Profit maximisation ignores timings. It properly points out that the profit factor should be considered from a long-term point of view.
In other words, the firm can pay all its bills as soon as they become due and have sufficient cash to take anticipated discounts for cash purchases along with a reserve in order to meet certain contingencies. It is not only restricted to fund raising process but also covers utilization of funds and monitoring its uses.
No doubt the latter project may result in a greater total profit if the firm could not immediately re-invest its profits when the same was received from the 3-year project. We all know that a firm has to deal with an uncertain future. The following illustration will make the principle clear: Similarly, the designation also differs from firm to firm, some are called financial controller, some are called financial manager or vice president for finance or director of finance etc.
These take care of both shortage and excess of cash. Flexibility can be maintained provided there is careful management of funds and activities.
The net present value is the difference between the gross present value of the benefits of that action and the amount of investment required to achieve those benefits.
Financial management itself is concerned with the planning and controlling of the financial resources of the firm. Financial management ensures that decisions like acquisition of fixed assets like equipment and facilities are made strategically. Besides, money has time value. The Value Maximisation or Net Present Worth Maximisation — which is universally accepted as an appropriate and operationally feasible criterion in order to choose among the alternative courses of action for financial management — is to maximise the value of the firm over a long run.
As we know, the top management viz. Assets that cannot be economically justified, may be reduced, eliminated or replaced.
This approach, however, recognises the following: The investment and the financial policies depend the above decisions. The Value Maximisation or Net Present Worth Maximisation — which is universally accepted as an appropriate and operationally feasible criterion in order to choose among the alternative courses of action for financial management — is to maximise the value of the firm over a long run.
Finally the accounting department will see how the funds would be raised to meet these needs. - Financial Management Techniques The study of Financial Management techniques involves the assumption that the single objective of commercial entities is the maximization of firm valuation and shareholder wealth It could be argued that in financial management the single objective of commercial entities is the maximization of firm valuation and.
Principles of Financial Management – Essay Sample Financial management is a system of principles, means and forms of economic relations between companies, aimed at managing their financial and economic activities, which include development and implementation of financial policies, informational support, evaluation of investment projects and.
Financial management It aids the firm to achieve its set of goals in the economy. The goals of management in the economy are to enable the company to increase its.
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Financial analysis is the process of determining the significant operating and financial characteristics of a firm from its accounting and its financial statements. The goal of such analysis is to determine the efficiency and performance of the firm’s management, reflected in the financial records and reports.
"The goal of financial management is to take actions which maximize the value of a firm's stock. Those actions will eventually appear in the firm's financial statement, so a general understanding of financial statements is very important for the manager." 3/5(20).Essays on financial management