Financial management is generally concerned with short term working capital management, focusing on current assets and current liabilities, and managing fluctuations in foreign currency and product cycles, often through hedging (see Corporate finance § Financial risk management). The function also entails the efficient and effective day-to-day management of funds, and thus overlaps treasury management. It is also involved with long term strategic financial management, focused on i.a. capital structure management, including capital raising, capital budgeting (capital allocation between business units or products), and dividend policy; these latter, in large corporates, being more the domain of "corporate finance."
Specific tasks
Profit maximisation happens when marginal cost is equal to marginal revenue. This is the main objective of Financial Management.
Maintaining proper cash flow is a short run objective of financial management. It is necessary for operations to pay the day-to-day expenses e.g. raw material, electricity bills, wages, rent etc. A good cash flow ensures the survival of company; see cashflow forecast.
Minimisation on capital cost in financial management can help operations gain more profit.
Estimating the Requirement of Funds: Businesses make forecast on funds needed in both short run and long run, hence, they can improve the efficiency of funding. The estimation is based on the budget e.g. sales budget, production budget; see Budget analyst.
Determining the Capital Structure: Capital structure is how a firm finances its overall operations and growth by using different sources of funds.[4] Once the requirement of funds has estimated, the financial manager should decide the mix of debt and equity and also types of debt.
