|
What Is Financial Management? |
|
Financial management involves the analyzing and interpreting the financial statement so as to be able to plan and control the business. |
|
Unlike bookkeeping or accounting, financial management has a wider spectrum and its goals are as follows:- |
|
|
In the very short run, a business needs cash/liquidity to survive but over a longer term period, it must be able to generate net incomes in excess of expenses to be on a going concern. [ refer to my article on profits versus cash ] |
|
Some Areas Where Financial Management Are Generally Applied: |
|
Working capital management including cash flow forecasting/management |
|
Breakeven analysis & cost accounting |
|
Business Valuation: how to value a business, computation of goodwill and others |
|
Gearing and equity and debt financing |
|
Reading and understanding financial statement of the enterprise |
|
Ratio Analysis: assessing the enterprise liquidity, profitability, gearing and others |
|
Raising finance in business |
|
Capital Investment Appraisals |