The purpose and function of financial management

Financial management

Content management policy certain aspects of financial activity largely depends on the selected priority goals and objectives of financial management. Depending on the specific economic conditions, the mission and strategic goals of the company, stage of life cycle, qualification of financial managers, adopted business ethics, acceptable level of risk in the financial management can be solved following tasks:
• survival in a competitive environment;
• avoid bankruptcy and financial turmoil;
• increase capital and optimize its structure;
• ensuring constant rate of growth in production and sales;
• Leadership in the fight against competitors;
• seeking funding for the sectoral and regional diversification of economic activity;
• maximizing net income;
• ensuring the profitability of activities;
• minimizing costs and risks, and so on. Al.
Unified view of the priority objectives of financial management in the economic literature there.
Given that the financial management of any entity is in the interest of its owners, the main purpose of financial management is logically viewed through the prism of maximizing financial well-being owners of capital company that provided by a permanent increase in the market value of the company and its shares.
More details revealed the essence of financial management through its main tasks include:
1. Ensuring financial viability in the process of development. This task is realized by forming an effective economic policy finance and investment company, optimizing the financial structure of its capital.
2. Optimization of monetary support and permanent solvency. This problem is solved by effective cash management businesses in the cycle of its cash liquidity support its working capital at a level that provides a constant solvency.
3. Ensuring maximization of net income through effective management of assets, optimize their size and composition, the effective tax, depreciation and dividend policy.
4. Ensure minimize financial risks by reducing the level of concentration, the use of methods to avoid and neutralize the negative effects of financial and economic activities, the formation of insurance funds, risk transfer insurance companies.
Not always possible to implement all of the targets in full. So, the maximization of company profits at any cost so contrary to the objectives of financial management as minimizing risk and ensuring the financial sustainability of the entity.
The main task of the financial manager is in balancing the whole system of purpose, agreeing priority at some point objectives with other objectives of financial management.
When financial instruments understand any contractual agreement according to which an increase in the assets of one entity and other financial obligations of the counterparty. These financial instruments include: cash, credit instruments, methods of ordinary shares and so on.

Financial impact methods are a way of financial relations in the economic process. Their action is manifested in the formation and use of funds. In practice, financial management widely used financial methods such as planning, forecasting, financing, self-financing, taxation, fondoutvorennya, renting, leasing, factoring, payment system, investment and so on.
Financial leverage - a reception of the financial method. These levers respectively include: cost, price, profit, profit, types of loans, interest rates, financial penalties, tax rates, deposits, mutual contributions, contributions to funds, rents, leasing and factoring payments, form of payment, investment income, discount the level of dividend payments and more.
Reproductive function of financial management is to ensure the balance of material and financial resources at all stages of circulation of capital in the simple and expanded reproduction. At the forefront of accumulating capital investment to address long-term problems. That implementation of financial management tool lets you find the optimal proportion between cash advances reimbursed for one cycle, and investment funds that are permanently withdrawn from circulation and returned parts.
Distribution function of financial management is the formation and use of funds, maintaining an efficient capital structure of enterprises. Financial Manager determines policy on profit distribution, which determines the overall conceptual approach to the development of financial management in the enterprise. The result of the distribution process is the creation of funds of funds (fund compensation fund consumption, accumulation fund) which provide funding received to implement programs that support optimal capital structure, minimizing the risk of bankruptcy.
Functions subject of financial management - a specific kind of management activities aimed at implementing the goals and objectives of financial management company.

The basis of the administrative functions of planning acts. It covers the whole range of measures to develop targets and their implementation in practice. With planning carried out economic assessment of financial solutions, choice of alternatives. A variety of features are forecasting (foresight), that develop in the longer term potential areas of financial activities and changes in financial condition.
Unlike proper planning forecasting does not aim to make all forecasts in practice, and is more in identifying alternative financial indicators and parameters.
The organization is to create a financial services units, determining their powers, establishing vertical and horizontal linkages between them to coordinate their actions.
Motivation provides financial incentives for workers to perform service tasks. From financial managers interested in the results of their work depends largely on the effectiveness of financial activity. By motivational factors include not only wages, but also the policy of the company and the management style, interpersonal relationship with supervisor, colleagues and subordinates, job security, working conditions, social security status worker.
Control as a function of financial management is to identify deviations from the plan and making timely adjustments. There are two main forms of control depending on its orientation:
- Monitoring the change in financial indicators as payments and settlements;
- Monitoring the implementation of the financing strategy ie the prediction of changes in operating conditions and timely adjustments to them.
The control function of financial management in the following areas:
• Control the correct and timely transfer of funds to funds established enterprises from all sources;
• monitoring compliance with the specified funds structure to meet the needs of industrial and social development;
• control of commitment and effective use of financial resources;
• Control the flow of revenue from product sales and services;
• Control the level of self-financing, profitability and profitability.
Depending on the time of control is preliminary, current and final.