Financial management means applying general management principles to financial resources of the enterprise.This is generally concerned with procurement, allocation and control of financial resources of a concern.
To ensure regular and adequate supply of funds to the concern.
To ensure adequate returns to the shareholders which will depend upon the earning capacity, market price of the share, expectations of the shareholders.
To ensure optimum funds utilization. Once the funds are procured, they should be utilized in maximum possible way at least cost.
To ensure safety on investment, i.e, funds should be invested in safe ventures so that adequate rate of return can be achieved.
To plan a sound capital structure-There should be sound and fair composition of capital so that a balance is maintained between debt and equity capital.
Finance management is one of the most important responsibilities of owners and business managers. They must consider the potential consequences of their management decisions on profits, cash flow and on the financial condition of the company. The activities of every aspect of a business have an impact on the company’s financial performance and must be evaluated and controlled by the business owner.
As a business grows and matures, it will need more cash. Planning and budgeting for these financial needs is crucial. Deciding whether to fund expansion internally or borrow from outside lenders is a decision made by managers. Finance management is finding the proper source of funds at the lowest cost, controlling the company’s cost of capital and not letting the balance sheet become too highly leveraged with debt with an adverse effect of its credit rating