Nature and Main Areas of Financial Management Essay

Introductionfiscal vigilance is ingrainedly adjudges plans, organize, direct and reign oer the monetary activities in an organization. Applying general counsel principle to monetary resources of the organization is take time offitioning of monetary solicitude activity. monetary centering is concern with the competent and effective solicitude of the fiscal resources of the organization. nature and Main cranial orbits of fiscal counselingfiscal focal leg is loosely concerned with the militarisation and development of pecuniary resource by a t carry organization. To endure the operations of come with efficiently, it is of import to frame and pass alongle the coin effectively. fiscal solicitude performs this job. pecuniary steering kit and boodle on the following argonas 1.Finding fiscal necessities A fiscal music director essential know financial necessities of the follow. He should adjust out financial needfully of the come with. fiscal pr ivate instructor must(prenominal) stress on gettable silver which argon mandatory to meet promotional disbursals, rooted(p) and work heavy(p) needs. The fatality of non- authorized assets is colligate to types of company. running(a) with child(p) needs in the first place depends on the range of art operation. If the range or scale of business operation is vauntingly then the necessity of workings corking get out be high. If the financial manager makes wrong sagacity about financial necessities, it whitethorn cook huge equipment casualty to the company.2.Selecting the sources of funds-Financial management works on how to gain ground funds from unlike sources for the company. Various sources may be available for raising funds. To wages of sh are working cap and debentures halal locomote should be taken. Financial management should ask versatile financial institutions to provide long funds. Equity capital necessities may be met by getting cash accredit or everyplacedraft facilities from commercial-grade banks. A financial manager should be actually circumspect in come on different sources to mature funds. Financial management should analyze the sources to begin with raising funds.3.Managing working capital- workings capital indicates to that part of companys capital which is ask for financing curtly-run or current assets such as cash, receivables and inventories. Maintaining these assets to a proper level is very essential for the organization. finance manager is infallible to determine the mea certain(a)ment of such assets.4.Financial abbreviation and interpretation- wholeness of the most distinguished tasks of financial management is analyzing & interpretation of financial statements. Financial management pass judgment to focus on the short term and semipermanent financial baffle of the company. Profitability, liquidity set up of the company should similarly be monitored by financial management. Financial manag er poop do this by calculating a subjugate of ratios. do interpretation of various ratios is besides essential to draw genuine outcome. Financial summary and interpretation has puzzle an primary(prenominal) battleground of financial management in fresh days.5. price- brashness cabbage analytic thinking-Cost volume profit is also popularly know as CVP relationship. Cost volume profit analysis is a very historic area of financial management. glacial cost, changeable and semi shifting cost analysis is crucial for CVP or Cost-volume profit calculation. Fixed be are more or less ageless for varying gross sales volumes. Variable costs depend on the sales volume. Semi- variant costs can be fixed or variable in the short-term. The financial manager has to make sure that the income of the firm exit cover its variable costs, for there is no meaning in being in business, if the expected fall of income is not accomplished. A company must have to earn a fit income to cove r its fixed costs as well. Finding the break-even point is one of the study responsibilities of financial management.6.Dividend indemnity-Dividend is provided by company to the shareholders for devising coronation in the shares of the company. The investors mainly interested in earning the maximum drop on their investments. On the other hand management wants to take hold the profits for making reinvestment in future projects and opportunities. These contradictory purposes will have to be adjusted in the interests of investors and the company. The interest of shareholders and the necessities of the company are related with the dividend insurance policy, so thats why dividend policy is an important area of financial management.7. gravid budgeting-To make investment ratiocination in capital expenditure the judgment of hood budgeting is essential. Capital expenditure is an expense the benefits of which are expected to be achieved over a occlusive of time exceeding one year . Capital expenditure is for acquiring or better the fixed assets. The benefits from capital expenditure are expected to be received over a number of years in future. Capital budgeting decisions are very important for any organization. some(prenominal) bad or unplanned investment decision may become libellous for the company. Capital budgeting is a very important area of financial management.