Financial Management
Financial Management can be defined as:
The planning, directing, monitoring, organizing, and controlling the monetary resources of a business or organization
Business Dictionary.com
The key objectives of financial management are:
Create wealth for the business
Generate cash, and
Provide an profitable ROI including risks and the resources invested
The ABC's of financial management
are:
(A) Planning
Planning involves short, medium, and long term objectives to meet the business present and future needs.
In the short term, funding may be needed to invest in equipment and stocks, payroll and order to cash sales.
In the medium and long term, funding may be required for significant additions to the productive capacity of the business or to make acquisitions.
(B) Control
Financial control is a critically important activity to help the business ensure that the business is meeting its objectives. According to one source financial control addresses questions such as:
Are assets being used efficiently?
Are the businesses assets secure?
Do management act in the best interest of shareholders and in accordance with business rules?
(C) Decision-making
The key aspects of financial decision-making relate to investment, financing and dividends:
Investments must be financed in some way however there are always financing alternatives that can be considered.
The key to financing decisions of course is to minimize cost and maximize profits
source: combined from multiple resources
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