FINANCE

finance refers to money and credit employed in business. It involves procurement and utilization of funds so that business firms may be able to carry out their operations effectively and efficiently.

characteristics of business finance

(i) finance includes all types of funds used in business. (ii)finance is needed in all types of organizations large or small, manufacturing or trading. (iii) The amount of business finance differs from one business firm to another depending upon its nature and size. It also varies from time to time. (iv) Business finance involves estimation of funds. It is concerned with raising funds from different sources as well as investment of funds for different purposes.

FINANCIAL & MANAGEMENT

Financial means procuring sources of money supply and allocation of these sources on the basis of forecasting monetary requirements of the business. MANAGEMENT refers to planning, organization, co-ordination and control of human activities and physical resources for achieving the objectives of an enterprise.

FINANCIAL MANAGEMENT
Financial management is that area of business management ,in which activities related to finance are managed and controlled in a effective manner. FM is that part of business management which is concerned with planning and controlling of firms financial resources.

OBJECTIVES
Adequate & regular supply of funds Provide max. returns to owners Efficient utilization of capital Minimize the cost of capital Investment of securities in a economic way. Establish co-ordination b/w finance and other departments.

IMPORTANCE
Basis of success of the enterprise Optimum allocation and utilization of resources Measurement of performance & efficiency Basis of planning, co-ordination and control. National importance Useful for business managers, shareholders, investors, financial institutions Central point of decision making

FINANCE FUNCTION
ADMINISTRATIVE FUNCTIONS: (A) Recurring finance functions 1. Planning of fund 2. Raising of fund 3. Allocation of resources 4. Control of funds 5. Allocation of income 6.Co-ordination with other departments (B) Non-recurring finance functions

ROUTINE FUNCTIONS
Supervision of receipt of cash and its disbursement. Keeping record of every transaction. Keeping the cash balances properly and safely. Management of credit transactions. Safety of securities and important documents. Providing information to top management. Obeying Govt. rules and regulations.

Shareholders Board of Directors Committee of Finance Managing Director

Production Manager

Personnel Manager

Finance Manager

Marketing Manger

Treasurer
Banking Transitions Receipt of Finance & planning finance Management of Cash

Financial Controller
General Accounts & Salary Statement

Financial Statements

Management of Credit

Budget

Internal Audit

Distribution of Dividend

Management of Pension

Admn. Of tax

Safety of Tax

FUNCTIONS OF CHIEF FINANCIAL OFFICER (A) Financial Analysis and Performance appraisal 1. Analysis of financial conditions & performance 2. Financial Forecasting and Planning 3. Financial control (B) Financing Decision 1. Selection of optimum combination of various sources of finance. 2. Determination of terms and timing of financing 3. Management of Income

(C) Investing Decisions

1. Determination of investment in current assets 2. Decisions regarding selection of Capital investment projects 3. Restructuring decisions (D) Dividend Decisions

RESPONSIBILITIES OF FINANCE MANAGER

Balancing costs and revenue Adequate return on shareholders funds Control of financial resources Protection of creditors interest.