Nature and Scope of Financial Management

What is Financial Management

Financial Management includes planning, organizing, directing and controlling of financial resources of the company i.e utilization of funds, controlling expenses, manage the flow of funds, etc. It helps the company to make them financially strong.

Scope of Financial Management

Investment Decision

Investment Decision helps to find the answer to Where the funds will be invested?. Because The company needs to invest some capital to fulfill the long and short term goals of the company.

Financial Decision

Financial Decision means the decision that helps the company to find out the right sources of collecting the funds. There are many sources to collect funds from the market the company has to decide the best and cheapest way.

Dividend Decision

It is the decision that helps the finance manager to distribute the dividend of the company. The finance manager takes the decision that how much amount he has to give shareholders and how much he has to save for retained profits.

Nature of Financial Management

  • The Primary nature of Financial Management is to increase the valuation of the company. That’s why the managers take all the possible decisions that help to increase the valuation of the company.
  • High risk brings high returns on the investment. So, the financial managers have to take care that what will be the best option to get high returns on less risk.
  • Financial Management helps to arrange the funds for the company.
  • Financial Management is never ending process. Because selling and buying of the goods or products will never end.

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