Finance is the life blood of any organisation. For survive or growth of an organisation it must needs funds. Financial management is necessary to do smooth operations in present and future.
It deals with procurement of funds and efficient utilisation and it concerned with the effective fund management in the business
Importance of Financial Management
#1. Financial planning
Planning is very important for every business in order to achieve future goal. FM helps to determine the financial requirement of the business concern and leads to take financial planning of the concern. It is an important part of the business concern, which helps to promotion of an enterprise.
#2. Financial Decision
FM helps to take sound financial decision in the business concern. Financial decision will affect the entire business operation of the concern because there is a direct relationship with various department functions such as marketing production personnel, etc.
#3. Proper utilisation of funds
Proper use and allocation of funds leads to improve the operational efficiency of the business concern. When the finance manager uses the funds properly, they can reduce the cost of capital and increase the value of the firm.
#4. Acquisition of funds
FM involves the acquisition of required finance to the business concern. Acquiring needed funds play a major part of the FM, which involve possible source o finance at minimum cost.
#5. Promoting savings
Savings are possible only when the business concern earns higher profitability and maximising wealth. Effective FM helps to promoting and mobilising individual and corporate savings.
#6. Increase the value of the firm
FM is very important in the field of increasing the wealth of the investors and the business concern. Ultimate aim of any business concern will achieve the maximum profit and higher profitability leads to maximise the wealth of the investors as well as the nation.
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