This document provides an overview of key concepts in financial management. It defines finance as the management of money and the study of value and good decision-making involving money. Financial management aims to acquire funds at optimal cost and utilize them with minimum risk. It is concerned with managing funds, determining what assets to acquire, how to raise capital to purchase assets, and how to maximize firm value. Financial management objectives include maintaining liquidity, profit maximization, and wealth maximization. It also aims to utilize available resources effectively and provide social welfare.

1. FINANCIAL MANAGEMENT
By:
Smt.UMA MINAJIGI REUR
HEAD, DEPT. OF COMMERCE & Management
Smt. V G Degree College for Women, Kalaburagi

2. WHAT IS FINANCE?
• The art and science of managing money, or management of money.
• It is the study of value.
• It is the study of how to make good
decision that involve money.
• – What assets to buy?
• – How to pay for the assets you buy?

3. VALUE CREATION COMPONENTS
• Time
• Uncertainty

4. WHY STUDY FINANCE?
• Marketing
• – Budgets, marketing research, marketing financial products
• Accounting
• – Dual accounting and finance function, preparation of financial statements
• Management
• – Strategic thinking, job performance, profitability
• Personal finance
• – Budgeting, retirement planning, day-to-day cash flow issues

5. KEY ISSUES IN FINANCE
• Where to raise financial resources from?
• Wherein to invest the resources?
• How best to manage the production-distribution function?
• How much of profit to distribute and how much to retain?

6. FINANCE
1.Financial Management
2.Capital Markets
3.Investments

7. FINANCIAL MANAGEMENT
• Acquisition of fund at optimum cost and its utilization
with minimum financial risk.
• It is concerned with management of fund.

8. FINANCIAL MANAGEMENT
• How much and what types of assets to acquire?
• How to raise the capital needed to purchase assets?
• How to run the firm so as to maximize its value?

9. MEANING OF FINANCE
• Finance is defined as the management of money and includes
activities such as investing, borrowing, lending, budgeting, saving,
and forecasting. There are three main types of finance:
(1) personal, (2) corporate, and (3) public/government.
• Business Finance is raising of funds and proper use of such funds
for the purpose of making profit.

10. MEANING OF FINANCIAL MANAGEMENT
Financial Management means planning,
organizing, directing and controlling the financial
activities such as procurement and utilization of funds
of the enterprise. It means applying general
management principles to financial resources of the
enterprise.

11. • Financial Management is the part of the management activity
which is concerned with the planning and controlling of firms’
financial resources.
• In other words, financial management is the part of the
management which is concerned with raising of funds in the most
economical manner and using them profitably.

12. DEFINITION:
• Prof Ezra Solomon, “Financial management is concerned with
the efficient use of an important economic resource, namely
capital funds”.
• In other words, Financial Management is an activity which is
concerned with the collection or raising of finance and its
effective utilisation for the attainment of common objectives of
the business enterprise.

13. NATURE OF FINANCIAL MANAGEMENT
THE NATURE OF FINANCIAL MANAGEMENT REFERS TO ITS OBJECTIVES, SCO PE AND
FUNCTIONS.
OBJECTIVES OF FINANCIAL MANAGEMENT
Basic Objectives Other Objectives
1. Maintenance of Liquid Assets
2. Profit Maximisation
3. Wealth Maximisation
1. To protect liquidity and solvency of the
firm.
2. To utilise the available financial resources
effectively
3. To provide social welfare.
4. To build-up adequate reserves for
financing, growth and expansion.
5. To ensure a fair rate of return in

14. BASIC OBJECTIVES:
1.Maintenance of Liquid Assets:
• What are Liquid assets ?
• Liquid assets are those assets that can easily be converted into cash in a
short amount of time. Liquid assets include things like cash, money market
instruments, and marketable securities.
• The financial management assures that there are adequate liquid assets,
i.e, cash in hand to meet all its obligations.

15. Let’s study
• Profit Maximisation
• Wealth Maximisation
• In our next slides/ video
BASIC OBJECTIVES:

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