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Financial Management Essay Sample

Financial Management Pages
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Question; what are the Nature, objectives and scope of Financial Management According to Dr. S. N. Maheshwari, “Financial management is concerned with raising financial resources and their effective utilization towards achieving the organizational goals.” Nature of Financial Management

Naturally, financial management relates the function and scope of accounting and economics. There are three main purposes of financial management i.e. making money, plan and control toward financial management functions. It concerns much on the means and ways to make money. According to its modern approach, financial management aims to analyze the money needed by certain firm, raise the money, and then invest it. To make it simple, nature and scope of financial management are related to making money and using it. The main objectives of financial management are:-

Profit maximization,Proper estimation of total financial requirements, Proper mobilization, Proper utilization of finance, Maintaining proper cash flow, Survival of company, Creating reserves, Proper coordination: ,Create goodwill, Increase efficiency,Financial discipline, Reduce cost of capital, Wealth maximization, Prepare capital structure and Reduce operating risks

Scope of Financial management
Financial managementhas a wide scope. According to Dr. S. C. Saxena, the scope of financial management includes the following five ‘A’s. 1.Anticipation: Financial management estimates the financial needs of the company. That is, it finds out how much finance is required by the company. 2.Acquisition: It collects finance for the company from different sources. 3.Allocation: It uses this collected finance to purchase fixed and current assets for the company. 4.Appropriation: It divides the company’s profits among the shareholders, debenture holders, etc. It keeps a part of the profits as reserves. 5.Assessment: It also controls all the financial activities of the company. Financial management is the most important functional area of management. All other functional areas such as production management, marketing management, personnel management, etc. depend on financial management. Efficient financial management is required for survival, growth and success of the company or firm. References:

Office of the Auditor General of Canada Financial Management Capability Model- Application Guide, April 1999 Dr S. N. Maheshwari (2009) Financial Management Theory

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