Question

What are the five elements of financial management how can a financial manager use them to make the organization work more effectively

Answer 1

Every Financial manager must consider the following activities for running a business smoothly and efficiently:

1. Financial Planning

It is an important element of financial management that ensures that an adequate amount of capital is present in the company at the requisite time to meet the needs of the business. These include Short term and Long term needs. Short term needs include fulfilling the short term needs like equipment and stock, payment to employees and fund the sales made on credit. Long term needs include borrowing money for the expansion of business, funding the special project and maintaining Financial stability.

2. Financial Control

This ensures that the company is fulfilling and meeting its financial goals by using its assets efficiently, are the businesses secured, etc

3. Financial Decision Making

This aspect explains that a Financial Manager must consider all the alternatives before making any financial decision. For e.g. Deciding whether to distribute dividends or not.

4. Organizing

In organizing the Financial manager decides how to use the resources of the organization in the best possible way.

5. Directing

A Financial manages directs the resources in the best possible way to increase the Profitability, financial stability of firm.