Financial Management

 The task of managing the functions of finance can be termed as financial management. Financial Management is concerned with the acquisition, financing & management of assets with some overall goal in mind.

If we explain the above definition we will find three aspects of financial management:
i. Acquisition of assets
ii. Financing for assets
iii. Management of assets

Here the term 'asset' includes both fixed and current assets; fixed assets for income generation and current assets for maintenance of fixed assets. Thus financing is required for acquisition. of fixed assets as well as for current assets or working capital. Professor Ross, Westerfield & Jordan also viewed financial management in the similar manner. Corporate finance has three main areas of concern:
i. Capital budgeting
ii. Capital structure
iii. Working capital management

If we elaborate these three major areas:
i. Capital budgeting: Long term investment decision (Acquisition of fixed assets)
ii. Capital structure: Financing decision (Raising of funds for acquiring fixed assets)
iii. Working capital management: Financing for everyday financial activities (Management of assets)

We can also quote Professor Prasanna Chandra who simplified the matter like this: financial management, also referred to as corporate finance as managerial finance, is broadly concerned with acquisition and use of funds by a business firm.

At the end it can be said that, financial management is concerned with where to invest, how to invest and how the investment should be managed.