Financial Management Report: Purpose, Decisions, and Assistance

This report provides a comprehensive overview of financial management, emphasizing its critical role in business success. It begins by critically evaluating the purpose of financial management, highlighting its importance in integrating business activities and achieving shareholder wealth maximization. The report then delves into the implications of key financial decisions—financing, dividend, and investment—from the perspective of shareholders and other stakeholders, such as employees and customers. It examines how these decisions impact capital structure, profitability, and shareholder returns. Furthermore, the report explores the need for government assistance in supporting businesses, particularly small and medium-sized enterprises, through financial resources, subsidies, and technological innovation. The interaction between government assistance, business planning, and decision-making is also discussed, emphasizing the importance of financial management in securing funding and making informed investment choices. The report concludes by summarizing the key findings and reiterating the importance of financial management in achieving sustainable business growth and meeting stakeholder expectations.

Financial Management

TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................3
Critically evaluate the purpose of financial management ...........................................................3
Implication of three main decision from shareholders perspective ............................................3
Need of government assistance for business ..............................................................................4
Interaction with business planning and decision making ...........................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Financial management is considered as the most important aspect through which business
can integrate all related activities and produce valid outcome. This is supportive for business to
cater requirement of all related parties and contribute toward success of the business. Present
report is based on financial management in which purpose of financial management has been
explained along with implication of three main shareholders' perspective. In addition to this,
need of government assistance to business have also been explained.
Critically evaluate the purpose of financial management
According to Brigham and Ehrhardt (2013) financial management deals with department
of financial handling the work related to cash flow for both short as well as long term. The major
objective of the financial management is to increase or maximize the wealth of the shareholders.
After this, other objectives related to maximizing the sales revenue and profitability as well as
earning per share are put on the lower priority. At last the total assets value is focused to
determine the success of the business. It is effective to estimating the requirement of capital and
accordingly ensure that business is performing effectively. Furthermore, sources of funds are
selected effectively in accordance with available fund. At the same time, financial management
has purpose to manage the cash related activities effectively and assists management to
accomplish long a well as well as short term objectives. This in turn business get higher rate of
return and certainty for managing its production flow. Furthermore, without implementation of
financial management, it is critical to access cost effective source of finance and in turn it might
increase the cost of production for the business.
Implication of three main decision from shareholders perspective
According to Petty and et. al., (2015) there are different stakeholders associated with the
business who have different need and requirement which management of the company need to
consider. The main stakeholders associated with business are;shareholder, employees and
customers. Here, companies must ensure the meet the expectations of all related parties by
focusing on three main decisions such as financing, dividend and investment decisions. The first
decision covers the work related to capital structure and tradition view for management of the
business. For example, workforce and union seek their own growth by expecting more profit
from the business. Owing to this, management need to ensure that employee get timely

increment. Furthermore, changing preferences of buyer is considered for their higher level of
satisfaction. In addition to this, investment decision are very important under which focus is laid
on capital budgeting methods so as to find the profitability derived from a particular project.
However, net value is considered as the appropriate method to measure the price of ordinary
share. Here, in case net present value is generating greater than zero then it would be effective
for corporation to enhance the earning. This is because investors also increase their wealth will
be increased through the profitability and higher earning of the business. On a critical note, in
case firm select the project with negative rate of return then it serves as the illusion for the
shareholders as they do not get proper rate of return on the same. Furthermore, dividend decision
covers dividend policy through which shareholders are provided security in term of payment of
good return. On the contrary, Hendriks (2013) asserted that using appropriate strategies to meet
stakeholders' expectations corporation can create its goodwill in the marketplace. Here, firm need
to put efforts to grab the attention of more customers in case it meet their requirement in a most
effective manner. On a critical note, Ndungo, Tobias and Florence (2017) consistent pay to
shareholders make it possible for business to cope up with changing scenario and deliver them
right kind of product and services in the marketplace. Hence, the most important task for the
success of the business is to meet the expectations of stakeholders which is fulfilled with the help
of financial management.
Need of government assistance for business
Government assistant is very important for the business in order to ensure their successful
operation and start up of the some of the small scale businesses. However, the requirement of
government assistance is emerged to ensure economy growth by supporting businesses and
promoting entrepreneurship. For example, financial resources are offered for the start ups on the
basis of effective terms related to interest and re-payment of the loan (Engel and et. al., 2016).
Apart from this, there is need of government subsidies is also provided for new businesses which
are operating on the basis of proposed plan of the government of the nation. However, the
government also support the business in term of export related facilities. For this purpose,
concession is provided for stock which is being sent out and accordingly appropriate
transportation facilities is also rendered. However, taxation related assistance is also offered for
certain business which work on social welfare and as per the government decided category.

Furthermore, government assists businesses in term of technological innovation. This is helpful
to start the business with rapid speed and carry out all operation activities effectively
(Government Grants, 2017).
Interaction with business planning and decision making
The need of government for business is felt by the specific businesses which are going to
open in energy or Gas or oil related specific sector. On the other, small businesses operating with
lack of financial resources also seek for the government assistance. For this purpose,
organization like small businesses need to share their business project with the financial
institutions and then get the approval for starting the business on the basis of certain percentage
of profit. It would be effective to contribute towards the growth and success of the business.
However, support can be provided in accordance with finance, equity, grant, loan and expertise
or advice (Andreou, Louca and Panayides, 2014). At this juncture, the last stage of planning such
as expertise and advice can be related to oil and gas or other environmental related project. In
this manner, corporation come to know about the requirement of finance. However, allocation of
the fund is also done as per the assistance provided by the government. At the same time,
estimation is done regarding the cost and other related elements of profit so as to determine the
success of the business. The tax related aspects are also communicated with the business so as to
encourage their profitability and support the employment of the nation. This proves to be
effective for success of the business and remove the hurdles related to successful expansion or
start up of the new project. Apart from this, financial management is helpful to take decision
related to acquiring finance from other sources like loan or relatives etc in case support provided
by the government is not enough (Chu and Li, 2015).
CONCLUSION
The aforementioned report concludes that financial management is the most important
past of the business through which company ensure its sustainable growth and development.
However, government assistance is needed by the small and medium size business in term of
financial resources or relaxation for the tax or legal obligations etc. It can also be concluded that
management of financial contribute towards meeting the expectations of all related stakeholders.

REFERENCES
Journals and books
Andreou, P. C., Louca, C., & Panayides, P. M. (2014). Corporate governance, financial
management decisions and firm performance: Evidence from the maritime
industry. Transportation Research Part E: Logistics and Transportation Review, 63, 59-
78.
Brigham, E. F., & Ehrhardt, M. C. (2013). Financial management: Theory & practice. Cengage
Learning.
Chu, L., & Li, D. (2015). Research on College Financial Budget Performance Evaluation.
In LISS 2013 (pp. 673-678). Springer Berlin Heidelberg.
Engel, L. & et. al., (2016). Identifying instruments to quantify financial management skills in
adults with acquired cognitive impairments. Journal of clinical and experimental
neuropsychology, 38(1). 76-95.
Hendriks, C. J. (2013). Integrated Financial Management Information Systems: guidelines for
effective implementation by the public sector of South Africa: original research. South
African Journal of Information Management, 15(1). 1-9.
Ndungo, J. M., Tobias, O., & Florence, M. (2017). EFFECT OF RISK MANAGEMENT
FUNCTION ON FINANCIAL PERFORMANCE OF SAVINGS AND CREDIT CO-
OPERATIVE SOCIETIES IN KENYA. International Journal of Finance, 2(5). 38-50.
Petty, J. W. & et. al., (2015). Financial management: Principles and applications. Pearson
Higher Education AU.
Online
Government Grants. 2017. [Online]. Available through: <http://www.government-
grants.co.uk/>. [Accessed on 31st March 2017].