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Financial Management - Finance – An Introduction

Significance - Financial Goals

   Posted On :  19.06.2018 09:44 pm

Finance guides and regulates investment decisions and expenditure of administers economic activities.

Significance
 
Finance guides and regulates investment decisions and expenditure of administers economic activities. The scope of finance is vast and determined by the financial requirements of the business organization. The objective provides a frame work for optimum financial decision
– making. In other words, to ensure optimum decisions the goals of financial management must be made clearer. The financial management functions covers decision making in three inter-related areas, namely investment, financing and dividend policy. The financial manager has to take these decisions with reference to the objectives of the firm. Financial management provides a framework for selecting a proper course of action and deciding a viable commercial strategy. The main objective of a business is to maximize the owners’ economic welfare. The goals of financial management of a corporate enterprise succinctly brought out by Alfred Rappaport which is reproduced below: “In a market based economy which recognize the rights of private property, the only social responsibility of business is to create value and do so legally and with integrity. It is a profound error to view increases in a company’s value as a concern just for its shareholders. Enlightened managers and public officials’ recognizer that increase in stock priced reflect improvement in competitiveness – an issue which affects everyone who has a stake in the company or economy”. 
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