Importance of Financial Management and Use of Ratios in Business Finance

Applied Business
Finance

Table of Contents
INTRODUCTION...........................................................................................................................3
SECTION 1......................................................................................................................................3
Identifying Financial management and its importance................................................................3
SECTION 2......................................................................................................................................4
Discussing financial statements and use of ratios........................................................................4
SECTION 3......................................................................................................................................6
SECTION 4......................................................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................1

INTRODUCTION
Business finance relates to funds that is being utilised by the company in achieving
business goals and objectives and it is important for the company to purchase of raw material to
deliver goods and services to the customer (Bouveret, 2018). Finance include many services like
procurement of funds to utilise to fulfil the demand of an organisation. This helps in providing
funds to business working capital requirement, capital requirement and it also gives
diversification of funds. In this report it is being discussed about the financial management and
its importance and how ratio are useful in the company is being analysed. It also involve the
financial statements and proper discussion of ratio that is used in the company.
SECTION 1
Identifying Financial management and its importance
This is the process of maintaining finance and activities related to the finance in the
organisation and make its easy to meet the daily requirement and proper utilisation of funds in
effective manner. This include the decision making that is related to the investment, purchase of
fixed asset, sources of funds and many more. This become very important in planning,
organising and controlling to operate related to the finance (Eka, 2018). This gives important
information related to profit and loss, cost of company to take the decision accordingly and that
will give the appropriate decision accordingly to attain the objectives and goals. For the manager
this will give the important role in reducing the cash wastage of funds and that helps in managing
the funds. Followings are importance of financial management are as follows-
 Financial planning- This helps in planning of financial system in the business and it
involve the issue related to the budget, requirement of funds and sources of business.
This also useful in preparing the situations due to change in the working environment
and useful in achieving the effectiveness of the company. It control over cost, expenses,
credit and income of organisation that will leads to certain advantages as well.
 Funds procurement- In the financial management this helps in procurement of funds
from the lower sources of funds and will allow the company to satisfy the financial needs
of the company. This also helps in reviewing the funds requirement to the firm and allow
to get in effective manner. This is not easy to get the proper requirement of the company