INTRODUCTION TO FINANCIAL MANAGEMENT

 DEFINITIONS 

The Chartered Institute of Management Accountants of UK [CIMA] defines Financial Management as “the identification of the possible strategies capable of maximising an organisation’s Net Present Value (NPV), the allocation of scarce capital resources between competing opportunities and the implementation and monitoring of the chosen strategy so as to achieve stated objectives. 

According to GP Jakhotiya “IT refers to both the financial implication and aspects of various business strategies and the strategic management of finances.” Thus, Financial Management brings together financial management and strategic management and provides the financial criteria for all management decision making – maximising the net present value of projected cash flows – focusing in particular on the two key ingredients: cash flow and net present value. 

CHARACTERISTICS  FINANCIAL MANAGEMENT 

The important characteristics of Strategic financial Management are the following:- 

1. It is concerned with the long term management of fund with a strategic perspective 

2. It aims at maximisation of profit and wealth of the concern 

3. It is both structured as well as flexible 

4. It promotes growth, profitability and existence of the firm in the long run and maximises shareholder value 

5. It is an evolving and continuous process that constantly tries to adopt and revise strategies in order to achieve strategic financial objectives of the firm. 

6. It involves innovative, creative and multidimensional approach for finding solutions to the problems. 

7. It helps to formulate appropriate strategies and facilitates constant monitoring of action plans to match with the long term objectives.