Principles of Financial Management

Principles Of Financial
Management

INTRODUCTION
 Financial management is defined as planning and
controlling financial functions of the organization.
 Planning of Financial Management involve controlling and
directing the financial activities such as procurement
decisions and other associated utilisation of financial
functions for conducting various organisations functions.
 Henceforth, this presentation will emphasis over
approaches, techniques and factors involve in financial
management. Stakeholder management will also be
summarized in this presentation.

Financial management approaches, techniques and factors
Financial Management Approaches: These are referred as the practices used to
manage financial function in context to corporate organization.
 Traditional Approach: Tradition approach of financial management emphasis
over acquisition of resources, financing and manage all assets in order to generate
optimum utilisation from such assets. This approach enables the management in
M&S to take productive decisions in respect to procuring assets and other
resources associated with different company's operations.
 Modern Approach: Modern approach of financial management emphasis over
acquisition, financing, merger, acquisition, cost management, quality
improvement and financial discipline as a part of financial management function.

Techniques of Financial Management
Financial Management Techniques involve financial practices in order to manage the financial
resources of the company in the most optimum manner.
 Ratio Analysis: Ratio analysis is an effective tool used to manage financial resources of
the company. Financial manager analysis different ratios like liquidity ratio, leverage ratio,
efficiency ratio, profitability ratio and market value ratio. All such ratio enable the financial
manager in M&S to control and manage financial sources of the company and also to
analyse operational effectiveness like profitability and other operational aspects.
 Risk Management: Risk managements an effective tool use in Financial Management to
evaluate risk associated with investment decisions of the M&S.