Concept and Importance of Financial Management

BSc (Hons) Business Management with
Foundation
BMP3005
Applied Business Finance
The concept and importance of financial
management and the processes
businesses might use to improve their
financial performance
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Table of Contents
Section 1: Definition and discussion of the concept and importance of financial
management.................................................................................................................3
Section 2: Description and discussion of the main financial statements and explain
the use of ratios in financial management....................................................................4
Section 3: Description and discussion of the main financial statements and explain
the use of ratios in financial management....................................................................5
Section 4: Using examples from the case study describing and discussing the
processes this business might use to improve their financial performance.................8
Conclusion....................................................................................................................9
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Introduction
Financial management is one of the most important function that has business
to perform well. it involves an acquisition of finance for the business at a minimum
possible cost, utilise the same and optimise in the way to run a operations for the
company smoothly. financial management is commonly done in every business is to
ensure that returns are received from the acquired finance should be greater than
the cost paid for the acquisition of the fund. it also aims to acquire the finance being
sure that any point of time there should be enough funds available for the
organisation so company can use in their operations to run smoothly.
There are certain importance of financial management that are
 It helps to ensure regular an adequate injection of funds in the business.
 It also has to exercise the stakeholders wealth by facilitating them higher
earning and returns from the investment.
 It also allow wrapping the maximum benefit from the funds so produced at the
least possible cost.
Section 1: Definition and discussion of the concept and importance
of financial management
Finance management can be defined as strategic planning, organizing,
directing and controlling financial aspect and activities within organization. Financial
management involves applying management principles to financial aspect of the
business and financial management is also important for fiscal management in
organization. Importance of financial management includes-
Enabling and guiding financial planning- This means that organization becomes
able to guide its financial planning through financial management (Ameliawati and
Setiyani, 2018). Financial planning is also important so that organization can make
right decisions regarding finance in organization.
Help in acquisition of funds from various sources- This is also a importance in
which effective financial management enables organization to get funds from
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