Nature of Financial Management

Nature of Financial Management

At any movement in time, a business firm can be viewed as a poll of funds come from various sources i.e. equity shares, preference shares, debentures, financial institutions and past earning retained in the business. Funds raised from the sources are committed to a number of uses i.e., fixed assets used in production of goods and services, inventories used to facilitate production and sales, accounts receivable owed by customers and cash and marketable securities used for transactions and liquidity purposes. At a given moment, the pool of funds of the firm is static overtime, however, the pool changes; and these changes are known as funds flow. In an ongoing business funds flow continually throughout the enterprise. The  term finance can be defined as the management of flow of funds through an organisation or procurement of funds (in flows) and their effective utilisation (out flows).

Finance concerns itself with the actual flows of money, as well as any claims against money.

Finance, or financial management is an applied field of business administration Principles developed economies and other fields are applied to the problems or managing money. Finance has its own theories and principles. but is fundamentally concerned with applications.