What Is Financial Management?
Financial management is the process of managing money in order to reach financial goals. This includes creating a budget, saving money, investing money, and making wise financial decisions. Financial management also includes understanding financial concepts and terminology.
What are Objectives of Financial Management
The objectives of financial management are:
1. Maximization of shareholders’ wealth
2. Maintenance of liquidity
3. Maximization of profits
4. Minimization of taxes
5. Maximization of cash flows
6. Management of working capital
7. Management of financial risks
What is the Scope of Financial Management
The scope of financial management includes the analysis of financial data, the development of financial plans and the implementation of financial plans. Financial management also includes the management of financial risks and the assessment of financial performance.
What are the Limitations of Traditional Approach in Financial Management
The limitations of the traditional approach in financial management include:
1. Limited use of financial information
2. Limited use of financial analysis
3. Limited use of financial planning
4. Limited use of financial control
5. Limited use of financial management information systems
What is Modern Approach in Financial Management
The modern approach to financial management is an attempt to integrate financial planning with business strategy. It emphasizes the need to make financial decisions that will improve a company’s competitive position and increase its value.
What are Investment Decisions
Investment decisions are the choices an individual or company makes about where to allocate their money. Investment decisions can be made about individual stocks, bonds, or other securities, or about entire asset classes, such as stocks, bonds, real estate, or precious metals.
What are Financing Decisions
Financing decisions are the choices a company makes about how to finance its operations and growth. A company’s financing decisions can be broken down into three categories:
1. How much debt and equity should the company issue?
2. What type of debt and equity should the company issue?
3. How should the company use the proceeds from the debt and equity issuance?
What are Dividend Decisions
The dividend decisions of a company involve the determination of how much money will be paid out to shareholders in the form of dividends and when those dividends will be paid. The board of directors of a company is responsible for making these decisions.
There are a number of factors that the board must consider when making dividend decisions. The most important factors are the company’s financial condition and its ability to pay dividends without putting its future at risk. The board must also consider the desires of shareholders, who may prefer to receive dividends in a particular form or at a particular time.
Dividends can be paid in cash, shares of the company’s stock, or other assets. They can be paid out regularly or irregularly, depending on the company’s financial condition and the wishes of the shareholders.