Question

What is Financial Management?

Hint:

Financial management focuses on three key decisions — investment, financing, and dividend decisions.

Answer 1

Step 1: Definition.
Financial management refers to the efficient planning, organizing, directing, and controlling of financial activities in an organization.
Step 2: Explanation.
It involves the process of managing the firm’s financial resources such as funds procurement, investment, and profit distribution to achieve business goals.
Step 3: Importance.
Effective financial management ensures liquidity, profitability, and stability in operations. It also helps in decision-making regarding capital budgeting and cost control.
Step 4: Conclusion.
Hence, financial management is the science of managing money efficiently to maximize the firm’s value and ensure financial stability.