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....................................................................................................................................................8
Company’s key finance performance indicators:.....................................................................................8
SECTION 4....................................................................................................................................................8
Discuss the process which business use for improve its financial performance:.....................................8
CONCLUSION.............................................................................................................................................10
REFERENCES..............................................................................................................................................11
APPENDIX..................................................................................................................................................12

INTRODUCTION
Financial management entails determining how an organisation will financial institution for
different purposes, allocating those funding in the most effective and profitable manner, having
power across those resources, and disbursing the cash reserves' distributions to various parties. It
is responsible for arranging, managing, coordinating, and coordinating a company's financial
operations. Financial management guarantees that the company achieves its top priorities, along
with maximizing profits capital, lowering finance costs, and other semi goals, as well as those
relating to the state, staff, and manufacturers (Wang and Huang, 2021). This report based on the
analysis of financial activities that conduct by the business and prepare different types of
statements like profit & loss, balance sheet. In this report consist of importance of financial
management; define different kinds of financial statement. Along with, measure financial
performance by ratio analysis and measure growth of an entity. Financial ratios are essential for
each business entity in order to measure growth and success in particular time period.
SECTION 1
Concept & importance of financial management
Finance is concerned with the assessment, reporting, and supervision of sustainable growth
and it is essential to the smooth functioning of industries and markets. Along with distribution of
finite capital across competitive market prospects, financial management generates value and
operational capability. It aids in the execution and tracking of corporate plans, as well as the
employee expectations. This is why financial accounting is so important. In fact, it entails the
creation and application of financial values that help an organisation achieve its primary
objective, and that is to increase the company's value. Financial management also includes debt
financing, financial reporting, and information gathering and interpretation in order to make
informed decisions.
Importance of financial management
 Life cycle of business: At the starting phase, most businesses lose money and have
negative net worth. During the same period, financial management is critical. Especially
if there is more money flowing out than moving in before the initial months of a