FINANCIAL MANAGEMENT
In the present economy, finance is defined as the provision of money at the time when it is required. Every business organisation, irrespective of its size, nature, scale of operation, needs finance to carry out its various activities for achieving its predetermined objectives. Hence, finance is indispensable today and is rightly called as the life blood of a business enterprise.
Meaning and Definition of Finance
Finance refers to the provision of money at the time when it is required and includes procurement and effective utilisation of funds. It is the art of management of money and other valuables, which can be easily converted into cash.
Finance is defined as, "the management of money and includes activities like, saving.investing, borrowing, lending, budgeting and forecasting".
Classification of Finance
The subject of finance has been basically classified into two, Public finance and Private finance. Public finance is concerned with the receipts and disbursements of funds by the Central Government, State Governments, and Local self governments. Private finance deals with the receipts and disbursements of funds of individuals and other organisations.
The subject of private finance can be classified into:
1. Personal finance: Personal finance is concerned with planning, raising and controlling of financial matters relating to individuals.
2. Finance of non-profit organisations: The finance of non-profit organisations is concerned with the policies, principles and procedures associated with the financial management of non-profit organisations.
3. Business finance: Business finance is concerned with the study of principles, policies, procedures and problems concerned with the financial management of trade, industry, commerce and other profit making organisations. Business finance is the process relating to raising of capital and its utilisation in the business activities. Business finance can be defined as "the activity concerned with planning, raising,controlling and administering of funds used in business".
The term business finance is also referred to as corporate finance. The management of business finance is known as financial management
Financial Management
The term financial management is composed of two terms finance and management. In this sense, financial management is concerned with the application of managerial principles and functions in the field of finance. It refers to that part of management activity which isconcerned with the planning and controlling of firm's financial resources.
Meaning and Definitions
Financial management refers to the process of planning, organizing, controlling and monitoring financial resources with a view to achieve organisational goals and objectives. It is concerned with the procurement of funds and its effective utilisation in business. It is the most vital activity in every business organisation.
According to J.L. Massie, "Financial management is the operational activity of a business that is responsible for obtaining and effectively utilising the funds necessary for effective operation."
According to 1.M. Pandey, "Financial Management is the managerial activity whichis concerned with the planning and controlling of the firm's financial resources".