Assignment Sample on M25291 Financial Management in Business
Introduction
First of all, let us actually define what financial management is. There can be a lot of different definitions for financial management but the most appropriate one and the one which is widely used all over is this i.e. “Financial Management can be termed as the proper planning, proper organizing and handling financial matters of an organization or an institute so that it will be economic and that there won’t be much expenditure”. According to Khan and Jain “Finance is the art and science of managing money”. It is very important to practice financial management whether it be on large sector or small sector because it helps in managing business in an appropriate way without causing much downfall and applying fiscal managements in financial matters helps a lot. The main objective of financial management is to make sure that it has wise planning and investments and better decaisions so that so that it will play a huge role in maximizing the financial matter of the firm or the bussiness (Al Breiki,2019).
Background
All of us can see that financial management is the most important part in running a business whether it be small scale or large scale. It is very important to have knowledge in financial management before starting a business or a firm. And when I say knowledge, it not only having knowledge on finaces but one has to be occupied with all the aspects that relates to business. Financial management is business should be dealt properly by applying management principles to financial assets of an organization or a business firm (Mishra,2018).
Some of the main features that are involved in proper planning of Financial management are as follows. It is very important that one that one maintains or have adequate supply of funds for the business organisations and there shouldn’t be any cases where they are out of funds or money. It is also very important that the organization’s shareholders receives a good return of funds for their investment. They should they should ensure that the investments that they are creating is safe and genuine and that it is trustworthy for the users so that the investors will actually feel safe in investing their money. They should make they should make the most utilization of their funds and income and should not be lavish on spending in unwanted things, they’ll have to make sure they invest most of it to their business firm if they want their business to grow and compete with other firms. One should be bolt be bolt enough to apply all the general management principles to help the financial resources of the business grow.
Profit and Loss statement
There can be different types of finance which are: Private Finance and Public Finance. Under private finance, there are Individual Finance, Partnership finance and business Finance and under Public Finance, there are Central Government, State Government and and Semi Government.It is very important that there that there is effective and efficient use of finaces as it will it will lead to proper utilization of the finances by the concerned business firm or organization and all these financial calculations will be all user the responsibilities of the of the financial manager so it is quiet importannt non his part to actually determine the basic the basic objectives of the financial management.Objectives of the financial Manager can be divided actually into two main parts. They are
- Profit maximation
- Wealth maximation
Profit maximation: Under this, it aims for the profit maximation of the concerned firm. And since and since the most important aim of a business is to earn profit, they search all the possible ways to earn profit from any source for betterment of the business. If this process is done carefully there is there is very high chances that the business will be successful.
Wealth maximization: Wealth maximization is mainly concerned about the development and modern approaches and innovations for the for the improvement of the firm or the business. It may be a any kind of business. Wealth maximation is found to be to be one of the latest approach in helping to establish a successful and proper business.
Business Plan
The practice of financial management is quiet important as it meets all the basic requirement of a business function. It is very important to maintain financial management in a business so as to so as to achieve their goals of running the business and also to have a lot of finance for the proper and smooth running of the business. In order for a business to be successful, it is very important to follow all the essential steps in financial management and one should not even neglect any step whatever situation they may be facing. Some of the points why financial management is very important for the smooth running of a business is given below:
- Proper utilization of the funds: The funds received should be utilised in an efficient manner and in such a way that it would cause profit and benefit to the running business. There shouldn’t be any penny that should be gone to waste. The funds received should be managed properly. As soon as the funds are received there should be proper allocation of the money on where to spend it should be very specific with each with each allocation. These all is done by the finance manager and should manage all the funds in a proper way because when the funds received are handled properly, the value of the firm will increase and there will be a decrease in the cost of capital. (Dwiastanti,2017)
- Proper financial Planning: Financial Planning is also one of the important factor in growing a business. In fact, it is one of the first step to financial management. If there is no planning there will be no management. Financial management helps in determining the financial requirements of a business about how much funds will be needed and how much money will be spent. It is very important because it helps in the in the development of a business firm (Kembauw,2020).
- Making proper financial decisions: Making decisions on financial matter is also quiet a factor in the management of the of the finances. If there if there is no proper decisions of where and what to invest then it is it is quiet likely that the business will go to a downfall as financial decisions will effect the entire operation of the business. If they make strong financial decisions then the operation within within the business firm will run smoothly but if their financial decisions are weak are weak then it is most likely that the operations within the business will be bumpy so it is very much mandatory for a business firm to take all those decisions as it will only cause benefit I’m increasing the value of their firm.
- Increasing the firm’s value: Increase in the firm’s value will actually help in help in acquiring more money and in that process it will lead to the maximization of wealth of the concerned investors and will gradually help the business to grow. So with time each time each business firm should increase the value as it benefits both the investors and the and the business firm (Alkaabi,2019).
- Increase in profit: When there is proper financial management of a business it is more likely that it will help in increasing the businesses profit as proper decisions will lead to proper utilization of the funds by the concerned business or the manager.
- It helps in increasing the savings: Practicing financial management helps in the increase of saving. When there is proper management of finances there will be more money which will which will lead to saving more money. In short we can say that financial management will leas to will lead to proper management of finances which will lead to more profit and again which leads to more saving as saving of finances can be acquired only when there is there is a lot of wealth.
- Helps in the stabilization of the economy: Proper finance management will lead to the stabilization not economy as proper decision will lead to more growth of the finances and more and more finances will lead to stabilization of an economy.
Decision making and Process management
Now we have discussed about the importance of Financial Management let us discuss about process in which financial management function. Proper management of finances will not will not be achieved if there is no proper functions. It is quiet important it know all the proper functions before even starting the management process so in order to get more detailed Some of the functions are given below.
- Fund investments: It is the job of the of the finance manager to check out where to allocate the funds and have to be aware of whether there will be profit if allocated on a particular segment and have also have to check the safety of allocating it as well.
- Surplus disposal: It is very important that the finance manger makes the net profit decision which may include checking out the rate of the dividends and all those other benefits or profit that they that they get.
- Cash management :The finance manager has to look up on all the various factors or areas where cash will be required. He has to make sure that the employees get their preferred salaries and have a I check into paying all those bills like water and electricity bills. If he is not able to mange properly in this in this then it is more likely that the money distribution will be will be altered and that there will be alteration of the finances of the business.
- Funding source: There are many sectors where the company can acquire different funds from different places. For example, they can take loans from different kind of banks and as well as and they can seek shares and depend ure binds. It is only through these funds that helps the company or the business to grow. (Chmutova,2017)
- Capital requirements estimation: It is very important of the finance manager to estimate all the funds and money where the where the company will invest on or spend on. This process is very much important and the finance manager has to make sure that the that the firm acquires all the profit all the profit and he has to make sure that during this process, he has to think about all the present and future requirements as well.
With so much going on in business and some business firms becoming more and more successful, people often tend to forget that there are finance mangers who are who are working endless to provide the best service to heir business firm or to investors. They play a very vital a vey vital role in management of the firm. Finance mangers makes sure that the Financial heath of an organization or a or a firm is well developed and we’ll equipped. Financial managers perform different task regarding different data collected from several location s and they make sure that the senior managers are being well trained and we’ll understood about maximizing their profit ideas. Their work is to provide data on all the financial investments and that has been done in the past present and are fully prepared for what is to come. They usually help in organizing the data and monitoring and they mostly review reports of financial activities that occurs on day to day basis. In short, they keep all the information’s of the finances safe and secure and organised so that next time it will be much more easier to sort out if f they want to view or check a particular data . So a lot of credit goes to them as well for maintaining all the important files and data of the business.
It is very important and one is aware of all the financial management of a business or firm .It gives us an overall view of how business firms or works and financial management should be done and is very important because without proper planning of finance the firm would not grow and if only this process is done properly and professionally the firm would be a huge success and being independent financially is one of the biggest factor in establishing a good business. And since every activity that they do effects all the aspects of a business it is very crucial for the company to hire highly educated and knowledgeable workers who are actually fit and ready to carry out any Tasks which is assigned to them and since a lot of the companies go into downfall during the start up of a business they tend to focus less on management of finaces, most of them faces huge loss of money and before even starting up a business the one who manages the company should make sure that they pay ransom amount of salaries to their employees because no one would love to work in a firm that pay less. Financial management should be followed and should be made mandatory in every business as this is the only factor that decides whether a company will go into downfall or make huge profit.
Meeting Minutes
Meeting Report: minutes
| GROUP: | LOCATION: |
| PERSONS PRESENT:
APOLOGIES (for absence): |
|
| DATE OF MEETING: 26/03/2021 | |
| Agenda Item |
| 1. Business planning
2. Financial Planning 3. Decision making |
| Action | Person Responsible |
| 1. Planning for Investment
2. Planning for funds generation 3. Planning for descion making 4. Planning for new investments 5. Planning for new business ideas |
Member 1
Member 2 Member 3 Member 4 |
Conclusion:
From this we have learnt all the management of finances of a firm. It gives us all overall view of how important finance management is in running a company. It made us aware that without this, the company would go into huge loss and downfall. We have learned how important is the role of finance manager ad that without them in it, the firm would not run property. This report, overall gave us an idea oh how mandatory it is to manage finances for a successful establishment of a firm.
References
Al Breiki, M. and Nobanee, H., 2019. The role of financial management in promoting sustainable business practices and development. Available at SSRN 3472404.
Alkaabi, H. and Nobanee, H., 2019. A study on financial management in promoting sustainable business practices & development. Available at SSRN 3472415.
Chang, C.L., McAleer, M. and Wong, W.K., 2020. Risk and financial management of COVID-19 in business, economics and finance.
Chmutova, I., Vovk, V. and Bezrodna, O., 2017. Analytical tools to implement integrated bank financial management technologies. Economic annals-XXI, (163), pp.95-99.
Dwiastanti, A., 2017. Analysis of financial knowledge and financial attitude on locus of control and financial management behavior. MBR (Management and Business Review), 1(1), pp.1-8.
Kembauw, E., Munawar, A., Purwanto, M.R., Budiasih, Y. and Utami, Y., 2020. Strategies of Financial Management Quality Control in Business. TEST Engineering & Management, 82, pp.16256-16266.
Mishra, S., 2018. Financial management and forecasting using business intelligence and big data analytic tools. International Journal of Financial Engineering, 5(02), p.1850011.
