Question No. 1 - BCOE - 143 Fundamentals of Financial Management

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BCOE - 143 Fundamentals of Financial Management

Question No. 1

Explain the meaning and objectives of financial management 

• Meaning of Financial Management

Financial Management means planning, organising, directing and controlling the financial activities such as procurement and utilisation of funds of the enterprise. It means applying general management principles to financial resources of the enterprise.

• Objectives of Financial Management

The financial management is generally concerned with procurement, allocation and control of financial resources of a concern. The objectives can be-

1. To ensure regular and adequate supply of funds to the concern.
2. To ensure adequate returns to the shareholders which will depend upon the earning capacity, market price of the share, expectations of the shareholders.
3. To ensure optimum funds utilisation. Once the funds are procured, they should be utilised in maximum possible way at least cost.
4. To ensure safety on investment, i.e, funds should be invested in safe ventures so that adequate rate of return can be achieved.
5. To plan a sound capital structure-There should be sound and fair composition of capital so that a balance is maintained between debt and equity capital.