project and implimentation report on working capital management in HAL
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Finance is one of the major element, which activates the overall growth of the economy. Finance is the life blood of economic activity. A well-knit finance system directly contributes to the growth of the economy. An efficient financial system calls for the effective performance of financial instruments and financial market.
Wheeler defines “Business finance is that finance which is concerned with the acquisition and conservation of capital funds in meeting the financial needs and overall objectives of a business enterprise.”
Importance of finance
To purchase fixed assets such as land; building, machinery, furniture etc.
To pay for purchase of raw material, wages etc.
To replace existing assets or acquired new assets.
To expand the existing business.
To hold stock of material and finished goods.
Financial management deals with planning and control of financial operations to corporate enterprise. Also deals with the procurement pf funds and their effective utilization.
Financial management in the minds of executives:
“Financial Management is a subject which deals with the tools and techniques through which a company’s balance sheet is constructed. It offers to the executives in building item in liabilities and assets side of a balance sheet. It clearly guides the financial manager to select long term as well as short term funds and its allocation to capital and revenue expenditure hence ultimately it is used as a communication tool to convince the investors about the performance of a corporate entity.
According to HOWARD & OPTION “ Financial Management may be defined as that area or set of administrative functions in an organization which, relates arrangement of cash and credit so that the organization may have the means to carry out its objective as satisfactorily as possible”.
OBJECTIVE OF FINANCIAL MANAGEMENT:
Financial management evaluates how funds are used. In all cases, it involves a sounds judgment. With logical approach of decision-making. The core of financial policy is to “maximize earnings in the long run and optimize them in short run” this calla or an evaluation of alternative of funds are allocation for business functions.
Earning profit by a corporate or a company is a social obligation. Profit is only means through which an efficiency of organization can be measured. As the business units are exploiting the resources of the country namely, land, labour, capital and resources has an obligation to make use of these resources to achieve profits. It is an economic obligation to cover the cost of funds and offer surplus funds to expansion and growth.
The concept of ‘wealth Maximization’ refers to the gradual growth of the value of the assets of the firm in terms of benefits it can products. Any financial action can be judged in terms of the benefits it produces less cost of action. The wealth maximization attained by a company is reflected in the market value of share. In other words, it is nothing but the process of creating wealth of an organization. This maximizes the wealth of shareholder.