SESSION NINE
FINANCIAL MANAGEMENT
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• All business organizations need to obtain
finances to start, operate, grow and
maintain its activities.
• Financial management is basically
concerned with the acquisition and
disbursement of funds as well as dividend
issues.
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Role of Financial Management
• Determination of the financial needs of the
firm
• Raising funds at minimal cost
• Making optimum allocation of funds to
activities
• Development of controls to evaluate the
financial performance
• Development of financial data for decisionmaking
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Sources of Finance for Business
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Retained profits
Sale of assets which are no longer required
Trade credit e.g. offered by suppliers
Investing surplus cash – firms receive interest on their
investments
Reducing stocks – to release cash tied up in stocks
Personal savings or loans from friends and relatives
Financial institutions can give loans or mortgages
Finance houses can be used in leasing equipment
Overdrafts from commercial banks – these are short term
loans
Issue of shares – public companies can sell shares to the
general public while private companies may sell shares
privately
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