Question

essay on financial management​

Answer 1

Capital Raising for Start ups

Starting a new business can be a challenging project especially raising the necessary amount of start-up capital to get your dreams off the ground and running. There are many different options availableto get funding,.One way to get funding for a new business is to visit local bank to inquire about their financingopportunities. It is important to see if they have any package or special deals available for newbusiness. It is certainly something to explore to raise the start-up capital.The following are the major sources of funding for entrepreneurs:1. Personal finances2. Friends and family3. Angel Investors4. Debt financing5. Equity financing6. Customer financing7. Government

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1. Personal Finances

People start companies at different points in their lives. Some entrepreneurs start companies duringthe early stages of their career. A majority of entrepreneurs start companies at later stages in theirlives and these entrepreneurs often have personal assets that they could use to finance their ideas. Itis important for entrepreneurs to invest their personal savings in their business ideas as it indicatesthat the entrepreneur is confident about his or her own idea, thereby encouraging other investors tolook at the idea more seriously. After all, who would want to invest in a company wherein the founder does not want to bet on the idea? Additionally, entrepreneurs who do not put their personalsavings into the venture can find it hard to raise money from friends and family. Entrepreneursshould think thoroughly before investing their personal finances. If the business idea is not feasible,the entrepreneur loses everything.

2. Friends and Family

Friends and family are important sources for financing start-ups since they would like to see theentrepreneur succeed. Such loans can be obtained quickly as this type of financing is based more on personal relationships than on financial analysis. However, friends and relatives who providebusiness loans sometime feel that they have the right to offer suggestions concerning the

management of the business. Their suggestions might be orthogonal to the entrepreneur’s strategy

and might create fissures in the relationships. It is important to minimize the chance of damagingimportant personal relationships. Therefore, entrepreneurs should plan on repaying such loans assoon as possible even if the business idea fails, thereby ensuring that relationships are maintained.

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Answer 2

Answer:

Introduction to Financial Management:

A business organisation seek to achieve their objectives by obtaining funds from various sources and then investing them in different types of assets, such as plant, buildings, machin­ery, vehicles etc. Financial management is managing the finances through scientific decision­-making.

For making right decisions, financial management needs to understand financial envi­ronment within which these decisions operate. Financial management will then be able to analyse these financial information’s to predict likely future results and to plan more carefully their proposed course of action.

Financial management is concerned with the acquisition (investment), financing (arranging funds), and management of assets with some overall goal in mind. Invest­ment decisions begin with a determination of the total amount of assets required by the firm and to determine the money value of the same. Assets that cannot be economically justified, may be reduced, eliminated or replaced.

Financing decisions include decisions regarding mix of financing, type of financing em­ployed, dividend policy and method of acquiring funds i.e., getting a short term loan, or a long term lease arrangement, sale of bonds or stock.

Asset management decisions means managing the assets efficiently after their acquisition.

Definition of Financial Management:

Financial management is an internal part of overall management and not a staff function of the organization. It is not only restricted to fund raising process but also covers utilization of funds and monitoring its uses. The finance function is concerned with the process of acquiring an efficient utilization of funds of a business system, in order to maximize the value of the enterprise.

Financial management involves the application of principles of general management to the finance function. These functions influence the operations of other crucial functional areas of the enterprise or firm such as marketing production and personnel. Thus the overall survival of the firm is effected by it financial operations.“The financial management refers to the application of skills in the manipulation, use and control of funds.” —Mock, Schultz and Schuckectat

Financial management can also be defined as that part of management, which is related mainly with raising or acquiring the funds for the enterprise or firm in the most economical way, utilizing those funds as profitably as possible, for a given risk level, planning the future investment of those funds and controlling the current performance plus future development by adopting budgeting, cost accounting and financial accounting.

Scope and Functions of Financial Management:

The main objectives of financial management are to arrange the sufficient funds for meeting short term long term requirements of the enterprise. These finances are procured at minimum cost in order to maximize the profitability.

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