There are many theories around financial management: Any organization needs finances to obtain physical resources, carry out the production activities and other business operations, pay compensation to the suppliers, etc.

Nature, Significance, and Scope of Financial Managementįinancial management is an organic function of any business. “Financial management is the operational activity of a business that is responsible for obtaining and effectively utilizing the funds necessary for efficient operations.”- Massie Browse more Topics under Business Functions “Financial management is that area of business management devoted to a judicious use of capital and a careful selection of the source of capital in order to enable a spending unit to move in the direction of reaching the goals.” – J.F. “Financial management is the activity concerned with planning, raising, controlling and administering of funds used in the business.” – Guthman and Dougal Deals with the planning, organizing, and controlling of financial activities like the procurement and utilization of funds.Ensures sufficient availability of funds.Endeavors to reduce the cost of finance.For any business, it is important that the finance it procures is invested in a manner that the returns from the investment are higher than the cost of finance. Let’s define financial management as the first part of the introduction to financial management.

Financial management decisions