What Is a Financial Magament?

Financial management can be defined as a field or activity in an organization that is primarily concerned with money, expenses, profit and repayment, so that all of the various aspects of the business may have the means to be able to continue operating at a profit. This financial management is often the result of complex inter-relations of many different factors, including a business’s financial structure, its management policies, its staff, its products and services, its trading partners and the country where it operates. Financial management therefore requires a wide knowledge of the different sectors or aspects of the business, their relative relationships and what their role is in the whole structure of the organization.

There are three main elements of financial management, namely cash management, capital budgeting and financial forecasting. The cash management element of financial management concerns itself with the source or sources of the company’s income, as well as the amount and timing of withdrawals from the company’s funds, or “rainy day”. The capital budgeting element of financial management deals with the allocation of resources to meeting the different obligations of the organization, and the financial forecasting element of financial management focuses on the methods by which the organization will estimate the effects of future events, take stock of the existing assets and liabilities, and make strategic decisions about exit strategies and buying and selling of securities and options. The financial planner is the individual who supervises these three major elements of financial management. Although, there are many other people who perform financial management functions, such as controller, bookkeeper, accounts assistant, finance administrator, risk manager, and the marketing or advertising department.

A financial manager performs three key functions when he is in charge of the finances of a certain company. First, he makes financial predictions about what the corporation will earn and spend its income on, depending on the policies and strategies adopted by the financial manager. Second, the financial manager analyzes the way the company will manage its assets and liabilities to determine how much will be made available for its current and future requirements and how much will go out as profit. Finally, financial management reports are prepared and presented to the shareholders (shareholders) and the manager for their approval. To become an effective manager, he must have the necessary knowledge about the financial markets, economic theory, and business law.