Financial Management Report: Business Planning and Decision Making

This report delves into the core principles of financial management, emphasizing its critical role in achieving organizational objectives by optimizing fund utilization. The report meticulously examines the purpose of financial management, highlighting its implications on profitability, capital structure, shareholder wealth maximization, risk management, and operational control. It then assesses the government's role in supporting businesses, focusing on taxation policies, training programs, market analysis, and financial assistance. Finally, the report analyzes the interplay between business planning and decision-making, underscoring their interdependence in areas such as fund allocation, investment strategies, and adherence to regulations. The conclusion summarizes the key findings, emphasizing the importance of financial management in fostering business success and the increasing support provided to entrepreneurs.

Financial Management

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
1. Critically evaluating the purpose of the financial management and its implications..............3
2. Assessing the role of government in providing assistance for business..................................4
3. Analyzing the interaction which takes place between business planning and decision
making.........................................................................................................................................5
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Financial management lays emphasis on taking decision regarding monetary aspects
which makes contribution in the attainment of organizational goals and objectives. Moreover, in
the strategic business environment company can attain success only when it ensures proper
management of funds. In this, report will describe the purpose of financial management along
with its implications. Besides this, it will also shed light on the extent to which government
authority helps in making suitable decisions.
MAIN BODY
1. Critically evaluating the purpose of the financial management and its implications
In the business organization, financial management is highly concerned with making
optimum use of funds that directly aid in the profitability aspect of firm. Hence, it is highly
concerned with the planning, organizing, directing and controlling financial activities with the
aim to meet the goals and objectives. Objectives of financial management are enumerated below:
 The main objectives of financial management are to ensure regular supply of funds.
Hence, manager of the firm places emphasis on assessing the financial requirements of
each department and thereby makes allocation.
 Along with this, manager undertakes financial management with the motive to develop
highly optimal capital structure. Hence, proper balance is highly required in the debt and
equity because both such factors have direct impact on the profit margin of firm. Thus,
suitable composition of capital structure is the major concern of such field (Financial
Management - Meaning, Objectives and Functions, 2017). For instance: By taking into
consideration the financial management theories and framework business entity can
determine suitable debt-equity mix.
 Further, maximization of shareholders wealth is the main aim of business organization.
Hence, manager of the firm has accountability to take suitable investment and other
financial decision that place positive impact on the market share of the firm.
 Business entity undertakes financial management with the motive to manage the level of
risk in an effectual way. Hence, by considering this, it can be stated that through the

means of risk and return evaluation business unit can find out the level of risk and
thereby would become able to generate high profitability.
 Financial management system is also undertaken by the manager with the aim to
improve operational control. Hence, by making evaluation of the departmental
performance in against to the predetermined standards business unit can find out
deviation (Zsidisin, 2016). In this way, such system offers opportunity to the firm to
attain success by taking strategic action or measure within the suitable time frame.
 Financing, investment and dividend are the main decisions that are highly important
from the shareholders perspective. Hence, by using the tool of financial management
such as capital budgeting business unit can assess the extent to which proposed
investment is viable. Along with this, by using capital structure theories and models firm
can develop high suitable or competent financial structure. Along with this, financial
management tool assists in framing suitable dividend policy.
However, it is to be critically evaluates that for the effective financial management business
organization requires highly skilled and competent personnel. Moreover, without having proper
knowledge and skills regarding the cost and other areas of finance it would not be possible for
the manager to take highly suitable decisions. Further, composition of capital structure, cost and
investment analysis activities are highly time consuming (Martin, 2016). Hence, higher
management team has to devote more time which in turn closely influences the other activities to
a great extent. Hence, by considering such aspect it can be stated that financial management
system has some deficiencies which in turn affects the significance of it.
2. Assessing the role of government in providing assistance for business
Government authority provides high level of assistance to the business organizations.
Moreover, government plays a vital role in framing taxation policies as well as other rules and
regulations. Usually, entrepreneurs are encouraged to implement their unique ideas and
suggestion when tax rate is moderate. The rationale behind this, tax is one of the main factors
that closely influence the profit margin of firm (Nieman and Fouché, 2016). In addition to this,
companies are motivated to deal at global level only when tax, tariffs and duties are supportive.
In this way, government policies have an impact on the performance of business units. Further,
government authority organizes training session for the entrepreneurs which in turn persuade

them in relation to risk and profit management. UK government also presents research outcome
in relation market trend analysis, customer trend, economic condition etc. Hence, by evaluating
government reports and articles business entities can start their venture successfully. Along with
this, by encouraging business entities towards innovation government makes contribution in the
economic growth and development. Hence, training activities which are introduced by the
government provides deeper insight to the entrepreneur about the manner through which they
can undertake innovative practices. By this, government can raise the living standard of people to
the significant level. Along with this, through the means of records government authority gives
indication to the business entities about the area which in turn demands for renovation and
development. In this, by offering high quality and suitable products to the customers
entrepreneur can enhance the profitability aspect. In the recent times, government authority lays
high level of emphasis on green policy concept. By encouraging personnel or business entities to
perform their activities in an eco-friendly manner government authority can make contribution in
the living standard of individuals. Besides this, government authority can also provide direction
to the individuals about the manner through which they can carry out activities without placing
negative impact on environment and the people of society.
Along with this, availability of sources also has greater influence on the decision making
aspect of business entities. Hence, now government encourages financial institutions to offer
loan or financial support to the entrepreneurs at concessional interest rates. In this, by offering
financial assistance at negligible rates government offer monetary support to the business
entities. Moreover, entrepreneurs usually face difficulty in getting fund for starting the new
venture. Along with this, government publishes report regarding the market trend and customer
base on a periodical basis. Hence, by considering all such aspects it can be stated that
government offers both monetary and non-monetary assistance to the business unit.
3. Analyzing the interaction which takes place between business planning and decision making
Business planning and decision making both the aspects are highly associated with each
other. Moreover, planning is always starts with the decision making aspects in which business
entity selects one option out of several alternatives. For instance: Before raising funds business
entity has to take decision regarding the fund which they need to raise either for ensuring the
smooth functioning of business operations or expansion purpose. Thereafter, entrepreneurs make

plan in relation to the source of finance which they need to employ for fulfilling the financial
requirements (Van der Stede, 2016). This aspect clearly shows that planning and decision
making aspects are highly dependent on each other.
The reason behind this, without taking suitable decisions business entity would not
become able to make competent plan for the near future. For instance: Once business unit has
taken decision to raise £90000 by issuing shares to the general public. Thereafter, manager
frames plan regarding how to introduce IPO and issuance of shares. By taking into account all
the above aspects it can be presented that level of interaction is high between the business
planning and decision making. Along with this, business unit should also keep in mind green
policies while developing framework. In addition to this, company requires to consider laws and
legislation such as free trade policies while making business planning.
CONCLUSION
From the above report, it has been concluded that financial management is the key which
in turn facilitates optimum utilization of funds. Besides this, it can be inferred that in the recent
times has taken several initiatives and thereby offered more support to the entrepreneurs. It can
be revealed from the report that there is high level of association takes place between the
business planning and decision making.

REFERENCES
Books and Journals
Martin, L.L., 2016. Financial management for human service administrators. Waveland Press.
Nieman, G. and Fouché, K., 2016. Developing a regulatory framework for the financial,
management performance and social reporting systems for co-operatives in developing
countries: a case study of South Africa: original research. Acta Commercii. 16(1). pp.1-7.
Van der Stede, W., 2016. Big data, bigger picture, financial management. Financial
Management. pp.40-43.
Zsidisin, G. A., 2016. Robert J. TrentSupply Chain Financial Management: Best Practices,
Tools, and Applications for Improved Performance2016J. Ross PublishingPlantation, FL.
Online
Financial Management - Meaning, Objectives and Functions. 2017. Online. Available through: <
http://www.managementstudyguide.com/financial-management.htm>. [Accessed on 18th March
2017].