Financial Management

Lesson

Part 1 — business finance, the objective of financial management, the three financial decisions and financial planning.

In this lesson you will

Explain business finance, the meaning and role of financial management, and its objective of wealth maximisation
Explain the investment, financing and dividend decisions and the factors affecting each
Explain the meaning, objectives and importance of financial planning

Part 1 at a glance

Concept

Business finance

Business finance is the money a business needs for all its activities: to start, to run and to grow.

Every stage of a business needs money: that money is business finance.
Why a business needs funds	Imagined example
To set up: land, building, machinery	A Nashik winery buys tanks and a bottling line
To run day to day: materials, wages, bills	It buys grapes and pays harvest workers
To grow and modernise	It adds a cold store and a visitor centre

Concept

Financial management is about raising funds at the lowest cost and putting them to the best use.