Page 7 - DMGT405_FINANCIAL%20MANAGEMENT

Mahesh Kumar Sarva, Lovely Professional University
Unit 1: Introduction to Financial Management

Unit 1: Introduction to Financial Management Notes

CONTENTS
Objectives
Introduction
1. 1 Meaning and Scope of Financial Management
1.1.1 Scope of Financial Management

1.1.2 Important Topics in Financial Management
1.2 Goals/Objectives of Financial Management—Profit Maximization vs. Wealth
Maximization
1.3 Finance Functions
1.3.1 Place of Finance Function in the Organizational Structure

1.3.2 Relation of Finance with Economics
1.3.3 Relation to Accounting
1.3.4 Interface with other Functions
1.4 Supplementary noteworthy Aspects related to Financial Management
1.4.1 Methods and Tools of Financial Management
1.4.2 Forms of Business Organization
1.5 Summary
1.6 Keywords
1.7 Review Questions

1.8 Further Readings

Objectives

After studying this unit, you will be able to:
 Recognize the meaning and scope of financial management
 Describe the goals and objectives of financial management
 Explain the different Finance functions
 Discuss various significant aspects related to financial management

Introduction

Finance can be defined as the art and science of managing money. Virtually, all individuals and
organizations earn or raise money and spend or invest money. Finance is concerned with the
process, institutions, markets and instruments involved in the transfer of money among
individuals, business and governments.

1. 1 Meaning and Scope of Financial Management

Financial management as an academic discipline has undergone fundamental changes with
regard to its scope and coverage. In the earlier years, it was treated synonymously with the

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