make a summary of "the scope of financial management"

Expert Solution

Financial Management is the process of planning, raising, controlling and administering all the funds used in the business. Financilal Management is an important function in all the organisations now a days because finance is the most important resource for any organisation.

Scope of Financial Management is as follows:

1) Evaluating Investment Decisions: : Managers in all the organisations need to evaluate the investment decisions before they are actually implemented because these are the responsible for the overall growth of the organisation. Investment decisions which are accurate increases the profits of the organisation and the finance manager has to evaluate the decisions carefully.

2) Taking Financial Decisions: The Finance manager has to take decisions regarding the sources from which the finance has to be raised in the company. These sources can be either short term or long term. Raising finance through debt required payment of interest on the debt value. The finance manager has to ensure that adequate funds are available in the organisation as and when required.

3) Dividend Decisions: The finance manager has to ensure that the owners of the organisations are always satisfied and in order to achieve this he has to make sure that a part of the profits of the organisation has to go to the shareholders as dividend. The finance manager has to apportion the profits of the company in such a way that both the shareholders and the company are at a better position.

In this way the financial management in an organisation is required to ensure that the funds are used in an efficient and effective way.

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jeff jeffy answered 2 years ago

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