Financial management is an essential aspect of running a business. It involves planning, organizing, directing, and controlling the financial activities of a company. The functions of financial management include:
1. Determining the Capital Requirement: Financial managers estimate the total capital required by the business to fulfill its mission and objectives.
2. Establishing the Capital Structure: After estimating the required capital, financial managers determine the structure of short-term and long-term equity.
3. Determining the Funding Sources: Financial managers decide where the capital will come from, such as bank loans, investors, or IPOs.
4. Fund Investment: Financial managers allocate funds to profitable ventures while considering risk and expected returns.
5. Implementing Financial Controls: Financial managers use controls like financial forecasting, cost analysis, and ratio analysis to make informed decisions.
6. Mergers and Acquisitions: Financial management also involves evaluating opportunities for business growth through mergers and acquisitions.
These functions help ensure that a company has sufficient funds available when needed and that those funds are used effectively to achieve business goals. If you have any more questions or need further assistance, feel free to ask!