The nature of financial management includes various factors related to the effective finance management of an organisation.
Here are some important key elements related to the nature of financial management that help an organisation to achieve sucess.
FM involves the establishment of long-term financial objectives and the development of strategies to achieve those objectives.
Strategic Planning
Strategic Planning
Strategic planning process involves various aspects such as capital structure, effective allocation of resources, identifying and evaluating investment opportunities.
Strategic Planning
Strategic Planning
Financial managers identify and reduce risks associated with the financial health of an organization. It involves managing financial risks such as credit risks, market fluctuations,.
Risk management
FM involves evaluating various investment opportunities and allocating resources to projects that generate the highest return on investment.
Capital Budgeting
This process involves the analysis of potential projects, estimating cash flows and assessing their feasibility.
Capital Budgeting
Financial managers regularly analyse the financial statements and performance metrics of the projects to assess the financial health of an organization.
Financial Analysis
This process involves the evaluation of liquidity, profitability, solvency, and efficiency ratios to make informed decisions.
Financial Analysis
FM involves managing day-to-day financial operations to ensure the smooth functioning of business operations within an organization.
Working Capital Management
It involves management of accounts receivable, cash flow, accounts payable, and inventory levels.
Working Capital Management
FM involves controlling of costs and optimizing resource allocation to maximize profitability.
Cost Management
It involves the improvement of operational efficiency, identification of cost-saving opportunities, and implementation of cost-control measures to achieve a competitive advantage.
Cost Management
FM involves the preparation and presentation of accurate and timely financial reports to stakeholders, including investors, shareholders, creditors and regulatory authorities.
Financial Reporting
It ensures accountability and transparency in financial reporting. within an organisation.
Financial Reporting
FM ensures compliance with relevant laws, regulations, and accounting standards.
Compliance and Governance
This also involves conducting audits, internal controls, and adhering to ethical standards in financial decision-making.