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Management of Finances
Notes 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
raising of funds. In the later years, its broader scope, included in addition to the procurement of
funds, efficient use of resources.
1.1.1 Scope of Financial Management
Financial Management is broadly concerned with the acquisition and use of funds by a business
firm. The important tasks of financial management, as related to the above, may be categorized
as follows:
Financial Analysis, Planning and Control
Analysis of financial condition and preference
Profit planning
Financial forecasting
Financial control
1.1.2 Important Topics in Financial Management
Table 1.1: Balance Sheet and Topics in Financial Management
Share Capital
Equity Capital Structure and Cost of Capital
Preference
Reserves and Surplus
Debentures
Unsecured Loan
Current Liabilities & Provisions Working Capital
Trade Creditors Financing Policy
Provisions
Fixed Assets (Net) Capital Budgeting
Gross Block
Less Depreciation
Investment Security Analysis
Current Assets, Loans and Advances
Cash and bank balances Cash Management
Receivables Receivables Management
Inventories Inventory Policy
Loans and Advances
Miscellaneous Expenditure and Losses
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