Financial management is crucial for effective business operations, focusing on the efficient use of capital funds. It encompasses various objectives such as profit and wealth maximization, risk management, and resource optimization. The finance manager plays a key role in forecasting, financing, investment, and performance evaluation, while balancing risk and return in decision-making.

1. Financial Management
Ms.S.V.Mohana Sujana
Asst. Professor
Department of Commerce

3. Finance is the life blood and nerve
centre of business. It is very essential
for smooth running of business

5. Definition:
 “Financial management is concerned with the
efficient use of an important economic resource,
namely capital funds”
– SOLOMON
 “Financial management deals with procurement
of funds and their effective utilisation in the
business”
– S.C.KUCHHAL

6. Financial Management
SCOPE
 Traditional approach
 Modern approach
OBJECTIVES
 Basic objectives
 Other objectives

7. Basic objectives
 Profit Maximization: Criticized :
1) Ambiguity
2) Time value of money
3) Risk Factor
 Wealth Maximization

8. Other Objectives
 Return maximization
 Provide support for decision making
 Manage risks
 Use resources efficiently, effectively and
economically
 Provide supportive control environment
 Comply with authorities and safeguard assets

9. Role of finance manager
 Forecasting financial requirements
 Financing decision
 Investment decision
 Dividend decision
 Deciding overall objectives
 Supply of funds to all parts of organization
 Evaluating financial performance
 Financial negotiation
 Keeping in touch with stock exchange quotations and behavior of share
prices

10. Risk & Return
Risk : Risk is defined as the variability of the
expected return from
the investment.
Return : Return is measured as a
gain or profit expected to be made, over a
period, at the time of making the investment.