MEANING OF FINANCIAL MANAGEMENT

MEANING OF FINANCIAL MANAGEMENT
Financial management is that managerial activity which is concerned with planning and controlling of the firm’s financial resources. In other words it is concerned with acquiring, financing and managing assets to accomplish the overall goal of a business enterprise (mainly to maximise the shareholder’s wealth).

In today’s world where positive cash flow is more important than book profit, Financial Management can also be defined as planning for the future of a business enterprise to ensure a positive cash flow. Some experts also refer to financial management as the science of money management. It can be defined as

“Financial Management comprises of forecasting, planning, organizing, directing, co- ordinating and controlling of all activities relating to acquisition and application of the financial resources of an undertaking in keeping with its financial objective.”

Another very elaborate definition given by Phillippatus is

“Financial Management is concerned with the managerial decisions that result in the acquisition and financing of short term and long term credits for the firm.”
As such it deals with the situations that require selection of specific assets (or combination of assets), the selection of specific problem of size and growth of an enterprise. The analysis of these decisions is based on the expected inflows and outflows of funds and their effect on managerial objectives.