UNIVERSITY OF EDUCATION OKARA (CAMPUS)

Assignment of

Financial Management
Submitted To:

Sir Ahsan
Submitted By:

Talha Anjum Roll # 02 BBA (hons.) 5th semester

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Finance:
Finance is the art and science of managing money. In other words we can say that "Finance" is the management of money or funds. It is also known as funds management.

Branches of finance:
There are two basic branches of finance, which are as follows: a. Financial services: Financial services refer to services provided by the finance industry. The finance industry encompasses a broad range of organizations that deal with the management of money. Among these organizations are credit unions, banks, credit card companies, insurance companies etc. These financial services are concerned with the design and delivery of advice and financial products to individuals, businesses and Govt. b. Managerial finance: Managerial finance is the branch of finance that concerns itself with the managerial significance of finance techniques. Sound financial management creates value and organizational agility through the allocation of scarce resources amongst competing business opportunities. It is an aid to the implementation and monitoring of business strategies and helps achieve business objectives. Managerial finance is concerned with the duties of finance manager in a business firm.

Duties of a finance manager:

The different duties of a finance manager can be classified into: 1. 2. 3. 4. 5. 6. 7. The routine working capital and cash management decisions. Dividend decisions. Investment decisions. Financial forecasting. International financial decisions. Risk management. Cash management.

By combining all of the above we can say that a finance manager performs following 3 kinds of functions/duties.

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1. Creation of funds: This means from where or from what sources the business is going to get money or funds. e.g. issuing shares, debentures or bank loans. 2. Allocation of funds: This means where or on what sources the business is going to invest its generated funds. e.g. fixed assets, debtors etc. 3. Control of funds: This refers to the control of cash inflows and outflows.

Financial decision areas:

The major decision areas of finance are the responsibilities of treasurer and controller. Further we can explain it as:

Treasurer (financers)
capital expenditure manager. credit manager

Controller (accountants)
Tax manager

cost accountant

cash manager

financial accountant

inventory manager foreign exchange manager

coorporate accountant

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Relationship between finance and accounting

Accounting

Primary function is to develop and provide data measuring the performance of the firm. The accountant is responsible for preparing financial statements such as the income statement, balance sheets, and cash flows. Credit earnings are considered as income.

Finance

The financial manager or consultant places primary emphasis on decision making. It uses the financial statements prepared by accountants to make decisions about the firm's financial condition and to advise others about possible losses and profits. Only cash earnings are considered as income.

Why we study finance?

Just like a company, we all need money. We need money to live (food, clothing, and shelter) and we probably want money for a great number of things (luxuries, cars, computers, etc.). Thus we need to get money. Finance helps us to have the money when we need it and even when we want it. Obviously finance is important if we run our own firm. Here we need to efficiently manage our resources and know what risks are worth taking. Further we need to know how to invest and how to raise money. Even if you never plan on owning your own business, Finance is still important to you. Finance teaches us to understand the other side of every transaction. If you understand what your employer wants, it is easier to achieve this and hence you are in a better position for raises and promotions.

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