of funds efficiently is the purview of financial
management
Financia Management 3

4. DEFINITION OF FINANCIAL
MANAGEMENT

• The most popular and acceptable definition of financial management
as given by S.C. Kuchal is that “Financial Management deals with
procurement of funds and their effective utilization in the business”
• Howard and Upton Defined Financial management “as an application
of general managerial principles to the area of financial decision-
making
• Joshep and Massie : Financial management “is the operational
activity of a business that is responsible for obtaining and effectively

5. DEFINITION CONT’

• Thus, financial management is the process of planning and
controlling the financial resources of a firm. It includes the
acquisition, allocation and management of firms’ financial resources.
Hence, it is concerned with how best to manage an organization’s
resources in order to make sure that the resources are maximized
fully

6. OBJECTIVE OF FINANCIAL
MANAGEMENT
1. Maximization of Profit: A business firm is a profit seeking organisation.
Hence, the financial manager should ensure that the profit of the firm is
maximized. Profit Maximization can be achieved through the followings:
 Increasing the sales thereby increasing the revenue
 Reducing the cost of production through efficient use of resource
 Judicious choice of funds
 Minimisation of risks

7. OBJECTIVE CONTINUED
2. Wealth Maximization: The major objective of management is to
maximize the shareholders’ wealth. The shareholders’ wealth is the
present value of future cash flows or present value of future dividends
payable to the shareholders infinitely. The Shareholders wealth
maximization is gradually becoming the single and narrow objective of
firms pursued by financial managers making it the most fashionable
objective of the firm.
This is been achieved through the followings:
 Increase in the market share of the firm
 Increase in Reported Profits
 Continuous Survival of the Business
 Provision of Valued Services to the Customers

8. ACCORDING TO DR. S.C. SEXENA,THE SCOPE OF FIN MGT INCLUDES THE FOLLOWING FIVE A’S
Scope of Financial Management
8
1. ANTICIPATION: Financial management estimates the financial needs of the company.
That’s it find out how much finance is required the company.
2. ACQUISITION: It collect finance for the company from different sources
3. ALLOCATION: It uses the collected funds to purchase fixed and current assets for the
company
4. APPROPRIATION: It divides the company’s profit among shareholders, debenture
holders and keeps some for business expansion.
5. ASSESSMENT: It also control all the financial activities of the company such as
production management, marketing, and human resources management.

9. ROLES OF FINANCIAL MANAGER/
MANAGEMENT
9
FORECASTING
FINANCIAL
REQUIREMENT
S
It is the primary
function of the
Finance Manager to
estimate the financial
requirement of the
business concern.
ACQUIRING
NECESSARY
CAPITAL
After deciding the
financial
requirement, the
finance manager
should concentrate
how the finance is
mobilized and
where it will be
available.
INVESTMENT
DECISION
The finance
manager must
carefully select best
investment
alternatives and
consider the
reasonable and
stable return from
the investment. He
must be well versed
in the field of capital
budgeting
techniques to
determine the
effective utilization
of investment
WORKING
CAPITAL
MANAGEMENT
Efficient
management of the
working capital will
ensure maximum
utilization of scarce
financial resource
and ipso facto
maximization of the
shareholder’s
wealth
INTERRELATION
WITH OTHER
DEPARTMENTS
Finance manager deals
with various functional
departments such as
marketing, production,
personel, system,
research, development,
etc. Finance manager
should have sound
knowledge not only in
finance related area but
also well versed in other
areas

10. ROLES OF FINANCIAL MANAGER/MANAGEMENT
CONT’
10
FINANCIAL DECISION
This is the effective
management of the capital
structure of the business. The
financial manager must
ensure maximum mixture of
debt and equity in financing
the firm.
DIVIDEND DECISION
This involves the
determination of the
appropriate amount to be
paid as dividend and the
profit that would be
ploughed back to finance
expansion in the company
FINANCIAL CONTROL
AND REPORTING
Financial control and reporting is
an important function of the
financial manager. He must be
able to present a lucid yet concise
financial report that provides
management with required
information necessary to take
financial decision.

11. THANK YOU