Question

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Identify the activities that structure the Financial management process.  

Answer 1

The activities that plays a crucial role in the overall financial management process includes estimation of capital required, procurement and allocation of funds, deciding the optimal capital structure, distribution and management of surplus and maintaining financial control.

• Estimation of capital required: How much capital is required for successfully and effectively managing the business operations of the company? It is one of the primary question, the answer of which is addressed by the financial managers. It is estimated by assessing the current and future cost that company will incur
• Procurement and allocation of funds: The next step is to make sure that necessary funds are procured and allocated on time, so that business does not suffer any hat in its activities and thus resultant loss can be avoided.
• Deciding the optimal structure: It is the responsibility of financial manager and one of the most important step of financial management process, under this the manager will choose the best mix of debt and equity for the company in which WACC will be lowest.
• Distribution and management of surplus: Surplus basically means profits, the management has to decide whether to retain the profits or use the same for the purpose of distribution in the form of dividends etc.
• Managing financial control: The financial control on the company and business can be attained only through effective evaluation of performance of the business and then taking necessary action to improve the same, the process is known as managing financial control.