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Finance executive has to evaluate each source or method of finance and select the best source keeping in view the various factors. Before uploading and sharing your knowledge on this site, please read the following pages: 1. This essay analyses both, causes and motives of earnings management as well as possible remedies. At the same time, it balances this single factor with related goals, such as, growth, stability, risk avoidance and the market price of the firm’s stock. Find paragraphs, long and short essays on ‘Financial System’ especially written for school and college students. Disclaimer 8. (ii) In what form should it hold its assets? Profit can be maximised either by increasing output for a given set of scarce input or by reducing the cost of production for a given output. While during detailed planning, estimated requirement is comparatively more realistic, and prepared after going into details more thoroughly. This help is provided to the students so that they can write good assignments on financial management. 3. The same is due to the fact that there is a time value of money. Arranging the funds when required, in the form needed in the most economical way. Published by Order Your Essay on December 7, 2020. (i) Profit-Risk Approach to Financial Goals: Under this approach, in order to maximise profits at a given level of risk, finance deals with creating the proper framework. The use of various control techniques by the Finance Manager will help him in evaluating the performance in different areas and take corrective action whenever needed. While taking financing decisions, the influence of inflammation on financial markets and on the cost of funds to the firm is also considered. It is a pathway to attain goals and objectives. Such actions should be undertaken. Survival and development of a firm depend on it. Investment decisions begin with a determination of the total amount of assets required by the firm and to determine the money value of the same. For this purpose, a financial manager should know the following: (i) How large should an enterprise be, and how fast should it grow? That is why it is rightly said that maximisation of wealth is more useful than maximisation of profit as a statement of the objective of most business firms. For this purpose, the firm must develop controls over flows of funds which allows sufficient flexibility to respond to change in the operating environment. (c) Since the traditional approach stresses more emphasis on the long-term problem, it ignores the importance of working capital management. Before uploading and sharing your knowledge on this site, please read the following pages: 1. Its conceptual and analytical limitations arose from the fact that it recognised only the problem of procuring the external funds and ignored the dimensions of allocations of capital which Solomon described as the central issues of financial management. The main goal of a financial manager is to ensure that there is … Uploader Agreement, Read Accounting Notes, Procedures, Problems and Solutions, Learn Accounting: Notes, Procedures, Problems and Solutions, Top 4 Significances of Cost of Capital | Financial Management, Investment Decisions in Financial Management, Impact of Taxation and Inflation on Financial Management, Income Determination under Marginal and Absorption Costing, Essay on the Nature of Financial Management, Essay on Approaches of Financial Management, Essay on the Objectives of Financial Management, Essay on the Goals of Financial Management, Essay on the Responsibilities of Financial Management in the Firm. Disclaimer 8. But, at present, it is used in a broader sense which includes the efficient use of resources in addition to procurement of funds. After reading this essay you will learn about:- 1. Let us discuss one by one. An optimal financing mix is one in which market price per share could be maximised. It is vague and ambiguous and does not recognise the two basic facts, viz: It can be stated that the appropriate operational-decision criterion should include the following: (ii) It should consider both quality and quantity dimension; (iii) It should be based on the bigger the better principle; and. Responsibilities of the Financial Management in the Firm: An efficient and sound organisation must be set up for the finance functions as the financial decision of a firm is very important. This ‘statement of funds’ is a summary of a firm’s changes in financial position from one period to another. Since the capital is a scarce item, it follows that the profit maximisation should serve as the primary need for the decision taken by the financial managers of private firms which, in practice, it follows. When the funds have been poured then a decision regarding pattern of investment has to be taken. Enugu, El ‘Demak Publishers. Therefore, if profit-maximisation is decision-criterion, both of them should be given equal importance. (b) The traditional approach is considered as the episodic financing function since it stresses overemphasis on topics of securities and its markets, incorporation, promotion, merger etc. As future benefits are not known with certainty, the investment proposals involve risk. Financial Management Essay examples. Asset management decisions means managing the assets efficiently after their acquisition. These functions influence the operations of other crucial functional areas of the enterprise or firm such as marketing production and personnel. On the other hand, profitability of a firm is represented by the rate of return on its capital employed (which is measured by Net Profit to Capita Employed). He has to assess the various cash requirements at different times and then make arrangements for cash needed. (ii) The treatment of various topics and their emphasis is not enough. Success of a firm depends on the ability to raise funds, invest in assets and manage wisely. 2177 Words9 Pages. Prohibited Content 3. Content Filtration 6. Plagiarism Prevention 5. From these two definitions it is quite overt that financial management is very crucial in the healthcare sector. Functions of Financial Management: Essay on the Introduction to Financial Management, Essay on the Definition of Financial Management, Essay on the Scope of Financial Management, Essay on the Role of Financial Management in a Business, Essay on the Financial Goals and Objectives, Essay on the Functions of Financial Management. Financial manager is concerned with the following aspects: 1. Following are the basic financial objectives: (b) Maximisation of shareholders’ owners’ wealth. According to E. Solomon’s symbols and methods, the net present worth can be ascertained as under: From the above, it becomes crystal clear that value maximisation decision criterion recognises the time value of money and also tackles the risk which is ascertained by the uncertainty of the expected benefits. The Value Maximisation or Net Present Worth Maximisation — which is universally accepted as an appropriate and operationally feasible criterion in order to choose among the alternative courses of action for financial management — is to maximise the value of the firm over a long run. In short, the traditional view is the outsider-looking-in approach. The functions of finance thus involve three major decisions the firm must make: Each of these decisions are taken in relation to the objective of the firm, an optimal combination of these three will maximise the value of the firm to its shareholders. apa format papers research aqa english a level coursework grade boundaries The new law which aimed at driving down costs, its manufacturing and papers past icaew financial management service machinery and equipment for sales and higher standards of work, or joules. Various sources from which finance may be raised include: shareholders’ debenture holders, banks and other financial institutions and public deposits etc. The task of personal financial management is the key element to getting and keeping money. The next feature of the wealth maximisation criterion is that it recognises both the quantity and quality dimensions of benefits along with the time value of money. After estimating the financial requirements, the finance executives have to decide about the composition of capital. Essay, Financial Management, Essay on Financial Management. After deciding the quantum of funds needed it should be decided which type of securities should be raised. Therefore, financial management includes as functions of finance the three major decisions which are: The new approach to financial management may be broadened to include profit-planning function also. In view of these factors the financial management scope concentrates on the following areas of finance function. Scope 4. Similarly, the designation also differs from firm to firm, some are called financial controller, some are called financial manager or vice president for finance or director of finance etc. Essay on the Responsibilities of Financial Management in the Firm. Financing decision are taken in relation to the overall valuation of the firm. Uploader Agreement. 7. This approach, however, recognises the following: Generally, finance strives for a high level of long-term profit and, at the same time, a short-term profit. (iii) Financial Functions should always be centralised which result in economise and. Content Guidelines 2. Profit maximisation concerns ambiguity since the term ‘profit’ is vague and can vary widely depending on the principles of accounting applied. i.e., the Dividend Policy decisions. Liquidity means one’s ability to meet claims and obligations as and when they become due. Under the former, an element in minimising risk is the achieving of liquidity, whereas, under the latter, achieving liquidity requires the maximisation of risks. Various methods of obtaining short, intermediate, and long term financing are also explored, examined, analysed and a decision is taken. Goals 5. Cash flow management is also an important task of finance executive. Financial Management Essay ...Financial Management APC308 Individual assignment Weighting – 100% of the marks for this module This is an individual assignment of about 3,000 words. The traditional approach to financial management did not allow the financial manager to take any decision regarding the allocation of the firm’s funds although he was required to raise the needed funds from various sources. Therefore, it can be taken into consideration that the profit maximisation, as an operational criterion, is unsuitable and inappropriate of a firm from the standpoint of investment, financing and dividend policy. According to this approach, the scope of financial management and the role of financial manager are considered to be confined to the procurement of funds in a broader sense. Because, we all know that the earlier the better as benefits received sooner are more valuable than benefits received later on the ground that the former can be reinvested ‘o earn a return. This is not an example of the work produced by our Essay Writing Service. He will prepare a financial plan for present as well as future for this purpose. Financial management is concerned with the acquisition (investment), financing (arranging funds), and management of assets with some overall goal in mind. The main function of financial management is to ensure that the firm must have sufficient funds to meet financial obligations when they are needed and to take advantage of investment opportunities. Besides, money has time value. Here we are discussing the funds requirement for a running business including its long term planning for expansion. It should be remembered that a clear understanding of the objectives which are sought to be attained is necessary in order to make wise decisions. 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