Home | ARTS | Financial Management | Financial Management as Science or Art

Financial Management - Finance – An Introduction

Financial Management as Science or Art

   Posted On :  19.06.2018 09:40 pm

Financial management is both a science and an art. Its nature is nearer to applied sciences as it envisages use of classified and tested knowledge as a help in practical affairs and solving business.

Financial Management as Science or Art
 
Financial management is both a science and an art. Its nature is nearer to applied sciences as it envisages use of classified and tested knowledge as a help in practical affairs and solving business.
 
Theory of financial management is based on certain systematic principles, some of which can be tested in mathematical equations like the law of physics and chemistry. Financial management contains a much larger body of rules or tendencies that hold true in general and on the average. The use of computers, operations research, statistical techniques and econometric models find wide application in financial management as tools for solving corporate financial problems like budgeting, choice of investments, acquisition or mergers etc. This takes the financial management nearer to treatment as a subject of science.
 
Most practical problems of finance have no hard and fast answers that can be worked out mathematically or programmed on a computer. They must be solved by judgment, intuition and the “feel” of experience. Thus, despite its frequent acceptance as an applied science, finance remains largely an art. Because, according to George A. Christy and Feyton Foster Roden (Finance: Environment and Decisions) knowledge of facts, principles and concepts is necessary for making decisions but personal involvement of the manager through his intuitive capacities and power of judgment becomes essential. As the application of human judgement and skills is also required for effective financial management, financial management is also an art.
 
In the entire study of financial management whether it is related to investment decisions, financing decisions i.e. deciding about the sources of financing, or dividend decisions, there is a mixture of science as well as art. When techniques for analytical purposes are used, it is science and when choice is application of the results it is an art. 
Tags : Financial Management - Finance – An Introduction
Last 30 days 1275 views

OTHER SUGEST TOPIC