Question

Define financial management and explain its importance?

Answer 1

Financial Management is concerned with planning, organizing, directing and controlling the financial activities of an organization. It involves procurement of funds and its effective utilization. It is concerned with applying general management principles in finance administering them.

Importance of financial management

• Financial management helps the organization in effective financial planning
• Financial management ensures sufficient acquisition of funds
• It enables the organization in utilizing and allocating the funds as per requirements
• Critical financial decisions are ensured in financial management
• Financial management ensures maximization of the profitability and the overall value of the organization.