Effective financial management is concerned with the efficient use of important economic resources, namely, capital funds.
Introduction
Effective financial management is
concerned with the efficient use of important economic resources, namely,
capital funds. The capital funds can be used to invest in two forms like,
1.Fixed Assets
A major portion of the capital
funds used for investing in purchase of fixed assets for permanent or long-term
purposes, for the purpose of diversification, expansion of business, renovation
or modernization of plant and machinery and research and development and
2.Current Assets
Rest of the portion of funds
needed for short-term purposes like investing into assets for current
operations of business is called working capital. For example, one who is
managing a trading business has to arrange funds regularly for, purchase of
finished stock and keeping it in storeroom, and also find suitable customer to
go for sales. On the other hand if it is a manufacturing firm he has to arrange
for funds continuously for, buying raw materials, keeping it for some time in
store, then taking it for the process of converting into finished goods, and
ultimately selling it to consumers.
Tags : Financial Management - WORKING CAPITAL MANAGEMENT
Last 30 days 639 views