Financial management||25% beneficiary to @null||Nature and scope of Financial management (Lesson one)

INTRODUCTION

The purpose of this post is to enlighten the young minds on the blockchain on how to manage finance and source finance wisely for an investment.

This is a while course that can take 3 months to lecture. I will try to break it down in simple words.

The objective of this post is for steemians to understand:
• The nature of financial management.
• Scope of Financial management
• Financial functions listed.

MEANING OF FINANCIAL MANAGEMENT

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Financial management refers to the principles and practices applied in order to manage finance. This involves the planning, execution and control of decision making regarding the finance. The decision making includes; the decision as to size of investment, sources of capital (where to get the money for the investment) and extension of retention of profit or dividend payout ratio.

In other words, you caan define financial management as part of management that deals with the raising of funds in the most economic and suitable manner and using the funds properly in order to make reasonable profit.

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THE NATURE OF FINANCIAL MANAGEMENT

This part of Financial management involves the function, goals, system, its relation with other subsistence in the firm, its environment,it's relationship with other discipline, and its equation with other division within the organisation.

Financial management is an integral part of overall management. Financial consideration are involved in all the business decision whether small or big so it makes it pervasive throughout the organization.

The major interest of Financial management is the value of the firm, that is, Financial decisions are taken for the sole purpose of increasing, optimizing and maximizing the value of the firm.

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Financial management involves risk. The decision on investment involves choosing assets which can generate returns although they are accompanied with risk. The higher the risk of an asset, the higher the returns of that asset and vice versa. Therefore, the Financial manager has to choose with regards with the level of risk the company is willing to assume.

Financial management affects the survival growth and vitality of a firm. Finance is said to be the life blood of every business, it is to business just as to what blood is to living animals. The amount, type, sources, conditions and cost of finance influences the functioning of business unit.

Finance function which includes investment, raising of capital, distribution of profit are performed in all firms or businesses and also in non businesses whether big or small and proprietory or corporate undertaking.

Financial management is the sub-system of the business which has other sub-system like production, marketing etc.

SCOPE OF FINANCIAL MANAGEMENT

The scope of financial management comprises the activities of raising funds, investing them in the asset and distributing returns earned from assets to share holders. While carrying out this activities, a firm attains to balance cash inflow and outflow.

Financial functions involves these four decisions;

1. Investment decision
2. Financing decision
3. Dividend decision
4. Liquidity decision

CONCLUSION

Finance is the life of every business and as such, has to be given serious attention. The decisions taken in raising funds, investing them and distributing the returns are all financial decisions.

In my next lesson, I will explain the financial functions proper.

Thanks for visiting my post

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