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Nature, Purpose and Scope of Financial Management

The document outlines the nature, purpose, and scope of financial management, emphasizing its role in planning, acquiring, and utilizing funds to achieve organizational goals. It discusses the three major types of financial decisions: investment, financing, and dividend decisions, and highlights the relationship between financial management, accounting, and economics. Additionally, it underscores the significance of financial management in ensuring financial discipline and maximizing shareholder wealth.

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Ziljane Villacruz
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6 views14 pages

Nature, Purpose and Scope of Financial Management

The document outlines the nature, purpose, and scope of financial management, emphasizing its role in planning, acquiring, and utilizing funds to achieve organizational goals. It discusses the three major types of financial decisions: investment, financing, and dividend decisions, and highlights the relationship between financial management, accounting, and economics. Additionally, it underscores the significance of financial management in ensuring financial discipline and maximizing shareholder wealth.

Uploaded by

Ziljane Villacruz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Nature, Purpose

and Scope of
Financial
Management
◊ Describe the nature, goal and basic scope 2

of Financial Management
◊ Explain briefly the three major parts types
Chapter of decision that the Financial Manager
makes
Objectives:
◊ Discuss the importance and significance of
Financial Management
◊ Describe the relationship between
Financial Management and Accounting
◊ Describe the relationship between
Financial Management and Economics
3

○ a decision making process


Financial concerned with planning,
Management acquiring and utilizing funds in a
manner that achieves the firm’s
desired goals
○ Process for and analysis of
making financial decisions in the
business context
4

Goal
Stock Price Make Money and Shareholder’s
Add Value Wealth
Maximization
Maximize the Profit Maximization
current value per and Managerial
share of the Reward
existing stock or Maximization
ownership in a Social
business firm. Responsibility
5

Acquisition

Scope of Funds

of FM
Financing

Management
of Assets
6

Procurement of
Short Term and
Traditional Long Term Funds
Function of
Financial
Management Mobilization of
Funds

Legal and
Regulatory
Compliance
7

Total Funds
Requirement
Financial of the Firm
Managers in
Modern
Approach Assets and
Resources to be
Acquired

Determine Best
Pattern of
Financing Assets
8

Types of Investment
Decisions Financing Decisions Dividend Decisions

Financial -determine how


scarce or limited -assert that the mix -Determination of

Decisions resources in terms


of funds of the
of debt and equity
chosen to finance
quantum of profits
to be distributed to
business firms are investments should the owners,
committed to maximize the value frequency of
projects. of investments payments and the
made amount to be
retained by the firm
Reduction of 9
Chance of Failure
-strength of a Measurement of
business lies in its Return of
Significance Broad Applicability
financial discipline. Investment
-FM is applicable in Finance function is
of FM all forms of primordial which
-FM studies Risk
Business. . enables other
and Return
functions like
production,
marketing and
personnel to be
effective in
achieving
organizational goal
10

Relationship
Accounting

Finance
between FM
and Treasury
Accounting

Tax
Etc
11

Financial
Management
and Economics
12

Financial Management
and Public Responsibility
Reconcile social and environmental requirement with
profit making motive.
“
“Having a plan with money does not
13

just help you right now,


it also gives you
VISION and HOPE
for the END GOAL”
14

Thanks!
Any questions?

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