Financial management:

Financial Management can be defined as the management of the finance of a business in order to achieve financial objectives.

The key point of financial management of a business are:

• Create wealth

• Generate cash

• Provide an adequate return on investment

There are 3 key elements in the process of financial managment

1) Financial Planning: Management need to ensure that enough resources are available at the right time to meet the needs of the business. In the short term, to invest in equipment and stocks etc. In the medium and long term, funding may be required for significant additions to the productive capacity of the business

2) Financial Control:Financial control is a important activity to help the business ensure that the business is meeting its objectives.

• 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?

3) Financial Decision-making: The key aspects of financial decision-making relate to:

• Investments must be financed in some way there are always financing alternatives that can be considered. For example it is possible to raise finance from selling new shares, borrowing from banks.

• Financing and dividends decision is whether profits earned by the business should be retained after distributed dividends to shareholders. If dividends are too high, the business may be run out of funding to reinvest in growing revenues.