Objectives of Financial Management[edit]
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Profit maximization happens when marginal cost is equal to marginal revenue. This is the
main objective of Financial Management.
Wealth maximization means maximization of shareholders' wealth. It is an advanced goal
compared to profit maximization.
Survival of company is an important consideration when the financial manager makes any
financial decisions. One incorrect decision may lead company to be bankrupt.
Maintaining proper cash flow is a short run objective of financial management. It is
necessary for operations to pay the day-to-day expenses e.g. raw material, electricity bills,
wages, rent etc. A good cash flow ensures the survival of company.
Minimization on capital cost in financial management can help operations gain more profit.
It is vague :- There are several types of profits before interest, depreciation and taxes, profit
before taxes, profit after taxes, cash profit etc
Scope of Financial Management[edit]
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Estimating the Requirement of Funds: Businesses make forecast on funds needed in both
short run and long run, hence, they can improve the efficiency of funding. The estimation is
based on the budget e.g. sales budget, production budget.
Determining the Capital Structure: Capital structure is how a firm finances its overall
operations and growth by using different sources of funds.[2] Once the requirement of funds
has estimated, the financial manager should decide the mix of debt and equity and also
types of debt.
Investment Fund: A good investment plan can bring businesses huge returns.
To ascertain maximum profit as well as maintain the core value of the organization
Financial Management for Start Up[edit]
For new enterprises, it is important to make a good estimation on costs, sales.[3] Consideration on
appropriate length sources of finances can help businesses avoid the cash flow problems even
the failure of setting up. There are fixed and current sides of assets balance sheet. Fixed
assets refers to assets that cannot be converted into cash easily, like plant, property, equipment
etc.[4] A current asset is an item on an entity's balance sheet that is either cash, a cash
equivalent, or which can be converted into cash within one year.[5] It is not easy for start ups to
forecast the current asset, because there are changes in receivables and payables.[6]