Finance Management offers ample employment opportunities to students who want to make a career in this field. Read the following post to know more.
Finance Management: Introduction
Finance Management is all about the efficient management of funds in a way so as to achieve the organizational goal of an establishment. It decides the means of raising the capital and allocating it in an effective manner. It is in important domain of business management dedicated to judicious utilization of capital and wise assortment of sources of capital to enable the business move towards its predefined goals. It is a specialized area directly connected to the apex management.
Nowadays many post graduate as well as graduate programs offer financial management as a specialization to students who have some previous exposure to finance or accounting. The financial management is suited for those aspiring to choose the path of financial analysis, banking, management consultation or management accounting. In any case the career prospect in this domain is very bright and lucrative. And for this reason there is a growing trend among the students to study financial management.
There is a bit of controversy regarding the inclusion of the subject financial management in the curriculum of a large number of academic as well as professional courses. In order to find its justification one must first of all understand the objective and the functions of financial management. It is then only he or she would be able in the position to grasp the answer of the question as to why study financial management.
Objectives of Financial Management
Financial Management has some significant objectives directly related to the profitability of a business firm –
- Financial Management takes care of the seamless and sufficient supply of funds to ensure the smooth running of all the business activities.
- It also ensures that the shareholders are given sufficient returns in keeping with their expectations from the organization.
- It is the responsibility of Financial Management to guarantee the optimum utilization of fund in a most effective way.
- To ensure the safety of the fund by investing in safe and profitable projects and ventures (through comprehensive research and calculations) so as to achieve considerable amount of return is another vital responsibility of Financial Management.
Functions of Financial Management
- Estimating Capital Requirement: Finance managers are to make a careful estimation of the actual capital requirement in regard to the business activities. They have to determine this based upon the estimated costs as well as the expected profit. This needs adequate mathematical knowledge and skill.
- Determining Capital Composition: After the estimation is done the capital structure is to be determined. This includes analysis of long term and short term debts. This is again dependent upon the amount of equity capital possessed by the company as well as additional funds required to be gathered from other sources. All of these involve very complex calculations requiring enough knowledge and accuracy.
- Selection of Fund Sources: For procurement additional fund, an organization has got different choices to opt from. They are –
- Issuance of debentures or shares.
- Loans from banks or other financial institutions.
- Drawing public deposits in shape of bonds.
Now which option would best suit the present requirement depends upon the aptitude and experience of an efficient finance manager.
- Disposal of Surplus: This can be done by declaration of dividend and retention of the profit or by combination of the both. It is upon the finance manager to determine as to which would be most beneficial standing at that particular point of time.
- Financial Control: In addition to the above mentioned functions the finance manager has also to exercise overall command over finance. There are many financial tools and techniques available to a financial manager for this purpose.
The Road Ahead
From the above information regarding the objectives and functions of financial management one can easily understand the significance of this domain in an organization and the worth of the person who handles it i.e. the financial manager. At the same time it also explains the answer as to why study financial management. And it is for the same reason that there is high demand of the financial managers irrespective of the industry and location. It is also a matter of fact that among the three broad segments of management namely finance, marketing and HR, the demand of the first one is the highest in the market.
There’s no doubt about the fact that financial management provide a student with depth of theoretical knowledge as well as high level of practical skill the combination of which is very much required of a worthy financial professional to get over the increasingly difficult and complex global financial environment.