√ Definition of Financial Management, Functions, Objectives, Main Duties, Principles, Scope
Definition of Financial Management, Functions, Objectives, Main Duties, Principles, Scope - In this discussion we will explain about financial management. Which includes the definition of financial management, financial management functions, objectives, main tasks, principles and scope of financial management which are explained in full and easy to understand. For more details, please see the review below carefully.
Definition of Financial Management, Functions, Objectives, Main Duties, Principles, Scope
Let's discuss the meaning of financial management first carefully.
Definition of Financial Management
Financial management is an activity of planning, budgeting, checking, processing, controlling, seeking and storing funds owned by a company or organization.
Financial Management Function
The functions of financial management are as follows:
- Financial Planning (Planning): This function includes planning cash flow and profit and loss.
- Budgeting: This function includes planning to receive and allocate budget costs efficiently and maximize the funds you have.
- Financial Management: The function of financial management in the use of company funds to maximize existing funds in various ways.
- Financial Search: Financial management seeks and exploits existing sources of funds for the operational activities of the company.
- Financial Storage: Funds that have been collected are stored and secured by financial management.
- Financial Control (Controlling): This function is to carry out evaluations and also improve the company's finances and financial systems.
- Financial Examination (Auditing): This function is financial management in carrying out internal audits of existing company finances so that they are in accordance with accounting standard rules and do not occur deviation.
- Financial Reporting (Reporting): This function is financial management to prepare information reports about the company's financial condition and ratio analysis of financial statements.
Financial Management Objectives
The goal of financial management is to make the company's value high. This is if one day the company is sold, then the price can be set with very high assets.
Main Duties of Financial Management
The main tasks of financial management are as follows:
- Obtaining company funding
- Using company funds
- Dividing company finances or profits
Financial Management Principles
The principles of financial management are as follows:
Consistency
Consistency or consistency is the principle that a company's financial system and policies are in accordance with what is planned, not changing every time period, but what must be emphasized is that a financial system does not mean that adjustments to taste and significant changes in the financial system cannot be carried out company. Irregular financial processes can be a sign of manipulation of the company's financial management.
Accountability
Accountability is a legal and moral obligation, which is inherent in every individual, group or organization company in providing an explanation of how and or authority that has been conveyed by a third party used. Each party must provide an in-depth explanation of the use of resources and what has been achieved in the form accountability to those who have interests, so that everyone knows how the authority and funds they have can be used used.
Transparency
Transparency is a principle in which each management activity must be open, both in providing information plans and all activities against those who have an interest, including fair, complete, timely and financial reports information that can be opened easily by the person concerned, if it is not transparent it will result in fraud in activities company.
Viability (Survival)
Survival is a principle in which the emphasis on the company's financial health is maintained, all operational expenses or within the level the strategy must be adapted to existing funds, the survival of the entity, namely a measure of the level of security and also in financial sustainability company. In company management, it is mandatory to prepare a financial plan which shows how the company can carry out its strategic plans to meet financial needs.
Integrity
Integrity is the principle that each individual must have a high level of integrity in carrying out operational activities. Not only that, in recording and reporting finances it is mandatory to maintain its integrity with the completeness and level of accuracy in a financial record.
Stewardship (Management)
Management is the principle which can properly manage the funds that have been obtained and in providing guarantees for funds obtained is to realize the goals that have been set, in practice it is carried out carefully by making a strategic plan, identify existing financial risks and to compile and create a sound financial control system in accordance.
Accounting Standards
Accounting standard is a financial accounting system that must be the same as the principles or standards of existing accounting regulations applies with the aim that the resulting financial statements can be easily understood and understood by all parties who have them interest.
Scope of Financial Management
The scope of financial management is as follows:
-
Funding Decision
In this case it includes management policies in seeking corporate funds such as policies on issuing bonds, short-term and long-term debt policies of companies whose sources are internal or external company.
-
Investation decision
Investment policy on fixed assets or fixed assets, for example buildings, land, and also equipment or financial assets in the form of securities such as stocks and bonds or investment activities in various funds assets.
-
Asset Processing Decisions
Is the policy of processing owned assets in an efficient way to achieve company goals.
Thus has been explained about Definition of Financial Management, Functions, Objectives, Main Duties, Principles, Scope, hopefully can add to your insight and knowledge. Thank you for visiting and don't forget to read our other articles.
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