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Purpose of Financial Management (pdf)

   

Added on  2021-01-02

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FINANCIAL MANAGEMENT

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK...............................................................................................................................................11. Evaluation of purpose of financial management.....................................................................12. Evaluating 3 main decisions from shareholder's perspective..................................................13. Explaining how factors within decision might affect financial position of shareholder ........3CONCLUSION................................................................................................................................3REFERENCES................................................................................................................................5

INTRODUCTIONFinancial management is considered as vital activity in any business as this is process oforganizing, controlling, planning and monitoring the financial resources with aspect to attainorganizational objective and goals. The present report would discuss about purpose of financialmanagement along with implication of three main decisions such as investment, financing anddividend from shareholder perspective. Simultaneously, it would explain factors within everydecision might impact financial position of shareholder.TASK1. Evaluation of purpose of financial managementThe financial management have direct concern about procurement, control and allocationof financial resources. Its main objective is to increase wealth of shareholder for whichattainment of optimum capital structure and appropriate utilization of funds is very important(Financial management, 2019). This directly ensures about adequate and regular supply of fundsas sound financial condition of business is very important for survival. In the similar aspect, itmaintains optimal capital structure as appropriate combination of shares and debentures isnecessity. The business does not only require large number of funds but along with this, skills aremandatory for handling large amounts. It leads to deduct unnecessary costs for saving fundthrough wasting is not useful assets important for business perspective. Moreover, its vital aimis about ensuring security of funds via creation of reserves.2. Evaluating 3 main decisions from shareholder's perspectiveThe shareholders are replicated as individual or institution along with corporation whichlegally owns single or more of shares in private or public corporations. This might be referred asmembers of corporations such as managers, employees etc.Investment decisionsThe managers are required for taking decision regarding availability of amount ofinvestment of existing fund on both short and long term aspect. It is described in detailed mannerbelow:The investment decisions for long term perspective or capital budgeting signifiescommitting funds for long durations such as fixed assets (Drury, 2017). Generally, thesedecisions are irreversible and comprise one directly pertaining to invest in building, land,1

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