Successfully reported this slideshow.
You’ve unlocked unlimited downloads on SlideShare!
• Meaning of Finance
• Features of Finance
• Scope of Finance
• Aim of Finance
• Role of Finance Manager (Traditional+ Modern)
• General organizational structure of Finance
• Importance of Finance in organization through an
• Finance is a management
of money and other
valuables, which can be
easily converted into cash.
• Finance is concerned with
the maintenance and
creation of economic value
• A science that describes
the management, creation
and study of money,
investments, assets and
Features of Finance
• Channelizing funds- Financial sector and financial markets
perform the essential function of channeling funds from
people who have surplus to people who have shortage.eg-
• Acquisition, Allocation & Utilization of funds- Business needs
to decide about mode of raising funds. once funds are
acquired, they have to be allocated to various projects and
services. business should ensure that the funds are utilized
efficiently and effectively to achieve its objectives.
• Maximization of shareholder’s wealth- Finance helps in
defining policies and efficient management of working
capital in order to achieve its wealth maximization objective.
• Future decision making- Finance is concerned with
future decisions of organization. Sound decision
making is possible only through proper analysis of
financial needs and availability. E.g.- capital
• Optimal mix of funds- It is concerned with best
optimal mix of funds in order to obtain desired and
determined results. The composition of funds should
not result in loss.
• Investment opportunities- Investment means
utilization of money for profit or returns.eg-
investment in mutual fund or financial securities or in
Scope of Finance
• Public finance- To deal with governmental financial
problems, separate and specialized field of finance
has emerged as public finance with not for profit
• Security and investment analysis- This area is of
interest to individual and institutional investors. It
covers mainly measurement of risk and return on
investment in securities.
• Institutional finance- It deals with issues of capital
formation and the organizations that perform the
financing function of the economy.eg- banks
• International finance- It studies economic
transactions among nations, corporations and
individually internationally. It is concerned with
flows of money across international boundaries.
• Financial management- Business firms face
problems dealing with acquisition of funds and
optimum methods of employing the funds. Thus, it
helps firm in seeking low cost funds for individual
firms and seek profitable business opportunities.
AIM OF FINANCE FUNCTION
• Anticipation of funds needed- Before anything,
there is a need to evaluate available assets and
projects. Selection of assets or projects takes place
only after proper evaluation, which is helpful to
anticipate the funds required for financing them.
• Acquire the anticipated funds- The prime objective
of finance function is to assess the required needs
of a firm and then arrange the funds needed by
raising from suitable source.
• Allocation and utilization of funds- Efficient
allocation and utilization of funds is the objective
of traditional finance function. Efficient allocation
means investing funds on profitable projects and
such operations that help to maximize
• Increase profitability- Proper planning and control
of finance function aim at increasing profitability of
the firm. It is important to arrange sufficient funds
at right time and on right asset.
• Maximizing firm’s value- Every firm strives to
maximize its value by taking right decisions. Thus, it
is one of the main objectives of finance function.
New role of Finance manager in
• Finance manager acts as central in audit and control
practices in an organization
• He acts as central in strategic alliances like Mergers &
• To work across the functional divide of the company
and exhibit leadership skills.
• Continuous focus and commitment towards value
creation of an organization.
GENERAL ORGANIZATIONAL STRUCTURE
OF FINANCE FUNCTION
• Treasurer- He is concerned mainly with
financing and investment activities including
cash management, relationship management
with bankers, credit ,management, portfolio
management, inventory management,
dividend disbursement, etc.
• Controller- His functions are related to
management and control of assets like cost
and financial accounting, taxation, auditing,
budget preparation, etc.
Importance of Finance in a
Business organization through an
Imagine a situation…
• You are the owner of ABC firm and you get 2
proposals for investing in a project that costs Rs.5
lakhs and Rs.8 lakhs respectively. Now there are
maximum three moves which you can make in this
1. Accept both
2. Reject both
3. Choose either of the two
• Analyze the data of both proposals.
• Apply several financial tools and techniques on
the data available. Example- pay back period
• Evaluate your findings.
• Take decision.
• Make plan for acquiring, allocating and utilising of
• Implement plan.
• Monitor all activities.