Question

How does managerial finance function relates with economics?

How does managerial finance function relates with economics?

Homework Answers

Answer #1

Managerial Finance is concerned with the duties of a financial manager in an organisation. Managerial finance is closely connected with economics and is even referred to as financial economics

A manager can only conduct his financial duties within the economic framework in which they operate. He needs to be closely connected with economics in order to react or anticipate to changes in different conditions.

The main economic principle used by financial managers is marginal cost benefit analysis under which financial decisions are implemented only when marginal benefits are greater than marginal costs.

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