Functions of Financial Management

The functions of financial management can be divided into two groups:

a. EXECUTIVE FUNCTIONS

These functions involve financial, investment_ and dividend decision-making. These significant decisions require administrative skill, financial corn lence and technical foresight on the sar financial executive.

To achieve the main objective i.e., Wealth maximisation Financial Manager has tordischarge the following. The interrelationship of components of Finance Function is shown.

INVESTMENT DECISION

1. Establishing asset management policies

Risk Vs Return 3. Estimating and Risk Vs. Return

controlling cash flows

and requirements cue.

External I Finanemg internal Financing

Debt/Equity Ratios

Financing Decisions

4. Deciding upon

needs and sources of new outside financing

5. Carrying on

negotiations for new outside financing etc.

Debt. uity Ratios Fig. 2.1 Components of Finance Function

LIQUIDITY vs PROFITABILITY | MAXIMISATION OF RETURN | WEALTH MAXIMISATION | Constraints - Policy Decisions - Profitability | IMPLICATIONS OF WEALTH MAXIMISATION | Suppliers of Loan Capital | RELEVANCE OF WEALTH MAXIMISATION | Retaining earning and Undistributed profits | Managerial finance function | Functions of Financial Management | FINANCIAL FORECASTING | MANAGEMENT OF CORPORATION ASSET STRUCTURE | THE MANAGEMENT OF INCOME | MANAGEMENT OF CASH | DECIDING OUT NEW SOURCES OF FINANCE | CONTACT AND CARRY NEGOTIATIONS FOR NEW FINANCING | ANALYSIS AND APPRAISAL OF FINANCIAL PERFORMANCE | INCIDENTAL OR ROUTINE FUNCTIONS | CAPITAL BUDGETING DECISION | CURRENT ASSET MANAGEMENT | Maximisation of Share Value | RESPONSIBILITIES OF FINANCIAL MANAGEMENT IN THE FIRM | Functions of the Treasurer and Controller | TASKS OF FINANCIAL MANAGEMENT | CHALLENGES OF FINANCIAL MANAGEMENT | Gross and Net Savings | Household Savings | How to politely win when credit disputes and problems arise