Financial management refers to the ability to use resources in a right manner. It aids the firm to achieve its set of goals in the economy. The goals of management in the economy are to enable the company to increase its earnings and improve its operations. There are four elements that should be put into consideration to be in a position to run the economy.
Financial planning is one of the principles that assist to cover both short and lasting goals of the firm. Proper financial plans enable the manager to prepare the business for future operations. Financial control is another aspect that is vital because it assist the firm to meet its goals. It also determines whether resources in the firm are safe. In addition, financial choice control incorporates activities such as benefits payments and investments. Through financial accountability, managers get the chance to account on expenses of purchases and salaries.
In this regard, managers in charge of finances need to take note of procedures that are involved in accounting. This is by considering operation and investment costs. Financial management is significant to firms that do not make profits to generate returns. This will enable them to maximize the investment value in a business. Evidently, nonprofit firms rely on money that is generated to meet specific goals. The purpose of this cash is to balance on flexibility that will facilitate operations in a nonprofit organization.
Financial management is significant to nonprofit firms to depict the progress of the company and how they use their resources. The benefits of nonprofit firms are that they do not have to pay for taxes. Due to their charitable nature, they are in a position to receive donations from the public. Participants are protected from personal liability that could subject them to legal cases against the firm.
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Roles and Objectives of Financial Management Essay
632 WordsJun 29th, 20123 Pages
Financial Management: Roles and Objectives
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|1. Planning |Identify and Manage Risks |
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|2. Organizing |Adequate supply of funds |
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|3. Directing |Adequate returns to shareholders |
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Financial management has a role within the overall context of general management. The scope/elements of financial management are making investment, financial, dividend decision for an enterprise to survive. Finance is needed to promote or establish the enterprise, acquire fixed assets, make investigations such as market surveys. By developing product, keep men and machine at work encourages management to make progress and create values. The financial management is generally concerned with procurement, allocation and control of financial resources of an enterprise. These types of objectives are carried out within the United States financial system. The first object of financial management is to identify and manage risks. A finance manager has to make estimation with regards to capital requirements of the company. This will depend upon expected costs and profits and future programs and policies of a concern. Estimations have to be made in an adequate manner which increases earning capacity of enterprise. Second objective is to ensure regular and adequate supply of funds (Moyer, McGuigan, Rao & Kretlow, 2012). Third objective is to ensure adequate returns to the shareholders which depend upon the earning capacity, market price of the share and expectations of the shareholders. The net profits decision has to be made by the finance manager and this can be done in two ways: Dividend declaration is identifying the rate of dividend and