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Financial Management Connections

Financial management is related to many other business disciplines in several key ways. It uses economic concepts from microeconomics and macroeconomics in investment and environmental analysis. It relies on accounting records to understand financial information. It employs mathematical tools like present value calculations, ratio analysis, and models. It must understand production needs to allocate funding. It provides financing for marketing of produced goods. It evaluates human resource needs and funds wages and benefits.

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2K views3 pages

Financial Management Connections

Financial management is related to many other business disciplines in several key ways. It uses economic concepts from microeconomics and macroeconomics in investment and environmental analysis. It relies on accounting records to understand financial information. It employs mathematical tools like present value calculations, ratio analysis, and models. It must understand production needs to allocate funding. It provides financing for marketing of produced goods. It evaluates human resource needs and funds wages and benefits.

Uploaded by

abhi2244in
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Scope Of Financial Management

1. Financial Manage ment and Economics

Economic concepts like micro and macroeconomics are directly applied with the financial management
approaches. Investment decisions, micro and macro environmental factors are closely associated with
the functions of financial manager. Financial management also uses the economic equations like money
value discount factor, economic order quantity etc. Financial economics is one of the emerging area,
which provides immense opportunities to finance, and economical areas.

2. Financial Management and Accounting

Accounting records includes the financial information of the business concern. Hence, we can easily
understand the relationship between the financial management and accounting. In the olden periods,
both financial management and accounting are treated as a same discipline and then it has been
merged as Management Accounting because this part is very much helpful to finance manager to take
decisions. But nowadays financial management and accounting discipline are separate and interrelated.

3. Financial Management or Mathematics


Modern approaches of the financial management applied large number of mathematical and statistical
tools and techniques. They are also called as econometrics. Economic order quantity, discount factor,
time value of money, present value of money, cost of capital, capital structure theories, dividend
theories, ratio analysis and working capital analysis are used as mathematical and statistical tools and
techniques in the field of financial management.

4. Financial Management and Production Management

Production management is the operational part of the business concern, which helps to multiple the
money into profit. Profit of the concern depends upon the production performance. Production
performance needs finance, because production department requires raw material, machinery, wages,
operating expenses etc. These expenditures are decided and estimated by the financial department and
the finance manager allocates the appropriate finance to production department. The financial manager
must be aware of the operational process and finance required for each process of production activities.

5. Financial Management and Marketing


Produced goods are sold in the market with innovative and modern approaches. For this, the marketing
department needs finance to meet their requirements. The financial manager or finance department is
responsible to allocate the adequate finance to the marketing department. Hence, marketing and
financial management are interrelated and depends on each other.

6. Financial Management and Human Resource

Financial management is also related with human resource department, which provides manpower to
all the functional areas of the management. Financial manager should carefully evaluate the
requirement of manpower to each department and allocate the finance to the human resource
department as wages, salary, remuneration, commission, bonus, pension and other monetary benefits
to the human resource department. Hence, financial management is directly related with human
resource management.

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