SCOPE OF FINANCIAL MANAGEMENT: The main aim of the financial management is to arrange the finance for short and long-term needs of the business. The followings are some scope of Financial Management :
PROPER CASH MANAGEMENT: A finance manager have the main task in a company is managing all cash. Cash can come from the sales, a collection of debts, short or long term arrangements with banks etc.it can be acquired from the purchases of raw material, daily expenses, wage bills etc. This management can be better with the help of cash flow statement.
CHECK THE VALUE OF FINANCE: A financial manager have to check the firstly the value of finance in an organization. With this purpose, he has to set all targets for future related to finance and done his preparation for any kind of losses.
DECIDE STRUCTURE OF CAPITAL: The capital structure refer to the kind of different securities for raising funds. After the raising of funds, it should be compulsory for the design and check the all structure of current capital which is required by the organization.
SELECTING A SOURCE OF MONEY OR FUND: After preparing a capital structure, source of funds should be selected. These can be selected include, share capitals, debentures, financial institutions, public deposits etc. Sources of finance can be raised short term or long term.
SELECTING A PATTERN OF INVESTMENT: When the funds are raised after that selection a good pattern of investment is required.this decision can be taken for which asset have to purchase. The decision-making techniques such as capital budgeting, cost analysis etc can be arises or applied in the making of decisions about the capital expenditure.
IMPLEMENT THE FINANCIAL CONTROL: A good financial management requires to use use the various system devices. These devices are:
- Return on investments
- Cost control
- Ratio analysis
- break-even analysis
Return on investment is the best control device to evaluate the performance of various financial policies. Evaluating the performance in various areas and take corrective measure whenever needed.
PROPER USE OF PROFIT: Proper use of surplus or profit is the important factor included in the financial management. A balance should be stuck in using funds for paying a dividend. A finance manager should consider the various factors, such as:
- The trend of earning of the enterprise
- Expected earning in future
- The market value of shares