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Financial Management - Finance – An Introduction

Nature of Finance Function

   Posted On :  19.06.2018 09:24 am

The finance function is the process of acquiring and utilizing funds of a business.

Nature of Finance Function
 
The finance function is the process of acquiring and utilizing funds of a business. Finance functions are related to overall management of an organization. Finance function is concerned with the policy decisions such as like of business, size of firm, type of equipment used, use of debt, liquidity position. These policy decisions determine the size of the profitability and riskiness of the business of the firm. Prof. K.M.Upadhyay has outlined the nature of finance function as follows:

1. In most of the organizations, financial operations are centralized. This results in economies.

2. Finance functions are performed in all business firms, irrespective of their sizes / legal forms of organization.

3. They contribute to the survival and growth of the firm.

4. Finance function is primarily involved with the data analysis for use in decision making.

5. Finance functions are concerned with the basic business activities of a firm, in addition to external environmental factors which affect basic business activities, namely, production and marketing.

6. Finance functions comprise control functions also

7. The central focus of finance function is valuation of the firm. 
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