Question

objectives and functions of financial administration

Answer 1

Objectives of Financial Management

• To ensure regular and adequate supply of funds to the concern.

• To ensure adequate returns to the shareholders which will depend upon the earning capacity, market price of the share, expectations of the shareholders.

• To ensure optimum funds utilization. Once the funds are procured, they should be utilized in maximum possible way at least cost.

• To ensure safety on investment, i.e, funds should be invested in safe ventures so that adequate rate of return can be achieved.

• To plan a sound capital structure-There should be sound and fair composition of capital so that a balance is maintained between debt and equity capital.

Functions of Financial Management

Estimation of capital requirements:

Determination of capital composition:

Choice of sources of funds:

Disposal of surplus:

Management of cash:

Financial controls:

Answer 2

OBJECTIVES OF FINANCIAL ADMINISTRATION

1. Proper Allocation of Resources : In order to manage optimum distribution of financial resources for making the most out of them for betterment of the business, financial administration is required.
2. Operation of Policies and Projects : Carrying out formation and implementation of policies or projects within stipulated budget and time requires major role of financial administration.

FUNCTIONS OF FINANCIAL ADMINISTRATION

1. Estimation of funds : Making a proper plan or budget regarding all the estimated cash flow , expenditures , incomes or other requirements including estimating the earning capacity to maintain fair accounts and hold required reserves.
2. Profitable Returns : Allocation of funds and investments for maximum and regular returns has to be planned by financial administration.