Concept and Importance of Financial Management

BUSINESS FINANCE
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
SECTION 1.....................................................................................................................................3
Concept and importance of financial management.....................................................................3
SECTION 2.....................................................................................................................................4
The main financial statement and use of ratios in financial management...................................4
SECTION 3.....................................................................................................................................5
SECTION 4.....................................................................................................................................7
Ways in which company can improve financial performance.....................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
APPENDIX....................................................................................................................................10
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INTRODUCTION
Finance management is one of the crucial process of organisation that involves strategic
planning, organising, directing and controlling financial activities so that better outcome can be
gained. The manager is responsible for handling financial of company so that all its expense,
profits are effectively managed and the end objectives are attained. An enterprise must have
sufficient amount to capital to pay debt to its creditors, meet all expense for smooth operation of
business in external environment. The report has covered information pertaining to concept and
importance of financial management; furthermore explain about use of ratio and main financial
statement. At last, on the basis of case study it has described the process that business might take
in order to improve its financial performance for fruitful results.
MAIN BODY
SECTION 1
Concept and importance of financial management
Financial management is process that contributes in controlling financial activities like
effective procurement and utilisation of fund so that company can achieve its end goals. It is duty
of financial manager of company to ensure that financial are effective allocated, acquired and
manage for smooth operation of business. It makes use of management principle while making
best use of financial assets (Al Muhairi and Nobanee, 2019). Therefore, the several reasons that
state the importance of financial management can be explained as follows:
 It helps organisation in planning the way its finance can be optimum utilised so that
company can enjoy higher profit margin and market share in external environment.
 It also assist firm in the way various fund can be easily acquired from different sources
so that maximum benefits can be gained by company.
 It also contribute in better decision making related to the way fund need to be utilised so
that company can get maximum return.
 Fourthly it can be stated that financial management lead in reducing overall cost of
company, making optimum utilisation of financial resources thereby delivering better
services to customers (Board, 2019).
 Furthermore it contribute in recording, maintaining and making best use of financial
report for planning strategies that can be used by organisation to grow and expand its
business operation.
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