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Financial Management - Importance and Objectives

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Title: Financial Management - Importance and Objectives


1
Financial Management Importance and Objectives

Robert Smith
Finance Consultant
2
Contents
  • Introduction
  • Importance of Financial Management
  • Objectives of Financial Management
  • Conclusion

3
Introduction
  • It is the art and science of managing money. It
    is the duties of financial managers in a business
    firm.
  • Financial management is all about obtaining funds
    and how to use that fund.
  • Financial Management is a careful selection of
    the source of working capital.
  • It includes financial planning, financial
    administration and financial control.

4
Importance of Financial Management
  • Development and Economic Growth
  • Improved Standard of Living
  • Improved Health

5
Contd..
  • Creates Job
  • Alleviation of Poverty
  • Better Financial Decisions

6
Objectives of Financial Management
  • Two main objectives of financial management are
  • 1. Profit Maximization
  • 2. Wealth Maximization
  • It provides a framework for optimum financial
    decision making.
  • It operates internal investment and financing of
    the firm.

7
Contd..
  • Profit Maximization
  • Profit/EPS maximization should be taken and
    those that decrease profit/EPS should be avoided.
  • It deals with the allocation of resources. Here
    resources are working capital for business
    funding.
  • Financial Management (FM) mainly depends on
    efficient economic resource i.e. capital.
  • The technical flaws of Profit Maximization are
  • 1. Ambiguity
  • 2 . Timing Benefits
  • 3. Quality Benefits

8
Contd..
  • Wealth Maximization
  • Wealth maximization is also known as value or net
    present worth maximization. It should satisfy all
    three requirement, i.e. exactness, quality and
    money value of time.
  • The technical flaws of Wealth Maximization are
  • 1. Focus on Stakeholders
    Stakeholders include
  • groups of employees, investors and stakeholders
    which are
  • directly related to the firm.
  • 2. EVA (Economic Value Added)
    EVA is equal to
  • after tax operating benefits of a firm less the
    cost of the firm

9
Conclusion
  • Financial Management is the mixture of financial
    planning, administration and control.
  • Financial corporation deals with how corporation
    obtains the funds and how corporation allocates
    that funds.

10
References
  • http//en.wikipedia.org/wiki/Financial_management
  • https//48factoring.com/working-capital-financing
  • http//www.managementstudyguide.com/financial-mana
    gement.htm
  • http//www.slideshare.net/anurag_toby/objectives-o
    f-financial-management-26656656

11
  • Thank You !!!
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