Financial Management and Decision Making

The financial management of a company involves making decisions regarding investment, dividend distribution, and financial planning to maximize profits. The report highlights the importance of government assistance in providing tax rates, financial guidance, and other forms of support that help businesses make informed decisions. The advantages of government assistance include facilitating access to finance, promoting equitable taxation, and providing proper guidance for businesses. However, there are also disadvantages such as bureaucracy, red tape, and potential for misuse of funds. Ultimately, the goal of financial management is to maximize profits by making strategic investment and dividend distribution decisions while balancing the need for government support with the desire for business autonomy.

FINANCIAL MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
1Critically evaluating the purpose of financial management and what are the implications of
the three main decisions from a shareholder perspective.......................................................3
2 Discuss the needs for government assistance for business and its interaction with business
planning and decision making................................................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Financial management plays a vital role for the firm as it helps in carry out the various
business activities in most effective manner. It provides an effective management of funds
through which Company can able to attain their objectives in most desired manner. The financial
managers play a great role in taking investment decisions in that are generally for long term. It
included a huge amount of finance and that are affecting on the earning capacity of a firm
(Brusca, Caperchione, Cohen and Rossi, 2016). Under this, the financial management adopts the
capital budgeting in which they can able to take decision regard to budgeting. It shows that
whether to invest in the project or not by consider the highest earning return from the project
when they invest and earn in future.
1Critically evaluating the purpose of financial management and what are the implications of the
three main decisions from a shareholder perspective
There are various different purpose through which the company adopts the financial
management which are as describe as follows-
Profit maximization- It is a traditional approach that are adopted by most of organisation
whether it is private and public enterprises. Therefore, the financial management have a first and
foremost objective is that to earn higher profits through selling and distributing goods or services
in wider area. Thus, the financial management involves an all types of decision are investment,
dividend and financial that are mainly focus on enhancing the profits at the optimum levels
(Chua, Lowe and Puxty, 2015). Therefore, the main objective of financial management is that
take decision regards to firm in which it can raising and also distributing dividends in equal
manner that leads to maximizing profits.
Wealth maximization- Most of the business are adopting the modern approach under
which they are focusing on the wealth maximization. Thus, the financial management have a
main objective or purpose is to enhance the wealth in which it helps the company in formulating
the policies through which it can able to enhance market value of a firm.
There are mainly three main decisions in respect to shareholder
 Investment decisions- The financial managers play a great role in taking investment
decisions in they are generally for long term. It included a huge amount of finance and

that are affecting on the earning capacity of a firm. Under this, the financial management
adopts the capital budgeting in which they can able to take decision regard to budgeting.
It shows that whether to invest in the project or not by considering the highest earning
return from the project when they invest and earn in future.
 Financing decisions- It is also a one of the most important decision that are taken by the
finance manager in that they gives a proper guidance in that they deciding the best source
of finance for a company. Therefore, a firm can able to earn higher amount of profits
through various different sources. It can raise money through the issue of debenture,
equity shares and also taking loans as well as advance. The source of finance are mainly
bifurcated into two parts are the borrowed funds (Mathuva, 2015). The decision are to be
taken by the finance manager in terms of whether to raise finance from the owners fund
or borrowed funds. It can be possible through make comparison among the various
source through advantages and disadvantages.
 Dividend decisions- The finance manager are taken decisions by analysing the dividend
and retained Earning. Thus, divided are to be distributed in the current and previous year
net Earning. It has shows that the company are able to declaring the higher rate of
dividend when they earn a higher amount of profits and vice versa. It helps the company
to make decisions in which they finding out which projects needs to be reinvest in the
project for the purpose of earning a higher profits.
2 Discuss the needs for government assistance for business and its interaction with business
planning and decision making.
There are the major role of government that helps in providing the financial assistance to a
business that are describe as follows-
Taxation- The government of UK formulate the tax rate for the both public and private
Company that helps them to generating a larger amount of revenue which is the most important
parts of budgets of governments. Thus, there are some taxed at the corporate level in which they
taxation on the person income that are distributing to the shareholder in the form of dividends.
Thus, it allow the balancing of the tax burden among the individuals and company which allow
the governments to take tax in equitable manner.
Financial assistance and proper guidance- They gives a proper guidance in that they
deciding the best source of finance for a company (McKinney, 2015). Therefore, a firm can able

to earn higher amount of profits through various different sources. Apart from this, the decision
are to be taken by the government in terms of whether to raise finance from the owners fund or
borrowed funds. Furthermore, it also supports whether to raise finance from the owners fund or
borrowed funds. It can be possible through make comparison among the various source through
advantages and disadvantages.
CONCLUSION
Summarizing the whole report it has been concluded that the financial management have a
first and foremost objective is that to earn higher profits through selling and distributing goods or
services in wider area. Thus, the financial management involves a all types of decision are
investment, dividend and financial that are mainly focus on enhancing the profits at the optimum
levels. Therefore, the main objective of financial management is that take decision regards to
firm in which it can raising and also distributing dividends in equal manner that leads to
maximizing profits. It has been also analysed that the financial managers play a great role in
taking investment decisions in they are generally for long term. It included a huge amount of
finance and that are affecting on the earning capacity of a firm. Under this, the financial
management adopts the capital budgeting in which they can able to take decision regard to
budgeting. It shows that whether to invest in the project or not by considering the highest earning
return from the project when they invest and earn in future.

REFERENCES
Books and journals
McKinney, J.B., 2015. Effective financial management in public and nonprofit agencies. ABC-
CLIO.
Chua, W.F., Lowe, T. and Puxty, T. eds., 2015. Critical perspectives in management control.
Springer.
Mathuva, D., 2015. The Influence of working capital management components on corporate
profitability.
Brusca, I., Caperchione, E., Cohen, S. and Rossi, F.M. eds., 2016. Public sector accounting and
auditing in Europe: The challenge of harmonization. Springer.