Concept of Financial Management and Importance

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Table of Contents
Section 1..........................................................................................................................................3
Concept of financial management...............................................................................................3
Importance of financial management..........................................................................................4
Section 2..........................................................................................................................................6
Main financial statements............................................................................................................6
Uses of ratios...............................................................................................................................9
References......................................................................................................................................10

Section 1
Concept of financial management
Financial management includes the planning, organization, management and control of financial
activities such as the purchase and use of venture capital. This includes applying the general
principles for managing the financial resources of the company. Financial management is an
important activity in any organization. This is the process of planning, organizing, managing and
monitoring financial resources to achieve the goals and objectives of the organization. This is a
unique practice for tracking an organization's financial activities such as receipts, cash use,
accounting, payments, risk assessment, and anything related to money.
In other words, financial management is the application of general governance principles to a
company's financial activities. Proper financial management of the organization provides high
quality fuel and regular maintenance to ensure efficient operation. If money is not managed
properly, there will be barriers for organizations that can negatively impact their growth and
development. There are several options that can be used to manage finances. A person may hire a
third party to manage all financial activities, such as direct management, hiring full-time staff,
hiring a part-time accountant or a certified public accountant.
In most cases, there are special departments that deal with the company's finances. The PSA is
designed to manage finances and resources within the company. In this case, all financial
decisions are made. Depending on the image of the company, the finance department may have
different specifications to meet the different needs of the company. Financial management deals
with short-term working capital management, which usually focuses on current assets and
liabilities and manages fluctuations in cash and product cycles, often through hedging.
This feature also duplicates control as effective and efficient day-to-day management is required.
It also refers to long-term strategic financial management with a focus on the management of
capital structures, including, for example, capital raising, capital budgeting (distribution of
capital between business units or products) and separation policies. The latter is more closely
related to the area of corporate finance in large corporations. The key is financial management to

prepare a business plan and ensure that not all departments are lost. With strong financial
management, the PSA or Vice President of Finance can provide data that supports a long-term
vision, inform decisions on where to invest and provide insight into how you can fund these
investments, liquidity, profitability, access to finance and more.
Importance of financial management
Finance is the soul of a true business relationship. The importance of financial management
satisfies all the conditions for the business. All businesses must have sufficient resources to keep
their business running smoothly. Furthermore, sustainable growth is one of the key elements of
financial management to achieve the organization's future goals. Today's financial management
must be given importance in today's operations in order to achieve a company's financial goals.
People cannot overlook the importance of financial management in planning and running a
business in all contexts and at all levels of the company.
Financial management is important when planning and managing your business for financial
stability and bankruptcy prevention. Here we see the importance of financial management in the
points outlined below.
1. Financial plan:
Financial planning is essential. It meets all the financial needs of your company. Additionally,
financial planners should make recommendations and take subsequent actions without worrying
about the financial management of the company. Financial planning appears to be an important
area of activity. Business success usually largely depends on the company's financial plan.
2. Save / protect money:
The importance of financial management includes financial protection in order to achieve
business goals. Areas requiring funding should be properly measured and distributed across all
areas so that the business can run smoothly. In many cases, manager may not have enough
money, so the cost of the project is higher and affects other activities. It is important to keep
money and invest wisely. The importance of financial management in the area of financial
management planning.