Finance and Management are the two backbones of any successful organization, as proper management of finances is very central aspect of any organization. The finance management is crucial in all the running undertakings, be it an educational institution or a small scale company. Finance and Management simply means handling with the matters of money management. The term finance management implies proficient use with respect to the economic resources mainly capital funds. In essence, finance and management is related to the decisions made at the managerial level, which upshots in the financing and achievements in long as well as short run credits of the organization. It primarily is concerned with the conditions demanding for particular assets or perhaps, a grouping of several assets, largely depending on the size of the organization.
The analysis of finance management is usually done by anticipating the potential inflows as well as outflows and also, the effects it poses on the managerial aims of the organization. Hence, the analysis computes 2 major facets of finance and management which are procural of funds, as well as effective utilization of finances, in order to attain business aims.
Aspects of Finance and Management:
The finances are incurred from various sources and hence, procural of finances is regarded as the most crucial task of the business. The finances collated from various sources come along with varied aspects with regards to risk, control and cost. From the perspective of risk confronted by the business, finances that are issued by the way of equity shares are considered to be the best for any company or organization. Since, the question of compensation of equity funds does not arise at all provided the company is not going from the liquidation process. From the perspective of cost, equity capital is considered to be the major costly source of finances. Since, the dividend anticipations of the shareholders typically are soaring as compared to the ubiquitous interest rates.
Finance and management comprises of cost, control and risk. Cost of the finances needs to be minimal, in order to get a right balance between the other 2 aspects that are control and risk. The mobilization of money plays a vital role in the conventional day’s globalize cutthroat state of affairs. The finances for the company can be elevated from the domestic marketplace or else from abroad. The 2 prime sources through which finances can be raised are FDI (Foreign Direct Investment) and FII (Foreign Institutional Investors).
Finance and Management’s very vital aspect is the utilization of the finances. This will ensure that the finances are not kept back as idle or improper utilization of finances are not practiced. If inappropriate utilization of finances is observed, then operation of a business would become very complex. Hence, it is very vital to make use of finances in a profitable and appropriate manner. For any organization, be it for profit or not for profit, a well grounded finance management is very essential. Additionally, it is indispensable in a premeditated economy and a capitalist system. Management of finance optimizes yields from a specified input of finances.