Importance of Finance Functions, Role of Financial Management, Sources of Finance

This guide provides an overview of finance functions, financial management, and sources of finance. It explains the importance of finance functions in identifying needs of funds, identifying sources of finance, and comparing various financial sources. It also discusses the role of financial management in financing the business and developing financial plans. Additionally, it explores different sources of finance such as equity market, commercial banks, and crowdfunding.

Financial
Management

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 4............................................................................................................................................3
Importance of finance functions:.................................................................................................3
Role of financial management:....................................................................................................5
Sources of finance:.......................................................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Finance is the backbone of every organisation. Finance is all about to generate the
activities of every department by providing funds to them. It describes the system of money
management, investments and other financial instruments. Financial management is all about to
manage the money by arrangement of funds, acquiring needed funds. It is the process of
planning, organising, analysis, managing, controlling etc. financial resources in order to
accomplish organisation objectives. It is the area which covers profitability, expenses, income,
liabilities, assets etc. financial managers uses the funds properly, they helps in reduce the cost of
capital and it increases the value of the company. The company which is selected for this report
is Tesco. It is the British multinational company which is deals in retail sector. It was founded in
1919, headquarter situated in UK. This report covers topics such as importance of finance
functions, role of the financial management. Apart from this it also covers topics such as sources
of finance (Herdjiono and Damanik, 2016).
TASK 4
Importance of finance functions:
Financial functions is the process of planning and controlling of financial resources. This
involves the acquiring and utilization of funds in order to efficient activities. In context to Tesco,
firms finance department helps it to managing and acquiring funds so that it can generate its
activities efficiently.
Importance of financial functions:
 Identify the needs of funds: The finance department is works for identifying needs
which business requires for formulating its other departments activities includes
production, HR, finance, sales etc. in this manner finance department assessing monetary
needs of the company. In context to Tesco, financial functions helps it to know initial
capital, how much capital it needs, have and requires to raise (Madura, 2020).
 Identify the sources of finance: Finance functions helps business for knowing its
financial requirements and after that how company manages its funds from where it can
raise money. In context to Tesco, firms finance managers allow firms for borrowing and
getting funds various shareholders.

 Comparison of various financial sources: Finance functions works after assessing the
various funds resources finance department compare them which is beneficial (Mitchell
and Calabrese, 2019). In context to Tesco, finance department comparing better option
between various financial sources it compares costs involves it.
 Investments options: Financial function involves to identify the better investment
options which gives better and higher returns to the company. In context to Tesco, it
allows firms for taking investment decisions which option gives it higher returns and
make profitable to it.
Role of financial management:
Financial management is the responsible for financial health of the organisations. This
helps business for producing financial reports, investment decisions, develop strategies, making
plans for short term and long term financial objectives for the organisation. In context to Tesco
financial management plays vital role in generating its activities so that it can provides fund
management to the every department in order to accomplish its objectives. The importance role
of financial managers are planning, investing, acquiring funds for expanding, increasing the
value and profitability of the company (Shapiro and Hanouna, 2019).
 Financing the business: The financial management is working towards in order to
finance, funding business activities. It is about planning, controlling, managing funds of
the company. The finance manager is working for finding funds requirement, sources for
fund and providing roadmap for activities according to budget.
 Developing the financial plans: In context to Tesco, firms financial managers develops
financial plans including calculating the amount of funds which company requires for the
specified period, detailing activities for getting funds from investors.
Sources of finance:
Sources of finance can be divided into two parts which includes, equity and debt
financing. Some known sources includes personal investment, angel broking, government,
commercial banks, financial bootstrapping etc (Paramasivan and Subramanian, 2020). The
sources which is use by Tesco are mentioned below:
 Equity Market: Companies which are registered in share market can acquire funds from
there. Equity is about securities which is issued by companies in order to raising funds

which is required by company for running its activities. Share market is the place where
business buy and sell of securities takes place.
 Commercial banks: These are institutions which provides loans to the businessman so
that they can expand their business. These banks charges interest for their loans. In
context to Tesco, firms finance team taking loans from banks. Banks gives loans to
reputed companies which can pay it on maturity period.
 Crowdfunding: Crowdfunding is about taking funds from public. In this types of source
by business raising small amount of money from the large number of peoples via internet
(Siminica, Motoi and Dumitru 2017). In this companies advertise its on internet so that
people can know about the business and invest for it.
CONCLUSION
From the above report it has been concluded that finance is the activity of acquiring and
managing funds for the business. Financial management is the process which involves planning,
organising, managing, controlling, budgeting the activities of the firms. It is the area which
covers profitability, expenses, income, liabilities, assets etc. it is important for managing funds so
that firms can better utilisation of its resources. Financial functions plays role for Financing the
business, Developing the financial plans, Identify the needs of funds, Identify the sources of
finance, Comparison of various financial sources etc. firms has various sources for acquiring
funds includes personal investment, angel broking, government, commercial banks, financial
bootstrapping, equity market etc.

REFERENCES
Books and journals:
Herdjiono, I. and Damanik, L. A., 2016. Pengaruh financial attitude, financial knowledge,
parental income terhadap financial management behavior. Jurnal Manajemen Teori dan
Terapan| Journal of Theory and Applied Management. 9(3).
Madura, J., 2020. International financial management. Cengage Learning.
Mitchell, G. E. and Calabrese, T. D., 2019. Proverbs of nonprofit financial management. The
American Review of Public Administration. 49(6). pp.649-661.
Paramasivan, C. and Subramanian, T., 2020. Financial management. New Age International.
Shapiro, A. C. and Hanouna, P., 2019. Multinational financial management. John Wiley & Sons.
Siminica, M., Motoi, A. G. and Dumitru, A., 2017. Financial management as component of
tactical management. Polish Journal of Management Studies. 15.