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Foundations of Business 6th Edition

Foundations of Business (6th Edition)

Book Edition6th Edition
Author(s)Hughes, Pride
PublisherCengage Learning
Section 16-1: Why Financial Management?
Section 16-2: The Need For Financing
Section 16-3: Planning- The Basis of Sound Financial Management
Section 16-4: Financial Services Provided by Banks and other Financial Institutions
Section 16-5: Sources of Short-Term Debt Financing
Section 16-6: Sources of Equity Financing
Section 16-7: Sources of Long-Term Debt Financing
Chapter 16, Section 16-1, Concept Check, Exercise 01
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For a business firm, what type of activities does financial management involve?


Typically, the financial managers do is, they prepare this financial statements and make reports for every business activities involving finances with monthly and annual forecast. They also observe details of finances to make sure that legal conditions are met. They have a financial team that do daily financial reporting and making allocations of budgets. In addition, they also review the company financial reports and plans on ways how to avoid unnecessary cost and how to reduce cost. 


The significance of financial management requires the assessment, disclosure, and administration of profitable activity and is critical to the successful and coherent function of business and markets.


The type of activities financial management involves are:


- planning, categorizing, managing and guiding the economic undertaking such as acquirement and application of funds of the operation.


- It is concentrated on evaluation rather than technique or methodology. For example, in discussing an annual report, one individual is bothered with the technique and would be more interested in computation. They would ask: is the money allocated to the right bracket or categories? 


- it involves in creating merit and operational capacity through the allotment of scarce assets amongst competing business advantage. It is an assistance to the execution and observing of business plan of action or strategy and aids to attain business objectives.


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