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Understanding the Various Functions of Financial Management

Financial management focuses on procurement, control as well as allotment of financial resources available. But for solving your financial management assignments, you need to have a good understanding of its major functions. They are:

1. Estimating the capital requirement

Capital that is required by the organization is estimated by the financial manager which depends upon the costs and profits expected. This estimation has to be made, keeping in mind that the estimate would increase the earning capacity of the enterprise.

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2. Choosing the source of funds

The company already has initial funds, to procure additional funds, it may issue shares and debentures, take loans from banks and financial institutions, or draw public deposits in the form of bonds. The factor that a company might choose will determine future merits and demerits depending upon the period of financing.

3. Allocation and investment

Allocation of funds and investing them into a profitable business is decided by the finance manager to ensure the safety of funds and ascertain continuous returns on investments. The manager must know about the proper allocation of investment ensuring that the funds do not get stuck, and there is no return generated from the investment. Efficient structure and understanding of fund allotment ensure better results. 

4. Determining capital composition

When the financial manager estimates the capital requirements then the capital structure has to be formed. The capital structure involves both short-term and long-term debt-equity analysis. It is determined by the amount of equity capital that the company has and the additional funds that are to be raised from outside. 

5. Disposing of the surplus

The financial manager can either declare the dividends or retain profits. The retained profits are further used by the organization for renovation, innovation, expansion, or diversification of plans. This requires in-depth knowledge of the allotment of funds appropriately. Such queries are often faced by you while completing your assignment. To excel in your course and attain excellent results, you can avail our Financial management assignment help UAE right away.

What is your Financial Goal? Profit vs. Wealth

Every business organization has predetermined objectives that it seeks to attain throughout a financial year. The economic goals of any organization are profit maximization and maximization of shareholder’s wealth. An organization must crucially understand Shareholder’s Wealth Maximization (SWM) to fulfil the organization’s objectives. Whereas the profit consists of the income earned by the entrepreneur after deducting all the expenses. To maximize the profit of the firm it is mandatory to minimize the expenditure incurred by the firm.

The profit that is earned by the organization is divided among shareholders in the form of dividends. The shareholders are invested in the business as they earn a profit when the business earns a profit. Every shareholder is provided with financial reports so that they can look at the financial expenses and the overall performance of the organization. The wealth of the organization lies within its shareholders, assets, and the growth that the organization strives to attain within a specified period. Entrepreneurs should also keep in mind that the public is benefited by their venture. As the informed customers are increasing, therefore being involved in NGO activities help retain better customer relations. This adds a benefit while marking the brand as well as fulfilling the social responsibilities of the organization.

Profit is considered as a parameter while measuring a firm’s productivity and efficiency. Therefore, an organization must keep on improvising their products according to customer demands to attain maximum profit, by selling more. This will be beneficial to both the society, as their demands are being met and the organization, as they are going to earn profits. 

When the cost of production is lowered, keeping the price of the product the same, then the wealth of the organization increases, keeping other factors constant but when there is a rise in profit due to a rise in prices of the product then it depicts the expenditure incurred by the organization has increased, thereby decreasing the profit margins. This takes place because consumers reduce their demand when there is a rise in prices. The profit motive of any organization and the public benefits go hand in hand, which in turn also increases both, the National Income of the country and the purchasing power of the consumer. 

Here is a Samples of Financial Management Assignment Solved by Our Expert

Financial Management Assignment Sample Financial Management Assignment Sample 2

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