FINANCIAL

MANAGEMENT
UNIT – 1
 FINANCE
Finance is one of the basic foundations of all
kinds of economic activities. It is a value of currency.
“Business finance is that business activity which is
concerned with the acquisition and conservation of
capital funds in meeting financial needs and over all
objectives of a business enterprise.
It is the master key which provides access to
all the sources for being employed in
manufacturing and merchandising activities.
 FINANCE ACTIVITIES

–
–
–
–
–
–
 FINANCIAL MANAGEMENT
It deals with financial or any decisions made
by the firm and the timely procurement of
adequate finance from various sources. It is utmost
effective utilization for the attainment of
organisational objectives.
S.C. Kuchhal defines that it deals with
procurement of and their effective utilisation
in the business.
SCOPE OF FM – Traditional Approach
It is an academic literature
Narrow sense in raising funds
It is called outsider – looking in
Internal financial decision making and
routine problems ignored
It concerned episodic events such as merger,
acquisition and reorganisation
It focus long term financial problem.
SCOPE OF FM – MODERN Approach
 Focus on wise use of funds
 Finance manager concerned about Technology,
Setting the direction, Growth of business, Shaping
the profitability, Amount of risk taking, Selecting the
mix of assets, Determination of opt capital structure.
It is an analytical way of viewing the financing
problems
It concerned with the solution for the major areas
relating to financial operations such as Investment,
Financing and Dividend decisions.
It require special care with extraordinary
administrative ability, management skills and
decision making technique.
 OBJECTIVES

–
–
–
–
–
–
–
–
 OBJECTIVES

–
–
–
–
–
–

–
 OTHER OBJECTIVES
–
–

–
–

–
–
–
–
–
KEY ACTIVITIES

–
–
–
–
–
–
–
–
–
KEY ACTIVITIES

–
–
–
–
–
–
–
IMPORTANCE
–
–
–
–
–
–
–
OTHER FUNCTIONAL AREAS
–
–
–
–
–
–
–
–
–
 KEY DECISIONS OF FM
–
–
–
–
–
–
–
–
 FINANCE MANAGER
– Financial managers are responsible for
the financial health of an organization.
They produce financial reports, direct
investment activities, and develop
strategies and plans for the long-
term financial goals of their
organization. Financial managers work in
many places, including banks and insurance
companies
FUNCTIONS OF FINANCE MANAGER
– Estimating the amount of capital required for the proper functioning of the
business
– Devising a capital structure
– Sources to raise funds
– Acquisition of funds
– Utilising funds
– Disposing of profits
– Managing the available cash
– Control of Finance
– Forecasting financial requirements
– Investment decision
– Cash Management
– Interrelation with other department
 FINANCIAL SYSTEM
–