Nature of Financial Management Identifying suitable sources and raising funds can be called financial management in short. Therefore, the nature of financial management and the method of bringing money, goals and activities related to financing revolve around. In this article briefly discussed 5 scope of financial management, functions of financial management, features of financial management, Nature of Financial Management also Let’s see:
The nature of financial management can therefore be summarized as the nature and characteristics of financial management. Below are the different | If the direction is discussed.
1. Sources of funds:
Business organizations at different times raise money from different sources. The nature of the source of fundraising depends on the use of the funds raised. Institutions usually raise appropriate funds from two major sources.
Such as- a. Internal and b, external.
a. Internal sources:
such as owners’ capital, reserve funds, undistributed profits and depreciation reserves, sale of movable and immovable assets, etc. The source directly affects the organization’s funding policy, taxes, laws, amount of earnings and its stability, and various national and international laws. Yet it is a potential source for business.
b. Financial External:
An External source such as Haq, insurance, leasehold, private loan or similar source. External source. In the case of such sources, the cost of capital is higher and the cost is higher. Thousands have rules and obligations. However, the popularity of this kind of wise to meet the toti.
2. Calention of Fund:
Recognize money from appropriate alternative sources after identification. Collection is essential work for the organization. Funds on various sectors of nan or tat, time and liability. There is also the necessity. Depends on the nature of the collection.
3. Used of Fund:
To ensure the best use of the money collected is financial. It is desirable to use this fund in Bolshe, Sunny cost depends on the guaranteed collar. As far as the expenditure of funds is concerned. One of the strongest tasks of a manager. Failure to do so hinders the purpose of the fruit. For the real management of financial management :
- a. Current good management and
- b, fixed asset management i.
4. Protection of funds:
Funds and equivalent of funds such as cash funds, reserved. Funds etc. are the total bill of the business. ‘Increasing funding, utilization is one of the tasks of financial management. Similarly, all the work related to its conservation is also financial management. Such as- theft of funds, robbery, fire, storm, flood, drought or accidental destruction. So the financial manager creates insurance contracts, complementary fund arrangements and miscellaneous reserve funds to protect the funds from these contingencies.
5. Distribution of Net Earnings:
Part of the earned net profit is one of the functions of financial management to distribute rationally among the shareholders. In order to retain the shareholder, increase the number of new investors and above all increase the value of the firm, one has to be very efficient in this regard. So how this distribution process will be done efficiently can also be considered as the nature of money management. The general consideration for income distribution is:
- a. How much of the profits will be saved for future arrangements. For example, in the banking sector, it is specified by law.
- b. Whether regular income distribution can be performed.
- c. Whether the profits will be distributed at the interim level, how much of the net income will be kept for the purpose of distribution among the owners, etc.
At the end of the discussion on the nature of financial management, it appears that the nature of finance is changing with the times. Finance As a branch of macroeconomics, it was assumed that only money or funds would meet the needs of the business.
But currently financial. The management team is making a special contribution to the organization as an independent department. To expect. The nature of this change has changed to financial management as an integral part of the organization.