Understand the objectives and functions of financial management. Get your concepts clear on what does financial management mean, why is financial management improtant and many more.

1. Financial Management:
Meaning, Objectives and
Functions

2. Allocation: Funds can be allocated to investments, operations etc. in
order to maximise profits
What Does Financial Management Mean?
Financial Management is the effective and efficient
management of a firm’s funds. It includes:
Monitoring: Financial assets are closely monitored to determine if
they are being utilized effectively
Procurement: Different strategies are used to raise funds and create
value
Planning: This stage effectively discusses how to raise and utilize a
firm’s funds for maximum profitability

3. What is the Scope of Financial Management in
Business Economics?
1
A robust financial plan is
crucial to understanding
the financial needs of a
business. It is the first step
of financial management
2
The main purpose helps
decide whether to raise
funds through equity or
debt.
4
Working capital and short
term investment decision
making
3
Investment decisions:
• Capital Budgeting
• Liquidity
5
Dividend Decision:
How profits will be
distributed or used is a
crucial part of financial
management
Click on the circle to know more

4. What are the Objectives of Financial Management?
Financial management for businesses is usually set up to
achieve the following objectives:
Availability of Funds
Businesses need to ensure a regular and adequate supply of
funds in order to operate smoothly and remain profitable
Utilization of Funds
Funds need to be utilized effectively in order to ensure maximum
profit and efficiently to minimize any losses

5. What are the Objectives of Financial Management?
(Continued)
Preserve Capital
Funds need to be invested suitably so that returns are adequate
and business is safeguarded
Sound Capital Structure
Have a balance between debt and equity so that returns to
shareholders are maximized
Shareholder Returns
Ensure adequate returns to shareholders through a robust
management structure

6. What is Financial Management Important?
As finances impact every aspect of a business, their
effective management is vital to business success.
Good financial management allows for the smooth
operating of a company along with its growth.
Decision Making: Accurate financial information is
necessary to make business decisions
Risk Management: Investments and business
opportunities are managed so to provide adequate
returns
Operational Controls: Reduces unnecessary
expenditures and increases employee productivity

7. Capital Composition: Makes decisions on long term debt and debt to
equity ratios
What are the Functions of a Financial Manager?
The Financial Manager carries out numerous functions in order to
ensure a business remains financially healthy.
Fund Sources: Makes decisions on how funds are raised
Estimation of Capital Requirement: Estimates the business’s
requirement for capital by looking into costs, future plans, policies and
profits
Investment: Decides how to invest business funds to ensure regular
returns

8. Capital Composition: Makes decisions on long term debt and debt to
equity ratios
What are the Functions of a Financial Manager?
(Continued)
Cash Management: Decides how cash flows are managed and
utilized including payment of bills, wages, stock purchases etc.
Distribution of Surplus: Decides how the net profits are utilized,
dividends are shared and sufficient earnings retained
Financial Reporting: Reports on the financial status of the business to
stockholders, executive board and government agencies by compiling
financial statements like balance sheets and annual reports

9. How Does Financial Management Help Start-ups?
1
Defines a clear strategy for
business operations and
growth
2
Allows start-ups to make
rational decisions driven
by data
4
Ensures good
investments to work as a
“cushion” in times of
austerity.
3
Ensures optimal use of the
often limited resources to
achieve long term financial
sustainability
5
Demonstrates good
management practices to
third parties like investors,
and strategic partners
6
Allows business
managers to fine tune
the business model on
a periodic basis

10. How Can You Learn Financial Management
Online?
You can learn different aspects of Financial
Management through a series of online courses that
focus on building your competency. The Centre for
Investment Education and Learning (CIEL) offers the
following online Financial Management Courses:
• Financial Statement Analysis
• Time Value Of Money
• Corporate Finance
• Working Capital
• Capital Budgeting
• Long Term Funding
• Statement Of Cash Flows
• Leverage And Lending
• Exchange Rate - Risk And Hedging
• Basics Of Treasury Management

11. Benefits of CIEL’s Online Courses
Learn in Your Own Time
Our online courses allow you to learn in your own time while letting
you adhere to all your other commitments.
Interactive Content
You learn through videos, quizzes and other interactive content so
you can to absorb knowledge in an interesting manner.
Learn through Examples
Our courses explain content using real world situations making the
content relevant, reinforcing it and demonstrating it’s applicability.

12. Benefits of CIEL’s Online Course (continued)
Self Assessment
You have the benefit of quizzes at the end of each module that let
you assess how much you have learnt. You can revisit the content
as many times as you like until you are comfortable with it.
Final Examination
You can take the final examination online only when you are
satisfied that you are ready to do so.
Learn From an Accredited Institution
Learning from a reputed institution like us ensures that you are
learning all you need to know from the best! Enroll now to take that
leap ahead in your career!

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