What is financial management?

What is financial management?

Financial management is about preparing, directing and managing the money activities of a company such as buying, selling and using money to its best results to maximize wealth of produce best value for the money. Basically, it means applying general management concepts to the cash of the company

 

What is finance?

Managing money?

Finance is the study or evaluation for business, investment and raising capital to fund them. This can simply put into context in two scenario. 

Imagine that you work in a company as an architect who gets paid weekly the understand evaluation and analysis of your paycheck and what you need to do with it maybe for luxury. 

See if you own a business at a local market selling shoes the understanding, evaluation and analysis of structuring a price point for sale of shoes to accommodate the rent worker wages ongoing inventory and other stuff is also called finance.

 

It is extremely important to understand the concept of money, if you envision yourself to become a successful entrepreneur, this is the fundamental way to start

 

According to Haitham Nobanee Abu Dhabi University, The University of Oxford, and The University of Liverpool Ph.D the three main categories of financial management goals are Official, Operative, and Operation goals; Official goals of financial management are at the top of the triangle shape; it is goals that are for every business in the market; goals like maximizing profits.

 

 

Basic areas in financial management in corporate finance

 

Managing Money, the evaluation or management money or funds

Assessment of Financial Performance, areas where handling allocation of the budget that are reserved and distributed to a designated department or ventures of a corporate business similar to this is a Budget for every Department. 

Profit evaluation and analysis whether the company are making profit or not. Funds for salaries, benefits and incentives, investments, law and credits, credit finances, banks

 

tips in financial management is that you must be good in analyzation, in every situational circumstances to fully understand because in some cases there will be computations as well as case studies.

Reporting these is where your analyzation are put into, this must be all the data collated in terms of the status of the company regarding finance including the financial or business planning and budgeting

 

Six principles of finance

(1) Money has a time value,

(2) Higher returns are expected for taking on more risk,

(3) Diversification of investments can reduce risk,

(4) Financial markets are efficient in pricing securities,

(5) Manager and stockholder objectives may differ, and

(6) Reputation matters.

 

to explain it better watch this video on YouTube

 

https://www.youtube.com/watch?v=WxXCPmKkfUI

 

Alremaithi, Latifa & Nobanee, Haitham. (2021). What is Financial Management? And What are the Goals of Financial Management?