SCOPE OF FINANCIAL MANAGEMENT, importance of financial management


Importance Of Financial Management

Finance is the lifeblood of a business organization. It must meet the need of the business concern. Each and every business concern must maintain an adequate amount of finance for the smooth running of the business concern and also maintain the business carefully to achieve the goal of the business concern. The business goal can be achieved solely with the assistance of the effective management of finance. We can’t neglect the importance of finance at any time and in any situation. Some of the importance of financial management are as follows:

Financial Statement Analysis

importance of financial management

Financial Planning

Financial management helps to work out the monetary demand of the business concern and results in the intake of monetary planning of the concern. Financial planning is a vital part of the business concern, that helps the promotion of an enterprise.

Acquisition of Funds

Financial management includes the acquisition of needed finance for the business concern. Acquiring needed funds play a major part in financial management, which involves a possible source of finance at minimum cost.

importance of financial management

Proper Use of Funds

Proper use and allocation of funds result in improving the operational potency of the business concern. Once the finance manager uses the funds properly, they’ll reduce the value of capital and increase the worth of the firm.

importance of financial management

Financial Decision

Financial management helps to make sound financial decisions in the business concern. The financial decision can have an effect on the whole business operation of the concern. Because there’s a direct relationship with varied department functions like promotion, production personnel, etc.

Improve Profitability

The profitability of the concern purely depends on the effectiveness and proper utilization of funds by the business concern. Financial management helps to improve the profitability position of the concern with the help of strong financial control devices such as budgetary control, ratio analysis, and cost volume profit analysis.

Increase the Value of the Firm

Financial management is very important in the field of increasing the wealth of investors and business concerns. The ultimate aim of any business concern can succeed with the utmost profit and better profit leads to maximizing the wealth of the investors likewise as the nation.

Promoting Savings

Savings are potential only if the business concern earns a higher profit and increases wealth. Effective financial management helps in promoting and mobilizing individual and corporate savings.

Nowadays financial management is additionally popularly referred to as business finance or corporate finances. The business concern or corporate sectors cannot function without the importance of financial management.


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book financial_management below is the link of complete book financial_management