What is financial management? Define objectives and scope of financial management.

Financial management is the set of activities concerned with planning, organising, directing and controlling the financial activities. Financial management accepts the general management principles for financial performances. Financial management acts like a guidance, where more investment opportunities are available.

Scope of financial management

The scope of financial management is given below −

  • Estimating the requirement of funds.
  • Determining the capital structure.
  • Investment fund.
  • Maximise profits.
  • Maintain core value of organisation.
  • Dividend for shareholders.
  • Retain profits.

Objectives of financial management

The objectives of financial management include −

  • Profit maximisation.
  • Wealth maximisation.
  • Optimum funds utilisation.
  • Ensure safety on investment.
  • Sound capital structure.

Functions of financial management

The functions of financial management are as follows −

  • Estimation of capital requirements.
  • Determination of capital composition.
  • Choice of source of funds.
    • Issue of shares and debentures.
    • Loans to be taken from banks/financial institutions.
    • Public deposits in form of bonds.
  • Investment of funds.
  • Disposal of surplus.
  • Management of cash.
  • Financial controls.

Updated on: 06-Aug-2020

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