Financial Management: Concept, Importance, and Financial Statements

Financial Management

Contents
Introduction.................................................................................................................................................3
Main body...................................................................................................................................................3
Concept & importance of financial management.....................................................................................3
Financial statements and use of ratios in financial management..............................................................4
Business Review Template......................................................................................................................6
Ways to improve financial performance..................................................................................................9
Conclusion...................................................................................................................................................9
References.................................................................................................................................................10

Introduction
The business finance is a core aspect in the organization. It is a foundation of the business
which involves the financial management. Financial management is divided into two parts where
financial means management of money including the activities of investing, borrowing, lending,
saving etc. It is method of handling and manipulating assets as well as other financial powers.
This field is primarily concerned with the acquisition of valuable raw materials, properties, and
useful materials that aid in the increase of a company's financial value whereas management term
refers to the planning, organising, directing and controlling the activities in the organisation
(Aprilia 2020). The finance can be personal, corporate or government. Hence the term financial
management refers to the planning, organising, arranging, managing, coordinating, and
controlling a company's financial operations. Every organization has a requirement of fiancé for
purchasing of assets, goods, raw materials and other flow of economic activities. It also applies
management principles to financial resources. Financial management involve those activities that
related to the acquisition and conservation of capital funds in meeting the needs and objective of
financial business enterprise.
Main body
Concept & importance of financial management
The financial management is the functional area in the organization concerned with the
profit, expenses, cash and credit so that organization can meets its requirement and achieves
objectives. Financial management entails determining how an organization will financial
institution for different purposes, allocating those funding in the most effective and profitable
manner, having power across those resources, and disbursing the cash reserves' distributions to
various parties. Financial management generates value and operational capability as finance is
concerned with the assessment, reporting, and supervision of sustainable growth and it is
essential to the smooth functioning of industries and markets. It is a base for maximizing the
value of firm for stakeholders which is associated with the short term working capital
management involving current assets and current liabilities. Financial management is concerned
with acquisition and financing of short and long term credits for the managerial decisions of the

company. It is a important part of accounting as it entails the creation and application of financial
values that helps an organization in achieving primary objective, and increase the company's
value. Financial management also includes debt financing, financial reporting, and information
gathering and interpretation in order to make informed decisions. The financial management
reduces the finance cost by ensuring sufficient availability of funds (Awaysheh and et.al., 2020).
The importance of financial management is very important in the company as it provides
funds keeping objectives in mind where funds are procured by various institutions. The financial
management provides accurate financial reporting for decisions by having economic stability
which encourages employees for saving money. It helps the company in allocating and utilizing
the resources of funds. There is increase and improvement of organization performance
efficiently. The financial management reduces the cost of funds by ensuring proper use of funds.
The shareholder wealth is increased having information on financial reporting. Financial
management guarantees that a company can cover the daily costs, including paying employees'
salaries, keeping adequate goods on target to assist consumers' needs, and setting aside enough
money for acquisition and growth.
Financial administration maintains business strategies for acquisition and planning
projects, ensuring sustainability and prosperity. There is Better disposal of surplus through
financial management manager’s takes decisions on how to use the surplus funds and determine
in which activities funds are needed. It also determines if the money should be paid as executive
bonuses or kept to reinvest in the company. in financial management financial analysts keep
track of all capital income and expenses in a company. They guarantee that there really is no
cash shortage or excess (Bataev 2018).
Financial statements and use of ratios in financial management
The financial statement refers to the financial report of recording financial activities and
position of the business entity. It reflects the financial position, performance that s useful in
decision making. These statements are used by the government agencies, accountants and firms
for ensuring the accuracy, tax financing and investing purpose. Financial statement is
summarized descriptions of specific data and therefore is a method of study. The ability to
include information in a concise format influences the types of records consultants write, the
manner they organize things on these reports, and their accounting requirements. The financial