Financial Management means planning, organizing, directing and controlling the financial activities such as procurement and exploitation of funds of the venture. All finance comes at some cost. It is quite imperative that it needs to be carefully managed. It means applying general management principles to financial resources of the enterprise. Financial Management is concerned with optimal procurement as well as usage of finance. For optimal procurement, different available sources of finance are identified and compared in terms of their costs and associated risks.
Similarly, the finance so procured needs to be invested in a manner that the returns from the investment exceed the cost at which procurement has taken place. Financial Management aims at reducing the cost of funds procured, keeping the risk under control and achieving effective deployment of such funds. Financial activities deal with not only the procurement and utilization of funds but also with the assessing of needs for funds, raising required finance, capital budgeting, distribution of surplus, financial controls, etc.
The objectives can be-
- To ensure regular and adequate supply of funds to the concern.
- To ensure optimum funds utilization. Once the funds are procured, they should be utilized in maximum possible way at least cost.
- To ensure adequate returns to the shareholders which will depend upon the earning capacity, market price of the share, expectations of the shareholders.
- To ensure safety on investment, i.e, funds should be invested in safe ventures so that adequate rate of return can be achieved.