Financial management is important in all types of business including banks. And other financial institutions, as well as industrial and retail firms. it is also important in governmental operations, schools, hospital and highway departments.
Financial management is must important for people in marketing, accounting, production, personal, and other areas to understand financial in order to do a good job in their own fields. Marketing people, for example, must understand how marketing decisions affect and are affected by funds availability, by inventory levels, by excess plant capacity, and so on. Nowadays the importance of managerial finance increasing day by day. Failure and deteriorating of many corporations increase the importance of the managerial finance. For example, the failure of Necon air limited,
The importance of managerial finance or financial management can be given below:
1. To make investment decision: - financial management is important for decision regarding the investment in long-term assets like building. Furniture, machineries etc.
2. To make capital structure decision :- capital structure is the mix of the ling – term sources capital structure helps to decide the appropriate proportion of the long-term funds like equity share capital, preference share capital, debt etc. therefore financial management is important for the determining the optimum capital structure that maximizes the value of the firm.
3. To make dividend decision:- dividends is the return for shareholders that are distributed to the shareholders. The firm is not legal obligation to pay dividend to the shareholders. Financial management helps to make dividend payout or retention decision amount of dividend per share.
4. To achieve certain goal:- most corporations have the goal of wealth maximization managerial finance or financial management helps to achieve such goal with the help of functional areas of financial management.
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