Importance of Financial Management

Importance of
Financial
Management

Contents
INTRODUCTION...........................................................................................................................................3
SECTION 1....................................................................................................................................................3
Concept & importance of financial management....................................................................................3
SECTION 2....................................................................................................................................................5
Difference types for financial statements and use of ratios in financial management............................5
SECTION 3....................................................................................................................................................6
Company’s key finance performance indicators:.....................................................................................6
SECTION 4....................................................................................................................................................7
Discuss the process which business use for improve its financial performance:.....................................7
CONCLUSION...............................................................................................................................................9
REFERENCES..............................................................................................................................................10

INTRODUCTION
Financial management is the process of efficiency and production, allocating monetary capacity,
and controlling financial activities in order to achieve an institution's goal. Financial
management can help a company meet the majority of its goals. With effective business
decisions, management consultants will get a comprehensive picture of their company's
accounting health. This enables the finance department to provide data that aids in the creation of
a long-term perspective and decision-making. The meaning and importance of financial reporting
in the workplace are considered. The firm must use all of its ratios in terms of increasing its
profitability, as this helps in the execution of the company's objectives and priorities, according
to the calculations. In addition to measuring an organization's efficiency, financial ratios are
essential to achieve.
SECTION 1
Concept & importance of financial management
Funding is a company's backbone, and it requires a steady flow of funds into and out of the
organisation. The wheels of industry will continue to turn quickly as long as there is money. The
process of planning, organising, overseeing, and controlling a company's monetary operations is
known as financial management. According to Guthman and Dougal, financial management is
"the process of planning, gathering, handling, and preserving capital used in industry." It is
concerned with the proper acquisition and utilisation of capital.
Importance of financial management
 Financial planning: One of the most crucial aspects of financial management is financial
planning. It establishes all financial conditions pertaining to a business's interest.
Financial advisory partners will also make suggestions and rational actions rather than
worrying in the later stages of a firm's earnings accounting existence. Money
management appears to be a crucial aspect of any industry. As a result, corporate
accounting preparation earns the majority of the credit for its expansion.
 Safeguarding: One of the most important aspects of financial accounting is ensuring
financial security in attempt to reach corporate goals. It is important to quantify the
regions where funds are required and allocate them correctly across all areas for a