Financial management is in charge of the efficient administration of working capital within a balance of risk and profitability criteria, in addition to guiding the financial strategy to guarantee the availability of financing sources and provide the proper registration of operations as tools. management control of the organization.
Effective financial management is more than accounting and reporting, it is crucial at all stages of the business cycle. It is responsible for raising money for the business, maintaining investor relations, includes effective accounting, reporting and communication with a wide range of stakeholders, involves budgets and forecasts, as well as cost management and cash flow also evaluates projects and manages assets, also covers the sale of the business. (Finch, p.1)
Financial management refers to the acquisition, financing, and management of assets, with some general purpose in mind. Thus, the role of financial managers in decision-making can be divided into three main areas: investment decisions, financing decisions, and asset management decisions. (Van Horne, and Wachowicz, p.2)
Financial management is concerned with evaluating the degree of satisfaction of the owners… The objective of financial management is to manage the company's resources to bring it closer to its goal. To achieve this purpose, two necessary conditions are required: you control costs and guarantee the flow of profits. (Navarro, p.12)
Financial management focuses on the decisions that companies make regarding their cash flows. Consequently, financial management is important in any type of company, whether public or private, that handles financial services or manufactures products. The kinds of tasks that the financial management gamut range from making decisions like expanding the plant, to choosing what types of securities to issue to finance such expansions. Finance managers are also responsible for deciding the terms of the credit that they will be able to offer to their clients, the size of the inventory that the company must handle, how much cash it must have on hand, whether it is appropriate to acquire other companies, and how much of the company's profits. the company will be reinvested in the business and how much to pay as dividends.(Besley and Brigham, p.5)
Financial administration is a phase of general administration, which aims to maximize the equity of a company in the long term, by obtaining financial resources through capital contributions or obtaining credits, its correct management and application, as well as coordination efficient working capital investments and results, through presentation and interpretation to make sound decisions. (Perdomo, p.31)
The fundamental objective of financial management in a for-profit company is to maximize the value invested by its owners… With this objective in mind, the strategies to be designed and executed in the organization must be linked so that its operations produce results that meet expectations performance of its shareholders; This implies not only the satisfaction of this group in terms of profitability, but also involves the entire organization as a generator of goods and services that must attract and maintain customers, attract human resources with the required training, motivate management personnel to achieving your goals, and in general, executing the necessary actions so that the maximization of value is not an easily exhausted short-term goal, but a permanent objective. That is to say,The maximization of shareholder value is not limited to the financial sphere of the company, but involves all its sectors: production, marketing, human resources, among others. (Vera, p.110)
Financial management is closely linked to making decisions regarding the size and composition of assets, the level and structure of financing, and the dividend policy, focusing on two primary factors such as profit maximization and wealth maximization, in order to achieve these objectives one of the most used tools for financial management to be really effective is financial planning, the final objective of this planning is a financial plan in which the financial tactics of the company are detailed and described. future forecasts based on the different accounting and financial statements of the same.
The purpose of financial and administrative management is the optimal management of human, financial and physical resources that are part of organizations through the areas of accounting, budget and treasury, administrative services and human resources.
Bibliography
- Besley, Scott and Brigham, Eugene F., Fundamentals of Financial Management, Cengage Learning Editors, 2008. Finch, Brian. Effective Financial Management, Kogan Page Publishers, 2010. Navarro C., Diego. Financial management topics, National University of Colombia, 2003. Perdomo Moreno Abraham, Basic elements of financial management, Cengage Learning Editores, 2002. Van Horne, James C. and Wachowicz, John M. Fundamentals of financial management, Pearson Education, 2002. Vera Colina, Mary A., Value-based management and financial management. In: Trends Magazine, Vol. I, No. 2. November 2000, pp. 109-132.
