What is Financial Management?

Financial management is a subject which is related to the management of financial resources of a company or organisation. We can also say that managing financial resources of a company or organisation in efficient and effective manner in order to run the business smoothly and generate more profit. Financial resources are those resources which are in terms of money e-g loans, money, assets and so on. So this course include all those tools and techniques to manage these financial resources in a manner as to be more effective and efficient.
The main goal of any business is to make more and more profit and by making more profit means proper management. If the company knows well about its financial resources and manage those resources properly then it can make good profit. On the other hand if finances are not managed properly the company can go to severe losses. Financial Management is important in every field of life, we also do manage our financial resources to have a peaceful life ( see also, About Financial Management), same is the case in business world.

Financial Management is done by special people or officers and they are called financial advisers or financial managers. Almost every company have their own financial managers or financial advisers who manage these financial resources for the company/organisation.

There are a lot of definitions of the term “Financial Management” but few of them are explained below:

Finance is the science of managing financial resources in an optimal pattern i.e. the best use of
available financial sources. Finance consists of three interrelated areas:

  1.  Money & Capital markets, which deals with securities markets & financial institutions.
  2. Investments, which focuses on the decisions of both individual and institutional investors as they choose assets for their investment portfolios.
  3.  Financial Management, or business finance which involves the actual management of firms.
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