Concerns of Financial Management

FinancialConcerns of Financial Management Management is concerned with optimal procurement as well as usage of finance. For optimal procurement ,different available sources of finance are identified and compared in terms of their costs and associated risks.Similarly, the finance so procured needs to be invested in a manner that the returns from the investment exceed the cost at which procurement has taken place. Financial Management aims at reducing the cost of funds procured,keeping the risk under control. Its also aims at ensuring availability of enough funds whenever required.

Role of Financial Management cannot be over-emphasized, since it has a direct bearing on the financial health of a business. Almost all the items in the financial statements of a business are affected directly or indirectly through some financial management decisions.Some of the prominent aspects being affected includes :
  1. The size as well as the composition of the fixed assets of the business.
  2. The quantum of current assets as well as its break up into cash,inventories.
  3. The amount of long term and short term finance to be used.
Thus, it can be stated that the financial statements of business have been largely determined by financial management decisions.Similarly, the future financial statements would depend upon past as well as current financial decisions.


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