What is Financial Management?
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We know, without finance any business activity or organization will not work, so finance is often called as the life blood of business organization. Finance is the art and science of managing money.
That is simply how the money is managed. Finance can be divided into two major areas: 1) financial services and 2) corporate finance.
Financial services is concerned with the design and delivery of financial products to individuals, businesses and governments within the area of banking and related institutions, personal financial planning, investments, real estate, insurance and so on.
Corporate finance also called financial management or managerial finance which is concerned with how finance is managed in a firm. Financial management activities are important in a firm irrespective of its size, kind or nature. That is whether it is a small or big firm, trading or service or manufacturing firm, it may be of any type of ownership, the financial management is very useful and important. In this course we are concentrating on corporate finance.
The skills required to work in any field of business always includes financial management skills. All the functions of management cannot do without finance and financial information. So finance and financial management is one of the skills that one should acquire in their life.
Some Definitions of Financial Management
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Finance has been defined in many ways, some of them are given below:
According to Khan and Jain, “Finance is the art and science of managing money”.
According to Oxford dictionary, “ the word ‘finance’ connotes ‘management of money’”.
According to the Wheeler, “Business finance is that business activity which concerns with the acquisition and conversation of capital funds in meeting financial needs and overall objectives of a business enterprise”.
According to the Guthumann and Dougall, “Business finance can broadly be defined as the activity concerned with planning, raising, controlling, administering of the funds used in the business”.
According to Raymond Chambers, “Financial Management comprises the forecasting, planning, organizing, directing, coordinating and controlling of all activities relating to acquisition and application of the financial resources of an undertaking in keeping with its financial objective”. According to Phillippatus, “Financial Management is concerned with the managerial decisions that result in the acquisition and financing of short term and long term credits for the firm”.