Illustrate the nature of financial management, Financial Management

Q. Illustrate the Nature of Financial Management?

Less Descriptive as well as More Analytical: - Financial management is less descriptive and more analytical. Because of the development of new statistical and accounting techniques of financial analysis the financial management chooses the best option out of the many possible alternatives.

Continuous Function: - Financing is an incessant function. Additionally to the raising of finance, there is a continuous requirement for planning and controlling the finances of an enterprise. A firm carry out finance functions continuously in the normal course of the business.

Different from Accounting Function: - There are major difference between the accounting and finance function. Accounting generates information or else data whereas in the finance function the data reanalysed and used for the purpose of decision making.

Wide Scope: - There is broad scope of financial management. It is concerned not merely with the raising of finance but as well with the allocation and efficient use of such finance.

Centralised Nature: - Financial management is essential in nature. It is neither probable nor desirable to decentralize the financial responsibilities.

Measurement of Performance: - Financial management is anxious with the wise use of finance. It fixes certain norms as well as standards against which the benefits of an investment decisions are matched.

Inseparable Relationship among Finance and other Activities: - There exists an inseparable relationship among finance on the one hand and marketing, production and other activities on the other. All other activities are connected to finance.

Applicable to All Kinds of Organisations: - It is applicable to every forms of organization whether corporate or non-corporate such as sole proprietorship as well as partnership firms etc.

Posted Date: 8/3/2013 2:27:51 AM | Location : United States

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