Functions of Financial Management

Financial functions can be divided into three broad categories:
(1) Investment decision
(2) Financing decision and
(3) Dividend decision.

In other words, the firm decides how much to invest in short - term assets and how to raised the required funds. In making these decisions the financial manager should aim at increasing the value of the shareholder stake in the firm.

The financial manager rises from capital markets. He or she should therefore know how the capital market functions to allocate capital to the competing firms and how security prices are determined in the capital markets. Most companies have only one senior financial officer. But a large company may have both a treasurer and a controller.

The treasurer’s function is to raise and /manage company funds while the controller oversees whether funds are correctly applied. A number of companies in India either have a finance director or a vice president of finance as the chief financial officer.

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