Financial management is the art of planning, organizing, and controlling funds to achieve business objectives such as profit and wealth maximization. It involves the efficient management of finances to navigate complex business environments, reduced costs, and increased profitability. Key objectives include managing risks, ensuring liquidity, and planning for contingencies to support the overall growth and sustainability of the organization.

1. FINANCIAL MANAGEMENT- BASICS

2. WHAT IS FINANCE??
IT IS TERMED AS THE LIFE BLOOD OF
BUSINESS
WHAT IS MANAGEMENT ?
IT IS THE ART OF PLANNING ORGANISING
REPORTING ANALYSIS BUDGETING
FORECASTING ETC
THEREFORE FINANCIAL MANAGEMENT MEANS
MANAGING OF FINANCE FOR ACHIEVING BEST
RESULTS

3. ELEMENTS OF
FINANCE
FINANCIAL
ENVIRONMENT
FINANCIAL
POLICIES
FINANCIAL
INSTRUMENTS
FINANCIAL
POLICIES
FINANCIAL
INSTITUTIONS
FINANCIAL
MARKETS
FINANCIAL
INTERMEDIARIE
S
FINANCIAL
REPORTING
FINANCIAL
ANALYSIS
FINANCIAL
MODELLING

4. INTRODUCTION
 A BUSINESS NEEDS FUNDS AT THE TIME OF –
 START OF THE BUSINESS
 FOR MANAGING ITS OPERATIONS
 EXPANSION
 DIVERSIFICATION
 INNOVATION
 COMPENSATION
 ALSO AT THE TIME OF WINDING UP OF COMPANIES
 EVERY ACTIVITY OF ANY BUSINESS WILL BEGIN WITH CASH AND
END WITH CASH AS MONEY IS THE MEDIUM OF EXCHANGE TO
DEAL WITH ALL ECONOMIC OR FINANCIAL ACTIVITIES.

5. FINANCE
 FINANCE IS ONE OF THE MAJOR ELEMENTS,
WHICH ACTIVATES THE OVERALL GROWTH
OF THE ECONOMY.
 FINANCE IS THE LIFEBLOOD OF ECONOMIC
ACTIVITY.
 A STRONG FINANCIAL SYSTEM DIRECTLY
CONTRIBUTES TO THE GROWTH OF THE
ECONOMY

6. WHY MANAGE FUNDS?
 IN THE MODERN BUSINESS WORLD , BUSINESS UNITS ARE MORE COMPLEX
 UNEXPECTED RISKS ARE PREVAILING IN THE MARKET
 HIGH LEVEL OF COMPETITION
 MULTI NATIONAL IN NATURE- DELAING WITH SEVREAL NATIONS ENVIRONMENT
 REDUCTION OF COSTS
 INCREASE PROFITABILITY
 GOVERNMENT POLICIES KEEP CHANGING
 CHANGES IN MARKET CONDITIONS
 DEMAND AND SUPPLY
 HIGH LEVEL OF RISKS
 GROWING EPIDEMICS AND PANDEMICS

7. FINANCIAL MANAGEMENT
 THEREFORE IT REFERS TO THE EFFICIENT AND EFFECTIVE
MANAGEMENT OF MONEY (FUNDS) IN SUCH A
MANNER AS TO ACCOMPLISH THE OBJECTIVES OF THE
ORGANIZATION

8. DEFINITION
 SOLOMON-” FINNACIAL MANAGEMENT IS CONCERNED WITH THE
EFFICIENT USE OF ECONOMIC RESOURCES”
 PHILLIPPATUS- “ FINANCIAL MANAGEMENT IS CONCERNED WITH
MANAGEMENT DECISION THAT RESULTS IN ACQUISITION AND
FINANCING OF LONG TERM AND SHORT TERM CREDITD OF THE
FIRM”

9. DEFINITION
 J.F. BRADLERY “FM IS THE AREA OF BUSINESS MANAGEMENT
DEVOTED TO A JUDICIOUS USE OF CAPITAL AND A CAREFUL
SELECTION OF SOURCES OF CAPITAL IN ORDER TO ENABLE A
BUSINESS FIRM TO MOVE IN THE DIRECTION OF REACHING ITS
GOALS”
 “FINANCIAL MANAGEMENT IS THE APPLICATION OF THE PLANNING
AND CONTROL FUNCTIONS TO THE FINANCE FUNCTION” BY
ARCHER & AMROSIO
 “BUSINESS FINANCE CAN BE BROADLY DEFINED AS THE ACTIVITY
CONCERNED WITH PLANNING, RAISING, CONTROLLING AND
ADMINISTERING OF FUNDS IN THE BUSINESS”. BY H.H. GATHMAN &
H.E. DOUGALL

10. OBJECTIVES:
 Profit Maximization
 Wealth Maximization
 Balanced Asset Structure
 Liquidity
 Planning of funds
 Managing Risks
 Fighting Competition
 Achieving Efficiency
 Financial Discipline
 Minimizing Wastages
 Preparedness for contingencies

11. PRIMARY OBJECTIVES
PROFIT MAXINMISATION
WEALTH MAXIMISATION

12. PROFIT MAXIMISATION
 IT IS THE PRIMARY AIM OF EVERY BUSINESS
 IT IS AN INDICATOR OF FINANCIAL PERFORMANCE
 OFFERS BETTER CREDITABILITY IN THE MARKET
 ENABLE A BUSINESS TO COPE WITH RISKS
 HELP IN THE GROWTH AND DEVELOPMENT OF THE BUSINESS
 FULFILLING SOCIAL GOALS OF THE ORGANISATION
 IS A BAROMETER FOR ECONOMIC EFFICIENCY AND PROSPERITY
 AIDS IN EXPANSION AND DIVERSIFICATION

13. WEALTH MAXIMISATION
 IT MEANS MAXIMISING SHAREHOLDER WEALTH AS SHAREHOLDERS
WEALTH IN A FIRM = NUMBER OF SHARES * CURRENT STOCK PRICE
 ONE OF THE PRIMARY OBJECTIVES OF ANY BUSINESS CONCERN
 IT MEANS MAXIMISING THE CURRENT STOCK PRICE AND INCREASING
THE VALUE OF SHARES IN THE MARKET
 THE SHARE’S MARKET PRICE IS AN INDICATOR OF THE PERFROMANCE
OR REPORT CARD OF ITS PROGRESS
 LEADS TO OWNERS ECONOMIC WELFARE
 SERVES THE INTERESTS OF OWNERS AS WELLAS OTHER STAKEHOLDERS
SUCH AS LENDERS, SUPPLIERS, CREDITORS, EMPLOYEES AND SOCIETY
 IT IMPROVES THE GOODWILL OF THE BUSINESS AND AIDS IN LONG
TERM SUSTAINABILITY , SURVIVALAND GROWTH