Question

Explain the concept of financial management through various definitions.

Answer 1

Finance:

• In layman language, management of finance is called financial management.
• Finance is the blood of business.
• Business can neither be started without finance nor can it sustain without it. Thus, finance is the foundation stone of business.

Financial management:

• The activity done at managerial level for planning and controlling financial resources for the business enterprise is called financial management.
• Under financial management, the managers try to optimally manage the financial resources so that the business earns a satisfactory return.

Various definitions of financial management:

• According to F. W. Paish, “In the modern economy, based on utilization of funds, financial management means acquiring of required funds at the required time.”
• According to Raymond J. Chambers, “Financial management means to take decisions about financial matters to implement then smoothly and to review, them.”
• According to Prof. M. Kimbal, “Financial management means acquisition of fund, its optimum utilization and its appropriate allocation.”
• From all these definitions we can conclude that the scope of financial management is so wide that it covers all the financial decisions of business, right from the inception.