Financial Management services- Things to know

The terms finance, finance function and financial management are all used interchangeably for the discipline related to managing of money matters. Money is the life – blood of the business and all the economic activities are carried out through the use of money. Management of finance is very crucial for the effective functioning of any business. It can be defined as the task of providing funds needed by the business to achieve its common goal. In other words financial management is related to the procurement of funds and their effective utilizations in the business. Up to some extend raising the fund is not a problem, the real task is ensuring the availability of funds, allocating them for different uses, managing them, controlling costs, forecasting financial requirements and estimating rate of return on investment.

Important decisions by the Finance Manager to manage Finance

  • Investment Decisions: this is one of the key areas where the finance manager has to show his experience to handle the financing functions of an organization. Investment decisions are made after evaluating different proposals with reference to growth and profitability projections of the company. Capital budgeting is a major aspect of investment decision making process.
  • Financing Decisions: once the investment decision has taken then they have to go for financing decision. Optimal use of funds is related with financing decision. Financing decision also involves evaluation of alternative uses of funds.
  • Dividend Decisions:  Dividend decision is another major area of Financial Management. The finance manager must decide whether the firm should distribute all profits or retain them or distribute a portion and retain the balance.

Objectives of Financial Management to achieve the organizational goals

Financial management of any business firm has to set goals for itself and to interpret them in relation to the objective of the firm.

  • Profit Maximization: it is considered as an important goal in financial decision making in an organization. It ensures that the firm utilizes its available resources most efficiently under conditions of competitive markets.
  • Wealth Maximization: Wealth maximization means maximizing the present value of the firm. The management maximizes the present value not only for shareholders but also for employees, customers and suppliers as well.

 

The Financial Management of an organization is very crucial for the successful functioning of the business enterprise. Effective utilization of funds and finding the sources for funds are very important. Emirates Chartered Accountants Group Dubai provides financial management consultancy services to the clients. For a free consultation please contact us info@emiratesca.comn

 

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