Financial Management and Government Policies

This assignment delves into the crucial role of financial management in maximizing profits, resource allocation, and cash flow for businesses. It also examines how government policies, such as financial assistance, tax incentives, and trade promotion, influence business growth and development. The document analyzes the symbiotic relationship between effective financial management strategies and supportive government initiatives.

FINANCIAL
MANAGEMENT

INTRODUCTION
For every company it is highly necessary to manage financial resources in the firm to
become more financially sound. The current study shows various number of purposes and
requirements of financial management within a firm and this are implemented on the
shareholders. Further, it shows role of government to assist business and relation between
business plan and decision making.
TASK 1
Evaluating purpose of financial management along with implications from the perspective of
shareholders
Financial management is a key aspect where money is to be manage and utilize in
effective way to achieve financial goals and objectives of the company. Further, there are various
purposes due to which a company use financial management process which are explained as
below:
 Maximize profit level: Key purpose of managing finance is to improve profitability
position of the company which helps to enhance financial performance in the industry.
With the help of financial management various kinds of costs and expenditures are
controlled which is the most profitable situation. When cost comes under control and
reduce then level of profit gets enhance (Brigham and Ehrhardt, 2013). Shareholders are
always look towards the firm that it will provide more and higher return of the investment
which is made in this. Furthermore, when profit is high then management able to give
more amount of dividend which lead to fulfil objectives of shareholders. Under the
financial management there mainly three kinds of decisions are taken by the firm which
are given as below:
1. Wealth decision: In this manager make decisions that there are company is at which
position ion terms of the wealth in the industry. Higher the wealth lead to attract high
number of stockholders towards it.
2. Investment decisions: At this particular point there are company make decision for
invest money by using capital budgeting methods at the working environment (Bordo
and Haubrich, 2017).
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3. Dividend decisions: Third kind of decision is related to the dividend under which the
firm thinks that how much amount of dividend has to pay to the stockholders.
 Optimum utilization of financial resources: Other purpose of financial management is
related to utilization of those financial resources which are available in the firm for
producing goods and services. With the use of financial management is easily able to
effective utilize such resources which lead to reduce debt to equity ratio. When such ratio
is lower, then the company will have more amount and can give shareholders better
return. Hence, it can be said that due to using financial management level of debt to
equity will reduce and stockholders attract in highly effective way.
 Cash management: Apart from above analysis, financial management requires for the
firms in order to manage cash receipts and outcomes which is necessary part of every
company. When cash will be manage in effectual way the liquidity condition of the entity
will be improve where it able to give fulfil all the debt and interest amount (Petty and
et.al., 2015). Further cash in hand will be increase in the firm by which more dividend
amount is to be given to the potential shareholders.
TASK 2
Role of government in order to provide assistance for business
Government plays an integral role in each and every business by which firm can operate
in the industry in smooth and appropriate manner. With the help of government entrepreneur
able to earn foreign currencies after exporting its products and services. Further, it provides
number of financial services also which helps to the management to expand business, enter in
emerging market, subsidies etc. Moreover, other assistance of the government towards business
are explained as below:
 The government provide financial services in terms of provide capital and loans at the
lower cost of finance and interest rate as compare to another financing sources. In this the
manager not need to pay more interest amount after raising fund from the profit generated
by it. Further, indirect expenses reduce and net profit will be enhance at the fiscal year
ending.
 When the firm going to import products and services then local producers become
unprotected and their sales hamper (Government Assistance Offered To Businesses,
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2016). In this case, government charge custom duties and various taxes which lead to
protect those firms and producers which are local.
 Apart from this, government allows subsidies on the loan which helps to the firm in order
to reduce total cost of production. For instance, government offers subsidy on the
fertilizer equipments to the farmer and agriculture companies. Hence, due to this cost of
the total production of crops will be reduce (Caporale and et.al., 2015).
 Various exhibitions and trade shows are to be arranged by the government where
companies show their products and services. Further, for advertising and promoting
number of goods and services the government is very assistance towards the business.
 The government encourage to the businesses by reducing tax holidays as well as tax
charges which are taken by the authority bodies. When charges of tax will be reduce then
companies will encourage to produce more number of products and services
(Parasuraman, 2014).
 In addition to this, the governance agencies arrange different kinds of training and
development programs like as managerial, technical etc. Due to this, employees of the
firm will become more skilled and efficient at the workplace which is the most beneficial
for the entities. Hence, it can be said that by using such kind of activities productivity in
the industry of enterprises will be enhance.
TASK 3
Appraising business planning as well as decision making
Business plan is that factor in which firm able to make effective plan to take appropriate
decisions. When the entrepreneur make plan for any particular project or to achieve objectives
and then implement in business. Further, while producing a plan and implementing he can
determine that which kinds of constraints and obstacles will be arise at the workplace. In order to
reduce such problems effective decisions are taken by it. Apart from this, with the help of proper
planning management of the business entity can know various kinds of problems which will
comes into consideration at the working environment (Dong, 2015). The business entity has to
include the green policy while making the business plan under which it focuses on various kinds
of environmental aspects up to higher extent. In this the firm take care that in the environment
there is pollution not create etc. by which it can make improve image and sustain in the industry.
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Further, by considering the green policy management focuses and looks upon the different
elements of the environment. When constraints are to be identified in easy and proper way then
management is highly helpful in order to determine effectual business decisions.
In addition to this, while making the proper plan in terms of financials then management
can know that how much fund is to be required. On the basis of this it can take effective decision
in order to allocate financial resources to every organisational functions in adequate manner.
Hence, it can be said that business planning and decision making both are interconnected in the
company.
CONCLUSION
It can be concluded that purposes of financial management are such as maximize profit,
effective utilization of financial resources, managing cash etc by which firm can fulfil objectives
of shareholders. Further, government helps to the firm such as provide financials, protect local
producers, reduce taxes, arrange trade show, training and development programmes etc.
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