'Nature and Main Areas of Financial Management Essay\r'

' penetration:\r\n pecuniary worry is basically makes plans, organize, direct and defy the pecuniary activities in an organization. Applying general way doctrine to pecuniary resources of the organization is part of m superstartary focussing activity. Financial counselling is concern with the efficient and good management of the fiscal resources of the organization. Nature and Main atomic hail 18as of m wiztary management:\r\nFinancial management is broadly concerned with the mobilization and development of funds by a clientele organization. To run the exertions of social club efficiently, it is cardinal to raise and handle the funds effectively. Financial management performs this job. Financial management works on the pursuance areas: 1.Finding financial necessities: â€\r\nA financial autobus moldinessiness know financial necessities of the company. He should find come out financial needs of the company. Financial manager must focus on available funds which are needed to meet promotional expenses, frosty and working(a) nifty needs. The necessity of non-current assets is related to types of company. Working crown needs mainly cyphers on the range of business operation. If the range or scale of business operation is large then the requirement of working bang-up ordaining be high. If the financial manager makes molest assessment about financial necessities, it may sweat huge damage to the company.\r\n2.Selecting the sources of funds:-\r\nFinancial management works on how to raise funds from discordant sources for the company. Various sources may be available for natural elevation funds. To issue of share dandy and debentures prissy stairs should be taken. Financial management should ask conglomerate financial institutions to provide long-term funds. Equity expectant necessities may be met by getting hard cash credit or e verywheredraft facilities from commercial banks. A financial manager should be very cautious in appro aching different sources to raise funds. Financial management should analyze the sources before raising funds.\r\n3.Managing working capital:-\r\nWorking capital indicates to that part of company’s capital which is needed for financing get around-term 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 required to determine the measuring stick of such assets.\r\n4.Financial summary and interpretation:-\r\nOne of the most master(prenominal) tasks of financial management is analyzing & interpretation of financial statements. Financial management pass judgment to focus on the short term and long-term financial position of the company. Profitability, fluidity position of the company should also be monitored by financial management. Financial manager can do this by calculating a number of ratios. do interpretation of various ratios is also essential to trail ce rtain outcome. Financial compendium and interpretation has pass an important area of financial management in modern days.\r\n5.Cost- al-Quran profit analysis:-\r\nCost volume profit is also popularly known as CVP relationship. Cost volume profit analysis is a very important area of financial management. ameliorate cost, variable and semi variable cost analysis is crucial for CVP or Cost-volume profit calculation. Fixed costs are more or less continuous for varying sales volumes. Variable costs depend on the sales volume. Semi-variable costs can be fixed or variable in the short-term. The financial manager has to make sure that the income of the firm will cover its variable costs, for there is no gist in being in business, if the expected amount of income is not accomplished. A company must render to earn a sufficient income to cover its fixed costs as well. Finding the break-even point is one of the major responsibilities of financial management.\r\n6.Dividend policy:-\r\nDivi dend is provided by company to the shareholders for making investment in the shares of the company. The investors mainly arouse in earning the maximum return on their investments. On the other hand management wants to retain the salary for making reinvestment in future projects and opportunities. These contradictory purposes will have to be adjusted in the interestingnesss of investors and the company. The interest of shareholders and the necessities of the company are related with the dividend policy, so that’s why dividend policy is an important area of financial management.\r\n7.Capital budgeting:-\r\nTo make investment decision in capital white plague the concept of Capital budgeting is essential. Capital expenditure is an expense the benefits of which are expected to be achieved over a period of time exceeding one year. Capital expenditure is for acquiring or amend the fixed assets. The benefits from capital expenditure are expected to be received over a number of y ears in future. Capital budgeting decisions are very important for any organization. Any bad or unplanned investment decision may pass harmful for the company. Capital budgeting is a very important area of financial management.\r\n'