Scope Of Financial Management
1. Financial Manage ment and Economics
Economic
concepts like micro and macroeconomics are directly applied with the financial
management approaches. Investment decisions, micro and macro environmental
factors are closely associated with the functions of financial manager.
Financial management also uses the economic equations like money value discount
factor, economic order quantity etc. Financial economics is one of the emerging
area, which provides immense opportunities to finance, and economical areas.
2. Financial Management and Accounting
Accounting
records includes the financial information of the business concern. Hence, we
can easily understand the relationship between the financial management and
accounting. In the olden periods, both financial management and accounting are
treated as a same discipline and then it has been merged as Management
Accounting because this part is very much helpful to finance manager to take
decisions. But nowadays financial management and accounting discipline are
separate and interrelated.
3. Financial Management or Mathematics
Modern
approaches of the financial management applied large number of mathematical and
statistical tools and techniques. They are also called as econometrics.
Economic order quantity, discount factor, time value of money, present value of
money, cost of capital, capital structure theories, dividend theories, ratio
analysis and working capital analysis are used as mathematical and statistical
tools and techniques in the field of financial management.
4. Financial Management and Production Management
Production
management is the operational part of the business concern, which helps to
multiple the money into profit. Profit of the concern depends upon the
production performance. Production performance needs finance, because
production department requires raw material, machinery, wages, operating
expenses etc. These expenditures are decided and estimated by the financial
department and the finance manager allocates the appropriate finance to
production department. The financial manager must be aware of the operational
process and finance required for each process of production activities.
5. Financial Management and Marketing
Produced
goods are sold in the market with innovative and modern approaches. For this,
the marketing department needs finance to meet their requirements. The
financial manager or finance department is responsible to allocate the adequate
finance to the marketing department. Hence, marketing and financial management
are interrelated and depends on each other.
6. Financial Management and Human Resource
Financial
management is also related with human resource department, which provides
manpower to all the functional areas of the management. Financial manager
should carefully evaluate the requirement of manpower to each department and
allocate the finance to the human resource department as wages, salary,
remuneration, commission, bonus, pension and other monetary benefits to the
human resource department. Hence, financial management is directly related with
human resource management.
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