Explain the importance of financial management.

Financial management provides pathways to attain goals and objectives in an organisation. The main duty of a financial manager is to measure organisational efficiency through proper allocation, acquisition and management.

The importance of financial management is explained below −

  • It provides guidance in financial planning.
  • It assists in acquiring funds from different sources.
  • It helps in investing an appropriate amount of funds.
  • It increases organisational efficiency.
  • It reduces delay production.
  • It cut down financial costs.
  • It reduces cost of fund.
  • It ensures proper use of fund.
  • It helps business firm to take financial decisions.
  • It prepares guideline for earning maximum profits with minimum cost.
  • It increases shareholders’ wealth.
  • It can control the financial aspects of the business.
  • It provides information through financial reporting.
  • It makes the employees aware of saving funds.

Updated on: 06-Aug-2020

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