Financial management refers to the efficient and effective management of money (funds) in such a manner as to accomplish the objectives of the organization. It is the specialized function directly associated with the top management. For new enterprises, it is important to make a good estimation on costs, sales. Consideration on appropriate length sources of finances can help businesses avoid the cash flow problems even the failure of setting up.
Although your business may be based on an aesthetic vision or a personal ideal, it will only be able to operate successfully if it is financially sound. Most businesses pass through startup and growth periods spending more than they earn, however, the long-term health of any company depends on ultimately earning more money than it spends. In addition, financially viable companies must manage cash flow effectively enough to avoid debilitating finance charges and have enough capital on hand to cover basic expenses.
Objectives of Financial Management
Profit maximization occurs when marginal cost is equal to marginal revenue. This is the main objective of Financial Management.
Wealth maximization means maximization of shareholders' wealth. It is an advanced goal compared to profit maximization.
Survival of company is an important consideration when the financial manager makes any financial decisions. One incorrect decision may lead company to be bankrupt.
Maintaining proper cash flow is a short run objective of financial management. It is necessary for operations to pay the day-to-day expenses e.g. raw material, electricity bills, wages, rent etc. A good cash flow ensures the survival of company.
Minimization on capital cost in financial management can help operations gain more profit.
Scope of Financial Management
Estimating the Requirement of Funds: Businesses make forecast on funds needed in both short run and long run, hence, they can improve the efficiency of funding. The estimation is based on the budget e.g. sales budget, production budget.
Determining the Capital Structure: Capital structure is how a firm finances its overall operations and growth by using different sources of funds. Once the requirement of funds has estimated, the financial manager should decide the mix of debt and equity and also types of debt.
Investment Fund: A good investment plan can bring businesses huge returns.
Tannet’s Financial services include, but are not limited to, international framework design, market entity design (tax), financial and tax analysis, financial and tax budgeting, fiscal planning, tax training, enterprise asset management and personal asset management,etc.
If you have further inquires, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website www.tannet-group.net, or calling HK hotline at 852-27826888, China hotline at 86-755-82143181, Malaysia hotline at 603-21100289, or emailing to firstname.lastname@example.org. You are also welcome to visit our office situated in 16/F, Taiyangdao Bldg 2020, Dongmen Rd South, Luohu, Shenzhen, China.
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