Functions of Financial Mgt

INTRODUCTION

Financial Management is nothing but management of the limited financial resources the organization has, to its utmost advantage. Resources are always limited, compared to its demands or needs. This is the case with every type of organisation. Proprietorship or limited company, be it public or private, profit oriented or even non-profitable organisation.

FINANCE FUNCTION– IMPORTANCE

In general, the term “Finance” is understood as provision of funds as and when needed. Finance is the essential requirement –sine qua non– of every organisation.

Required Everywhere: All activities, be it production, marketing, human resources development, purchases and even research and development, depend on the adequate and timely availability of finance both for commencement and their smooth continuation to completion. Finance is regarded as the life-blood of every business enterprise.

Efficient Utilisation More Important: Finance function is the most important function of all business activities. The efficient management of business enterprise is closely linked with the efficient management of its finances. The need of finance starts with the setting up of business. Its growth and expansion require more funds. The funds have to be raised from various sources. The sources have to be selected keeping in relation to the implications, in particular, risk attached. Raising of money, alone, is not important. Terms and conditions while raising money are more important. Cost of funds is an important element. Its utilisation is rather more important. If funds are utilised properly, repayment would be ossible and easier, too. Care has to be exercised to match the inflow and outflow of funds. Needless to say, profitability of any firm is dependent on its cost as well as its efficient utilisation.

CONCEPT OF FINANCIAL MANAGEMENT

As already discussed, the general meaning of finance refers to providing funds, as and when needed. However, as management function, the term...